EXHIBIT INDEX ON PAGE 57
                                  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, 2003

[ ] 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:

        Title of each class           Name of each exchange on which registered
        --------------------          -----------------------------------------
Common Stock, $1 par value per share              New York Stock Exchange

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

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 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, 2003 was $164,535,000.

As of February 20, 2004, there were 5,000,850 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 27, 2004

                               TABLE OF CONTENTS

                   ITEM                                                                 PAGE
                   ----                                                                 ----
                                                                                     
PART I.    1.      Business..........................................................      4
           2.      Properties........................................................     15
           3.      Legal Proceedings.................................................     19
           4.      Submission of Matters to a Vote of Security Holders...............     19
                   Executive Officers of the Registrant..............................     20

PART II.   5.      Market for Registrant's Common Equity and Related Stockholder
                   Matters...........................................................     21
           6.      Selected Financial Data...........................................     22
           7.      Management's Discussion and Analysis of Financial Condition and
                   Results of Operations.............................................     23
           7A.     Quantitative and Qualitative Disclosures About Market Risk........     32
           8.      Financial Statements and Supplementary Data.......................     33
           9.      Changes in and Disagreements with Accountants on Accounting
                   and Financial Disclosure..........................................     33
           9A.     Controls and Procedures...........................................     33

PART III.  10.     Directors and Executive Officers of the Registrant (1) ...........     51
           11.     Executive Compensation (1)........................................     51
           12.     Security Ownership of Certain Beneficial Owners and Management
                   and Related Stockholder Matters (1)...............................     51
           13.     Certain Relationships and Related Transactions (1)................     51
           14.     Principal Accountant Fees and Services (1)........................     51

PART IV.   15.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K..     52

SIGNATURES..........................................................................      53

- ---------------
(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 involving the election of directors with the Securities and
Exchange Commission not later than 120 days after December 31, 2003, which is
incorporated by reference herein. See "Executive Officers of the Registrant" for
information relating to executive officers.

                                      -2-

                           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 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.

         For 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. 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-

                                     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 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.;

     (ii) 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;

     (iii) 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; and

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

Property under development

     (v)  the Lexington Avenue development property, which comprises the entire
          square block bounded by Lexington Avenue, East 59th Street, Third
          Avenue and East 58th Street in Manhattan, New York; 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.

Lexington Avenue

     The development at Lexington Avenue consists of an approximately 1.3
million square foot multi-use building. The building will contain approximately
885,000 net rentable square feet of office space, approximately 171,000 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")). Of the construction budget of $630,000,000
(which excludes $29,000,000 for development and guarantee fees to Vornado),
$402,000,000 has been expended through December 31, 2003 and an additional
$62,200,000 has been committed to at December 31, 2003. Construction is expected
to be completed in 2005.

     On May 1, 2001, the Company entered into a triple-net lease with Bloomberg
L.P. for approximately 695,000 square feet of office space at the Lexington
Avenue property (the "Bloomberg Space"). The initial term of the lease is 25
years with a ten-year renewal option. Base annual net rent is $34,529,000 in
each of the first four years and $38,533,000 in the fifth year with a similar
percentage increase each four years thereafter. On November 15, 2003, the
Company delivered approximately 87% of the space. As of February 9, 2004, all of
the Bloomberg Space has been delivered. Payment of base rent commences nine
months from delivery of each parcel of space; rent recognition commenced from
delivery of space.

     At December 31, 2003, 115,000 square feet of retail space has been leased,
of which The Home Depot and Hennes & Mauritz have leased 83,000 and 27,000
square feet, respectively. The Company expects to deliver the leased space in
2004. Payment of base rent commences six to nine months from delivery of each
space; rent recognition commences on delivery of space.

                                       -4-

     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, 2003, would produce (inclusive of the value of existing contracts)
an aggregate sale price of $457,000,000. As of December 31, 2003, the Company
has received deposits of $10,425,000 on sales of the condominium units.

     Financing of the Project

     On February 13, 2004, the Company completed a $400,000,000 mortgage
financing on the office space. The loan was placed by German American Capital
Corporation, an affiliate of Deutsche Bank. 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. $253,529,000 of
the loan proceeds was used to repay the entire amount outstanding under the
previously existing construction loan (the "Construction Loan") with Hypo Real
Estate Capital Corporation.

     The Construction Loan was modified so that the remaining availability is
$237,000,000, which is approximately the amount estimated to complete the
Lexington Avenue development project (not including $29,000,000 for development
and guarantee fees to Vornado). The interest rate of the Construction Loan of
LIBOR plus 2.5% (3.64% at December 31, 2003) 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 the Lexington
Avenue project and funding of project costs in excess of a stated loan budget,
if not funded by the Company (the "Completion Guarantee"). If Vornado should
advance any funds under the Completion Guarantee in excess of $21,000,000, which
is the amount currently available under the line of credit with Vornado,
interest on those advances would be at 15% per annum.

     There can be no assurance that the Lexington Avenue project will be
completed on time or completed for the budgeted amount. Any failure to complete
the Lexington Avenue project on time or within budget may adversely affect
future cash flows and funds from operations, and the Company's financial
condition.

Significant Tenants

     Sears accounted for 18%, 19% and 21% of the Company's consolidated revenues
for the years ended December 31, 2003, 2002 and 2001, respectively. No other
tenant accounted for more than 10% of revenues. Rents from the Bloomberg L.P.
lease will represent a significant portion of revenues in 2004.

Liquidity

     In the aggregate, Alexander's operating properties do not generate
sufficient cash flow to pay all of its expenses. After the completion of the
Lexington Avenue property, which is expected in 2005, the Company expects that
cash flow will become positive. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources" for a further discussion.

Relationship with Vornado Realty Trust

     Vornado owned 33.1% of the Company's common stock as of December 31, 2003.
Steven Roth is the Chief Executive Officer and a director 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, 2003, 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, 27.5% of the
outstanding common stock of the Company, in addition to the common stock owned
directly by Vornado, and 11.7% 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 owning, developing, leasing, operating and
managing retail and office properties. Further, in conjunction with the
Company's 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 loan budget,
if not funded by the Company. 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."

                                      -5-

     At December 31, 2003, 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 12.48% and resets
quarterly using a 9.48% spread to a one-year treasury with a 3% floor for
treasuries. On July 3, 2002, in conjunction with the 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. 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 $2,436,000
has been paid as of December 31, 2003, 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 cost prohibitive. The Company has not recorded an asset as of December 31,
2003 for possible recoveries of environmental remediation costs from potentially
responsible third parties.

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 the Lexington Avenue project, at
profitable levels. The Company competes with a large number of real estate
property owners and developers. In addition, although the Company believes that
it will realize significant value from its properties over time, the Company
anticipates that it may take a number of years before all of its properties
generate cash flow at or near anticipated levels. The Company's success is also
subject to its ability to finance development projects and refinance existing
debts as they come due and on acceptable terms.

EMPLOYEES

     The Company currently has one corporate level employee and 34 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 filings 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

                                      -6-

Company a "controlled" company for the purposes of the New York Stock Exchange,
Inc.'s corporate governance Standards (the "NYSE Rules"). In turn, 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.

     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

     Set forth below are the risks and certain factors that may adversely affect
the Company's business and operations. This section contains forward-looking
statements. Refer 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 increase in interest rates,

     -    any increase in real estate taxes and 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.

                                      -7-

     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.

     Sears accounted for 18%, 19% and 21% of the Company's consolidated revenues
for the years ended December 31, 2003, 2002 and 2001, respectively. In addition,
at the Lexington Avenue property, Bloomberg L.P. has entered into a long-term
lease for 695,000 of the 885,000 net rentable square feet of office space at
that site. It is expected that the rents from the Bloomberg L.P. lease will also
represent a significant portion of revenues in 2004. 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.

     The Company's all-risk insurance policies in effect before September 11,
2001 did not expressly exclude coverage for hostile acts, except acts of war.
Since September 11, 2001, but prior to the enactment of the Terrorism Risk
Insurance Act of 2002, insurance companies had, for the most part, excluded
terrorist acts from coverage in all-risk policies. The Company was generally
unable to obtain all-risk insurance that includes coverage for terrorist acts
for policies renewed during that period.

     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 an
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, it may adversely affect the Company's ability to
finance and/or refinance its properties and businesses, including the
construction of the Lexington Avenue development property.

      On November 26, 2002, the Terrorism Risk Insurance Act of 2002 was signed
into law. Under this new legislation, through 2004 (with a possible extension
through 2005), regulated insurers must offer coverage in their commercial
property and casualty policies (including existing policies) for losses
resulting from defined "acts of

                                      -8-

terrorism." As a result of the legislation, in June 2003, the Company obtained
$500,000,000 of coverage per occurrence for certified terrorist acts, as defined
in the legislation, and $150,000,000 per occurrence for non-certified acts. In
addition, on February 13, 2004, the Company increased the builders' risk
insurance coverage for its Lexington Avenue project, which includes full
coverage for certified terrorist acts, per occurrence, and $200,000,000 for
non-certified acts, per occurrence. Therefore, the Company is at risk for
financial loss in excess of these limits for terrorist acts, as defined by the
policies and the legislation. Such loss could be material. Prior to June 2003,
the Company had $200,000,000 of separate aggregate coverage for terrorist acts.

THE COMPANY HAS MADE A SIGNIFICANT INVESTMENT IN THE DEVELOPMENT OF ITS
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.

     The development at Lexington Avenue consists of an approximately 1.3
million square foot multi-use building. The building will contain approximately
885,000 net rentable square feet of office space, approximately 171,000 net
rentable square feet of retail space, and approximately 248,000 net saleable
square feet of residential space consisting of condominium units (through a
TRS). There can be no assurance that the Lexington Avenue project will be
completed on time or completed for the budgeted amount. Any failure to complete
the Lexington Avenue project on time or within budget may adversely affect
future cash flows and funds from operations, and the Company's financial
condition.

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

     In addition to the Lexington Avenue project, 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 Lexington Avenue property, on time or
within budget. The Company also might not succeed in leasing newly developed or
acquired properties, including the Lexington Avenue property, 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.

     Equity real estate investments are 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, 2003, 2002 and 2001, all of the
Company's revenues came from properties located in the New York City
metropolitan area and in Paramus, New Jersey. 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:

                                      -9-

     -    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.

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 have 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
$2,436,000 has been paid as of December 31, 2003, 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 New York City metropolitan area and Paramus, New
Jersey. 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

                                      -10-

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 Lexington Avenue project, at
profitable levels.

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

THERE MAY BE A DECREASE IN DEMAND FOR SPACE IN LARGE METROPOLITAN AREAS THAT ARE
CONSIDERED AT RISK FOR FUTURE TERRORIST ATTACKS, AND THIS DECREASE MAY REDUCE
THE COMPANY'S REVENUES FROM PROPERTY RENTALS.

     All of the Company's properties are located in the New York City
metropolitan area and Paramus, New Jersey. 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 MAY NOT BE ABLE TO OBTAIN SUFFICIENT EXTERNAL FINANCING TO FUND ITS
OPERATIONS AND BUSINESS.

     In the aggregate, the Company's operating properties do not generate
sufficient cash flow to pay all of its expenses. While the Company expects that
its cash flow will become positive after the completion of the construction of
the Lexington Avenue property, which is expected in 2005, there can be no
assurance that the Lexington Avenue property will be completed on time or
completed for the budgeted amount or that the operational and financial
expectations are accurate.

     Accordingly, the Company depends principally upon external financing to
fund its operations and business, including the development of the Lexington
Avenue property. While it has received financing and credit support in the form
of guarantees from Vornado, there can be no assurance that Vornado will provide
the Company with any additional financing or credit support. Additionally, the
Company's access to debt or equity financing depends on banks' willingness to
lend and on conditions in the capital markets. The Company and other companies
in the real estate industry have experienced limited availability of bank loans
and capital market financing from time to time. Although the Company believes
that it will be able to finance any investments it wishes to make in the
foreseeable future, financing in addition to what it already has available may
not be available on acceptable terms.

     For information about the available sources of funds, see "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

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, 2003, Interstate and its partners owned approximately 11.7%
of the common shares of beneficial interest of Vornado, the Company's manager,
and approximately 27.5% of Alexander's, Inc. common stock. Steven Roth, David
Mandelbaum and Russell B. Wight, Jr. are the three partners of Interstate. Mr.
Roth is the Company's Chief Executive Officer and a director, 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, 2003, Vornado owned 33.1% 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

                                      -11-

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, 2003, Vornado had loans receivable from the Company of
$124,000,000 at an interest rate of 12.48%. These loans mature on the earlier of
January 3, 2006 or the date that the Lexington Avenue construction loan is
finally repaid. In addition, $21,000,000 was available under the line of credit
with Vornado at December 31, 2003. Vornado also manages, develops and leases the
Company's properties under agreements under which Vornado receives annual fees
and will receive an estimated development fee and guarantee fee for the
Lexington Avenue property of $26,300,000 and $6,300,000, respectively. These
agreements have one-year terms expiring in March of each year, except that the
Lexington Avenue management and development agreements have terms lasting until
substantial completion of the construction of the 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 AND PREFERRED SECURITY HOLDERS
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, 2003, the Company had approximately $731,485,000 in
total debt outstanding, inclusive of $124,000,000 due to Vornado. Our ratio of
total debt to total enterprise value was 54.9% at December 31, 2003. "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, 2003, the Company's cash
payments for principal and interest were $49,582,000. Except for the year ended
December 31, 2001, the Company had deficiencies in earnings to cover fixed
charges. In the future, the Company may incur additional debt, as it did in
February 2004 with the $400,000,000 financing collateralized by the office space
at the Lexington Avenue project, and thus increase the ratio of total debt to
total enterprise value, to finance acquisitions or 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, 2003, 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, 2003, the
Company would have had to

                                      -12-

pay $44,917,000 in cash. Further appreciation in the Alexander's, Inc. stock
price from the closing stock price of $124.66 at December 31, 2003 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, 2003, substantially all of the Company's properties were
pledged to secure obligations under $731,485,000 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, 2003, the Company had reported net operating loss
carryovers ("NOLs") of $64,518,000, 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. 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

                                      -13-

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, 2003, 105,000 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.

     In addition, the stock market in recent years has experienced extreme price
and volume fluctuations that have often been unrelated or disproportionate to
the operating performance of companies.

                                      -14-

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, 2003.

                                                     Approximate
                                                       Building      Average
                                                       Leaseable    Annualized                                            Lease
                                                     Square Feet/   Base Rent                                 Square    Expiration/
                                       Approximate     Number of    Per Square  Percent       Significant     Footage     Option
            Property        Ownership     Area          Floors         Foot     Leased          Tenants       Leased    Expiration
       ------------------   ---------  -----------   ------------   ----------  -------    ---------------    -------   ----------
                                                                                                
OPERATING PROPERTIES
   Kings Plaza Regional      Owned     24.3 acres    759,000(1)(2)/  $   34.48    99%           Sears         289,000    2023/2033
    Shopping Center                                     2 and 4                            124 Mall tenants   461,000     Various
    Flatbush Avenue and
    Avenue U
    Brooklyn, New York

   Rego Park I               Owned      4.8 acres    351,000(1)/3        31.92   100%         Sears           195,000   2021/2031
    Queens Boulevard and                                                                     Circuit City      50,000     2021
    63rd Road                                                                                 Bed Bath &       46,000   2013/2021
    Queens, New York                                                                           Beyond
                                                                                              Marshalls        39,000   2008/2021

   Routes 4 and 17           Owned     30.3 acres        N/A,           N/A,     100%       IKEA Property,      N/A,       2041
    Paramus, New Jersey                                 Ground        Ground                     Inc.         Ground
                                                        Lease          Lease                                   Lease

   Roosevelt Avenue and      Leased(3) 44,975 sq.ft. 177,000(1)/4                  0%
    Main Street
    Flushing, New York
                                                     ------------
                                                      1,287,000
                                                     ============
PROPERTY UNDER
DEVELOPMENT
   Square block at East      Owned     84,420 sq.ft. 1,304,000/55                            Bloomberg L.P.   695,000   2030/2040
     59th Street and                                                                        The Home Depot     83,000   2025/2035
     Lexington Avenue                                                                          Hennes &        27,000      2020
     New York, New York                                                                        Mauritz

PROPERTY TO BE DEVELOPED
   Rego Park II              Owned      6.6 acres
    Adjacent to Rego Park I
    Queens, New York

- ------------
    (1) Excludes parking garages.

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

    (3) 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.

                                      -15-

Operating Properties

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, 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 $13 to 15 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.

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

                                                                            Percent of    Percent of
                                                                          Total Leased    2003 Gross
                        Approximate       Annualized       Annualized        Square       Annual Base
                       Leased Area in     Fixed Rent       Fixed Rent        Footage        Rentals
          Number of     Square Feet          Under       Under Expiring    Represented    Represented
           Leases      Under Expiring      Expiring        Leases per      by Expiring    by Expiring
Year      Expiring         Leases           Leases        Square Foot        Leases         Leases
- ----      ---------    -------------      -----------    --------------    -----------    -----------
                                                                        
2004          5            20,678        $   894,000       $  43.25            4.5%           4.1%
2005          9            13,262            572,000          43.16            2.9%           2.6%
2006         16            87,742          2,701,000          30.79           19.0%          12.2%
2007         16            52,632          2,570,000          48.83           11.4%          11.6%
2008          9            15,791          1,052,000          66.62            3.4%           4.8%
2009         14            68,766          3,744,000          54.45           14.9%          16.9%
2010         10            22,907          1,548,000          67.57            5.0%           7.0%
2011         12            36,965          1,916,000          51.84            8.0%           8.7%
2012         16            79,973          2,787,000          34.85           17.4%          12.6%
2013         14            40,379          2,459,000          60.89            8.8%          11.1%

     The following table shows the occupancy rate and the average annual rent
per square foot for the Mall stores as of:

                                                                 Average
                                                             Annual Base Rent
                                        Occupancy Rate        Per Square Foot
                                        --------------        ---------------
                                                       
December 31, 2003                             98%                $  47.95
December 31, 2002                             97%                   45.59
December 31, 2001                             96%                   45.97
December 31, 2000                             91%                   44.66
December 31, 1999                             86%                   43.12

     The Center is encumbered by a first mortgage loan with a balance of
$216,586,000 at December 31, 2003. The loan matures in June 2011 and bears
interest at 7.46%.

                                      -16-

Rego Park I

     The Rego Park I property 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
$82,000,000 at December 31, 2003. The loan matures in June 2009 and bears
interest at 7.25%

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.

     On October 5, 2001, the Company entered into a ground lease for the
Paramus, New Jersey property with 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.

     On May 30, 2002, the Company entered into an agreement to sell its
subsidiary which owns the building and has the ground lease for its property in
Flushing for $18,750,000. The Company received a non-refundable deposit of
$1,875,000 from the purchaser. By Notice of Default dated August 16, 2002, the
landlord of the premises notified the Company of certain alleged defaults under
the lease including, but not limited to, the fact that the purchaser performed
unauthorized construction at the premises. The Company commenced an action
against the landlord for injunctive relief and a declaration of the rights and
obligations of the parties under the lease. The Company has obtained an
injunction, which temporarily restrains the landlord from terminating the lease.
On September 6, 2002, the scheduled closing date, the Company notified the
purchaser that it failed to close and is in default of its obligations under the
purchase contract. Since the purchaser has not met its obligations under the
purchase contract, the Company recognized $1,289,000 as income, representing the
non-refundable deposit of $1,875,000, net of $586,000 for costs associated with
this transaction. This income is included in "Interest and other income, net" in
the Company's consolidated statement of operations for the year ended December
31, 2003.

Property Under Development

Lexington Avenue

     The Company owns a 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.

     The development at Lexington Avenue consists of an approximately 1.3
million square foot multi-use building. The building will contain approximately
885,000 net rentable square feet of office space, approximately 171,000 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). Of the construction budget of $630,000,000 (which

                                      -17-

excludes $29,000,000 for development and guarantee fees to Vornado),
$402,000,000 has been expended through December 31, 2003 and an additional
$62,200,000 has been committed to at December 31, 2003. Construction is expected
to be completed in 2005.

     On May 1, 2001, the Company entered into a triple-net lease with Bloomberg
L.P. for approximately 695,000 square feet of office space at the Lexington
Avenue property (the "Bloomberg Space"). The initial term of the lease is 25
years with a ten-year renewal option. Base annual net rent is $34,529,000 in
each of the first four years and $38,533,000 in the fifth year with a similar
percentage increase each four years thereafter. On November 15, 2003, the
Company delivered approximately 87% of the space. Accordingly, the Company
transferred approximately $195,000,000 from "Construction in progress" to "Land"
and "Buildings, leaseholds and leasehold improvements" in the year ended
December 31, 2003. As of February 9, 2004, all of the Bloomberg Space has been
delivered. Payment of base rent commences nine months from delivery of each
parcel of space; rent recognition commenced from delivery of space.

     At December 31, 2003, 115,000 square feet of retail space has been leased,
of which The Home Depot and Hennes & Mauritz have leased 83,000 and 27,000
square feet, respectively. The Company expects to deliver the leased space in
2004. Payment of base rent commences six to nine months from delivery of each
space; rent recognition commences on delivery of space.

     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, 2003, would produce (inclusive of the value of existing contracts)
an aggregate sale price of $457,000,000. As of December 31, 2003, the Company
has received deposits of $10,425,000 on sales of the condominium units.

     Financing of the Project

     On February 13, 2004, the Company completed a $400,000,000 mortgage
financing on the office space. The loan was placed by German American Capital
Corporation, an affiliate of Deutsche Bank. 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. $253,529,000 of
the loan proceeds was used to repay the entire amount outstanding under the
previously existing construction loan (the "Construction Loan") with Hypo Real
Estate Capital Corporation.

     The Construction Loan was modified so that the remaining availability is
$237,000,000, which is approximately the amount estimated to complete the
Lexington Avenue development project (not including $29,000,000 for development
and guarantee fees to Vornado). The interest rate of the Construction Loan of
LIBOR plus 2.5% (3.64% at December 31, 2003) 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 the Lexington
Avenue project and funding of project costs in excess of a stated loan budget,
if not funded by the Company (the "Completion Guarantee"). If Vornado should
advance any funds under the Completion Guarantee in excess of $21,000,000, which
is the amount currently available under the line of credit with Vornado,
interest on those advances would be at 15% per annum.

     There can be no assurance that the Lexington Avenue project will be
completed on time or completed for the budgeted amount. Any failure to complete
the Lexington Avenue project on time or within budget may adversely affect
future cash flows and funds from operations, and the Company's financial
condition.

Property to Be Developed

Rego Park II

     The Company owns two land parcels containing 6.6 acres adjacent to its Rego
Park I property. They comprise the entire square block bounded by the Long
Island Expressway, 97th Street, 62nd Drive and Junction Boulevard and a smaller
parcel of approximately one-half square block at the intersection of 97th Street
and the Long Island Expressway. Both parcels are currently zoned for residential
use and are being used for public paid parking. The Company intends to continue
to use these properties for paid parking while it evaluates its development
options.

                                      -18-

     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 500,000 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. The other project consists of two retail buildings
containing approximately 80,000 square feet. It is anticipated that neither of
these projects will commence prior to 2005. There can be no assurance that these
development projects will be completed, completed on time or completed for the
budgeted amount.

Other Encumbrances

     At December 31, 2003, 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.

     The Company's all-risk insurance policies in effect before September 11,
2001 did not expressly exclude coverage for hostile acts, except acts of war.
Since September 11, 2001, but prior to the enactment of the Terrorism Risk
Insurance Act of 2002, insurance companies had, for the most part, excluded
terrorist acts from coverage in all-risk policies. The Company was generally
unable to obtain all-risk insurance that includes coverage for terrorist acts
for policies renewed during that period.

     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 an
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, it may adversely affect the Company's ability to
finance and/or refinance its properties and businesses, including the
construction of the Lexington Avenue development property.

     On November 26, 2002, the Terrorism Risk Insurance Act of 2002 was signed
into law. Under this new legislation, through 2004 (with a possible extension
through 2005), regulated insurers must offer coverage in their commercial
property and casualty policies (including existing policies) for losses
resulting from defined "acts of terrorism." As a result of the legislation, in
June 2003, the Company obtained $500,000,000 of coverage per occurrence for
certified terrorist acts, as defined in the legislation, and $150,000,000 per
occurrence for non-certified acts. In addition, on February 13, 2004, the
Company increased the builders' risk insurance coverage for its Lexington Avenue
project, which includes full coverage for certified terrorist acts, per
occurrence, and $200,000,000 for non-certified acts, per occurrence. Therefore,
the Company is at risk for financial loss in excess of these limits for
terrorist acts, as defined by the policies and the legislation. Such loss could
be material. Prior to June 2003, the Company had $200,000,000 of separate
aggregate coverage for terrorist acts.

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 a discussion of the litigation concerning the sale of the Company's
subsidiary which owns the building and has the ground lease for the Company's
property in Flushing, New York, see "Item 2. Properties -- Operating Properties
- -- Flushing."

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, 2003.

                                      -19-

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.

                                         PRINCIPAL OCCUPATIONS AND OFFICES (CURRENT AND DURING THE PAST FIVE YEARS
          NAME               AGE                        WITH THE COMPANY UNLESS OTHERWISE STATED)
- ---------------------     ---------     ---------------------------------------------------------------------------
                                  
Stephen Mann                 68         Chairman of the Board of Directors since March 1995; Interim Chairman of
                                        the Board of Directors from August 1994 to March 1995; Chairman of Coast to
                                        Coast Financial Corp. since 2001; Chairman of the Clifford Companies since
                                        1990; and, prior thereto, counsel to Mudge Rose Guthrie Alexander & Ferdon,
                                        attorneys.

Steven Roth                  62         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; Chairman of the Board and
                                        Chief Executive Officer of Vornado Operating Company since 1998; and
                                        Managing General Partner of Interstate Properties.

Michael D. Fascitelli        47         President since August 2000; Director of the Company and President and
                                        trustee of Vornado Realty Trust since December 1996; President and director
                                        of Vornado Operating Company since 1998; 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.

Joseph Macnow                58         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; Vice President and Chief Financial
                                        Officer of Vornado Realty Trust from 1985 to January 1998; Executive Vice
                                        President and Chief Financial Officer of Vornado Operating Company since
                                        June 2002; Executive Vice President - Finance and Administration of Vornado
                                        Operating Company from 1998 to June 2002.

                                      -20-

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     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
common stock for each full quarterly period within the two most recent years.

                                                        YEAR ENDED DECEMBER 31,
                                  --------------------------------------------------------------
                                             2003                                2002
                                  ---------------------------        ---------------------------
          QUARTER                     HIGH              LOW              HIGH              LOW
          -------                 ---------         ---------        ---------         ---------
                                                                           
First......................       $   66.98         $   61.40        $   64.80         $   55.75
Second.....................           86.90             63.75            77.00             60.00
Third......................          106.50             83.20            77.76             59.49
Fourth.....................          126.00            102.50            65.54             61.45

     As of February 29, 2004, there were approximately 1,450 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 2003 and 2002. 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,
2003, the Company had net operating loss carryovers ("NOLs") of approximately
$64,518,000. 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.

                                      -21-

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.

(amounts in thousands, except per share data

                                                                        YEAR ENDED DECEMBER 31,
                                                  -------------------------------------------------------------------
                                                     2003           2002          2001          2000           1999
                                                  ---------      ---------     ---------     ---------      ---------
                                                                                             
Total revenues...............................     $  87,162      $  76,800     $  67,792     $  62,696      $  63,133
                                                  =========      =========     =========     =========      =========
(Loss) income from continuing operations.....     $ (18,948)     $  12,400     $   7,414     $   4,425      $   4,743
Income from discontinued operations..........         1,206         11,184           946           772            781
Gain on sale of Fordham Road property........            --             --        19,026            --             --
                                                  ---------      ---------     ---------     ---------      ---------
Net (loss) income...........................      $ (17,742)(1)  $  23,584(2)  $  27,386(3)  $   5,197      $   5,524(4)
                                                  =========      =========     =========     =========      =========
Net (loss) income per common share (basic and
  diluted):
   (Loss) income from continuing operations..     $   (3.79)     $    2.48     $    1.48     $    0.89      $    0.95
   Income from discontinued operations.......          0.24           2.24          0.19          0.15           0.15
   Gain on sale of Fordham Road property.....            --             --          3.81            --             --
                                                  ---------      ---------     ---------     ---------      ---------
   Net (loss) income.........................     $   (3.55)     $    4.72     $    5.48     $    1.04      $    1.10
                                                  =========      =========     =========     =========      =========
Balance sheet data:
   Total assets..............................     $ 920,996      $ 664,912     $ 583,339     $ 403,305      $ 366,496
   Real estate, net..........................       773,083        542,975       377,961       343,612        269,324
   Debt......................................       731,485        543,807       515,831       367,788        329,161
   Stockholders' equity......................        50,923         68,665        45,081        17,695         12,498

- ----------------------
(1) Loss from continuing operations includes (i) an accrual of $44,917 for
compensation expense for stock appreciation rights due to an increase in the
Company's stock price and (ii) $1,289 resulting from the recognition as income
of the non-refundable deposit from the planned sale of the Flushing property of
$1,875, net of $586 for costs associated with this transaction. Income from
discontinued operations represents the reversal of previously accrued contingent
liabilities.

(2) Income from discontinued operations includes the gain on the sale of the
Third Avenue property of $10,366.

(3) Income from continuing operations includes (i) a gain from the early
extinguishment of debt of $3,534, (ii) a $3,058 write off of architectural and
engineering costs associated with the development plans for the Paramus property
prior to the ground lease with IKEA Property, Inc. and (iii) a $2,030 write off
of professional fees resulting from the termination of the spin-off of
Alexander's Tower LLC.

(4) Income from continuing operations includes a $4,877 write off of an asset
arising from the straight-lining of rents, which was primarily due to Caldor's
rejection of its Flushing lease in 1999.

                                      -22-

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

OVERVIEW

     The Company had a net loss of $17,742,000 for the year ended December 31,
2003, compared to net income of $23,584,000 in the prior year. The net loss for
2003 includes (i) an accrual of $44,917,000 for compensation expense for stock
appreciation rights ("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. Net
income for 2002 includes income from discontinued operations of $11,184,000,
which includes a gain on the sale of the Third Avenue property of $10,366,000.

     Effective January 1, 2002, the Company changed its method of accounting for
long-lived assets sold or held for sale, in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 144, Accounting for the Impairment
and Disposal of Long-Lived Assets. This statement requires that the results of
operations and gains and losses attributable to properties held for sale or sold
during 2002 and thereafter, such as the Third Avenue property, be classified as
discontinued operations for all periods presented, and that any assets and
liabilities of these properties be presented separately in the consolidated
balance sheets. Properties sold as a result of sales activities that were
initiated prior to January 1, 2002, such as the Fordham Road property, continue
to be accounted for under the applicable prior accounting guidance.

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 Lexington Avenue development project progresses and
as components of the building are placed into service (e.g., the space delivered
to Bloomberg L.P. during 2003), the Company will cease capitalizing property
operating expenses, including interest expense, and begin to expense these
items, as well as depreciation, for those components.

     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.

                                      -23-

     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. In connection with the repayment of $253,529,000 of the
construction loan for the Lexington Avenue development project, the Company will
write off $3,050,000 of deferred financing costs in the first quarter of 2004.

     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 Lexington
Avenue project. Residential paid no income taxes in the years ended December 31,
2003, 2002 and 2001.

     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.

     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 Standards - In April 2002, the Financial
Accounting Standards Board issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. SFAS No. 145 requires, among other things, that (i) the
modification of a lease that results in a change of the classification of the
lease from capital to operating under the provisions of SFAS No. 13, Accounting
for Leases, be accounted for as a sale-leaseback transaction and (ii) the
reporting of gains or losses from the early extinguishment of debt as
extraordinary items only if they meet the criteria of Accounting Principles
Board Opinion No. 30, Reporting the Results of Operations - Reporting the
Effects of Disposal of a Segment of a Business, and

                                      -24-

Extraordinary, Unusual and Infrequently Occurring Events and Transactions. The
amendment of SFAS No. 13 had no impact on the Company's consolidated financial
statements. As required by this statement, the Company reclassified the
$3,534,000 extraordinary gain in the year ended December 31, 2001 to "Gain on
early extinguishment of debt."

RESULTS OF OPERATIONS

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.

     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.

Years Ended December 31, 2002 and December 31, 2001

     Property rentals were $50,630,000 in 2002, compared to $44,560,000 in 2001,
an increase of $6,070,000. The increase resulted primarily from (i) the
commencement, on October 5, 2001, of the ground lease with IKEA Property, Inc.
for the Paramus property and (ii) an increase in occupancy at the Kings Plaza
Regional Shopping Center.

     Tenant expense reimbursements were $26,170,000 in 2002, compared to
$23,232,000 in 2001, an increase of $2,938,000. The increase was largely due to
higher reimbursements as real estate taxes, insurance and repairs and
maintenance also increased.

     Operating expenses were $33,042,000 in 2002, compared to $29,265,000 in
2001, an increase of $3,777,000. This increase is primarily attributable to an
increase in real estate taxes, insurance and repairs and maintenance.

                                      -25-

      Interest and other income, net was $2,178,000 in 2002, compared to
$3,237,000 in 2001, a decrease of $1,059,000. This decrease is largely
attributable to lower average cash balances in 2002 due to expenditures for the
Lexington Avenue project and lower yields on cash investments. Also, 2002
results include a non-recurring gain of $169,000 resulting from the sale of air
rights.

     Interest and debt expense was $22,888,000 in 2002, compared to $22,469,000
in 2001, an increase of $419,000. This increase primarily resulted from (i)
higher average debt in 2002, partially offset by (ii) a reduction in average
interest rates from 9.20% to 8.23% and (iii) higher capitalized interest in 2002
for the Lexington Avenue property (interest of $23,788,000 was capitalized in
2002, as compared to $19,259,000 in 2001).

LIQUIDITY AND CAPITAL RESOURCES

     In the aggregate, Alexander's operating properties do not generate
sufficient cash flow to pay all of its expenses. After the completion of the
Lexington Avenue property, which is expected in 2005, the Company expects that
cash flow will become positive.

Development Projects

      LEXINGTON AVENUE

     The development at Lexington Avenue consists of an approximately 1.3
million square foot multi-use building. The building will contain approximately
885,000 net rentable square feet of office space, approximately 171,000 net
rentable square feet of retail space and approximately 248,000 net saleable
square feet of residential space consisting of condominium units (through a
TRS). Of the construction budget of $630,000,000 (which excludes $29,000,000 for
development and guarantee fees to Vornado), $402,000,000 has been expended
through December 31, 2003 and an additional $62,200,000 has been committed to at
December 31, 2003. Construction is expected to be completed in 2005.

     On May 1, 2001, the Company entered into a triple-net lease with Bloomberg
L.P. for approximately 695,000 square feet of office space at the Lexington
Avenue property (the "Bloomberg Space"). The initial term of the lease is 25
years with a ten-year renewal option. Base annual net rent is $34,529,000 in
each of the first four years and $38,533,000 in the fifth year with a similar
percentage increase each four years thereafter. On November 15, 2003, the
Company delivered approximately 87% of the space. Accordingly, the Company
transferred approximately $195,000,000 from "Construction in progress" to "Land"
and "Buildings, leaseholds and leasehold improvements" in the year ended
December 31, 2003. As of February 9, 2004, all of the Bloomberg Space has been
delivered. Payment of base rent commences nine months from delivery of each
parcel of space; rent recognition commenced from delivery of space.

     At December 31, 2003, 115,000 square feet of retail space has been leased,
of which The Home Depot and Hennes & Mauritz have leased 83,000 and 27,000
square feet, respectively. The Company expects to deliver the leased space in
2004. Payment of base rent commences six to nine months from delivery of each
space; rent recognition commences on delivery of space.

     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, 2003, would produce (inclusive of the value of existing contracts)
an aggregate sale price of $457,000,000. As of December 31, 2003, the Company
has received deposits of $10,425,000 on sales of the condominium units.

      Financing of the Project

      On February 13, 2004, the Company completed a $400,000,000 mortgage
financing on the office space. The loan was placed by German American Capital
Corporation, an affiliate of Deutsche Bank. 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. $253,529,000 of
the loan proceeds was used to repay the entire amount outstanding under the
previously existing construction loan (the "Construction Loan") with Hypo Real
Estate Capital Corporation.

      The Construction Loan was modified so that the remaining availability is
$237,000,000, which is approximately the amount estimated to complete the
Lexington Avenue development project (not including $29,000,000 for development
and guarantee fees to Vornado). The interest rate of the Construction Loan of
LIBOR plus 2.5% (3.64%

                                      -26-

at December 31, 2003) 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 the Lexington Avenue project and
funding of project costs in excess of a stated loan budget, if not funded by the
Company (the "Completion Guarantee"). If Vornado should advance any funds under
the Completion Guarantee in excess of $21,000,000, which is the amount currently
available under the line of credit with Vornado, interest on those advances
would be at 15% per annum.

     There can be no assurance that the Lexington Avenue project will be
completed on time or completed for the budgeted amount. Any failure to complete
the Lexington Avenue project on time or within budget may adversely affect
future cash flows and funds from operations, and the Company's financial
condition.

      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 $13 to 15 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.

      REGO PARK II

     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 500,000 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. The other project consists of two retail buildings
containing approximately 80,000 square feet. It is anticipated that neither of
these projects will commence prior to 2005. There can be no assurance that these
development projects will be completed, completed on time or completed for the
budgeted amount.

Relationship with Vornado Realty Trust

     The Company is managed, and its properties are leased, by Vornado pursuant
to management, leasing and development agreements with one-year terms, expiring
in March of each year, which are automatically renewable. In conjunction with
the original closing of the Lexington Avenue Construction Loan on July 3, 2002,
these agreements were bifurcated to cover the Company's Lexington Avenue
property separately. Further, the management and development agreements with
Vornado for the Lexington Avenue property were amended to provide for a term
lasting until substantial completion of the property with automatic renewals,
and for the payment of the Lexington Avenue development fee upon the earlier of
January 3, 2006 or the repayment finally of the Construction Loan encumbering
the property. The $6,300,000 estimated fee payable by the Company to Vornado for
the Completion Guarantee is 1% of construction costs, as defined, and is due at
the same time that the development fee is due. The development fee is estimated
to be $26,300,000.

     The annual fees payable by the Company to Vornado consist of (i) an annual
management fee of $3,000,000 plus 3% of the gross income from the Kings Plaza
Mall, (ii) a development fee equal to 6% of development costs, as defined, with
minimum guaranteed fees of $750,000 per annum, and (iii) a leasing fee. The
leasing fee to Vornado is equal to (a) 3% of the gross proceeds, as defined,
from the sale of an asset and (b) in the event of a lease or sublease of an
asset, 3% of lease rent for the first ten years of a lease term, 2% of lease
rent for the eleventh through the twentieth years of a lease term, and 1% of
lease rent for the twenty-first through thirtieth year of a lease term, subject
to the payment of rents by tenants. 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%.
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. At December 31, 2003, the Company owed Vornado (A)
$14,810,000 in development fees, (B) $14,586,000 in leasing fees, (C) $3,898,000
for the guarantee fee, (D) $741,000 in interest, and (E) $392,000 in management
fees and other costs.

                                      -27-

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

(amounts in thousands)                                           YEAR ENDED DECEMBER 31,
                                                          ------------------------------------
                                                            2003         2002          2001
                                                          ---------   ----------   -----------
                                                                          
Management fee.........................................  $    3,635  $     3,602   $     3,522
Development fee, guarantee fee and rent for development
  office...............................................      10,292       10,769         1,855
Leasing and other fees.................................       3,722        3,056         3,984
                                                         ----------  -----------   -----------
                                                         $   17,649  $    17,427   $     9,361
                                                         ==========  ===========   ===========

     At December 31, 2003, 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").

Leases

     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 Home Depot and Hennes
& Mauritz leases) is as follows:

(amounts in thousands)

Year Ending December 31,
                                             
2004.........................................   $   54,380
2005.........................................       86,044
2006.........................................       86,336
2007.........................................       83,224
2008.........................................       86,927
Thereafter...................................    1,632,863

     On May 1, 2001, the Company entered into a triple-net lease with Bloomberg
L.P. for the Bloomberg Space. The initial term of the lease is 25 years with a
ten-year renewal option. Base annual net rent is $34,529,000 in each of the
first four years and $38,533,000 in the fifth year with a similar percentage
increase each four years thereafter. On November 15, 2003, the Company delivered
approximately 87% of the Bloomberg Space. As of February 9, 2004, all of the
Bloomberg Space has been delivered. Payment of base rent commences nine months
from delivery of each parcel of space; rent recognition commenced from delivery
of space.

Dispositions of Properties

Flushing Property

     On May 30, 2002, the Company entered into an agreement to sell its
subsidiary which owns the building and has the ground lease for its property in
Flushing, New York for $18,750,000. The Company received a non-refundable
deposit of $1,875,000 from the purchaser. By Notice of Default dated August 16,
2002, the landlord of the premises notified the Company of certain alleged
defaults under the lease including, but not limited to, the fact that the
purchaser performed unauthorized construction at the premises. The Company
commenced an action against the landlord for injunctive relief and a declaration
of the rights and obligations of the parties under the lease. The Company has
obtained an injunction, which temporarily restrains the landlord from
terminating the lease. On September 6, 2002, the scheduled closing date, the
Company notified the purchaser that it failed to close and is in default of its
obligations under the purchase contract. Since the purchaser has not met its
obligations under the purchase contract, the Company recognized $1,289,000 as
income, representing the non-refundable deposit of $1,875,000, net of $586,000
for costs associated with this transaction. This income is included in "Interest
and other income, net" in the Company's consolidated statement of operations for
the year ended December 31, 2003.

                                      -28-

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.

     The Company's all-risk insurance policies in effect before September 11,
2001 did not expressly exclude coverage for hostile acts, except acts of war.
Since September 11, 2001, but prior to the enactment of the Terrorism Risk
Insurance Act of 2002, insurance companies had, for the most part, excluded
terrorist acts from coverage in all-risk policies. The Company was generally
unable to obtain all-risk insurance that includes coverage for terrorist acts
for policies renewed during that period.

     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 an
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, it may adversely affect the Company's ability to
finance and/or refinance its properties and businesses, including the
construction of the Lexington Avenue development property.

     On November 26, 2002, the Terrorism Risk Insurance Act of 2002 was signed
into law. Under this new legislation, through 2004 (with a possible extension
through 2005), regulated insurers must offer coverage in their commercial
property and casualty policies (including existing policies) for losses
resulting from defined "acts of terrorism." As a result of the legislation, in
June 2003, the Company obtained $500,000,000 of coverage per occurrence for
certified terrorist acts, as defined in the legislation, and $150,000,000 per
occurrence for non-certified acts. In addition, on February 13, 2004, the
Company increased the builders' risk insurance coverage for its Lexington Avenue
project, which includes full coverage for certified terrorist acts, per
occurrence, and $200,000,000 for non-certified acts, per occurrence. Therefore,
the Company is at risk for financial loss in excess of these limits for
terrorist acts, as defined by the policies and the legislation. Such loss could
be material. Prior to June 2003, the Company had $200,000,000 of separate
aggregate coverage for terrorist acts.

Debt and Contractual Obligations

     Below is a summary of the Company's properties and their encumbrances at
December 31, 2003:

(amounts in thousands except interest rates)

                                                             INTEREST
                                         BALANCE               RATE             MATURITY
                                    ---------------         -----------         --------
                                                                      
Lexington Avenue...............     $       240,899           3.64%(1)         Jan. 2006
Kings Plaza....................             216,586           7.46%            June 2011
Rego Park I....................              82,000           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(2)..........             124,000          12.48%(1)         Jan. 2006
                                    ---------------
                                    $       731,485
                                    ===============

- -------------------
(1) These loans bear interest at a variable rate. The rate shown is as of
December 31, 2003.

(2) At December 31, 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 12.48% and resets quarterly, using a 9.48%
spread to a 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.

     On February 13, 2004, the Company completed a $400,000,000 mortgage
financing on the office space at the Lexington Avenue project. 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. $253,529,000 of the loan proceeds was used to repay the entire amount
outstanding under the previously existing Construction Loan. The Construction
Loan was modified so that, among

                                      -29-

other things, the remaining availability is $237,000,000 which is approximately
the amount estimated to complete the Lexington Avenue development project (not
including $29,000,000 for development and guarantee fees to Vornado).

Below is a summary of the Company's contractual obligations at December 31,
2003.

(amounts in thousands)

                                                               Less
                                                             than One     One to Two      Three to     More than
                                                 Total         Year         Years        Five Years   Five Years
                                               ----------    ---------    ---------       ---------    ----------
                                                                                       
Contractual obligations

  Long-term debt obligations(1)........        $  731,485    $   3,226    $ 372,992       $   8,833    $  346,434
  Operating lease obligations..........             6,095          416          832             631         4,216
  Other obligations(2).................           105,650       64,700(2)    31,500(3)        2,500         6,950
                                               ----------    ---------    ---------       ---------    ----------
                                               $  843,230    $  68,342    $ 405,324       $  11,964    $  357,600
                                               ==========    =========    =========       =========    ==========
Commitments

  Standby letters of credit............        $    4,130    $   4,130    $      --       $      --    $       --
                                               ==========    =========    =========       =========    ==========

- ----------
(1) The contractual payments under long-term debt obligations shown on a pro
forma basis for the effect of the $400,000 financing are as follows:

(amounts in thousands)

                                                            Less than     One to Two       Three to     More than
                                                Total        One Year       Years         Five Years   Five Years
                                               ----------    ---------    ---------       ---------    ----------
                                                                                        
Long-term debt obligations............         $  890,586    $   3,226    $ 138,862       $  28,428    $  720,070

- --------------------------
(2) Of the construction budget for the Lexington Avenue project of $630,000
(which excludes $29,000 for development and guarantee fees to Vornado), $402,000
has been expended through December 31, 2003 and an additional $62,200 has been
committed to at December 31, 2003.

(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, 2003, 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, 2003, the Company would have had to pay
$44,917,000 in cash. Further appreciation in the Alexander's, Inc. stock price
from the closing stock price of $124.66 at December 31, 2003 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, 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.

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

                                      -30-

$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.

Year Ended December 31, 2001

         Net cash provided by operating activities of $9,839,000 was comprised
of (i) income from continuing and discontinued operations of $8,360,000 and (ii)
non-cash items of $6,378,000, partially offset by the net change in operating
assets and liabilities of $4,899,000. The adjustments for non-cash items include
(a) the write off of architectural and engineering costs of $3,058,000
associated with the development plans for the Paramus property prior to the IKEA
Property, Inc. ground lease, (b) the write off of professional fees of
$2,030,000 resulting from the termination of the spin-off of Alexander's Tower
LLC and (c) depreciation and amortization of $7,973,000, partially offset by (d)
a gain from early extinguishment of debt of $3,534,000 and (e) the effect of
straight-lining of rental income of $3,149,000.

         Net cash used in investing activities of $22,995,000 was comprised of
(i) capital expenditures of $48,490,000 and (ii) an increase in restricted cash
of $19,876,000, partially offset by (iii) net proceeds from the sale of the
Fordham Road property of $23,701,000 and (iv) the release of restricted cash of
$21,670,000. The capital expenditures were primarily comprised of (a)
capitalized interest and other carrying costs of $21,378,000, (b) renovations to
the Kings Plaza Regional Shopping Center of $3,651,000 and (c) excavation,
foundation and predevelopment costs at Lexington Avenue of $21,599,000.

         Net cash provided by financing activities of $146,142,000 was comprised
of (i) proceeds from the issuance of debt of $300,685,000, partially offset by
(ii) the repayment of debt of $149,337,000 and (iii) debt issuance costs of
$5,206,000.

FUNDS FROM OPERATIONS ("FFO") FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

         FFO was a negative $10,245,000 in the year ended December 31, 2003,
compared to FFO of $19,921,000 in the year ended December 31, 2002, a decrease
of $30,166,000. 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.
Effective with the Company's filing of its 2003 first quarter Form 10-Q, the
Company revised its definition of FFO to include the effect of straight-lining
of rents and exclude the effect of leasing fees paid directly to Vornado in
excess of the expense recognized. This change was made in order to comply with
the Securities and Exchange Commission's Regulation G concerning non-GAAP
financial measures, to adhere to the National Association of Real Estate
Investment Trust's ("NAREIT") definition of FFO and to disclose FFO on a
comparable basis with the vast majority of other companies in the industry. FFO
for the year ended December 31, 2002 has been restated for comparability.
Straight-lining of rents amounted to $6,742,000, or $1.35 per share, and
$3,099,000, or $0.62 per share, for the years ended December 31, 2003 and 2002,
respectively. Leasing fees paid in excess of the expense recognized amounted to
$2,387,000, or $0.48 per share, and $2,189,000, or $0.44 per share, for the
years ended December 31, 2003 and 2002, respectively. Such amounts are included
in reported FFO described above.

                                      -31-

         The following table reconciles net (loss) income to FFO.

(amounts in thousands except per share amounts)

                                                                              FOR THE YEAR
                                                                           ENDED DECEMBER 31,
                                                                  -----------------------------------
                                                                       2003                  2002
                                                                  -------------         -------------
                                                                                  
Net (loss) income............................................     $     (17,742)        $      23,584
Depreciation of real property (including $35 from
   discontinued operations in 2002)..........................             7,497                 6,703
Gain on sale of Third Avenue property........................                --               (10,366)
                                                                  -------------         -------------
FFO .........................................................     $     (10,245)        $      19,921
                                                                  =============         =============
FFO per common share - basic and diluted.....................     $       (2.05)        $        3.98
                                                                  =============         =============

         FFO does not represent cash generated from operating activities in
accordance with accounting principles generally accepted in the United States of
America and is not necessarily indicative of cash available to fund cash needs,
which is disclosed in the consolidated statements of cash flows for the
applicable periods. There are no material legal or functional restrictions on
the use of FFO. FFO should not be considered as an alternative to net (loss)
income as an indicator of the Company's operating performance. Management
considers FFO a relevant supplemental measure of operating performance because
it provides a basis for comparison among REITs. FFO is computed in accordance
with NAREIT's standards, which may not be comparable to FFO reported by other
REITs that do not define the term in accordance with NAREIT's definition or that
interpret NAREIT's definition differently.

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)

                                                                           EFFECT OF
                                                                           CHANGE IN
                                  DECEMBER 31,       WEIGHTED-AVERAGE    BASE RATES OF
                                  2003 BALANCE        INTEREST RATE           1%
                                  ------------       ----------------    ------------
                                                                
 Variable rate.................   $    364,899             6.64%         $      3,649
 Fixed rate....................        366,586             7.13%                   --
                                  ------------                           ------------
                                       731,485                                  3,649
                                  ============                           ============

Total effect on the Company's annual net earning per share -
 diluted.............................................................    $       0.73

         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 $14,631,000 at December 31, 2003. Such fair
value estimates are not necessarily indicative of the amounts that would be paid
upon liquidation of the Company's debt.

                                      -32-

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                                                                      Page
                                                                                                                     Number
                                                                                                                     ------
                                                                                                                  
Independent Auditors' Report............................................................................               34

Consolidated Balance Sheets at December 31, 2003 and 2002...............................................               35

Consolidated Statements of Operations for the
   Years Ended December 31, 2003, 2002 and 2001.........................................................               36

Consolidated Statements of Stockholders' Equity for the
   Years Ended December 31, 2003, 2002 and 2001.........................................................               37

Consolidated Statements of Cash Flows for the
   Years Ended December 31, 2003, 2002 and 2001.........................................................               38

Notes to Consolidated Financial Statements..............................................................               39

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.

         (b) Internal Control over Financial Reporting - There have not been any
changes in the Company's internal control over financial reporting during the
fourth quarter of the fiscal year to which this Annual Report on Form 10-K
relates that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.

                                      -33-

                          INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying consolidated balance sheets of Alexander's,
Inc. and Subsidiaries (the "Company") as of December 31, 2003 and 2002 and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 2003. Our
audits also included the financial statement schedules listed 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 auditing standards generally accepted
in the United States of America. 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 the Company as of December 31, 2003
and 2002, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2003, 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.

As discussed in Note 7 to the consolidated financial statements, the Company has
changed its presentation of the consolidated financial statements to conform to
Statement of Financial Accounting Standards No. 144.

DELOITTE & TOUCHE LLP

Parsippany, New Jersey
March 2, 2004

                                      -34-

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

                                                                                                        DECEMBER 31,
                                                                                                ----------------------------
                                                                                                     2003           2002
                                                                                                -------------  -------------
                                                                                                         
ASSETS
Real estate, at cost:
   Land.......................................................................................  $      91,928  $      90,768
   Buildings, leaseholds and leasehold improvements...........................................        371,353        176,581
   Construction in progress (including fees to Vornado of $23,197 and $13,325)................        355,015        315,781
   Air rights acquired for Lexington Avenue development project...............................         17,531         17,531
                                                                                                -------------  -------------
      Total...................................................................................        835,827        600,661
   Accumulated depreciation and amortization..................................................        (62,744)       (57,686)
                                                                                                -------------  -------------
Real estate, net..............................................................................        773,083        542,975

Cash and cash equivalents.....................................................................         21,336         45,239
Escrow deposits and restricted cash...........................................................         16,291          2,425
Accounts receivable, net of allowance for doubtful accounts of $55 and $96....................          3,101          2,508
Receivable arising from the straight-lining of rents..........................................         27,412         20,670
Deferred lease and other property costs (including unamortized leasing fees to Vornado
   of $31,021 and $14,837), net...............................................................         61,594         27,765
Deferred debt expense, net....................................................................         10,806         14,619
Other assets..................................................................................          7,373          8,711
                                                                                                -------------  -------------
TOTAL ASSETS                                                                                    $     920,996  $     664,912
                                                                                                =============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Debt (including $124,000 and $119,000 due to Vornado).........................................  $     731,485  $     543,807
Amounts due to Vornado........................................................................         34,427         11,294
Accounts payable and accrued expenses.........................................................         47,402         36,895
Liability for stock appreciation rights.......................................................         44,917             --
Other liabilities.............................................................................         11,842          4,251
                                                                                                -------------  -------------
TOTAL LIABILITIES                                                                                     870,073        596,247
                                                                                                -------------  -------------

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............................................................................         24,843         24,843
Retained earnings.............................................................................         21,866         39,608
                                                                                                -------------  -------------
                                                                                                       51,883         69,625
Treasury shares: 172,600 shares at cost.......................................................           (960)          (960)
                                                                                                -------------  -------------
Total stockholders' equity....................................................................         50,923         68,665
                                                                                                -------------  -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                      $     920,996  $     664,912
                                                                                                =============  =============

                 See notes to consolidated financial statements.

                                      -35-

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

                                                                                                YEAR ENDED DECEMBER 31,
                                                                                          -----------------------------------
                                                                                             2003         2002         2001
                                                                                          ---------    ---------    ---------
                                                                                                           
REVENUES
   Property rentals.....................................................................  $  56,785    $  50,630    $  44,560
   Expense reimbursements...............................................................     30,377       26,170       23,232
                                                                                          ---------    ---------    ---------
Total revenues..........................................................................     87,162       76,800       67,792
                                                                                          ---------    ---------    ---------

EXPENSES
   Operating (including management fees to Vornado of $1,475, $1,442 and $1,362)........     37,984       33,042       29,265
   Write off of architectural and engineering costs associated with development plans
     for Paramus prior to IKEA ground lease.............................................         --           --        3,058
   General and administrative (including management fees to Vornado of $2,160 in each
     year)                                                                                   48,921        3,980        3,836
   Depreciation and amortization........................................................      7,497        6,668        6,442
                                                                                          ---------    ---------    ---------
Total expenses..........................................................................     94,402       43,690       42,601
                                                                                          ---------    ---------    ---------

OPERATING (LOSS) INCOME.................................................................     (7,240)      33,110       25,191

Interest and other income, net..........................................................      1,983        2,178        3,237
Interest and debt expense (including interest on loans from Vornado)....................    (13,691)     (22,888)     (22,469)
Gain on early extinguishment of debt....................................................         --           --        3,534
Write off of professional fees resulting from termination of spin-off of Alexander's
   Tower LLC............................................................................         --           --       (2,030)
Minority interest.......................................................................         --           --          (49)
                                                                                          ---------    ---------    ---------

(Loss) income from continuing operations................................................    (18,948)      12,400        7,414
Income from discontinued operations.....................................................      1,206       11,184          946
                                                                                          ---------    ---------    ---------
(Loss) income before gain on sale of Fordham Road property..............................    (17,742)      23,584        8,360
Gain on sale of Fordham Road property...................................................         --           --       19,026
                                                                                          ---------    ---------    ---------

NET (LOSS) INCOME.......................................................................  $ (17,742)   $  23,584    $  27,386
                                                                                          =========    =========    =========

Net (loss) income per common share (basic and diluted):
   (Loss) income from continuing operations.............................................  $  (3.79)    $   2.48     $    1.48
   Income from discontinued operations..................................................      0.24         2.24          0.19
   Gain on sale of Fordham Road property................................................         --           --         3.81
                                                                                          ---------    ---------    ---------
   Net (loss) income....................................................................  $  (3.55)    $   4.72     $    5.48
                                                                                          =========    =========    =========

                See notes to consolidated financial statements.

                                      -36-

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

                                                                                 RETAINED
                                           COMMON           ADDITIONAL          (DEFICIT)            TREASURY        STOCKHOLDERS'
                                           STOCK             CAPITAL             EARNINGS             SHARES             EQUITY
                                        -----------        -----------         -----------         -----------       -------------
                                                                                                       
Balance, January 1, 2001............    $     5,174        $    24,843         $   (11,362)        $      (960)       $    17,695

Net income..........................             --                 --              27,386                  --             27,386
                                        -----------        -----------         -----------         -----------        -----------
Balance, December 31, 2001..........          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
                                        ===========        ===========         ===========         ===========        ===========

                 See notes to consolidated financial statements

                                      -37-

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

                                                                                                YEAR ENDED DECEMBER 31,
                                                                                      ------------------------------------------
                                                                                          2003           2002            2001
                                                                                      -----------    -----------     -----------
                                                                                                            
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss) income from continuing operations:.......................................      $   (18,948)   $    12,400     $     7,414
Adjustments to reconcile (loss) income from continuing operations to net
     cash provided by continuing operations:
     Depreciation and amortization (including debt issuance costs)..............           11,310          8,999           7,907
     Straight-lining of rental income...........................................           (6,742)        (3,099)         (3,149)
     Gain on sale of air rights.................................................               --           (169)             --
     Gain on early extinguishment of debt.......................................               --             --          (3,534)
     Write off of architectural and engineering costs associated with
        development plans for Paramus prior to IKEA ground lease................               --             --           3,058
     Write off of professional fees resulting from termination of spin-off
        of Alexander's Tower LLC................................................               --             --           2,030
Change in operating assets and liabilities:
     Accounts receivable, net...................................................             (593)          (974)            189
     Amounts due to Vornado.....................................................           14,012         (3,115)          3,555
     Accounts payable and accrued expenses......................................             (379)        (2,845)            348
     Other liabilities..........................................................           11,192           (789)            932
     Other......................................................................           (2,829)        (3,618)         (9,923)
                                                                                      -----------    -----------     -----------
Net cash provided by continuing operations......................................            7,023          6,790           8,827
                                                                                      -----------    -----------     -----------

Income from discontinued operations.............................................            1,206         11,184             946
     Depreciation and amortization..............................................               --             35              66
     Change in other liabilities................................................           (1,206)            --              --
     Gain on sale of Third Avenue property......................................               --        (10,366)             --
                                                                                      -----------    -----------     -----------
Net cash provided by discontinued operations....................................               --            853           1,012
                                                                                      -----------    -----------     -----------
Net cash provided by operating activities.......................................            7,023          7,643           9,839
                                                                                      -----------    -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Cash flows from continuing operations:
     Additions to real estate...................................................         (215,158)      (133,250)        (48,490)
     Restricted cash made available for construction financing..................               --             --           8,388
     Restricted cash made available for operating liabilities...................           10,657         13,574          13,282
     Cash restricted for operating liabilities..................................          (14,103)        (9,403)        (19,876)
     Deposit on sale of Flushing property.......................................               --          1,875              --
     Net proceeds from sale of Fordham Road property............................               --             --          23,701
                                                                                      -----------    -----------     -----------
Net cash used in continuing operations..........................................         (218,604)      (127,204)        (22,995)
Cash flows from discontinued operations:
     Net proceeds from sale of Third Avenue property............................               --         13,176              --
                                                                                      -----------    -----------     -----------
Net cash used in investing activities...........................................         (218,604)      (114,028)        (22,995)
                                                                                      -----------    -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from borrowings (including $5,000, $0 and $4,000 from
        Vornado)................................................................          190,399         55,500         300,685
     Repayments of borrowings...................................................           (2,721)       (27,524)       (149,337)
     Deferred debt expense......................................................               --        (11,110)         (5,206)
     Payment of acquisition obligation..........................................               --           (500)             --
                                                                                      -----------    -----------     -----------
Net cash provided by financing activities.......................................          187,678         16,366         146,142
                                                                                      -----------    -----------     -----------

Net (decrease) increase in cash and cash equivalents............................          (23,903)       (90,019)        132,986
Cash and cash equivalents at beginning of year..................................           45,239        135,258           2,272
                                                                                      -----------    -----------     -----------
Cash and cash equivalents at end of year........................................      $    21,336    $    45,239     $   135,258
                                                                                      ===========    ===========     ===========

SUPPLEMENTAL INFORMATION
Cash payments for interest (of which $37,516, $23,788 and $19,259 have
    been capitalized)...........................................................      $    46,861    $    45,818     $    38,793
                                                                                      ===========    ===========     ===========

                See notes to consolidated financial statements.

                                      -38-

                       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 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.;

         (ii)     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;

         (iii)    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; and

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

Property under development

         (v)      the Lexington Avenue development property, which comprises the
                  entire square block bounded by Lexington Avenue, East 59th
                  Street, Third Avenue and East 58th Street in Manhattan, New
                  York; 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.

         In the aggregate, Alexander's operating properties do not generate
sufficient cash flow to pay all of its expenses. After the completion of the
Lexington Avenue property, which is expected in 2005, the Company expects that
cash flow will become positive.

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 currently operates in one business segment.

         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.

                                      -39-

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

         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 "Escrow deposits 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 their leases. Management exercises judgment in
establishing these allowances, considering payment history and current credit
status to develop 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 $14,631,000 at
December 31, 2003. 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.

         At December 31, 2003, the Company has reported NOLs for federal tax
purposes of approximately $64,518,000, expiring from 2007 to 2015. The Company
also has investment and targeted jobs tax credits of approximately $2,800,000
expiring from 2008 to 2014.

                                      -40-

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

         The following table reconciles net (loss) income to REIT taxable income
for the years ended December 31, 2003, 2002 and 2001.

                      (amounts in thousands)                               YEARS ENDED DECEMBER 31,
                                                                   ---------------------------------------
                                                                      2003           2002          2001
                                                                   ---------      ---------     ----------
                                                                                       
Net (loss) income................................................  $ (17,742)     $  23,584     $   27,386
Straight-line rent adjustments...................................     (6,668)        (2,953)        (3,002)
Depreciation and amortization timing differences.................      2,859          2,985          2,625
Differences on gain of sale of assets............................         --          1,345         16,026
Interest expense.................................................     (2,837)        (2,972)        (6,515)
Stock appreciation rights compensation expense...................     44,917             --             --
Interest income..................................................     10,439             --             --
Other............................................................     (1,422)           988         (1,181)
                                                                   ---------      ---------     ----------
Taxable income...................................................     29,546         22,977         35,339
NOL carry forward beginning balance..............................    (94,064)      (117,041)      (152,380)
                                                                   ---------      ---------     ----------
NOL carry forward ending balance.................................  $ (64,518)     $ (94,064)    $ (117,041)
                                                                   =========      =========     ==========

         The net basis of the Company's assets and liabilities for tax purposes
is approximately $51,000,000 lower 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 Lexington
Avenue project. Residential paid no income taxes in the years ended December 31,
2003, 2002 and 2001. Residential's net basis in its assets and liabilities for
tax purposes approximates their basis for financial reporting purposes.

         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.

         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, 2003, 2002 and 2001.

               (amounts in thousands except                                     YEAR ENDED DECEMBER 31,
                    per share amounts)                         -----------------------------------------------------------
                                                                     2003                  2002                  2001
                                                               ---------------       ---------------       ---------------
                                                                                                  
Net (loss) income:
   As reported...........................................      $       (17,742)      $        23,584       $        27,386
   Less: stock - based compensation expense determined
     under fair value method.............................                   --                   384                 1,535
                                                               ---------------       ---------------       ---------------
   Pro forma.............................................      $       (17,742)      $        23,200       $        25,851
                                                               ===============       ===============       ===============

   As reported...........................................      $        (3.55)       $          4.72       $          5.48
   Pro forma.............................................      $        (3.55)       $          4.64       $          5.17

         In December 2002, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 148, Accounting for Stock-Based Compensation - Transition and
Disclosure, an amendment of FASB Statement No. 123. SFAS No. 148

                                      -41-

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

provides alternative methods of transition for entities that voluntarily change
to the fair value method of accounting for stock-based employee compensation in
accordance with SFAS No. 123, Accounting for Stock-Based Compensation. As noted
above, the Company continues to account for stock-based compensation using the
intrinsic value method.

         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.

         Recently Issued Accounting Standards - In April 2002, FASB issued SFAS
No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections. SFAS No. 145 requires, among other
things, that (i) the modification of a lease that results in a change of the
classification of the lease from capital to operating under the provisions of
SFAS No. 13, Accounting for Leases, be accounted for as a sale-leaseback
transaction and (ii) the reporting of gains or losses from the early
extinguishment of debt as extraordinary items only if they meet the criteria of
Accounting Principles Board Opinion No. 30, Reporting the Results of Operations
- - Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions. The
amendment of SFAS No. 13 had no impact on the Company's consolidated financial
statements. As required by this statement, the Company reclassified the
$3,534,000 extraordinary gain in the year ended December 31, 2001 to "Gain on
early extinguishment of debt."

3.       RELATED PARTY TRANSACTIONS

Vornado Realty Trust

         Vornado owned 33.1% of the Company's common stock as of December 31,
2003. Steven Roth is the Chief Executive Officer and a director 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, 2003, 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, 27.5%
of the outstanding common stock of the Company, in addition to the common stock
owned directly by Vornado, and 11.7% 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 with one-year terms,
expiring in March of each year, which are automatically renewable. In
conjunction with the original closing of the Lexington Avenue construction loan
(the "Construction Loan") on July 3, 2002, these agreements were bifurcated to
cover the Company's Lexington Avenue property separately. Further, the
management and development agreements with Vornado for the Lexington Avenue
property were amended to provide for a term lasting until substantial completion
of the property with automatic renewals, and for the payment of the Lexington
Avenue development fee upon the earlier of January 3, 2006 or the repayment
fully of the Construction Loan encumbering the property.

         Vornado has agreed to guarantee to the construction lender, the lien
free, timely completion of the construction of the Lexington Avenue project and
funding of project costs in excess of a stated loan budget, if not funded by the
Company (the "Completion Guarantee"). The $6,300,000 estimated fee payable by
the Company to Vornado for the Completion Guarantee is 1% of construction costs,
as defined, and is due at the same time that the development fee is due. This
development fee is estimated to be $26,300,000. In addition, if Vornado should
advance any funds under the Completion Guarantee in excess of $21,000,000, which
is available at December 31, 2003 under the line of credit with Vornado (see
Note 8), interest on those advances would be at 15% per annum.

         The annual fees payable by the Company to Vornado consist of (i) an
annual management fee of $3,000,000 plus 3% of the gross income from the Kings
Plaza Mall, (ii) a development fee equal to 6% of development costs, as defined,
with minimum guaranteed fees of $750,000 per annum, and (iii) a leasing fee. The
leasing fee to Vornado is equal to (a) 3% of the gross proceeds, as defined,
from the sale of an asset and (b) in the event of a lease or sublease of an
asset, 3% of lease rent for the first ten years of a lease term, 2% of lease
rent for the eleventh through the twentieth years of a lease term, and 1% of
lease rent for the twenty-first through thirtieth year of a lease term, subject
to the payment of rents by tenants. 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

                                      -42-

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

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%. 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. At December 31, 2003, the Company owed Vornado (A) $14,810,000
in development fees, (B) $14,586,000 in leasing fees, (C) $3,898,000 for the
guarantee fee, (D) $741,000 in interest, and (E) $392,000 in management fees and
other costs.

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

(amounts in thousands)

                                                                          YEAR ENDED DECEMBER 31,
                                                                   -------------------------------------
                                                                     2003           2002         2001
                                                                   -------       ---------    ----------
                                                                                     
Management fee...................................................  $ 3,635       $   3,602    $    3,522
Development fee, guarantee fee and rent for development
  office.........................................................   10,292          10,769         1,855
Leasing and other fees...........................................    3,722           3,056         3,984
                                                                   -------       ---------   -----------
                                                                   $17,649       $  17,427    $    9,361
                                                                   =======       =========    ==========

         At December 31, 2003, in addition to the fees and costs described
above, the Company was indebted to Vornado in the amount of $124,000,000 (see
Note 8). The Company incurred interest (including a 1% unused commitment fee on
the line of credit) on this debt of $15,633,000, $15,547,000 and $17,455,000 for
the years ended December 31, 2003, 2002 and 2001, respectively.

         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.

         In connection with tax planning for the development of the Lexington
Avenue property, 59th Street Corporation, a wholly owned subsidiary of the
Company, sold 100 shares of preferred stock, $0.01 par value, to Vornado in
August 2001 for $1,200,000. This non-convertible preferred stock entitled the
holder to cumulative 10% dividends payable semi-annually and was redeemable at
any time at the option of 59th Street Corporation. In December 2001, 59th Street
Corporation redeemed this issue and paid a $49,000 dividend.

Other

         In the years ended December 31, 2003, 2002 and 2001, 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
$100,000, $480,000 and $648,000, respectively.

                                      -43-

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

4.       LEXINGTON AVENUE PROJECT

         The development at Lexington Avenue consists of an approximately 1.3
million square foot multi-use building. The building will contain approximately
885,000 net rentable square feet of office space, approximately 171,000 net
rentable square feet of retail space and approximately 248,000 net saleable
square feet of residential space consisting of condominium units (through a
TRS). Of the construction budget of $630,000,000 (which excludes $29,000,000 for
development and guarantee fees to Vornado), $402,000,000 has been expended
through December 31, 2003 and an additional $62,200,000 has been committed to at
December 31, 2003. Construction is expected to be completed in 2005.

         On May 1, 2001, the Company entered into a triple-net lease with
Bloomberg L.P. for approximately 695,000 square feet of office space at the
Lexington Avenue property (the "Bloomberg Space"). The initial term of the lease
is 25 years with a ten-year renewal option. Base annual net rent is $34,529,000
in each of the first four years and $38,533,000 in the fifth year with a similar
percentage increase each four years thereafter. On November 15, 2003, the
Company delivered approximately 87% of the space. Accordingly, the Company
transferred approximately $195,000,000 from "Construction in progress" to "Land"
and "Buildings, leaseholds and leasehold improvements" in the year ended
December 31, 2003. As of February 9, 2004, all of the Bloomberg Space has been
delivered. Payment of base rent commences nine months from delivery of each
parcel of space; rent recognition commenced from delivery of space.

         At December 31, 2003, 115,000 square feet of retail space has been
leased, of which The Home Depot and Hennes & Mauritz have leased 83,000 and
27,000 square feet, respectively. The Company expects to deliver the leased
space in 2004. Payment of base rent commences six to nine months from delivery
of each space; rent recognition commences on delivery of space.

         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, 2003, would produce (inclusive of the value of existing
contracts) an aggregate sale price of $457,000,000. As of December 31, 2003, the
Company has received deposits of $10,425,000 on sales of the condominium units.

         Financing of the Project

         On February 13, 2004, the Company completed a $400,000,000 mortgage
financing on the office space. The loan was placed by German American Capital
Corporation, an affiliate of Deutsche Bank. 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. $253,529,000 of
the loan proceeds was used to repay the entire amount outstanding under the
previously existing the Construction Loan with Hypo Real Estate Capital
Corporation.

         The Construction Loan was modified so that the remaining availability
is $237,000,000, which is approximately the amount estimated to complete the
Lexington Avenue development project (not including $29,000,000 for development
and guarantee fees to Vornado). The interest rate of the Construction Loan of
LIBOR plus 2.5% (3.64% at December 31, 2003) 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 will write off $3,050,000, the proportionate
share of unamortized deferred financing costs, in the first quarter of 2004.
Vornado has agreed to guarantee to the construction lender, the lien free,
timely completion of the construction of the Lexington Avenue project 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 is the amount currently available under the line of
credit with Vornado, interest on those advances would be at 15% per annum.

         There can be no assurance that the Lexington Avenue project will be
completed on time or completed for the budgeted amount. Any failure to complete
the Lexington Avenue project on time or within budget may adversely affect
future cash flows and the Company's financial condition.

                                      -44-

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

5.       PARAMUS PROPERTY

         On October 5, 2001, the Company entered into a ground lease for its
Paramus, New Jersey property with 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.

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 Home Depot and Hennes
& Mauritz leases) is as follows:

(amounts in thousands)
Year Ending December 31,
                                                       
2004.................................................     $   54,380
2005.................................................         86,044
2006.................................................         86,336
2007.................................................         83,224
2008.................................................         86,927
Thereafter...........................................      1,632,863

         These future minimum amounts do not include additional rents based on a
percentage of tenants' sales. For the years ended December 31, 2003, 2002 and
2001, these rents were $945,000, $977,000 and $468,000, respectively.

         Sears accounted for 18%, 19% and 21% of the Company's consolidated
revenues for the years ended December 31, 2003, 2002 and 2001, respectively. No
other tenant accounted for more than 10% of revenues. Rents from the Bloomberg
L.P. lease will represent a significant portion of revenues in 2004.

As Lessee

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

(amounts in thousands)
Year Ending December 31,
                                                         
2004.................................................       $   416
2005.................................................           416
2006.................................................           416
2007.................................................           315
2008.................................................           315
Thereafter...........................................         4,217

         Rent expense was $416,000 for each of the years ended December 31,
2003, 2002 and 2001.

                                      -45-

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

7.       DISCONTINUED OPERATIONS

         Effective January 1, 2002, the Company changed its method of accounting
for long-lived assets sold or held for sale, in accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. This statement
requires that the results of operations and gains and losses attributable to
properties held for sale or sold during 2002 and thereafter, such as the Third
Avenue property, be classified as discontinued operations for all periods
presented, and that any assets and liabilities of these properties be presented
separately in the consolidated balance sheets. Properties sold as a result of
sales activities that were initiated prior to January 1, 2002, such as the
Fordham Road property, continue to be accounted for under the applicable prior
accounting guidance.

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

(amounts in thousands)

                                                                                 YEAR ENDED DECEMBER 31,
                                                                  -----------------------------------------------------
                                                                      2003               2002                2001
                                                                  --------------      --------------     --------------
                                                                                                
Total revenues................................................    $           --      $        1,198     $        1,551
Less: total expenses..........................................                --                 380                605
                                                                  --------------      --------------     --------------
                                                                              --                 818                946
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     $          946
                                                                  ==============      ==============     ==============

Third Avenue Property

         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.

Fordham Road Property

         On January 12, 2001, the Company sold its Fordham Road property,
located in Bronx, New York. The 303,000 square foot property was sold for
$25,500,000, resulting in a gain of $19,026,000. In addition, the Company repaid
the mortgage on this property at a discount, resulting in a gain from the early
extinguishment of debt of $3,534,000. Included in the expenses relating to the
sale, the Company paid a commission of $1,020,000, of which $520,000 was paid to
Vornado.

Flushing Property

         On May 30, 2002, the Company entered into an agreement to sell its
subsidiary which owns the building and has the ground lease for its property in
Flushing, New York for $18,750,000. The Company received a non-refundable
deposit of $1,875,000 from the purchaser. By Notice of Default dated August 16,
2002, the landlord of the premises notified the Company of certain alleged
defaults under the lease including, but not limited to, the fact that the
purchaser performed unauthorized construction at the premises. The Company
commenced an action against the landlord for injunctive relief and a declaration
of the rights and obligations of the parties under the lease. The Company has
obtained an injunction, which temporarily restrains the landlord from
terminating the lease. On September 6, 2002, the scheduled closing date, the
Company notified the purchaser that it failed to close and is in default of its
obligations under the purchase contract. Since the purchaser has not met its
obligations under the purchase contract, the Company recognized $1,289,000 as
income, representing the non-refundable deposit of $1,875,000, net of $586,000
for costs associated with this transaction. This income is included in "Interest
and other income, net" in the Company's consolidated statement of operations for
the year ended December 31, 2003. The results of operations of the property were
previously reported as discontinued operations in the consolidated statements of
income included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002 and were reclassified to continuing operations during the
three months ended September 30, 2003. In that period, the Company recorded
$59,000 of depreciation expense that would have been recognized had the property
been continuously classified as "held and used".

                                      -46-

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

8.       DEBT

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

(amounts in thousands except for percentages)

                                                                            INTEREST
                                                                             RATE AT           BALANCE AT DECEMBER 31,
                                                                            DECEMBER         ----------------------------
                                                            MATURITY        31, 2003           2003                2002
                                                            ---------       --------         ---------          ---------
                                                                                                    
Construction loan, secured by the Lexington
   Avenue property (see Note 4).................            Jan. 2006         3.64%          $ 240,899          $  55,500
First mortgage, secured by the Kings Plaza
   Regional Shopping Center (1).................            June 2011         7.46%            216,586            219,307
Term loan and line of credit to Vornado (2).....            Jan. 2006        12.48%            124,000            119,000
First mortgage, secured by the Rego Park I
   Shopping Center (3)..........................            June 2009         7.25%             82,000             82,000
First mortgage, secured by the Paramus
   property (see Note 5)........................            Oct. 2011         5.92%             68,000             68,000
                                                                                             ---------          ---------
                                                                                             $ 731,485          $ 543,807
                                                                                             =========          =========

- --------------------------
(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, 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 12.48% and resets quarterly, using a 9.48%
spread to a 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.

(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, 2003, the principal repayments for the next five years
and thereafter are as follows:

(amounts in thousands)
Year Ending December 31,
                                                        
2004.................................................      $  3,226
2005.................................................         3,895
2006(1)..............................................       369,097
2007.................................................         4,526
2008.................................................         4,817
Thereafter...........................................       345,924

- --------------------------
(1) On February 13, 2004, the Company completed a $400,000 mortgage financing on
the office space at the Lexington Avenue project (see Note 4). $240,899 of the
amount shown above for the year ending December 31, 2006 was repaid with the
loan proceeds.

                                      -47-

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

         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 $773,083,000 at December 31, 2003.

         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.

         See Note 9 (Insurance) for a discussion of the insurance coverage
required under the Company's debt instruments.

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.

         The Company's all-risk insurance policies in effect before September
11, 2001 did not expressly exclude coverage for hostile acts, except acts of
war. Since September 11, 2001, but prior to the enactment of the Terrorism Risk
Insurance Act of 2002, insurance companies had, for the most part, excluded
terrorist acts from coverage in all-risk policies. The Company was generally
unable to obtain all-risk insurance that includes coverage for terrorist acts
for policies renewed during that period.

         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 an 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, it may adversely affect the Company's
ability to finance and/or refinance its properties and businesses, including the
construction of the Lexington Avenue development property.

         On November 26, 2002, the Terrorism Risk Insurance Act of 2002 was
signed into law. Under this new legislation, through 2004 (with a possible
extension through 2005), regulated insurers must offer coverage in their
commercial property and casualty policies (including existing policies) for
losses resulting from defined "acts of terrorism." As a result of the
legislation, in June 2003, the Company obtained $500,000,000 of coverage per
occurrence for certified terrorist acts, as defined in the legislation, and
$150,000,000 per occurrence for non-certified acts. In addition, on February 13,
2004, the Company increased the builders' risk insurance coverage for its
Lexington Avenue project, which includes full coverage for certified terrorist
acts, per occurrence, and $200,000,000 for non-certified acts, per occurrence.
Therefore, the Company is at risk for financial loss in excess of these limits
for terrorist acts, as defined by the policies and the legislation. Such loss
could be material. Prior to June 2003, the Company had $200,000,000 of separate
aggregate coverage for terrorist acts.

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 has developed a
remediation approach, which is ongoing. The New York State Department of
Environmental

                                      -48-

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

Conservation ("NYDEC") has approved a portion of the remediation approach. The
Company accrued $2,675,000 in previous years, of which $2,436,000 has been paid
as of December 31, 2003, 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 cost prohibitive. The Company has not recorded an asset as of December 31,
2003 for possible recoveries of environmental remediation costs from potentially
responsible third parties.

Flushing Property

         See Note 7 (Flushing Property), for a discussion of the litigation
concerning the sale of the Company's subsidiary which owns the building and has
the ground lease for the Company's property in Flushing, New York.

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 $13 to 15 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, 2003.

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 105,000 options which were outstanding and exercisable at December
31, 2003 have a remaining contractual life of 5.2 years and an exercise price of
$70.38. There were no changes to the options outstanding in the years ended
December 31, 2003, 2002 and 2001. Shares available for future grant under the
Plan at December 31, 2003 were 1,745,000.

         At December 31, 2003, 850,000 SARs were outstanding and exercisable.
The consolidated statement of operations for the year ended December 31, 2003
includes $44,917,000 of compensation expense based on the Company's closing
stock price of $124.66 at December 31, 2003. Since the closing stock prices at
December 31, 2002 and 2001 were less than the weighted-average strike price of
$71.82, there was no compensation expense in the statement of operations for the
years ended December 31, 2002 and 2001. SARs, unlike options, are not aggregated
under the REIT rules.

                                      -49-

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

11.      EARNINGS PER SHARE

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

(amounts in thousands except shares and per share amounts)

                                                                                           YEAR ENDED DECEMBER 31,
                                                                           ---------------------------------------------------------
                                                                                2003                  2002               2001
                                                                           --------------        --------------       -----------
                                                                                                             
Numerator:
   (Loss) income from continuing operations...........................     $      (18,948)       $       12,400       $     7,414
   Income from discontinued operations................................              1,206                11,184               946
   Gain on sale of Fordham Road property..............................                 --                    --            19,026
                                                                           --------------        --------------       -----------
   Net (loss) income..................................................     $      (17,742)       $       23,584       $    27,386
                                                                           ==============        ==============       ===========

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

Net (loss) income per common share (basic and diluted):
   (Loss) income from continuing operations...........................     $        (3.79)       $         2.48       $      1.48
   Income from discontinued operations................................               0.24                  2.24              0.19
   Gain on sale of Fordham Road property..............................                 --                    --              3.81
                                                                           --------------        --------------       -----------
   Net (loss) income..................................................     $        (3.55)       $         4.72       $      5.48
                                                                           ==============        ==============       ===========

         Options to purchase 105,000 shares of the Company's common stock were
not included in the calculations of (i) loss per share in the year ended
December 31, 2003 as they are anti-dilutive in that case and (ii) income per
share in the years ended December 31, 2002 and 2001 as the average market prices
of the Company's common stock during these years were less than the exercise
prices.

12.      SUMMARY OF QUARTERLY RESULTS (UNAUDITED)

         (amounts in thousands except per share amounts)

                                                                                                INCOME (LOSS) PER COMMON SHARE
                                                         INCOME (LOSS)                                (BASIC AND DILUTED)
                                         ----------------------------------------------    ----------------------------------------
                                         CONTINUING       DISCONTINUED                      CONTINUING    DISCONTINUED
                         REVENUE         OPERATIONS        OPERATIONS       TOTAL           OPERATIONS     OPERATIONS       TOTAL
                        ---------        ----------       ------------    ----------        ----------    ------------   ----------
                                                                                                    
         2003
First quarter.........  $  19,723        $    4,804        $      --      $    4,804        $    0.96      $     --      $    0.96
Second quarter........     20,156            (4,396)              --          (4,396)(1)        (0.88)           --          (0.88)
Third quarter.........     19,902           (13,560)              --         (13,560)(1)        (2.71)           --          (2.71)
Fourth quarter........     27,381(2)         (5,796)           1,206          (4,590)(1)        (1.16)         0.24          (0.92)

         2002

First quarter.........  $  18,871        $    3,235        $     296      $    3,531        $    0.65     $    0.06       $   0.71
Second quarter........     18,762            (1,428)             295          (1,133)(3)        (0.29)         0.06          (0.23)
Third quarter.........     19,397             6,787           10,593          17,380(3)          1.36          2.12           3.48
Fourth quarter........     19,770             3,806               --           3,806             0.76            --           0.76

- --------------------------
(1) Includes an accrual for compensation expense for SARs, due to an increase in
the Company's stock price, of $9,923, $18,708 and $16,286 in the three months
ended June 30, 2003, September 30, 2003 and December 31, 2003, respectively.
Loss from continuing operations for the three months ended December 31, 2003
includes $1,289 resulting from the recognition as income of the non-refundable
deposit from the planned sale of the Flushing property of $1,875, net of $586
for costs associated with this transaction. Income from discontinued operations
for the three months ended December 31, 2003 represents the reversal of
previously accrued contingent liabilities.

(2) Includes $5,081 of rent revenue (resulting from the straight-lining of base
rents) on the space leased to Bloomberg L.P. at the Lexington Avenue property.

(3) Includes an accrual for compensation expense for SARs of $4,236 for the
three months ended June 30, 2003. This expense was reversed in the three months
ended September 30, 2003. The third quarter also includes the gain on the sale
of the Third Avenue property of $10,366.

                                      -50-

                                    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, 2003. 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.

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.

                             EQUITY COMPENSATION PLAN INFORMATION
- ----------------------------------------------------------------------------------------------------
                                                                              NUMBER OF SECURITIES
                                                                             REMAINING AVAILABLE FOR
                                 NUMBER OF SECURITIES                        FUTURE ISSUANCE UNDER
                                 TO BE ISSUED UPON       WEIGHTED-AVERAGE      EQUITY COMPENSATION
                                    EXERCISE OF          EXERCISE PRICE OF      PLANS (EXCLUDING
                                OUTSTANDING OPTIONS,   OUTSTANDING OPTIONS,  SECURITIES REFLECTED IN
PLAN CATEGORY                  WARRANTS AND RIGHTS(A)  WARRANTS AND RIGHTS         COLUMN (A))
- -----------------------------  ----------------------  --------------------  -----------------------
                                                                    
Equity compensation plans
approved by security holders          105,000                $ 70.38               1,745,000

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

Total                                 105,000                $ 70.38               1,745,000

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.

                                      -51-

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(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.

                                                                            PAGES IN THIS
                                                                            ANNUAL REPORT
                                                                            ON FORM 10-K
                                                                            -------------
                                                                         
Schedule II - Valuation and Qualifying Accounts - years ended
     December 31, 2003, 2002 and 2001................................            54
Schedule III - Real Estate and Accumulated Depreciation as of
     December 31, 2003...............................................            55

                  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 57.

(b)      Reports on Form 8-K

         During the last quarter of the period covered by this Annual Report on
Form 10-K, Alexander's, Inc. filed the following report on Form 8-K:

PERIOD COVERED (DATE
 OF EVENT REPORTED)            ITEMS REPORTED              DATE FILED
- --------------------  --------------------------------  -----------------
                                                  
 November 20, 2003    Update of Items 6, 7, and 8 and   November 20, 2003
                      Schedule III in Annual Report on
                        Form 10-K for the year ended
                             December 31, 2002

                                      -52-

                                   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: March 2, 2004

         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.

             SIGNATURE                                   TITLE                            DATE
- ------------------------------------   --------------------------------------------   -------------
                                                                                
      /s/ Steven Roth                  Chief Executive Officer and Director           March 2, 2004
- ------------------------------------   (Principal Executive Officer)
      Steven Roth

      /s/ Michael D. Fascitelli        President and Director                         March 2, 2004
- ------------------------------------
      Michael D. Fascitelli

      /s/ Joseph Macnow                Executive Vice President and Chief Financial   March 2, 2004
- ------------------------------------   Officer (Principal Financial and Accounting
      Joseph Macnow                    Officer)

      /s/ Thomas R. DiBenedetto        Director                                       March 2, 2004
- ------------------------------------
      Thomas R. DiBenedetto

      /s/ David Mandelbaum             Director                                       March 2, 2004
- ------------------------------------
      David Mandelbaum

      /s/ Stephen Mann                 Chairman of the Board of Directors             March 2, 2004
- ------------------------------------
      Stephen Mann

      /s/ Arthur I. Sonnenblick        Director                                       March 2, 2004
- ------------------------------------
      Arthur I. Sonnenblick

      /s/ Neil Underberg               Director                                       March 2, 2004
- ------------------------------------
      Neil Underberg

      /s/ Richard West                 Director                                       March 2, 2004
- ------------------------------------
      Richard West

      /s/ Russell B. Wight, Jr.        Director                                       March 2, 2004
- ------------------------------------
      Russell B. Wight, Jr.

                                      -53-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                                   SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS

                                            COLUMN B    COLUMN C     COLUMN D     COLUMN E
                                           ----------  ----------  -------------  --------
                                                       ADDITIONS:   DEDUCTIONS:
                                           BALANCE AT   CHARGED    UNCOLLECTIBLE   BALANCE
     (amounts in thousands)                 BEGINNING   AGAINST      ACCOUNTS      AT END
                                             OF YEAR   OPERATIONS   WRITTEN OFF    OF YEAR
                                           ----------  ----------  -------------  --------
      COLUMN A - DESCRIPTION
                                                                      
Allowance for doubtful accounts:
Year Ended December 31, 2003..........       $  96       $ 112        $ 153        $  55
                                             =====       =====        =====        =====
Year Ended December 31, 2002..........       $ 929       $(191)       $ 642        $  96
                                             =====       =====        =====        =====
Year Ended December 31, 2001..........       $ 722       $ 365        $ 158        $ 929
                                             =====       =====        =====        =====

                                      -54-

                       ALEXANDER'S, INC. AND SUBSIDIARIES
             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 2003
                             (amounts in thousands)

      COLUMN A          COLUMN B            COLUMN C              COLUMN D                          COLUMN E
- --------------------- ------------ --------------------------- --------------- ------------------------------------------------
                                   INITIAL COST TO COMPANY (1)                 GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF PERIOD
                                   ---------------------------                 ------------------------------------------------
                                                   BUILDING,         COST                BUILDINGS,
                                                   LEASEHOLDS    CAPITALIZED             LEASEHOLD
                                                 AND LEASEHOLD  SUBSEQUENT TO          AND LEASEHOLDS  CONSTRUCTION
     DESCRIPTION      ENCUMBRANCES   LAND        IMPROVEMENTS  ACQUISITION (2)   LAND   IMPROVEMENTS    IN PROGRESS   TOTAL (2)
- --------------------------------------------------------------------------------------------------------------------------------
                                                                                              
Commercial Property:
  New York, NY
    Rego Park I        $   82,000  $  1,647        $  8,953       $  57,641    $ 1,647    $ 66,594       $      --    $  68,241
    Rego Park II               --     3,906           1,467           1,387      3,906       1,567           1,287        6,760
    Flushing                   --        --           1,660           1,657         --       3,213             104        3,317
    Lexington Ave.        240,899    14,432          12,355         587,334     49,539     194,436         370,146      614,121
    Kings Plaza
    Regional Shopping
    Center                216,586       497           9,542         119,190     24,483     103,737           1,009      129,229
                       ----------  --------        --------       ---------    -------    --------       ---------    ---------
                          539,485    20,482          33,977         767,209     79,575     369,547         372,546      821,668
  Paramus, NJ              68,000     1,441              --          10,313     11,754          --              --       11,754
  Other properties             --       599           1,804               2        599       1,806              --        2,405
                                   --------        --------       ---------    -------    --------       ---------    ---------
  Other debt (4)          124,000
                       ----------

TOTAL                  $  731,485  $ 22,522        $ 35,781       $ 777,524    $91,928    $371,353       $ 372,546    $ 835,827
                       ==========  ========        ========       =========    =======    ========       =========    =========

      COLUMN A          COLUMN F      COLUMN G      COLUMN H        COLUMN I
- --------------------- ------------  ------------  ------------   ---------------
                                                                 LIFE ON WHICH
                      ACCUMULATED                                DEPRECIATION IN
                      DEPRECIATION                               LATEST INCOME
                           AND        DATE OF         DATE        STATEMENT IS
     DESCRIPTION      AMORTIZATION  CONSTRUCTION  ACQUIRED (1)     COMPUTED
- --------------------------------------------------------------------------------
                                                     
Commercial Property:
  New York, NY
    Rego Park I         $ 20,754        1959          1992        15-39 years
    Rego Park II           1,480        1965          1992        38-39 years
    Flushing               1,800        1975 (3)      1992          26 years
    Lexington Ave.           623        2003          1992          39 years
    Kings Plaza
    Regional Shopping
    Center                36,281        1970          1992         7-50 years
                          60,938
  Paramus, NJ                 --         --           1992            --
  Other properties         1,806       Various        1992         7-25 years
                        --------
  Other debt (4)

TOTAL                   $ 62,744

- --------------------------
(1)      Initial cost is as of May 15, 1992 (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 $51,000,000 lower 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).

                                      -55-

                       ALEXANDER'S, INC. AND SUBSIDIARIES
             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             (amounts in thousands)

                                                                      DECEMBER 31,
                                                             ----------------------------------
                                                               2003        2002         2001
                                                             ---------   ---------    ---------
                                                                             
REAL ESTATE:
Balance at beginning of period ...........................   $ 600,661   $ 436,742    $ 404,935
Additions during the period:
    Land .................................................       1,160        --           --
    Buildings, leaseholds and leasehold improvements .....     194,772       4,608        3,118
    Construction in progress .............................      39,234     164,948       45,372
                                                             ---------   ---------    ---------
                                                               835,827     606,298      453,425
Assets sold ..............................................        --        (5,637)     (16,683)
                                                             ---------   ---------    ---------
Balance at end of period .................................   $ 835,827   $ 600,661    $ 436,742
                                                             =========   =========    =========
ACCUMULATED DEPRECIATION:
Balance at beginning of period ...........................   $  57,686   $  56,383    $  58,884
Additions charged to operating expenses ..................       5,058       4,563        4,535
                                                             ---------   ---------    ---------
                                                                62,744      60,946       63,419
Assets sold ..............................................        --        (3,260)      (7,036)
                                                             ---------   ---------    ---------
Balance at end of period .................................   $  62,744   $  57,686    $  56,383
                                                             =========   =========    =========

                                      -56-

                                  EXHIBIT INDEX

EXHIBIT  * - Incorporated by reference
NO.
- -------
                                                                                  
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, 2002..............................      *

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, 2002...............................     *

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, 2002...............................................................     *

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, 2002................     *

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, 2002.....................................     *

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, 2002................     *

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, 2002...............................................................     *

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, 2002..........................................................     *

- ----------

                                       57

EXHIBIT  * - Incorporated by reference
NO.
- -------
                                                                                  
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, 2002............................................     *

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, 2002.......................     *

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, 2002...............................     *

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, 2002...............................     *

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, 2002.......................     *

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, 2002............................................     *

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, 2002..........................................................     *

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.

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.

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.

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.

- ----------

                                       58

EXHIBIT  * - Incorporated by reference
NO.
- -------
                                                                                  
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.

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

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.

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.

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.

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.

10.26    Note Exchange Agreement dated as of February 13, 2004, by and between
         731 Office One LLC and German American Capital Corporation.

10.27    Promissory Note A-1 dated as of February 13, 2004, and 731 Office One
         LLC in favor of German American Capital Corporation.

10.28    Promissory Note A-2 dated as of February 13, 2004, and 731 Office One
         LLC in favor of German American Capital Corporation.

10.29    Promissory Note A-3 dated as of February 13, 2004, and 731 Office One
         LLC in favor of German American Capital Corporation.

10.30    Promissory Note A-4 dated as of February 13, 2004, and 731 Office One
         LLC in favor of German American Capital Corporation.

10.31    Promissory Note A-X dated as of February 13, 2004, and 731 Office One
         LLC in favor of German American Capital Corporation.

10.32    Promissory Note B dated as of February 13, 2004, and 731 Office One LLC
         in favor of German American Capital Corporation.

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.

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.

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................     *

                                       59

EXHIBIT  * - Incorporated by reference
NO.
- -------
                                                                                  
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......     *

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 registrant's Quarterly Report on Form 10-Q for the
         quarter ended June 30, 2002............................................     *

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................................     *

- ----------

                                       60

EXHIBIT  * - Incorporated by reference
NO.
- -------
                                                                                  
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......     *

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...............................................................     *

- ----------

                                       61

EXHIBIT  * - Incorporated by reference
NO.
- -------
                                                                                  
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.........................     *

12       Consolidated Ratios of Earnings to Fixed Charges

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

- ----------

                                       62

================================================================================

                    FIRST OMNIBUS AMENDMENT TO LOAN DOCUMENTS

                            Dated as of March 5, 2003

                                    Between

                   731 COMMERCIAL LLC and 731 RESIDENTIAL LLC,
                           collectively, as Borrower,

                                       and

                      BAYERISCHE HYPO- UND VEREINSBANK AG,
                                NEW YORK BRANCH,
                                    as Agent,

                                       and

                            THE LENDERS NAMED HEREIN,
                                   as Lenders

                                 ---------------

                         Location:  731 Lexington Avenue
                                    New York, New York

                           County:  New York County

                         ------------------------------

================================================================================

                    FIRST OMNIBUS AMENDMENT TO LOAN DOCUMENTS

                  THIS FIRST OMNIBUS AMENDMENT TO LOAN DOCUMENTS, dated as of
March 5, 2003 (this "AMENDMENT"), between 731 COMMERCIAL LLC ("COMMERCIAL
OWNER") and 731 RESIDENTIAL LLC ("RESIDENTIAL OWNER"), each a Delaware limited
liability company, having its principal place of business at 888 Seventh Avenue,
New York, New York 10019, collectively as Borrower ("BORROWER"), and BAYERISCHE
HYPO- UND VEREINSBANK AG, NEW YORK BRANCH, a German banking corporation
organized under the laws of the Federal Republic of Germany, having an address
at 622 Third Avenue, New York, New York 10017, as administrative agent
(including any of its successors and assigns, "AGENT") for itself and the other
Lenders signatory hereto (collectively, together with such other co-lenders as
may exist from time to time, "LENDERS").

                              W I T N E S S E T H :

                  WHEREAS, pursuant to the terms and provisions and subject to
the conditions set forth in (i) that certain Building Loan Agreement dated as of
July 3, 2002 between Borrower, Agent and Lenders signatory thereto filed on July
9, 2002 as Index No. 150 in the County Clerk's Office of New York County (the
"EXISTING BUILDING LOAN AGREEMENT"), (ii) that certain Supplemental Loan
Agreement dated as of July 3, 2002 between Borrower, Agent and Lenders signatory
thereto (the "EXISTING SUPPLEMENTAL LOAN AGREEMENT"), and (iii) that certain
Project Loan Agreement dated as of July 3, 2002 between Borrower, Agent and
Lenders signatory thereto (the "EXISTING PROJECT LOAN AGREEMENT" and together
with the Existing Building Loan Agreement and the Existing Supplemental Loan
Agreement, collectively, the "EXISTING LOAN AGREEMENT"), Agent has agreed to
administer and Lenders have agreed to make loans (collectively, the "LOAN") to
Borrower in the aggregate principal amount of FOUR HUNDRED NINETY MILLION and
NO/100 DOLLARS ($490,000,000.00) related to the construction of the Improvements
(as hereinafter defined) on the property described on Exhibit A hereto;

                  WHEREAS, Borrower has requested that Agent and Lenders reduce
the amount of the Supplemental Loan and to the extent of such reduction,
increase in the aggregate the amount of the Building Loan (pursuant to the
hereinafter referred to BLA Amendment) and the amount to the Project Loan;

                  WHEREAS, Borrower has also requested that Borrower have the
right to use a portion of the proceeds of the Project Loan in a principal amount
of up to TEN MILLION and NO/100 DOLLARS ($10,000,000.00) to fund direct Advances
to the Borrower secured by direct mortgages to be made by Borrower to Agent
encumbering the Property in the same manner as Building Loan proceeds are
disbursed to Borrower pursuant to the Building Loan Agreement, rather than for
the purpose of acquiring Spread Mortgages and Spread Notes as now provided for
in the Existing Project Loan Agreement;

                  WHEREAS, the increase of the amount of the Building Loan and
other amendments to the Existing Building Loan Agreement are being accomplished
pursuant to that

certain First Amendment to Building Loan Agreement dated as of the date hereof
and intended to be filed in the County Clerk's Office of New York County (the
"BLA AMENDMENT"; the Existing Building Loan Agreement as amended by the BLA
Amendment, and as the same may hereafter be amended, modified or supplemented,
the "BUILDING LOAN AGREEMENT"); and

                  WHEREAS, Borrower, Agent and Lenders wish to amend the
Existing Supplemental Loan Agreement, the Existing Project Loan Agreement and
other Loan Documents (excluding the Building Loan Agreement) to accomplish the
foregoing, all upon the terms and provisions and subject to the conditions
hereinafter set forth.

                  NOW, THEREFORE, in consideration of the agreements set forth
in this Amendment and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

                               A G R E E M E N T:

         Section 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Building Loan
Agreement.

         Section 2. Changed Loan Amounts. The principal amount of the
Supplemental Loan is hereby reduced to be a principal amount of up to ONE
HUNDRED EIGHTY TWO MILLION TWO HUNDRED FIFTY-FOUR THOUSAND NINE HUNDRED NINETEEN
and NO/100 DOLLARS ($182,254,919.00) or so much thereof as may be advanced
pursuant to the Existing Supplemental Loan Agreement as modified by this
Amendment; the principal amount of the Project Loan is hereby increased to be a
principal amount of up to NINETY TWO MILLION SEVEN HUNDRED FORTY-FIVE THOUSAND
EIGHTY-ONE and NO/100 DOLLARS ($92,745,081) or so much thereof as may be
advanced pursuant to the Existing Project Loan Agreement as modified by this
Amendment; and the principal amount of the Building Loan is increased pursuant
to the BLA Amendment to be a principal amount of up to TWO HUNDRED FIFTEEN
MILLION and NO/100 DOLLARS ($215,000,000.00) or so much thereof as may be
advanced pursuant to the Building Loan Agreement. Wherever references are made
in any of the Loan Documents to the principal amounts of the Building Loan,
Supplemental Loan and/or Project Loan as being $200,000,000, $215,316,818 and
$74,683,182, respectively, such references shall be deemed to be the relevant
respective amounts set forth in this Section 2 of this Amendment and are hereby
so amended.

         Section 3. Specific Amendments to the Existing Supplemental Loan
Agreement.

                  (a) In Section 1.1 of the Existing Supplemental Loan
Agreement, the definitions of "Building Loan Amount", and "Supplemental Loan
Costs" are hereby amended as follows:

                  (i) "Building Loan Amount" shall mean TWO HUNDRED FIFTEEN
         MILLION and NO/100 DOLLARS ($215,000,000.00).

                  (ii) In the definition of "Supplemental Loan Costs", delete
         the reference to "$55,000,000" and insert "$70,000,000" in its place.

                                       2

                  (b) All references in Sections 2.1.1(a) and 2.1.3 of the
Existing Supplemental Loan Agreement to "TWO HUNDRED FIFTEEN MILLION THREE
HUNDRED SIXTEEN THOUSAND EIGHT HUNDRED EIGHTEEN AND NO/100 DOLLARS
($215,316,818)" are hereby deleted and replaced with ONE HUNDRED EIGHTY TWO
MILLION TWO HUNDRED FIFTY-FOUR THOUSAND NINE HUNDRED NINETEEN and NO/100 DOLLARS
($182,254,919.00).

                  (c) In Section 2.1.13(b) of the Existing Supplemental Loan
Agreement, the reference to "$290,000,000" is hereby deleted and "$275,000,000"
is inserted in its place.

         Section 4. Specific Amendments to the Existing Project Loan Agreement.

                  (a) In Section 1.1 of the Existing Project Loan Agreement, the
definitions of "Building Loan Amount", "Project Loan Mortgage" and "Supplemental
Loan Costs" are hereby amended as follows:

                  (i)      "Building Loan Amount" shall mean TWO HUNDRED FIFTEEN
         MILLION and NO/100 DOLLARS ($215,000,000.00).

                  (ii)     At the end of the definition of "Project Loan
         Mortgage" add the following:

                           "and any new mortgage(s) on the Property given by
                           Borrower to Agent directly secure the Project Loan".

                  (iii)    In the definition of "Supplemental Loan Costs",
         delete the reference to "$55,000,000" and insert "$70,00,000" in its
         place.

                  (b) All references in Sections 2.1.1(a) and 2.1.3 of the
Existing Project Loan Agreement to "SEVENTY FOUR MILLION SIX HUNDRED EIGHTY
THREE THOUSAND ONE HUNDRED EIGHTY TWO AND NO/100 DOLLARS ($74,683,182)" are
hereby deleted and replaced with NINETY TWO MILLION SEVEN HUNDRED FORTY-FIVE
THOUSAND EIGHTY-ONE and NO/100 DOLLARS ($92,745,081).

                  (c) Section 2.1.4 of the Existing Project Loan Agreement is
hereby amended to provide for the funding of up to the first $10,000,000 of the
proceeds of the Project Loan directly to Borrower in the same manner in which
Advances are made to Borrower pursuant to the Building Loan Agreement provided
that Borrower execute and deliver to Agent a Project Loan Note and Project Loan
Mortgage for that amount in addition to satisfying the other conditions to
Advances set forth in the Existing Project Loan Agreement (except to the extent
that any of those conditions are only applicable where a Spread Mortgage would
be acquired rather than for a direct Project Loan Mortgage), as well as
satisfying all of the Collateral Disbursement Conditions (as defined in the Cash
Collateral Agreement) under the Cash Collateral Agreement as though the
disbursement of such proceeds were a disbursement of Project Cash Collateral,
and, in addition, the following conditions shall be satisfied:

                  (i)      The Project Loan Mortgage shall constitute a valid
         second lien (until such time as a Supplemental Loan Mortgage is made
         and, thereafter, a valid third lien) on the Property for the full
         amount of the Project Loan advanced to and including the date of the

                                       3

         Advance, free and clear of all liens except for Permitted Encumbrances.
         In connection with each subsequent Advance of the Project Loan (after
         the initial Advance thereof) that is secured by a direct Project
         Mortgage, Agent shall have been furnished with a title continuation or
         an endorsement to Title Insurance Policy issued to Agent and Lenders in
         connection with the initial Advance of the Project Loan which
         continuation or endorsement shall state that since the last
         disbursement of the Loan there have been no changes in the state of
         title to the Project (other than Permitted Encumbrances) and that there
         are no additional survey exceptions not previously approved by Agent;
         and

                  (ii)     Borrower shall pay any and all mortgage recording
         taxes in connection with the recording of the Project Loan Mortgage.

                  (d) In Section 2.1.13(b) of the Existing Project Loan
Agreement, the reference to "$290,000,000" is hereby deleted and "$275,000,000"
is inserted in its place.

         Section 5. Lien Priority of Project Loan Mortgage. Notwithstanding
anything to the contrary contained in any Loan Documents, until such time as a
Supplemental Mortgage shall exist, the Project Loan Mortgage shall constitute
and grant to Agent a second priority lien on the Property. As a condition to the
initial Advance of the Supplemental Loan, Borrower and Agent shall enter into a
subordination agreement or an amended and restated Project Loan Mortgage
containing a provision whereby the then existing Project Loan Mortgage shall be
subordinated to the lien of the Supplemental Mortgage.

         Section 6. Borrower's Representations and Warranties. Borrower
represents, warrants and certifies to Lender, that as of the date hereof:

                  (i)      The Obligations of the Borrower to repay the Loan
         (with interest as set forth in the Loan Documents) to the Lender and to
         perform or otherwise satisfy Borrower's other Obligations under the
         Loan Documents, as well as the security interest in the Property
         granted by the Borrower to the Lender under the Loan Agreement, the
         Mortgage and the other Loan Documents (A) each remain and shall
         continue in full force and effect, both before and after giving effect
         to this Amendment and/or to the BLA Amendment, (B) are not subject as
         of the date of this Amendment to any defense, counterclaim, setoff,
         right or recoupment, abatement, reduction or other claim or
         determination, and (C) are and shall continue to be governed by the
         terms and provisions of the Loan Agreement and the other Loan Documents
         as supplemented, modified and amended by this Amendment and the BLA
         Amendment.

                  (ii)     All representations and warranties contained in the
         Existing Supplemental Loan Agreement, the Existing Project Loan
         Agreement and the other Loan Documents are true and correct in all
         material respects as of the date of this Amendment.

                  (iii)    No material Default and no Event of Default has
         occurred and is continuing.

         Section 7. Authorization, Conflicts, Enforceability. The execution,
delivery, and performance of this Amendment and the other documents which are
being executed and delivered in connection herewith by the Borrower have been
duly authorized, executed and

                                       4

delivered by Borrower and will not conflict with, result in a breach of, or
constitute a default under, any of the terms, conditions or provisions of any of
Borrower's organizational documents or any agreement or instrument to which
Borrower is a party or by which it is bound, or any order or decree applicable
to Borrower, or result in the creation or imposition of any lien on any of
Borrower's assets or property (other than pursuant to the Loan Documents).

         Section 8. Successors and Assigns. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, subject to Article VIII of the Existing Building Loan Agreement
(and no other Person shall be deemed a benefited party hereunder under any
circumstances).

         Section 9. No Further Modification. Except as modified and amended by
this Amendment and the BLA Amendment, the Loan, the Loan Agreement, the Note and
the other Loan Documents and the obligations of Lender, Borrower and Guarantor
thereunder shall remain unmodified and in full force and effect. Wherever
reference is made in any Loan Document to the Building Loan Agreement, it shall
be deemed to mean the Existing Building Loan Agreement as amended by the BLA
Amendment, and as the same may be amended from time to time in accordance with
its terms and wherever reference is made any Loan Document to any of the other
Loan Documents, it shall be deemed to mean such other Loan Document as the same
may be amended by this Amendment, and as the same may be amended from time to
time in accordance with its terms.

         Section 10. Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall be an original and all of which shall
constitute together but one and the same agreement.

         Section 11. Section Headings. The Section headings in this Amendment
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

         Section 12. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

         Section 13. Consent, Ratification and Agreement by Guarantors. By their
signatures below, each of the Guarantors hereby agrees as follows:

                  (a) Each of the Guarantors consents to the foregoing Amendment
as well as the BLA Amendment (a true copy of which each Guarantor hereby
confirms having received and reviewed), ratifies and confirms all of the terms
and provisions set forth in their respective Guaranties and that their
respective liability under said Guaranties continues without impairment or
limitation by reason of this Amendment or the BLA Amendment.

                  (b) Each of the Guarantors agrees that wherever references are
made in any of the Guaranties to the principal amounts of the Building Loan,
Supplemental Loan and/or Project Loan as being $200,000,000, $215,316,818 and
$74,683,182, respectively, such references shall

                                       5

be deemed to be the relevant respective amounts set forth in Section 2 of this
Amendment. In addition, wherever reference is made in any Guaranty to the
Building Loan Agreement, it shall be deemed to mean the Existing Building Loan
Agreement as amended by the BLA Amendment, and as the same may be amended from
time to time in accordance with its terms and wherever reference is made in the
Guaranty to any of the other Loan Documents, it shall be deemed to mean such
Loan Document as the same may be amended by this Amendment, and as the same may
be amended from time to time in accordance with its terms.

                  (c) Vornado, as Guarantor under the Guaranty of Completion, by
its signature below confirms and agrees that the language "and the Collateral
Disbursement Conditions under the Cash Collateral Agreement with respect to any
disbursements of Cash Collateral" which appears twice at the end of subparagraph
(f) under the definition of "Guarantor Draw Conditions" should only appear in
said subparagraph (f) once and should be repeated at the end of subparagraph (g)
[where it does not currently appear] as well.

         Section 14. Governing Law. The governing law provisions of Section
10.3(A) of the Existing Loan Agreements are incorporated herein by reference as
though fully set forth.

         Section 15. Mutatis Mutandis. To the extent necessary to effectuate
that amendments intended by the foregoing provisions of this Amendment and the
BLA Amendment, each of the Loan Documents (other than the Existing Building Loan
Agreement as amended by the BLA Amendment) is hereby deemed modified and
amended, mutatis mutandis, and the parties hereto agree to enter into such
amendments to such Existing Loan Documents as may be reasonably required in
order to confirm the foregoing.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       6

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their duly authorized representatives, all as
of the day and year first above written.

                                  BORROWER:

                                  731 COMMERCIAL LLC, a Delaware limited
                                  liability company

                                  By: 731 Commercial Holding LLC,
                                      a Delaware limited liability company,
                                      as member

                                      By: Alexander's, Inc., a Delaware
                                          corporation, member

                                          By: /s/ Joseph Macnow
                                              __________________________________
                                              Name:  Joseph Macnow
                                              Title: Executive Vice President-
                                                     Finance and Administration

                                  731 RESIDENTIAL LLC, a Delaware limited
                                  liability company

                                  By: 731 Residential Holding LLC,
                                      a Delaware limited liability company,
                                      as member

                                      By: Alexander's, Inc., a Delaware
                                          corporation, member

                                          By: /s/ Joseph Macnow
                                              __________________________________
                                              Name:  Joseph Macnow
                                              Title: Executive Vice President-
                                                     Finance and Administration

                                       AGENT:

                                       BAYERISCHE HYPO- UND
                                       VEREINSBANK AG, NEW YORK
                                       BRANCH

                                       By: /s/ Robert Dowling
                                           _______________________________
                                           Name:  Robert Dowling
                                           Title: Managing Director

                                       By: /s/ Anthony Mugno
                                           _______________________________
                                           Name:  Anthony Mugno
                                           Title: Director

                                       LENDER[S]:

                                       BAYERISCHE HYPO- UND
                                       VEREINSBANK AG, NEW YORK
                                       BRANCH

                                       By: /s/ Robert Dowling
                                           _______________________________
                                           Name:  Robert Dowling
                                           Title: Managing Director

                                       By: /s/ Anthony Mugno
                                           _______________________________
                                           Name:  Anthony Mugno
                                           Title: Director

                                       Lending Office:

                                       622 Third Avenue
                                       29th Floor
                                       New York, New York 10017
                                       Attention: Real Estate Lending

CONSENTED AND AGREED TO:

VORNADO REALTY L.P.,
a Delaware limited partnership

By: Vornado Realty Trust,
    a Maryland business trust

    By: /s/ Joseph Macnow
       ____________________________
       Name: Joseph Macnow
       Title: Executive Vice President-
          Finance and Administration

ALEXANDER'S, INC.,
a Delaware corporation

By:  /s/ Joseph Macnow
    ____________________________________
    Name:  Joseph Macnow
    Title: Executive Vice President-
           Finance and Administration

                                 ACKNOWLEDGMENT

STATE OF NEW YORK)
                                     SS.:
COUNTY OF NEW YORK)

On the 5 day of March 2003, before me, the undersigned, personally appeared
Joseph Macnow, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person on behalf of which the individual acted, executed the instrument.

                                                /s/ Joseph Macnow
                                    --------------------------------------------
                                          Signature & office of individual
                                             taking the acknowledgement

STATE OF NEW YORK)
                                     SS.:
COUNTY OF NEW YORK)

On the 5 day of March 2003, before me, the undersigned, personally appeared
Joseph Macnow, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person on behalf of which the individual acted, executed the instrument.

                                                /s/ Joseph Macnow
                                    --------------------------------------------
                                          Signature & office of individual
                                             taking the acknowledgement

STATE OF NEW YORK)
                                     SS.:
COUNTY OF NEW YORK)

On the 5 day of March 2003, before me, the undersigned, personally appeared
Robert Dowling, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person on behalf of which the individual acted, executed the instrument.

                                     /s/ Robert Dowling
                                    --------------------------------------------
                                          Signature & office of individual
                                             taking the acknowledgement

STATE OF NEW YORK)
                                     SS.:
COUNTY OF NEW YORK)

On the 5 day of March 2003, before me, the undersigned, personally appeared
Anthony Mugno, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person on behalf of which the individual acted, executed the instrument.

                                     /s/ Anthony Mugno
                                    --------------------------------------------
                                          Signature & office of individual
                                             taking the acknowledgement

                                    EXHIBIT A

                          LEGAL DESCRIPTION OF PROPERTY

                               RESIDENTIAL PARCEL

ALL THAT CERTAIN volume of space, situate, lying and being in the Borough of
Manhattan, County, City and State of New York, bounded and described as follows:

All that portion of the below described parcel lying between a lower horizontal
plane drawn at elevation 512 feet 2 inches above the datum level used by the
Topographical Bureau, Borough of Manhattan, which is 2 feet 9 inches above
National Geodetic Survey Vertical Datum of 1929, mean sea level Sandy Hook, New
Jersey and an upper horizontal plane drawn at 809 feet 2 inches above such datum
level bounded and described as follows:

BEGINNING at a point distant 48 feet 8 inches north of the northerly line of
East 58th Street and 30 feet 9 inches east of easterly line of Lexington Avenue;

RUNNING THENCE northerly, parallel with the easterly line of Lexington Avenue,
12 feet 6 inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 78 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 12 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 103 feet
6 inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 35 feet 0
inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 88 feet 6
inches;

THENCE, westerly, parallel with the northerly line of East 58th Street, 35 feet
0 inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 103 feet
6 inches to the point or place of BEGINNING.

                                COMMERCIAL PARCEL

ALL that certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, County of New York, City and State of New York, being more
particularly bounded and described as follows:

BEGINNING at the corner formed by the intersection of the northerly line of East
58th Street with the easterly side of Lexington Avenue;

RUNNING THENCE northerly, along the easterly line of Lexington Avenue 200 feet
10 inches to the corner formed by the intersection of the southerly line of East
59th Street with the easterly line of Lexington Avenue;

THENCE easterly, along the southerly line of East 59th Street, 420 feet 0 inches
to the corner formed by the intersection of the southerly line of East 59th
Street with the westerly line of Third Avenue;

THENCE southerly, along the westerly line of Third Avenue, 200 feet 10 inches to
the corner formed by the intersection of the northerly line of East 58th Street
with the westerly line of Third Avenue;

THENCE westerly, along the northerly line of East 58th Street, 420 feet to the
point or place of BEGINNING.

LESS AND EXCEPT:

All that portion of the below described parcel lying between a lower horizontal
plane drawn at elevation 512 feet 2 inches above the datum level used by the
Topographical Bureau, Borough of Manhattan, which is 2 feet 9 inches above
National Geodetic Survey Vertical Datum of 1929, mean sea level Sandy Hook, New
Jersey and an upper horizontal plane drawn at 809 feet 2 inches above such datum
level bounded and described as follows:

BEGINNING at a point distant 48 feet 8 inches north of the northerly line of
East 58th Street and 30 feet 9 inches east of easterly line of Lexington Avenue;

RUNNING THENCE northerly, parallel with the easterly line of Lexington Avenue,
12 feet 6 inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 78 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 12 feet 6
inches

THENCE easterly, parallel with the northerly line of East 58th Street, 103 feet
6 inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 35 feet 0
inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 88 feet 6
inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 35 feet 0
inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 103 feet
6 inches to the point or place of BEGINNING.

================================================================================

                   SECOND OMNIBUS AMENDMENT TO LOAN DOCUMENTS

                         Dated as of February 13, 2004

                                     Between

                   731 COMMERCIAL LLC AND 731 RESIDENTIAL LLC,
                           collectively, as Borrower,

                                       and

                      HYPO REAL ESTATE CAPITAL CORPORATION,
                                    as Agent,

                                       and

                            THE LENDERS NAMED HEREIN,
                                   as Lenders

                                 ---------------

                         Location: 731 Lexington Avenue
                                   New York, New York

                             County: New York County

                                 ---------------

================================================================================

                   SECOND OMNIBUS AMENDMENT TO LOAN DOCUMENTS

                  THIS SECOND OMNIBUS AMENDMENT TO LOAN DOCUMENTS, dated as of
February 13, 2004 (this "Amendment"), between 731 COMMERCIAL LLC ("COMMERCIAL
OWNER") and 731 RESIDENTIAL LLC ("RESIDENTIAL OWNER"), each a Delaware limited
liability company, having its principal place of business at 888 Seventh Avenue,
New York, New York 10019, collectively as Borrower ("BORROWER"), and HYPO REAL
ESTATE CAPITAL CORPORATION ("HYPO") , a Delaware corporation, having an address
at 622 Third Avenue, New York, New York 10017, as administrative agent
(including any of its successors and assigns, "AGENT") for itself and the other
Lenders signatory hereto (collectively, together with such other co-lenders as
may exist from time to time, "LENDERS").

                              W I T N E S S E T H :

                  WHEREAS, pursuant to the terms and provisions and subject to
the conditions set forth in (i) that certain Building Loan Agreement dated as of
July 3, 2002 between Borrower, Bayerische Hypo- und Vereinsbank AG, New York
Branch ("HVB"), as agent thereunder and the lenders signatory thereto filed on
July 9, 2002 as Index No. 150 in the County Clerk's Office of New York County,
as amended by that certain First Amendment to Building Loan Agreement dated as
of March 5, 2003 between Borrower, HVB, as agent thereunder and the lenders
signatory thereto, which was filed on March 11, 2003 as Index No. 39 in said
County Clerk's Office (as so amended, the "EXISTING BUILDING LOAN AGREEMENT"),
(ii) that certain Supplemental Loan Agreement dated as of July 3, 2002 between
Borrower, HVB, as agent thereunder and the lenders signatory thereto, as amended
by that certain First Omnibus Amendment to Loan Documents dated as of March 5,
2003 between Borrower, HVB, as agent thereunder and the lenders signatory
thereto ("FIRST OMNIBUS AMENDMENT") (as so amended, the "EXISTING SUPPLEMENTAL
LOAN AGREEMENT"), and (iii) that certain Project Loan Agreement dated as of July
3, 2002 between Borrower, Agent and Lenders signatory thereto, as amended by the
First Omnibus Amendment (as so amended, the "EXISTING PROJECT LOAN AGREEMENT"
and together with the Existing Building Loan Agreement and the Existing
Supplemental Loan Agreement, collectively, the "EXISTING LOAN AGREEMENT"), Agent
as successor administrative agent to HVB under the Existing Loan Agreement, has
agreed to administer and Lenders have agreed to make loans (respectively, the
"BUILDING LOAN", the "SUPPLEMENTAL LOAN" and the "PROJECT LOAN, and
collectively, the "LOAN") to Borrower in the aggregate principal amount of FOUR
HUNDRED NINETY MILLION and NO/100 DOLLARS ($490,000,000.00) related to the
construction of the Improvements (as hereinafter defined) on the property
described on Exhibit A hereto (the "ORIGINAL MORTGAGED PREMISES");

                  WHEREAS, the Building Loan is (i) evidenced by that certain
Consolidated, Amended and Restated Building Loan Note dated March 5, 2003 made
by 731 Residential LLC and 731 Commercial LLC in favor of HVB, in the principal
amount of $215,000,000.00, which was endorsed and assigned by HVB to Hypo on
December 4, 2003 (the "EXISTING BUILDING LOAN NOTE") and (ii) secured by, inter
alia, that certain Consolidated, Amended and Restated Building Loan Mortgage,
Assignment of Leases and Rents and Security Agreement (Series No. 1), dated as
of July 3, 2002, made by Borrower in favor of HVB, as agent ("Original
Mortgagee") and recorded on September 25, 2002 in the Office of the Register of
the City of New York, County of New York ("REGISTER'S OFFICE") in Reel 3617 Page
2024, and that certain

Gap Mortgage, dated as of March 5, 2003, in the principal amount of $159,500,000
made by Borrower to Original Mortgagee and recorded on May 1, 2003 in CRFN
#2003000112521 in the Register's Office, as consolidated, amended and restated
by that certain Consolidated, Amended and Restated Building Loan Mortgage,
Assignment of Rents and Leases and Security Agreement, dated as of March 5,
2003, to form a single consolidated lien in the principal amount of $215,000,000
made by Borrower to Original Mortgagee and recorded on May 1, 2003 in
CRFN#2003000112522 in the Register's Office, which consolidated, amended and
restated mortgage in the consolidated principal amount of $215,000,000.00 was
assigned by Original Mortgagee to Agent pursuant to that certain Assignment of
Consolidated, Amended and Restated Building Loan Mortgage, Assignment of Rents
and Leases and Security Agreement dated as of December 4, 2003 and intended to
be recorded in the Register's Office (said consolidated, amended and restated
mortgage as so assigned, the "EXISTING BUILDING LOAN MORTGAGE").

                  WHEREAS, the total principal amount of the Building Loan has
been fully funded and the outstanding principal amount of the Existing Building
Loan Note which is secured by the Existing Building Loan Mortgage is
$215,000,000.00.

                  WHEREAS, the Supplemental Loan or so much thereof advanced and
outstanding as of the date of this Amendment, which is $22,940,962.00 (the
"ADVANCED SUPPLEMENTAL LOAN AMOUNT"), is (i) evidenced by that certain
Consolidated, Amended and Restated Supplemental Loan Note (No. 3), dated January
28, 2004, made by Borrower in favor of Hypo in the principal amount of
$22,940,962.00 (the "EXISTING SUPPLEMENTAL LOAN NOTE") and (ii) secured by that
certain Consolidated, Amended and Restated Supplemental Loan Mortgage,
Assignment of Leases and Rents and Security Agreement (No. 3), dated as of
January 28, 2004, made by Borrower in favor of Agent and intended to be recorded
in the Register's Office (the "EXISTING SUPPLEMENTAL LOAN MORTGAGE").

                  WHEREAS, the Project Loan or so much thereof advanced and
outstanding as of the date of this Amendment, which is $15,587,546.00 (the
"ADVANCED PROJECT LOAN AMOUNT"), is (i) evidenced by that certain Consolidated,
Amended and Restated Supplemental Loan Note (No. 3), dated January 28, 2004,
made by Borrower in favor of Hypo in the principal amount of $15,587,546.00 (the
"EXISTING PROJECT LOAN NOTE") and (ii) secured by that certain Consolidated,
Amended and Restated Project Loan Mortgage, Assignment of Leases and Rents and
Security Agreement (No. 3), dated as of January 28, 2004, made by Borrower in
favor of Agent and intended to be recorded in the Register's Office (the
"EXISTING PROJECT LOAN MORTGAGE").

                  WHEREAS, concurrently herewith, the parties hereto are
entering into a Note and Mortgage Modification and Severance Agreement (the
"SEVERANCE AGREEMENT") pursuant to which (i) the indebtedness evidenced by the
Existing Building Loan Note is being split and modified into two separate
indebtednesses of $90,000,000.00 and $125,000,000.00, respectively, and the
Existing Building Loan Note is being replaced and restated in its entirety by
two substitute building loan mortgage notes, one in the principal amount of
$90,000,000.00 ("SUBSTITUTE BUILDING LOAN NOTE A") and the other in the
principal amount of $125,000,000.00 ("SUBSTITUTE BUILDING LOAN NOTE B") and (ii)
the consolidated lien of the Existing Building Loan Mortgage is being split and
modified into two separate liens securing such separate indebtednesses of
$90,000,000.00 and $125,000,000.00, respectively, and the Existing Building

                                      -2-

Loan Mortgage is being replaced in its entirety by two substitute building loan
mortgages, assignments of leases and rents and security agreements, one in the
principal amount of $90,000,000.00 ("SUBSTITUTE BUILDING LOAN MORTGAGE A")
securing Substitute Building Loan Note A, and the other in the principal amount
of $125,000,000.00 ("SUBSTITUTE BUILDING LOAN MORTGAGE B") securing Substitute
Building Loan Note B.

                  WHEREAS, pursuant to Section 4.1.37 of the Existing Building
Loan Agreement, the Original Mortgaged Premises were subjected to a declaration
(the "DECLARATION") establishing a plan for condominium ownership of the
Original Mortgaged Premises under the Condominium Act, dated December 4, 2003,
which was recorded on February 3, 2004 in the City Register's Office, New York
County as CRFN#2004000064392, and the Existing Building Loan Mortgage was or
concurrently herewith will be subordinated to the Declaration so that the
description of the property now encumbered by the lien of the Existing Building
Loan Mortgage is as set forth on Part II of Exhibit A hereto.

                  WHEREAS, concurrently herewith, Agent and Lender are entering
into (i) a Partial Release of Lien of Mortgaged Premises No. 1 pursuant to which
the condominium units created pursuant to the Declaration and more particularly
described as "Office Unit 1" and "Office Unit 2" on Part II of Exhibit A hereto
(hereinafter referred to, respectively, as the "BLP UNIT" and the "OFFICE SPEC
UNIT") are being released from the lien of Substitute Building Loan Note
Mortgage A, (ii) a Partial Release of Lien of Mortgaged Premises No. 2 pursuant
to which the condominium units created pursuant to the Declaration and more
particularly described as "Retail Unit" and "Residential Unit" on Part II of
Exhibit A hereto (said Units being hereinafter referred to, respectively, as the
"RETAIL UNIT" and the "MASTER RESIDENTIAL UNIT", and collectively as the
"REMAINING PREMISES") are being released from the lien of Substitute Building
Loan Note Mortgage B and Residential Owner is being released from its
obligations and liabilities under Substitute Building Loan Note B and Substitute
Building Loan Mortgage B, (iii) a Partial Release of Lien of Mortgaged Premises
No. 3 pursuant to which the Remaining Premises are being released from the lien
of Existing Supplemental Loan Mortgage and Residential Owner is being released
from its obligations and liabilities under the Existing Supplemental Loan Note
and Existing Supplemental Loan Mortgage and (iv) a Partial Release of Lien of
Mortgaged Premises No. 4 pursuant to which the Remaining Premises are being
released from the lien of Existing Project Loan Mortgage and Residential Owner
is being released from its obligations and liabilities under the Existing
Project Loan Note and Existing Project Loan Mortgage.

                  WHEREAS, concurrently herewith Borrower, Agent and Lender are
entering into a certain Second Amendment to Building Loan Agreement dated as of
the date (the "SECOND BLA AMENDMENT" and the Existing Building Loan Agreement,
as amended by the Second BLA Amendment, being hereinafter referred to as the
"BUILDING LOAN AGREEMENT").

                  WHEREAS, concurrently herewith, after giving effect to the
aforesaid Partial Releases, Agent is assigning (the "ASSIGNMENT TRANSACTION") to
German American Capital Corporation (the "BLP UNIT LENDER") (i) the Substitute
Building Loan Note B and Substitute Building Loan Mortgage B, (ii) the Existing
Supplemental Loan Note and the Existing Supplemental Loan Mortgage and (iii) the
Existing Project Loan Note and the Existing Project

                                      -3-

Loan Mortgage, and BLP Unit Lender is modifying the same which will no longer be
governed by the terms of the Existing Loan Agreement.

                  WHEREAS, Borrower has requested that Agent and Lenders reduce
the undisbursed amount of the Supplemental Loan and the amount to the Project
Loan by an aggregate amount roughly corresponding to the Additional Cash
Collateral (as defined in the Second BLA Amendment).

                  WHEREAS, Borrower has also requested that Borrower have the
right, at its option, to use a portion of the proceeds of the Supplemental Loan
and/or the Project Loan to fund direct Advances to the Borrower secured by
direct mortgages to be made by Borrower to Agent encumbering the Property (as
hereinafter defined) in the same manner as Building Loan proceeds were disbursed
to Borrower pursuant to the Existing Building Loan Agreement, rather than for
the purpose of acquiring Spread Mortgages and Spread Notes as now provided for
in the Existing Project Loan Agreement; and

                  WHEREAS, Borrower, Agent and Lenders wish to amend the
Existing Supplemental Loan Agreement, the Existing Project Loan Agreement and
other Loan Documents (excluding the Building Loan Agreement) to accomplish the
foregoing, all upon the terms and provisions and subject to the conditions
hereinafter set forth.

                  NOW, THEREFORE, in consideration of the agreements set forth
in this Amendment and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

                               A G R E E M E N T:

                  Section 1.         Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings set forth in the
Building Loan Agreement.

                  Section 2.         Changed Loan Amounts. The principal amount
of the Supplemental Loan is hereby reduced to be a principal amount of up to
EIGHTY-TWO MILLION FOUR HUNDRED THOUSAND and NO/100 DOLLARS ($82,400,000.00) or
so much thereof as may be advanced pursuant to the Existing Supplemental Loan
Agreement as modified by this Amendment; the principal amount of the Project
Loan is hereby reduced to be a principal amount of up to SIXTY-FOUR MILLION SIX
HUNDRED THOUSAND and NO/100 DOLLARS ($64,600,000.00) or so much thereof as may
be advanced pursuant to the Existing Project Loan Agreement as modified by this
Amendment; and the principal amount of the Building Loan that remains
outstanding after giving effect to the Assignment Transactions is NINETY MILLION
and NO/100 DOLLARS ($90,000,000.00). Wherever references are made in any of the
Loan Documents to the principal amounts of the Building Loan, Supplemental Loan
and/or Project Loan as being $215,000,000, $182,254,919.00 and $92,745,081,
respectively, such references shall be deemed to be the relevant respective
amounts set forth in this Section 2 of this Amendment and are hereby so amended.

                                      -4-

                  Section 3.         Specific Amendments to the Existing
Supplemental Loan Agreement.

                  (a)      In Section 1.1 of the Existing Supplemental Loan
Agreement, the definitions are hereby amended as follows:

                  (i)      "BUILDING LOAN" shall mean the loan made by Lenders
         to Borrower pursuant to the Existing Building Loan Agreement in the
         principal amount of $215,000,000.00, or so much thereof as remains
         outstanding under the Building Loan Note.

                  (ii)     "BUILDING LOAN AMOUNT" shall mean TWO HUNDRED FIFTEEN
         MILLION and NO/100 DOLLARS ($215,000,000.00), or so much thereof as
         remains outstanding under the Building Loan Note. It being acknowledged
         that after the assignment of Substitute Building Loan Note B and
         Substitute Building Loan Mortgage B to the BLP Unit Lender, the amount
         that will remain outstanding on the Building Loan will be NINETY
         MILLION and NO/100 DOLLARS ($90,000,000.00).

                  (iii)    "BUILDING LOAN MORTGAGE" shall mean the Existing
         Building Loan Mortgage prior to the date of the Second BLA Amendment
         and the assignment of Substitute Building Loan Mortgage B to BLP Unit
         Lender, and upon such assignment shall mean the Substitute Building
         Loan Mortgage A, encumbering the Remaining Premises.

                  (iv)     "GUARANTY" shall mean, collectively, the Guaranty of
         Completion, the Guaranty of Carrying Costs, each Guaranty of Limited
         Recourse Obligations and the Additional Alexander's Guaranty.

                  (v)      The definition of "PROPERTY" in Section 1.1 of the
         Existing Supplemental Loan Agreement is hereby amended to delete the
         word "Residential" where it appears in each case before the word "Unit"
         and to add the following sentence at the end of such definition:
         "Notwithstanding the foregoing, for the purposes of Article V of the
         Building Loan Agreement and of each of the Guaranties and the
         Environmental Indemnity, references therein to "Property" shall be
         deemed to continue to refer to the "Property" as defined in and
         encumbered by the Existing Building Loan Mortgage, prior to giving
         effect to any such release."

                  (vi)     At the end of the definition of "Supplemental Loan
         Mortgage" add the following: "and any new mortgage(s) on the Property
         given by Borrower to Agent directly secure the Supplemental Loan".

                  (b)      All references in Sections 2.1.1(a) and 2.1.3 of the
Existing Supplemental Loan Agreement to "ONE HUNDRED EIGHTY TWO MILLION TWO
HUNDRED FIFTY-FOUR THOUSAND NINE HUNDRED NINETEEN and NO/100 DOLLARS
($182,254,919.00)" are hereby deleted and replaced with EIGHTY-TWO MILLION FOUR
HUNDRED THOUSAND and NO/100 DOLLARS ($82,400,000.00).

                                      -5-

                  (c)      Section 2.1.4 of the Existing Supplemental Loan
Agreement is hereby amended to provide for, at Borrower's option, the funding of
the proceeds of the Supplemental Loan directly to Borrower in the same manner in
which Advances were made to Borrower pursuant to the Building Loan Agreement
provided that Borrower execute and deliver to Agent a Supplemental Loan Note and
Supplemental Loan Mortgage for the amount to be funded in addition to satisfying
the other conditions to Advances set forth in the Existing Supplemental Loan
Agreement (except to the extent that any of those conditions are only applicable
where a Spread Mortgage would be acquired rather than for a direct Supplemental
Loan Mortgage), as well as satisfying all of the Collateral Disbursement
Conditions (as defined in the Cash Collateral Agreement) under the Cash
Collateral Agreement as though the disbursement of such proceeds were a
disbursement of Supplemental Cash Collateral, and, in addition, the following
conditions shall be satisfied:

                  (i)      The Supplemental Loan Mortgage shall constitute a
         valid second lien on the Property for the full amount of the
         Supplemental Loan advanced to and including the date of the Advance,
         free and clear of all liens except for Permitted Encumbrances. In
         connection with each subsequent Advance of the Supplemental Loan (after
         the initial Advance thereof) that is secured by a direct Supplemental
         Mortgage, Agent shall have been furnished with a title endorsement to
         the Title Insurance Policy issued to Agent and Lenders in connection
         with the initial Advance of the Supplemental Loan which endorsement
         shall state that since the last disbursement of the Loan there have
         been no changes in the state of title to the Property (other than
         Permitted Encumbrances) and that there are no additional survey
         exceptions not previously approved by Agent; and

                  (ii)     Borrower shall pay any and all mortgage recording
         taxes payable in connection with the recording of the Supplemental Loan
         Mortgage.

                  (d)      Section 2.1.8 of the Existing Supplemental Loan
Agreement is hereby amended to delete the text in the first sentence thereof
beginning with the words "provided that such amount" to the end of that
sentence.

                  (e)      Section 2.1.9(d) of the Existing Supplemental Loan
Agreement is hereby amended and restated as follows:

                           "Borrower shall have submitted a Draw Request for
                           such Advance and for a disbursement of Supplemental
                           Cash Collateral under (and as defined in) the Cash
                           Collateral Agreement, and all conditions precedent to
                           Agent's making such disbursement under the Cash
                           Collateral Agreement shall have been satisfied
                           (assuming for such purposes only that the requested
                           Advance is being made).

                  (f)      Section 2.1.13 of the Existing Supplemental Loan
Agreement is hereby amended to eliminate the references to "through the date of
the Draw Request for such Advance plus $10,000,000" in each place where it
appears and to delete the last sentence of said Section, it being the intention
of the parties that subject to all other conditions to the disbursement of
proceeds of the Supplemental Loan to acquire Spread Mortgage(s) and Spread
Mortgage Note(s), the aggregate amount of all such Mortgages and Notes shall not
exceed the aggregate amount of

                                      -6-

undisbursed proceeds of the Supplemental Loan less the amount of any direct
mortgages given by Borrower pursuant to Section 2.1.4 of the Supplemental Loan
Agreement.

                  (g)      In Section 2.1.13(b) of the Existing Supplemental
Loan Agreement, the reference to "$275,000,000" wherever it appears is hereby
deleted and "237,000,000" is inserted in its place.

                  Section 4.         Specific Amendments to the Existing Project
Loan Agreement.

                  (a)      In Section 1.1 of the Existing Project Loan
Agreement, the definitions of "Building Loan Amount", "Project Loan Mortgage"
and "Supplemental Loan Costs" are hereby amended as follows:

                  (i)      "BUILDING LOAN" shall mean the loan made by Lenders
         to Borrower pursuant to the Existing Building Loan Agreement in the
         principal amount of $215,000,000.00, or so much thereof as remains
         outstanding under the Building Loan Note.

                  (ii)     "BUILDING LOAN AMOUNT" shall mean TWO HUNDRED FIFTEEN
         MILLION and NO/100 DOLLARS ($215,000,000.00), or so much thereof as
         remains outstanding under the Building Loan Note. It being acknowledged
         that after the assignment of Substitute Building Loan Note B and
         Substitute Building Loan Mortgage B to the BLP Unit Lender, the amount
         that will remain outstanding on the Building Loan will be NINETY
         MILLION and NO/100 DOLLARS ($90,000,000.00).

                  (iii)    "BUILDING LOAN MORTGAGE" shall mean the Existing
         Building Loan Mortgage prior to the date of the Second BLA Amendment
         and the assignment of Substitute Building Loan Mortgage B to BLP Unit
         Lender, and upon such assignment shall mean the Substitute Building
         Loan Mortgage A, encumbering the Remaining Premises.

                  (iv)     "GUARANTY" shall mean, collectively, the Guaranty of
         Completion, the Guaranty of Carrying Costs, each Guaranty of Limited
         Recourse Obligations and the Additional Alexander's Guaranty.

                  (v)      The definition of "PROPERTY" in Section 1.1 of the
         Existing Project Loan Agreement is hereby amended to delete the word
         "Residential" where it appears in each case before the word "Unit" and
         to add the following sentence at the end of such definition:
         "Notwithstanding the foregoing, for the purposes of Article V of the
         Building Loan Agreement and of each of the Guaranties and the
         Environmental Indemnity, references therein to "Property" shall be
         deemed to continue to refer to the "Property" as defined in and
         encumbered by the Existing Building Loan Mortgage, prior to giving
         effect to any such release.

                  (vi)     At the end of the definition of "Project Loan
         Mortgage" add the following:

                           "and any new mortgage(s) on the Property given by
                           Borrower to Agent directly secure the Project Loan".

                                      -7-

                  (vii)    The following defined term is added in proper
         alphabetical order: "SECOND OMNIBUS AMENDMENT" shall mean that certain
         Second Omnibus Amendment to Loan Documents dated as of February ___,
         2004 between Borrower, Agent and the Lenders signatory thereto.

                  (viii)   The defined terms set forth in the Recitals to this
         Amendment shall be added to the definitions set forth in Section 1.1 of
         the Existing Building Loan Agreement, as the same are amended pursuant
         to paragraph (a) above, as though each such defined term was set forth
         in proper alphabetical order with the other definitions in said Section
         1.1, and each provided that it "shall have the meaning as set forth in
         the Second Omnibus Amendment".

                  (ix)     The principles of construction set forth in Section
         1.2 of the Existing Supplemental Loan Agreement shall be applicable to
         this Amendment as if the terms and provisions of said Section 1.2 were
         set forth at length herein. References in the Existing Building Loan
         Agreement to "this Agreement" "herein," "hereof" or terms of similar
         import shall refer to the Existing Building Loan Agreement, as amended
         by this Amendment and as the same may, from time to time, hereafter be
         amended, modified, extended, supplemented or restated and shall include
         all Addendums, Schedules and Exhibits hereto and thereto. All
         references in the Original Loan Agreement to "this Agreement,"
         "herein," "hereof" or terms of similar import shall refer to the Loan
         Agreement.

                  (b)      All references in Sections 2.1.1(a) and 2.1.3 of the
Existing Project Loan Agreement to "NINETY TWO MILLION SEVEN HUNDRED FORTY-FIVE
THOUSAND EIGHTY-ONE and NO/100 DOLLARS ($92,745,081)" are hereby deleted and
replaced with SIXTY-FOUR MILLION SIX HUNDRED THOUSAND and NO/100 DOLLARS
($64,600,000.00).

                  (c)      Section 2.1.4 of the Existing Project Loan Agreement
is hereby amended to provide for, at Borrower's option, the funding of the
proceeds of the Project Loan directly to Borrower in the same manner in which
Advances were made to Borrower pursuant to the Building Loan Agreement provided
that Borrower execute and deliver to Agent a Project Loan Note and Project Loan
Mortgage for the amount to be funded in addition to satisfying the other
conditions to Advances set forth in the Existing Project Loan Agreement (except
to the extent that any of those conditions are only applicable where a Spread
Mortgage would be acquired rather than for a direct Project Loan Mortgage), as
well as satisfying all of the Collateral Disbursement Conditions (as defined in
the Cash Collateral Agreement) under the Cash Collateral Agreement as though the
disbursement of such proceeds were a disbursement of Project Cash Collateral,
and, in addition, the following conditions shall be satisfied:

                  (i)      The Project Loan Mortgage shall constitute a valid
         second lien (until such time as a Supplemental Loan Mortgage is made
         and, thereafter, a valid third lien) on the Property for the full
         amount of the Project Loan advanced to and including the date of the
         Advance, free and clear of all liens except for Permitted Encumbrances.
         In connection with each subsequent Advance of the Project Loan (after
         the initial Advance thereof) that is secured by a direct Project
         Mortgage, Agent shall have been furnished with a title

                                      -8-

         endorsement to the Title Insurance Policy issued to Agent and Lenders
         in connection with the initial Advance of the Project Loan which
         endorsement shall state that since the last disbursement of the Loan
         there have been no changes in the state of title to the Property (other
         than Permitted Encumbrances) and that there are no additional survey
         exceptions not previously approved by Agent; and

                  (ii)     Borrower shall pay any and all mortgage recording
         taxes in connection with the recording of the Project Loan Mortgage.

                  (d)      Section 2.1.8 of the Existing Project Loan Agreement
is hereby amended to delete the text in the first sentence thereof beginning
with the words "provided that such amount" to the end of that sentence.

                  (e)      In Section 2.1.13(b) of the Existing Project Loan
Agreement, the reference to "$275,000,000" is hereby deleted and "$237,000,000"
is inserted in its place.

                  Section 5.         Approved Budget. The parties hereto
acknowledge and confirm that Borrower has submitted to Agent a revised Project
Budget showing the direct and indirect costs estimated to be incurred by
Borrower to achieve Completion of the Improvements to be $237,000,000 and a
revised Loan Budget for Agent's approval, and Agent has approved the same. Agent
further acknowledges and confirms that the proceeds of the Loan may continue to
be used to pay for Hard Costs, Soft Costs and Project Loan Costs, as
appropriate, in connection with the entire Improvement subject to and in
accordance with the Loan Agreement despite the release of the BLP Unit and the
Office Spec Unit on the date hereof.

                  Section 6.         Lien Priority of Project Loan Mortgage.
Notwithstanding anything to the contrary contained in any Loan Documents, until
such time as a Supplemental Mortgage shall exist, any Project Loan Mortgage
shall constitute and grant to Agent a second priority lien on the Property. As a
condition to the initial Advance of the Supplemental Loan, Borrower and Agent
shall enter into a subordination agreement or an amended and restated Project
Loan Mortgage containing a provision whereby the then existing Project Loan
Mortgage shall be subordinated to the lien of the Supplemental Mortgage.

                  Section 7.         Borrower's Representations and Warranties.
Borrower represents, warrants and certifies to Agent and Lenders, that as of the
date hereof:

                  (i)      The obligations of the Borrower to repay the Loan
         (with interest as set forth in the Loan Documents) to the Lender and to
         perform or otherwise satisfy Borrower's other obligations under the
         Loan Documents, as well as the security interest in the Property
         granted by the Borrower to the Lender under the Loan Agreement, the
         Mortgage and the other Loan Documents (A) each remain and shall
         continue in full force and effect, both before and after giving effect
         to this Amendment and/or to the Second BLA Amendment, (B) are not
         subject as of the date of this Amendment to any defense, counterclaim,
         setoff, right or recoupment, abatement, reduction or other claim or
         determination, and (C) are and shall continue to be governed by the
         terms and provisions of the Loan Agreement and the other Loan Documents
         as supplemented, modified and amended by this Amendment and the Second
         BLA Amendment.

                                      -9-

                  (ii)     All representations and warranties contained in the
         Existing Supplemental Loan Agreement, the Existing Project Loan
         Agreement and the other Loan Documents are true and correct in all
         material respects as of the date of this Amendment.

                  (iii)    No material Default and no Event of Default has
         occurred and is continuing.

                  Section 8.         Authorization, Conflicts, Enforceability.
Borrower further represents, warrants and certifies to Agent and Lenders that
the execution, delivery, and performance of this Amendment and the other
documents which are being executed and delivered in connection herewith by the
Borrower have been duly authorized, executed and delivered by Borrower and will
not conflict with, result in a breach of, or constitute a default under, any of
the terms, conditions or provisions of any of Borrower's organizational
documents or any agreement or instrument to which Borrower is a party or by
which it is bound, or any order or decree applicable to Borrower, or result in
the creation or imposition of any lien on any of Borrower's assets or property
(other than pursuant to the Loan Documents).

                  Section 9.         Successors and Assigns. This Amendment
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, subject to Article VIII of the Existing
Building Loan Agreement (and no other Person shall be deemed a benefited party
hereunder under any circumstances).

                  Section 10.        No Further Modification. Except as modified
and amended by this Amendment and the Second BLA Amendment, the Loan, the Loan
Agreement, the Note (other than Existing Supplemental Note and Existing Project
Loan Note) and the other Loan Documents and the obligations of Lender, Borrower
and Guarantor thereunder shall remain unmodified and in full force and effect.
Wherever reference is made in any Loan Document to the Building Loan Agreement,
it shall be deemed to mean the Existing Building Loan Agreement as amended by
the Second BLA Amendment, and as the same may be amended from time to time in
accordance with its terms and wherever reference is made any Loan Document to
any of the other Loan Documents, it shall be deemed to mean such other Loan
Document as the same may be amended by this Amendment, and as the same may be
amended from time to time in accordance with its terms.

                  Section 11.        Counterparts. This Amendment may be
executed in any number of counterparts, each of which shall be an original and
all of which shall constitute together but one and the same agreement.

                  Section 12.        Section Headings. The Section headings in
this Amendment are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.

                  Section 13.        Severability. Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

                                      -10-

                  Section 14.        Consent, Ratification and Agreement by
Guarantors. By their signatures below, each of the Guarantors hereby agrees as
follows:

                  (a)      Each of the Guarantors consents to the foregoing
Amendment as well as to the Second BLA Amendment (a true copy of which each
Guarantor hereby confirms having received and reviewed), ratifies and confirms
all of the terms and provisions set forth in their respective Guaranties and
that their respective liability under said Guaranties continues without
impairment or limitation by reason of this Amendment or the Second BLA
Amendment.

                  (b)      Each of the Guarantors agrees that wherever
references are made in any of the Guaranties to the principal amounts of the
Building Loan, Supplemental Loan and/or Project Loan as being $215,000,000.00,
$182,254,919.00 and $92,745,081.00, respectively, such references shall be
deemed to be the relevant respective amounts set forth in Section 2 of this
Amendment. In addition, wherever reference is made in any Guaranty to the
Building Loan Agreement, it shall be deemed to mean the Existing Building Loan
Agreement as amended by the Second BLA Amendment, and as the same may be amended
from time to time in accordance with its terms and wherever reference is made in
the Guaranty to any of the other Loan Documents, it shall be deemed to mean such
Loan Document as the same may be amended by this Amendment, and as the same may
be amended from time to time in accordance with its terms.

                  (c)      Each of the Guarantors and the Borrower acknowledge
that, at Borrowers' request, Agent has agreed to subordinate the lien of the
Mortgage on the Office Spec Unit to that certain Declaration of Restrictive
Covenants and Agreement among Commercial Owner, 731 Office One LLC, and German
American Capital Corporation and each of the Guarantor's and Residential Owner
hereby consent to the same. In addition, each of the Guarantors and Borrowers
hereby acknowledge and agree that Agent may, at any time in Agent's sole
discretion, release the Office Spec Unit from the lien of the Mortgage and any
other Loan Documents securing the indebtedness evidenced by the Note, without
regard to whether any of the conditions set forth in Section 6 of the Second BLA
Amendment have been satisfied and without impairing any of its other rights or
the obligations of Borrowers under the Loan Documents and of Guarantors under
the respective Guaranties.

                  Section 15.        Governing Law. The governing law provisions
of Section 10.3(A) of the Existing Building Loan Agreement are incorporated
herein by reference as though fully set forth.

                  Section 16.        Mutatis Mutandis. To the extent necessary
to effectuate that amendments intended by the foregoing provisions of this
Amendment and the Second BLA Amendment, each of the Loan Documents (other than
the Existing Building Loan Agreement as amended by the Second BLA Amendment) is
hereby deemed modified and amended, mutatis mutandis, and the parties hereto
agree to enter into such amendments to such Existing Loan Documents as may be
reasonably required in order to confirm the foregoing.

                         [NO FURTHER TEXT ON THIS PAGE]

                                      -11-

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their duly authorized representatives, all as
of the day and year first above written.

                                       BORROWER:

                                       731 COMMERCIAL LLC, a Delaware limited
                                          liability company

                                       By: 731 Commercial Holding LLC,
                                           a Delaware limited liability company,
                                           as member

                                           By: Alexander's, Inc., a Delaware
                                               corporation, member

                                               By: /s/ Brian Kurtz
                                                   _____________________________
                                                   Name: Brian Kurtz
                                                   Title:Assistant Secretary

                                       731 RESIDENTIAL LLC, a Delaware limited
                                          liability company

                                       By: 731 Residential Holding LLC,
                                           a Delaware limited liability company,
                                           as member

                                           By: Alexander's, Inc., a Delaware
                                               corporation, member

                                               By: /s/ Brian Kurtz
                                                   _____________________________
                                                   Name: Brian Kurtz
                                                   Title:Assistant Secretary

                                       AGENT:

                                       HYPO REAL ESTATE CAPITAL
                                       CORPORATION, AS AGENT

                                       By: /s/ Robert Dowling
                                           _____________________________________
                                           Name: Robert Dowling
                                           Title:Managing Director

                                       By: /s/ William J. Rogers
                                           _____________________________________
                                           Name: William J. Rogers
                                           Title:Managing Director

                                       LENDER:

                                       HYPO REAL ESTATE CAPITAL
                                       CORPORATION

                                       By: /s/ Robert Dowling
                                           _____________________________________
                                           Name: Robert Dowling
                                           Title:Managing Director

                                       By: /s/ William J. Rogers
                                           _____________________________________
                                           Name: William J. Rogers
                                           Title:Managing Director

                                       Lending Office:

                                       622 Third Avenue
                                       29th Floor
                                       New York, New York 10017
                                       Attention: Real Estate Lending

CONSENTED AND AGREED TO:

VORNADO REALTY L.P.,
a Delaware limited partnership

By: Vornado Realty Trust,
    a Maryland business trust

    By: /s/ Joseph Macnow
        _______________________________
        Name: Joseph Macnow
        Title:Executive Vice President,
              Financing and Administration

ALEXANDER'S, INC.,
a Delaware corporation

By: /s/ Brian Kurtz
    ___________________________________
    Name: Brian Kurtz
    Title:Assistant Secretary

                                 ACKNOWLEDGMENT

Acknowledgment for Borrower:
STATE OF ___________________________)
                                    ) ss.:

COUNTY OF __________________________)

On the _____ day of February in the year 2004 before me, the undersigned, a
Notary Public in and for said State, personally appeared ______________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument, and that such individual(s) made
such appearance before the undersigned in the City/Town of __________, County of
_____________, and State of _______.

                                       _________________________________________
                                           Signature & office of individual
                                               taking the acknowledgement

Acknowledgment for Agent:

STATE OF NEW YORK          )
                           ) ss.:
COUNTY OF NEW YORK         )

On the ____ day of February 2004, before me, the undersigned, a notary public in
and for said state, personally appeared ________________________ and
________________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individuals whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
capacities, and that by their signatures on the instrument, the individuals, or
the person upon behalf of which the individuals acted, executed the instrument.

                                       _________________________________________
                                           Signature & office of individual
                                               taking the acknowledgement

Acknowledgment for Lender:

STATE OF NEW YORK          )
                           ) ss.:
COUNTY OF NEW YORK         )

On the ____ day of February 2004, before me, the undersigned, a notary public in
and for said state, personally appeared ________________________ and
________________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individuals whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
capacities, and that by their signatures on the instrument, the individuals, or
the person upon behalf of which the individuals acted, executed the instrument.

                                       _________________________________________
                                           Signature & office of individual
                                               taking the acknowledgement

Acknowledgment for Guarantors

STATE OF ___________________________)
                                    ) ss.:
COUNTY OF __________________________)

On the _____ day of February in the year 2004 before me, the undersigned, a
Notary Public in and for said State, personally appeared ______________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument, and that such individual(s) made
such appearance before the undersigned in the City/Town of __________, County of
_____________, and State of _______.

                    _________________________________________
                        Signature & office of individual
                           taking the acknowledgement

STATE OF ___________________________)
                                    ) ss.:
COUNTY OF __________________________)

On the _____ day of February in the year 2004 before me, the undersigned, a
Notary Public in and for said State, personally appeared ______________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument, and that such individual(s) made
such appearance before the undersigned in the City/Town of __________, County of
_____________, and State of _______.

                    _________________________________________
                        Signature & office of individual
                           taking the acknowledgement

                                    EXHIBIT A

                          LEGAL DESCRIPTION OF PROPERTY

                                     PART I

                               RESIDENTIAL PARCEL

ALL THAT CERTAIN volume of space, situate, lying and being in the Borough of
Manhattan, County, City and State of New York, bounded and described as follows:

All that portion of the below described parcel lying between a lower horizontal
plane drawn at elevation 512 feet 2 inches above the datum level used by the
Topographical Bureau, Borough of Manhattan, which is 2 feet 9 inches above
National Geodetic Survey Vertical Datum of 1929, mean sea level Sandy Hook, New
Jersey and an upper horizontal plane drawn at 809 feet 2 inches above such datum
level bounded and described as follows:

BEGINNING at a point distant 48 feet 8 inches north of the northerly line of
East 58th Street and 30 feet 9 inches east of easterly line of Lexington Avenue;

RUNNING THENCE northerly, parallel with the easterly line of Lexington Avenue,
12 feet 6 inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 78 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 12 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 103 feet
6 inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 35 feet 0
inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 88 feet 6
inches;

THENCE, westerly, parallel with the northerly line of East 58th Street, 35 feet
0 inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 103 feet
6 inches to the point or place of BEGINNING.

                                COMMERCIAL PARCEL

ALL that certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, County of New York, City and State of New York, being more
particularly bounded and described as follows:

BEGINNING at the corner formed by the intersection of the northerly line of East
58th Street with the easterly side of Lexington Avenue;

RUNNING THENCE northerly, along the easterly line of Lexington Avenue 200 feet
10 inches to the corner formed by the intersection of the southerly line of East
59th Street with the easterly line of Lexington Avenue;

THENCE easterly, along the southerly line of East 59th Street, 420 feet 0 inches
to the corner formed by the intersection of the southerly line of East 59th
Street with the westerly line of Third Avenue;

THENCE southerly, along the westerly line of Third Avenue, 200 feet 10 inches to
the corner formed by the intersection of the northerly line of East 58th Street
with the westerly line of Third Avenue;

THENCE westerly, along the northerly line of East 58th Street, 420 feet to the
point or place of BEGINNING.

LESS AND EXCEPT:

All that portion of the below described parcel lying between a lower horizontal
plane drawn at elevation 512 feet 2 inches above the datum level used by the
Topographical Bureau, Borough of Manhattan, which is 2 feet 9 inches above
National Geodetic Survey Vertical Datum of 1929, mean sea level Sandy Hook, New
Jersey and an upper horizontal plane drawn at 809 feet 2 inches above such datum
level bounded and described as follows:

BEGINNING at a point distant 48 feet 8 inches north of the northerly line of
East 58th Street and 30 feet 9 inches east of easterly line of Lexington Avenue;

RUNNING THENCE northerly, parallel with the easterly line of Lexington Avenue,
12 feet 6 inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 78 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 12 feet 6
inches

THENCE easterly, parallel with the northerly line of East 58th Street, 103 feet
6 inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 35 feet 0
inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 88 feet 6
inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 35 feet 0
inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 103 feet
6 inches to the point or place of BEGINNING.

SAID RESIDENTIAL PARCEL AND COMMERCIAL PARCEL DESCRIBED IN PART I OF THIS
EXHIBIT A BEING ONE AND THE SAME AS THE FOLLOWING PROPERTY DESCRIBED IN PART II
OF THIS EXHIBIT A

                                     PART II

                                 (OFFICE UNIT 1)

The Condominium Unit (the "Unit") in the premises known as Beacon Court
Condominium and by the street number by the street number 151 East 58th Street,
Borough of Manhattan, City, County and State of New York, said Unit being
designated and described as "Office Unit 1" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1002
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

TOGETHER with an undivided 49.0559% percentage interest in the General Common
Elements (as such term is defined in the Declaration);

TOGETHER with the appurtenances and all the estate and rights in and to the
Unit;

TOGETHER with, and subject to, the rights, obligations, easements, restrictions
and other provisions set forth in the Declaration and the By-Laws, all of which
constitute covenants running with the Land and will bind any person having at
any time any interest or estate in (any of) the Unit, as though recited and
stipulated at length herein;

The premises within which the Unit is located is more particularly described as:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
borough of Manhattan, County, City and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the southerly side of East
59th Street and the westerly side of Third Avenue;

RUNNING THENCE southerly, along the westerly side of Third Avenue, 200'-10" to
the northerly side of East 58th Street;

THENCE westerly, along the northerly side of East 58th Street 420' to the
easterly side of Lexington Avenue;

THENCE northerly along the easterly side of Lexington Avenue, 200'-10" to the
southerly side of East 59th Street;

THENCE easterly, along the southerly side of East 59th Street, 420' to the point
or place of BEGINNING.

TOGETHER with the benefits and SUBJECT to the burdens of the easements set forth
in the deed made by Seven Thirty One Limited Partnership to 59th Street
Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339 Page 1100.

                                  (RETAIL UNIT)

The Condominium Unit (the "Unit") in the premises known as Beacon Court
Condominium and by the street number by the street number 151 East 58th Street,
Borough of Manhattan, City, County and State of New York, said Unit being
designated and described as "Retail Unit" in the declaration (the "Declaration")
establishing a plan for condominium ownership of said premises under Article 9-B
of the Real Property Law of the State of New York (the "Condominium Act"), dated
December 4, 2003, and recorded in the New York County office of the Register of
The City of New York (the "City Register's Office") on February 3, 2004, in CRFN
No. 2004000064392, and also designated as Tax Lot 1001 in Block 1313 of Section
5 of the Borough of Manhattan on the Tax Map of the Real Property Assessment
Department of the City of New York and on the Floor Plans of said building,
certified by Peter Claman, Registered Architect, on January 29, 2004, and filed
in the Real Property Assessment Department of the City of New York on January
30, 2004 as Condominium Plan No. 1350 also filed in the City Register's Office
on February 3, 2004 in CRFN No. 2004000064393. All capitalized terms herein
which are not separately defined herein will have the meanings given to those
terms in the Declaration or in the by-laws of Beacon Court Condominium. (Said
by-laws, as the same may be amended from time to time, are hereinafter referred
to as the "By-Laws.")

TOGETHER with an undivided 13.2894% percentage interest in the General Common
Elements (as such term is defined in the Declaration);

TOGETHER with the appurtenances and all the estate and rights in and to the
Unit;

TOGETHER with, and subject to, the rights, obligations, easements, restrictions
and other provisions set forth in the Declaration and the By-Laws, all of which
constitute covenants running with the Land and will bind any person having at
any time any interest or estate in (any of) the Unit, as though recited and
stipulated at length herein;

The premises within which the Unit is located is more particularly described as:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
borough of Manhattan, County, City and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the southerly side of East
59th Street and the westerly side of Third Avenue;

RUNNING THENCE southerly, along the westerly side of Third Avenue, 200'-10" to
the northerly side of East 58th Street;

THENCE westerly, along the northerly side of East 58th Street 420' to the
easterly side of Lexington Avenue;

THENCE northerly along the easterly side of Lexington Avenue, 200'-10" to the
southerly side of East 59th Street;

THENCE easterly, along the southerly side of East 59th Street, 420' to the point
or place of BEGINNING.

TOGETHER with the benefits and SUBJECT to the burdens of the easements set forth
in the deed made by Seven Thirty One Limited Partnership to 59th Street
Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339 Page 1100.

                                 (OFFICE UNIT 2)

The Condominium Unit (the "Unit") in the premises known as Beacon Court
Condominium and by the street number by the street number 151 East 58th Street,
Borough of Manhattan, City, County and State of New York, said Unit being
designated and described as "Office Unit 2" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1003
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

TOGETHER with an undivided 14.0095% percentage interest in the General Common
Elements (as such term is defined in the Declaration);

TOGETHER with the appurtenances and all the estate and rights in and to the
Unit;

TOGETHER with, and subject to, the rights, obligations, easements, restrictions
and other provisions set forth in the Declaration and the By-Laws, all of which
constitute covenants running with the Land and will bind any person having at
any time any interest or estate in (any of) the Unit, as though recited and
stipulated at length herein;

The premises within which the Unit is located is more particularly described as:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
borough of Manhattan, County, City and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the southerly side of East
59th Street and the westerly side of Third Avenue;

RUNNING THENCE southerly, along the westerly side of Third Avenue, 200'-10" to
the northerly side of East 58th Street;

THENCE westerly, along the northerly side of East 58th Street 420' to the
easterly side of Lexington Avenue;

THENCE northerly along the easterly side of Lexington Avenue, 200'-10" to the
southerly side of East 59th Street;

THENCE easterly, along the southerly side of East 59th Street, 420' to the point
or place of BEGINNING.

TOGETHER with the benefits and SUBJECT to the burdens of the easements set forth
in the deed made by Seven Thirty One Limited Partnership to 59th Street
Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339 Page 1100.

                               (RESIDENTIAL UNIT)

The Condominium Unit (the "Unit") in the premises known as Beacon Court
Condominium and by the street number by the street number 151 East 58th Street,
Borough of Manhattan, City, County and State of New York, said Unit being
designated and described as "Residential Unit" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1004
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

TOGETHER with an undivided 23.6452% percentage interest in the General Common
Elements (as such term is defined in the Declaration);

TOGETHER with the appurtenances and all the estate and rights in and to the
Unit;

TOGETHER with, and subject to, the rights, obligations, easements, restrictions
and other provisions set forth in the Declaration and the By-Laws, all of which
constitute covenants running with the Land and will bind any person having at
any time any interest or estate in (any of) the Unit, as though recited and
stipulated at length herein;

The premises within which the Unit is located is more particularly described as:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
borough of Manhattan, County, City and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the southerly side of East
59th Street and the westerly side of Third Avenue;

RUNNING THENCE southerly, along the westerly side of Third Avenue, 200'-10" to
the northerly side of East 58th Street;

THENCE westerly, along the northerly side of East 58th Street 420' to the
easterly side of Lexington Avenue;

THENCE northerly along the easterly side of Lexington Avenue, 200'-10" to the
southerly side of East 59th Street;

THENCE easterly, along the southerly side of East 59th Street, 420' to the point
or place of BEGINNING.

TOGETHER with the benefits and SUBJECT to the burdens of the easements set forth
in the deed made by Seven Thirty One Limited Partnership to 59th Street
Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339 Page 1100.

================================================================================

                   FIRST AMENDMENT TO BUILDING LOAN AGREEMENT

                            Dated as of March 5, 2003

                                     Between

                   731 COMMERCIAL LLC and 731 RESIDENTIAL LLC,
                           collectively, as Borrower,

                                       and

                      BAYERISCHE HYPO- UND VEREINSBANK AG,
                                NEW YORK BRANCH,
                                    as Agent,

                                       and

                            THE LENDERS NAMED HEREIN,
                                   as Lenders

                                 ---------------

                         Location:  731 Lexington Avenue
                                    New York, New York

                           County:  New York County

                         ------------------------------

                        TO BE FILED WITH THE COUNTY CLERK
                          OF NEW YORK COUNTY, NEW YORK

================================================================================

                   FIRST AMENDMENT TO BUILDING LOAN AGREEMENT

                  THIS FIRST AMENDMENT TO BUILDING LOAN AGREEMENT, dated as of
March 5, 2003 (this "AMENDMENT"), between 731 COMMERCIAL LLC ("COMMERCIAL
OWNER") and 731 RESIDENTIAL LLC ("RESIDENTIAL OWNER"), each a Delaware limited
liability company, having its principal place of business at 888 Seventh Avenue,
New York, New York 10019, collectively as Borrower ("BORROWER"), and BAYERISCHE
HYPO- UND VEREINSBANK AG, NEW YORK BRANCH, a German banking corporation
organized under the laws of the Federal Republic of Germany, having an address
at 622 Third Avenue, New York, New York 10017, as administrative agent
(including any of its successors and assigns, "AGENT") for itself and the other
Lenders signatory hereto (collectively, together with such other co-lenders as
may exist from time to time, "LENDERS").

                              W I T N E S S E T H :

                  WHEREAS, pursuant to the terms and provisions and subject to
the conditions set forth in that certain Building Loan Agreement dated as of
July 3, 2002 between Borrower, Agent and Lenders signatory thereto filed on July
9, 2002 as Index No. 150 in the County Clerk's Office of New York County (the
"EXISTING BUILDING LOAN AGREEMENT"), Lender has agreed to make advances of a
certain building loan to Borrower in the aggregate principal sum of up to Two
Hundred Million and no/100 Dollars ($200,000,000.00) (the "EXISTING BUILDING
LOAN AMOUNT" or "EXISTING BUILDING LOAN") for Building Loan Costs (as
hereinafter defined) related to the construction of the Improvements (as
hereinafter defined) on the property described on Exhibit A hereto.

                  WHEREAS, Borrower, Agent and Lenders wish to amend the
Existing Building Loan Agreement to increase the amount of the Building Loan,
all upon the terms and provisions and subject to the conditions hereinafter set
forth.

                  NOW, THEREFORE, in consideration of the agreements set forth
in this Amendment and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

                               A G R E E M E N T:

         Section 1. Definitions.

                  (a) In Section 1.1 of the Existing Building Loan Agreement,
the definitions of "Building Loan Amount" and "Capped Libor Rate" are hereby
amended and restated as follows:

                           "BUILDING LOAN AMOUNT" shall mean TWO HUNDRED FIFTEEN
                  MILLION and NO/100 DOLLARS ($215,000,000.00).

                           "CAPPED LIBOR RATE" shall mean 4.5%.

                  (b) All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Existing Building Loan Agreement.

         Section 2. Building Loan Amount. The Building Loan Amount is hereby
increased to $215,000,000.00. Accordingly, (i) all references in Sections
2.1.1(a) and 2.1.3 of the Existing Building Loan Agreement to "TWO HUNDRED
MILLION DOLLARS ($200,000,000)" are hereby deleted and replaced with TWO HUNDRED
FIFTEEN MILLION and NO/100 DOLLARS ($215,000,000.00)" and (ii) all references in
Section 2.9.2(o) of the Existing Building Loan Agreement to "$144,500,000" are
hereby deleted and replaced with "$159,500,000".

         Section 3. Bloomberg Reimbursables.

                  (a) As a result of additional work to be performed by
Commercial Owner for Bloomberg pursuant to the Bloomberg Lease for which
Bloomberg is obligated to reimburse Commercial Owner (such work, including,
without limitation, any future work that Bloomberg requests be performed under
the Bloomberg Lease and that Bloomberg is required to pay for, being herein
referred to as the "Bloomberg Reimbursable Work" and the cost of such work being
herein referred to as the "Bloomberg Reimbursable Cost"), the undisbursed
proceeds of the Building Loan and Supplemental Loan are insufficient to pay the
remaining Hard Costs and Soft Costs (which include the Bloomberg Reimbursable
Cost). Borrower agrees that none of the Bloomberg Reimbursable Work shall form
the basis of a requisition for Building Loan Proceeds or a disbursement of Cash
Collateral and that Borrower shall pay for the Bloomberg Reimbursable Costs out
of its own funds and seek reimbursement for the same directly from Bloomberg
pursuant to the Bloomberg Lease.

                  (b) Borrower further agrees that, as part of Borrower's
Requisition, Borrower shall provide Agent with a written statement, which shall
be in the form annexed hereto as Schedule 1, of Borrower and Construction
Manager stating whether the completed Application and Certificate for Payment
(AIA Document G702) (an "Application for Payment") being submitted as part of
Borrower's Requisition covers any Bloomberg Reimbursable Work, and, if so, the
Construction Manager's and the Borrower's reasonable estimate of the amount of
the Bloomberg Reimbursable Cost attributable to such work. Borrower shall pay
for all Bloomberg Reimbursable Work directly and agrees that, as a condition to
any subsequent Advance or disbursement of Cash Collateral, Borrower shall
furnish to Agent lien waivers and payment receipts for the Bloomberg
Reimbursable Work covered by an Application for Payment in the prior month. To
the extent, if any, that Lender disburses proceeds of the Loan to pay for work
which has been or should have been paid for by Bloomberg under the Bloomberg
Lease, Borrower agrees to reconcile such discrepancy as part of the next Draw
Request or to deposit with Agent the difference in the same manner as provided
for with respect to a Shortfall pursuant to Section 2.1.11 of the Building Loan
Agreement.

                  (c) Lender and Agent agree that it will not invoke the
provisions of Section 2.1.11 of the Existing Building Loan Agreement or the
other Loan Agreements, to the extent that any Shortfall is attributable to the
Bloomberg Reimbursable Cost.

                                       2

         Section 4. Prefabrication Deposits. In connection with the second
advance of Building Loan proceeds, Lender is advancing $12,100,000 to pay for
Prefabrication Deposits, notwithstanding the limit set forth in Section 2.1.9(d)
of the Building Loan Agreement. Lender shall not be obligated to waive such
limit for any future Advances under the Building Loan Agreement.

         Section 5. Interest Rate Protection Agreement.

                  (a) The first sentence of Section 4.1.14(a) of the Existing
Building Loan Agreement is hereby amended (i) to delete the following at the
beginning thereof, "Not later than six (6) months following the Closing Date or
within ten (10) Business Days after request of Agent if prior to such time" and
replace the same with the words "Within ten (10) Business Days after request of
Agent if" and (ii) to delete the reference to "5.5%" where it appears in that
first sentence and replace the same with "3%".

                  (b) Section 4.1.14(e) of the Existing Building Loan Agreement
is hereby amended and restated to read as follows:

                           Borrower's failure to obtain an Interest Rate
                  Protection Agreement in accordance with subsection (a) of this
                  Section 4.1.14 (within ten (10) Business Days after requested
                  to do so by Agent pursuant thereto) or Borrower's failure to
                  comply with any or all of the other covenants set forth in
                  this Section 4.1.14 (within ten (10) Business Days after
                  notice thereof is given by Agent to Borrower) shall constitute
                  an Event of Default hereunder.

         Section 6. Borrower's Representations and Warranties. Borrower
represents, warrants and certifies to Lender that, as of the date hereof,
Fifty-Five Million Five Hundred Thousand Dollars ($55,500,000) of Building Loan
proceeds has been advanced pursuant to the Building Loan Agreement and remains
outstanding under the Building Loan Note.

         Section 7. Lien Law; Lien Law Affidavit.

                  (a) This Amendment and the Existing Building Loan Agreement,
as modified hereby, are subject to the trust fund provisions of Section 13 of
the Lien Law.

                  (b) In addition, a true statement under oath, verified by the
Borrower, as required by Section 22 of the New York Lien Law is attached hereto
as Attachment I and made a part hereof; and, effective on the date hereof , said
Attachment I to this Amendment shall be deemed to be substituted for EXHIBIT F
which is attached to the Existing Building Loan Agreement.

                  (c) Borrower shall cause the Title Company to deliver this
Amendment and the Lien Law Statement attached hereto as Attachment I for filing
in the County Clerk's Office of New York County when and as required by Section
22 of the Lien Law.

                  (d) Borrower is contemporaneously herewith causing the Title
Insurer to deliver to the Agent an endorsement to the Title Insurance Policy
indicating the filing of this Amendment without raising any title exception
therefor.

                                       3

         Section 8. Authorization, Conflicts, Enforceability. The execution,
delivery, and performance of this Amendment and the other documents which are
being executed and delivered in connection herewith by the Borrower have been
duly authorized, executed and delivered by Borrower and will not conflict with,
result in a breach of, or constitute a default under, any of the terms,
conditions or provisions of any of Borrower's organizational documents or any
agreement or instrument to which Borrower is a party or by which it is bound, or
any order or decree applicable to Borrower, or result in the creation or
imposition of any lien on any of Borrower's assets or property (other than
pursuant to the Loan Documents).

         Section 9. Successors and Assigns. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, subject to Article VIII of the Existing Building Loan Agreement
(and no other Person shall be deemed a benefited party hereunder under any
circumstances).

         Section 10. No Further Modification. Except as modified and amended by
this Amendment, the Building Loan Agreement and the obligations of Agent, Lender
and Borrower thereunder shall remain unmodified and in full force and effect.

         Section 11. Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall be an original and all of which shall
constitute together but one and the same agreement.

         Section 12. Section Headings. The Section headings in this Amendment
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

         Section 13. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

         Section 14. Governing Law. The governing law provisions of Section
10.3(A) of the Existing Building Loan Agreement are incorporated herein by
reference as though fully set forth.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       4

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their duly authorized representatives, all as
of the day and year first above written.

                                  BORROWER:

                                  731 COMMERCIAL LLC, a Delaware limited
                                  liability company

                                  By: 731 Commercial Holding LLC,
                                      a Delaware limited liability company,
                                      as member

                                      By: Alexander's, Inc., a Delaware
                                          corporation, member

                                          By:  /s/ Joseph Macnow
                                              __________________________________
                                              Name:  Joseph Macnow
                                              Title: Executive Vice President-
                                                     Finance and Administration

                                  731 RESIDENTIAL LLC, a Delaware limited
                                  liability company

                                  By: 731 Residential Holding LLC,
                                      a Delaware limited liability company,
                                      as member

                                      By: Alexander's, Inc., a Delaware
                                          corporation, member

                                          By:  /s/ Joseph Macnow
                                              __________________________________
                                              Name:  Joseph Macnow
                                              Title: Executive Vice President-
                                                     Finance and Administration

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their duly authorized representatives, all as
of the day and year first above written.

                                   BORROWER:

                                       AGENT:

                                       BAYERISCHE HYPO- UND
                                       VEREINSBANK AG, NEW YORK
                                       BRANCH

                                       By: /s/ Robert Dowling
                                           _______________________________
                                           Name:  Robert Dowling
                                           Title: Managing Director

                                       By: /s/ Anthony Mugno
                                           _______________________________
                                           Name:  Anthony Mugno
                                           Title: Director

                                       LENDER[S]:

                                       BAYERISCHE HYPO- UND
                                       VEREINSBANK AG, NEW YORK
                                       BRANCH

                                       By: /s/ Robert Dowling
                                           _______________________________
                                           Name:  Robert Dowling
                                           Title: Managing Director

                                       By: /s/ Anthony Mugno
                                           _______________________________
                                           Name:  Anthony Mugno
                                           Title: Director

                                       Lending Office:

                                       622 Third Avenue
                                       29th Floor
                                       New York, New York 10017
                                       Attention: Real Estate Lending

                                 ACKNOWLEDGMENT

STATE OF NEW YORK)
                                      SS.:
COUNTY OF NEW YORK)

On the 5 day of March 2003, before me, the undersigned, personally appeared
Joseph Macnow, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person on behalf of which the individual acted, executed the instrument.

                                                   /s/ JOSEPH MACNOW
                                             -----------------------------------
                                              Signature & office of individual
                                                 taking the acknowledgement

STATE OF NEW YORK)
                                      SS.:
COUNTY OF NEW YORK)

On the 5 day of March 2003, before me, the undersigned, personally appeared
Joseph Macnow, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person on behalf of which the individual acted, executed the instrument.

                                                    /s/ JOSEPH MACNOW
                                             -----------------------------------
                                              Signature & office of individual
                                                 taking the acknowledgement

STATE OF NEW YORK)
                                      SS.:
COUNTY OF NEW YORK)

On the 5 day of March 2003, before me, the undersigned, personally appeared
Robert Dowling, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person on behalf of which the individual acted, executed the instrument.

                                                  /s/ ROBERT DOWLING
                                             -----------------------------------
                                              Signature & office of individual
                                                 taking the acknowledgement

STATE OF NEW YORK)
                                      SS.:
COUNTY OF NEW YORK)

On the 5 day of March 2003, before me, the undersigned, personally appeared
Anthony Mugno, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person on behalf of which the individual acted, executed the instrument.

                                                   /s/ ANTHONY MUGNO
                                             -----------------------------------
                                              Signature & office of individual
                                                 taking the acknowledgement

                                    EXHIBIT A

                          LEGAL DESCRIPTION OF PROPERTY

                               RESIDENTIAL PARCEL

ALL THAT CERTAIN volume of space, situate, lying and being in the Borough of
Manhattan, County, City and State of New York, bounded and described as follows:

All that portion of the below described parcel lying between a lower horizontal
plane drawn at elevation 512 feet 2 inches above the datum level used by the
Topographical Bureau, Borough of Manhattan, which is 2 feet 9 inches above
National Geodetic Survey Vertical Datum of 1929, mean sea level Sandy Hook, New
Jersey and an upper horizontal plane drawn at 809 feet 2 inches above such datum
level bounded and described as follows:

BEGINNING at a point distant 48 feet 8 inches north of the northerly line of
East 58th Street and 30 feet 9 inches east of easterly line of Lexington Avenue;

RUNNING THENCE northerly, parallel with the easterly line of Lexington Avenue,
12 feet 6 inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 78 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 12 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 103 feet
6 inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 35 feet 0
inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 88 feet 6
inches;

THENCE, westerly, parallel with the northerly line of East 58th Street, 35 feet
0 inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 103 feet
6 inches to the point or place of BEGINNING.

                                COMMERCIAL PARCEL

ALL that certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, County of New York, City and State of New York, being more
particularly bounded and described as follows:

BEGINNING at the corner formed by the intersection of the northerly line of East
58th Street with the easterly side of Lexington Avenue;

RUNNING THENCE northerly, along the easterly line of Lexington Avenue 200 feet
10 inches to the corner formed by the intersection of the southerly line of East
59th Street with the easterly line of Lexington Avenue;

THENCE easterly, along the southerly line of East 59th Street, 420 feet 0 inches
to the corner formed by the intersection of the southerly line of East 59th
Street with the westerly line of Third Avenue;

THENCE southerly, along the westerly line of Third Avenue, 200 feet 10 inches to
the corner formed by the intersection of the northerly line of East 58th Street
with the westerly line of Third Avenue;

THENCE westerly, along the northerly line of East 58th Street, 420 feet to the
point or place of BEGINNING.

LESS AND EXCEPT:

All that portion of the below described parcel lying between a lower horizontal
plane drawn at elevation 512 feet 2 inches above the datum level used by the
Topographical Bureau, Borough of Manhattan, which is 2 feet 9 inches above
National Geodetic Survey Vertical Datum of 1929, mean sea level Sandy Hook, New
Jersey and an upper horizontal plane drawn at 809 feet 2 inches above such datum
level bounded and described as follows:

BEGINNING at a point distant 48 feet 8 inches north of the northerly line of
East 58th Street and 30 feet 9 inches east of easterly line of Lexington Avenue;

RUNNING THENCE northerly, parallel with the easterly line of Lexington Avenue,
12 feet 6 inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 78 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 12 feet 6
inches

THENCE easterly, parallel with the northerly line of East 58th Street, 103 feet
6 inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 35 feet 0
inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 88 feet 6
inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 35 feet 0
inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 103 feet
6 inches to the point or place of BEGINNING.

                                   Schedule 1

       Statement Attached To Application and Certificate AIA Document G702

PROJECT: 731 Lexington Avenue, NY, NY           APPLICATION NO.: _______________

PERIOD COVERED: ____________ to _________________

CONTRACTOR: Bovis Lend Lease

OWNER: 731 Commercial LLC and 731 Residential LLC

The undersigned Contractor hereby states to the best of the Contractor's
knowledge, information and belief that Contractor reasonably estimates the cost
of the Work that is covered by the Application for Payment to which this
Statement is attached, which is attributable to Work requested to be performed
for Bloomberg, L.P. under that certain lease between 731 Commercial LLC and
Bloomberg, L. P. dated as of April 30, 2001 (as amended) to be $______________.

CONTRACTOR:

BOVIS LEND LEASE

By:  ______________________                 Date:  ____________________

   Statement Attached To Application and Certificate AIA Document G702 (cont.)

PROJECT: 731 Lexington Avenue, NY, NY          APPLICATION NO.: _______________

PERIOD COVERED: ____________ to _________________

CONTRACTOR: Bovis Lend Lease

OWNER: 731 Commercial LLC and 731 Residential LLC

The undersigned Owner hereby states for the benefit of Bayerische Hypo- und
Vereinsbank AG, New York Branch, as Agent, to the best of the Owner's knowledge,
information and belief that Owner reasonably estimates the cost of the Work that
is covered by the Application for Payment to which this Statement is attached,
which is attributable to Work requested to be performed for Bloomberg, L.P.
under that certain lease between 731 Commercial LLC and Bloomberg, L. P.. dated
as of April 30, 2001 (as amended) to be $________________.

OWNER:

731 COMMERCIAL LLC,                                Date: _______________________
a Delaware limited liability company

By:  731 Commercial Holding LLC,
     a Delaware limited liability company,
     as member

     By: Alexander's, Inc.,
         a Delaware corporation, member

         By: _____________________
             Name:
             Title:

731 RESIDENTIAL LLC,
a Delaware limited liability company               Date: _______________________

By: 731 Residential Holding LLC,
    a Delaware limited liability company,
    as member

    By: Alexander's, Inc.,
        a Delaware corporation, member

        By: _________________________
            Name:
            Title:

                                  ATTACHMENT 1

             AFFIDAVIT UNDER SECTION 22 OF THE LIEN LAW OF NEW YORK
                             (Revised March 5, 2003)

                                 (See Attached)

             AFFIDAVIT UNDER SECTION 22 OF THE LIEN LAW OF NEW YORK
                             (Revised March 5, 2003)

STATE OF NEW YORK   )
                    )       ss:
COUNTY OF NEW YORK  )

         The undersigned, being duly sworn, deposes and says that:

                                                                            
1.       He resides at the address shown at the foot hereof and he is the
         Executive Vice President - Finance and Administration of Alexander's,
         Inc., which is the member of 731 Commercial Holding LLC and 731
         Residential Holding LLC, each of which is the respective member of 731
         Commercial LLC and 731 Residential LLC (together, Borrower").

2.       He gives this Affidavit in connection with that certain Building Loan
         Agreement, dated as of July 3, 2002, between Borrower and Bayerische
         Hypo- und Vereinsbank AG, New York Branch, as agent for itself and
         certain co-lenders (the "Existing Building Loan Agreement"), as amended
         by that certain First Amendment to Building Loan Agreement, dated as of
         March 5, 2003, between Borrower and Bayerische Hypo- und Vereinsbank
         AG, New York Branch, as agent for itself and certain co-lenders (as so
         amended, the "Building Loan Agreement").

3.       The amount of the building loan (the "Building Loan") under the
         Building Loan Agreement is:                                              $215,000,000.00

4.       The consideration for the Building Loan paid or to be paid from the
         Building Loan is (or is estimated to be):

              Real estate taxes:                             $4,180,000
              Insurance premiums:                            $4,496,000
              Interest on Building Loan:                     $3,184,000
              Architects/Engineers Permits and Fees:         $3,140,000

                   Original Total (as set forth in original
                   Affidavit Under Section 22 of the Lien
                   Law of New York dated July 3, 2002
                   attached to the Existing Building Loan
                   Agreement (the "Original Affidavit"):     $   - 0 -

                   Revised Total:                                                 $15,000,000.00

                                                                      
5.       All other expenses incurred or to be incurred in connection
         with the Building Loan for costs of the improvements and to be
         advanced pursuant to the Building Loan Agreement during the
         construction of the Improvement are:

              Acquisition of Existing Mortgages          $55,000,000.00

                   TOTAL                                                 $ 55,000,000.00

6.       The amount, if any, to be advanced from the Building Loan to
         repay amounts previously advanced to Borrower pursuant to
         Notices of Lending for Costs of the Improvements is:     $0.00

7.       The net sum available to Borrower from the Building Loan for
         the Improvements is:                                            $145,000,000.00

8.       This affidavit is made pursuant to and in compliance with
         Section 22 of the Lien Law of the State of New York and is a
         part of the Building Loan Agreement.

         9.       The facts stated above and any costs itemized on this
                  statement are true, to the knowledge of the undersigned. Such
                  facts are verified by deponent and not by Borrower because
                  each Borrower is a limited liability company, of which 731
                  Commercial Holding LLC and 731 Residential Holding LLC is the
                  respective member. Alexander's, Inc. is the member of each of
                  731 Commercial Holding LLC and 731 Residential Holding LLC.

Sworn to before me this ____day
of March ___, 2003

- ------------------------------                  --------------------------------
        Notary Public                           Name:
                                                Address:

================================================================================

                   SECOND AMENDMENT TO BUILDING LOAN AGREEMENT

                         Dated as of February 13, 2004

                                     Between

                   731 COMMERCIAL LLC and 731 RESIDENTIAL LLC,
                           collectively, as Borrower,

                                       and

                      HYPO REAL ESTATE CAPITAL CORPORATION,
                                    as Agent,

                                       and

                            THE LENDERS NAMED HEREIN,
                                   as Lenders

                                 ---------------

                         Location: 731 Lexington Avenue
                                   New York, New York

                             County: New York County

                                 ---------------

                        TO BE FILED WITH THE COUNTY CLERK
                          OF NEW YORK COUNTY, NEW YORK

================================================================================

                   SECOND AMENDMENT TO BUILDING LOAN AGREEMENT

                  THIS SECOND AMENDMENT TO BUILDING LOAN AGREEMENT, dated as of
February 13, 2004 (this "AMENDMENT"), between 731 COMMERCIAL LLC ("COMMERCIAL
OWNER") and 731 RESIDENTIAL LLC ("RESIDENTIAL OWNER"), each a Delaware limited
liability company, having its principal place of business at 888 Seventh Avenue,
New York, New York 10019, collectively as Borrower ("BORROWER"), and HYPO REAL
ESTATE CAPITAL CORPORATION ("HYPO") , a Delaware corporation, having an address
at 622 Third Avenue, New York, New York 10017, as administrative agent
(including any of its successors and assigns, "AGENT") for itself and the other
Lenders signatory hereto (collectively, together with such other co-lenders as
may exist from time to time, "LENDERS").

                              W I T N E S S E T H :

                  WHEREAS, Residential Owner, Commercial Owner, Agent (as
successor agent to Bayerische Hypo- und Vereinsbank AG, New York Branch ("HVB"))
and Hypo (as assignee of HVB), as Lender, are parties to that certain Building
Loan Agreement dated as of July 3, 2002 between Borrower, HVB, as agent, and the
lenders signatory thereto, filed on July 9, 2002 as Index No. 150 in the County
Clerk's Office of New York County, as amended by that certain First Amendment to
Building Loan Agreement dated as of March 5, 2003 between Borrower, HVB, as
agent and the lenders signatory thereto, which was filed on March 11, 2003 as
Index No. 39 in said County Clerk's Office (as so amended, the "EXISTING
BUILDING LOAN AGREEMENT"), Agent agreed to administer and Lender agreed to make
a building loan to Borrower in the aggregate principal sum of up to Two Hundred
Fifteen Million and no/100 Dollars ($215,000,000.00) (the "BUILDING LOAN")
related to the construction of the Improvements (as hereinafter defined) on the
property described on Exhibit A hereto (the "ORIGINAL MORTGAGED PREMISES").

                  WHEREAS, the Building Loan is (i) evidenced by that certain
Consolidated, Amended and Restated Building Loan Note dated March 5, 2003 made
by 731 Residential LLC and 731 Commercial LLC in favor of HVB, in the principal
amount of $215,000,000.00, which was endorsed and assigned by HVB to Hypo on
December 4, 2003 (the "EXISTING BUILDING LOAN NOTE") and (ii) secured by, inter
alia, that certain Consolidated, Amended and Restated Building Loan Mortgage,
Assignment of Leases and Rents and Security Agreement (Series No. 1), dated as
of July 3, 2002, made by Borrower in favor of HVB, as agent ("ORIGINAL
MORTGAGEE") and recorded on September 25, 2002 in the Office of the Register of
the City of New York, County of New York ("REGISTER'S OFFICE") in Reel 3617 Page
2024, and Gap Mortgage, dated as of March 5, 2003, in the principal amount of
$159,500,000 made by Borrower to Original Mortgagee and recorded on May 1, 2003
in CRFN #2003000112521 in the Register's Office, as consolidated, amended and
restated by that certain Consolidated, Amended and Restated Building Loan
Mortgage, Assignment of Rents and Leases and Security Agreement, dated as of
March 5, 2003, to form a single consolidated lien in the principal amount of
$215,000,000, made by Borrower to Original Mortgagee, and recorded on May 1,
2003 in CRFN#2003000112522 in the Register's Office, which consolidated, amended
and restated mortgage in the consolidated principal amount of $215,000,000.00
was assigned by Original

Mortgagee to Agent pursuant to that certain Assignment of Consolidated, Amended
and Restated Building Loan Mortgage, Assignment of Rents and Leases and Security
Agreement, dated as of December 4, 2003, and intended to be recorded in the
Register's Office (said consolidated, amended and restated mortgage as so
assigned, the "EXISTING BUILDING LOAN MORTGAGE").

                  WHEREAS, the total principal amount of the Building Loan has
been fully funded and the outstanding principal amount of the Existing Building
Loan Note which is secured by the Existing Building Loan Mortgage is Two Hundred
Fifteen Million and No/100 Dollars ($215,000,000.00).

                  WHEREAS, concurrently herewith, the parties hereto are
entering into a Note and Mortgage Modification and Severance Agreement (the
"SEVERANCE AGREEMENT") pursuant to which (i) the indebtedness evidenced by the
Existing Building Loan Note is being split and modified into two separate
indebtednesses of $90,000,000.00 and $125,000,000.00, respectively, and the
Existing Building Loan Note is being replaced and restated in its entirety by
two substitute building loan mortgage notes, one in the principal amount of
$90,000,000.00 ("SUBSTITUTE BUILDING LOAN NOTE A") and the other in the
principal amount of $125,000,000.00 ("SUBSTITUTE BUILDING LOAN NOTE B") and (ii)
the consolidated lien of the Existing Building Loan Mortgage is being split and
modified into two separate liens securing such separate indebtednesses of
$90,000,000.00 and $125,000,000.00, respectively, and the Existing Building Loan
Mortgage is being replaced in its entirety by two substitute building loan
mortgages, assignments of leases and rents and security agreements, one in the
principal amount of $90,000,000.00 ("SUBSTITUTE BUILDING LOAN MORTGAGE A")
securing Substitute Building Loan Note A, and the other in the principal amount
of $125,000,000.00 ("SUBSTITUTE BUILDING LOAN MORTGAGE B") securing Substitute
Building Loan Note B.

                  WHEREAS, pursuant to Section 4.1.37 of the Existing Building
Loan Agreement, the Original Mortgaged Premises were subjected to a declaration
(the "DECLARATION") establishing a plan for condominium ownership of the
Original Mortgaged Premises under the Condominium Act, dated December 4, 2003,
which was recorded on February 3, 2004 in the City Register's Office, New York
County as CRFN#2004000064392, and the Existing Building Loan Mortgage was or
concurrently herewith will be subordinated to the Declaration so that the
description of the property now encumbered by the lien of the Existing Building
Loan Mortgage is as set forth on Part II of Exhibit A hereto.

                  WHEREAS, concurrently herewith, Agent and Lender are entering
into (i) a Partial Release of Lien of Mortgaged Premises No. 1 pursuant to which
the condominium units created pursuant to the Declaration and more particularly
described as "Office Unit 1" and "Office Unit 2" on Part II of Exhibit A hereto
(hereinafter referred to, respectively, as the "BLP UNIT" and the "OFFICE SPEC
UNIT") are being released from the lien of Substitute Building Loan Note
Mortgage A and (ii) a Partial Release of Lien of Mortgaged Premises No. 2
pursuant to which the condominium units created pursuant to the Declaration and
more particularly described as "Retail Unit" and "Residential Unit" on Part II
of Exhibit A hereto (said Units being hereinafter referred to, respectively, as
the "RETAIL UNIT" and the "MASTER RESIDENTIAL UNIT", and collectively as the
"REMAINING PREMISES") are being released from the lien of Substitute Building
Loan Note Mortgage B and Residential Owner is being released from its
obligations and liabilities under Substitute Building Loan Note B and Substitute
Building Loan Mortgage B.

                                       2

                  WHEREAS, concurrently herewith, after giving effect to the
aforesaid Partial Releases, Agent is assigning to German American Capital
Corporation (the "BLP UNIT LENDER") Substitute Building Loan Note B and
Substitute Building Loan Mortgage B, and BLP Unit Lender is modifying the same
which will no longer be governed by the terms of the Existing Building Loan
Agreement as modified hereby or the other Loan Documents.

                  WHEREAS, in consideration of the foregoing, Borrowers are
concurrently herewith and as a condition of this Amendment, depositing with
Agent cash collateral in the amount of $90,000,000 as additional security for
the Debt and entering into that certain Amendment to Cash Collateral Agreement
dated the date hereof pursuant to which the existing Cash Collateral Agreement
is being amended.

                  WHEREAS, Borrower, Agent and Lenders wish to amend the
Existing Building Loan Agreement to reflect the foregoing premises, all upon the
terms and provisions and subject to the conditions hereinafter set forth.

                  NOW, THEREFORE, in consideration of the agreements set forth
in this Amendment and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

                               A G R E E M E N T:

         Section 1.        Definitions.

                  (a) In Section 1.1 of the Existing Building Loan Agreement,
the following definitions are hereby amended and restated to read as follows:

                  (i)      "BUILDING LOAN" shall mean the loan made by Lenders
         to Borrower pursuant to the Existing Building Loan Agreement in the
         principal amount of $215,000,000.00, or so much thereof as remains
         outstanding under the Building Loan Note.

                  (ii)     "BUILDING LOAN AMOUNT" shall mean TWO HUNDRED FIFTEEN
         MILLION and NO/100 DOLLARS ($215,000,000.00), or so much thereof as
         remains outstanding under the Building Loan Note. It being acknowledged
         that after the assignment of Substitute Building Loan Note B and
         Substitute Building Loan Mortgage B to the BLP Unit Lender, the amount
         that will remain outstanding on the Building Loan will be NINETY
         MILLION and NO/100 DOLLARS ($90,000,000.00).

                  (iii)    "BUILDING LOAN MORTGAGE" shall mean the Existing
         Building Loan Mortgage prior to the date of the Second Amendment and
         the assignment of Substitute Building Loan Mortgage B to BLP Unit
         Lender, and upon such assignment shall mean the Substitute Building
         Loan Mortgage A encumbering the Remaining Premises.

                  (iv)     "GUARANTY" shall mean, collectively, the Guaranty of
         Completion, the Guaranty of Carrying Costs, each Guaranty of Limited
         Recourse Obligations and the Additional Alexander's Guaranty.

                                       3

                  (b) In Section 1.1 of the Existing Building Loan Agreement,
the definition of "PROPERTY" is hereby amended to delete the word "Residential"
where it appears in each case before the word "Unit" and to add the following
sentence at the end of such definition: "Notwithstanding the foregoing, for the
purposes of Article V of the Building Loan Agreement and of each of the
Guaranties and the Environmental Indemnity, references therein to "Property"
shall be deemed to continue to refer to the "Property" as defined in and
encumbered by the Existing Building Loan Mortgage, prior to giving effect to any
such release.

                  (c) The defined terms set forth in the Recitals to this
Amendment shall be added to the definitions set forth in Section 1.1 of the
Existing Building Loan Agreement, as the same are amended pursuant to paragraphs
(a) and (b) above, as though each such defined term was set forth in proper
alphabetical order with the other definitions in said Section 1.1, and each
provided that it "shall have the meaning as set forth in the Second Amendment".
In addition, the following definitions are hereby added to the definitions set
forth in Section 1.1 of the Existing Building Loan Agreement, as amended hereby,
in proper alphabetical order:

                  (i)      "ADDITIONAL ALEXANDER'S GUARANTY" shall mean that
         certain Guaranty from Alexander's in favor of Agent dated as of the
         date hereof.

                  (ii)     "ADDITIONAL CASH COLLATERAL" shall have the meaning
         as set forth in Section 6 of the Second Amendment.

                  (iii)    "COMMERCIAL UNIT RELEASE PRICE" shall mean as to the
         Retail Unit, the amount required to be paid to Agent (for the ratable
         benefit of Lenders) for the release of the Retail Unit, which shall be
         equal to $15,000,000.00 less the amount of Excess Residential
         Condominium Unit Sales Proceeds on the date of determination.

                  (iv)     "EXCESS RESIDENTIAL CONDOMINIUM UNIT SALES PROCEEDS"
         shall mean, as of any date of determination, an amount equal to (A) the
         product of (I) the square footage of Residential Units under new
         Qualifying Contracts entered into after the date of the Second
         Amendment (i.e., in excess of the 44,280 square feet of Residential
         Units which are the subject of Qualifying Contracts in existence on the
         date of the Second Amendment), multiplied times (II) the amount by
         which the Net Sales Proceeds per square foot pursuant to such new
         Qualifying Contracts exceeds $800 per square foot or (B)
         $15,000,000.00, whichever is less.

                  (v)      "SECOND AMENDMENT" shall mean that certain Second
         Amendment to Building Loan Agreement dated as of the date hereof
         between Borrower, Agent and the Lenders signatory thereto.

                  (d) All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Existing Building Loan Agreement.
The principles of construction set forth in Section 1.2 of the Existing Building
Loan Agreement shall be applicable to this Amendment as if the terms and
provisions of said Section 1.2 were set forth at length herein. References in
the Existing Building Loan Agreement to "this Agreement" "herein," "hereof" or
terms of similar import shall refer to the Existing Building Loan Agreement, as
amended by this Amendment and as the same may, from time to time, hereafter be
amended, modified, extended,

                                       4

supplemented or restated and shall include all Addendums, Schedules and Exhibits
hereto and thereto. All references in the Original Loan Agreement to "this
Agreement," "herein," "hereof" or terms of similar import shall refer to the
Loan Agreement.

         Section 2.        Building Loan Amount. The parties hereto acknowledge
and confirm that the Building Loan Amount (as defined in the Existing Building
Loan Agreement) has been fully funded in the principal amount of $215,000,000.00
pursuant to the Existing Building Loan Agreement and that Lenders have no
further obligations to make any advances of the Building Loan under the Existing
Building Loan Agreement as amended by this Amendment.

         Section 3.        Extension Option Conditions. The conditions set forth
in clauses (vii) and (viii) of Section 2.1.5(b) of the Existing Building Loan
Agreement are hereby eliminated as conditions to the Borrower's exercising its
option to extend the Loan for the First Extension Period pursuant to said
Section 2.1.5(b) and as conditions to the Borrower's exercising its option to
extend the Loan for the Second Extension Period pursuant to Section 2.1.5(c) of
the Existing Building Loan Agreement.

         Section 4.        Loan Balancing. Agent agrees that in determining
whether any Shortfall exists under Section 2.1.11 of the Building Loan
Agreement, it shall take into consideration the amount of Cash Collateral it is
holding at the time of determination.

         Section 5.        Bloomberg Financials. Section 4.1.6(f) of the
Existing Building Loan Agreement is hereby deleted, and "intentionally deleted"
is inserted in its place.

         Section 6.        Commercial Unit Release. Section 4.1.37(i) of the
Existing Building Loan Agreement is hereby amended to delete, "Intentionally
omitted" and to insert in its stead the following new subsection (i):

                  "(i) (A) Provided that no Event of Default exists under this
                  Agreement, Agent shall release the Retail Unit from the lien
                  of the Building Loan Mortgage, Supplemental Loan Mortgage and
                  Project Loan Mortgage and all other Loan Documents securing
                  the indebtedness evidenced by the Building Loan Note, the
                  Supplemental Loan Note and the Project Loan Note (and from any
                  UCC-1 financing statements executed by Borrower in favor of
                  Agent covering such Units) and Commercial Owner from the
                  obligations and liabilities thereafter arising under this
                  Agreement, the Building Loan Mortgage, Supplemental Loan
                  Mortgage and Project Loan Mortgage and all other Loan
                  Documents securing the indebtedness evidenced by the Building
                  Loan Note, the Supplemental Loan Note and the Project Loan
                  Note except for the Environmental Indemnity and deliver to
                  Borrower a duly executed release(s) in recordable form, a
                  UCC-3 release of security interest and other such documents as
                  may be reasonably required to release the Retail Unit from the
                  lien and/or security interest of the Building Loan Documents,
                  Supplemental Loan Documents and Project Loan Documents and
                  Commercial Owner from such obligations upon satisfaction of
                  each of the following conditions:

                                       5

                                    (1)      Agent shall have received not less
                           than five (5) Business Days prior written notice of
                           the proposed release accompanied by an officer's
                           Certificate setting forth the Commercial Unit Release
                           Price and the Excess Residential Condominium Unit
                           Sales Proceeds used in the calculation thereof;

                                    (2)      the Unit to be released will
                           constitute one or more tax lots separate and distinct
                           from the tax lot or lots applicable to the remaining
                           portion of the Property encumbered by the liens of
                           the Mortgage;

                                    (3)      the release from the liens of the
                           Mortgage will not violate any applicable zoning or
                           subdivision laws;

                                    (4)      Agent shall have received in cash
                           or by wire transfer of immediately available funds or
                           by certified or bank check payable to Agent the
                           Commercial Unit Release Price; and

                                    (5)      Agent shall have received such
                           other documents, certificates, instruments, opinions
                           or assurances as Agent may reasonably request.

                           (B)      The Commercial Unit Release Price received
                  by Agent under this Section 4.1.37 shall be applied in
                  accordance with subsection (C) below and shall not be deemed a
                  payment until such time.

                           (C)      Amounts received by Agent under this
                  subsection shall be applied on the date received or, at
                  Agent's option, on the date immediately succeeding the
                  expiration of the then current Interest Period (without
                  penalty other than Additional Costs) first to the payment of
                  principal outstanding under the Project Loan Documents, second
                  to the payment of principal outstanding under the Supplemental
                  Loan Documents and third to the payment of principal
                  outstanding under Building Loan Documents. In the event Agent
                  shall have elected not to apply such amounts on the date
                  received, such amounts shall be held by Agent in an interest
                  bearing reserve account and all interest earned therein shall
                  be paid to Borrower. Notwithstanding the foregoing, if the
                  aggregate principal amount outstanding on the Loan less the
                  aggregate amount of Cash Collateral being held by Agent in the
                  Cash Collateral Account does not equal or exceed the
                  Commercial Unit Release Price, then notwithstanding the
                  foregoing, the difference (the "CRP EXCESS"), shall be applied
                  as follows: (1) first, to reduce the unfunded amount of the
                  Supplemental Loan and the Project Loan (in such proportions as
                  the Agent determines in its reasonable discretion based upon
                  the Loan Budget) by (x) the amount of the CRP Excess or (y)
                  the aggregate unfunded amount of the Supplemental Loan and the
                  Project Loan, whichever of (x) or (y) is less, and (2) next,
                  to reduce the aggregate outstanding principal amount of the
                  Project Loan and the Supplemental Loan (in such proportions as
                  the Agent determines in its reasonable discretion based upon
                  the Loan Budget) by the amount of the CRP Excess after
                  application pursuant to clause (1) above in which

                                       6

                  event a corresponding amount of Project Cash Collateral and
                  Supplemental Cash Collateral as that being applied pursuant to
                  this clause (2) shall be released to Borrower. The amount of
                  the Commercial Unit Release Price, if any, that is applied to
                  reduce the aggregate unfunded amount of the Supplemental Loan
                  and the Project Loan pursuant to clause (1) above shall not be
                  required to be paid to Agent; provided, however, that Borrower
                  shall have the option to deposit the same with Agent pursuant
                  to Section 2.1.11. Nothing contained herein shall be deemed a
                  waiver of Agent's rights pursuant to Section 2.1.11 of the
                  Building Loan Agreement notwithstanding that a Shortfall
                  thereunder may result from the application of the Commercial
                  Unit Release Price as provided herein and Borrower shall be
                  deemed to have been notified by Agent in accordance with said
                  Section 2.1.11 that a Shortfall exists in the amount of the
                  CRP Excess."

         Section 7.        Residential Unit Required Release Price. (a) Section
4.1.37(f) of the Existing Building Loan Agreement is hereby amended by deleting
the semi-colon in the fifth line thereof and all of the text that follows and
replacing the same with a period.

                  (b) In addition, Section 4.1.37(j)(i)(H) of the Existing
Building Loan Agreement is hereby amended by inserting a semi-colon immediately
after the end parenthesis following the defined term "Required Release Price"
and deleting the remaining text beginning with ", provided that so long" through
the end of clause (H).

         Section 8.        Insurance Coverage. (a) Section 5.1.1(a)(i)(A)(V) of
the Existing Building Loan Agreement is hereby amended to delete the
$490,000,000 minimum limit amount, so as to correspond with the obligations of
Borrower under Section 5.1.3(b) of the Existing Building Loan Agreement as
modified hereby.

                  (b) Section 5.1.3(b) of the Existing Building Loan Agreement
is hereby amended to delete "(which amount shall not be required to exceed
$490,000,000)" where it appears.

         Section 9.        Major Casualty or Condemnation. Section 5.3.2 of the
Existing Building Loan Agreement is hereby amended as follows:

                  (a) Section 5.3.2(a)(iii) is hereby deleted in its entirety,
and the following is inserted in its stead:

                  "(iii)   Qualifying Contracts covering not less than 33% of
                  the net saleable area of the Master Residential Unit shall
                  remain in full force and effect during and after the
                  completion of the Restoration without reduction of the
                  purchase prices thereunder, notwithstanding the occurrence of
                  such Casualty or Condemnation;"

                  (b)      In the second to last sentence of Section 5.3.2(i),
which begins with the words, "Notwithstanding the preceding sentence,", the
words "Borrower votes its interests" is hereby deleted and replaced with the
words "the necessary Unit owners under said Section 339-cc vote".

         Section 10.       Events of Default. Section 9.1(a)(v) of the Existing
Building Loan Agreement is hereby deleted, and "intentionally deleted" is
inserted in its place.

                                       7

         Section 11.       Additional Cash Collateral. In order to induce Agent
and Lenders to enter into this Amendment and the other Amendment Transaction
Loan Documents, simultaneously herewith Borrower is entering into that certain
Amendment to Cash Collateral Agreement and depositing with Agent (for the
ratable benefit of Lenders), as additional collateral for the Loan, the sum of
$90,000,000.00 (the "ADDITIONAL CASH COLLATERAL").

                  (a) Authorization, Conflicts, Enforceability. Borrower
represents, warrants and certifies to Agent and Lenders that the execution,
delivery, and performance of this Amendment and the other documents which are
being executed and delivered in connection herewith by the Borrower have been
duly authorized, executed and delivered by Borrower and will not conflict with,
result in a breach of, or constitute a default under, any of the terms,
conditions or provisions of any of Borrower's organizational documents or any
agreement or instrument to which Borrower is a party or by which it is bound, or
any order or decree applicable to Borrower, or result in the creation or
imposition of any lien on any of Borrower's assets or property (other than
pursuant to the Loan Documents). No consent, approval, authorization or order of
any court or Governmental Authority or other Person is required for the
execution, delivery and performance by Borrower of, or compliance by Borrower
with, this Amendment or the other Amendment Transaction Loan Documents or the
consummation of the transactions contemplated hereby, other than those which
have been obtained by Borrower.

         Section 12.       Filing of Amendment. Borrower shall cause the Title
Company to deliver this Amendment for filing in the County Clerk's Office of New
York County when and as required by Section 22 of the Lien Law. The parties
hereto affirm that the Net Sum Available to Borrower from the Building Loan for
the Improvements as shown on the Lien Law Affidavit filed with the Existing
Building Loan Agreement has been fully funded and that the Net Sum Available to
Borrower from the Building Loan for the Improvements by virtue of the making of,
and after giving effect to, all advances of the proceeds of the Building Loan
previously made is now zero.

         Section 13.       Successors and Assigns. This Amendment shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, subject to Article VIII of the Existing Building Loan
Agreement (and no other Person shall be deemed a benefited party hereunder under
any circumstances).

         Section 14.       No Further Modification. Except as modified and
amended by this Amendment, the Existing Building Loan Agreement shall remain
unmodified and in full force and effect.

         Section 15.       Counterparts. This Amendment may be executed in any
number of counterparts, each of which shall be an original and all of which
shall constitute together but one and the same agreement.

         Section 16.       Section Headings. The Section headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.

                                       8

         Section 17.       Severability. Wherever possible, each provision of
this Amendment shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Amendment shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Amendment.

         Section 18.       Governing Law. The governing law provisions of
Section 10.3(A) of the Existing Building Loan Agreement are incorporated herein
by reference as though fully set forth.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       9

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their duly authorized representatives, all as
of the day and year first above written.

                                       BORROWER:

                                       731 COMMERCIAL LLC, a Delaware limited
                                       liability company

                                       By: 731 Commercial Holding LLC,
                                           a Delaware limited liability company,
                                           as member

                                           By: Alexander's, Inc., a Delaware
                                               corporation, member

                                               By: /s/ Brian Kurtz
                                                   _____________________________
                                                   Name: Brian Kurtz
                                                   Title:Assistant Secretary

                                       731 RESIDENTIAL LLC, a Delaware limited
                                       liability company

                                       By: 731 Residential Holding LLC,
                                           a Delaware limited liability company,
                                           as member

                                           By: Alexander's, Inc., a Delaware
                                               corporation, member

                                               By: /s/ Brian Kurtz
                                                   _____________________________
                                                   Name: Brian Kurtz
                                                   Title:Assistant Secretary

                                       AGENT:

                                       HYPO REAL ESTATE CAPITAL
                                       CORPORATION, AS AGENT

                                       By: /s/ Robert Dowling
                                           _____________________________________
                                           Name: Robert Dowling
                                           Title:Managing Director

                                       By: /s/ William J. Rogers
                                           _____________________________________
                                           Name: William J. Rogers
                                           Title:Managing Director

                                       LENDER:

                                       HYPO REAL ESTATE CAPITAL
                                       CORPORATION

                                       By: /s/ Robert Dowling
                                           _____________________________________
                                           Name: Robert Dowling
                                           Title:Managing Director

                                       By: /s/ William J. Rogers
                                           _____________________________________
                                           Name: William J. Rogers
                                           Title:Managing Director

                                       Lending Office:

                                       622 Third Avenue
                                       29th Floor
                                       New York, New York 10017
                                       Attention: Real Estate Lending

                                 ACKNOWLEDGMENT

Acknowledgment for Borrower:

STATE OF ___________________________)

                                    ) ss.:

COUNTY OF __________________________)

On the _____ day of January in the year 2004 before me, the undersigned, a
Notary Public in and for said State, personally appeared ______________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument, and that such individual(s) made
such appearance before the undersigned in the City/Town of __________, County of
_____________, and State of ____________.

                                       _________________________________________
                                            Signature & office of individual
                                                taking the acknowledgement

Acknowledgment for Agent:

STATE OF NEW YORK          )
                           ) ss.:
COUNTY OF NEW YORK         )

On the ____ day of February 2004, before me, the undersigned, a notary public in
and for said state, personally appeared ________________________ and
________________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individuals whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
capacities, and that by their signatures on the instrument, the individuals, or
the person upon behalf of which the individuals acted, executed the instrument.

                                       _________________________________________
                                            Signature & office of individual
                                                taking the acknowledgement

Acknowledgment for Lender:

STATE OF NEW YORK          )
                           ) ss.:
COUNTY OF NEW YORK         )

On the ____ day of February 2004, before me, the undersigned, a notary public in
and for said state, personally appeared ________________________ and
________________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individuals whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
capacities, and that by their signatures on the instrument, the individuals, or
the person upon behalf of which the individuals acted, executed the instrument.

                                       _________________________________________
                                            Signature & office of individual
                                                taking the acknowledgement

                                    EXHIBIT A

                          LEGAL DESCRIPTION OF PROPERTY

                                     PART I

                               RESIDENTIAL PARCEL

ALL THAT CERTAIN volume of space, situate, lying and being in the Borough of
Manhattan, County, City and State of New York, bounded and described as follows:

All that portion of the below described parcel lying between a lower horizontal
plane drawn at elevation 512 feet 2 inches above the datum level used by the
Topographical Bureau, Borough of Manhattan, which is 2 feet 9 inches above
National Geodetic Survey Vertical Datum of 1929, mean sea level Sandy Hook, New
Jersey and an upper horizontal plane drawn at 809 feet 2 inches above such datum
level bounded and described as follows:

BEGINNING at a point distant 48 feet 8 inches north of the northerly line of
East 58th Street and 30 feet 9 inches east of easterly line of Lexington Avenue;

RUNNING THENCE northerly, parallel with the easterly line of Lexington Avenue,
12 feet 6 inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 78 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 12 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 103 feet
6 inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 35 feet 0
inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 88 feet 6
inches;

THENCE, westerly, parallel with the northerly line of East 58th Street, 35 feet
0 inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 103 feet
6 inches to the point or place of BEGINNING.

                                COMMERCIAL PARCEL

ALL that certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, County of New York, City and State of New York, being more
particularly bounded and described as follows:

BEGINNING at the corner formed by the intersection of the northerly line of East
58th Street with the easterly side of Lexington Avenue;

RUNNING THENCE northerly, along the easterly line of Lexington Avenue 200 feet
10 inches to the corner formed by the intersection of the southerly line of East
59th Street with the easterly line of Lexington Avenue;

THENCE easterly, along the southerly line of East 59th Street, 420 feet 0 inches
to the corner formed by the intersection of the southerly line of East 59th
Street with the westerly line of Third Avenue;

THENCE southerly, along the westerly line of Third Avenue, 200 feet 10 inches to
the corner formed by the intersection of the northerly line of East 58th Street
with the westerly line of Third Avenue;

THENCE westerly, along the northerly line of East 58th Street, 420 feet to the
point or place of BEGINNING.

LESS AND EXCEPT:

All that portion of the below described parcel lying between a lower horizontal
plane drawn at elevation 512 feet 2 inches above the datum level used by the
Topographical Bureau, Borough of Manhattan, which is 2 feet 9 inches above
National Geodetic Survey Vertical Datum of 1929, mean sea level Sandy Hook, New
Jersey and an upper horizontal plane drawn at 809 feet 2 inches above such datum
level bounded and described as follows:

BEGINNING at a point distant 48 feet 8 inches north of the northerly line of
East 58th Street and 30 feet 9 inches east of easterly line of Lexington Avenue;

RUNNING THENCE northerly, parallel with the easterly line of Lexington Avenue,
12 feet 6 inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 78 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 5 feet 10
inches;

THENCE northerly, parallel with the easterly line of Lexington Avenue, 12 feet 6
inches

THENCE easterly, parallel with the northerly line of East 58th Street, 103 feet
6 inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE easterly, parallel with the northerly line of East 58th Street, 35 feet 0
inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 88 feet 6
inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 35 feet 0
inches;

THENCE southerly, parallel with the easterly line of Lexington Avenue, 7 feet 6
inches;

THENCE westerly, parallel with the northerly line of East 58th Street, 103 feet
6 inches to the point or place of BEGINNING.

SAID RESIDENTIAL PARCEL AND COMMERCIAL PARCEL DESCRIBED IN PART I OF THIS
EXHIBIT A BEING ONE AND THE SAME AS THE FOLLOWING PROPERTY DESCRIBED IN PART II
OF THIS EXHIBIT A

                                     PART II

                                 (OFFICE UNIT 1)

                  The Condominium Unit (the "Unit") in the premises known as
Beacon Court Condominium and by the street number by the street number 151 East
58th Street, Borough of Manhattan, City, County and State of New York, said Unit
being designated and described as "Office Unit 1" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1002
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

                  TOGETHER with an undivided 49.0559% percentage interest in the
General Common Elements (as such term is defined in the Declaration);

                  TOGETHER with the appurtenances and all the estate and rights
in and to the Unit;

                  TOGETHER with, and subject to, the rights, obligations,
easements, restrictions and other provisions set forth in the Declaration and
the By-Laws, all of which constitute covenants running with the Land and will
bind any person having at any time any interest or estate in (any of) the Unit,
as though recited and stipulated at length herein;

                  The premises within which the Unit is located is more
particularly described as:

                  ALL that certain plot, piece or parcel of land, situate, lying
and being in the borough of Manhattan, County, City and State of New York,
bounded and described as follows:

                  BEGINNING at the corner formed by the intersection of the
southerly side of East 59th Street and the westerly side of Third Avenue;

                  RUNNING THENCE southerly, along the westerly side of Third
Avenue, 200'-10" to the northerly side of East 58th Street;

                  THENCE westerly, along the northerly side of East 58th Street
420' to the easterly side of Lexington Avenue;

                  THENCE northerly along the easterly side of Lexington Avenue,
200'-10" to the southerly side of East 59th Street;

                  THENCE easterly, along the southerly side of East 59th Street,
420' to the point or place of BEGINNING.

                  TOGETHER with the benefits and SUBJECT to the burdens of the
easements set forth in the deed made by Seven Thirty One Limited Partnership to
59th Street Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339
Page 1100.

                                  (RETAIL UNIT)

                  The Condominium Unit (the "Unit") in the premises known as
Beacon Court Condominium and by the street number by the street number 151 East
58th Street, Borough of Manhattan, City, County and State of New York, said Unit
being designated and described as "Retail Unit" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1001
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

                  TOGETHER with an undivided 13.2894% percentage interest in the
General Common Elements (as such term is defined in the Declaration);

                  TOGETHER with the appurtenances and all the estate and rights
in and to the Unit;

                  TOGETHER with, and subject to, the rights, obligations,
easements, restrictions and other provisions set forth in the Declaration and
the By-Laws, all of which constitute covenants running with the Land and will
bind any person having at any time any interest or estate in (any of) the Unit,
as though recited and stipulated at length herein;

                  The premises within which the Unit is located is more
particularly described as:

                  ALL that certain plot, piece or parcel of land, situate, lying
and being in the borough of Manhattan, County, City and State of New York,
bounded and described as follows:

                  BEGINNING at the corner formed by the intersection of the
southerly side of East 59th Street and the westerly side of Third Avenue;

                  RUNNING THENCE southerly, along the westerly side of Third
Avenue, 200'-10" to the northerly side of East 58th Street;

                  THENCE westerly, along the northerly side of East 58th Street
420' to the easterly side of Lexington Avenue;

                  THENCE northerly along the easterly side of Lexington Avenue,
200'-10" to the southerly side of East 59th Street;

                  THENCE easterly, along the southerly side of East 59th Street,
420' to the point or place of BEGINNING.

                  TOGETHER with the benefits and SUBJECT to the burdens of the
easements set forth in the deed made by Seven Thirty One Limited Partnership to
59th Street Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339
Page 1100.

                                 (OFFICE UNIT 2)

                  The Condominium Unit (the "Unit") in the premises known as
Beacon Court Condominium and by the street number by the street number 151 East
58th Street, Borough of Manhattan, City, County and State of New York, said Unit
being designated and described as "Office Unit 2" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1003
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

                  TOGETHER with an undivided 14.0095% percentage interest in the
General Common Elements (as such term is defined in the Declaration);

                  TOGETHER with the appurtenances and all the estate and rights
in and to the Unit;

                  TOGETHER with, and subject to, the rights, obligations,
easements, restrictions and other provisions set forth in the Declaration and
the By-Laws, all of which constitute covenants running with the Land and will
bind any person having at any time any interest or estate in (any of) the Unit,
as though recited and stipulated at length herein;

                  The premises within which the Unit is located is more
particularly described as:

                  ALL that certain plot, piece or parcel of land, situate, lying
and being in the borough of Manhattan, County, City and State of New York,
bounded and described as follows:

                  BEGINNING at the corner formed by the intersection of the
southerly side of East 59th Street and the westerly side of Third Avenue;

                  RUNNING THENCE southerly, along the westerly side of Third
Avenue, 200'-10" to the northerly side of East 58th Street;

                  THENCE westerly, along the northerly side of East 58th Street
420' to the easterly side of Lexington Avenue;

                  THENCE northerly along the easterly side of Lexington Avenue,
200'-10" to the southerly side of East 59th Street;

                  THENCE easterly, along the southerly side of East 59th Street,
420' to the point or place of BEGINNING.

                  TOGETHER with the benefits and SUBJECT to the burdens of the
easements set forth in the deed made by Seven Thirty One Limited Partnership to
59th Street Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339
Page 1100.

                               (RESIDENTIAL UNIT)

                  The Condominium Unit (the "Unit") in the premises known as
Beacon Court Condominium and by the street number by the street number 151 East
58th Street, Borough of Manhattan, City, County and State of New York, said Unit
being designated and described as "Residential Unit" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1004
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

                  TOGETHER with an undivided 23.6452% percentage interest in the
General Common Elements (as such term is defined in the Declaration);

                  TOGETHER with the appurtenances and all the estate and rights
in and to the Unit;

                  TOGETHER with, and subject to, the rights, obligations,
easements, restrictions and other provisions set forth in the Declaration and
the By-Laws, all of which constitute covenants running with the Land and will
bind any person having at any time any interest or estate in (any of) the Unit,
as though recited and stipulated at length herein;

                  The premises within which the Unit is located is more
particularly described as:

                  ALL that certain plot, piece or parcel of land, situate, lying
and being in the borough of Manhattan, County, City and State of New York,
bounded and described as follows:

                  BEGINNING at the corner formed by the intersection of the
southerly side of East 59th Street and the westerly side of Third Avenue;

                  RUNNING THENCE southerly, along the westerly side of Third
Avenue, 200'-10" to the northerly side of East 58th Street;

                  THENCE westerly, along the northerly side of East 58th Street
420' to the easterly side of Lexington Avenue;

                  THENCE northerly along the easterly side of Lexington Avenue,
200'-10" to the southerly side of East 59th Street;

                  THENCE easterly, along the southerly side of East 59th Street,
420' to the point or place of BEGINNING.

                  TOGETHER with the benefits and SUBJECT to the burdens of the
easements set forth in the deed made by Seven Thirty One Limited Partnership to
59th Street Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339
Page 1100.

                           LOAN AND SECURITY AGREEMENT

                          Dated as of February 13, 2004

                                     Between

                               731 OFFICE ONE LLC
                                   as Borrower

                                       and

                      GERMAN AMERICAN CAPITAL CORPORATION,
                                    as Lender

                                TABLE OF CONTENTS

                                                                                                            Page
                                                                                                            ----

I.    DEFINITIONS; PRINCIPLES OF CONSTRUCTION..........................................................        1
Section 1.1       Definitions..........................................................................        1
Section 1.2       Principles of Construction...........................................................       27

II.   GENERAL TERMS....................................................................................       27
Section 2.1       Loan; Disbursement to Borrower.......................................................       27
Section 2.2       Interest; Loan Payments; Late Payment Charge.........................................       28
Section 2.3       Prepayments..........................................................................       29
Section 2.4       Regulatory Change; Taxes.............................................................       30

III.  CASH MANAGEMENT..................................................................................       32
Section 3.1       Cash Management......................................................................       32

IV.   REPRESENTATIONS AND WARRANTIES...................................................................       43
Section 4.1       Borrower Representations.............................................................       43
Section 4.2       Survival of Representations..........................................................       53

V.    BORROWER COVENANTS...............................................................................       53
Section 5.1       Affirmative Covenants................................................................       53
Section 5.2       Negative Covenants...................................................................       63

VI.   INSURANCE; CASUALTY; CONDEMNATION; RESTORATION...................................................       66
Section 6.1       Insurance Coverage Requirements......................................................       66
Section 6.2       Condemnation and Insurance Proceeds..................................................       71

VII.  IMPOSITIONS, OTHER CHARGES, LIENS AND OTHER ITEMS................................................       77
Section 7.1       Borrower to Pay Impositions and Other Charges........................................       77
Section 7.2       No Liens.............................................................................       77
Section 7.3       Contest..............................................................................       78

VIII. TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS....................................................       79
Section 8.1       Restrictions on Transfers............................................................       79
Section 8.2       Sale of Building Equipment...........................................................       79
Section 8.3       Immaterial Transfers and Easements, etc..............................................       79
Section 8.4       Intentionally Omitted..............................................ERROR! BOOKMARK NOT DEFINED.
Section 8.5       Permitted Transfers..................................................................       80
Section 8.6       Deliveries to Lender.................................................................       81
Section 8.7       Loan Assumption......................................................................       81
Section 8.8       Bloomberg Lease......................................................................       82

IX.   DEFEASANCE.......................................................................................       85
Section 9.1       Defeasance...........................................................................       85

X.    MAINTENANCE OF PROPERTY; ALTERATIONS.............................................................       88

                                                                                                          
Section 10.1      Maintenance of Property..............................................................       88
Section 10.2      Conditions to Alteration.............................................................       89
Section 10.3      Costs of Alteration..................................................................       89

XI.   BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION, LOW DSCR PERIOD..........       90
Section 11.1      Books and Records....................................................................       90
Section 11.2      Financial Statements.................................................................       91

XII.  ENVIRONMENTAL MATTERS............................................................................       93
Section 12.1      Representations......................................................................       93
Section 12.2      Covenants............................................................................       93
Section 12.3      Environmental Reports................................................................       94
Section 12.4      Environmental Indemnification........................................................       94
Section 12.5      Recourse Nature of Certain Indemnifications..........................................       95

XIII. INTENTIONALLY OMITTED............................................................................       95

XIV.  SECURITIZATION AND PARTICIPATION.................................................................       95
Section 14.1      Sale of Note and Securitization......................................................       95
Section 14.2      Cooperation with Rating Agencies.....................................................       97
Section 14.3      Securitization Financial Statements..................................................       97
Section 14.4      Securitization Indemnification.......................................................       97
Section 14.5      Certain Indemnifications.............................................................      100
Section 14.6      Retention of Servicer................................................................      100

XV.   ASSIGNMENTS AND PARTICIPATIONS...................................................................      100
Section 15.1      Intentionally Omitted................................................................      100
Section 15.2      Intentionally Omitted................................................................      100
Section 15.3      Substitute Notes.....................................................................      100
Section 15.4      Participations.......................................................................      101
Section 15.5      Disclosure of Information............................................................      101
Section 15.6      Security Interest in Favor of Federal Reserve Bank...................................      101

XVI.  RESERVE ACCOUNTS.................................................................................      101
Section 16.1      Tax Reserve Account..................................................................      101
Section 16.2      Insurance Reserve Account............................................................      102
Section 16.3      Structural Reserve Account...........................................................      103
Section 16.4      Additional Debt Service Reserve Account..............................................      104
Section 16.5      Cash Trap Reserve Account............................................................      104

XVII. DEFAULTS.........................................................................................      105
Section 17.1      Event of Default.....................................................................      105
Section 17.2      Remedies.............................................................................      110
Section 17.3      Remedies Cumulative; Waivers.........................................................      112
Section 17.4      Costs of Collection..................................................................      112

XVIII.SPECIAL PROVISIONS...............................................................................      113

                                                                                                          
Section 18.1      Exculpation..........................................................................      113

XIX.  MISCELLANEOUS....................................................................................      116
Section 19.1      Survival.............................................................................      116
Section 19.2      Lender's Discretion..................................................................      116
Section 19.3      Governing Law........................................................................      116
Section 19.4      Modification, Waiver in Writing......................................................      117
Section 19.5      Delay Not a Waiver...................................................................      117
Section 19.6      Notices..............................................................................      118
Section 19.7      TRIAL BY JURY........................................................................      119
Section 19.8      Headings.............................................................................      120
Section 19.9      Severability.........................................................................      120
Section 19.10     Preferences..........................................................................      120
Section 19.11     Waiver of Notice.....................................................................      120
Section 19.12     Expenses; Indemnity..................................................................      120
Section 19.13     Exhibits and Schedules Incorporated..................................................      123
Section 19.14     Offsets, Counterclaims and Defenses..................................................      123
Section 19.15     Liability of Assignees of Lender.....................................................      123
Section 19.16     No Joint Venture or Partnership; No Third Party Beneficiaries........................      123
Section 19.17     Publicity............................................................................      124
Section 19.18     Waiver of Marshalling of Assets......................................................      124
Section 19.19     Waiver of Counterclaim and other Actions.............................................      124
Section 19.20     Conflict; Construction of Documents; Reliance........................................      124
Section 19.21     Prior Agreements.....................................................................      125
Section 19.22     USA Patriot Act Notification.........................................................      125
Section 19.23     Tax Treatment........................................................................      125
Section 19.24     Counterparts.........................................................................      126

                             EXHIBITS AND SCHEDULES

EXHIBIT A        INTENTIONALLY DELETED
EXHIBIT B        FORM OF TENANT NOTIFICATION LETTER
EXHIBIT C        OWNERSHIP DIAGRAM
EXHIBIT D        LITIGATION SCHEDULE
EXHIBIT E        INTENTIONALLY DELETED
EXHIBIT F        FORM OF SUBORDINATION, NON-DISTURBANCE,
                 ATTORNMENT AND ESTOPPEL AGREEMENT
EXHIBIT G        FORM OF COMPLETION GUARANTY

SCHEDULE I       LIST OF SECURITY DEPOSITS
SCHEDULE II      LIST OF ERISA EXCEPTIONS
SCHEDULE III     SCHEDULE TO REPRESENTATION 4.1.43

                           LOAN AND SECURITY AGREEMENT

                  THIS LOAN AND SECURITY AGREEMENT dated as of February 13, 2004
(as amended, restated, replaced, supplemented or otherwise modified from time to
time, this AGREEMENT), between 731 OFFICE ONE LLC, a Delaware limited liability
company (BORROWER) having an address for notice purposes c/o Alexander's Inc.,
888 Seventh Avenue, New York, New York 10019, and GERMAN AMERICAN CAPITAL
CORPORATION, a Maryland corporation, having an address at 60 Wall Street, New
York, New York 10005 (together with its successors and assigns, LENDER).

                              W I T N E S S E T H:

                  WHEREAS, Borrower desires to obtain the Loan (as hereinafter
defined) from Lender;

                  WHEREAS, Lender is willing to make the Loan to Borrower,
subject to and in accordance with the terms of this Agreement and the other Loan
Documents (as hereinafter defined).

                  NOW, THEREFORE, in consideration of the making of the Loan by
Lender and the covenants, agreements, representations and warranties set forth
in this Agreement, the parties hereto hereby covenant, agree, represent and
warrant as follows:

                  I.       DEFINITIONS; PRINCIPLES OF CONSTRUCTION

                  SECTION 1.1       DEFINITIONS.

                  For all purposes of this Agreement, except as otherwise
expressly required or unless the context clearly indicates a contrary intent:

                  ACCOUNT AGREEMENT shall mean the Account and Control
Agreement, dated the date hereof, among Lender, Borrower and Cash Management
Bank.

                  ACCOUNT COLLATERAL shall have the meaning set forth in Section
3.1.2.

                  ADDITIONAL DEBT SERVICE RESERVE ACCOUNT shall have the meaning
set forth in Section 3.1.1.

                  ADDITIONAL NON-CONSOLIDATION OPINION shall have the meaning
set forth in Section 4.1.29(b).

                  AFFILIATE shall mean, with respect to any specified Person,
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with, or any general partner or managing
member in, such specified Person. An Affiliate of a Person includes, without
limitation, (i) any officer or director of such Person, (ii) any record or
beneficial owner of more than 20% of any class of

ownership interests of such Person and (iii) any Affiliate of the foregoing. For
the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interest, by contract or otherwise; and the terms
"controlling" and "controlled" have the meanings correlative to the foregoing.

                  AGREEMENT shall mean this Agreement, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

                  ALTA shall mean American Land Title Association, or any
successor thereto.

                  ALTERATIONS shall have the meaning set forth in Article X.

                  ALTERATIONS RESERVE ACCOUNT shall have the meaning set forth
in Section 3.1.1.

                  ANNUAL BUDGET shall mean the operating budget for the Property
prepared by Borrower or Manager, on Borrower's behalf, pursuant to the
Management Agreement, for the applicable Fiscal Year or other period setting
forth, in reasonable detail, Borrower's or Manager's (as applicable) good faith
estimates of the anticipated results of operations of the Property, including
revenues from all sources, all Operating Expenses, management fees and Capital
Expenditures.

                  ANNUAL REPORTS shall have the meaning set forth in Section
11.2.2 hereof.

                  ANTICIPATED REPAYMENT DATE shall have the meaning set forth in
the Note.

                  APPLICABLE INTEREST RATE shall have the meaning set forth in
the Note.

                  APPROVED BANK shall have the meaning set forth in the Account
Agreement.

                  APPROVED CONTRACTOR shall mean Amec, Bovis Lend Lease,
Skanska, Structure Tone, Turner Construction or any other general contractor
approved by Lender in its sole but reasonable discretion.

                  APPROVED OPERATING EXPENSES shall mean (i) the monthly
Operating Expenses as set forth on the Annual Budget approved by Lender pursuant
to Section 11.2.6 plus (ii) the amount by which the actual amounts paid or
payable for such month for non-discretionary items, including, without
limitation, real estate taxes, insurance premiums, electric, gas, oil, water,
sewer or other utility services to the Condominium Unit exceeds the budgeted
amount for each such line item on the Annual Budget; provided, however, that if
such Annual Budget has not been approved by Lender, then the term APPROVED
OPERATING EXPENSES shall mean the amount of Operating Expenses set forth on the
immediately preceding Annual Budget approved by the Lender adjusted

upwards, but not downwards for discretionary items by the annual increase (if
any) in the Consumer Price Index (and subject to actual increases for
non-discretionary items).

                  ASSIGNMENT OF LEASES shall mean that certain first priority
(subject to Permitted Encumbrances) Assignment of Leases, Rents and Security
Deposits, dated as of the date hereof, from Borrower, as assignor, to Lender, as
assignee, assigning to Lender all of Borrower's interest in and to the Bloomberg
Lease, Rents and Security Deposits as security for the Loan, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

                  ASSIGNMENT OF MANAGEMENT AGREEMENT shall mean that certain
Manager's Consent and Subordination of Management Agreement, dated the date
hereof, among Lender, Borrower and Manager, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

                  ASSUMPTION FEE shall have the meaning set forth in Section
8.7.

                  BANKRUPTCY ACTIONS shall have the meaning ascribed thereto in
the definition of "Single Purpose Entity" herein.

                  BANKRUPTCY CODE shall mean Title 11, U.S.C.A., as amended from
time to time and any successor statute thereto.

                  BLOOMBERG shall mean Bloomberg L.P., a Delaware limited
partnership, together with its permitted successors and assigns under the
Bloomberg Lease.

                  BLOOMBERG DEFAULT shall have the meaning set forth in Section
17.1(b).

                  BLOOMBERG LEASE shall mean the Agreement of Lease, dated as of
April 30, 2001, as amended by (i) a letter agreement, dated December 20, 2001,
(ii) a letter agreement, dated January 30, 2002, (iii) a First Amendment of
Lease, dated as of April 19, 2002, (iv) a letter agreement, dated July 3, 2002,
(v) a letter agreement, dated September 30, 2002, (vi) a letter agreement, dated
February 5, 2003, (vii) a letter agreement, dated March 14, 2003, and (viii) a
letter agreement, dated May 22, 2003 (together with any permitted amendments or
supplements thereto), between Seven Thirty One Limited Partnership (as
predecessor in interest to Borrower), as landlord, and Bloomberg, as tenant.

                  BLOOMBERG SNDA shall mean the Subordination, Non-Disturbance,
Attornment and Estoppel Agreement, dated as of the date hereof, among Lender,
Borrower, as landlord, and Bloomberg, as tenant.

                  BORROWER has the meaning set forth in the first paragraph of
this Agreement.

                  BORROWER'S ACCOUNT shall mean the following account:

                           Account Name:    731 Office One Operating Acct.

                           Account Number:  230-334482
                           Bank Address:    JPMorgan Chase Bank
                                            4 New York Plaza, 13th Floor
                                            New York, New York 10004
                           ABA Number:      021000021

                  BUILDING shall have the meaning set forth in the Condominium
Declaration.

                  BUILDING EQUIPMENT shall have the meaning set forth in the
Security Instrument.

                  BUSINESS DAY shall mean any day other than a Saturday, Sunday
or any other day on which national banks in New York or in the state in which
Servicer is located (as identified in Section 19.6) are not open for business.

                  BY-LAWS shall mean the By-Laws of the Beacon Court Condominium
(together with any permitted amendments or supplements thereto).

                  CAPITAL EXPENDITURES shall mean any amount incurred in respect
of capital items which in accordance with GAAP would not be included in
Borrower's annual financial statements for an applicable period as an operating
expense of the Property and is not reasonably expected by Borrower to be a
regularly recurring operating expense of the Property.

                  CASH shall mean the legal tender of the United States of
America.

                  CASH AND CASH EQUIVALENTS shall mean any or a combination of
the following: (i) Cash, and (ii) U.S. Government Obligations.

                  CASH MANAGEMENT BANK shall mean JP Morgan Chase or any
successor Approved Bank acting as Cash Management Bank under the Account
Agreement or other financial institution reasonably approved by the Lender and,
if a Securitization has occurred, the Rating Agencies.

                  CASH TRAP PERIOD shall mean any period where a (i) Low DSCR
Period has occurred and is continuing and/or (ii) any Casualty Restoration
Period has occurred and is continuing, in each case, as determined by Lender in
accordance with the terms of Section 16.5 hereof.

                  CASH TRAP RESERVE ACCOUNT shall have the meaning set forth in
Section 3.1.1.

                  CASUALTY RESTORATION PERIOD shall mean the period commencing
on a Casualty Event and ending on the Casualty Rent Restoration Date, if any.

                  CASUALTY RENT RESTORATION DATE the day, if any that Bloomberg
resumes paying Rent for the portion of space affected by the applicable Casualty
Event (provided

that no other Casualty Restoration Period is then continuing) as determined by
Lender in accordance with the terms of Section 16.5 hereof.

                  CASUALTY EVENT shall mean a casualty affecting 10% or more of
the Property which entitles Bloomberg to a rent abatement under the Bloomberg
Lease.

                  CLOSING DATE shall mean the date hereof.

                  CODE shall mean the Internal Revenue Code of 1986, as amended,
as it may be further amended from time to time, and any successor statutes
thereto, and applicable U.S. Department of Treasury regulations issued pursuant
thereto in temporary or final form.

                  COLLATERAL ACCOUNTS shall have the meaning set forth in
Section 3.1.1.

                  COLLECTION ACCOUNT shall have the meaning set forth in Section
3.1.1 hereof.

                  COLLECTION PERIOD shall have the meaning set forth in Section
3.1.6.

                  COMMON ELEMENTS shall have the meaning provided in the
Condominium Declaration.

                  COMPLETION GUARANTY shall have the meaning set forth in
Section 6.2.4 hereof.

                  COMPONENT NOTES shall mean, collectively, that certain (i)
Promissory Note A-1 in the original principal amount of Ninety Million Dollars
($90,000,000), (ii) Promissory Note A-2 in the original principal amount of
Ninety Five Million Dollars ($95,000,000), (iii) Promissory Note A-3 in the
original principal amount of Thirty Five Million Dollars ($35,000,000) (iv)
Promissory Note A-4 in the original principal amount of Ninety Four Million
Dollars ($94,000,000), (v) Note A-X in the original notional amount of Eighty
Six Million Dollars ($86,000,000) and (vi) Promissory Note B in the original
principal amount of Eighty Six Million Dollars ($86,000,000), each made by
Borrower to Lender, dated as of the date hereof, as the same may be amended,
restated, replaced, substituted (including any components or subcomponents)
supplemented or otherwise modified from time to time.

                  CONDOMINIUM ASSOCIATION shall have the meaning set forth in
the Bloomberg Lease.

                  CONDOMINIUM BOARD shall mean (i) the board of managers of the
Beacon Court Condominium designated pursuant to the Condominium Declaration and
(ii) the board of managers comprised of representatives of the Office Unit
Owners (as such term is defined in the Condominium Declaration) designated
pursuant to the Condominium Declaration.

                  CONDOMINIUM DECLARATION shall mean that certain Declaration of
Condominium made under the Condominium Act of the State of New York (Article 9-B
of the Real Property Law of the State of New York), dated December 4, 2003 and
recorded on February 4, 2004, in the Office of the Register, The City of New
York, County of New York, in CRFN 2004000064392 (together with any permitted
modifications, amendments, restatements or supplements).

                  CONDOMINIUM DOCUMENTS shall mean the Condominium Declaration
and By-Laws and any additions or amendments permitted thereto.

                  CONDOMINIUM REGIME shall have the meaning provided in Section
5.1.23.

                  CONDOMINIUM UNIT shall have the meaning set forth in the
Security Instrument.

                  CONTROL shall mean (i) the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through ownership of voting securities, by contract or
otherwise and (ii) the ownership, direct or indirect, of no less than 51% of the
voting securities of such Person, and the terms Controlled, Controlling and
Common Control shall have correlative meanings.

                  CREDIT WRAP INSURANCE POLICY shall mean that certain "Credit
Wrap Insurance Policy" from Lexington Insurance Company, policy #7472483
covering the Property (as defined in the Condominium Documents).

                  CUT-OFF DATE shall have the meaning set forth in Section
6.2.3.

                  DBS shall have the meaning set forth in Section 14.4.2(b).

                  DBS GROUP shall have the meaning set forth in Section
14.4.2(b).

                  DEBT shall mean, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (excluding trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with GAAP, recorded as capital leases; (c) current
liabilities of such Person in respect of unfunded vested benefits under plans
covered by Title IV of ERISA; (d) obligations issued for, or liabilities
incurred on the account of, such Person; (e) obligations or liabilities of such
Person arising under letters of credit, credit facilities or other acceptance
facilities; (f) obligations of such Person under any guarantees or other
agreement to become secondarily liable for any obligation of any other Person,
endorsements (other than for collection or deposit in the ordinary course of
business) and other contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any Person or otherwise to assure a
creditor against loss; (g) obligations of such Person secured by any Lien on any
property of such Person, whether or not the obligations have been assumed by
such Person; or (h) obligations of such Person under any interest rate or
currency exchange agreement.

                  DEBT SERVICE shall mean, with respect to any particular period
of time, scheduled interest and principal payments under the Note.

                  DEBT SERVICE COVERAGE RATIO shall mean a ratio, calculated by
Lender in accordance with the terms of Section 11.2.9 hereof as of the last day
of each calendar quarter for the trailing twelve (12) calendar month period then
ended, in which:

                  (a)      the numerator is the Net Operating Income, as stated
on Borrower's most recent quarterly financial statements delivered to Lender
pursuant to Section 11.2, for the trailing twelve (12) calendar month period
(during the first year of the Loan, if quarterly financial statements are not
available for a twelve (12) calendar month period then the most recent quarterly
statements available for the one, two or three quarters most recently then
ended, as applicable, shall be used on an annualized basis) immediately prior to
the applicable calculation date; provided that from and after the final Rent
Commencement Date under the Bloomberg Lease, the Net Operating Income for the
purposes of determining the Debt Service Coverage Ratio shall equal the total
net rental payments paid under the Bloomberg Lease for the prior twelve (12)
calendar months (or, annualized payment stream if less than twelve (12) calendar
months) and during any period prior to such final Rent Commencement Date shall
include amounts paid out of the Additional Debt Service Reserve Account for Debt
Service during such trailing twelve (12) month period; and

                  (b)      the denominator is the Debt Service for the
immediately preceding twelve (12) Interest Periods (annualized during the first
year of the Loan).

                  DEBT SERVICE RESERVE ACCOUNT shall have the meaning set forth
in Section 3.1.1.

                  DEFAULT shall mean the occurrence of any event hereunder or
under any other Loan Document which, but for the giving of notice or passage of
time, or both, would be an Event of Default.

                  DEFAULT RATE shall have the meaning set forth in the Note.

                  DEFEASANCE shall have the meaning provided in Section 9.1.1.

                  DEFEASANCE COLLATERAL shall mean Defeasance Eligible
Investments pledged to Lender as collateral pursuant to Section 9.1.1
(including, without limitation, all amounts then on deposit in the Defeasance
Collateral Account).

                  DEFEASANCE COLLATERAL ACCOUNT shall have the meaning provided
in Section 9.1.1.

                  DEFEASANCE COLLATERAL REQUIREMENT shall mean with respect to
the Defeasance of the Lien of the Security Instrument, Defeasance Collateral in
an amount sufficient to provide payment of all (A) principal indebtedness
outstanding as of the date of Defeasance under the Note as it becomes due
through the Anticipated Repayment Date (and, notwithstanding any term to the
contrary in the Loan Documents, calculated by

assuming all the Indebtedness outstanding as of the date of the Defeasance is
due in full on the Anticipated Repayment Date) and (B) scheduled interest on the
Loan as it becomes due through the Anticipated Repayment Date.

                  DEFEASANCE ELIGIBLE INVESTMENTS shall mean obligations or
securities not subject to prepayment, call or early redemption which are direct
obligations of, or obligations fully guaranteed as to timely payment by, the
United States of America or any agency or instrumentality of the United States
of America, the obligations of which are backed by the full faith and credit of
the United States of America, the ownership of which will not cause Lender to be
an "investment company" under the Investment Company Act of 1940, as amended, as
evidenced by an Opinion of Counsel reasonably acceptable to Lender, and which
qualify under Section 1.860G-2(a)(8) of the Treasury regulations. All such
obligations or securities shall mature or be redeemable, or provide for payments
of interest thereon on or prior to the Business Day preceding the date principal
and interest payments are scheduled to be paid under the Note.

                  DEFEASANCE LOCKOUT PERIOD shall have the meaning set forth in
the Note.

                  DEFEASANCE NOTE shall have the meaning provided in Section
9.1.1.

                  DEFEASANCE SECURITY AGREEMENT shall have the meaning provided
in Section 9.1.1.

                  DEFICIENCY shall have the meaning set forth in Section
6.2.4(b).

                  DISCLOSURE DOCUMENTS shall have the meaning set forth in
Section 14.4.1.

                  ELIGIBLE ACCOUNT has the meaning set forth in the Account
Agreement.

                  ENVIRONMENTAL CERTIFICATE shall have the meaning set forth in
Section 12.2.

                  ENVIRONMENTAL CLAIM shall mean any claim, action, cause of
action, investigation or written notice by any Person alleging potential
liability (including potential liability for investigatory costs, cleanup costs,
natural resource damages, property damages, personal injuries or penalties)
arising out of, based upon or resulting from (a) the presence, threatened
presence, release or threatened release into the environment of any Hazardous
Substances from or at the Property, or (b) the violation, or alleged violation,
of any Environmental Law relating to the Property.

                  ENVIRONMENTAL CONSULTANT shall mean National Assessment
Corporation or such other Independent environmental consulting firm having at
least five years experience (i) conducting environmental assessments for
properties similar to the Property and (ii) preparing and supervising
remediation plans for properties similar to the Property, which firm is selected
by Borrower and is reasonably acceptable to Lender.

                  ENVIRONMENTAL EVENT shall have the meaning set forth to such
term in Section 12.2.

                  ENVIRONMENTAL INDEMNITY shall mean the Environmental
Indemnity, dated the date hereof, made by Guarantor and Borrower for the benefit
of Lender.

                  ENVIRONMENTAL LAWS shall mean all federal, state and local
laws, statutes, rules, ordinances, and regulations relating to pollution or
protection of the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata) in effect during
the term of the Loan, including, without limitation laws, statutes, rules,
ordinances and regulations relating to emissions, discharges or releases of
Hazardous Substances, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C.Sections 9601 et seq.; the Resource Conservation and Recovery Act of 1976,
42 U.S.C. Sections 6901 et seq.; the Toxic Substance Control Act, 15 U.S.C.
Sections 2601 et seq.; the Water Pollution Control Act (also known as the Clean
Water Act), 33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section
7401 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801
et seq.; the Safe Drinking Water Act, 21 U.S.C. Section 349; 42 U.S.C. Section
201 and Section 300 et seq.; the National Environmental Policy Act of 1969, 42
U.S.C. Section 4321; the Superfund Amendment and Reauthorization Act of 1986,
codified in scattered Sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.;
and Title III of the Superfund Amendment and Reauthorization Act, 40 U.S.C.
Section 1101 et seq., as the same may be hereafter amended or modified during
the term of the Loan.

                  ENVIRONMENTAL REPORTS shall have the meaning set forth in
Section 12.1.

                  ERISA shall mean the United States Employee Retirement Income
Security Act of 1974, as amended from time to time, and the regulations
promulgated and the rulings issued thereunder.

                  EVENT OF DEFAULT shall have the meaning set forth in Section
17.1(a).

                  EXCESS CASH FLOW shall have the meaning set forth in Section
3.1.6.

                  EXCHANGE ACT shall have the meaning set forth in Section
14.4.1.

                  EXCUSABLE DELAY shall mean a delay solely due to acts of god,
governmental restrictions, stays, judgments, orders, decrees, enemy actions,
civil commotion, fire, casualty, strikes, work stoppages, shortages of labor or
materials or other causes beyond the reasonable control of Borrower, but
Borrower's lack of funds in and of itself shall not be deemed a cause beyond the
control of Borrower.

                  FISCAL YEAR shall mean each twelve (12) month period
commencing on January 1 and ending on December 31 during each year of the term
of the Loan or the portion of any such 12-month period falling within the term
of the Loan in the event that such a 12-month period occurs partially before or
after the term of the Loan.

                  GAAP shall mean the generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American

Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession, to the extent such principles are applicable
to the facts and circumstances on the date of determination.

                  GOVERNMENTAL AUTHORITY shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental unit (federal, state, county, district, municipal, city or
otherwise) whether now or hereafter in existence.

                  GUARANTOR shall mean Alexander's Inc., a Delaware corporation.

                  HAZARDOUS SUBSTANCE shall mean any material, waste or
substance which is:

                  (a)      included within the definition of "hazardous
substances," "hazardous materials," "toxic substances," or "solid waste" in or
pursuant to any Environmental Law, or subject to regulation and subject to any
Environmental Law;

                  (b)      listed in and subject to the United States Department
of Transportation Optional Hazardous Materials Table, 49 C.F.R. Section 172.101
enacted as of the date hereof or hereafter amended, or in the United States
Environmental Protection Agency List of Hazardous Substances and Reportable
Quantities, 40 C.F.R. Part 302, as enacted as of the date hereof or as hereafter
amended during the term of the Loan; or

                  (c)      an explosive, radioactive, friable, asbestos,
polychlorinated biphenyl, oil or petroleum product subject to any Environmental
Law.

                  HOLDING ACCOUNT shall have the meaning set forth in Section
3.1.1.

                  IMPOSITIONS shall mean all taxes (including all ad valorem,
sales (including those imposed on lease rentals), use, single business, gross
receipts, value added, intangible transaction, privilege or license or similar
taxes), governmental assessments (including all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not commenced or completed within the term of this
Agreement), water, sewer or other rents and charges, excises, levies, fees
(including license, permit, inspection, authorization and similar fees), and all
other governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in respect of the
Property and/or any Rents (including all interest and penalties thereon), which
at any time prior to, during or in respect of the term hereof may be assessed or
imposed on or in respect of or be a Lien upon (a) Borrower (including all
income, franchise, single business or other taxes imposed on Borrower for the
privilege of doing business in the jurisdiction in which the Property is
located), (b) the Property, or any other collateral delivered or pledged to
Lender in connection with the Loan, or any part thereof, or any Rents therefrom
or any estate, right, title or interest therein, or (c) any occupancy,
operation, use or possession of,

or sales from, or activity conducted on, or in connection with the Property or
the leasing or use of all or any part thereof. Impositions shall exclude, any
tax, assessment, levy or charge imposed on (i) any tenant occupying any portion
of the Property, (ii) any third party manager of the Property, including any
Manager, or (iii) Borrower or Lender in the nature of a capital levy, estate,
inheritance, succession, income or net revenue tax.

                  IMPROVEMENTS shall have the meaning set forth in the Security
Instrument.

                  INCREASED COSTS shall have the meaning set forth in Section
2.4.1.

                  INDEBTEDNESS shall mean, at any given time, the Principal
Amount, together with all accrued and unpaid interest thereon and all other
obligations and liabilities due or to become due to Lender pursuant hereto,
under the Note or in accordance with the other Loan Documents and all other
amounts, sums and expenses paid by or payable to Lender hereunder or pursuant to
the Note or the other Loan Documents.

                  INDEMNIFIED PARTIES shall have the meaning set forth in
Section 19.12(b).

                  INDEPENDENT shall mean, when used with respect to any Person,
a Person who: (i) does not have any direct financial interest or any material
indirect financial interest in any Borrower or in any Affiliate of any Borrower,
(ii) is not connected with any Borrower or any Affiliate of any Borrower, as an
officer, employee, promoter, underwriter, trustee, partner, member, manager,
creditor, director, supplier, customer or person performing similar functions,
and (iii) is not a member of the immediate family of a Person defined in (i) or
(ii) above.

                  INDEPENDENT ACCOUNTANT shall mean Deloitte & Touche or another
firm of nationally recognized, certified public accountants which is Independent
and which is selected by Borrower and reasonably acceptable to Lender.

                  INDEPENDENT ARCHITECT shall mean SLCE Architects or such other
architect, engineer or construction consultant selected by Borrower which is
Independent, licensed to practice in the State and has at least five (5) years
of architectural, engineering or construction experience, as the case may be,
and which is reasonably acceptable to Lender.

                  INDEPENDENT DIRECTOR, INDEPENDENT MANAGER, OR INDEPENDENT
MEMBER shall mean a Person who is not and will not be while serving and has
never been (i) a member (other than an Independent Member), manager (other than
an Independent Manager), director (other than an Independent Director),
employee, attorney, or counsel of Borrower or its Affiliates, (ii) a customer,
supplier or other Person who derives more than 1% of its purchases or revenues
from its activities with Borrower or its Affiliates, (iii) a direct or indirect
legal or beneficial owner in such entity or any of its Affiliates, (iv) a member
of the immediate family of any member, manager, employee, attorney, customer,
supplier or other Person referred to above or (v) a person Controlling or under
the common Control of anyone listed in (i) - (iv) above. A Person that otherwise
satisfies the foregoing shall not be disqualified from serving as an Independent

Director or Independent Manager or Independent Member if such individual is at
the time of initial appointment, or at any time while serving, is also serving
as an Independent Director or Independent Manager or Independent Member, as
applicable, of a Single Purpose Entity affiliated with Borrower. Additionally, a
natural person who satisfies the foregoing definition other than clause (ii)
above shall not be disqualified from serving as an Independent Director,
Independent Manager or Independent Member of a particular entity because of fees
collected for serving as such if such individual is an independent director
provided by a nationally recognized company that provides professional
independent directors.

                  INSURANCE REQUIREMENTS shall mean, collectively, (i) all
material terms of any insurance policy required pursuant to this Agreement and
(ii) all material regulations and then-current standards applicable to or
affecting the Property or any part thereof or any use or condition thereof,
which may, at any time, be recommended by the Board of Fire Underwriters, if
any, having jurisdiction over the Property, or such other body exercising
similar functions.

                  INSURANCE RESERVE ACCOUNT shall have the meaning set forth in
Section 3.1.1.

                  INSURANCE RESERVE AMOUNT shall have the meaning set forth in
Section 16.2.

                  INTANGIBLE shall have the meaning set forth in the Security
Instrument.

                  INTEREST PERIOD shall have the meaning set forth in the Note.

                  LATE PAYMENT CHARGE shall have the meaning set forth in
Section 2.2.3.

                  LEASE shall mean any lease, sublease or subsublease, letting,
license, concession or other agreement (whether written or oral and whether now
or hereafter in effect) pursuant to which any Person is granted by Borrower,
Manager, Guarantor or any Affiliate of such Person a possessory interest in, or
right to use or occupy all or any portion of, any space in the Property, and
every modification, amendment or other agreement relating to such lease,
sublease, subsublease, or other agreement entered into in connection with such
lease, sublease, subsublease, or other agreement and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.

                  LEGAL REQUIREMENTS shall mean all present and future laws,
statutes, codes, ordinances, orders, judgments, decrees, injunctions, rules,
regulations and requirements, and irrespective of the nature of the work to be
done, of every Governmental Authority including, without limitation,
Environmental Laws and all covenants, restrictions and conditions now or
hereafter of record which may be applicable to Borrower or to the Property and
the Improvements and the Building Equipment thereon, or to the use, manner of
use, occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of the Property and the Improvements

and the Building Equipment thereon including, without limitation, building and
zoning codes and ordinances and laws relating to handicapped accessibility.

                  LENDER shall have the meaning set forth in the first paragraph
of this Agreement.

                  LENDER'S CONSULTANT shall mean National Assessment
Corporation, or such other environmental consulting and engineering firm having
experience (i) conducting environmental and engineering assessments (as
applicable) for properties similar to the Property and (ii) preparing and
supervising remediation and repair plans (as applicable) for properties similar
to the Property.

                  LETTER OF CREDIT shall mean an irrevocable, unconditional,
transferable, without the imposition of any fees except such fees as are
expressly payable by Borrower, clean sight draft letter of credit (either an
evergreen letter of credit or one which does not expire until at least sixty
(60) days after the Maturity Date, or the date reasonably determined by Lender
by which the Alteration is to be completed if such Letter of Credit is delivered
to Lender in connection with an Alteration (whichever is earlier), or as
otherwise provided in Section 16.4 and Section 16.6 with respect to the
Additional Debt Service Reserve Account or the Tax Reserve Account) (the LC
EXPIRATION DATE), in favor of Lender and entitling Lender to draw thereon in New
York, New York, without the imposition of any fees except such fees as are
expressly payable by Borrower, based solely on a statement executed by an
officer or authorized signatory of Lender and issued by an Approved Bank.

                  LIABILITY shall have the meaning set forth in Section
14.4.2(b).

                  LICENSE shall have the meaning set forth in Section 4.1.23.

                  LIEN shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance or charge
on or affecting Borrower, the Property, any portion thereof or any interest
therein, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of any financing statement, and the
filing of mechanic's, materialmen's and other similar liens and encumbrances.

                  LIQUIDATED DAMAGES AMOUNT shall have the meaning set forth in
the Note.

                  LOAN shall mean the loan in the amount of Four Hundred Million
Dollars ($400,000,000) made by Lender to Borrower pursuant to this Agreement.

                  LOAN DOCUMENTS shall mean, collectively, this Agreement, the
Note, the Security Instrument, the Assignment of Leases, the Environmental
Indemnity, the Assignment of Management Agreement, the Account Agreement, the
Recourse Guaranty, the Bloomberg SNDA, the Proxy and all other documents
executed and/or delivered by Borrower in connection with the Loan including any
certifications or representations

delivered by or on behalf of Borrower, any Affiliate of Borrower, the Manager,
or any Affiliate of the Manager.

                  LOW DSCR PERIOD shall mean the period commencing on the date
on which a Low DSCR Trigger Event has occurred and ending on the last day of the
first period of two (2) consecutive calendar quarters first occurring thereafter
during which the Debt Service Coverage Ratio has, as of the last day of each
such calendar quarter, been greater than the Required Debt Service Coverage
Ratio as determined by Lender in accordance with the terms of Section 16.5
hereof.

                  LOW DSCR TRIGGER EVENT shall mean the Debt Service Coverage
Ratio as of the date of determination by Lender is equal to or less than the
Required Debt Service Coverage Ratio for the previous calendar quarter.

                  MANAGEMENT AGREEMENT shall have the meaning provided in the
Assignment of Management Agreement, or, if the context requires, a Replacement
Management Agreement, pursuant to which the Manager is to provide management and
other services with respect to the Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time in
accordance with the terms hereof.

                  MANAGEMENT FEE shall mean an amount equal to the property
management fee payable to the Manager pursuant to the terms of the Management
Agreement for management services.

                  MANAGER shall mean any Qualified Manager with which Borrower
enters into a Management Agreement.

                  MATERIAL ADVERSE EFFECT shall mean any event or condition that
has a material adverse effect on (i) the use, operation or value of the Property
taken as a whole, (ii) the business, profits, operations or financial condition
of Borrower taken as a whole, or (iii) the ability of Borrower to repay the
principal and interest of the Loan as it becomes due or to satisfy any of
Borrower's obligations under the Loan Documents.

                  MATERIAL ALTERATION shall mean any Alteration (other than
decorative work such as painting, wall papering and carpeting and the
replacement of fixtures, furnishings and equipment to the extent being of a
routine and recurring nature and performed in the ordinary course of business
and tenant improvement work paid for by Bloomberg) which, when aggregated with
all related Alterations constituting a single project, involves an estimated
cost exceeding $20,000,000 with respect to such Alteration or related
Alterations (including the Alteration in question) then being undertaken at the
Property.

                  MATURITY DATE shall have the meaning set forth in the Note.

                  MATURITY DATE PAYMENT shall have the meaning set forth in the
Note.

                  MAXIMUM LEGAL RATE shall mean the maximum non-usurious
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received on the indebtedness evidenced by the
Note and as provided for herein or the other Loan Documents, under the laws of
such state or states whose laws are held by any court of competent jurisdiction
to govern the interest rate provisions of the Loan.

                  MODIFIED LEASE shall have the meaning set forth in Section
8.8.1.

                  MONETARY DEFAULT shall mean a Default (i) that can be cured
with the payment of money or (ii) arising pursuant to Section 17.1(a)(vi) or
(vii).

                  MONTHLY INSURANCE RESERVE AMOUNT shall have the meaning set
forth in Section 16.2.

                  MONTHLY PAYMENT AMOUNT shall have the meaning set forth in the
Note.

                  MONTHLY STRUCTURAL RESERVE AMOUNT shall have the meaning set
forth in Section 16.3.

                  MONTHLY TAX RESERVE AMOUNT shall have the meaning set forth in
Section 16.1.

                  MOODY'S shall mean Moody's Investors Service, Inc.

                  NET OPERATING INCOME shall mean the amount obtained by
subtracting Operating Expenses from Operating Income.

                  NON-DISTURBANCE AGREEMENT shall have the meaning set forth in
Section 8.8.8.

                  NOTE shall mean that certain Amended, Restated and
Consolidated Note in the principal amount of Four Hundred Million Dollars
($400,000,000), made by and between Borrower and Lender as of the date hereof,
as exchanged and replaced by, pursuant to the terms of the Note Exchange
Agreement, the Component Notes, as the same may be amended, restated, replaced,
substituted (including any components or subcomponents) supplemented or
otherwise modified from time to time.

                  NOTES shall mean, collectively, the Note, as exchanged and
replaced by the Component Notes and any replacement, substitute or component
notes made payable by Borrower to the order of Lender in accordance with the
terms hereof, as the same may be amended, restated, replaced, substituted
(including any components or subcomponents) or supplemented or otherwise
modified from time to time.

                  NOTE EXCHANGE AGREEMENT shall mean that certain Note Exchange
Agreement, made by and between Borrower and Lender, dated as of the date hereof,
exchanging and replacing the Note with the Component Notes.

                  OBLIGATIONS shall have meaning set forth in the recitals of
the Security Instrument.

                  OFAC LIST means the list of specially designated nationals and
blocked persons subject to financial sanctions that is maintained by the U.S.
Treasury Department, Office of Foreign Assets Control and accessible through the
internet website www.treas.gov/ofac/t11sdn.pdf.

                  OFFICE UNIT 2 shall have the meaning set forth in the Security
Instrument.

                  OFFICER'S CERTIFICATE shall mean a certificate executed by an
authorized signatory of Borrower that is familiar with the financial condition
of Borrower and the operation of the Property, as the act of Borrower and not as
of such authorized signatory, who shall, subject to the terms of Section 18.1.2
hereof, have no personal liability in connection therewith which may be given to
the best knowledge of such authorized signatory.

                  OPERATING ASSET shall have the meaning set forth in the
Security Instrument.

                  OPERATING EXPENSES shall mean, for any period, without
duplication, all expenses actually paid or payable by Borrower, or Bloomberg
under the Bloomberg Lease, during such period in connection with the ownership,
operation, management, maintenance, repair and use of the Property, determined
on an accrual basis, and, except to the extent otherwise provided in this
definition, in accordance with GAAP, which shall include, but shall not be
limited to, real estate taxes and insurance premiums, except to the extent
otherwise provided in this definition. Operating Expenses specifically shall
include (i) all expenses incurred in the immediately preceding applicable period
based on quarterly financial statements delivered to Lender in accordance with
Article XI, (ii) property management fees in an amount equal to the management
fees actually paid under the Management Agreement, (iii) administrative,
payroll, security and general expenses for the Property, (iv) the cost of
utilities, inventories and fixed asset supplies consumed in the operation of the
Property, (v) a reasonable reserve for uncollectable accounts, (vi) costs and
fees of independent professionals (including, without limitation, legal,
accounting, consultants and other professional expenses), technical consultants,
operational experts (including quality assurance inspectors) or other third
parties retained to perform services required or permitted hereunder, (vii) cost
of attendance by employees at training and manpower development programs, (viii)
association dues, (ix) computer processing charges, (x) operational equipment
and other lease payments as reasonably approved by Lender, (xi) taxes and other
Impositions, other than income taxes or other Impositions in the nature of
income taxes, and insurance premiums, (xii) all payments required to be made
pursuant to the Condominium Declaration and/or the By-Laws and (xiii) all
underwritten reserves required by Lender hereunder (without duplication),
including, without limitation, reserves for capital expenditures of $1.00 per
square foot per annum. Notwithstanding the foregoing, Operating Expenses shall
not include (1) depreciation or amortization, (2) income taxes or other
Impositions in the nature of income taxes, (3) any expenses (including legal,
accounting and other

professional fees, expenses and disbursements) incurred in connection with the
making of the Loan or the sale, exchange, transfer, financing or refinancing of
all or any portion of the Property or in connection with the recovery of
Proceeds which are applied to prepay the Note, (4) any expenses which in
accordance with GAAP should be capitalized, (5) Debt Service, and (6) any item
of expense which would otherwise be considered within Operating Expenses
pursuant to the provisions above but is paid directly by Bloomberg.

                  OPERATING INCOME shall mean, for any period, all income of
Borrower during such period from the use, ownership or operation of the Property
as follows:

                  (a)      all amounts payable to Borrower by any Person as Rent
and other amounts under the Bloomberg Lease, license agreements, parking
agreements, occupancy agreements, concession agreements or other agreements
relating to the Property;

                  (b)      business interruption insurance proceeds allocable to
the applicable reporting period;

                  (c)      all other amounts which in accordance with GAAP are
included in Borrower's annual financial statements as operating income
attributable to the Property; and

                  (d)      any amounts paid (i) by the Borrower from Excess Cash
Flow to the Collection Account and/or (ii) by any Affiliate of Borrower to the
Collection Account, in each case to pay any insurance premiums for the
Condominium Unit not paid by Bloomberg.

                  Notwithstanding the foregoing, Operating Income shall not
include (a) any Proceeds (other than business interruption insurance proceeds
and only to the extent allocable to the applicable reporting period), (b) any
proceeds resulting from the Transfer of all or any portion of the Property, (c)
any Rent attributable to a Lease (i) during a period which the Lease is in
default (unless such Rent has been paid to Borrower) or (ii) prior to the date
in which Bloomberg has taken occupancy or in which the actual payment of rent is
required to commence thereunder, (d) any item of income otherwise included in
Operating Income but paid directly by Bloomberg to a Person other than Borrower
as an offset or deduction against Rent payable by Bloomberg, provided such item
of income is an item of expense (such as payments for utilities paid directly to
a utility company) and is otherwise excluded from the definition of Operating
Expenses pursuant to clause "(6)" of the definition thereof, and (e) security
deposits received from Bloomberg until forfeited or applied. Operating Income
shall be calculated on the accrual basis of accounting and, except to the extent
otherwise provided in this definition, in accordance with GAAP.

                  OPINION OF COUNSEL shall mean an opinion of counsel of a law
firm selected by Borrower and reasonably acceptable to Lender; Lender hereby
acknowledges that Proskauer Rose LLP and Richards, Layton & Finger, P.A. are
acceptable in connection with the foregoing.

                  OTHER CHARGES shall mean maintenance charges, impositions
other than Impositions, and any other charges, including, without limitation,
vault charges and license fees for the use of vaults, chutes and similar areas
adjoining the Property, now or hereafter levied or assessed or imposed against
the Property or any part thereof by any Governmental Authority, other than those
required to be paid by Bloomberg pursuant to the Bloomberg Lease and any and all
condominium common charges, assessments, expenses and other expenses and fees
required to be paid pursuant to the Condominium Declaration and/or the By-Laws

                  OTHER TAXES shall have the meaning set forth in Section 2.4.3.

                  PAYMENT DATE shall have the meaning set forth in the Note.

                  PERMITTED DEBT shall mean collectively, (a) the Note and the
other obligations, indebtedness and liabilities specifically provided for in any
Loan Document and secured by this Agreement, the Security Instrument and the
other Loan Documents; and (b) trade payables (including, without limitation,
leasing commissions) incurred in the ordinary course of Borrower's business, not
secured by Liens on the Property (other than liens being properly contested in
accordance with the provisions of this Agreement or the Security Instrument) and
equipment leases, not to exceed $8,000,000 at any one time outstanding, payable
by or on behalf of Borrower for or in respect of the operation and/or
development of the Property in the ordinary course of operating Borrower's
business, provided that (but subject to the remaining terms of this definition)
each such amount shall be paid within sixty (60) days following the date on
which each such amount is due and payable unless being contested in accordance
with the terms of Section 7.3 hereof. Notwithstanding anything set forth herein,
in no event shall Borrower be permitted under this provision to enter into a
note or other instrument for borrowed money.

                  PERMITTED ENCUMBRANCES shall mean collectively, (a) the Liens
and security interests created or permitted by the Loan Documents (including any
Liens filed against equipment leases that are otherwise permitted pursuant to
the terms hereunder), (b) all Liens, encumbrances and other matters disclosed in
the Title Policy that do not have a Material Adverse Effect on the use, value or
operation of the Property, and (c) Liens, if any, for Impositions imposed by any
Governmental Authority not yet delinquent.

                  PERMITTED INVESTMENTS shall have the meaning set forth in the
Account Agreement.

                  PERSON shall mean any individual, corporation, partnership,
joint venture, limited liability company, estate, trust, unincorporated
association, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.

                  PERSONAL PROPERTY shall have the meaning set forth in the
granting clause of the Security Instrument.

                  PHYSICAL CONDITIONS REPORT shall mean means the structural
engineering report with respect to the Property (i) prepared by National
Assessment Corporation, (ii) addressed to Lender or with respect to which Lender
shall have received a reliance letter, (iii) prepared based on a scope of work
determined by Lender in Lender's reasonable discretion, and (iv) in form and
content acceptable to Lender in Lender's reasonable discretion, together with
any amendments or supplements thereto.

                  PREPAYMENT LOCKOUT PERIOD shall have the meaning set forth in
the Note.

                  PRINCIPAL AMOUNT shall have the meaning set forth in the Note.

                  PROCEEDS shall have the meaning set forth in Section 6.2.2.

                  PROCEEDS RESERVE ACCOUNT shall have the meaning set forth in
Section 3.1.1.

                  PROHIBITED PERSON means any Person identified on the OFAC List
or any other Person with whom a U.S. Person may not conduct business or
transactions by prohibition of Federal law or Executive Order of the President
of the United States or America.

                  PROPERTY shall have the meaning set forth in the Security
Instrument.

                  PROVIDED INFORMATION shall have the meaning set forth in
Section 14.1.1.

                  PROXY shall mean that certain Irrevocable Proxy, dated as of
the date hereof, from Borrower to Lender.

                  QUALIFIED INSTITUTIONAL BORROWER shall mean one or more of the
following: (i) a real estate investment trust, bank, saving and loan
association, investment bank, insurance company, trust company, commercial
credit corporation, pension plan, pension fund or pension advisory firm, mutual
fund, government entity or plan, (ii) an investment company, money management
firm or "qualified institutional buyer" within the meaning of Rule 144A under
the Securities Act of 1933, as amended, or an institutional "accredited
investor" within the meaning of Regulation D under the Securities Act of 1933,
as amended, (iii) an institution substantially similar to any of the foregoing,
(iv) any entity Controlled (as defined below) by any of the entities described
in clauses (i), (ii) or (iii) above, (v) an investment fund, limited liability
company, limited partnership or general partnership where an entity that is
otherwise a Qualified Institutional Borrower under clauses (i), (ii), (iii) or
(iv) above acts as the general partner, managing member or fund manager and at
least 50% of the equity interests in such investment fund are owned, directly or
indirectly, by one or more entities that are otherwise Qualified Institutional
Borrowers under clauses (i), (ii), (iii) or (iv) above, or (vi) any other entity
approved by the Rating Agencies; in each case of clauses (i), (ii) or (iii) of
this definition, which (A) has total assets (in name or under management) in
excess of $1,000,000,000 and (except with respect to a pension advisory firm or
similar fiduciary) capital/statutory surplus or shareholder's equity of
$500,000,000 and (B) is regularly engaged in the business of making or owning
commercial real estate loans or

operating commercial mortgage properties. For purposes of this definition only
"Control" means the ownership, directly or indirectly, in the aggregate of more
than fifty percent (50%) of the beneficial ownership interest of an entity and
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of an entity, whether through the
ability to exercise voting power, by contract or otherwise.

                  QUALIFIED MANAGER shall mean (i) a reputable and experienced
management organization which together with its Affiliates manages a minimum of
2,000,000 square feet of Class A or Class B (and any combination thereof) office
space located in major United States cities, provided that (a) prior to a
Securitization, Borrower shall have obtained the prior written consent of Lender
for such Person, which consent shall not be unreasonably withheld or delayed and
(b) after a Securitization, in addition to Lender's consent, which consent shall
not be unreasonably withheld or delayed, Borrower shall have obtained a Rating
Agency Confirmation or (ii) any other manager as Lender shall approve in its
sole and absolute discretion.

                  RATING AGENCIES shall mean (a) prior to a Securitization, each
of S&P, Moody's and Fitch, Inc. and any other nationally-recognized statistical
rating agency which has been approved by Lender and (b) after a Securitization
has occurred, each such Rating Agency which has rated the Securities in the
Securitization.

                  RATING AGENCY CONFIRMATION shall mean, collectively, a written
affirmation from each of the Rating Agencies that the credit rating of the
Securities given by such Rating Agency of such Securities immediately prior to
the occurrence of the event with respect to which such Rating Agency
Confirmation is sought will not be qualified, downgraded or withdrawn solely as
a result of the occurrence of such event, which affirmation may be granted or
withheld in such Rating Agency's sole and absolute discretion. In the event
that, at any given time, no such Securities shall have been issued and are then
outstanding, then the term Rating Agency Confirmation shall be deemed instead to
require the written approval of Lender based on its good faith determination of
whether the Rating Agencies would issue a Rating Agency Confirmation if any such
Securities were outstanding.

                  REAL ESTATE TAXES shall mean all real estate taxes,
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not commenced or completed within the term of the
Security Instrument), water, sewer or other rents and charges, and all other
governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in respect of the
Property (including all interest and penalties thereon), which at any time prior
to, during or in respect of the term hereof may be assessed or imposed on or in
respect of or be a lien upon the Condominium Unit or any part thereof or any
estate, right, title or interest therein.

                  REAL PROPERTY shall mean, collectively, the Condominium Unit,
the Improvements and the Appurtenances (as defined in the Security Instrument).

                  RECOURSE GUARANTY shall mean that certain Guaranty of Recourse
Obligations of Borrower, dated as of the date hereof, by Guarantor in favor of
Lender, as the same may be amended, supplemented, restated or otherwise modified
from time to time.

                  REGISTER shall have the meaning set forth in Section 15.4.

                  REGULATORY CHANGE shall mean any change after the date of this
Agreement in federal, state or foreign laws or regulations or the adoption or
the making, after such date, of any interpretations, directives or requests
applying to Lender, or any Person Controlling Lender or to a class of banks or
companies Controlling banks of or under any federal, state or foreign laws or
regulations (whether or not having the force of law) by any court or
Governmental Authority or monetary authority charged with the interpretation or
administration thereof.

                  RELEVANT PORTIONS shall have the meaning set forth in Section
14.4.2(a).

                  RENTS shall mean all rents, rent equivalents, moneys payable
as damages or in lieu of rent or rent equivalents, royalties (including, without
limitation, all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including, without limitation,
security, utility and other deposits), accounts, cash, issues, profits, charges
for services rendered, and other consideration of whatever form or nature
received by or paid to or for the account of or benefit of Borrower from any and
all sources arising from or attributable to the Property and Proceeds, if any,
from business interruption or other loss of income insurance.

                  RENT COMMENCEMENT DATE shall mean

                           Lower Level 3; Floors Lower Level 2, 3 through 15 -
                           August 14, 2004
                           Floors 16 through 19 - September 26, 2004
                           Lower Level 2 pit area - November 1, 2004; and
                           Lower Level 2 pit area - November 9, 2004.

                  REPLACEMENT MANAGEMENT AGREEMENT shall mean, collectively, (a)
either (i) a replacement management agreement with a Qualified Manager; and (b)
an assignment of management agreement and subordination of management fees
substantially in the form of the Assignment of Management Agreement, executed
and delivered to Lender by Borrower and such Qualified Manager at Borrower's
expense.

                  REQUIRED DEBT SERVICE COVERAGE RATIO shall mean, 1.15 to 1.0.

                  REVISED INTEREST RATE shall have the meaning set forth in the
Note.

                  S&P shall mean Standard & Poor's Ratings Services, Inc., a
division of The McGraw-Hill Companies.

                  SECURITIES shall have the meaning set forth in Section 14.1.

                  SECURITIES ACT shall have the meaning set forth in Section
14.4.1.

                  SECURITIZATION shall have the meaning set forth in Section
14.1.

                  SECURITY INSTRUMENT shall mean that certain first priority
Amended, Restated and Consolidated Mortgage, Security Agreement, Financing
Statement and Assignment of Leases, Rents and Security Deposits, dated the date
hereof, executed and delivered by and between Borrower and Lender and
encumbering the Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

                  SERVICER shall mean GMAC Commercial Mortgage Corporation or
such other Person designated in writing with an address for such Person by
Lender, in its sole discretion, to act as Lender's agent hereunder with such
powers as are specifically delegated to the Servicer by Lender, whether pursuant
to the terms of this Agreement, the Account Agreement or otherwise, together
with such other powers as are reasonably incidental thereto.

                  SINGLE PURPOSE ENTITY shall mean a Person, other than an
individual, which (i) is formed or organized solely for the purpose of owning,
developing, using, operating, leasing, managing, maintaining and financing,
directly or indirectly, an ownership interest in the Property, (ii) does not
engage in any business or activity unrelated to the Property and the ownership,
development, use, operation, leasing, managing, maintaining and financing
thereof, (iii) has not and will not have any assets other than those related to
its interest in the Property, or in the case of any SPE Entity its direct or
indirect interest in Borrower, or the operation, management, leasing and
financing thereof or any indebtedness other than the Permitted Debt, (iv)
maintains its own separate books and records and its own accounts, in each case
which are separate and apart from the books and records and accounts of any
other Person, provided, however, that all amounts paid to Borrower (including,
without limitation, all amounts transferred from the Holding Account) may be
deposited into a centralized cash management account (controlled by an Affiliate
of Borrower) on behalf of Borrower and various other entities that are
Affiliates of Borrower, as and when received, provided that all amount deposited
into such centralized account for the benefit of Borrower and all amounts
disbursed out of such centralized account for the benefit of Borrower are
clearly segregated, for accounting purposes, from the revenues and expenses of
all other Persons, (v) holds itself out to the public as a legal entity,
separate and distinct from any other Person, (vi) does not and will not
commingle its funds or assets with those of any other Person, (vii) conducts its
own business in its own name, (viii) maintains separate financial statements,
provided that such Persons financial statements may be included in the
consolidated financial statements of an Affiliate of such Person in accordance
with GAAP, provided further, that all amounts paid to Borrower (including,
without limitation, all amounts transferred from the Holding Account) may be
deposited into a centralized cash management account (controlled by an Affiliate
of Borrower) on behalf of Borrower and various other entities that are
Affiliates of Borrower, as and when received, provided that all amount deposited
into such centralized account for the benefit of Borrower and all amounts
disbursed out of such centralized account for the benefit of Borrower are
clearly

segregated, for accounting purposes, from the revenues and expenses of all other
Persons, (ix) pays its own liabilities out of its own funds, (x) observes all
partnership, corporate or limited liability company formalities and procedures
required under its organizational documents and applicable law, as applicable,
(xi) pays the salaries of its own employees, if any, and maintains a sufficient
number of employees, if any, in light of its contemplated business operations,
(xii) does not assume or guarantee or otherwise obligate itself with respect to
the debts of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person, (xiii) does not acquire obligations
or securities of its Affiliated partners, members or shareholders, (xiv)
allocates fairly and reasonably shared expenses, including, without limitation,
any overhead for shared office space, if any, (xv) does not and will not pledge
its assets for the benefit of any other Person or make any loans or advances to
any other Person, (xvi) does and will continue to use commercially reasonable
efforts to correct any known misrepresentation or misunderstanding regarding its
separate identity, (xvii) maintains adequate capital in light of its reasonably
foreseeable business operations, (xviii) has and will continue to have a
partnership or operating agreement, certificate of incorporation, articles of
organization or other organizational document which has been approved by Lender
(Lender hereby acknowledges that each of Borrower and Guarantor is approved in
connection with the foregoing), (xix) uses separate stationary, invoices, and
checks, (xx) maintains an arms-length relationship with its Affiliates, (xxi)
has not and will not engage in, seek, or consent to the dissolution, winding up,
liquidation, termination, consolidation or merger and except as otherwise
permitted in this Agreement, and (xxii) has not and will not engage in, seek or
consent to any sale of all or substantially all of its assets and, except as
permitted hereunder, transfer any partnership, membership or shareholder
interests, or amendments of its partnership or operating agreement, certificate
of incorporation, articles of organization or other organizational document. In
addition, if such Person is a partnership, (1) all general partners of such
Person shall be Single Purpose Entities; and (2) if such Person has more than
one general partner, then the organizational documents shall provide that such
Person shall continue (and not dissolve) for so long as a solvent general
partner exists. In addition, if such Person is a corporation, then, at all
times: (a) such Person shall have at least two (2) Independent Directors and (b)
the board of directors of such Person may not take any action requiring the
unanimous affirmative vote of 100% of the members of the board of directors
unless all of the directors, including the Independent Directors, shall have
participated in such vote. In addition, if such Person is a limited liability
company, (a) such Person shall have at least two (2) Independent Managers or
Independent Members, (b) if such Person is managed by a board of managers, the
board of managers of such Person may not take any action as to any Bankruptcy
Actions requiring the unanimous affirmative vote of 100% of the members of the
board of managers unless all of the managers, including the Independent
Managers, shall have participated in such vote, (c) if such Person is not
managed by a board of managers as to any Bankruptcy Actions, the members of such
Person may not take any action requiring the affirmative vote of 100% of the
members of such Person unless all of the members, including the Independent
Members, shall have participated in such vote, (d) each managing member of
Borrower shall be a Single Purpose Entity, (e) its articles of organization,
certificate of formation and/or operating agreement, as applicable, shall
provide that until all of the Indebtedness is paid in full such entity will

not dissolve and (f) if such Person has more than one (1) managing member, then
the organizational documents shall provide that such Person shall continue (and
not dissolve) for so long as a solvent managing member exists. In addition, the
organizational documents of such Person shall provide that such Person (1)
without the affirmative consent of all of the Independent Directors, Independent
Managers or Independent Members, as applicable, shall not with respect to itself
or to any other Person in which it has a direct or indirect legal or beneficial
interest (a) seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or other similar official for the
benefit of the creditors of such Person or all or any portion of such Person's
properties, (b) take any action that might cause such Person to become
insolvent, petition or otherwise institute insolvency proceedings or otherwise
seek any relief under any laws relating to the relief from debts or the
protection of debtors generally, (c) instituting proceedings to have such Person
adjudicated as bankrupt or insolvent, (d) file, consent to, acquiesce in the
filing of, or join in the filing of a bankruptcy or insolvency petition or the
institution of bankruptcy or insolvency proceedings against such Person, (e)
file a petition or consent to a petition seeking reorganization, arrangement,
adjustment, winding-up, dissolution, composition, liquidation or other relief on
behalf of such Person of its debts under any federal or state law relating to
bankruptcy, (f) make any assignment for the benefit of the such Person's
creditors; or (g) take any action in furtherance of any of the foregoing (such
actions set forth in (a) through (g) of this sentence, collectively, BANKRUPTCY
ACTIONS), (2) has and will maintain its books, records, resolutions and
agreements as official records, (3) has held and will hold its assets in its own
name, (4) has and will maintain its financial statements, accounting records and
other organizational documents, books and records separate and apart from any
other Person, (5) has not and will not identify its partners, members or
shareholders, or any affiliates of any of them as a division or department of
it, (6) has and will maintain an arms-length relationship with its Affiliates,
and (7) has not and will not enter into or be a party to any transaction with
its partners, members, shareholders, or its Affiliates except in the ordinary
course of business and on terms which are intrinsically fair and are no less
favorable to it than would be obtained in a comparable arms-length transaction
with a third party.

                  SPECIAL TAXES shall mean any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, or any liabilities with
respect thereto imposed as a result of the Loan, including those arising after
the date hereof as result of the adoption of or any change in law, treaty, rule,
regulation, guideline or determination of a Governmental Authority or any change
in the interpretation or application thereof by a Governmental Authority but
excluding, in the case of Lender, such taxes (including income taxes, franchise
taxes and branch profit taxes) as are imposed on or measured by Lender's net
income by the United States of America or any Governmental Authority of the
jurisdiction under the laws under which Lender is organized or maintains a
lending office.

                  SPE ENTITY shall mean Borrower and 731 Office One Holding LLC,
a Delaware limited liability company, which are required by this Agreement to
be, as long as the Loan is outstanding, a Single Purpose Entity.

                  STATE shall mean the State in which the Property or any part
thereof is located.

                  STRUCTURAL RESERVE ACCOUNT shall have the meaning set forth in
Section 3.1.1.

                  STRUCTURAL RESERVE AMOUNT shall have the meaning set forth in
Section 16.3(a).

                  SUB-ACCOUNT(S) shall have the meaning set forth in Section
3.1.1.

                  SURVEY shall mean a survey of the Property prepared by a
surveyor licensed in the State and satisfactory to Lender and the company or
companies issuing the Title Policy, and containing a certification of such
surveyor satisfactory to Lender.

                  TAKING shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Property, or any interest therein or right accruing thereto, including any
right of access thereto or any change of grade affecting the Property or any
part thereof.

                  TAX RESERVE ACCOUNT shall have the meaning set forth in
Section 3.1.1.

                  TAX RESERVE AMOUNT shall have the meaning set forth in Section
16.1.

                  TAXES shall mean any and all taxes, fees, levies, duties,
tariffs, imposts, surcharges and other charges of any kind (together with any
and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any governmental or taxing authority including,
without limitation, (i) taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation or net worth, (ii) taxes or other charges in the
nature of excise, withholding, ad valorem, stamp, transfer, value added or gains
taxes, license registration and documentation fees, and (iii) customs' duties,
tariffs and similar charges.

                  TERRORISM INSURANCE shall have the meaning set forth in
Section 6.1.8.

                  THRESHOLD AMOUNT shall mean an amount equal to $12,000,000.

                  TITLE COMPANY shall mean Lawyer's Title Insurance Corporation,
National Land Tenure Company LLC, TitleServ, Commonwealth Land Title Insurance
Company, Fidelity National Title Insurance Company and Chicago Title Insurance
Company.

                  TITLE POLICY shall mean an ALTA mortgagee title insurance
policy in a form acceptable to Lender (or, if the Property is in a State which
does not permit the issuance of such ALTA policy, such form as shall be
permitted in such State and

acceptable to Lender) issued by the Title Company with respect to the Property
and insuring the lien of the Security Instrument.

                  TOTAL LOSS shall mean (i) a casualty, damage or destruction of
the Property, which, in the reasonable judgment of Lender, (A) involves an
actual or constructive loss of more than thirty percent (30%) of the fair market
value of the Property, or (B) results in the cancellation of leases comprising
more than thirty percent (30%) of the rentable area of the Property, and in
either case with respect to which Borrower is not required under the Bloomberg
Lease to apply Proceeds to the restoration of the Property or (ii) a permanent
Taking which, in the reasonable judgment of Lender, (A) involves an actual or
constructive loss of more than fifteen percent (15%) of the fair market value of
the Property, or (B) renders untenantable either more than fifteen percent (15%)
of the rentable area of the Property or (iii) a casualty, damage, destruction or
Taking that affects so much of the Property such that it would be impracticable,
in Lender's reasonable discretion, even after restoration, to operate the
Property as an economically viable whole.

                  TRANSFER shall mean directly or indirectly (other than
pursuant to the Loan Documents) sell, assign, convey, mortgage, transfer,
pledge, hypothecate, encumber, grant a security interest in, exchange or
otherwise dispose of any beneficial interest or grant any option or warrant with
respect to, or where used as a noun, a direct or indirect sale, assignment,
conveyance, transfer, pledge or other disposition of any beneficial interest by
any means whatsoever whether voluntary, involuntary, by operation of law or
otherwise.

                  TRIA shall have the meaning set forth in Section 6.1.8.

                  UCC or UNIFORM COMMERCIAL CODE shall mean the Uniform
Commercial Code as in effect in the State.

                  UNDERWRITER GROUP shall have the meaning set forth in Section
14.4.2(b).

                  UNIT shall have the meaning set forth in the Condominium
Declaration.

                  U.S. GOVERNMENT OBLIGATIONS shall mean any direct obligations
of, or obligations guaranteed as to principal and interest by, the United States
Government or any agency or instrumentality thereof, provided that such
obligations are backed by the full faith and credit of the United States. Any
such obligation must be limited to instruments that have a predetermined fixed
dollar amount of principal due at maturity that cannot vary or change. If any
such obligation is rated by S&P, it shall not have an "r" highlighter affixed to
its rating. Interest must be fixed or tied to a single interest rate index plus
a single fixed spread (if any), and move proportionately with said index. U.S.
Government Obligations include, but are not limited to: U.S. Treasury direct or
fully guaranteed obligations, Farmers Home Administration certificates of
beneficial ownership, General Services Administration participation
certificates, U.S. Maritime Administration guaranteed Title XI financing, Small
Business Administration guaranteed participation certificates or guaranteed pool
certificates, U.S. Department of Housing and

Urban Development local authority bonds, and Washington Metropolitan Area
Transit Authority guaranteed transit bonds. In no event shall any such
obligation have a maturity in excess of 365 days.

                  WORK shall have the meaning provided in Section 6.2.4(a).

                  YIELD MAINTENANCE PREMIUM shall have the meaning set forth in
the Note.

                  SECTION 1.2       PRINCIPLES OF CONSTRUCTION.

                  All references to sections and schedules are to sections and
schedules in or to this Agreement unless otherwise specified. When used herein
with respect to Annual Reports, the term "financial statements" shall include
the notes and schedules thereto. Unless otherwise specified herein or therein,
all terms defined in this Agreement shall have the definitions given them in
this Agreement when used in any other Loan Document or in any certificate or
other document made or delivered pursuant thereto. All uses of the word
"including" shall mean including, without limitation unless the context shall
indicate otherwise. Unless otherwise specified, the words hereof, herein and
hereunder and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all meanings attributed to defined terms herein
shall be equally applicable to both the singular and plural forms of the terms
so defined.

                  II.      GENERAL TERMS

                  SECTION  2.1      LOAN; DISBURSEMENT TO BORROWER.

                           2.1.1    THE LOAN. Subject to and upon the terms and
conditions set forth herein, Lender hereby makes and Borrower hereby accepts the
Loan on the Closing Date.

                           2.1.2    DISBURSEMENT TO BORROWER. Borrower may
request and receive only one borrowing hereunder in respect of the Loan and any
amount borrowed and repaid hereunder in respect of the Loan may not be
reborrowed. Borrower acknowledges and agrees that the full proceeds of the Loan
have been disbursed by Lender to Borrower on the Closing Date.

                           2.1.3    THE NOTE, SECURITY INSTRUMENT AND LOAN
DOCUMENTS. The Loan shall be evidenced by the Note and secured by the Security
Instrument, the Assignment of Leases, this Agreement and the other Loan
Documents.

                           2.1.4    USE OF PROCEEDS. Borrower shall use the
proceeds of the Loan to (a) refinance any financing existing immediately prior
to the making of the Loan which encumbers the Property, (b) pay costs and
expenses incurred in connection with the closing of the Loan, (c) make deposits
into the Sub-Accounts as required hereunder and (d) distribute the balance, if
any, to Borrower.

                  SECTION  2.2      INTEREST; LOAN PAYMENTS; LATE PAYMENT
CHARGE.

                           2.2.1    PAYMENT OF PRINCIPAL AND INTEREST.

                           (a)      Except as set forth in Section 2.2.1(b),
         interest shall accrue on the Principal Amount as set forth in the Note.

                           (b)      Upon the occurrence and during the
         continuance of an Event of Default and from and after the Maturity Date
         if the entire Principal Amount is not repaid on the Maturity Date,
         interest on the outstanding principal balance of the Loan and, to the
         extent permitted by law, overdue interest and other amounts due in
         respect of the Loan shall accrue at the Default Rate calculated from
         the date such payment was due without regard to any grace or cure
         periods contained herein. Interest at the Default Rate shall be
         computed from the occurrence of the Event of Default until the actual
         receipt and collection of the Indebtedness (or that portion thereof
         that is then due) or the cure of such Event of Default. To the extent
         permitted by applicable law, interest at the Default Rate shall be
         added to the Indebtedness, shall itself accrue interest at the same
         rate as the Loan and shall be secured by the Security Instrument. This
         paragraph shall not be construed as an agreement or privilege to extend
         the date of the payment of the Indebtedness, nor as a waiver of any
         other right or remedy accruing to Lender by reason of the occurrence of
         any Event of Default; and Lender retains its rights under the Note to
         accelerate and to continue to demand payment of the Indebtedness upon
         the happening of any Event of Default.

                           2.2.2    METHOD AND PLACE OF PAYMENT.

                           (a)      On each Payment Date, Borrower shall pay to
         Lender interest accruing pursuant to the Note for the entire Interest
         Period ending on the day before such Payment Date.

                           (b)      All amounts advanced by Lender pursuant to
         the applicable provisions of the Loan Documents, other than the
         Principal Amount, together with any interest at the Default Rate or
         other charges as provided therein, shall be due and payable hereunder
         as provided in the Loan Documents. In the event any such advance or
         charge is not so repaid by Borrower, Lender may, at its option, first
         apply any payments received under the Note to repay such advances,
         together with any interest thereon, or other charges as provided in the
         Loan Documents, and the balance, if any, shall be applied in payment of
         any installment of interest or principal then due and payable.

                           (c)      The Maturity Date Payment shall be due and
         payable in full on the Maturity Date.

                           (d)      From and after the Anticipated Repayment
         Date, unless the Indebtedness has been repaid in full, all Excess Cash
         Flow shall be applied on each Payment Date as a partial prepayment of
         the outstanding principal Indebtedness, as set forth in Section
         3.1.6(a)(vi). Interest accrued at the Revised

         Interest Rate shall be deferred and shall earn interest at the Revised
         Interest Rate to the extent permitted by applicable law.

                           2.2.3    LATE PAYMENT CHARGE. If any principal,
interest or any other sums due under the Loan Documents (other than the
outstanding Principal Amount due and payable on the Maturity Date) is not paid
by Borrower within two (2) Business Days after the date on which it is due (in
the case of interest due hereunder, after giving effect to the grace period with
respect thereto), Borrower shall pay to Lender upon demand an amount equal to
the lesser of four percent (4%) of such unpaid sum or the Maximum Legal Rate
(the LATE PAYMENT CHARGE) in order to defray the expense incurred by Lender in
handling and processing such delinquent payment and to compensate Lender for the
loss of the use of such delinquent payment. Any such amount shall be secured by
this Agreement, the Security Instrument and the other Loan Documents to the
extent permitted by applicable law.

                           2.2.4    USURY SAVINGS. This Agreement and the Note
are subject to the express condition that at no time shall Borrower be obligated
or required to pay interest on the principal balance of the Loan at a rate which
could subject Lender to either civil or criminal liability as a result of being
in excess of the Maximum Legal Rate. If, by the terms of this Agreement or the
other Loan Documents, Borrower is at any time required or obligated to pay
interest on the principal balance due under the Note at a rate in excess of the
Maximum Legal Rate, then the Applicable Interest Rate or the Default Rate, as
the case may be, shall be deemed to be immediately reduced to the Maximum Legal
Rate and all previous payments in excess of the Maximum Legal Rate shall be
deemed to have been payments in reduction of principal and not on account of the
interest due in respect of the Note. All sums paid or agreed to be paid to
Lender for the use, forbearance, or detention of the sums due in respect of the
Loan, shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Loan does not
exceed the Maximum Legal Rate of interest from time to time in effect and
applicable to the Loan for so long as the Loan is outstanding.

                  SECTION  2.3      PREPAYMENTS.

                           2.3.1    PREPAYMENTS. No prepayments of the
Indebtedness shall be permitted except as set forth in Section 4 of the Note.

                           2.3.2    PREPAYMENTS AFTER EVENT OF DEFAULT. If,
following an Event of Default, Lender shall accelerate the Indebtedness and
Borrower thereafter tenders payment of all or any part of the Indebtedness, or
if all or any portion of the Indebtedness is recovered by Lender after such
Event of Default, (a) such payment may be made on any Business Day together with
all unpaid interest thereon as calculated through the end of the then current
Interest Period, and all other fees and sums payable hereunder or under the Loan
Documents, including without limitation, interest that has accrued at the
Default Rate, the Yield Maintenance Premium and any Late Payment Charge), (b)
such payment shall be deemed a voluntary prepayment by Borrower, and (c)

in the event the payment occurs during the Lockout Period, Borrower shall pay,
in addition to the Indebtedness, an amount equal to the Liquidated Damages
Amount.

                           2.3.3    RELEASE OF PROPERTY. Lender shall, upon the
written request and at the expense of Borrower, upon payment in full of the
Principal Amount and interest on the Loan and all other amounts due and payable
under the Loan Documents in accordance with the terms and provisions of the Note
and this Agreement or upon a Defeasance in accordance with Section 9.1, release
the Lien of (i) this Agreement upon the Account Collateral, (ii) the Security
Instrument on the Property or assign it, in whole or in part, to a new lender as
requested by Borrower, and (iii) release or assign (as requested by Borrower) to
Borrower (or Borrower's nominee) all other Loan Documents (including UCC
financing statements) other than the Environmental Indemnity. In such event,
Borrower shall submit to Lender, not less than ten (10) Business Days prior to
the date of such release or assignment, a release of lien or assignment of lien,
as applicable, for such property for execution by Lender. Such release or
assignment, as applicable, shall be in a form appropriate in each jurisdiction
in which the Property is located and satisfactory to Lender in its reasonable
discretion. In addition, at Borrower's sole cost and expense, Borrower shall
provide all other documentation Lender reasonably requires to be delivered by
Borrower in connection with such release or assignment, as applicable, and
Lender, at Borrower's sole cost and expense, shall provide all other normal and
customary documentation Borrower reasonably requested by Borrower that is
reasonably acceptable to Lender in connection with such release or assignment.

                  SECTION 2.4       REGULATORY CHANGE; TAXES.

                          2.4.1     INCREASED COSTS. If as a result of any
Regulatory Change or compliance of Lender therewith the basis of taxation of
payments to Lender or any company Controlling Lender of the principal of or
interest on the Loan is changed or Lender or the company Controlling Lender
shall be subject to (i) any tax, duty, charge or withholding of any kind with
respect to this Agreement (excluding federal taxation of the overall net income
of Lender or the company Controlling Lender); or (ii) any reserve, special
deposit or similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities, of Lender or any company
Controlling Lender is imposed, modified or deemed applicable and Lender
reasonably determines that, by reason thereof, the cost to Lender or any company
Controlling Lender of making, maintaining or extending the Loan to Borrower is
increased, or any amount receivable by Lender or any company Controlling Lender
hereunder in respect of any portion of the Loan to Borrower is reduced, in each
case by an amount deemed by Lender in good faith to be material (such increases
in cost and reductions in amounts receivable being herein called INCREASED
COSTS), then Lender shall provide notice thereof to Borrower and Borrower agrees
that it will pay to Lender upon Lender's written request such additional amount
or amounts as will compensate Lender or any company Controlling Lender for such
Increased Costs to the extent Lender determines that such Increased Costs are
allocable to the Loan. If Lender requests compensation under this Section 2.4.1,
Borrower may, by notice to Lender, require that Lender furnish to Borrower a
statement setting forth the basis for requesting such compensation and the
method for determining

the amount thereof. To the extent Borrower is required to pay any Increased
Costs in accordance with the terms hereof, Borrower shall have the right to
prepay the Principal Amount (together will all accrued but unpaid interest
thereon calculated through the end of the then current Interest Period) without
the imposition of any Yield Maintenance Premium or the Liquidated Damages Amount
or any other prepayment premium or charge of any kind.

                           2.4.2    SPECIAL TAXES. Borrower shall make all
payments hereunder free and clear of and without deduction for Special Taxes,
other than as may be imposed in connection with a sale or assignment of the Loan
by Lender. If Borrower shall be required by law to deduct any Special Taxes from
or in respect of any sum payable hereunder or under any other Loan Document to
Lender, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.4.2) Lender receives an amount equal to the
sum it would have received had no such deductions been made, (ii) Borrower shall
make such deductions, and (iii) Borrower shall pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.
Notwithstanding anything to the contrary contained in this Section 2.4, Borrower
shall not be liable for any amounts as a result of withholding for Special Taxes
or additional costs incurred as a result of the assignment of all or any portion
of the Loan by Lender to any Person that is subject to Special Taxes and which
is organized under or has its principal place of business outside of the United
States of America or any political subdivision thereof.

                           2.4.3    OTHER TAXES. In addition, Borrower agrees to
pay any present or future stamp or documentary taxes or other excise or property
taxes, charges, or similar levies which arise from any payment made hereunder,
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement, the other Loan Documents, or the Loan (hereinafter referred
to as OTHER TAXES).

                           2.4.4    INDEMNITY. Borrower shall indemnify Lender
for the full amount of Special Taxes and Other Taxes (including any Special
Taxes or Other Taxes imposed by any Governmental Authority on amounts payable
under this Section 2.4.4) paid by Lender and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto, whether or
not such Special Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within thirty (30) days after the date Lender
makes written demand therefor.

                           2.4.5    CHANGE OF OFFICE. To the extent that
changing the jurisdiction of Lender's applicable office would have the effect of
minimizing Special Taxes, Other Taxes or Increased Costs, Lender shall use
reasonable efforts to make such a change, provided that same would not otherwise
be disadvantageous to Lender.

                           2.4.6    SURVIVAL. Without prejudice to the survival
of any other agreement of Borrower hereunder, the agreements and obligations of
Borrower contained

in this Section 2.4 shall survive the payment in full of principal and interest
hereunder, and the termination of this Agreement.

                  III.     CASH MANAGEMENT

                  SECTION 3.1       CASH MANAGEMENT.

                          3.1.1     ESTABLISHMENT OF ACCOUNTS. Borrower hereby
confirms that, simultaneously with the execution of this Agreement, pursuant to
the Account Agreement, it has established with Cash Management Bank, in the name
of Borrower for the benefit of Lender, as secured party, the collection account
(the COLLECTION ACCOUNT), which has been established as an interest-bearing
deposit account and the holding account (the HOLDING ACCOUNT), which has been
established as a securities account. Both the Collection Account and the Holding
Account and each sub-account of either such account and the funds deposited
therein and securities and other assets credited thereto shall serve as
additional security for the Loan. Pursuant to the Account Agreement, Borrower
shall irrevocably instruct and authorize Cash Management Bank to disregard any
and all orders for withdrawal from the Collection Account or the Holding Account
made by, or at the direction of, Borrower other than to transfer all amounts on
deposit in the Collection Account on a daily basis to the Holding Account.
Pursuant to the Account Agreement, Cash Management Bank on a daily basis shall
transfer all collected and available funds as determined by Cash Management
Bank's then current funds availability schedule received in the Collection
Account to the Holding Account. Borrower agrees that, prior to the payment in
full of the Indebtedness, the terms and conditions of the Account Agreement
shall not be amended or modified without the prior written consent of Lender
(which consent Lender may grant or withhold in its sole discretion), and if a
Securitization has occurred, the delivery by Borrower of a Rating Agency
Confirmation. In recognition of Lender's security interest in the funds
deposited into the Collection Account and the Holding Account, Borrower shall
identify both the Collection Account and the Holding Account with the name of
Lender, as secured party. The Collection Account shall be named as follows: "731
Office One LLC f/b/o German American Capital Corporation, as secured party
Collection Account" (Account Number 323962033). The Holding Account shall be
named as follows: "731 Office One LLC f/b/o German American Capital Corporation,
as secured party Holding Account" (Account Number 323962025). Borrower confirms
that it has established with Cash Management Bank the following sub-accounts of
the Holding Account (each, a SUB-ACCOUNT and, collectively, the Sub-Accounts and
together with the Holding Account and the Collection Account, the COLLATERAL
ACCOUNTS), which (i) may be ledger or book entry sub-accounts and need not be
actual sub-accounts, (ii) shall each be linked to the Holding Account, (iii)
shall each be a "Securities Account" pursuant to Article 8 of the UCC and (iv)
shall each be an Eligible Account to which certain funds shall be allocated and
from which disbursements shall be made pursuant to the terms of this Agreement:

                                    (i)      a sub-account for the retention of
                  Account Collateral in respect of Debt Service on the Loan with
                  the account number 323962025-01 (the DEBT SERVICE RESERVE
                  ACCOUNT);

                                    (ii)     a sub-account for the retention of
                  Account Collateral in respect of Real Estate Taxes and Other
                  Charges for the Property with the account number 323962025-02
                  (the TAX RESERVE ACCOUNT);

                                    (iii)    a sub-account for the retention of
                  Account Collateral in respect of insurance premiums for the
                  Property with the account number 323962025-03 (the INSURANCE
                  RESERVE ACCOUNT);

                                    (iv)     a sub- account for the retention of
                  Account Collateral in respect of reserves for capital
                  improvements to the Property with the account number
                  323962025-04 (the STRUCTURAL RESERVE ACCOUNT);

                                    (v)      a sub- account for the retention of
                  Account Collateral in respect of reserves for budgeted
                  Operating Expenses for the Property with the account number
                  323962025-07 (the OPERATING EXPENSE RESERVE ACCOUNT);

                                    (vi)     a sub- account for the retention of
                  Account Collateral in respect of Proceeds as more fully set
                  forth in Section 6.2 with the account number 323962025-05 (the
                  PROCEEDS RESERVE ACCOUNT);

                                    (vii)    a sub-account for the retention of
                  Account Collateral in respect of reserves relating to Debt
                  Service shortfalls for the period prior to the final Rent
                  Commencement Date with the account number 323962025-08 (the
                  ADDITIONAL DEBT SERVICE RESERVE ACCOUNT);

                                    (viii)   a sub-account for the retention of
                  Account Collateral in respect of the Alterations as more fully
                  set forth in Section 10.3 with the account number 323962025-06
                  (the ALTERATIONS RESERVE ACCOUNT) and

                                    (ix)     a sub-account for the retention of
                  Account Collateral in respect of the collection of Excess Cash
                  Flow during a Cash Trap Period with the account number
                  323962025-09 (the CASH TRAP RESERVE ACCOUNT).

Amounts on deposit in the Holding Account and Sub-Accounts will be invested in
Permitted Investments in accordance with the terms of the Account Agreement.

                           3.1.2    PLEDGE OF ACCOUNT COLLATERAL. To secure the
full and punctual payment and performance of the Obligations, Borrower hereby
collaterally assigns, grants a security interest in and pledges to Lender, to
the extent not prohibited by applicable law, a first priority continuing
security interest in and to Borrower's right, title and interest in and to the
following property, whether now owned or existing or hereafter acquired or
arising and regardless of where located (all of the same, collectively, the
ACCOUNT COLLATERAL):

                           (a)      the Collateral Accounts and all cash,
         checks, drafts, securities entitlements, certificates, instruments and
         other property, including,

         without limitation, all deposits and/or wire transfers from time to
         time deposited or held in, credited to or made to Collateral Accounts;

                           (b)      any and all amounts invested in Permitted
         Investments;

                           (c)      all interest, dividends, cash, instruments,
         securities entitlements and other property from time to time received,
         receivable or otherwise payable in respect of, or in exchange for, any
         or all of the foregoing or purchased with funds from the Collateral
         Accounts; and

                           (d)      to the extent not covered by clauses (a),
         (b) or (c) above, all proceeds (as defined under the UCC) of any or all
         of the foregoing.

                  In addition to the rights and remedies herein set forth,
Lender shall have all of the rights and remedies with respect to the Account
Collateral available to a secured party at law or in equity, including, without
limitation, the rights of a secured party under the UCC, as if such rights and
remedies were fully set forth herein.

                  This Agreement shall constitute a security agreement for
purposes of the Uniform Commercial Code and other applicable law.

                           3.1.3    MAINTENANCE OF BORROWER.

                           (a)      Borrower agrees that the Collection Account
         is and shall be maintained (i) as a "deposit account" (as such term is
         defined in Section 9-102(a)(29) of the UCC), (ii) in such a manner that
         Lender shall have control (within the meaning of Section 9-104(a)(2) of
         the UCC) over the Collection Account and (iii) such that neither the
         Borrower nor Manager shall have any right of withdrawal from the
         Collection Account and, except as provided herein, no Account
         Collateral shall be released to the Borrower or Manager from the
         Collection Account. Without limiting the Borrower's obligations under
         the immediately preceding sentence, Borrower shall only establish and
         maintain the Collection Account with a financial institution that has
         executed an agreement substantially in the form of the Account
         Agreement or in such other form acceptable to Lender in its sole
         discretion.

                           (b)      Borrower agrees that each of the Holding
         Account and the Sub-Accounts is and shall be (or if each such
         Sub-Account has yet to be established, will and shall be) maintained
         (i) as a "securities account" (as such term is defined in Section
         8-501(a) of the UCC), (ii) in such a manner that Lender shall have
         control (within the meaning of Section 8-106(d)(2) of the UCC) over the
         Holding Account and any Sub-Account thereof, (iii) such that neither
         Borrower nor any Manager shall have any right of withdrawal from the
         Holding Account or the Sub-Accounts and, except as provided herein, no
         Account Collateral shall be released to Borrower from the Holding
         Account or the Sub-Accounts, (iv) in such a manner that the Cash
         Management Bank shall agree to treat all property credited to the
         Holding Account or the Sub-Accounts as "financial assets" and (v) such
         that all securities or other property underlying any

         financial assets credited to any of the Sub-Accounts shall be
         registered in the name of Cash Management Bank, indorsed to Cash
         Management Bank or in blank or credited to another securities account
         maintained in the name of Cash Management Bank and in no case will any
         financial asset credited to the Accounts be registered in the name of
         Borrower, payable to the order of Borrower or specially indorsed to
         Borrower except to the extent the foregoing have been specially
         indorsed to Cash Management Bank or in blank. Without limiting
         Borrower's obligations under the immediately preceding sentence,
         Borrower shall only establish and maintain the Holding Account with a
         financial institution that has executed an agreement substantially in
         the form of the Account Agreement or in such other form acceptable to
         Lender in its sole discretion.

                           3.1.4    ELIGIBLE ACCOUNTS. The Collateral Accounts
shall be Eligible Accounts. The Collateral Accounts shall be subject to such
applicable laws, and such applicable regulations of the Board of Governors of
the Federal Reserve System and of any other banking or governmental authority,
as may now or hereafter be in effect. Income and interest accruing on the
Collateral Accounts or any investments held in such accounts shall be
periodically added to the principal amount of such account and shall be held,
disbursed and applied in accordance with the provisions of this Agreement and
the Account Agreement. Borrower shall be the beneficial owner of the Collateral
Accounts for federal income tax purposes and shall report all income on the
Collateral Accounts.

                           3.1.5    DEPOSITS INTO SUB-ACCOUNTS. On the date
hereof, Borrower has deposited the following amounts into the Sub-Accounts:

                                    (i)      $382,217 into the Tax Reserve
                  Account;

                                    (ii)     $0 into the Insurance Reserve
                  Account;

                                    (iii)    $0 into the Debt Service Reserve
                  Account;

                                    (iv)     $0 into the Structural Reserve
                  Account;

                                    (v)      $0 into the Operating Expense
                  Reserve Account;

                                    (vi)     $11,169,694 into the Additional
                  Debt Service Reserve Account;

                                    (vii)    $0 into the Alteration Reserve
                  Account;

                                    (viii)   $0 into the Proceeds Reserve
                  Account; and

                                    (ix)     $0 into the Cash Trap Reserve
                  Account.

                           3.1.6    MONTHLY FUNDING OF ACCOUNTS.

                           (a)      Borrower hereby irrevocably authorizes
         Lender to transfer (and, pursuant to the Account Agreement shall
         irrevocably authorize Cash

         Management Bank to execute any corresponding instructions of Lender),
         and Lender shall transfer, from the Holding Account by 2:00 p.m. New
         York time commencing on the first (1st) Business Day of each calendar
         month, and on each Business Day thereafter until, but not including,
         the first (1st) Business Day of the next succeeding calendar month
         (such period, the COLLECTION PERIOD), or as soon thereafter as
         sufficient funds are in the Holding Account to make the applicable
         transfers, in the following amounts and in the following order of
         priority:

                                    (i)      during any period that Bloomberg is
                  not required or has failed to pay Real Estate Taxes and Other
                  Charges in full, funds in an amount equal to the Monthly Tax
                  Reserve Amount and any other amounts required pursuant to
                  Section 16.1 for the Collection Period in which the transfer
                  from the Holding Account is made and transfer the same to the
                  Tax Reserve Account (Borrower hereby agrees that prior to the
                  final Rent Commencement Date, fifty (50%) percent of all Real
                  Estate Taxes and Other Charges shall be paid directly out of
                  the Tax Reserve Account from the Initial Tax Reserve Amount as
                  more particularly set forth in Section 16.1 hereof);

                                    (ii)     during any period that Bloomberg is
                  not required or has failed to pay the insurance premiums in
                  full with respect to the policies required hereunder or the
                  common charges related thereto pursuant to the Bloomberg Lease
                  and the Condominium Declaration and/or the By-laws, funds in
                  an amount equal to the Monthly Insurance Reserve Amount
                  determined in accordance with Section 16.2 and any other
                  amounts required pursuant to Section 16.2 for the Collection
                  Period in which the transfer from the Holding Account is made
                  and transfer the same to the Insurance Reserve Account;

                                    (iii)    funds in an amount equal to the
                  amount of Debt Service due on the Payment Date in the
                  Collection Period in which the transfer from the Holding
                  Account is made and transfer the same to the Debt Service
                  Reserve Account (provided, prior to the final Rent
                  Commencement Date, Debt Service shall be paid directly out of
                  the Additional Debt Service Reserve Account in accordance with
                  the terms of Section 16.4 hereof);

                                    (iv)     during any period that Bloomberg is
                  not required or has failed to pay the Operating Expenses for
                  the Property in full, funds in an amount equal to the Approved
                  Operating Expenses for the month in which the Payment Date
                  immediately following the date of the transfer from the
                  Holding Account occurs, and transfer the same to Borrower's
                  Account; provided, however, that to the extent that the
                  Officer's Certificate delivered to Lender on a quarterly basis
                  by Borrower pursuant to Article XI provides evidence
                  reasonably satisfactory to Lender that actual Operating
                  Expenses for such calendar quarter were either less than or
                  greater than Approved Operating Expenses, then Lender may
                  direct Cash

                  Management Bank to increase or decrease the amount of the
                  Approved Operating Expense transfer to be made for the month
                  following the month in which such Officer's Certificate was
                  delivered, such adjustment to be in an amount reasonably
                  determined by Lender to appropriately reflect such difference
                  between actual Operating Expenses and Approved Operating
                  Expenses;

                                    (v)      during any period that Bloomberg is
                  not required or has failed to pay the cost of any capital
                  improvements for the Property in full, funds in an amount
                  equal to the Monthly Structural Reserve Amount determined in
                  accordance with Section 16.3 for the Collection Period in
                  which the transfer from the Holding Account is made and
                  transfer the same to the Structural Reserve Account; and

                                    (vi)     funds in an amount equal to the
                  balance (if any) remaining or deposited in the Holding Account
                  after the foregoing deposits (such remainder being hereinafter
                  referred to as EXCESS CASH FLOW) and provided no Event of
                  Default (which shall be governed by the terms of Section
                  3.1.10 hereof) or Cash Trap Period (which shall be governed by
                  the terms of Section 16.5 hereof) shall have occurred and is
                  then continuing, transfer any Excess Cash Flow (x) prior to
                  the Anticipated Repayment Date, to the Borrower's Account and
                  (y) on or after the Anticipated Repayment Date, to the Debt
                  Service Reserve Account to be applied as a partial prepayment
                  of the principal Indebtedness without the imposition of any
                  Yield Maintenance Premium or the Liquidated Damages Amount or
                  any other prepayment premium or charge of any kind.

                           (b)      If after such transfer, Lender shall
         reasonably determine that there are insufficient funds in the Tax
         Reserve Account to make payments of Real Estate Taxes and/or Other
         Charges when due, or if Lender shall reasonably determine that there
         will be insufficient amounts in the Collection Account or the Holding
         Account to make any of the transfers pursuant to this Section 3.1.6
         inclusive on the date required hereunder on the next Payment Date,
         Lender shall provide notice to Borrower of such insufficiency (except
         that in no event shall Lender be required to notify Borrower of any
         deficiency in the Debt Service Reserve Account, such deficiency on any
         Payment Date being an Event of Default) and, within five (5) Business
         Days after receipt of said notice and prior to the expiration of any
         grace period applicable to such payment, Borrower shall deposit into
         the Holding Account, an amount equal to the shortfall of available
         funds in the Holding Account, taking into account any funds which
         accumulate in the Holding Account during such five (5) Business Day
         period. Notwithstanding anything to the contrary contained in this
         Agreement or in the other Loan Documents, Borrower shall not be deemed
         to be in default hereunder or thereunder in the event funds sufficient
         for a required transfer are held in the Holding Account, or the
         appropriate Sub-Account, and Lender or Cash Management Bank fails to
         timely make any transfer from the Holding Account, or

         to or from such Sub-Account, as contemplated by this Agreement unless
         due to an act or omission of Borrower; and

                           (c)      Notwithstanding anything to the contrary
         contained herein or in the Security Instrument, to the extent that
         Borrower shall fail to pay any mortgage recording tax, costs, expenses
         or other amounts pursuant to Section 19.12 of this Agreement (other
         than any such costs, expenses or other amounts to be paid at closing)
         within the time period set forth therein, Lender shall have the right,
         at any time, without notice to Borrower, to withdraw from the Holding
         Account, an amount equal to such unpaid taxes, costs, expenses and/or
         other amounts and pay such amounts to the Person(s) entitled thereto.

                           3.1.7    PAYMENTS FROM SUB-ACCOUNTS.

                           (a)      Borrower irrevocably authorizes Lender to
         make and, provided no Event of Default shall have occurred and be
         continuing, Lender hereby agrees to make, the following payments from
         the Sub-Accounts to the extent of the monies on deposit therefor:

                                    (i)      funds from the Debt Service Reserve
                  Account to Lender sufficient to pay Debt Service on each
                  Payment Date, and Lender, on each Payment Date, shall apply
                  such funds to the payment of the Debt Service payable on such
                  Payment Date;

                                    (ii)     if notified (timely) by Borrower or
                  otherwise determined by Lender in its reasonable discretion
                  that Bloomberg will not pay Real Estate Taxes or Other
                  Charges, funds from the Tax Reserve Account to Lender
                  sufficient to permit Lender to pay (A) Real Estate Taxes and
                  (B) Other Charges, on the respective due dates therefor, and
                  Lender shall so pay such funds to the Governmental Authority
                  having the right to receive such funds;

                                    (iii)    if notified (timely) by Borrower or
                  otherwise determined by Lender in its reasonable discretion
                  that Bloomberg will not pay the insurance premiums with
                  respect to the policies required hereunder, funds from the
                  Insurance Reserve Account to Lender sufficient to permit
                  Lender to pay insurance premiums for the insurance required to
                  be maintained pursuant to the terms of this Agreement and the
                  Security Instrument, on the respective due dates therefor, and
                  Lender shall so pay such funds to the insurance company having
                  the right to receive such funds (or to Borrower as a
                  reimbursement for premiums paid in accordance with the terms
                  of Section 16.1.2 hereof);

                                    (iv)     if notified (timely) by Borrower or
                  otherwise determined by Lender in its reasonable discretion
                  that Bloomberg will not pay the operating expenses for the
                  Property, no more frequently than once in any calendar month,
                  funds from the Operating Expense Reserve

                  Account in an amount equal to the Approved Operating Expenses
                  for the month in which the transfer is made, and transfer the
                  same to Borrower's Account;

                                    (v)      if notified (timely) by Borrower or
                  otherwise determined by Lender in its reasonable discretion
                  that Bloomberg will not pay the cost of any capital
                  improvements for the Property, no more frequently than once in
                  any calendar month, funds from the Structural Reserve Account
                  to the Borrower's Account to reimburse Borrower or to pay for
                  the cost of capital improvements to the Property; and

                                    (vi)     payments from the Additional Debt
                  Service Reserve Account will be made in accordance with the
                  terms of Section 16.4.

                           (b)      Provided that no Event of Default or Cash
         Trap Period has occurred and is continuing, Lender agrees to release to
         Borrower any amounts (or portions thereof) on deposit in the Tax
         Reserve Account, Insurance Reserve Account, Operating Expense Reserve
         Account and/or the Structural Reserve Account if Borrower provides
         written evidence reasonably satisfactory to Lender that Bloomberg has
         paid when due the item for which the amount on deposit was reserved
         for. To the extent in Lender's sole but reasonable discretion (whether
         based upon information provided by Borrower or otherwise) any such
         amounts (or portions thereof) would have been released to Borrower but
         for the continuance of a Cash Trap Period, such amounts (or portions
         thereof) will be transferred to the Cash Trap Reserve Account as
         additional Excess Cash Flow to be applied by Lender in accordance with
         the terms of Section 16.5 hereof.

                           3.1.8    CASH MANAGEMENT BANK.

                           (a)      Lender shall have the right at Borrower's
         sole cost and expense to replace the Cash Management Bank with a
         financial institution reasonably satisfactory to Borrower in the event
         that (i) the Cash Management Bank fails, in any material respect, to
         comply with the Account Agreement, (ii) the Cash Management Bank named
         herein is no longer the Cash Management Bank, unless Lender has
         consented in writing to such change or the Cash Management Bank named
         herein has merged with, acquired or has been acquired by another bank
         which is and continues to be an Approved Bank or (iii) the Cash
         Management Bank is no longer an Approved Bank. Upon the occurrence and
         during the continuance of an Event of Default, Lender shall have the
         right at Borrower's sole cost and expense to replace Cash Management
         Bank with an Approved Bank at any time, with three (3) Business Days
         prior notice to Borrower. Borrower shall cooperate with Lender in
         connection with the appointment of any replacement Cash Management Bank
         and the execution by the Cash Management Bank and the Borrower of an
         Account Agreement and delivery of same to Lender.

                           (b)      So long as no Event of Default shall have
         occurred and be continuing, Borrower shall have the right at its sole
         cost and expense to replace the Cash Management Bank with a financial
         institution that is an Approved Bank provided that such financial
         institution and Borrower shall execute and deliver to Lender an Account
         and Control Agreement in substantially the form of the Account
         Agreement.

                           3.1.9    BORROWER'S ACCOUNT REPRESENTATIONS. Borrower
represents, warrants and covenants that (i) as of the date hereof, Borrower has
directed Bloomberg to either mail all checks or wire all funds with respect to
rental funds due under the Bloomberg Lease directly into the Collection Account
and has delivered to Bloomberg a letter substantially in the form attached
hereto as EXHIBIT B, (ii) Borrower shall cause Manager to deposit all amounts
payable to Borrower pursuant to the Management Agreement directly into the
Collection Account, (iii) Borrower shall pay or cause to be paid all Rents, Cash
and Cash Equivalents or other items of Operating Income not covered by the
preceding clauses (i) and (ii) within two (2) Business Days after receipt
thereof directly into the Collection Account and (iv) as of the date hereof,
there are no accounts other than the Collateral Accounts maintained by Borrower
or any other Person with respect to the collection of Rents with respect to the
Property and, so long as the Loan shall be outstanding, neither Borrower nor any
other Person shall open any other operating accounts with respect to the
collection of Rents with respect to the Property except for the Collateral
Accounts, provided that the foregoing shall not prohibit Borrower or Manager
from utilizing one or more separate accounts for the disbursement or retention
of funds that have been transferred to the Borrower's Account pursuant to
Section 3.1.6. Borrower hereby agrees that all amounts required to be deposited
in the Collateral Accounts and received by Borrower or any of its Affiliates
shall be deposited within two (2) Business Days of Borrower's receipt thereof,
or after the occurrence of an Event of Default immediately, into the Collateral
Accounts. Until so deposited, any such amounts held by Borrower, Manager or any
Affiliate of Borrower or Manager shall be deemed to be Account Collateral and
shall be held in trust by it for the benefit, and as the property, of Lender and
shall not be commingled with any other funds or property of Borrower or Manager.

                           3.1.10   ACCOUNT COLLATERAL AND REMEDIES.

                           (a)      Upon the occurrence and during the
         continuance of an Event of Default, without additional notice from
         Lender to Borrower, (i) Lender may, in addition to and not in
         limitation of Lender's other rights, make any and all withdrawals from,
         and transfers between and among, the Collateral Accounts as Lender
         shall determine in its sole and absolute discretion to pay any
         Obligations, Operating Expenses and/or capital expenditures for the
         Property; (ii) all Excess Cash Flow shall be retained in the Holding
         Account or applicable Sub-Accounts, (iii) all payments to Borrower's
         Account pursuant to Section 3.1.6 shall immediately cease and (iv)
         Lender may liquidate and transfer any amounts then invested in
         Permitted Investments to the Collateral Accounts to which they relate
         or reinvest such amounts in other Permitted Investments as Lender may
         reasonably determine is necessary to perfect or protect any security
         interest

         granted or purported to be granted hereby or to enable Lender to
         exercise and enforce Lender's rights and remedies hereunder with
         respect to any Account Collateral or to preserve the value of the
         Account Collateral.

                           (b)      Upon the occurrence and during the
         continuance of an Event of Default, Borrower hereby irrevocably
         constitutes and appoints Lender as Borrower's true and lawful
         attorney-in-fact, with full power of substitution, to execute,
         acknowledge and deliver any instruments and to exercise and enforce
         every right, power, remedy, option and privilege of Borrower with
         respect to the Account Collateral, and do in the name, place and stead
         of Borrower, all such acts, things and deeds for and on behalf of and
         in the name of Borrower, which Borrower could or might do or which
         Lender may deem necessary or desirable to more fully vest in Lender the
         rights and remedies provided for herein and to accomplish the purposes
         of this Agreement. The foregoing powers of attorney are irrevocable and
         coupled with an interest. Upon the occurrence and during the
         continuance of an Event of Default, Lender may perform or cause
         performance of any such agreement, and any reasonable expenses of
         Lender incurred in connection therewith shall be paid by Borrower as
         provided in Section 5.1.16.

                           (c)      During a Cash Trap Period, all Excess Cash
         Flow shall be retained by Lender and applied in accordance with the
         terms of Section 16.5 hereof.

                           (d)      Borrower hereby expressly waives, to the
         fullest extent permitted by law, presentment, demand, protest or any
         notice of any kind in connection with this Agreement or the Account
         Collateral. Borrower acknowledges and agrees that ten (10) days' prior
         written notice of the time and place of any public sale of the Account
         Collateral or any other intended disposition thereof shall be
         reasonable and sufficient notice to Borrower within the meaning of the
         UCC.

                           3.1.11   TRANSFERS AND OTHER LIENS. Borrower agrees
that it will not (i) sell or otherwise dispose of any of the Account Collateral
or (ii) create or permit to exist any Lien upon or with respect to all or any of
the Account Collateral, except for the Lien granted to Lender, under this
Agreement.

                           3.1.12   REASONABLE CARE. Beyond the exercise of
reasonable care in the custody thereof, Lender shall have no duty as to any
Account Collateral in its possession or control as agent therefor or bailee
thereof or any income thereon or the preservation of rights against any person
or otherwise with respect thereto. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of the Account Collateral in its
possession if the Account Collateral is accorded treatment substantially equal
to that which Lender accords its own property, it being understood that Lender
shall not be liable or responsible for any loss or damage to any of the Account
Collateral, or for any diminution in value thereof, by reason of the act or
omission of Lender, its Affiliates, agents, employees or bailees, except to the
extent that such loss or damage results from Lender's, its Affiliate's, agent's,
employee's or bailee's

gross negligence or willful misconduct. In no event shall Lender be liable
either directly or indirectly for losses or delays resulting from any event
which may be the basis of an Excusable Delay, computer malfunctions,
interruption of communication facilities, labor difficulties or other causes
beyond Lender's reasonable control or for indirect, special or consequential
damages except to the extent of Lender's gross negligence or willful misconduct.
Notwithstanding the foregoing, Borrower acknowledges and agrees that (i) Lender
does not have custody of the Account Collateral, (ii) Cash Management Bank has
custody of the Account Collateral, (iii) Cash Management Bank was originally
chosen by Borrower and (iv) Lender has no obligation or duty to supervise Cash
Management Bank or to see to the safe custody of the Account Collateral.

                           3.1.13   LENDER'S LIABILITY.

                           (a)      Lender shall be responsible for the
         performance only of such duties with respect to the Account Collateral
         as are specifically set forth in this Section 3.1 or elsewhere in the
         Loan Documents, and no other duty shall be implied from any provision
         hereof. Lender shall not be under any obligation or duty to perform any
         act with respect to the Account Collateral which would cause it to
         incur any expense or liability or to institute or defend any suit in
         respect hereof, or to advance any of its own monies. Borrower shall
         indemnify and hold Lender, its employees and officers harmless from and
         against any loss, cost or damage (including, without limitation,
         reasonable attorneys' fees and disbursements) incurred by Lender in
         connection with the transactions contemplated hereby with respect to
         the Account Collateral except as such may be caused by the gross
         negligence or willful misconduct of Lender, its employees, officers or
         agents.

                           (b)      Lender shall be protected in acting upon any
         notice, resolution, request, consent, order, certificate, report,
         opinion, bond or other paper, document or signature believed by it in
         good faith to be genuine, and, in so acting, it may be assumed that any
         person purporting to give any of the foregoing in connection with the
         provisions hereof has been duly authorized to do so. Lender may consult
         with counsel, and the opinion of such counsel shall be full and
         complete authorization and protection in respect of any action taken or
         suffered by it hereunder and in good faith in accordance therewith.

                           3.1.14   CONTINUING SECURITY INTEREST. This Agreement
shall create a continuing security interest in the Account Collateral and shall
remain in full force and effect until payment in full of the Indebtedness. Upon
payment in full of the Indebtedness, this security interest shall automatically
terminate without further notice from any party and Borrower shall be entitled
to the return, upon its request, of such of the Account Collateral as shall not
have been sold or otherwise applied pursuant to the terms hereof and Lender
shall execute such instruments and documents as may be reasonably requested by
Borrower to evidence such termination and the release of the Account Collateral.

                  IV.      REPRESENTATIONS AND WARRANTIES

                  SECTION  4.1      BORROWER REPRESENTATIONS.

                  Borrower represents and warrants as of the Closing Date that:

                           4.1.1    ORGANIZATION.

                           (a)      Borrower has been duly organized as a
         limited liability company and is validly existing and in good standing
         pursuant to the laws of the state of Delaware with requisite power and
         authority to own its properties and to transact the businesses in which
         it is now engaged. Borrower has duly qualified to do business and is in
         good standing in each jurisdiction where it is required to be so
         qualified in connection with its properties, businesses and operations.
         Borrower possesses all rights, licenses, permits and authorizations,
         governmental or otherwise, necessary to entitle it to own its
         properties and to transact the businesses in which it is now engaged,
         and the sole business of Borrower is the management and operation of
         the Property. The organizational structure of Borrower is accurately
         depicted by the schematic diagram attached hereto as EXHIBIT C.
         Borrower shall not change its name, identity, corporate structure or
         jurisdiction of organization unless it shall have given Lender 30 days
         prior written notice of any such change and shall have taken all steps
         reasonably requested by Lender to grant, perfect, protect and/or
         preserve the security interest granted hereunder to Lender.

                           (b)      Guarantor has been duly organized as a
         corporation and is validly existing and in good standing pursuant to
         the laws of the state of Delaware with requisite power and authority to
         own its properties and to transact the business in which it is now
         engaged.

                           4.1.2    PROCEEDINGS. Borrower has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement and the other Loan Documents. This Agreement and the other Loan
Documents have been duly executed and delivered by, or on behalf of, Borrower
and constitute legal, valid and binding obligations of Borrower, enforceable
against Borrower in accordance with their respective terms, subject only to
applicable bankruptcy, insolvency and similar laws affecting rights of creditors
generally, and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).

                           4.1.3    NO CONFLICTS. The execution, delivery and
performance of this Agreement and the other Loan Documents by Borrower will not
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower and Guarantor pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement, partnership agreement or other
agreement or instrument to which Borrower is a party or by which

any of Borrower's or Guarantor's property or assets is subject (unless consents
from all applicable parties thereto have been obtained), nor will such action
result in any violation of the provisions of any statute or any order, rule or
regulation of any court or Governmental Authority having jurisdiction over
Borrower or any of Borrower's or Guarantor's properties or assets, and any
consent, approval, authorization, order, registration or qualification of or
with any court or any such regulatory authority or other Governmental Authority
required for the execution, delivery and performance by Borrower of this
Agreement or any other Loan Documents has been obtained and is in full force and
effect.

                           4.1.4    LITIGATION. Except as set forth on EXHIBIT D
attached hereto, there are no arbitration proceedings, governmental
investigations, actions, suits or proceedings at law or in equity by or before
any Governmental Authority or other agency now pending or, to the best of
Borrower's knowledge, threatened in writing against or affecting Borrower, any
SPE Entity, Guarantor or the Property. The actions, suits or proceedings
identified on EXHIBIT D, if determined against Borrower, any SPE Entity,
Guarantor or the Property, would not materially and adversely affect the
condition (financial or otherwise) or business of Guarantor or have a Material
Adverse Effect.

                           4.1.5    AGREEMENTS. Borrower is not a party to any
agreement or instrument or subject to any restriction which is reasonably likely
to have a Material Adverse Effect. Borrower is not to the best of its knowledge
in default in any material respect in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which Borrower or the Property is bound.
Borrower has no material financial obligation (contingent or otherwise) under
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which Borrower is a party or by which Borrower or the Property is
otherwise bound, other than (a) obligations incurred in the ordinary course of
the operation of the Property and (b) obligations under the Loan Documents.

                           4.1.6    TITLE. Borrower has good and insurable fee
simple title to the Condominium Unit and all Common Elements appurtenant thereto
and good and insurable title to the Improvements, free and clear of all Liens
whatsoever except the Permitted Encumbrances, such other Liens as are permitted
pursuant to the Loan Documents and the Liens created by the Loan Documents.
Borrower has good title to the remainder of the Property, free and clear of all
Liens whatsoever except the Permitted Encumbrances. The Security Instrument,
when properly recorded in the appropriate records, together with the Assignment
of Leases and any Uniform Commercial Code financing statements required to be
filed in connection therewith, will create (a) a valid, perfected first mortgage
lien on Borrower's interest in and to the Condominium Unit and the Improvements,
subject only to Permitted Encumbrances and (b) perfected security interests in
and to, and perfected collateral assignments of, all personalty (including the
Bloomberg Lease described therein), all in accordance with the terms thereof, in
each case subject only to any applicable Permitted Encumbrances. There are no
claims for payment for work, labor or materials affecting the Property which are
or may become a lien prior to, or of equal priority with, the Liens created by
the Loan Documents. Borrower represents and warrants that none of the Permitted
Encumbrances will have a

Material Adverse Effect as of the Closing Date and thereafter. Borrower will
preserve its right, title and interest in and to the Property (except for
replacements thereof, if permitted hereby) for so long as the Note remains
outstanding and will warrant and defend same and the validity and priority of
the Lien hereof from and against any and all claims whatsoever other than the
Permitted Encumbrances.

                           4.1.7    NO BANKRUPTCY FILING. Neither Borrower nor
Guarantor is contemplating either the filing of a petition by it under any state
or federal bankruptcy or insolvency laws or the liquidation of all or a major
portion of such entity's assets or property, and Borrower has no knowledge of
any Person contemplating the filing of any such petition against Borrower or
Guarantor.

                           4.1.8    FULL AND ACCURATE DISCLOSURE. No statement
of fact made by Borrower in this Agreement or in any of the other Loan Documents
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained herein or therein not materially
misleading. There is no fact presently known to Borrower and related to the
Loan, the Property, Borrower, Manager, Guarantor or any Affiliate of any such
Person which has not been disclosed which could reasonably be expected to have a
Material Adverse Effect.

                           4.1.9    ALL PROPERTY. The Property constitutes all
of the real property, personal property, equipment and fixtures currently (i)
owned or leased by Borrower or (ii) used by Borrower, in the operation of the
business located on the Property, other than items owned or leased by Bloomberg.

                           4.1.10   NO PLAN ASSETS.

                           (a)      Except as set forth on SCHEDULE II, Borrower
         does not maintain an employee benefit plan as defined by Section 3(3)
         of ERISA, which is subject to Title IV of ERISA, and Borrower (i) has
         no knowledge of any material liability which has been incurred or is
         expected to be incurred by Borrower which is or remains unsatisfied for
         any taxes or penalties with respect to any "employee benefit plan,"
         within the meaning of Section 3(3) of ERISA, or any "plan," within the
         meaning of Section 4975(e)(1) of the Internal Revenue Code or any other
         benefit plan (other than a multiemployer plan) maintained, contributed
         to, or required to be contributed to by Borrower or by any entity that
         is under common control with Borrower within the meaning of ERISA
         Section 4001(a)(14) (a PLAN) or any plan that would be a Plan but for
         the fact that it is a multiemployer plan within the meaning of ERISA
         Section 3(37); and (ii) has made and shall continue to make when due
         all required contributions to all such Plans, if any. Each such Plan
         has been and will be administered in compliance with its terms and the
         applicable provisions of ERISA, the Internal Revenue Code, and any
         other applicable federal or state law; and no action shall be taken or
         fail to be taken that would result in the disqualification or loss of
         tax-exempt status of any such Plan intended to be qualified and/or tax
         exempt; and

                           (b)      Borrower is not an employee benefit plan, as
         defined in Section 3(3) of ERISA, subject to Title I of ERISA, none of
         the assets of Borrower constitutes or will constitute plan assets of
         one or more such plans within the meaning of 29 C.F.R. Section
         2510.3-101 and Borrower is not a governmental plan within the meaning
         of Section 3(32) of ERISA and transactions by or with Borrower are not
         subject to state statutes regulating investment of, and fiduciary
         obligations with respect to, governmental plans similar to the
         provisions of Section 406 of ERISA or Section 4975 of the Code
         currently in effect, which prohibit or otherwise restrict the
         transactions contemplated by this Agreement.

                           4.1.11   COMPLIANCE. Borrower and the Property and
the use thereof comply in all respects with all applicable Legal Requirements,
including, without limitation, building and zoning ordinances and codes except
where the failure to so comply individually or in the aggregate could not have a
Material Adverse Effect. To the best of Borrower's knowledge, Borrower is not in
default or in violation of any order, writ, injunction, decree or demand of any
Governmental Authority. To the best of Borrower's knowledge, there has not been
committed by Borrower any act or omission affording the federal government or
any other Governmental Authority the right of forfeiture as against the Property
or any part thereof or any monies paid in performance of Borrower's obligations
under any of the Loan Documents.

                           4.1.12   FINANCIAL INFORMATION. All the financial
data including, without limitation, the statements of cash flow and income and
operating expense, that have been delivered by or on behalf of Borrower and/or
Guarantor to Lender in respect of the Property (i) are true, complete and
correct in all material respects, (ii) fairly represent the financial condition
of the Property as of the date of such reports, and (iii) to the extent prepared
or audited by an independent certified public accounting firm, have been
prepared in accordance with GAAP throughout the periods covered, except as
disclosed therein. Other than the Bloomberg Lease, Borrower does not have any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to Borrower and likely to have a Material Adverse Effect on the
operation of the Property as a Class A office building. Since the date of such
financial statements, there has been no event that would have a Material Adverse
Effect on the financial condition, operations or business of Borrower from that
set forth in said financial statements.

                           4.1.13   CONDEMNATION. No Condemnation has been
commenced or, to Borrower's knowledge, is contemplated with respect to all or
any portion of the Property or for the relocation of roadways providing access
to the Property.

                           4.1.14   FEDERAL RESERVE REGULATIONS. None of the
proceeds of the Loan will be used for the purpose of purchasing or carrying any
"margin stock" as defined in Regulation U, Regulation X or Regulation T or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry "margin stock" or for any other purpose which
might constitute this transaction a "purpose credit"

within the meaning of Regulation U or Regulation X. As of the Closing Date,
Borrower does not own any "margin stock."

                           4.1.15   UTILITIES AND PUBLIC ACCESS. The Property
has rights of access to public ways and is served by water, sewer, sanitary
sewer and storm drain facilities adequate to service the Property for its
intended uses. All utilities necessary to the existing use of the Property are
located either in the public right-of-way abutting the Property (which are
connected so as to serve the Property without passing over other property) or in
recorded easements serving the Property and such easements are set forth in and
insured by the Title Policy. All roads necessary for the use of the Property for
its current purposes have been completed and, if necessary, dedicated to public
use.

                           4.1.16   NOT A FOREIGN PERSON. Borrower is not a
foreign person within the meaning of Section 1445(f)(3) of the Code.

                           4.1.17   SEPARATE LOTS. The Property is comprised of
one (1) or more parcels which constitute a separate tax lot or lots and does not
constitute or include a portion of any other tax lot not a part of the Property.

                           4.1.18   ASSESSMENTS. To the best of Borrower's
knowledge, there are (i) no pending or proposed special or other assessments for
public improvements or otherwise affecting the Property and (ii) no contemplated
improvements to the Property that may result in such special or other
assessments.

                           4.1.19   ENFORCEABILITY. The Loan Documents are not
subject to any existing right of rescission, set-off, counterclaim or defense by
Borrower, including the defense of usury, nor would the operation of any of the
terms of the Loan Documents, or the exercise of any right thereunder, render the
Loan Documents, as a whole, unenforceable, and Borrower has not asserted any
right of rescission, set-off, counterclaim or defense with respect thereto,
subject to applicable bankruptcy, insolvency or similar laws generally affecting
the enforcement of creditors' rights and to general principles of equity.

                           4.1.20   NO PRIOR ASSIGNMENT. There are no prior
sales, transfers or assignments of the Bloomberg Lease or any portion of the
Rents due and payable or to become due and payable, in each case which are
presently outstanding following the funding of the Loan, other than those being
terminated or assigned to Lender concurrently herewith.

                           4.1.21   INSURANCE. Borrower has not, and to the best
of Borrower's knowledge no Person has, done by act or omission which would
impair the coverage of any insurance policy covering the property.

                           4.1.22   USE OF PROPERTY. The Condominium Unit is to
be used exclusively for Class-A office and other appurtenant and related uses.

                           4.1.23   CERTIFICATE OF OCCUPANCY; LICENSES. All
certifications, permits, licenses and approvals, including without limitation,
certificates of completion

and temporary occupancy permits for the core and shell of the Building required
of Borrower for the contemplated legal use, occupancy and operation of the
Condominium Unit as a Class A office building (collectively, the LICENSES), have
been obtained and are in full force and effect except to the extent the failure
to so maintain such item could not result in a Material Adverse Effect. Borrower
shall keep and maintain, or shall cause to be kept and maintained, all Licenses
necessary for the operation of the Property as a Class A office building. The
use being made of the Condominium Unit is in conformity with the certificate of
occupancy issued for the Condominium Unit.

                           4.1.24   FLOOD ZONE. None of the Improvements
(including any recreational areas) on the Property are located in an area as
identified by the Federal Emergency Management Agency as an area having special
flood hazards.

                           4.1.25   PHYSICAL CONDITION. To the best of
Borrower's knowledge and except as expressly disclosed in the Physical
Conditions Report, the Property, including, without limitation, all buildings,
Improvements, parking facilities, sidewalks, storm drainage systems, roofs,
plumbing systems, HVAC systems, fire protection systems, electrical systems,
equipment, elevators, exterior sidings and doors, landscaping, irrigation
systems and all structural components, are in good condition, order and repair
in all material respects; to the best of Borrower's knowledge and except as
disclosed in the Physical Conditions Report, there exists no structural or other
material defects or damages in or to the Property, whether latent or otherwise,
and Borrower has not received any written notice from any insurance company or
bonding company of any defects or inadequacies in the Property, or any part
thereof, which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.

                           4.1.26   BOUNDARIES. To the best of Borrower's
knowledge and in reliance on the Survey, all of the Improvements lie wholly
within the boundaries and building restriction lines of the Property, and no
improvements on adjoining properties encroach upon the Property, and no
easements or other encumbrances upon the Property encroach upon any of the
Improvements, so as to materially affect the value or marketability of the
Property except those which are insured against by the Title Policy.

                           4.1.27   BLOOMBERG LEASE. The Property is not subject
to any Leases other than the Bloomberg Lease. No Person has any possessory
interest in the Property or right to occupy the same except under and pursuant
to the provisions of the Bloomberg Lease. The Bloomberg Lease is in full force
and effect and to Borrower's knowledge, there are no material defaults
thereunder by either party and there are no conditions that, with the passage of
time or the giving of notice, or both, would constitute material defaults
thereunder. No Rent under the Bloomberg Lease has been paid more than one (1)
month in advance of its due date. There has been no prior sale, transfer or
assignment, hypothecation or pledge by Borrower of any Lease or of the Rents
received therein, which will be outstanding following the funding of the Loan,
other than those being assigned to Lender concurrently herewith. Other than as
set forth in Section 40.1 of the Bloomberg Lease, Bloomberg does not have a
right or option pursuant to the

Bloomberg Lease or otherwise to purchase all or any part of the property of
which the leased premises are a part.

                           4.1.28   FILING AND RECORDING TAXES. All transfer
taxes, recording fees, deed stamps, intangible taxes or other amounts in the
nature of transfer taxes required to be paid by any Person under applicable
Legal Requirements currently in effect in connection with the transfer of the
Property to Borrower and the granting and recording of the Security Instrument
and the UCCs have been paid. All mortgage, mortgage recording, stamp, intangible
or other similar tax required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of any of the Loan
Documents, including, without limitation, the Security Instrument, have been
paid or will be paid by Borrower simultaneously with the recording of the
Security Instrument, and, under current Legal Requirements, the Security
Instrument is enforceable against Borrower in accordance with its terms by
Lender (or any subsequent holder thereof), subject to applicable bankruptcy,
insolvency or similar laws generally affecting the enforcement of creditors'
rights and to general principles of equity.

                           4.1.29   SINGLE PURPOSE ENTITY/SEPARATENESS.

                           (a)      Until the Indebtedness has been paid in
         full, Borrower hereby represents, warrants and covenants that Borrower
         and each SPE Entity is, shall be, and shall continue to be, a Single
         Purpose Entity.

                           (b)      All of the assumptions made in the
         Non-Consolidation Opinion, including, but not limited to, any exhibits
         attached thereto, are true and correct in all respects and any
         assumptions made in any subsequent non-consolidation opinion delivered
         in connection with the Loan Documents (an ADDITIONAL NON-CONSOLIDATION
         OPINION), including, but not limited to, any exhibits attached thereto,
         will have been and shall be true and correct in all respects. Borrower
         and each SPE Entity have complied and will comply with all of the
         assumptions made with respect to it in the Non-Consolidation Opinion.
         Borrower and each SPE Entity will have complied and will comply with
         all of the assumptions made with respect to it in any Additional
         Non-Consolidation Opinion. Each entity other than Borrower with respect
         to which an assumption shall be made in any Additional
         Non-Consolidation Opinion will have complied and will comply with all
         of the assumptions made with respect to it in any Additional
         Non-Consolidation Opinion.

                           4.1.30   MANAGEMENT AGREEMENT. The Management
Agreement is in full force and effect and there is no default thereunder by any
party thereto and no event has occurred that, with the passage of time and/or
the giving of notice would constitute a default thereunder. The Manager is an
Affiliate of Borrower.

                           4.1.31   ILLEGAL ACTIVITY. No portion of the Property
has been or will be purchased with proceeds of any illegal activity.

                           4.1.32   NO CHANGE IN FACTS OR CIRCUMSTANCES;
DISCLOSURE. All written information, reports, certificates and other documents
submitted by Borrower to Lender in connection with the Loan are, to the best of
Borrower's knowledge, accurate, complete and correct in all material respects.
Except with respect to such representations and warranties contained in this
Agreement or in any other Loan Document which are qualified as being made to the
best of Borrower's knowledge, to Borrower's knowledge or words of similar
import, all representations and warranties made by Borrower in this Agreement or
in any other Loan Document, are accurate, complete and correct in all material
respects. There has been no material adverse change known to Borrower in any
condition, fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading in any material respect or that
otherwise materially and adversely affects the Property or the business
operations or the financial condition of Borrower.

                           4.1.33   TAX FILINGS. Borrower has filed (or has
obtained effective extensions for filing) all federal, state and local tax
returns required to be filed, if any and has paid or made adequate provision for
the payment of all federal, state and local taxes, charges and assessments
payable by Borrower.

                           4.1.34   SOLVENCY/FRAUDULENT CONVEYANCE. Borrower (a)
has not entered into the transaction contemplated by this Agreement or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor and
(b) has received reasonably equivalent value in exchange for its obligations
under the Loan Documents. After giving effect to the Loan, the fair saleable
value of Borrower's assets exceeds and will, immediately following the making of
the Loan, exceed Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
the maximum amount of its contingent liabilities on its Debts as such Debts
become absolute and matured, Borrower's assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur Debt and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such Debt and liabilities as they mature (taking into account the timing and
amounts of cash to be received by Borrower and the amounts to be payable on or
in respect of obligations of Borrower).

                           4.1.35   INVESTMENT COMPANY ACT. Borrower is not (a)
an investment company or a company Controlled by an investment company, within
the meaning of the Investment Company Act of 1940, as amended; (b) a holding
company or a subsidiary company of a holding company or an affiliate of either a
holding company or a subsidiary company within the mean of the Public Utility
Holding Company Act of 1935, as amended; or (c) subject to any other federal or
state law or regulation which purports to restrict or regulate its ability to
borrow money.

                           4.1.36   LABOR. No organized work stoppage or labor
strike is pending or, to the best of Borrower's knowledge, threatened by
employees and other

laborers at the Property. Borrower (i) is not involved in or, to the best of
Borrower's knowledge, threatened with any labor dispute, grievance or litigation
relating to labor matters involving any employees and other laborers at the
Property, including, without limitation, violation of any federal, state or
local labor, safety or employment laws (domestic or foreign) and/or charges of
unfair labor practices or discrimination complaints; (ii) has not engaged in any
unfair labor practices within the meaning of the National Labor Relations Act or
the Railway Labor Act; and (iii) is not a party to, nor bound by, any collective
bargaining agreement or union contract with respect to employees and other
laborers at the Property and no such agreement or contract is currently being
negotiated by the Borrower or any of its Affiliates.

                           4.1.37   BROKERS. Neither Lender nor Borrower has
dealt with any broker or finder with respect to the transactions contemplated by
the Loan Documents and neither Lender nor Borrower has done any acts, had any
negotiations or conversations, or made any agreements or promises which will in
any way create or give rise to any obligation or liability for the payment by
either party of any brokerage fee, charge, commission or other compensation to
any Person with respect to the transactions contemplated by the Loan Documents.
Borrower and Lender shall each indemnify and hold harmless the other from and
against any loss, liability, cost or expense, including any judgments,
attorneys' fees, or costs of appeal, incurred by the other party and arising out
of or relating to any breach or default by the indemnifying party of its
representations, warranties and/or agreements set forth in this Section 4.1.37.
The provisions of this Section 4.1.37 shall survive the expiration and
termination of this Agreement and the payment of the Indebtedness.

                           4.1.38   NO OTHER DEBT. Borrower has not borrowed or
received debt financing that has not been heretofore repaid in full, other than
Permitted Debt.

                           4.1.39   TAXPAYER IDENTIFICATION NUMBER. The federal
taxpayer identification number of Borrower is 06-1716800. The federal taxpayer
identification number of 731 Office One LLC is 11-3712031.

                           4.1.40   COMPLIANCE WITH ANTI-TERRORISM, EMBARGO AND
ANTI-MONEY LAUNDERING LAWS. (i) None of Borrower, Guarantor or any Person who
Controls Borrower, or Guarantor currently is identified on the OFAC List or
otherwise qualifies as a Prohibited Person, and Borrower has implemented
procedures to ensure that no Person who now or hereafter owns any direct equity
interest in Borrower is a Prohibited Person or Controlled by a Prohibited
Person, and (ii) none of Borrower or Guarantor is in violation of any Legal
Requirements relating to anti-money laundering or anti-terrorism, including,
without limitation, Legal Requirements related to transacting business with
Prohibited Persons or the requirements of the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001, U.S. Public Law 107-56, and the related regulations issued thereunder,
including temporary regulations, all as amended from time to time. To the best
of Borrower's knowledge, no tenant at the Condominium Unit is currently is
identified on the OFAC List or otherwise qualifies as a Prohibited Person, and
no tenant at the Condominium Unit is owned or Controlled by a Prohibited Person.
Borrower has

determined that Manager has implemented procedures, approved by Borrower to
ensure that no tenant at the Condominium Unit is a Prohibited Person or owned or
Controlled by a Prohibited Person.

                           4.1.41   OFFICE OF FOREIGN ASSET CONTROL. Neither
Borrower nor Guarantor shall (a) b e or become subject at any time to any law,
regulation, or list of any government agency (including, without limitation, the
U.S. Office of Foreign Asset Control list) that prohibits or limits any Lender
from making any advance or extension of credit to Borrower or from otherwise
conducting business with Borrower and the Guarantor, or (b) fail to provide
documentary and other evidence of Borrower's identity as may be requested by any
Lender at any time to enable any Lender to verify Borrower's identity or to
comply with any applicable law or regulation, including, without limitation,
Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318 (the PATRIOT
ACT). In addition, Borrower hereby agrees to provide to Lender with any
additional information that Lender deems necessary from time to time in order to
ensure compliance with all applicable Laws concerning money laundering and
similar activities.

                           4.1.42   BLOOMBERG LEASE. Borrower represents that it
has heretofore delivered to Lender true and complete copies of the Bloomberg
Lease and any and all amendments or modifications thereof. No events or
circumstances exist which with or without the giving of notice, the passage of
time or both, may constitute a default on the part of Borrower under the
Bloomberg Lease. Except as set forth on attached SCHEDULE III, Borrower or its
predecessors have complied with and performed all of its or their material
construction, improvement and alteration obligations with respect to the
Property required under the Bloomberg Lease and any other obligations under the
Bloomberg Lease that are required as of the date hereof have either been
complied with or the failure to comply with the same does not and will not have
a Material Adverse Effect. Borrower does not owe any brokerage, leasing or other
commissions to any Person in connection with the Property (as such term is
defined in the Condominium Documents). Borrower represents that the Upper Option
Space (as defined in the Bloomberg Lease) consists solely of Office Unit 2.

                           4.1.43   CONDOMINIUM DECLARATION AND BY-LAWS.
Borrower represents that it has heretofore delivered to Lender true and complete
copies of the Condominium Declaration and the By-Laws and any and all amendments
or modifications thereof. The Condominium Declaration and the By-Laws are in
full force and effect and neither Borrower nor, to Borrower's knowledge, any
other party to the Condominium Declaration and the By-Laws, is in default
thereunder, and to the best of Borrower's knowledge, there are no conditions
which, with the passage of time or the giving of notice, or both, would
constitute a default thereunder. The Condominium Declaration and the By-Laws
have not been modified, amended or supplemented. The Condominium Board consists
of five (5) members. As of the date hereof, the members are as follows: Joseph
Macnow, David Greenbaum, Glen Weiss, Barbara Wattenbach and Thomas Dunlap, the
first two (2) of which were appointed by Borrower and are employees of VRT.

                           4.1.44   CONSTRUCTION MILESTONES. The construction of
the Condominium Unit has reached and satisfied the Second Construction Milestone
Stage, the Third Construction Milestone Stage and the Fourth Construction
Milestone Stage, respectively (as such terms are defined in the Bloomberg
Lease). Subject to the terms of Section 10.1 and Section 11.1 of the Bloomberg
Lease, neither Borrower nor Bloomberg has any current or future right pursuant
to Section 22.13 of the Bloomberg Lease or any other provision of the Bloomberg
Lease relating to the construction of the Building to terminate the Bloomberg
Lease. Bloomberg is not currently entitled (i) to an extension of the Rent
Commencement Date (as such term is defined in the Bloomberg Lease), (ii)
entitled to any amounts from Borrower due to a delay in the delivery of any
space to be delivered under the Bloomberg Lease or (iii) entitled to an
abatement of Rents or credit pursuant to Article 22 of the Bloomberg Lease.
Except as set forth on attached SCHEDULE III, all conditions precedent under the
Bloomberg Lease for the commencement of the final Rent Commencement Date to
occur no later than November 9, 2004 for all the premises to be delivered to
Bloomberg, have occurred and Bloomberg is not entitled to any rent abatements or
other payments from Borrower. To the best of Borrower's knowledge (after due
inquiry), the aggregate amount to complete all construction related obligations
of Borrower under the Bloomberg Lease pursuant to Article 22 thereof equals
approximately $550,000.00, all as more particularly set forth on attached
SCHEDULE III. Bloomberg has received all credits it is entitled to under Section
22.2(C) of the Bloomberg Lease and is not entitled now or the future any other
sums under such section.

                  SECTION  4.2      SURVIVAL OF REPRESENTATIONS. Borrower agrees
that all of the representations and warranties of Borrower set forth in Section
4.1 and elsewhere in this Agreement and in the other Loan Documents shall be
deemed given and made as of the date of the funding of the Loan and survive for
so long as any amount remains owing to Lender under this Agreement or any of the
other Loan Documents by Borrower or Guarantor unless a longer survival period is
expressly stated in a Loan Document with respect to a specific representation or
warranty, in which case, for such longer period. All representations,
warranties, covenants and agreements made in this Agreement or in the other Loan
Documents by Borrower shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.

                  V.       BORROWER COVENANTS

                  SECTION  5.1      AFFIRMATIVE COVENANTS.

                  From the Closing Date and until payment and performance in
full of all obligations of Borrower under the Loan Documents, Borrower hereby
covenants and agrees with Lender that:

                           5.1.1    PERFORMANCE BY BORROWER. Borrower shall in a
timely manner observe, perform and fulfill each and every covenant, term and
provision of each Loan Document executed and delivered by, or applicable to,
Borrower and shall not enter into or otherwise suffer or permit any amendment,
waiver, supplement, termination or other modification of any Loan Document
(other than any amendment, waiver,

supplement, termination or other modification of any Loan Document to which
Lender must be a signatory) executed and delivered by, or applicable to,
Borrower without the prior written consent of Lender.

                           5.1.2    EXISTENCE; COMPLIANCE WITH LEGAL
REQUIREMENTS; INSURANCE. Subject to Borrower's right of contest pursuant to
Section 7.3, Borrower shall at all times comply in all material respects and
cause the Property to comply in all material respects with all Legal
Requirements applicable to the Borrower, any SPE Entity and the Property and the
uses permitted upon the Property. Borrower shall do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its
existence, rights, licenses, permits and franchises necessary to comply in all
material respects with all Legal Requirements applicable to it and the Property.
There shall never be committed by Borrower, and Borrower shall not knowingly
permit any other Person in occupancy of or involved with the operation or use of
the Property to commit, any act or omission affording the federal government or
any state or local government the right of forfeiture as against the Property or
any part thereof or any monies paid in performance of Borrower's obligations
under any of the Loan Documents. Borrower hereby covenants and agrees not to
commit, permit or suffer to exist any act or omission affording such right of
forfeiture. Borrower shall at all times maintain, preserve and protect all
franchises and trade names and preserve all the remainder of its property used
in the conduct of its business and shall keep (or cause Bloomberg to keep) the
Property in good working order and repair, and from time to time make, or cause
to be made, all reasonably necessary repairs, renewals, replacements,
betterments and improvements thereto, all as more fully set forth in the
Security Instrument. Borrower shall keep or cause Bloomberg to keep the Property
insured at all times to such extent and against such risks, and maintain
liability and such other insurance, as is more fully set forth in this
Agreement.

                           5.1.3    LITIGATION. Borrower shall give prompt
written notice to Lender of any litigation or governmental proceedings pending
or threatened in writing against Borrower which, if determined adversely to
Borrower, would have a Material Adverse Effect.

                           5.1.4    SINGLE PURPOSE ENTITY.

                           (a)      Each of Borrower and each SPE Entity are,
         and from and after the date hereof shall remain, Single Purpose
         Entities.

                           (b)      Other than distributions from Borrower to
         Guarantor from Excess Cash Flow to Guarantor or from Guarantor to its
         members, none of the funds or assets of Borrower or any SPE Entity will
         be diverted to any other Person or for other than business uses of
         Borrower or any SPE Entity, as applicable, nor will such funds or
         assets be commingled with the funds or assets of any other Affiliate.

                           (c)      To the extent that Borrower or any SPE
         Entity shares the same officers or other employees as any of Borrower,
         any SPE Entity or Affiliates,

         the salaries of and the expenses related to providing benefits to such
         officers and other employees shall be fairly allocated among such
         entities, and each such entity shall bear its fair share of the salary
         and benefit costs associated with all such common officers and
         employees.

                           (d)      To the extent that Borrower or any SPE
         Entity jointly contracts with any of Borrower, any SPE Entity or either
         of their Affiliates, as applicable, to do business with vendors or
         service providers or to share overhead expenses, the costs incurred in
         so doing shall be allocated fairly among such entities, and each such
         entity shall bear its fair share of such costs. To the extent that
         either Borrower or any SPE Entity contracts or does business with
         vendors or service providers where the goods and services provided are
         partially for the benefit of any other Person, the costs incurred in so
         doing shall be fairly allocated to or among such entities for whose
         benefit the goods and services are provided, and each such entity shall
         bear its fair share of such costs. All material transactions between
         Borrower or each SPE Entity and any of their respective Affiliates
         shall be conducted on substantially the same terms (or on more
         favorable terms for Borrower or any SPE Entity, as applicable) as would
         be conducted with third parties.

                           (e)      To the extent that Borrower, any SPE Entity
         or any of their Affiliates have offices in the same location, there
         shall be a fair and appropriate allocation of overhead costs among
         them, and each such entity shall bear its fair share of such expenses.

                           (f)      Borrower and each SPE Entity shall conduct
         its affairs strictly in accordance with its organizational documents,
         and observe all necessary, appropriate and customary corporate, limited
         liability company or partnership formalities, as applicable, including,
         but not limited to, obtaining any and all members' consents necessary
         to authorize actions taken or to be taken, and maintaining accurate and
         separate books, records and accounts, including, without limitation,
         payroll and intercompany transaction accounts.

                           (g)      In addition, Borrower and each SPE Entity
         shall each: (a) maintain books and records separate from those of any
         other Person; (b) maintain its assets in such a manner that it is not
         more costly or difficult to segregate, identify or ascertain such
         assets; (c) hold regular meetings of its board of directors,
         shareholders, partners or members, as the case may be, and observe all
         other corporate, partnership or limited liability company, as the case
         may be, formalities; (d) hold itself out to creditors and the public as
         a legal entity separate and distinct from any other entity; (e) prepare
         separate tax returns and financial statements, or if part of a
         consolidated group, then it will be shown as a separate member of such
         group; (f) transact all business with Affiliates on an arm's-length
         basis and pursuant to enforceable agreements; (g) conduct business in
         its name and use separate stationery, invoices and checks; (h) not
         commingle its assets or funds with those of any other Person; and (i)
         not assume, guarantee or pay the debts or

         obligations of any other Person, except that Guarantor and/or Guarantor
         shall enter into the Recourse Guaranty and Environmental Indemnity.

                           5.1.5    CONSENTS. If Borrower or any SPE Entity is a
corporation, the board of directors of such Person may not take any action
requiring the affirmative vote of 100% of the members of the board of directors
unless all of the directors, including the Independent Directors, shall have
participated in such vote. If Borrower or any SPE Entity is a limited liability
company, (a) if such Person is managed by a board of managers as to actions
concerning Bankruptcy Actions, the board of managers of such Person may not take
any action requiring the affirmative vote of 100% of the members of the board of
managers unless all of the managers, including the Independent Managers, shall
have participated in such vote, (b) if such Person is not managed by a board of
managers as to actions concerning Bankruptcy Actions, the members of such Person
may not take any action requiring the affirmative vote of 100% of the members of
such Person unless all of the members, including the Independent Members, shall
have participated in such vote. An affirmative vote of 100% of the directors,
board of managers or members, as applicable, of Borrower and any SPE Entity
shall be required for any Bankruptcy Action against Borrower or any SPE Entity.
Furthermore, Borrower's and each SPE Entity's formation documents shall
expressly state that for so long as the Loan is outstanding, none of Borrower
nor any SPE Entity shall be permitted to (i) dissolve, liquidate, consolidate,
merge or sell all or substantially all of Borrower's or any SPE Entity's assets
other than in connection with the repayment of the Loan or (ii) engage in any
other business activity and such restrictions shall not be modified or violated
for so long as the Loan is outstanding.

                           5.1.6    ACCESS TO PROPERTY. Borrower shall permit
agents, representatives and employees of Lender and the Rating Agencies to
inspect the Property or any part thereof during normal business hours on
Business Days, upon reasonable advance notice and subject to any limitations or
restrictions in the Bloomberg Lease and accompanied by a representative of
Borrower.

                           5.1.7    NOTICES OF CERTAIN OCCURRENCES. Borrower
shall provide Lender written notice (a) promptly of any event or condition of
which Borrower has knowledge that has or is likely to have a Material Adverse
Effect, (b) promptly of the occurrence of any Event of Default of which Borrower
has knowledge, (c) within three (3) Business Days of any Casualty Event, (d)
within three (3) Business Days of any failure of Bloomberg to pay any operating
expenses required to be paid by Bloomberg under the Bloomberg Lease (including,
without limitation, taxes, insurance premiums, capital expenditures and without
duplication, Operating Expenses), (e) within one Business Day of any Casualty
Rent Restoration Date (together with an Officer's Certificate and supporting
documentation acceptable to Lender in its sole but reasonable discretion
demonstrating that the Casualty Rent Restoration Date has occurred) and (f)
within one Business Day of any delay in the occurrence of any Rent Commencement
Date.

                           5.1.8    COOPERATE IN LEGAL PROCEEDINGS. Borrower
shall cooperate fully with Lender with respect to any proceedings before any
court, board or other Governmental Authority which could reasonably be expected
to affect in any way

affect the rights of Lender hereunder or under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election but subject to the
same restrictions set forth in Section 19.12 hereof (regarding the commencement
of a separate action to settle such proceedings by Lender), to participate in
any such proceedings which may have a Material Adverse Effect.

                           5.1.9    PERFORM LOAN DOCUMENTS. Borrower shall
observe, perform and satisfy all the terms, provisions, covenants and conditions
of, and shall pay when due all costs, fees and expenses to the extent required,
under the Loan Documents executed and delivered by, or applicable to, Borrower.

                           5.1.10   INSURANCE.

                           (a)      Borrower shall cooperate with Lender in
         obtaining for Lender the benefits of any Proceeds lawfully or equitably
         payable in connection with the Property in accordance with the Loan
         Documents, and subject to the terms of the Bloomberg Lease and the
         Bloomberg SNDA and the Condominium Documents, and Lender shall be
         reimbursed for any reasonable out of pocket expenses incurred in
         connection therewith (including reasonable attorneys' fees and
         disbursements) out of such Proceeds.

                           (b)      Borrower shall comply with all Insurance
         Requirements and shall not bring or keep or permit to be brought or
         kept any article upon any of the Property or cause or permit any
         condition to exist thereon which would be prohibited by any Insurance
         Requirement, or would invalidate insurance coverage required hereunder
         to be maintained by Borrower on or with respect to any part of the
         Property pursuant to Section 6.1.

                           5.1.11   FURTHER ASSURANCES; SEPARATE NOTES; LOAN
RESIZING.

                           (a)      Borrower shall execute and acknowledge (or
         cause to be executed and acknowledged) and deliver to Lender all
         documents, and take all actions, reasonably required by Lender from
         time to time to confirm the rights created or now or hereafter intended
         to be created under this Agreement and the other Loan Documents and any
         security interest created or purported to be created thereunder, to
         protect and further the validity, priority and enforceability of this
         Agreement and the other Loan Documents, to subject to the Loan
         Documents any property of Borrower intended by the terms of any one or
         more of the Loan Documents to be encumbered by the Loan Documents, or
         otherwise carry out the purposes of the Loan Documents and the
         transactions contemplated thereunder provided that the foregoing shall
         not impose any additional material liability or obligation on, nor
         materially reduce the rights of Borrower. Borrower agrees that it
         shall, upon request, reasonably cooperate with Lender in connection
         with any request by Lender to sever the Note into two (2) or more
         separate substitute notes in an aggregate principal amount equal to the
         Principal Amount and to reapportion the Loan among such separate
         substitute notes, including, without limitation, by executing and
         delivering to Lender new substitute notes to replace

         the Note, amendments to or replacements of existing Loan Documents to
         reflect such severance and/or Opinions of Counsel with respect to such
         substitute notes, amendments and/or replacements, provided that
         Borrower shall not be responsible for fees for any such
         fractionalization that are incurred following the Closing Date other
         than administrative costs and expenses of the Borrower. Subject to the
         foregoing sentence, Lender shall reimburse Borrower for its reasonable
         out-of-pocket fees, costs and expenses actually incurred in connection
         with such resizing. Any such substitute notes may as among themselves
         be pari passu, senior and subordinate and/or otherwise have varying
         principal amounts and economic terms, provided, however, that (i) the
         initial weighted average Applicable Interest Rate for the term of the
         Notes shall not exceed the Applicable Interest Rate under the Note
         immediately prior to the issuance of Notes; and (ii) subject to the
         effect of any prepayments of such notes after an Event of Default, the
         economics of the Loan (or severed portions thereof) and other terms of
         the Loan, taken as a whole, shall not be modified by such
         fractionalization in a manner which is in any material respect adverse
         to Borrower (except any increase in the weighted average interest rate
         of the Notes that may result after certain prepayments of the Loan have
         been made in accordance with the terms hereof). Upon the occurrence and
         during the continuance of an Event of Default, Lender may apply payment
         of all sums due Notes in such order and priority as Lender shall elect
         in its sole and absolute discretion.

                           (b)      Borrower and Lender agree that Lender may,
         at any time, elect to reduce the mortgage debt on the Property and
         re-size the principal amount of the Loan and allocate the reduced
         portion to a mezzanine loan (a MEZZANINE LOAN). In connection with the
         foregoing, at Lender's sole cost and expense, Borrower agrees, subject
         to the provisions of this Section 5.1.11(b) to (i) create a new single
         purpose entity which will become the mezzanine borrower (a MEZZANINE
         BORROWER), and cause the Mezzanine Borrower and any members in
         Mezzanine Borrower to enter into the documents reasonably deemed
         necessary by Lender to evidence the Mezzanine Loan, including, without
         limitation, a promissory note and a mezzanine loan agreement
         (collectively, the MEZZANINE LOAN DOCUMENTS), which Mezzanine Loan
         Documents shall be subject to the review and approval of Borrower, not
         to be unreasonably withheld or delayed, (ii) cause Mezzanine Borrower
         to pledge the equity interests in the Borrower, (iii) execute and
         deliver such documents and other agreements reasonably required by
         Lender to reduce the amount of the mortgage debt encumbering the
         Property, including, without limitation, an amendment to the Note and
         the other Loan Documents, an endorsement to the Title Policy reflecting
         a change in the insured amount thereunder, legal opinions and other
         customary loan documentation, provided, that, cumulatively, the
         Mezzanine Loan Documents and the amendment to the Loan Documents and
         any other actions taken pursuant to this Section 5.1.11(b) will not (x)
         increase in any material respect the obligations or exposure, or
         decrease the rights, of the Mezzanine Borrower and Borrower under the
         Loan Documents and the Mezzanine Loan Documents, other than to a de
         minimis extent or (y) change the economic or other material terms of
         the Loan (taken as a whole with the Mezzanine Loan). Lender agrees to
         reimburse Borrower for all

         out of pocket costs and expenses (including, without limitation,
         reasonable attorneys' fees and expenses) actually incurred by Borrower
         in connection with any of the undertakings contemplated by this Section
         5.1.11(b).

                           (c)      In addition, Borrower shall, at Borrower's
         sole cost and expense:

                                    (i)      furnish to Lender, to the extent
                  not otherwise already furnished to Lender and reasonably
                  acceptable to Lender, all instruments, documents, boundary
                  surveys, footing or foundation surveys, certificates, plans
                  and specifications, appraisals, title and other insurance
                  reports and agreements, and each and every other document,
                  certificate, agreement and instrument required to be furnished
                  by Borrower pursuant to the terms of the Loan Documents to the
                  extent reasonably requested by Lender and in Borrower's or
                  it's Affiliate's possession;

                                    (ii)     execute and deliver, from time to
                  time, such further instruments as may be reasonably requested
                  by Lender to confirm the lien of the Security Instrument on
                  any Building Equipment, Operating Asset or any Intangible;

                           (d)      execute and deliver to Lender such
         documents, instruments, certificates, assignments and other writings,
         and do such other acts necessary to evidence, preserve and/or protect
         the collateral at any time securing or intended to secure the
         obligations of Borrower under the Loan Documents, as Lender may
         reasonably require.

                           5.1.12   MORTGAGE TAXES. Borrower shall pay all
taxes, charges, filing, registration and recording fees, excises and levies
payable with respect to the Note or the Liens created or secured by the Loan
Documents, other than income, franchise and doing business taxes imposed on
Lender.

                           5.1.13   OPERATION. Borrower shall, and, shall cause
Manager to, (i) promptly perform and/or observe in all material respects all of
the covenants and agreements required to be performed and observed by it under
the Management Agreement and do all things necessary to preserve and to keep
unimpaired its material rights thereunder; (ii) promptly notify Lender of any
"event of default" under the Management Agreement of which it has notice; (iii)
promptly deliver to Lender a copy of each financial statement, capital
expenditures plan, property improvement plan and any other notice, report and
estimate received by it under the Management Agreement that has been utilized by
Manager or Borrower, as applicable, to prepare the financial statements required
to be delivered by Borrower pursuant to Article XI; (iv) deliver to Lender the
Annual Budget for the then-current fiscal year, which Annual Budget shall be
reasonably acceptable to Lender and shall be certified by an Officer's
Certificate; and (v) enforce in a commercially reasonable manner the performance
and observance of all of the covenants and agreements required to be performed
and/or observed by the Manager under the Management Agreement.

                           5.1.14   BUSINESS AND OPERATIONS. Borrower will
continue to engage in the businesses presently conducted by it as and to the
extent the same are necessary for its ownership of the Property and the
maintenance, management and operation of the Property as currently conducted by
Borrower. Borrower will qualify to do business and will remain in good standing
under the laws of the State as and to the extent the same are required for its
ownership of the Property and the maintenance, management and operation of the
Property as currently conducted by Borrower.

                           5.1.15   TITLE TO THE PROPERTY. Borrower will warrant
and defend (a) the title to the Property and every part thereof, subject only to
Liens permitted hereunder (including Permitted Encumbrances) and (b) the
validity and priority of the Lien of the Security Instrument, the Assignment of
Leases and this Agreement on the Property, subject only to Liens permitted
hereunder (including Permitted Encumbrances), in each case against the claims of
all Persons whomsoever. Borrower shall reimburse Lender for any actual out of
pocket losses, costs, damages or expenses (including reasonable attorneys' fees
and court costs) incurred by Lender if an interest in the Property, other than
as permitted hereunder, is claimed by another Person.

                           5.1.16   COSTS OF ENFORCEMENT. In the event (a) that
this Agreement or the Security Instrument is foreclosed in whole or in part or
that this Agreement or the Security Instrument is put into the hands of an
attorney for collection, suit, action or foreclosure, (b) of the foreclosure of
any security agreement prior to or subsequent to this Agreement in which
proceeding Lender is made a party, or a mortgage prior to or subsequent to the
Security Instrument in which proceeding Lender is made a party, or (c) of the
bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of
Borrower or any of its constituent Persons or an assignment by Borrower or any
of its constituent Persons for the benefit of its creditors, Borrower, its
successors or assigns, shall be chargeable with and agrees to pay all reasonable
costs of collection and defense, including reasonable attorneys' fees and costs,
incurred by Lender or Borrower in connection therewith and in connection with
any appellate proceeding or post-judgment action involved therein, together with
all required service or use taxes.

                           5.1.17   ESTOPPEL STATEMENT.

                           (a)      Borrower shall, from time to time at the
         reasonable request of Lender, upon thirty (30) days' prior written
         request from Lender, execute, acknowledge and deliver to the Lender, an
         Officer's Certificate, stating that this Agreement and the other Loan
         Documents are unmodified and in full force and effect (or, if there
         have been modifications, that this Agreement and the other Loan
         Documents are in full force and effect as modified and setting forth
         such modifications), stating the amount of accrued and unpaid interest
         and the outstanding principal amount of the Note and containing such
         other information with respect to the Borrower, the Property and the
         Loan as Lender shall reasonably request. The estoppel certificate shall
         also state either that, to the best of Borrower's knowledge, no Event
         of Default exists hereunder or, if any Event of Default shall exist
         hereunder, specify such Event of Default and the steps being taken to
         cure such Event of Default.

                           (b)      Borrower shall use all commercially
         reasonable efforts to deliver to Lender upon Lender's reasonable
         request within twenty (20) Business Days of Lender's request an
         estoppel certificate from Bloomberg as required under Section 7.3 of
         the Bloomberg Lease.

                           5.1.18   LOAN PROCEEDS. Borrower shall use the
proceeds of the Loan received by it on the Closing Date only for the purposes
set forth in Section 2.1.4.

                           5.1.19   NO JOINT ASSESSMENT. Borrower shall not
suffer, permit or initiate the joint assessment of the Property (a) with any
other real property constituting a tax lot separate from the Property, and (b)
which constitutes real property with any portion of the Property which may be
deemed to constitute personal property, or any other procedure whereby the lien
of any taxes which may be levied against such personal property shall be
assessed or levied or charged to such real property portion of the Property and
shall make commercially reasonable efforts to prevent Bloomberg from doing the
same.

                           5.1.20   NO FURTHER ENCUMBRANCES. Borrower shall do,
or cause to be done, all things necessary to keep and protect the Property and
all portions thereof unencumbered from any Liens, easements or agreements
granting rights in or restricting the use or development of the Property, except
for (a) Permitted Encumbrances, (b) Liens created or permitted pursuant to the
Loan Documents, (c) Liens for Impositions prior to the imposition of any
interest, charges or expenses for the non-payment thereof and (d) any liens
permitted pursuant to the Bloomberg Lease and shall make commercially reasonable
efforts to prevent Bloomberg from doing the same.

                           5.1.21   EXPANSION SPACE; BLOOMBERG LEASE,
CONDOMINIUM DECLARATION AND BY-LAWS.

                           (a)      Subject to the terms of the Security
         Instrument, Lender will, at Borrower's request and cost and expense,
         reasonably cooperate with Borrower to permit Borrower to modify the
         Bloomberg Lease to exclude from the premises demised thereunder the
         Upper Option Space and/or Lower Option Space (as defined in the
         Bloomberg Lease). In connection with the foregoing, Borrower shall take
         (or shall cause to be taken) all actions reasonably requested by
         Lender.

                           (b)      Borrower will promptly after receipt thereof
                  deliver to Lender a copy of any notice received with respect
                  to the Condominium Declaration, the By-Laws and the Bloomberg
                  Lease claiming that Borrower is in default in the performance
                  or observance of any of the material terms, covenants or
                  conditions of any of the Condominium Declaration, the By-Laws
                  or the Bloomberg Lease.

                           (c)      All costs and expenses incurred by Lender
                  (including, without imitation, reasonable attorney's fees) to
                  effectuate any of the terms of this Section 5.1.21(a) and the
                  terms of Section 15 of the Security

                  Instrument shall be paid promptly (or in advance if requested
                  by Lender) by the Borrower.

                           5.1.22   NOTICE OF CERTAIN OCCURRENCES. In addition
to all other notices required to be given by Borrower hereunder, Borrower shall
give notice to Lender promptly upon the occurrence of: (a) any Event of Default;
(b) any litigation or proceeding affecting Borrower or the Property or any part
thereof in which the amount involved is $3,000,000 or more and not covered by
insurance or in which injunctive or similar relief is sought and likely to be
obtained; and (c) any default beyond applicable notice and cure periods under
the Bloomberg Lease.

                           5.1.23   BEACON COURT CONDOMINIUM DECLARATION.

                           (a)      Borrower shall cause the Condominium Board
         (i) to keep the Common Elements insured (or shall maintain such
         insurance on behalf of the Condominium Board) as required pursuant to
         the Condominium Declaration, (ii) to appoint Lender as the Insurance
         Trustee (as such term is defined in the By-Laws) and (iii) to deliver
         any insurance proceeds payable to Borrower to Lender, and such
         insurance policies are hereby added to the definition of the term
         "Policies" set forth herein.

                           (b)      Borrower shall upon the reasonable request
         of Lender use commercially reasonable efforts to deliver to Lender upon
         request, an estoppel certificate from the Condominium Board in form and
         substance reasonably satisfactory to Lender.

                           (c)      Borrower shall observe and perform in all
         material respects each and every material term to be observed or
         performed by Borrower pursuant to the terms of the Condominium
         Declaration and the By-Laws.

                           (d)      Borrower shall promptly deliver to Lender a
         true and complete copy of all notices of default received by the
         Borrower with respect to any obligation or duty of Borrower under the
         Condominium Declaration or the By-Laws.

                           (e)      Borrower shall not, except with the prior
         written consent of Lender (i) institute any action or proceeding for
         partition of the Property, the Common Elements, the regime created with
         respect to the Property under the Condominium Declaration (the
         CONDOMINIUM REGIME) or the Condominium Unit, (ii) vote for or consent
         to any modification of, amendment to or relaxation in the enforcement
         of the Condominium Declaration or the By-Laws which could result in a
         Material Adverse Effect (it being further agreed in no event shall
         Borrower amend or modify any of the matters referred to in the Proxy
         without Lender's prior written consent, not to be unreasonably
         withheld, delayed or conditioned), (iii) in the event of damage to or
         destruction of the Property, the Common Elements or the Condominium
         Unit, vote in opposition to a motion to repair, restore or rebuild the
         Common Elements or the Condominium Unit, or (iv)

         amend or modify any material terms or provisions of the Condominium
         Declaration or the By-Laws which could result in a Material Adverse
         Effect.

                           (f)      Borrower shall not vote to terminate the
         Condominium Declaration without the prior written consent of Lender.
         Any agreement whereby the Condominium Declaration is terminated or the
         Property is withdrawn therefrom (and a replacement Condominium
         Declaration approved by Lender is not simultaneously recorded) shall be
         deemed a sale, conveyance, alienation, mortgage, encumbrance, pledge or
         transfer prohibited under the Loan Documents and shall constitute an
         Event of Default.

                  SECTION 5.2       NEGATIVE COVENANTS.

                  From the Closing Date until payment and performance in full of
all obligations of Borrower under the Loan Documents or the earlier release of
the Lien of this Agreement or the Security Instrument in accordance with the
terms of this Agreement and the other Loan Documents, Borrower covenants and
agrees with Lender that Borrower will not do, directly or indirectly, any of the
following:

                           5.2.1    INCUR DEBT. Incur, create or assume any Debt
other than Permitted Debt or Transfer or lease all or any part of the Property
or any interest therein, except as permitted in the Loan Documents;

                           5.2.2    ENCUMBRANCES. Incur, create or assume or
permit the incurrence, creation or assumption of any Debt secured by an interest
in Borrower or any SPE Entity and shall not Transfer or permit the Transfer of
any interest in Borrower or any SPE Entity except as permitted pursuant to
Article VIII;

                           5.2.3    ENGAGE IN DIFFERENT BUSINESS. Engage,
directly or indirectly, in any business other than that of entering into this
Agreement and the other Loan Documents to which Borrower is a party and the use,
ownership, management, leasing, renovation, financing, development, operation
and maintenance of the Property and activities related thereto;

                           5.2.4    MAKE ADVANCES. Make advances or make loans
to any Person, or hold any investments, except as expressly permitted pursuant
to the terms of this Agreement or any other Loan Document;

                           5.2.5    PARTITION. Partition the Property;

                           5.2.6    COMMINGLE. Commingle its funds or assets
with those of any other Person;

                           5.2.7    GUARANTEE OBLIGATIONS. Guarantee any
obligations of any Person;

                           5.2.8    TRANSFER ASSETS. Transfer any asset other
than in the ordinary course of business or Transfer any interest in the Property
except as may be permitted hereby or in the other Loan Documents;

                           5.2.9    AMEND ORGANIZATIONAL DOCUMENTS. Amend or
modify any of its organizational documents without Lender's consent, other than
in connection with any Transfer permitted pursuant to Article VIII or to reflect
any change in capital accounts, contributions, distributions, allocations or
other provisions that do not and could not reasonably be anticipated to have a
Material Adverse Effect and provided that Borrower and each SPE Entity each
remain a Single Purpose Entity;

                           5.2.10   DISSOLVE. Dissolve, wind-up, terminate,
liquidate, merge with or consolidate into another Person, except as expressly
permitted pursuant to this Agreement;

                           5.2.11   BANKRUPTCY. (i) dissolve, liquidate,
consolidate, merge or sell all or substantially all of Borrower's assets other
than in connection with the repayment of the Loan, (ii) engage in any other
business activity or (iii) engage in any Bankruptcy Action against Borrower or
any SPE Entity, without obtaining the prior consent of each of the Independent
Managers of Borrower or such SPE Entity, as the case may be;

                           5.2.12   ERISA. Engage in any activity that would
result in Borrower being an employee benefit plan, as defined in Section 3(3) of
ERISA, or the assets of Borrower constituting plan assets of one or more such
plans within the meaning of 29 C.F.R. Section 2510.3-101;

                           5.2.13   DISTRIBUTIONS. From and after the occurrence
and during the continuance of an Event of Default, make any distributions to or
for the benefit of any of its partners or members or its or their Affiliates.

                           5.2.14   MANAGER.

                           (a)      Borrower shall not, without the prior
         written consent of Lender, which consent shall be in the Lender's
         reasonable discretion (and if a Securitization shall have occurred,
         Borrower may, in Lender's sole and absolute discretion and at
         Borrower's sole cost and expense, be required to obtain a Rating Agency
         Confirmation with respect to such action): enter into, materially
         modify, change, supplement, alter or amend the Management Agreement or
         waive or release any of its right and remedies under the Management
         Agreement that could have a Material Adverse Effect or replace the
         Manager with a Person other than a Qualified Manager. Borrower agrees
         that any Management Agreement shall require the Manager to hold itself
         out in the capacity as an agent of the Borrower party to such
         Management Agreement;

                           (b)      Borrower shall notify Lender in writing (and
         shall deliver a copy of the proposed management agreement) of any
         entity proposed to be designated as a Qualified Manager of the Property
         not less than thirty (30) days

         before such Qualified Manager, begins to manage the Property, and, if a
         Securitization shall have occurred, shall obtain prior to any
         appointment of a Qualified Manager a Rating Agency Confirmation, with
         respect to any proposed Qualified Manager.

                           (c)      Upon the retention of a Qualified Manager,
         Lender shall have the right to approve (which approval shall be in the
         Lender's reasonable discretion) any new management agreement with such
         Qualified Manager. If a Securitization shall have occurred upon the
         retention of a Qualified Manager, Borrower shall at its sole cost and
         expense obtain shall obtain a Rating Agency Confirmation with respect
         to any new management agreement with such Qualified Manager. Borrower
         shall cause the Manager to enter into a Manager's Consent and
         Subordination of Management Agreement and shall deliver a reasonably
         acceptable Non-Consolidation Opinion covering such Manager if such
         Person (i) is not covered by the Non-Consolidation Opinion or an
         Additional Non-Consolidation Opinion, and (ii) is an Affiliate of
         Borrower.

                           (d)      If, after Borrower shall have entered into a
         Management Agreement in accordance with the terms hereof, (a) a
         monetary Event of Default has occurred and is continuing, (b) with
         respect to any property manager that is not an Affiliate of Borrower, a
         material default (as determined by Lender in its sole and absolute
         discretion) occurs and is continuing under the terms of any Management
         Agreement or (c) the Manager shall become insolvent, Borrower shall, at
         the request of Lender, terminate the Management Agreement and replace
         the Manager with a Qualified Manager in accordance with this Section
         5.2.14 and shall deliver a reasonably acceptable Non-Consolidation
         Opinion (except such opinion shall not be acceptable if not acceptable
         to any Rating Agency in such agency's sole and absolute discretion)
         covering such replacement Manager if such Person (i) is not covered by
         the Non-Consolidation Opinion or an Additional Non-Consolidation
         Opinion, and (ii) is an Affiliate of Borrower.

                           5.2.15   BLOOMBERG LEASE. Without the prior written
consent of Lender (and if a Securitization shall have occurred, such consent
may, in Lender's sole and absolute discretion, be conditioned upon Borrower
delivering, at its sole cost and expense to Lender a Rating Agency Confirmation)
(i) send Bloomberg written notice of its election to end the term of the
Bloomberg Lease or (ii) take any action with respect to the Bloomberg Lease
contemplated under Section 8.8.1.

                           5.2.16   MODIFY ACCOUNT AGREEMENT. Without the prior
written consent of Lender, which shall not be unreasonably withheld, delayed or
conditioned, (and if a Securitization shall have occurred, a Rating Agency
Confirmation obtained by Borrower), execute any modification to the Account
Agreement;

                           5.2.17   ZONING RECLASSIFICATION. Without the prior
written consent of Lender, not to be unreasonably withheld, conditioned or
delayed, initiate or consent to (a) any zoning reclassification of any portion
of the Property, (b) seek any variance under any existing zoning ordinance that
could result in the use of the Property

becoming a non-conforming use under any zoning ordinance or any other applicable
land use law, rule or regulation, or (c) allow any portion of the Property to be
used in any manner that could result in the use of the Property becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation;

                           5.2.18   CHANGE OF PRINCIPAL PLACE OF BUSINESS.
Change its address for notice purposes set forth on the first page of this
Agreement without first giving Lender thirty (30) days prior written notice (but
in any event, within any period required pursuant to the UCC) and there shall
have been taken such action, reasonably satisfactory to Lender, as may be
necessary to maintain fully the effect, perfection and priority of the security
interest of Lender hereunder in the Account Collateral at all times;

                           5.2.19   DEBT CANCELLATION. Cancel or otherwise
forgive or release any material claim or debt owed to it by any Person, except
for adequate consideration or in a commercially reasonable course of its
business;

                           5.2.20   MISAPPLICATION OF FUNDS. Distribute any
revenue from the Property or any Proceeds in violation of the provisions of this
Agreement, fail to remit amounts to the Collection Account or Holding Account,
as applicable, as required by Section 3.1, misappropriate any security deposit
or portion thereof or misapply the proceeds of the Loan; or

                           5.2.21   SINGLE-PURPOSE ENTITY. Fail to be a
Single-Purpose Entity or take or suffer any action or inaction the result of
which would be to cause it or any SPE Entity to cease to be a Single-Purpose
Entity.

                  VI.      INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

                  SECTION 6.1       INSURANCE COVERAGE REQUIREMENTS. Borrower
shall, at its sole cost and expense, keep or cause to be kept in full force and
effect insurance coverage of the types and minimum limits as follows during the
term of this Agreement:

                           6.1.1    PROPERTY INSURANCE. Insurance against loss
customarily included under so called "All Risk" policies including flood,
earthquake, vandalism, and malicious mischief, boiler and machinery and such
other insurable hazards as, under good insurance practices, from time to time
are insured against for other property and buildings similar to the Improvements
and Building Equipment in nature, use, location, height, and type of
construction. Such insurance policy shall also insure the additional expense of
demolition and if any of the Improvements or the use of the Property shall at
any time constitute legal non-conforming structures or uses, provide coverage
for contingent liability from Operation of Building Laws, Demolition Costs and
Increased Cost of Construction Endorsements and containing an "Ordinance or Law
Coverage" or "Enforcement" endorsement. The amount of such "All Risk" insurance
shall be not less than the Principal Amount. Each such insurance policy shall
contain an agreed amount endorsement or a coinsurance waiver (or in the
alternative, a no co-insurance policy) and replacement cost value endorsement
and shall cover, without limitation, all tenant

improvements and betterments which Borrower is required to insure in accordance
with any Lease (excluding subleases). If the insurance required under this
paragraph is not obtained by blanket insurance policies, the insurance policy
shall be endorsed to also provide a limit greater than 100% of the replacement
cost. Lender shall be named as "Loss Payee" on a "Standard Mortgagee
Endorsement" and be provided not less than thirty (30) days advance notice of
change in coverage, cancellation or non-renewal.

                           6.1.2    LIABILITY INSURANCE. "General Public
Liability" insurance, including, without limitation, "Commercial General
Liability" insurance; "Owned" (if any), "Hired" and "Non Owned Auto Liability";
and "Umbrella Liability" coverage for "Personal Injury", "Bodily Injury",
"Death, Accident and Property Damage", providing in combination no less than
$50,000,000 per occurrence and in the annual aggregate, per location. The
policies described in this paragraph shall cover, without limitation, elevators,
escalators, independent contractors, "Contractual Liability" (covering, to the
maximum extent permitted by law, Borrower's obligation to indemnify Lender as
required under this Agreement) and "Products and Completed Operations Liability"
coverage. All public liability insurance shall name Lender as "Additional
Insured" either on a specific endorsement or under a blanket endorsement
satisfactory to Lender.

                           6.1.3    WORKERS' COMPENSATION INSURANCE. Statutory
workers compensation and disability insurance (to the extent the risks to be
covered thereby are not already covered by other policies maintained by
Borrower), with respect to any work by Borrower performed on or about the
Property.

                           6.1.4    COMMERCIAL RENTS INSURANCE. "Commercial
rents" insurance in an amount equal to thirty-six (36) months actual rental loss
(inclusive of any operating expenses and taxes regarding the Condominium Unit)
with a limit of liability sufficient to avoid any co-insurance penalty and to
provide Proceeds which will cover the actual loss of profits and rents sustained
during the period of at least thirty-six (36) months following the date of
casualty. Such policies of insurance shall be subject only to exclusions that
are reasonably acceptable to Lender; provided, however, that such exclusions are
reasonably consistent with those required for loans similar to the Loan provided
herein. Such insurance shall be deemed to include "loss of rental value"
insurance where applicable. The term "rental value" means the sum of (A) the
total then ascertainable Rents payable under the Bloomberg Lease (other than
subleases) and (B) the total ascertainable amount of all other amounts to be
received by Borrower from third parties which are the legal obligations of
Bloomberg, reduced to the extent such amounts would not be received because of
operating expenses not incurred during a period of non-occupancy of that portion
of such Property then not being occupied.

                           6.1.5    BUILDER'S ALL-RISK INSURANCE. During any
period of repair or restoration, builder's "All-Risk" insurance on a completed
value, non-reporting basis in an amount equal to not less than the full
insurable value of the Property against such risks (including so called "All
Risk" perils coverage and collapse of the Improvements to agreed limits as
Lender may reasonably request, in form and substance reasonably acceptable to
Lender).

                           6.1.6    BOILER AND MACHINERY INSURANCE.
Comprehensive boiler and machinery insurance (without exclusion for explosion)
covering all mechanical and electrical equipment, if any, located in, on or
about the Property against physical damage, rent loss and improvement loss and
covering, without limitation, all tenant improvements and betterments that
Borrower is required to insure pursuant to any lease on a replacement cost
basis. The minimum amount of limits to be provided shall be $50,000,000 per
accident.

                           6.1.7    FLOOD INSURANCE. If any portion of the
Improvements is located within an area designated as "flood prone" or a "special
flood hazard area" (as defined under the regulations adopted under the National
Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973),
flood insurance shall be provided, in an amount not less than the maximum limit
of coverage available under the Federal Flood Insurance plan with respect to the
Property. Lender reserves the right to require flood insurance in excess of that
available under the Federal Flood Insurance plan.

                           6.1.8    OTHER INSURANCE, LEASE TERMINATION INSURANCE
AND TERRORISM INSURANCE.

                           (a)      Provided that the Terrorism Risk Insurance
         Act of 2002 (TRIA) or a similar statute is in effect, Borrower shall be
         required to maintain or cause to be maintained insurance coverage
         relating to the acts of terrorism by or on behalf of foreign groups,
         individuals or interests (TERRORISM INSURANCE) on a per occurrence
         basis for the Building, the Commercial Premises, Residential Premises,
         Property, any Unit and/or any other interest in the Property (as each
         such term is defined in the Condominium Documents) in an amount equal
         to the sum of (x) the Principal Amount and (y) the amount of any
         Terrorism Insurance required by any other lender or Person that has a
         loan at any time secured by an interest in the Building, the Commercial
         Premises, Residential Premises, Property, any Unit and/or any other
         interest in the Property (as each such term is defined in the
         Condominium Documents) (the REQUIRED TERRORISM INSURANCE AMOUNT);
         provided, however, Lender agrees that Borrower shall not be required to
         spend (or cause the Condominium Board to spend) more than $2,000,000
         per annum for Terrorism Insurance (it being agreed that if the cost to
         purchase the Required Terrorism Insurance Amount exceeds $2,000,000 per
         year, Borrower will only be required to obtain or cause to be to
         obtained that amount of Terrorism Insurance that can be purchased for
         $2,000,000 per annum). If TRIA or a similar statute is not in effect,
         then, provided that Terrorism Insurance is either (i) commercially
         available, or (ii) maintained for another Class "A" office property in
         the same geographic area as the Property which is owned directly or
         indirectly by an Affiliate of Borrower, then Borrower shall be required
         to carry Terrorism Insurance throughout the term of the Loan on a per
         occurrence basis for the Condominium Unit in an amount not less than
         the Principal Amount. Lender agrees that Terrorism Insurance may be
         provided under a blanket policy that is acceptable to Lender.

                           (b)      At Lender's reasonable request, such other
         insurance with respect to the Property against loss or damage of the
         kinds from time to time customarily insured against and in such amounts
         as are generally required by institutional lenders on loans of similar
         amounts and secured by properties comparable to the Property.

                           6.1.9    RATINGS OF INSURERS. Borrower shall maintain
the insurance coverage described in Section 6.1.1 through Section 6.1.8 above,
in all cases, with one or more domestic primary insurers reasonably acceptable
to Lender, having claims-paying-ability and financial strength ratings by S&P of
not less than "A" and its equivalent by the other Rating Agencies. All insurers
providing insurance required by this Agreement shall be authorized to issue
insurance in the State; provided, however, if the insurance provided pursuant to
Sections 6.1.1 and 6.1.4 is procured by a syndication of more then five (5)
insurers then the foregoing requirements shall not be violated if such insurance
is provided (a) under a blanket policy and at least sixty percent (60%) of the
limits of insurance in place on the date hereof and thereafter is with the
primary carrier having a claims paying ability rating of "A" or better and the
other carriers having a claims paying ability rating of "BBB" or better by S&P
and its equivalent by the other Rating Agencies.

                           6.1.10   FORM OF INSURANCE POLICIES; ENDORSEMENTS.
All insurance policies shall be in such form (except to the extent the forms are
"filed forms") and with such endorsements as are satisfactory to Lender (and
Lender shall have the right to confirm amounts, form (except to the extent the
forms are "filed forms"), risk coverage, deductibles, loss payees and insureds).
A certificate of insurance with respect to all of the above-mentioned insurance
policies has been delivered to Lender and Borrower shall make available all
certificates of insurance or copies of such policies as are provided to it
pursuant to the Bloomberg Lease, if any. Borrower shall make all originals or
certified copies of all such policies available for Lender's review in New York
City when the same are normally and customarily available following the Closing
Date. All policies (except policies for worker's compensation) shall name Lender
as an additional insured, shall provide that all Proceeds (except with respect
to Proceeds of general liability and workers' compensation insurance) be payable
to Lender as and to the extent set forth in Section 6.2, and shall contain: (i)
a standard "non-contributory mortgagee" endorsement or its equivalent relating
to recovery by Lender notwithstanding the negligent or willful acts or omissions
of Borrower; (ii) a waiver of subrogation endorsement in favor of Lender; (iii)
an endorsement providing that no policy shall be impaired or invalidated by
virtue of any act, failure to act, negligence of, or violation of declarations,
warranties or conditions contained in such policy by Borrower, Lender or any
other named insured, additional insured or loss payee, except for the willful
misconduct of Lender knowingly in violation of the conditions of such policy;
and (iv) an endorsement providing for a deductible per loss of an amount not
more than that which is customarily maintained by prudent owners of properties
with a standard of operation and maintenance comparable to and in the general
vicinity of the Property, but in no event in excess of an amount reasonably
acceptable to Lender. Borrower shall use commercially reasonable efforts to have
each such insurance policy also include (1) a provision that such policies shall
not be canceled, terminated or expire without at least thirty (30) days' prior
written notice to

Lender, in each instance and (2) a provision whereby the insurer agrees that
such policy shall not be canceled or terminated, the coverage, deductible, and
limits of such policy shall not be modified, other provisions of such policy
shall not be modified is such policy, after giving effect to such modification,
would not satisfy the requirements of this Agreement, and such policy shall not
be canceled or fail to be renewed, without in each case, at least thirty (30)
days prior written notice to Lender. Each insurance policy shall contain a
provision whereby the insurer: (1) waives any right to claim any premiums and
commissions against Lender, provided that the policy need not waive the
requirement that the premium be paid in order for a claim to be paid to the
insured, and (2) provides that Lender at its option, shall be permitted to make
payments to effect the continuation of such policy upon notice of cancellation
due to non-payment of premiums. In the event any insurance policy (except for
general public and other liability and workers compensation insurance) shall
contain breach of warranty provisions, such policy shall provide that with
respect to the interest of Lender, such insurance policy shall not be
invalidated by and shall insure Lender regardless of (A) any act, failure to act
or negligence of or violation of warranties, declarations or conditions
contained in such policy by any named insured, (B) the occupancy or use of the
Property for purposes more hazardous than permitted by the terms thereof, or (C)
any foreclosure or other action or proceeding taken by Lender pursuant to any
provision of this Agreement.

                           6.1.11   CERTIFICATES. Borrower shall deliver to
Lender annually, concurrently with the renewal of the insurance policies
required hereunder, a certificate from Borrower's insurance agent stating that
the insurance policies required to be delivered to Lender pursuant to this
Section 6.1 are maintained with insurers who comply with the terms of Section
6.1.9, setting forth a schedule describing all premiums required to be paid by
Borrower to maintain the policies of insurance required under this Section 6.1,
and stating that Borrower has paid such premiums. Certificates of insurance with
respect to all replacement policies shall be delivered to Lender not less than
seven (7) Business Days prior to the expiration date of any of the insurance
policies required to be maintained hereunder which certificates shall bear
notations evidencing payment of applicable premiums. Borrower shall (i) subject
to the second sentence of Section 6.1.10 hereof, make originals (or certified
copies) of such replacement insurance policies available for review by Lender in
New York City and (ii) use commercially reasonable efforts to deliver to Lender
certificates of such replacement insurance policies within thirty (30) days
after the effective date thereof and deliver such policies to Lender within five
(5) Business Days after Borrower's receipt thereof. If Borrower fails to
maintain and make available the certified copies or originals of insurance
policies or to deliver to Lender the certificates of insurance and required by
this Agreement, upon five (5) Business Days' prior notice to Borrower, Lender
may procure such insurance, and all costs thereof (and interest thereon at the
Default Rate) shall be added to the Indebtedness. Lender shall not, by the fact
of approving, disapproving, accepting, preventing, obtaining or failing to
obtain any insurance, incur any liability for or with respect to the amount of
insurance carried, the form or legal sufficiency of insurance contracts,
solvency of insurance companies, or payment or defense of lawsuits, and Borrower
hereby expressly assumes full responsibility therefor and all liability, if any,
with respect.

                           6.1.12   SEPARATE INSURANCE. Borrower will not take
out separate insurance contributing in the event of loss with that required to
be maintained pursuant to this Section 6.1 unless such insurance complies with
this Section 6.1.

                           6.1.13   BLANKET POLICIES. The insurance coverage
required under Section 6.1 may be effected under a blanket policy or policies
covering the Property and other properties and assets not constituting a part of
the Property; provided that any such blanket policy shall specify, except in the
case of public liability insurance, the portion of the total coverage of such
policy that is allocated to the Property, and any sublimits in such blanket
policy applicable to the Property, which amounts shall not be less than the
amounts required pursuant to Section 6.1 and which shall in any case comply in
all other respects with the requirements of this Section 6.1. Upon Lender's
request, Borrower shall deliver to Lender an Officer's Certificate setting forth
(i) the number of properties covered by such policy, (ii) the location by city
(if available, otherwise, county) and state of the properties, (iii) the average
square footage of the properties (or the aggregate square footage), (iv) a brief
description of the typical construction type included in the blanket policy and
(v) such other information as Lender may reasonably request. Borrower shall make
all such policies available for inspection by Lender in Borrower's offices upon
reasonable advance notice by Lender to Borrower. Borrower will not, and will not
permit any other Person to amend the terms of the Credit Wrap Insurance Policy
to add any other additional insured, mortgagee and/or loss payee of any
insurance proceeds regarding the Building, the Commercial Premises, Residential
Premises, Property, any Unit and/or any other interest in the Property (as each
such term is defined in the Condominium Documents) (including, without
limitation, adding any lender which finances any interest in any of the
Building, the Commercial Premises, Residential Premises, any Unit and/or any
other interest in the Property).

                  SECTION 6.2       CONDEMNATION AND INSURANCE PROCEEDS.

                           6.2.1    NOTIFICATION. Borrower will promptly notify
Lender in writing upon obtaining knowledge of (i) the institution of any
proceedings relating to any Taking (whether material or immaterial) of, or (ii)
the occurrence of any casualty, damage or injury to the Property or any portion
thereof, the restoration of which is estimated by Borrower in good faith to cost
more than the Threshold Amount. In addition, each such notice shall set forth
such good faith estimate of the cost of repairing or restoring such casualty,
damage, injury or Taking in reasonable detail if the same is then available and,
if not, as soon thereafter as it can reasonably be provided.

                           6.2.2    PROCEEDS. In the event of any Taking or any
casualty or other damage or injury to the Property, Borrower's right, title and
interest in and to all compensation, awards, proceeds, damages, claims,
insurance recoveries, causes and rights of action (whether accrued prior to or
after the date hereof) and payments which Borrower may receive or to which
Borrower may become entitled with respect to the Property or any part thereof
other than payments received in connection with any liability or loss of rental
value or business interruption insurance (collectively, PROCEEDS), in connection
with any such Taking of, or casualty or other damage or injury to, the Property
or any part thereof are hereby assigned by Borrower to Lender and, except as

otherwise provided herein, in the Bloomberg Lease, in the Condominium
Declaration or in the By-Laws, shall be paid to the Lender. Borrower will or
will cause the Condominium Board to, in good faith and in a commercially
reasonable manner, file and prosecute the adjustment, compromise or settlement
of any claim for Proceeds and, subject to the Condominium Documents, the terms
hereof and the Proxy, Borrower's right to receive the direct payment of any
Proceeds and Bloomberg's right to such Proceeds under the Bloomberg Lease, will
cause the same to be paid directly to Lender to be held and applied in
accordance with the provisions of this Agreement. Except upon the occurrence and
during the continuance of a Monetary Default or an Event of Default, Borrower
may settle any insurance claim with respect to Proceeds which does not exceed
the Threshold Amount. Subject to the Condominium Documents, whether or not a
Monetary Default or an Event of Default shall have occurred and be continuing,
Lender shall have the right to approve, such approval not to be unreasonably
withheld, conditioned, or delayed any settlement which could in Lender's sole
but reasonable discretion result in any Proceeds in excess of the Threshold
Amount and Borrower will deliver or cause to be delivered to Lender all
instruments reasonably requested by Lender to permit such approval. Borrower
will pay all reasonable out-of-pocket costs, fees and expenses reasonably
incurred by Lender (including all reasonable attorneys' fees and expenses, the
reasonable fees of insurance experts and adjusters and reasonable costs incurred
in any litigation or arbitration), and interest thereon at the Default Rate to
the extent not paid within fifteen (15) days after delivery of a written request
for reimbursement by Lender, in connection with the settlement of any claim for
Proceeds and seeking and obtaining of any payment on account thereof in
accordance with the foregoing provisions. If any Proceeds are received by
Borrower and may be retained by Borrower pursuant to this Section 6.2, such
Proceeds shall, until the completion of the related Work, be held in trust for
Lender and shall be segregated from other funds of Borrower to be used to pay
for the cost of the Work in accordance with the terms hereof, and in the event
such Proceeds exceed the Threshold Amount (unless such Proceeds are the result
of a Casualty Event), such Proceeds shall be forthwith paid directly to and held
by Lender in the Proceeds Reserve Account in trust for Borrower, in each case to
be applied or disbursed in accordance with this Section 6.2 subject to the
Bloomberg Lease, the Condominium Declaration and/or the By-Laws. If an Event of
Default shall have occurred and be continuing, or if Borrower fails to file
and/or prosecute (or fails to cause the Condominium Board to file and/or
prosecute) any insurance claim for a period of fifteen (15) Business Days
following Borrower's receipt of written notice from Lender, Borrower hereby
irrevocably empowers Lender, in the name of Borrower as its true and lawful
attorney-in-fact, to file and prosecute such claim (including settlement
thereof) with counsel satisfactory to Lender and to collect and to make receipt
for any such payment, all at Borrower's expense (including payment of interest
at the Default Rate for any amounts advanced by Lender pursuant to this Section
6.2 and not reimbursed by Borrower within thirty (30) days). Notwithstanding
anything to the contrary set forth in this Agreement, however, and excluding
situations requiring prepayment of the Note, to the extent any Proceeds (either
singly or when aggregated with all other then unapplied Proceeds with respect to
the Property) do not exceed the Threshold Amount (unless such Proceeds are the
result of a Casualty Event), such Proceeds are to be paid directly to Borrower
to be applied to restoration of the Property in accordance with the terms hereof

(except that Proceeds paid in respect of the insurance described in Section
6.1.4 shall be deposited directly to the Collection Account as revenue of the
Property).

                           6.2.3    LENDER TO TAKE PROCEEDS. Subject to the
Bloomberg Lease, the Condominium Declaration and/or the By-Laws, if (i) a
Monetary Default or an Event of Default shall have occurred and be continuing,
or (ii) a Total Loss with respect to the Property shall have occurred, or (iii)
the Work is not capable of being completed before the earlier to occur of the
date which is three (3) months prior to the earlier of the Anticipated Repayment
Date and the date on which the business interruption insurance carried by
Borrower with respect to the Property shall expire (the CUT-OFF DATE), unless on
or prior to the Cut-Off Date the Borrower (x) shall deliver to the Lender and
there shall remain in effect a binding written offer, subject only to customary
conditions, of an Approved Bank or such other financial institution or
investment bank reasonably satisfactory to Lender duly authorized to originate
loans secured by real property located in the State for a loan from such
Approved Bank or such other financial institution or investment bank to the
Borrower in a principal amount of not less than the then Principal Amount and
which shall, in the Lender's reasonable judgment, enable the Borrower to
refinance the Loan prior to the Anticipated Repayment Date and (y) if a
Securitization shall have occurred, shall obtain a Rating Agency Confirmation,
or (iv) Bloomberg shall exercise its termination right under the Bloomberg
Lease, or (v) the Property is not capable of being restored substantially to its
condition prior to such Taking or casualty and such incapacity shall have a
Material Adverse Effect, then in any such case, all Proceeds (other than any
amounts to which Bloomberg is entitled to under the Bloomberg Lease or any other
party is entitled to under the Condominium Declaration or By-Laws) shall be paid
over to Lender (if not paid directly to Lender) and any Proceeds (other than any
amounts to which Bloomberg is entitled to under the Bloomberg Lease or any other
party is entitled to under the Condominium Declaration or By-Laws) remaining
after reimbursement of Lender's or its agent's reasonable out-of-pocket costs
and expenses actually incurred in connection with recovery of any such Proceeds
(including, without limitation, reasonable out-of-pocket administrative costs
and inspection fees) shall be applied by Lender to prepay the Note in accordance
with the provisions thereof, and the balance, if any shall be paid to the
Borrower; provided, however, if such Proceeds would pursuant to the terms of
this Section be applied to prepay the Note solely as a result of a Monetary
Default, Lender shall not apply such Proceeds to prepay the Loan until such
Monetary Default results in an Event of Default.

                           6.2.4    BORROWER TO RESTORE.

                           (a)      Subject to the Bloomberg Lease, the
         Condominium Declaration and the By-Laws and promptly after the
         occurrence of any damage or destruction to all or any portion of the
         Property or a Taking of a portion of the Property, Borrower shall
         commence and diligently prosecute, or cause to be commenced and
         diligently prosecuted, to completion, subject to Excusable Delays, the
         repair, restoration and rebuilding of the Property (in the case of a
         partial Taking, to the extent it is capable of being restored) so
         damaged, destroyed or remaining after such Taking in full compliance
         with all material Legal Requirements and free and clear of any and all
         Liens except Permitted

         Encumbrances (such repair, restoration and rebuilding are sometimes
         hereinafter collectively referred to as the WORK). The plans and
         specifications shall require that the Work be done in a workmanlike
         manner at least equivalent to the quality and character prior to the
         damage or destruction (provided, however, that in the case of a partial
         Taking, the Property restoration shall be done to the extent reasonably
         practicable after taking into account the consequences of such partial
         Taking), so that upon completion thereof, the Property shall be at
         least equal in value and general utility to the Property prior to the
         damage or destruction; it being understood, however, that Borrower
         shall not be obligated to restore the Property to the precise condition
         of the Property prior to any partial Taking of, or casualty or other
         damage or injury to, the Property, if the Work actually performed, if
         any, or failed to be performed, shall have no Material Adverse Effect
         on the value of the Property from the value that the Property would
         have had if the same had been restored to its condition immediately
         prior to such Taking or casualty. Subject to Borrower's rights pursuant
         to Section 2.3.3 to cause the Property to be released from the Lien of
         the Security Instrument, and subject to the Bloomberg Lease, the
         Condominium Declaration and the By-Laws, Borrower shall be obligated to
         restore the Property suffering a casualty or which has been subject to
         a partial Taking in accordance with the provisions of this Section 6.2
         at Borrower's sole cost and expense whether or not the Proceeds shall
         be sufficient, provided that, if applicable, the Proceeds shall be made
         available to Borrower by Lender in accordance with this Agreement.
         Notwithstanding any term in the Loan Documents to the contrary, (i) any
         Work resulting from a Casualty Event may only be performed by an
         Approved Contractor (together with any sub-contractors hired by such
         Approved Contractor) pursuant to a construction contract acceptable to
         Lender in its sole but reasonable discretion (which must expressly
         include Lender as a third party beneficiary and permitted assignee of
         Borrower's rights under the contract) and (ii) Proceeds will only be
         made available by Lender to Borrower for Work resulting from a Casualty
         Event after Borrower provides to Lender (a) evidence that the Approved
         Contractor has provided payment and performance bonds (with Lender
         named as a dual obligee thereunder) for completion of all of the Work
         in favor of Lender (by way of a collateral assignment from Borrower and
         consented to in writing by the Approved Contractor) in form acceptable
         to Lender in its sole but reasonable discretion and (b) a completion
         guaranty from Guarantor in favor of Lender in form substantially
         identical to the form of guaranty attached hereto as Exhibit G (the
         COMPLETION GUARANTY) together with an Opinion of Counsel reasonably
         acceptable to Lender regarding the due organization and authority of
         Guarantor, enforcement of the guaranty and any other matters reasonably
         requested by Lender. After a Casualty Event occurs, Borrower agrees to
         cause Guarantor to deliver to Lender a duly executed copy of the
         Completion Guaranty within two (2) Business Days after the earlier to
         occur of (i) any election by Bloomberg not to terminate the Bloomberg
         Lease in accordance with the terms of Section 10.1(B)(1) thereof and
         (ii) the date Borrower delivers to Bloomberg a Casualty Statement
         pursuant to Section 10.1(B(1) of the Bloomberg Lease which by its terms
         does not entitle Bloomberg to terminate the Bloomberg Lease.

                           (b)      If Proceeds are not required to be applied
         toward payment of the Indebtedness pursuant to the terms hereof, the
         terms of the Bloomberg Lease, the terms of the Condominium Declaration
         or the terms of the By-Laws, then Lender shall make the Proceeds which
         it is holding pursuant to the terms hereof (after payment of any
         reasonable out-of-pocket expenses actually incurred by Lender in
         connection with the collection thereof plus interest thereon at the
         Applicable Interest Rate (from the date advanced through the date of
         reimbursement) to the extent the same are not paid within thirty (30)
         after request for reimbursement by Lender) available to Borrower for
         payment of or reimbursement of Borrower's or Bloomberg's expenses
         incurred with respect to the Work, upon the terms and subject to the
         conditions set forth in paragraphs (i), (ii) and (iii) below and in
         Section 6.2.4 and Section 6.2.5:

                                    (i)      at the time of loss or damage or at
                  any time thereafter while Borrower is holding any portion of
                  the Proceeds, there shall be no continuing or Event of
                  Default;

                                    (ii)     if, at any time, the estimated cost
                  of the Work (as estimated by the Independent Architect
                  referred to in clause (iii) below) shall exceed the Proceeds
                  (a DEFICIENCY), Borrower shall, at its option (within a
                  reasonable period of time after receipt of such estimate)
                  either deposit with or deliver to Lender (A) Cash and Cash
                  Equivalents in amount equal to the Deficiency, (B) a Letter or
                  Letters of Credit in an amount equal to the Deficiency, or (C)
                  such other evidence of Borrower's ability to meet such excess
                  costs and which is reasonably satisfactory to Lender and the
                  Rating Agencies; for so long as a Deficiency shall exist,
                  Lender shall not be required to make any Proceeds disbursement
                  to Borrower;

                                    (iii)    Each of Lender and the Independent
                  Architect shall have reasonably approved the plans and
                  specifications for the Work and any change orders in
                  connection with such plans and specifications; and

                                    (iv)     Lender shall, within a reasonable
                  period of time prior to request for initial disbursement, be
                  furnished with an estimate of the cost of the Work accompanied
                  by an Independent Architect's certification as to such costs
                  and appropriate plans and specifications for the Work.
                  Borrower shall restore all Improvements such that when they
                  are restored and/or repaired, such Improvements and their
                  contemplated use comply in all material respects with all
                  applicable Legal Requirements including zoning, environmental
                  and building laws, codes, ordinances and regulations.

                           6.2.5    DISBURSEMENT OF PROCEEDS.

                           (a)      Subject to Section 6.2.4, the Bloomberg
         Lease, the Condominium Declaration and the By-Laws, disbursements of
         the Proceeds in

         Cash or Cash Equivalents to Borrower hereunder shall be made from time
         to time (but not more frequently than once in any month) by Lender but
         only for so long as no Event of Default shall have occurred and be
         continuing, as the Work progresses upon receipt by Lender of (i) an
         Officer's Certificate dated not more than ten (10) Business Days prior
         to the application for such payment, requesting such payment or
         reimbursement and describing the Work performed that is the subject of
         such request, the parties that performed such Work and the actual cost
         thereof, and also certifying that such Work and materials are or, upon
         disbursement of the payment requested to the parties entitled thereto,
         will be free and clear of Liens other than Permitted Encumbrances, (ii)
         evidence reasonably satisfactory to Lender that (A) all materials
         installed and work and labor performed in connection with such Work
         have been or, upon disbursement of the requested payments to the
         parties entitled thereto, will be, paid for in full and (B) there
         exists no notices of pendency, stop orders, mechanic's liens or notices
         of intention to file same (unless the same is required by State law as
         a condition to the payment of a contractor) or any liens or
         encumbrances of any nature whatsoever on the Property arising out of
         the Work which have not been either fully bonded to the satisfaction of
         Lender or discharged of record or in the alternative, fully insured to
         the satisfaction of Lender by the Title Company that issued the Title
         Policy and (iii) an Independent Architect's certificate certifying
         performance of the Work together with an estimate of the cost to
         complete the Work. No payment made prior to the final completion of the
         Work, as certified by the Independent Architect, except for payment
         made to contractors whose Work shall have been fully completed and from
         which final lien waivers have been received, shall exceed ninety
         percent (90%) (the RETAINAGE RELEASE THRESHOLD) of the value of the
         Work performed and materials furnished and incorporated into the
         Improvements from time to time until such time as fifty percent (50%)
         of such Work has been satisfactorily completed (as certified by the
         Independent Architect), at which time the Retainage Release Threshold
         with respect to such Work shall be increased to ninety-five (95%), and
         at all times the undisbursed balance of said Proceeds together with all
         amounts deposited, bonded, guaranteed or otherwise provided for
         pursuant to Section 6.2.4(b) above, shall be at least sufficient to pay
         for the estimated cost of completion of the Work; final payment of all
         Proceeds remaining with Lender shall be made upon receipt by Lender of
         a certification by an Independent Architect, as to the completion of
         the Work substantially in accordance with the submitted plans and
         specifications, final lien releases, and the filing of a notice of
         completion and the expiration of the period provided under the law of
         the State for the filing of mechanics' and materialmens' liens which
         are entitled to priority as to other creditors, encumbrances and
         purchasers, as certified pursuant to an Officer's Certificate, and
         delivery of a temporary certificate of occupancy for the core and shell
         with respect to the Work, or, if not applicable, an Officer's
         Certificate to the effect that a certificate of occupancy is not
         required.

                           (b)      Subject to the Bloomberg Lease, the
         Condominium Declaration and the By-Laws, if, after the Work is
         completed and all costs of completion have been paid, there are excess
         Proceeds, Lender shall apply such

         excess Proceeds with respect to the Taking of or casualty to the
         Property to the payment or prepayment of all or any portion of the
         Indebtedness secured hereby, without payment of the Yield Maintenance
         Premium, the Liquidated Damages Amount or any other prepayment fee or
         charge of any kind (except that interest shall be payable through the
         end of the then current Interest Period even if such period extends
         beyond the date of such prepayment) and any balance thereof, shall be
         paid over to Borrower.

                  VII.     IMPOSITIONS, OTHER CHARGES, LIENS AND OTHER ITEMS

                  SECTION 7.1       BORROWER TO PAY IMPOSITIONS AND OTHER
CHARGES. Borrower shall pay or cause to be paid all Impositions now or hereafter
levied or assessed or imposed against the Property or any part thereof prior to
the imposition of any interest, charges or expenses for the non-payment thereof
and shall pay all Other Charges on or before the date they are due. Borrower
shall deliver to Lender annually, no later than fifteen (15) Business Days after
the first day of each fiscal year of Borrower, and shall update as new
information is received, a schedule describing all Impositions, payable or
estimated to be payable during such fiscal year attributable to or affecting the
Property or Borrower. Subject to Borrower's right of contest set forth in
Section 7.3, as set forth in the next two sentences and provided that there are
sufficient funds available in the Tax Reserve Account, Lender, on behalf of
Borrower, shall pay all Impositions and Other Charges which are attributable to
or affect the Property or Borrower, prior to the date such Impositions or Other
Charges shall become delinquent or late charges may be imposed thereon, directly
to the applicable taxing authority with respect thereto. Lender shall, or Lender
shall direct the Cash Management Bank to, pay to the taxing authority or other
relevant Person such amounts to the extent funds in the Tax Reserve Account are
sufficient to pay such Impositions. Nothing contained in this Agreement or the
Security Instrument shall be construed to require Borrower to pay any tax,
assessment, levy or charge imposed on Lender in the nature of a franchise,
capital levy, estate, inheritance, succession, income or net revenue tax.

                  SECTION 7.2       NO LIENS. Subject to its right of contest
set forth in Section 7.3, Borrower shall at all times keep, or cause to be kept,
the Property free from all Liens (other than Permitted Encumbrances) and shall
pay when due and payable (or bond over) all claims and demands of mechanics,
materialmen, laborers and others which, if unpaid, might result in or permit the
creation of a Lien on the Property or any portion thereof and shall in any event
cause the prompt, full and unconditional discharge of all Liens imposed on or
against the Property or any portion thereof within sixty (60) days after
receiving written notice of the filing (whether from Lender, the lienor any
other Person) thereof. Borrower shall do or cause to be done, at the sole cost
of Borrower, everything reasonably necessary to fully preserve the first
priority of the Lien of the Security Instrument against the Property, subject to
the Permitted Encumbrances. Upon the occurrence and continuance of an Event of
Default with respect to its Obligations as set forth in this Article VII, Lender
may (but shall not be obligated to) make such payment or discharge such Lien,
and Borrower shall reimburse Lender within twenty (20) days after Lender's
demand therefor for all such advances pursuant to Section 19.12 (together with

interest thereon at the Default Rate). Lender agrees that (x) the lien of the
Security Instrument is, subject to the terms of the Condominium Declaration,
subordinate to the Condominium Declaration (as amended from time to time in
accordance with the terms of the Loan Agreement), and (y) Lender will confirm
such subordination in a written instrument (in recordable form) in favor of the
Condominium Board that is in form reasonably satisfactory to Lender from time to
time (at the reasonable request of Borrower) within ten (10) Business days after
Borrower's written request. All reasonable costs and expenses incurred by Lender
in connection with the negotiation, preparation, execution and delivery of any
Non-Disturbance Agreement, including, without limitation, reasonable attorneys'
fees and disbursements, shall be paid by Borrower (in advance, if requested by
Lender).

                  SECTION 7.3       CONTEST. Nothing contained herein shall be
deemed to require Borrower to pay, or cause to be paid, any Imposition, to
satisfy any Lien, or to comply with any Legal Requirement or Insurance
Requirement, so long as Borrower is in good faith, and by proper legal
proceedings, where appropriate, diligently contesting the validity, amount or
application thereof, provided that in each case, at the time of the commencement
of any such action or proceeding, and during the pendency of such action or
proceeding (i) no Event of Default shall exist and be continuing hereunder, (ii)
Borrower shall keep Lender informed of the status of such contest at reasonable
intervals, (iii) if Borrower is not providing security as provided in clause
(vi) below, adequate reserves with respect thereto are maintained on Borrower's
books or in the Tax Reserve Account or Insurance Reserve Account, as applicable,
(iv) such contest operates to suspend collection or enforcement as the case may
be, of the contested Imposition, Lien or Legal Requirement and such contest is
maintained and prosecuted continuously and with diligence or the Imposition or
Lien is bonded, (v) in the case of any Insurance Requirement, the failure of
Borrower to comply therewith shall not impair the validity of any insurance
required to be maintained by Borrower under Section 6.1 or the right to full
payment of any claims thereunder, and (vi) in the case of Impositions and Liens
in excess of $5,000,000 individually, or in the aggregate, which are not bonded,
during such contest, Borrower, shall deposit with or deliver to Lender either
Cash and Cash Equivalents or a Letter or Letters of Credit in an amount equal to
110% of (A) the amount of Borrower's obligations being contested plus (B) any
additional interest, charge, or penalty arising from such contest; provided,
however, Borrower shall not be required to deliver such additional collateral if
in Lender's sole but reasonable discretion a provision is made to Lender for
protection of Lender's interest in the Property. Notwithstanding the foregoing,
the creation of any such reserves or the furnishing of any bond or other
security, Borrower promptly shall comply with any contested Legal Requirement or
Insurance Requirement or shall pay any contested Imposition or Lien, and
compliance therewith or payment thereof shall not be deferred, if, at any time
the Property or any portion thereof shall be, in Lender's reasonable judgment,
in imminent danger of being forfeited or lost or Lender is likely to be subject
to civil or criminal damages as a result thereof. If such action or proceeding
is terminated or discontinued adversely to Borrower, Borrower shall deliver to
Lender reasonable evidence of Borrower's compliance with such contested
Imposition, Lien, Legal Requirements or Insurance Requirements, as the case may
be.

                  VIII.    TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS

                  SECTION 8.1       RESTRICTIONS ON TRANSFERS. Unless such
action is permitted by the provisions of this Article VIII, Borrower shall not,
and shall not permit any other Person to, except with the prior written consent
of Lender, (i) Transfer all or any part of the Property, (ii) incur any Debt of
Borrower, other than Permitted Debt or Permitted Encumbrances, or (iii) permit
any Transfer (directly or indirectly) of any interest in Borrower, or any SPE
Entity.

                  SECTION 8.2       SALE OF BUILDING EQUIPMENT. Borrower may
Transfer or dispose of Building Equipment which is being replaced or which is no
longer necessary in connection with the operation of the Property free from the
Lien of the Security Instrument provided that such Transfer or disposal will not
have a Material Adverse Effect on the value of the Property taken as a whole,
will not materially impair the utility of the Property, and will not result in a
reduction or abatement of, or right of offset against, the Rents payable under
any Lease (excluding subleases), in either case as a result thereof, and
provided that any new Building Equipment acquired by Borrower (and not so
disposed of) shall be subject to the Lien of the Security Instrument. Lender
shall, from time to time, upon receipt of an Officer's Certificate requesting
the same and confirming satisfaction of the conditions set forth above, execute
a written instrument in form reasonably satisfactory to Lender to confirm that
such Building Equipment which is to be, or has been, sold or disposed of is free
from the Lien of the Security Instrument.

                  SECTION 8.3       IMMATERIAL TRANSFERS AND EASEMENTS, ETC.
Borrower may, without the consent of Lender, (i) make immaterial Transfers of
portions of the Property to Governmental Authorities for dedication or public
use (subject to the provisions of Section 6.2) or, portions of the Property to
third parties for the purpose of erecting and operating additional structures
whose use is integrated with the use of the Property, and (ii) grant easements,
restrictions, covenants, reservations and rights of way in the ordinary course
of business for access, water and sewer lines, cable, telephone and telegraph
lines, electric lines or other utilities or for other similar purposes, provided
that no such Transfer, conveyance or encumbrance set forth in the foregoing
clauses (i) and (ii) shall materially impair the utility and operation of the
Property or have a Material Adverse Effect on the value of the Property taken as
a whole. In connection with any Transfer permitted pursuant to this Section 8.3,
Lender shall execute and deliver any instrument reasonably necessary or
appropriate, in the case of the Transfers referred to in clause (i) above, to
release the portion of the Property affected by such Taking or such Transfer
from the Lien of the Security Instrument or, in the case of clause (ii) above,
to subordinate the Lien of the Security Instrument to such easements,
restrictions, covenants, reservations and rights of way or other similar grants
upon receipt by Lender of:

                           (a)      thirty (30) days prior written notice
         thereof;

                           (b)      a copy of the instrument or instruments of
         Transfer;

                           (c)      an Officer's Certificate stating (x) with
         respect to any Transfer, the consideration, if any, being paid for the
         Transfer and (y) that such Transfer does not materially impair the
         utility and operation of the Property, materially reduce the value of
         the Property or have a Material Adverse Effect; and

                           (d)      reimbursement of all of Lender's reasonable
         costs and expenses incurred in connection with such Transfer.

                  SECTION 8.4       INTENTIONALLY DELETED.

                  SECTION 8.5       PERMITTED TRANSFERS. A Transfer of (but not
a mortgage, pledge, hypothecation, encumbrance or grant of a security interest
in) a direct or indirect beneficial interest in Borrower shall be permitted
without Lender's consent if (i) Lender receives thirty (30) days prior written
notice thereof, (ii) such Transfer is to one or more Qualified Institutional
Borrowers or one or more Persons wholly owned, directly or indirectly, by one or
more Qualified Institutional Borrowers, (iii) immediately prior to such
Transfer, no Event of Default shall have occurred and be continuing, (iv)
subsequent to such Transfer, Borrower will continue to be a Single Purpose
Entity, (v) a Qualifying Manager shall manage the Property, (vi) if (x) such
Transfer causes the Transferee to own, in the aggregate with the ownership
interests of its Affiliates and family members, more than a 49% interest in
Borrower (and the Transferee (in the aggregate with the ownership interests of
its Affiliates and family members) did not, prior to such Transfer, own more
than a 49% interest in Borrower), or (y) such Transfer, together with all other
Transfers by Borrower, whether in a single Transfer or in a series of Transfers
and whether or not effected simultaneously, results in a Transfer of more than
49% of the aggregate limited liability interests in Borrower or (z) subsequent
to any Transfer, Guarantor does not Control, directly or indirectly, Borrower,
(a) a reasonably acceptable non-consolidation opinion is delivered to Lender
concerning, as applicable, Borrower, the new Transferee, any Person which
subsequent to the permitted Transfer will own 49% or more of Borrower and/or
their respective owners (if applicable), and (b) a Rating Agency Confirmation is
obtained by Borrower and delivered to Lender and (vii) Borrower shall reimburse
Lender, on the date of such Transfer, for all reasonable costs and expenses,
including, without limitation, reasonable attorney's fees and disbursements,
incurred or to be incurred by Lender in connection with such Transfer.
Notwithstanding the foregoing, nothing contained in this Agreement or the other
Loan Documents shall in any way restrict or prohibit, nor shall any notice to
Lender or consent of Lender be required in connection with (1) the Transfer or
issuance of any securities or any direct or indirect interests in any direct or
indirect owner of Borrower that is publicly traded on a national exchange
(including, for so long as it is an indirect owner of Borrower, Guarantor and/or
Vornado Realty Trust, a Maryland business trust (VRT), as the case may be), or
(2) the merger or consolidation of Guarantor and/or VRT, as the case maybe, with
or into any other Person (each, a PUBLIC TRANSFER, and collectively, the PUBLIC
TRANSFERS); provided, however, that, if any Public Transfer or series of Public
Transfers (other than the sale of publicly traded shares in Guarantor and/or
VRT, as applicable, in the ordinary course of business) shall result in a change
in Control of Guarantor and/or VRT, as applicable, then Lender's prior written
consent shall be required (and, after a Securitization, a Rating Agency
Confirmation shall be required) in connection with such Public Transfer unless

after giving effect to such Public Transfer, Guarantor and/or VRT, as the case
may be (or their respective successor entity thereto), shall be a Person that
has and provides substantially at least the same experience and expertise as
Guarantor and/or VRT, as applicable, prior to such Transfer in conducting
business of the nature currently conducted by Guarantor and/or VRT, as
applicable or (3) the Transfer of any direct or indirect interest in Borrower to
VRT or Vornado Realty L.P., a Delaware limited partnership (VOP); provided if
after giving effect to such Transfer (a) more than 49% of the direct or indirect
aggregate limited liability interests in Borrower (whether individually or in
the aggregate of all such Transfers) are transferred to VRT and/or VOP (or
together with any of their respective Affiliates would exceed), Borrower must
first deliver to Lender a reasonably acceptable non-consolidation opinion to
Lender concerning Borrower, VRT and/or VOP (as applicable) and/or their
respective owners (if applicable) and/or (b) Guarantor would not Control,
directly or indirectly, Borrower, as a condition to such Transfer Borrower must
deliver to Lender a Guaranty of Recourse Obligations and Environmental Indemnity
and Completion Guaranty (if a Completion Guaranty is then in effect or a
ratification from Borrower that it will cause VRT to deliver such Completion
Guaranty in the future if required by the terms hereof and treating VRT as
Guarantor hereunder) in substantially the form of the Recourse Guaranty and
Environmental Indemnity and EXHIBIT G, respectively, from VRT to Lender (and
Lender shall release the Guarantor from its obligations under the Loan Documents
except for any obligations which first arose prior to the applicable transfer)
together with any other documents reasonably requested by Lender. In addition,
notwithstanding the foregoing, nothing contained in this Agreement or the other
Loan Documents shall in any way restrict or prohibit, nor shall any notice to
Lender or consent of Lender be required in connection with (i) the Transfer or
issuance of any direct or indirect interests in VOP, or (ii) the merger or
consolidation of VOP with or into any other Person; provided, however, that,
immediately after giving effect to each such Transfer, VRT (or any successor
entity permitted above as a result of a Public Transfer) shall continue to be
the managing general partner of VOP and VRT shall remain in control of the
business and operations of VOP, regardless of the percentage of equity interests
in VOP owned by VRT.

                  SECTION 8.6       DELIVERIES TO LENDER. Not less than thirty
(30) days prior to the closing of any transaction subject to the provisions of
this Article VIII, Borrower shall deliver to Lender an Officer's Certificate
describing the proposed transaction (other than transfers of publicly traded
shares in Guarantor in the ordinary course of business) and stating that such
transaction is permitted by this Article VIII, together with any appraisal or
other documents upon which such Officer's Certificate is based. In addition,
Borrower shall provide Lender with copies of executed transfer instruments or
other similar closing documents within ten (10) Business Days after such
closing.

                  SECTION 8.7       LOAN ASSUMPTION. Borrower shall have the
right to request Lender's consent, which consent shall not be unreasonably
withheld, to the assumption of the Loan by a proposed purchaser of the Property.
Any such assumption of the Loan shall be conditioned upon, among other things,
(i) the delivery of a Rating Agency Confirmation, (ii) the delivery of financial
information, including, without limitation, if available, audited financial
statements, for such purchaser and the direct and indirect owners such
purchaser, (iii) the delivery of evidence that the purchaser is a SPE

Entity, (iv) the execution and delivery of all documentation evidencing the loan
assumption reasonably requested by Lender, (v) the delivery of Opinions of
Counsel reasonably requested by Lender, including, without limitation, a
non-consolidation opinion with respect to the purchaser and other entities
identified by Lender or requested by the Rating Agencies and opinions with
respect to the valid formation, due authority and good standing of the purchaser
and any additional pledgors and the continued enforceability of the Loan
Documents and any other matters requested by Lender, (vi) the delivery of a
Guaranty of Recourse Obligations and Environmental Indemnity in substantially
the form of the Recourse Guaranty and Environmental Indemnity, respectively,
from an entity acceptable to Lender in its sole and absolute discretion (and if
such entity is acceptable to Lender, Lender shall release the Guarantor from its
obligations under the Loan Documents except for any obligations which first
arose prior to the applicable transfer); (vii) the delivery of an endorsement to
the Title Policy in form and substance acceptable to Lender, insuring the lien
of the Security Instrument, as assumed, subject only to the Permitted
Encumbrances (or a letter from the Title Company confirming such matters in form
acceptable to Lender in its sole but reasonable discretion), (viii) other than
in connection with the first assumption of the Loan, the payment of an
assumption fee equal to one percent (1%) of the Principal Amount (the ASSUMPTION
FEE), (ix) all costs and expenses related to any assumption are to be paid by
Borrower and (x) the payment of all of Lender's reasonable fees, costs and
expenses, including, without limitation, reasonable attorneys' fees and costs,
actually incurred by Lender in connection with such assumption.

                  SECTION 8.8       BLOOMBERG LEASE.

                           8.8.1    MODIFIED LEASE. Borrower shall not (y)
consent to an assignment of the Bloomberg Lease that releases Bloomberg from its
obligations under the Lease, or (z) modify the Bloomberg Lease (including,
without limitation, accept a surrender of any portion of the Property subject to
the Bloomberg Lease (unless otherwise permitted or required by law), allow a
reduction in the term of such Lease or a reduction in the Rent payable
thereunder, change any renewal provisions thereunder, materially increase the
obligations of Borrower or materially decrease the obligations of Bloomberg or
terminate the Bloomberg Lease or permit the assignment or other transfer (by
operation of law or otherwise) of the Bloomberg Lease (any such action referred
to in clauses (y) and (z) being referred to herein as a MODIFIED LEASE) without
the prior written consent of Lender which consent shall not be unreasonably
withheld, conditioned or delayed provided such modification could not in
Lender's sole and absolute discretion result in a Material Adverse Effect. If,
after five (5) Business Day's following Lender's receipt of such Modified Lease
Lender has not either approved or disapproved the proposed Modified Lease,
Borrower shall deliver a second notice to Lender which notice must state on the
outside envelope in which such Modified Lease is delivered in bold, large
letters (no less than 15 font) the following: NOTICE: YOU WILL BE DEEMED TO HAVE
CONSENTED TO THE DOCUMENT ENCLOSED HEREIN IF NOT DISAPPROVED WITHIN FIVE (5)
BUSINESS DAYS OF RECEIPT. Lender's failure to approve or disapprove such
Modified Lease within ten Business Days after Lender's receipt of the second
notice shall be deemed to constitute Lender's approval thereof.

                           8.8.2    DELIVERY OF MODIFIED LEASE. Upon the
execution of any Modified Lease, as applicable, Borrower shall deliver to Lender
an executed copy of such Modified Lease.

                           8.8.3    LEASE AMENDMENTS. Borrower agrees that it
shall not have the right or power, as against Lender without its consent, to
cancel, abridge, amend or otherwise modify the Bloomberg Lease unless such
modification complies with this Section 8.8.

                           8.8.4    SECURITY DEPOSITS/TERMINATION PAYMENTS.

                           (a)      All security or other deposits of Bloomberg
         under the Bloomberg Lease shall be treated as trust funds and shall not
         be commingled with any other funds of Borrower, and such deposits,
         shall be deposited, upon receipt of the same by Borrower in a separate
         account (which shall be a trust account if required by applicable law)
         maintained by Borrower expressly for such purpose. Within ten (10)
         Business Days after written request by Lender, Borrower shall furnish
         to Lender reasonably satisfactory evidence of compliance with this
         Section 8.8.4, together with a statement of all lease securities
         deposited with Borrower by Bloomberg and the location and account
         number of the account in which such Security Deposits are held.
         Attached hereto as SCHEDULE I, is a true correct and complete list of
         all Security Deposits and the amounts thereof, currently in Borrower's
         possession.

                           (b)      In the event that Borrower receives the
         proceeds of any security deposit as the result of a Bloomberg Default
         (as hereinafter defined) or a termination payment as the result a
         termination of the Bloomberg Lease or otherwise, Borrower agrees to
         deposit such funds within two (2) Business Days after Borrower's
         receipt thereof, into the Structural Reserve Account to be disbursed by
         Lender pursuant to Section 16.3.

                           8.8.5    NO DEFAULT UNDER BLOOMBERG LEASE,
CONDOMINIUM DECLARATION OR BY-LAWS. Borrower shall (i) promptly perform and
observe all of the terms, covenants and conditions required to be performed and
observed by Borrower under the Bloomberg Lease the Condominium Declaration or
the By-Laws, if the failure to perform or observe the same would have a Material
Adverse Affect; (ii) exercise, within ten (10) Business Days after a written
request by Lender, any right to request from Bloomberg under the Bloomberg
Lease, a certificate with respect to the status thereof; and (iii) not collect
any of the Rents, more than one (1) month in advance (except that Borrower may
collect such security deposits and last month's rents as are permitted by Legal
Requirements and are commercially reasonable in the prevailing market and
collect other charges in accordance with the terms of the Bloomberg Lease).

                           8.8.6    SUBORDINATION. All Modified Leases entered
into by Borrower after the date hereof shall by their express terms be subject
and subordinate to this Agreement and the Security Instrument (through a
subordination provision contained in such Lease or otherwise) and shall provide
that the Person holding any rights

thereunder shall attorn to Lender or any other Person succeeding to the
interests of Lender upon the exercise of its remedies hereunder or any transfer
in lieu thereof on the terms set forth in Section 8.8.7.

                           8.8.7    ATTORNMENT. Subject to the terms of the
Bloomberg SNDA (which shall supercede any conflicting provisions of this
section), each Modified Lease entered into from and after the date hereof shall
provide that in the event of the enforcement by Lender of any remedy under this
Agreement or the Security Instrument, Bloomberg under such Lease shall, at the
option of Lender or of any other Person succeeding to the interest of Lender as
a result of such enforcement, attorn to Lender or to such Person and shall
recognize Lender or such successor in the interest as lessor under such Lease
without change in the provisions thereof; provided, however, Lender or such
successor in interest shall not: (1) be liable for any previous act or omission
of Borrower under the Bloomberg Lease except to the extent that such act or
omission first arises under the Bloomberg Lease from and after the date that
Successor-Landlord (as such term is defined in the Bloomberg Lease) succeeds to
the interest of Borrower; (2) be subject to any off-set, credit, defense or
counterclaim which shall have theretofore accrued to Bloomberg against Borrower;
(3) be bound by (a) any modification of the Bloomberg Lease entered into without
Lender's consent after Bloomberg has, subject to the terms of Section 6 of the
Bloomberg SNDA, received written notice of Lender's existence, address and
relation to Borrower, or (b) any previous prepayment of rent or additional rent
for more than one (1) month which Bloomberg might have paid to Borrower other
than as required by the terms of the Bloomberg Lease; (4) be bound by any
obligation to make any payments to Bloomberg except to the extent that such
obligation first arises under the Bloomberg Lease from and after the date that
Successor-Landlord succeeds to the interest of Borrower; and (5) be bound by any
obligation to perform any work or to make improvements to the Condominium Unit,
except for (i) repairs and maintenance pursuant to the provisions of Articles 4,
5 and 6 of the Bloomberg Lease, the need for which repairs and maintenance first
arises after the date upon which Lender is entitled to possession of the
Condominium Unit, (ii) repairs to the Condominium Unit or any part thereof as a
result of damage by fire or other casualty pursuant to Article 10 of the
Bloomberg Lease, but only to the extent that such repairs can be reasonably made
from the net proceeds of any insurance actually made available to Lender (with
the understanding, however, that (I) nothing contained in this clause (ii)
limits Bloomberg's rights to terminate the Bloomberg Lease after the occurrence
of a fire or other casualty under Section 10.1(B) of the Bloomberg Lease, and
(II) Lender shall have the right to avoid being so bound by Borrower's covenant
to rebuild the Landlord Restoration Items (as such term is defined in the
Bloomberg Lease) after the occurrence of a fire or other casualty (regardless of
the availability of insurance proceeds therefor) only by giving notice to
Bloomberg of the election of Lender not to so rebuild earlier than the later to
occur of (X) the date that Lender is required to give the Casualty Statement (as
such term is defined in the Bloomberg Lease) for such fire or other casualty to
Bloomberg, and (Y) the thirtieth (30th) day after the date that Lender succeeds
to the interest of Borrower under the Bloomberg Lease), and (iii) repairs to the
Condominium Unit as a result of a partial condemnation pursuant to Article 11 of
the Bloomberg Lease, but only to the extent that such repairs can be reasonably
made from the net proceeds of any award made available to Lender (with the
understanding that nothing contained in

this clause (iii) shall limit Bloomberg's right to terminate the Bloomberg Lease
after the occurrence of a complete or partial condemnation under Section 11.1 of
the Bloomberg Lease). Borrower shall cause Bloomberg, upon the reasonable
request by Lender or such successor in interest, to execute and deliver an
instrument or instruments confirming such attornment.

                           8.8.8    NON-DISTURBANCE AGREEMENTS. Subject to the
terms of the Bloomberg SNDA, Lender shall enter into, and, if required by
applicable law to provide constructive notice or requested by Bloomberg, record
in the county where the subject Property is located, a subordination,
attornment, non-disturbance and estoppel agreement, in form and substance
substantially similar to the form attached hereto as EXHIBIT F (a
NON-DISTURBANCE AGREEMENT), with Bloomberg regarding a Modified Lease for which
Lender's prior written consent is required by this Section 8.8, within ten (10)
Business Days after written request therefor by Borrower, provided that, such
request is accompanied by an Officer's Certificate stating that such Lease
complies in all material respects with this Section 8.8. All reasonable costs
and expenses incurred by Lender in connection with the negotiation, preparation,
execution and delivery of any Non-Disturbance Agreement, including, without
limitation, reasonable attorneys' fees and disbursements, shall be paid by
Borrower (in advance, if requested by Lender).

                  IX.      DEFEASANCE

                  SECTION 9.1       DEFEASANCE.

                           9.1.1    At any time subsequent to the Defeasance
Lockout Period and prior to the Anticipated Repayment Date, provided that all of
the conditions set forth in Section 9.1.2 are complied with, Lender hereby
agrees that Borrower shall have the right to obtain a release of the Lien on the
Property upon at least 30 days prior written notice upon satisfaction of the
following (each such release, after satisfaction of the other provisions of this
Section 9.1, a DEFEASANCE):

                           (a)      the execution and delivery of a defeasance
         note (the DEFEASANCE NOTE), in form and substance reasonably acceptable
         to Lender, dated as of the date of the Defeasance (which must be as of
         a Payment Date), payable to Lender, in an amount equal to the
         Defeasance Collateral Requirement (which Defeasance Note Lender agrees
         to accept by assignment from any new lender to Borrower);

                           (b)      the execution and delivery of a security
         agreement (the DEFEASANCE SECURITY AGREEMENT), in form and substance
         reasonably acceptable to Lender, dated as of the date of the Defeasance
         (which must be as of a Payment Date), in favor of the Lender, pursuant
         to which the Lender is granted a perfected first priority security
         interest in the Defeasance Collateral (which Defeasance Security
         Agreement Lender agrees to accept by assignment from any new lender to
         Borrower);

                           (c)      the execution and delivery of appropriate
         and reasonable agreements and/or instruments, each in form and
         substance reasonably acceptable to Lender, pursuant to which the
         obligations and liabilities of Borrower under the Defeasance Note and
         the Defeasance Security Agreement are assumed by a new entity which
         satisfies all of the Single Purpose Entity requirements, upon which
         execution and delivery Lender agrees to release Borrower from any and
         all liability under the Defeasance Note and Defeasance Security
         Agreement; and

                           (d)      delivery of a Rating Agency Confirmation.

                           9.1.2    Simultaneously with Lender's receipt of the
Defeasance Note and Defeasance Security Agreement from the new lender, Lender
shall transfer to the new lender or to Borrower's nominee the Note, the Security
Instrument and the Assignment of Leases, and shall release or terminate the
other Loan Documents (other than the Environmental Indemnity).

                           9.1.3    With respect to a Defeasance pursuant to
Section 9.1.1 hereof, Borrower shall deposit the Defeasance Collateral in
accordance with Section 9.1.5 below to the Defeasance Collateral Account. In no
event shall the deliverance of Defeasance Collateral cause Borrower to be
released from its obligations to make payments of principal and interest on the
Note until Defeasance shall have occurred. Defeasance shall be permitted at such
time as all of the following events shall have occurred:

                           (a)      the Defeasance Collateral Account shall have
         been established pursuant to Section 9.1.5 hereof;

                           (b)      Borrower shall have delivered or caused to
         have been delivered to Lender the Defeasance Collateral for deposit
         into the Defeasance Collateral Account such that it will satisfy the
         Defeasance Collateral Requirement at the time of delivery and all such
         Defeasance Collateral, if in registered form, shall be registered in
         the name of the Borrower for the benefit of Lender or its nominee (and,
         if registered in nominee name endorsed to Lender or in blank) and, if
         issued in book-entry form, the name of Lender or its nominee shall
         appear as the owner of such securities on the books of the Federal
         Reserve Bank or other party maintaining such book-entry system;

                           (c)      Borrower shall have granted or caused to
         have been granted to Lender a valid perfected first priority security
         interest in the Defeasance Collateral and all proceeds thereof;

                           (d)      Borrower shall have delivered or caused to
         be delivered to Lender an Officers' Certificate, dated as of the date
         of such delivery (x) that sets forth the aggregate face amount or
         unpaid principal amount, interest rate and maturity of all such
         Defeasance Collateral, a copy of the transaction journal, if any, or
         such other notification, if any, published by or on behalf of the
         Federal Reserve Bank or other party maintaining a book-entry system
         advising that

         Lender or its nominee is the owner of such securities issued in
         book-entry form, and (y) that states that:

                                    (i)      Borrower owns the Defeasance
                  Collateral being delivered to Lender free and clear of any and
                  all Liens, security interests or other encumbrances (other
                  than the Defeasance Security Agreement), and has not assigned
                  any interest or participation therein (or, if any such
                  interest or participation has been assigned, it has been
                  released), and Borrower has full power and authority to pledge
                  such Defeasance Collateral to Lender;

                                    (ii)     such Defeasance Collateral consists
                  solely of Defeasance Eligible Investments;

                                    (iii)    such Defeasance Collateral
                  satisfies the Defeasance Collateral Requirement, determined as
                  of the date of delivery; and

                                    (iv)     the information set forth in the
                  schedule attached to such Officer's Certificate is correct and
                  complete in all material respects as of the date of delivery
                  (such schedule, which shall be attached to and form a part of
                  such Officer's Certificate, shall demonstrate satisfaction of
                  the requirement set forth in clause (ii) above, in a form
                  reasonably acceptable to Lender).

                           (e)      Borrower shall have delivered or caused to
         be delivered to Lender a Rating Agency Confirmation and such other
         documents and certificates as Lender may reasonably request, including
         Opinions of Counsel, in connection with demonstrating that Borrower has
         satisfied the provisions of this Section 9.1.3(e), including but not
         limited to an Opinion of Counsel stating, among other things, that (x)
         Lender has a perfected first priority security interest in the
         Defeasance Collateral and that the Defeasance Security Agreement is
         enforceable in accordance with its terms and (y) that any trust formed
         as a REMIC pursuant to a securitization will not fail to maintain its
         status as a REMIC as a result of such defeasance.

                           (f)      Borrower shall have delivered to Lender a
         certificate of a "big four" or other public accounting firm reasonably
         acceptable to Lender certifying that the Defeasance Collateral will
         generate monthly amounts which satisfy the Defeasance Collateral
         Requirement.

                           9.1.4    For purposes of determining whether
sufficient amounts of Defeasance Collateral are on deposit in the Defeasance
Collateral Account, there shall be included only payments of principal and
predetermined and certain income thereon (as reasonably determined by Lender and
agreed to by Borrower without regard to any reinvestment of such amounts) that
will occur on a stated date for a stated payment on or before the dates when
such amounts may be required to be applied to pay the principal and interest
when due on the Note (and/or any substitute notes, as applicable) as of the

Anticipated Repayment Date, together with the outstanding principal balance of
the Note (and/or any substitute notes, as applicable) as of the Anticipated
Repayment Date.

                           9.1.5    On or before the date on which Borrower
delivers Defeasance Collateral to Lender pursuant to Section 9.1.3(b) hereof,
Borrower shall open at any Approved Bank (or other bank subject to the next
sentence hereof) at the time and acting as custodian for Lender, a defeasance
collateral account (the Defeasance Collateral Account) which shall at all times
be an Eligible Account, in which Borrower shall grant to Lender or reconfirm the
grant to Lender of a security interest. The Defeasance Collateral Account shall
contain (i) all Defeasance Collateral delivered by Borrower pursuant to Section
9.1.3(b) hereof, (ii) all payments received on Defeasance Collateral held in the
Defeasance Collateral Account and (iii) all income or other gains from
investment of moneys or other property deposited in the Defeasance Collateral
Account. All such amounts, including all income from the investment or
reinvestment thereof, shall be held by Lender, subject to withdrawal by Lender
for the purposes set forth in Section 9.1.6. Borrower shall be the owner of the
Defeasance Collateral Account and shall report all income accrued on Defeasance
Collateral for federal, state and local income tax purposes in its income tax
return.

                           9.1.6    Lender shall withdraw, draw on or collect
and apply the amounts that are on deposit in the Defeasance Collateral Account
to pay when due the principal and all installments of interest and principal on
the Defeasance Note. Funds and other property in the Defeasance Collateral
Account shall not be commingled with any other monies or property of Borrower or
any Affiliate of Borrower. Lender shall not in any way be held liable by reason
of any insufficiency in the Defeasance Collateral Account except to the extent
caused by the gross negligence or willful misconduct of Lender.

                           9.1.7    Borrower and Lender shall enter into any
appropriate amendments to the Loan Documents necessitated by a Defeasance of the
Loan, such amendments to be in form and substance reasonably acceptable to both
Borrower and Lender.

                  X.       MAINTENANCE OF PROPERTY; ALTERATIONS

                  SECTION 10.1       MAINTENANCE OF PROPERTY. Borrower shall
keep and maintain, or cause to be kept and maintained, the Property and every
part thereof in good condition and repair, subject to ordinary wear and tear,
and, subject to Excusable Delays and the provisions of this Agreement with
respect to damage or destruction caused by casualty events or Takings, shall not
permit or commit any waste, impairment, or deterioration of any portion of the
Property in any material respect. Borrower further covenants to do all other
acts which from the character or use of the Property may be reasonably necessary
to protect the security hereof, the specific enumerations herein not excluding
the general. Borrower shall not remove or demolish any Improvement on the
Property except as the same may be necessary in connection with an Alteration or
a restoration in connection with a Taking or casualty, or as otherwise permitted
herein, in each case in accordance with the terms and conditions hereof.

                  SECTION 10.2      CONDITIONS TO ALTERATION. Provided that no
Event of Default shall have occurred and be continuing hereunder, Borrower shall
have the right, without Lender's consent, to undertake any alteration,
improvement, demolition or removal of the Property or any portion thereof (any
such alteration, improvement, demolition or removal, an ALTERATION) so long as
(i) Borrower provides Lender with prior written notice of any Material
Alteration, and (ii) such Alteration is undertaken in accordance with the
applicable provisions of this Agreement and the other Loan Documents, is not
prohibited by the Condominium Declaration, the By-Laws or any of the Bloomberg
Lease (except subleases) and shall not, upon completion (giving credit to rent
and other charges attributable to the Modified Leases executed upon such
completion), have a Material Adverse Effect on the value, use or operation of
the Property taken as a whole or otherwise. Any Material Alteration shall be
conducted under the supervision of an Independent Architect and, in connection
with any Material Alteration, Borrower shall deliver to Lender, for information
purposes only and not for approval by Lender, detailed plans and specifications
and cost estimates therefor, prepared by such Independent Architect, as well as
an Officer's Certificate stating whether such Alteration will involve an
estimated cost of not more than the Threshold Amount for Alterations at the
Property. Such plans and specifications may be revised at any time and from time
to time by such Independent Architect provided that material revisions of such
plans and specifications are filed with Lender, for information purposes only.
All work done in connection with any Alteration shall be performed with due
diligence in a good and workmanlike manner, all materials used in connection
with any Alteration shall not be less than the standard of quality of the
materials currently used at the Property and all materials used shall be in
accordance with all applicable material Legal Requirements and Insurance
Requirements. Nothing contained in this Section 10.2 shall limit the rights of
Bloomberg under the Bloomberg Lease with respect to alterations.

                  SECTION 10.3      COSTS OF ALTERATION. Notwithstanding
anything to the contrary contained in this Article X, no Material Alteration
(exclusive of Alterations being directly paid for by Bloomberg at the Property)
shall be performed by or on behalf of Borrower unless Borrower shall have
delivered to Lender Cash and Cash Equivalents and/or a Letter of Credit as
security in an amount not less than the estimated cost of the Material
Alteration which is in excess of the Threshold Amount (as set forth in the
Independent Architect's written estimate referred to above). Borrower and Lender
acknowledge that such security (i) will be held by the Cash Management Bank in
the Alterations Reserve Account and (ii) disbursed as hereinafter provided in
this Section 10.3. In addition to payment or reimbursement from time to time of
Borrower's expenses incurred in connection with any Material Alteration, the
amount of such security shall be reduced on any given date to the Independent
Architect's written estimate of the cost to complete the Material Alteration
(including any retainages), free and clear of Liens, other than Permitted
Encumbrances. Costs which are subject to retainage (which in no event shall be
less than 5% in the aggregate) shall be treated as due and payable and unpaid
from the date they would be due and payable but for their characterization as
subject to retainage. In the event that any Material Alteration shall be made in
conjunction with any restoration with respect to which Borrower shall be
entitled to withdraw Proceeds pursuant to Section 6.2, the amount of the Cash
and Cash Equivalents and/or Letter of Credit to be furnished pursuant hereto
need not exceed the aggregate cost of such

restoration and such Material Alteration (as estimated by the Independent
Architect), less the sum of the amount of any Proceeds which Borrower may be
entitled to withdraw pursuant to 6.2 and which are held by Lender in accordance
with Section 6.2. Payment or reimbursement of Borrower's expenses incurred with
respect to any Material Alteration shall be accomplished upon the terms and
conditions specified in Section 6.2. At any time after substantial completion of
any Material Alteration in respect of which Cash and Cash Equivalents and/or a
Letter of Credit was deposited pursuant hereto, the whole balance of any Cash
and Cash Equivalents so deposited by Lender and then remaining on deposit
(together with earnings thereon), as well as all retainages, may be withdrawn by
Borrower and shall be paid by Lender to Borrower, and any other Cash and Cash
Equivalents and/or a Letter of Credit so deposited or delivered shall, to the
extent it has not been called upon, reduced or theretofore released, be released
to Borrower, within ten (10) days after receipt by Lender of an application for
such withdrawal and/or release together with an Officer's Certificate, and
signed also (as to the following clause (i)) by the Independent Architect,
setting forth in substance as follows:

                           (a)      that the Material Alteration in respect of
         which such Cash and Cash Equivalents and/or a Letter of Credit was
         deposited has been substantially completed in all material respects
         substantially in accordance with any plans and specifications therefor
         previously filed with Lender under Section 10.2 and that, if
         applicable, a certificate of occupancy has been issued with respect to
         such Material Alteration by the relevant Governmental Authority(ies)
         or, if not applicable, that a certificate of occupancy is not required;
         and

                           (b)      that to the knowledge of the certifying
         Person all amounts which Borrower is or may become liable to pay in
         respect of such Material Alteration through the date of the
         certification have been paid in full or adequately provided for or are
         being contested in accordance with Section 7.3 and that lien waivers
         have been obtained from the general contractor and major subcontractors
         performing such Material Alterations (or such waivers are not customary
         and reasonably obtainable by prudent managers in the area where the
         Property is located).

Nothing contained in this Section 10.3 shall limit the rights of Bloomberg under
the Bloomberg Lease with respect to alterations.

                  XI.      BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND
OTHER INFORMATION, LOW DSCR PERIOD

                  SECTION 11.1      BOOKS AND RECORDS. Borrower shall keep and
maintain on a fiscal year basis proper books and records separate from any other
Person, in which accurate and complete entries shall be made of all dealings or
transactions of or in relation to the Note, the Property and the business and
affairs of Borrower relating to the Property which shall reflect all items of
income and expense in connection with the operation on an individual basis of
the Property and in connection with any services,

equipment or furnishings provided in connection with the operation of the
Property, in accordance with GAAP. Lender and its authorized representatives
shall have the right at reasonable times and upon reasonable notice to examine
the books and records of Borrower at Borrower's or its Affiliate's offices
relating to the operation of the Property and to make such copies or extracts
thereof as Lender may reasonably require.

                  SECTION 11.2      FINANCIAL STATEMENTS.

                           11.2.1   QUARTERLY REPORTS. Not later than forty-five
(45) days following the end of each calendar quarter, Borrower shall deliver to
Lender unaudited financial statements, internally prepared on accrual basis
including a balance sheet and profit and loss statement as of the end of such
quarter and for the corresponding quarter of the previous year, and a statement
of revenues and expenses for the year to date, a statement of Net Operating
Income for such quarter on a calendar month basis, and a comparison of the year
to date results with (i) the results for the same period of the previous year,
(ii) the results that had been projected by Borrower for such period and (iii)
the Annual Budget for such period and the Fiscal Year. Such statements for each
quarter shall be accompanied by an Officer's Certificate certifying to the best
of the signer's knowledge, (A) that such statements fairly represent the
financial condition and results of operations of Borrower, (B) that as of the
date of such Officer's Certificate, no Event of Default exists under this
Agreement, the Note or any other Loan Document or, if so, specifying the nature
and status of each such Event of Default and the action then being taken by
Borrower or proposed to be taken to remedy such Event of Default, (C) that as of
the date of each Officer's Certificate, no litigation exists involving Borrower
or the Property in which the amount involved is $500,000 (in the aggregate) or
more or in which all or substantially all of the potential liability is not
covered by insurance, or, if so, specifying such litigation and the actions
being taking in relation thereto and (D) the amount by which actual Operating
Expenses were greater than or less than the Operating Expenses anticipated in
the applicable Annual Budget. Such financial statements shall contain such other
information as shall be reasonably requested by Lender for purposes of
calculations to be made by Lender pursuant to the terms hereof.

                           11.2.2   ANNUAL REPORTS. Not later than one hundred
and twenty (120) days after the end of each Fiscal Year of Borrower's
operations, Borrower shall deliver to Lender audited financial statements (such
audited financial statements are collectively referred to herein as the ANNUAL
REPORTS) certified by an Independent Accountant in accordance with GAAP,
covering the Property, including a balance sheet as of the end of such year and
a statement of revenues and expenses for such year, and stating in comparative
form the figures for the previous fiscal year and the Annual Budget for such
fiscal year, as well as the supplemental schedule of net income or loss
presenting the net income or loss for the Property and occupancy statistics for
the Property. Together with the annual reports, Borrower shall furnish copies of
a statement of Net Operating Income for the year thereof and copies of all
federal income tax returns to be filed. Such annual financial statements shall
also be accompanied by an Officer's Certificate in the form required pursuant to
Section 11.2.1.

                           11.2.3   RESERVED

                           11.2.4   CAPITAL EXPENDITURES SUMMARIES. Borrower
shall, within 120 days after the end of each calendar year during the term of
the Note, deliver to Lender an annual summary of any and all capital
expenditures made at the Property by Borrower during the prior twelve (12) month
period.

                           11.2.5   MANAGEMENT AGREEMENT. Borrower shall deliver
to Lender, within ten (10) Business Days of the receipt thereof by Borrower, a
copy of all reports prepared by Manager pursuant to the Management Agreement,
including, without limitation, the Annual Budget and any inspection reports.

                           11.2.6   ANNUAL BUDGET. Borrower shall deliver to
Lender the proposed Annual Budget for Lender's approval, not to be unreasonably
withheld, delayed or conditioned at least thirty (30) days prior the end of each
Fiscal Year. Neither Borrower nor Manager shall change or modify the Annual
Budget that has been approved by Lender without the prior written consent of
Lender. If, after ten (10) Business Day's following Lender's receipt of such
Budget Lender has not either approved or disapproved the proposed Budget,
Borrower shall deliver a second notice to Lender which notice must state on the
outside envelope in which such Budget is delivered in bold, large letters (no
less than 15 font) the following: NOTICE: YOU WILL BE DEEMED TO HAVE CONSENTED
TO THE DOCUMENT ENCLOSED HEREIN IF NOT DISAPPROVED WITHIN TEN (10) BUSINESS DAYS
OF RECEIPT. Lender's failure to approve or disapprove such Budget within ten
(10) Business Days after Lender's receipt of the second notice shall be deemed
to constitute Lender's approval thereof.

                           11.2.7   BLOOMBERG LEASE INFORMATION.

                           (a)      Promptly upon receipt or delivery thereof
         Borrower shall deliver to Lender true, correct and complete copies of
         all materials, reports and information which is material in nature and
         which are delivered by Bloomberg to Borrower, other than as restricted
         by confidentiality agreements entered into by Borrower and delivered to
         Lender.

                           (b)      Not later than forty-five (45) days after
         the end of each calendar quarter of Borrower's operations, Borrower
         will deliver to Lender a statement from Borrower complying with the
         provisions of Section 7.4 of the Bloomberg Lease

                           11.2.8   OTHER INFORMATION. Borrower will, promptly
after written request by Lender, furnish or cause to be furnished to Lender, in
such manner and in such detail as may be reasonably requested by Lender, such
reasonable additional information in Borrower's or its Affiliate's possession
and as may be reasonably requested by Lender with respect to the Property.

                           11.2.9   LOW DSCR PERIOD. Commencing on December 1,
2004 and after the end of each calendar quarter thereafter, Lender will perform
a test of the Debt Service Coverage Ratio to determine whether a Low DSCR
Trigger Event has occurred (it being agreed that (i) all determinations as to
whether a Low DSCR Trigger

Event and resulting Low DSCR Period has occurred and is continuing shall be made
by Lender based on the financial information delivered by Borrower pursuant to
Section 11.2 hereof and/or any other information available to Lender pursuant to
the terms of the Loan Documents and (ii) the first test performed by Lender
after December 1, 2004 shall be based on an annualized basis in accordance with
the definition of "Debt Service Coverage Ratio" set forth herein and based on
the financial information delivered by Borrower pursuant to Section 11.2 hereof
and/or any other information available to Lender pursuant to the terms of the
Loan Documents).

                  XII.     ENVIRONMENTAL MATTERS

                  SECTION 12.1      REPRESENTATIONS. Borrower hereby represents
and warrants that except as set forth in the Phase I Environmental Assessment
Report, dated February 4, 2004, prepared by National Assessment Corporation
previously delivered to Lender (the ENVIRONMENTAL REPORTS), (i) Borrower has not
engaged in or knowingly permitted any operations or activities upon, or any use
or occupancy of the Property, or any portion thereof, for the purpose of or in
any way involving the handling, manufacture, treatment, storage, use,
generation, release, discharge, refining, dumping or disposal of any Hazardous
Substances on, under, in or about the Property, or transported any Hazardous
Substances to, from or across the Property, except in all cases in material
compliance with applicable Environmental Laws and in the course of ordinary
business operations at the Property; (ii) to the best of Borrower's knowledge,
Bloomberg, other occupant or user of the Property, nor any other person, has
engaged in or permitted any operations or activities upon, or any use or
occupancy of the Property, or any portion thereof, for the purpose of or in any
material way involving the handling, manufacture, treatment, storage, use,
generation, release, discharge, refining, dumping or disposal of any Hazardous
Substances on, in or about the Property, or transported any Hazardous Substances
to, from or across the Property, except in all cases in material compliance with
applicable Environmental Laws and in the course of ordinary business operations
at the Property; (iii) to the best of Borrower's knowledge, no Hazardous
Substances are presently constructed, deposited, stored, or otherwise located
on, under, in or about the Property except in material compliance with
applicable Environmental Laws; (iv) to the best of Borrower's knowledge, no
Hazardous Substances have migrated from the Property upon or beneath other
properties which would reasonably be expected to result in material liability
for Borrower; and (v) to Borrower's knowledge, no Hazardous Substances have
migrated or threaten to migrate from other properties upon, about or beneath the
Property which would reasonably be expected to result in material liability for
Borrower.

                  SECTION 12.2      COVENANTS. COMPLIANCE WITH ENVIRONMENTAL
LAWS. Subject to Borrower's right to contest under Section 7.3, Borrower
covenants and agrees with Lender that Borrower shall comply, in all material
respects, with all applicable Environmental Laws during the term of the Loan. If
at any time during the continuance of the Lien of the Security Instrument or
this Agreement, a Governmental Authority having jurisdiction over the Property
requires remedial action to correct the presence of Hazardous Materials in or on
the Property (an ENVIRONMENTAL EVENT), Borrower shall deliver prompt notice of
the occurrence of such Environmental Event to Lender. Within

thirty (30) days after Borrower has knowledge of the occurrence of an
Environmental Event, Borrower shall deliver to Lender an Officer's Certificate
(an ENVIRONMENTAL CERTIFICATE) explaining the Environmental Event in reasonable
detail and setting forth the proposed remedial action, if any. Borrower shall
promptly provide Lender with copies of all notices which allege or identify any
actual or potential violation or noncompliance received by or prepared by or for
Borrower in connection with any Environmental Law. For purposes of this
paragraph, the term "notice" shall mean any written summons which could
reasonably be excepted to give rise to any environmental liability to Borrower
in excess of $10,000, citation, directive, order, claim, pleading, letter,
application, filing, report, findings, declarations or other written materials
pertinent to compliance of the Property and Borrower with applicable
Environmental Laws. If the Security Instrument is foreclosed, Borrower shall
deliver the Property in material compliance with all applicable Environmental
Laws.

                  SECTION 12.3      ENVIRONMENTAL REPORTS. Upon the occurrence
of an Environmental Event or during the continuance of any Event of Default,
Lender shall have the right to have its consultants perform a comprehensive
environmental audit of the Property. Such audit shall be conducted by an
Environmental Consultant chosen by Borrower (so long as such consultant is
reasonably acceptable to Lender) and may include a visual survey, a record
review, an area reconnaissance assessing the presence of hazardous or toxic
waste or substances, PCBs or storage tanks at the Property, an asbestos survey
of the Property, which may include random sampling of the improvements and air
quality testing, and such further site assessments as reasonably recommended by
such Environmental Consultant as a result of such audit and which Lender may
reasonably require due to the results obtained from the foregoing. Borrower
grants Lender, its agents, consultants and contractors the right to enter the
Property as reasonable or appropriate for the circumstances and subject to the
rights of Bloomberg under the Bloomberg Lease, if any, for the purposes of
performing such studies and the reasonable cost of such studies shall be due and
payable by Borrower to Lender within five (5) Business Days of demand and shall
be secured by the Lien of the Security Instrument. Lender shall not unreasonably
interfere with, and Lender shall direct the Environmental Consultant to use its
commercially reasonable efforts not to hinder, Borrower's or Bloomberg's, other
occupant's or Manager's operations upon the Property when conducting such audit,
sampling or inspections. By undertaking any of the measures identified in and
pursuant to this Section 12.3, Lender shall not be deemed to be exercising any
control over the operations of Borrower or the handling of any environmental
matter or hazardous wastes or substances of Borrower for purposes of incurring
or being subject to liability therefor.

                  SECTION 12.4      ENVIRONMENTAL INDEMNIFICATION. Borrower
shall protect, indemnify, save, defend, and hold harmless the Indemnified
Parties from and against any and all liability, loss, damage, actions, causes of
action, costs or expenses whatsoever (including reasonable attorneys' fees and
expenses) and any and all claims, suits and judgments which any Indemnified
Party may suffer, as a result of or with respect to: (a) any Environmental Claim
relating to or arising from the Property; (b) the violation of any Environmental
Law in connection with the Property; (c) any release, spill, or the presence of
any Hazardous Substances affecting the Property; and (d) the presence at, in, on
or

under, or the release, escape, seepage, leakage, discharge or migration at or
from, the Property of any Hazardous Substances, whether or not such condition
was known or unknown to Borrower; provided that, in each case, Borrower shall be
relieved of its obligation under this subsection if any of the matters referred
to in clauses (a) through (d) above did not occur (and were not discovered)
prior to (1) the foreclosure of the Security Instrument, (2) the delivery by
Borrower to Lender or its designee of a deed-in-lieu of foreclosure with respect
to the Property, (3) Lender's or its designee's taking possession and control of
the Property after the occurrence of an Event of Default hereunder or (4) the
satisfaction in full of the Obligations and the discharge of the Indebtedness.
If any such action or other proceeding shall be brought against Lender, upon
written notice from Borrower to Lender (given reasonably promptly following
Lender's notice to Borrower of such action or proceeding), Borrower shall be
entitled to assume the defense thereof, at Borrower's expense, with counsel
reasonably acceptable to Lender; provided, however, Lender may, at its own
expense, retain separate counsel to participate in such defense, but such
participation shall not be deemed to give Lender a right to control such
defense, which right Borrower expressly retains. Notwithstanding the foregoing,
each Indemnified Party shall have the right to employ separate counsel at
Borrower's expense if, in the reasonable opinion of legal counsel, a conflict or
potential conflict exists between the Indemnified Party and Borrower that would
make such separate representation advisable. Notwithstanding anything contained
herein, Borrower shall have no obligation to indemnify an Indemnified Party for
damage or loss resulting from such Indemnified Party's gross negligence or
willful misconduct.

                  SECTION 12.5      RECOURSE NATURE OF CERTAIN INDEMNIFICATIONS.
Notwithstanding anything to the contrary provided in this Agreement or in any
other Loan Document, the indemnification provided in Section 12.4 shall be fully
recourse to Borrower and shall be independent of, and shall survive for a period
of five (5) years after the first to occur of: (i) the discharge of the
Indebtedness, the release of the Lien created by the Security Instrument, and/or
(ii) the conveyance of title to the Property to Lender or any purchaser or
designee in connection with a foreclosure of the Security Instrument or
conveyance in lieu of foreclosure.

                  XIII.    INTENTIONALLY OMITTED

                  XIV.     SECURITIZATION AND PARTICIPATION

                  SECTION 14.1      SALE OF NOTE AND SECURITIZATION. At the
request of Lender and, to the extent not already required to be provided by
Borrower under this Agreement, Borrower shall, at Borrower's sole cost and
expense, use reasonable efforts to satisfy the market standards which may be
reasonably required in the marketplace or by the Rating Agencies in connection
with the sale of the Notes or participation therein as part of any
securitization (including all in any series of securitizations of any substitute
notes such sale and/or securitization, the SECURITIZATION) of rated single or
multi-class securities (the SECURITIES) secured by or evidencing ownership
interests in the Notes and this Agreement (all such sales and/or
securitizations, including, without limitation where a "REMIC" election is made,
the SECURITIZATION), including using reasonable efforts to do (or cause to be
done) the following (but Borrower shall not in any event be required to incur,
suffer

or accept (except to a de minimis extent)) any lesser rights or greater
obligations than as currently set forth in the Loan Documents (except, after an
event of Default any increase in the weighted average interest rate of the Notes
that may result after certain prepayments of the Loan have been made and applied
in accordance with the terms hereof). Notwithstanding anything contained in the
Loan Documents, the Loan shall at all times be serviced by one servicer;

                           14.1.1   PROVIDED INFORMATION. (i) Provide, at
Borrower's sole cost and expense, such non-confidential financial and other
information (but not projections) with respect to the Property and Borrower and
Manager to the extent such information is reasonably available to Borrower or
Manager, (ii) provide, at Borrower's sole expense, business plans (but not
projections) and budgets relating to the Property, to the extent prepared by the
Borrower or Manager and (iii) cooperate with the holder of the Note (and its
representatives) in obtaining, at the sole expense of Borrower, such site
inspection, appraisals, market studies, environmental reviews and reports,
engineering reports and other due diligence investigations of the Property, as
may be reasonably requested by the holder of the Note or reasonably requested by
the Rating Agencies (all information provided pursuant to this Section 14.1.1
together with all other information heretofore provided to Lender in connection
with the Loan, as such may be updated, at Borrower's request, in connection with
a Securitization, or hereafter provided to Lender in connection with the Loan or
a Securitization, being herein collectively called the PROVIDED INFORMATION);

                           14.1.2   UPDATES TO OPINIONS OF COUNSEL. Use
reasonable efforts to cause to be rendered, at Borrower's sole expense, such
customary updates or customary modifications to the Opinions of Counsel
delivered at the closing of the Loan as may be reasonably requested by Lender or
the Rating Agencies in connection with the Securitization. Borrower's failure to
use reasonable efforts to deliver or cause to be delivered the opinion updates
or modifications required hereby within twenty (20) Business Days after written
request therefor shall constitute an "Event of Default" hereunder. To the extent
any of the foregoing Opinions of Counsel were required to be delivered in
connection with the closing of the Loan, any update thereof shall be without
cost to Borrower. Any such Opinions of Counsel that Borrower is reasonably
required to cause to be delivered in connection with a Securitization other than
those delivered at the original Loan closing, shall be delivered at Borrower's
expense (it being agreed that Borrower shall not be obligated to deliver an
Opinion of Counsel with respect to "10b-5", "true sale", "no fraudulent
conveyance" and "REMIC" matters); and

                           14.1.3   MODIFICATIONS TO LOAN DOCUMENTS. Without
cost to the Borrower (except for Borrower's counsel and administrative costs),
execute such amendments to the Security Instrument and Loan Documents as may be
reasonably requested by Lender or the Rating Agencies in order to achieve the
required rating or to effect the Securitization (including, without limitation,
modifying the Payment Date to any of the first ten days of a calendar month) and
the Interest Period, as defined in the Note, to a date other than as originally
set forth in the Note), provided, however, that nothing contained in this
Section 14.1.3 shall result in any economic or other material adverse change in
the transaction contemplated by the Security Instrument or the Loan

Documents (unless Borrower is made whole by the holder of the Note), or result
in any operational changes that are unduly burdensome to the Property or
Borrower.

                  SECTION 14.2      COOPERATION WITH RATING AGENCIES. Borrower
shall, at its sole expense, (i) at Lender's request, meet with representatives
of such Rating Agencies at reasonable times to discuss the business and
operations of the Property, and (ii) cooperate with the reasonable requests of
the Rating Agencies in connection with the Property.

                  SECTION 14.3      SECURITIZATION FINANCIAL STATEMENTS.
Borrower acknowledges that all such financial information delivered by Borrower
to Lender pursuant to Article XI may, at Lender's option, be delivered to the
Rating Agencies.

                  SECTION 14.4      SECURITIZATION INDEMNIFICATION.

                           14.4.1   DISCLOSURE DOCUMENTS. Borrower understands
that certain of the Provided Information may be included in disclosure documents
in connection with the Securitization, including a prospectus or private
placement memorandum or a public registration statement (each, a DISCLOSURE
DOCUMENT) and may also be included in filings with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the SECURITIES
ACT) or the Securities and Exchange Act of 1934, as amended (the EXCHANGE Act),
or provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required to be
revised prior to the sale of all Securities, upon request and subject to Section
14.1.4, Borrower will reasonably cooperate with the holder of the Note in
updating the Provided Information for inclusion or summary in the Disclosure
Document by providing all current information in Borrower's possession
pertaining to Borrower and the Property reasonably requested by Lender.

                           14.4.2   INDEMNIFICATION CERTIFICATE. In connection
with each of (x) a preliminary and a private placement memorandum, or (y) a
preliminary and final prospectus, as applicable, Borrower agrees to provide, at
Lender's reasonable request, an indemnification certificate:

                           (a)      certifying that Borrower has carefully
         examined those portions of such memorandum or prospectus, as
         applicable, reasonably designated in writing by Lender for Borrower's
         review pertaining to Borrower, the Property, the Loan and/or the
         Provided Information, and insofar as such sections or portions thereof
         specifically pertain to Borrower, the Property, the Provided
         Information or the Loan, (the RELEVANT PORTIONS), the Relevant Portions
         do not (except to the extent specified by Borrower if Borrower does not
         agree with the statements therein), as of the date of such certificate,
         to Borrower's actual knowledge, contain any untrue statement of a
         material fact or omit to state a material fact necessary in order to
         make the statements made, in the light of the circumstances under which
         they were made, not misleading; and

                           (b)      indemnifying Lender and the Affiliates of
         Deutsche Bank Securities, Inc. (collectively, DBS) that have prepared
         and/or filed the Disclosure Document relating to the Securitization,
         each of its directors, each of its officers who have signed the
         Disclosure Document and each person or entity who controls DBS within
         the meaning of Section 15 of the Securities Act or Section 20 of the
         Exchange Act (collectively, the DBS GROUP), and DBS, together with the
         DBS Group, each of their respective directors and each person who
         controls DBS or the DBS Group, within the meaning of Section 15 of the
         Securities Act and Section 20 of the Exchange Act (collectively, the
         UNDERWRITER GROUP) for any actual, out-of-pocket losses, third party
         claims, damages (excluding lost profits, diminution in value and other
         consequential damages) or liabilities arising out of third party claims
         (the LIABILITIES) to which any member of the Underwriter Group may
         become subject to the extent such Liabilities arise out of or are based
         upon any untrue statement of any material fact contained in the
         Relevant Portions and in the Provided Information or arise out of or
         are based upon the omission by Borrower to state therein a material
         fact required to be stated in the Relevant Portions in order to make
         the statements in the Relevant Portions or in light of the
         circumstances under which they were made, not misleading (except that
         (x) Borrower's obligation to indemnify in respect of any information
         contained in a preliminary or final registration statement, private
         placement memorandum or preliminary or final prospectus that is derived
         in part from information provided by Borrower and in part from
         information provided by others unrelated to or not employed by Borrower
         shall be limited to any untrue statement or omission of material fact
         therein known to Borrower that results directly from an error in any
         information provided (or which should have been provided as required by
         Section 14.4.2(a) hereof) by Borrower which Borrower has been given the
         reasonable opportunity to examine and reasonably and promptly approve
         and (y) Borrower shall have no responsibility for the failure of any
         member of the Underwriter Group to accurately transcribe written
         information supplied by Borrower or to include any portions of the
         Provided Information).

                           (c)      Borrower's liability under clauses (a) and
         (b) above shall be limited to Liabilities arising out of or based upon
         any such untrue statement or omission by Borrower made therein in
         reliance upon and in conformity with information delivered to Lender
         and prepared by Borrower, Manager, Guarantor or any Affiliate of any
         such Person in connection with the preparation of those portions of the
         registration statement, memorandum or prospectus pertaining to
         Borrower, the Property or the Loan, including financial statements of
         Borrower and operating statements with respect to the Property. This
         indemnity agreement will be in addition to any liability which Borrower
         may otherwise have.

                           (d)      Promptly after receipt by an indemnified
         party under this Article XIV of notice of the commencement of any
         action, such indemnified party will, if a claim in respect thereof is
         to be made against the indemnifying party under this Article XIV,
         notify the indemnifying party in writing of the commencement thereof,
         but the omission to so notify the indemnifying party will not relieve
         the indemnifying party from any liability which the indemnifying

         party may have to any indemnified party hereunder except to the extent
         that failure to notify causes prejudice to the indemnifying party. In
         the event that any action is brought against any indemnified party, and
         it notifies the indemnifying party of the commencement thereof, the
         indemnifying party will be entitled, jointly with any other
         indemnifying party, to participate therein and, to the extent that it
         (or they) may elect by written notice delivered to the indemnified
         party promptly after receiving the aforesaid notice from such
         indemnified party, to assume the defense thereof with counsel
         reasonably satisfactory to such indemnified party. After notice from
         the indemnifying party to such indemnified party under this Article XIV
         of its assumption of such defense, the indemnifying party shall not be
         liable for any legal or other expenses subsequently incurred by such
         indemnified party in connection with the defense thereof; provided,
         however, if the defendants in any such action include both the
         indemnified party and the indemnifying party and the indemnified party
         shall have reasonably concluded that there are any legal defenses
         available to it and/or other indemnified parties that are different
         from or in conflict with those available to the indemnifying party, the
         indemnified party or parties shall have the right to select separate
         counsel to assert such legal defenses and to otherwise participate in
         the defense of such action on behalf of such indemnified party or
         parties at the expense of the indemnifying party. The indemnifying
         party shall not be liable for the expenses of separate counsel unless
         an indemnified party shall have reasonably concluded that there may be
         legal defenses available to it that are different from or in conflict
         with those available to another indemnified party.

                           (e)      In order to provide for just and equitable
         contribution in circumstances in which the indemnity provided for in
         this Article XIV is for any reason held to be unenforceable by an
         indemnified party in respect of any actual, out-of-pocket losses,
         claims, damages or liabilities relating to third party claims (or
         action in respect thereof) referred to therein which would otherwise be
         indemnifiable under this Article XIV, the indemnifying party shall
         contribute to the amount paid or payable by the indemnified party as a
         result of such actual, out of pocket losses, third party claims,
         damages or liabilities (or action in respect thereof) (but excluding
         damages for loss profits, diminution in value of the Property and
         consequential damages); provided, however, that no person guilty of
         fraudulent misrepresentation (within the meaning of Section 11(f) of
         the Securities Act) shall be entitled to contribution for Liabilities
         arising therefrom from any person who was not guilty of such fraudulent
         misrepresentation. In determining the amount of contribution to which
         the respective parties are entitled, the following factors shall be
         considered: (i) the DBS Group's and Borrower's relative knowledge and
         access to information concerning the matter with respect to which claim
         was asserted; (ii) the opportunity to correct and prevent any statement
         or omission; (iii) the limited responsibilities and obligations of
         Borrower as specified herein; and (iv) any other equitable
         considerations appropriate in the circumstances.

                  The Borrower's failure to deliver the Indemnification
Certificate within fifteen (15) Business Days of Lender's request therefor,
shall be a material Event of

Default under this Agreement, entitling Lender to exercise all of its rights and
remedies permitted under the Loan Documents.

                  SECTION 14.5      CERTAIN INDEMNIFICATIONS. Notwithstanding
anything to the contrary provided in this Agreement or in any other Loan
Document, the indemnification provided in Article XIV shall be fully recourse to
Borrower but shall be limited to Borrower's interest in the Property (and any
Proceeds and Net Operating Income relating thereto).

                  SECTION 14.6      RETENTION OF SERVICER. Lender reserves the
right, at Lender's sole cost and expense, to retain the Servicer. Borrower shall
pay any reasonable fees and expenses of the Servicer and any reasonable third
party fees and expenses (including, without limitation, reasonable attorneys
fees and disbursements) solely in connection with a prepayment, release of the
Property, or assumption of the Loan as part of Borrower's monthly Debt Service
payment next due.

                  XV.      ASSIGNMENTS AND PARTICIPATIONS

                  SECTION 15.1      INTENTIONALLY OMITTED

                  SECTION 15.2      INTENTIONALLY OMITTED

                  SECTION 15.3      SUBSTITUTE NOTES. Upon its receipt of an
Assignment and Acceptance executed by an assignee, together with any Note or
Notes subject to such assignment, Lender shall, if such Assignment and
Acceptance has been completed and is in substantially the form of EXHIBIT A
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register, and (iii) give prompt written notice thereof
to Borrower. Within seven (7) Business Days after its receipt of such notice,
Borrower, at Lender's own expense, shall execute and deliver to Lender in
exchange and substitution for the surrendered Note or Notes a new Note to the
order of such assignee in an amount equal to the portion of the Loan assigned to
it and a new Note to the order of Lender in an amount equal to the portion of
the Loan retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate then outstanding principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the Note (modified, however, to the extent necessary so as not to impose
duplicative or increased obligations on Borrower and to delete obligations
previously satisfied by Borrower). Notwithstanding the provisions of this
Article XV, Borrower shall not be responsible or liable for any additional
taxes, reserves, adjustments or other costs and expenses that are related to, or
arise as a result of, any transfer of the Loan or any interest or participation
therein that arise solely and exclusively from the transfer of the Loan or any
interest or participation therein or from the execution of the new Note
contemplated by this Section 15.5, including, without limitation, any mortgage
tax. Lender and/or the assignees, as the case may be, shall from time to time
designate one agent and one servicer through which Borrower shall request all
approvals and consents required or contemplated by this Agreement and on whose
statements Borrower may rely.

                  SECTION 15.4      PARTICIPATIONS. Each assignee pursuant to
this Article XV may sell participations to one or more Persons (other than
Borrower or any of its Affiliates) in or to all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of the Note held by it); provided, however,
that (i) such assignee's obligations under this Agreement and the other Loan
Documents shall remain unchanged, (ii) such assignee shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such assignee shall remain the holder of any such Note for all purposes of
this Agreement and the other Loan Documents, and (iv) Borrower, Lender and the
assignees pursuant to this Article XV shall continue to deal solely and directly
with such assignee in connection with such assignee's rights and obligations
under this Agreement and the other Loan Documents. In the event that more than
one (1) party comprises Lender, Lender shall designate one party to act on the
behalf of all parties comprising Lender in providing approvals and all other
necessary consents under the Loan Documents and on whose statements Borrower may
rely.

                  SECTION 15.5      DISCLOSURE OF INFORMATION. Any assignee
pursuant to this Article XV may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Article
XV, disclose to the assignee or participant or proposed assignee or participant,
any information relating to Borrower furnished to such assignee by or on behalf
of Borrower; provided, however, that, prior to any such disclosure, the assignee
or participant or proposed assignee or participant shall agree in writing for
the benefit of Borrower to preserve the confidentiality of any confidential
information received by it.

                  SECTION 15.6      SECURITY INTEREST IN FAVOR OF FEDERAL
RESERVE BANK. Notwithstanding any other provision set forth in this Agreement or
any other Loan Document, any assignee pursuant to this Article XV may at any
time create a security interest in all or any portion of its rights under this
Agreement or the other Loan Documents (including, without limitation, the
amounts owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.

                  XVI.     RESERVE ACCOUNTS

                  SECTION 16.1      TAX RESERVE ACCOUNT. On the Closing Date,
Borrower shall deposit into the Tax Reserve Account as additional collateral for
the Loan an amount equal to $382,217, such amount to be increased by Borrower,
within two (2) Business Days of Borrower receiving notice from Bloomberg that
the final Rent Commencement Date (as such term is defined in the Bloomberg
Lease) has been delayed, in amount equal to Real Estate Taxes and Other Charges
that would be due and payable by Borrower during such delayed period by Borrower
depositing such amount into the Tax Reserve Account (the INITIAL TAX RESERVE
AMOUNT). From and after the final Rent Commencement Date and in accordance with
the time periods and subject to the terms set forth in Section 3.1, Borrower
shall deposit into the Tax Reserve Account an amount equal to (a) one-twelfth of
the annual Real Estate Taxes that Lender reasonably estimates will be payable
during the next ensuing twelve (12) months in order to accumulate with

Lender sufficient funds to pay all such Real Estate Taxes at least thirty (30)
days prior to the imposition of any interest, charges or expenses for the
non-payment thereof and (b) one-twelfth of the annual Other Charges that Lender
reasonably estimates will be payable during the next ensuing twelve (12) months
(said monthly amounts in (a) and (b) above hereinafter called the MONTHLY TAX
RESERVE AMOUNT, and the aggregate amount of funds held in the Tax Reserve
Account being the TAX RESERVE AMOUNT). The Monthly Tax Reserve Amount is subject
to adjustment by Lender in Lender's reasonable discretion upon notice to
Borrower. In the event that, and for so long as, Bloomberg is not paying all
Real Estate Taxes and Other Charges under the Bloomberg Lease, then the Monthly
Tax Reserve Amount shall be paid by Borrower to Lender on each Payment Date,
pursuant to Section 3.1.7(a)(ii). Lender will apply the Monthly Tax Reserve
Amount (or, prior to the final Rent Commencement Date, a portion of the Initial
Tax Reserve Amount) to payments of Real Estate Taxes and Other Charges required
to be made by Borrower pursuant to Article VII and under the Security
Instrument, subject to Borrower's right to contest Real Estate Taxes in
accordance with Section 7.3. In making any payment relating to the Tax Reserve
Account, Lender may do so according to any bill, statement or estimate procured
from the appropriate public office, without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of funds in the
Tax Reserve Account shall exceed the amounts due for Real Estate Taxes and Other
Charges pursuant to Article VII, Lender shall transfer such excess funds to the
Collection Account. If at any time Lender reasonably determines that the Tax
Reserve Amount is not or will not be sufficient to pay Real Estate Taxes and
Other Charges by the dates set forth above, Lender shall notify Borrower of such
determination and Borrower shall increase its monthly payments to Lender by the
amount that Lender reasonably estimates is sufficient to make up the deficiency
at least thirty (30) days prior to the imposition of any interest, charges or
expenses for the non-payment of the Real Estate Taxes. Upon payment of the Real
Estate Taxes, Lender shall reassess the amount necessary to be deposited in the
Tax Reserve Account for the succeeding period, which calculation shall take into
account any excess amounts remaining in the Tax Reserve Account. Borrower agrees
to deposit any required increases in the Monthly Tax Reserve Amount within five
(5) Business Days after receipt of written notice thereof from Lender.

                  SECTION 16.2      INSURANCE RESERVE ACCOUNT. In accordance
with the time periods and subject to the terms set forth in Section 3.1,
Borrower shall deposit into the Insurance Reserve Account an amount equal to
one-twelfth of the insurance premiums that Lender reasonably estimates, based on
the most recent bill, will be payable for the renewal of the coverage afforded
by the insurance policies upon the expiration thereof, or the portion of the
premium allocated to the Property with respect to any blanket insurance policy
obtained pursuant to Section 6.1.13, in order to accumulate with Lender
sufficient funds to pay all such insurance premiums at least thirty (30) days
prior to the expiration of the policies required to be maintained by Borrower
pursuant to the terms hereof (said monthly amounts hereinafter called the
MONTHLY INSURANCE RESERVE AMOUNT, and the aggregate amount of funds held in the
Insurance Reserve Account being the INSURANCE RESERVE AMOUNT). The Monthly
Insurance Reserve Amount is subject to adjustment by Lender in Lender's
reasonable discretion upon notice to Borrower. In the event that, and for so
long as, Bloomberg is not paying all insurance premiums provided for under the

Bloomberg Lease, then, the Monthly Insurance Reserve Amount shall be paid by
Borrower to Lender on each Payment Date, pursuant to Section 3.1.7(ii). Lender
will apply the Monthly Insurance Reserve Amount to payments of insurance
premiums required to be made by Borrower pursuant to Article V and Article VI
and under the Security Instrument. In making any payment relating to the
Insurance Reserve Account, Lender may do so according to any bill, statement or
estimate procured from the insurer or agent, without inquiry into the accuracy
of such bill, statement or estimate or into the validity thereof. If the amount
of funds in the Insurance Reserve Account shall exceed the amounts due for
insurance premiums pursuant to Article V and Article VI, Lender shall transfer
such excess to the Collection Account. If at any time Lender reasonably
determines that the Insurance Reserve Amount is not or will not be sufficient to
pay insurance premiums by the dates set forth above, Lender shall notify
Borrower of such determination and Borrower shall increase its monthly payments
to Lender by the amount that Lender reasonably estimates is sufficient to make
up the deficiency at least thirty (30) days prior to expiration of the Policies.
Upon payment of the such insurance premiums, Lender shall reassess the amount
necessary to be deposited in the Insurance Reserve Account for the succeeding
period, which calculation shall take into account any excess amounts remaining
in the Insurance Reserve Account. Provided no Event of Default has occurred and
is continuing, Lender agrees to reimburse to Borrower from funds on deposit in
the Insurance Reserve Account the amount of any insurance premium allocable to
the Property that was paid under a blanket insurance policy. Prior to any such
disbursement, Borrower will provide Lender with an Officer's Certificate
together with supporting documentation reasonably acceptable to Lender
evidencing such payment.

                  SECTION 16.3      STRUCTURAL RESERVE ACCOUNT.

                           (a)      In the event that, and for so long as,
         Bloomberg is not paying for all capital improvements at the Property
         pursuant to the Bloomberg Lease, then, in accordance with the time
         periods set forth in Section 3.1, Borrower shall deposit into the
         Structural Reserve Account an amount equal to $11,312.35 (the MONTHLY
         STRUCTURAL RESERVE AMOUNT and together with all amounts deposited in
         the Structural Reserve Account, the STRUCTURAL RESERVE AMOUNT) and held
         by the Cash Management Bank for the benefit of Lender as additional
         security for the Loan in accordance with Section 3.1.7(iv) and the
         Account Agreement. In connection with any Alteration, other than in
         connection with tenant improvement work, such funds shall be disbursed
         to Borrower from the Alterations Reserve Account in accordance with the
         terms of this Section for disbursements from the Structural Reserve
         Account.

                           (b)      Lender shall make disbursements from the
         Structural Reserve Account to reimburse Borrower for the cost of
         capital improvements to the Property in accordance with and in the
         manner provided in this Section 16.3. Lender shall, within fifteen (15)
         Business Days of a written request from Borrower and satisfaction of
         the requirements set forth in this Section 16.3 disburse to Borrower
         amounts from the Structural Reserve Account necessary to pay for the
         actual costs of completed capital improvement work. In no event shall

         Lender be obligated to disburse funds from the Structural Reserve
         Account if a an Event of Default exists.

                  Each request for disbursement from the Structural Reserve
Account shall be in a form reasonably specified or reasonably approved by Lender
and be submitted together with an Officer's Certificate specifying the specific
items for which the disbursement is requested, certifying that such item
qualifies as capital improvement work, the estimated cost for the applicable
Alteration through completion and the cost of each item purchased. Each request
for disbursement shall be delivered at least fifteen (15) Business Days prior to
the date of the requested disbursement and shall include copies of invoices for
all costs incurred and each request shall include evidence reasonably
satisfactory to Lender (i) that the work has been completed in a workmanlike
manner and (ii) of payment of all such amounts or evidence that such amounts
will be paid by such disbursement. Borrower shall not make a request for
disbursement from the Structural Reserve Account more frequently than once in
any calendar month and the total amount of any request shall not be less than
$10,000 (except in the case of the final request for disbursement).

                  SECTION 16.4      ADDITIONAL DEBT SERVICE RESERVE ACCOUNT. On
the Closing Date, Borrower shall deposit into the Additional Debt Service
Reserve Account as additional collateral for the Loan an amount equal to
$11,169,694, such amount to be increased by Borrower, within two (2) Business
Days of Borrower receiving notice from Bloomberg that the final Rent
Commencement Date (as such term is defined in the Bloomberg Lease) has been
delayed, in amount equal to the Debt Service that would be due and payable
during such delayed period by Borrower depositing such amount into the
Additional Debt Service Reserve Account. Lender shall transfer a portion of the
funds in the Additional Debt Service Reserve Account on a monthly basis
sufficient to pay Debt Service (to the extent of sufficient funds on deposit
therein) on each Payment Date until the final Rent Commencement Date has
occurred. During the continuance of an Event of Default, Lender shall have the
right to apply any amounts then remaining in the Additional Debt Service Reserve
Account to repay the Indebtedness or any other amounts due hereunder or under
the other Loan Documents in the order of priority and manner set forth in
Section 11 of the Security Instrument.

                  SECTION 16.5      CASH TRAP RESERVE ACCOUNT. During a Cash
Trap Period, all Excess Cash Flow shall be transferred from the Holding Account
into the Cash Trap Reserve Account (or, subject to the terms of Section 3.1.7(b)
hereof, from the applicable Sub-account) and shall be retained by Lender as
additional security for the Loan and shall be applied or disbursed as
hereinafter provided. From and after the occurrence and continuation of an Event
of Default, Lender shall have the right to apply any amounts then remaining in
the Cash Trap Reserve Account to repay the Loan or any other amounts due
hereunder or under the other Loan Documents in such order, manner and amount as
Lender shall determine in its sole discretion. Provided no Event of Default
shall have occurred and be continuing, Lender shall instruct the Cash Management
Bank to release to Borrower any amounts remaining in the Cash Trap Reserve
Account promptly after the Cash Trap Period is no longer continuing (as
determined by Lender in accordance with the subsequent terms of this Section);
provided, notwithstanding the

foregoing, any amounts then remaining in the Cash Trap Reserve Account on the
Anticipated Repayment Date shall be applied by Lender to reduce the Principal
Amount of the Loan and all other Obligations then outstanding, including,
without limitation, payment of the Liquidated Damages Amount to the extent any
such amounts are applied prior to the expiration of the Prepayment Lockout
Period. All determinations as to whether (i) a Low DSCR Period has occurred and
is continuing shall be made by Lender in its sole but reasonable discretion and
based on the financial information delivered by Borrower pursuant to Section
11.2 hereof and/or any other information available to Lender pursuant to the
terms of the Loan Documents and (ii) a Casualty Restoration Period has occurred
and is continuing shall be made by Lender in its sole but reasonable discretion
and based on information required to be delivered by Borrower pursuant to
Section 5.1.7 hereof (or any other information available to Lender).

                  XVII.    DEFAULTS

                  SECTION 17.1      EVENT OF DEFAULT.

                           (a)      Each of the following events shall
         constitute an event of default hereunder (an EVENT OF DEFAULT):

                                    (i)      if (A) the Indebtedness is not paid
                  in full on the Maturity Date, (B) any Monthly Payment due
                  under the Note is not paid in full by the fifth (5th) day of
                  each calendar month, provided, however, if the fifth (5th) day
                  of any such calendar month is not a Business Day, then the
                  immediately preceding Business Day, (C) any prepayment of
                  principal due under this Agreement or the Note is not paid
                  when due, (D) the Liquidated Damages Amount or Yield
                  Maintenance Premium is not paid when due, (E) any deposit to
                  the Collection Account is not made on the required deposit
                  date therefor; or (F) except as to any amount included in (A),
                  (B), (C), (D), and/or (E), of this clause (i), any other
                  amount payable pursuant to this Agreement, the Note or any
                  other Loan Document is not paid in full on or before the tenth
                  Business Day after Lender delivers written notice thereof to
                  Borrower;

                                    (ii)     subject to Borrower's right to
                  contest as set forth in Section 7.3, if any of the Impositions
                  or Other Charges are not paid prior to the imposition of any
                  interest, penalty, charge or expense for the non-payment
                  thereof unless such non-payment is the sole result of Lender's
                  failure to disburse funds from the Tax Reserve Account to pay
                  such sums to the extent required to be paid by Lender pursuant
                  to the terms of the Loan Documents;

                                    (iii)    if the insurance policies required
                  by Section 6.1 are not kept in full force and effect, or if
                  certified copies of any of such insurance policies are not
                  delivered to Lender within thirty (30) days of the effective
                  date thereof unless the failure to keep such policies in full
                  force and effect is the sole result of Lender's failure to
                  disburse funds from the Insurance

                  Reserve Account to pay insurance premiums to the extent
                  required to be paid by Lender pursuant to the terms of the
                  Loan Documents; provided, however, if Borrower delivers to
                  Lender certificates of insurance within the aforesaid 30 day
                  period, the failure to deliver policies to Lender within such
                  period shall not be an Event of Default so long as Borrower is
                  diligently pursuing and continues to diligently pursue
                  delivery of the policies to Lender;

                                    (iv)     if, except as permitted pursuant to
                  Article VIII, (a) any Transfer of any direct or indirect
                  legal, beneficial or equitable interest in all or any portion
                  of the Property occurs, (b) any Transfer of any direct or
                  indirect interest in Borrower, or any other SPE Entity, (c)
                  any Lien or encumbrance on all or any portion of the Property,
                  or (d) any pledge, hypothecation, creation of a security
                  interest in or other encumbrance of any direct or indirect
                  interests in Borrower, or any other SPE Entity;

                                    (v)      if any representation or warranty
                  made by Borrower herein or by Borrower, Guarantor or any
                  Affiliate of Borrower in any other Loan Document, or in any
                  report, certificate (including any certificates attached to
                  any legal opinions delivered to Lender by Borrower on the date
                  hereof), financial statement or other instrument, agreement or
                  document furnished to Lender shall have been false or
                  misleading in any material adverse respect as of the date the
                  representation or warranty was made;

                                    (vi)     if Borrower, any SPE Entity or any
                  Guarantor shall make an assignment for the benefit of
                  creditors;

                                    (vii)    if a receiver, liquidator or
                  trustee shall be appointed for Borrower, any SPE Entity or any
                  Guarantor or if Borrower, any SPE Entity or any Guarantor
                  shall be adjudicated a bankrupt or insolvent, or if any
                  petition for bankruptcy, reorganization or arrangement
                  pursuant to federal bankruptcy law, or any similar federal or
                  state law, shall be filed by or against, consented to, or
                  acquiesced in by, Borrower, any SPE Entity or any Guarantor,
                  or if any proceeding for the dissolution or liquidation of
                  Borrower, any SPE Entity or any Guarantor shall be instituted;
                  provided, however, if such appointment, adjudication, petition
                  or proceeding was involuntary and not consented to by
                  Borrower, any SPE Entity or any Guarantor, upon the same not
                  being discharged, stayed or dismissed within ninety (90) days;

                                    (viii)   if Borrower, any SPE Entity or any
                  Guarantor, as applicable assigns its rights under this
                  Agreement or any of the other Loan Documents or any interest
                  herein or therein in contravention of the Loan Documents;

                                    (ix)     with respect to any term, covenant
                  or provision set forth herein which specifically contains a
                  notice requirement or grace period, if Borrower or any
                  Guarantor shall be in default under such term, covenant or
                  condition after the giving of such notice or the expiration of
                  such grace period;

                                    (x)      if any of the assumptions contained
                  in the Non-Consolidation Opinion, in any Additional
                  Non-Consolidation Opinion or in any other non-consolidation
                  opinion delivered to Lender in connection with the Loan, or in
                  any other non-consolidation delivered subsequent to the
                  closing of the Loan, is or shall become untrue in any material
                  respect;

                                    (xi)     if Borrower or any Affiliate
                  defaults in any of its obligations under Section 15 of the
                  Security Instrument;

                                    (xii)    if Borrower shall fail to comply
                  with any covenants set forth in Sections 5.1.4 (other than
                  solely in connection with clause (xviii) of the definition of
                  "Single Purpose Entity" set forth herein), 5.1.6 through
                  5.1.8, inclusive, 5.1.12, 5.1.18 through 5.1.20, inclusive,
                  5.1.22, 5.2 or Article XI (except with respect to Section
                  11.2.1 which is covered by clause (xxiv) of this Section) with
                  such failure continuing for ten (10) Business Days after
                  Lender delivers written notice thereof to Borrower;

                                    (xiii)   if Borrower shall fail to comply
                  with any covenants set forth in Section 3(d) of the Security
                  Instrument or Section 8 of the Security Instrument with such
                  failure continuing for ten (10) Business Days after Lender
                  delivers written notice thereof to Borrower;

                                    (xiv)    Borrower shall fail to deposit the
                  full amount required to be deposited in the Holding Account or
                  any Sub-Accounts thereof pursuant to Section 3.1.6 within the
                  time periods (if any) required by Section 3.1.6;

                                    (xv)     Intentionally omitted;

                                    (xvi)    if the Property becomes subject (i)
                  to any Lien which is superior to the lien of the Security
                  Instrument, other than a Lien for real estate taxes and
                  assessments not due and payable or a Permitted Encumbrance, or
                  (ii) to any mechanic's, materialman's or other Lien which is
                  superior to the lien of the Security Instrument, and such Lien
                  under clause (i) or (ii) shall remain undischarged (by
                  payment, bonding, or otherwise) for fifteen (15) days after
                  notice of such Lien unless contested in accordance with the
                  terms hereof;

                                    (xvii)   if the Management Agreement is
                  terminated (other than as a result of a Borrower default as
                  addressed in clause (xvi)) and a Qualified Manager is not
                  appointed as a replacement manager pursuant to

                  the provisions of Section 5.2.14 within sixty (60) days after
                  such termination;

                                    (xviii)  except as expressly permitted
                  pursuant to the Loan Documents, if Borrower grants any
                  easement, covenant or restriction (other than the Permitted
                  Encumbrances) over the Property;

                                    (xix)    if Borrower shall default beyond
                  the expiration of any applicable cure period under any
                  existing easement, covenant or restriction which affects the
                  Property, the default of which shall have a Material Adverse
                  Effect;

                                    (xx)     if (A) the Bloomberg Lease shall be
                  surrendered, terminated or canceled, or (B) any of the terms,
                  covenants or conditions of the Bloomberg Lease shall in any
                  manner be modified, changed, supplemented, altered or amended
                  in violation of the provisions of Section 8.8.1 hereof;

                                    (xxi)    if the Condominium Board fails (A)
                  to maintain the Common Elements in good condition and repair,
                  and such failure directly or indirectly decreases the security
                  value of the Property (except to a de minimis extent as
                  determined by Lender in its sole and absolute discretion), (B)
                  to promptly comply in all material respects with all laws,
                  orders, and ordinances affecting the Common Elements, or the
                  use thereof, (C) to promptly repair, replace or rebuild any
                  part of the Common Elements which may be damaged or destroyed
                  by any casualty or which may be affected by any condemnation
                  proceeding if the failure to do so could have a Material
                  Adverse Effect, or (D) to complete and pay for, within a
                  reasonable time, any construction or repair undertaken on the
                  Common Elements, all to the extent that the Board is required
                  to so maintain, comply, repair, replace, rebuild and complete
                  the Common Elements by the Condominium Declaration and the
                  Bylaws (as defined in the Condominium Declaration) if the
                  failure to do so could have a Material Adverse Effect ; and,
                  in the case of any of the foregoing, Borrower fails to compel
                  the Board to cure such failure or to itself cure or cause such
                  failure to be cured, within seventy-five (75) days after
                  written notice from Lender;

                                    (xxii)   if withdrawal of the Property from
                  the Condominium Regime shall be joined in or authorized by
                  Borrower;

                                    (xxiii)  if, without the prior written
                  consent of Lender, Borrower joins in or authorizes the
                  amendment of any of the material terms or provisions of the
                  Condominium Declaration or the By-Laws in contravention of the
                  terms hereof;

                                    (xxiv)   if Borrower shall fail to comply
                  with any of its obligations set forth in Sections 5.1.23 or
                  11.2.1;

                                    (xxv)    if a default has occurred by
                  Borrower under the Condominium Declaration and/or the By-Laws
                  (a CONDOMINIUM DEFAULT), whether monetary or non-monetary, and
                  such Condominium Default continues for thirty (30) days;
                  provided, however, that if such Condominium Default is
                  susceptible of cure but cannot reasonably be cured within such
                  thirty (30) day period and provided further that the
                  defaulting party shall have commenced to cure such Condominium
                  Default within such thirty (30) day period and thereafter
                  diligently proceeds to cure the same, such thirty (30) day
                  period shall be extended for such time as is reasonably
                  necessary for the defaulting party in the exercise of due
                  diligence to cure such Condominium Default, such additional
                  period not to exceed one hundred and twenty (120) days;

                                    (xxvi)   if a default has occurred under the
                  Bloomberg Lease (a BLOOMBERG DEFAULT), whether monetary or
                  non-monetary, and such Bloomberg Default continues for thirty
                  (30) days; provided, however, that if such Bloomberg Default
                  is susceptible of cure but cannot reasonably be cured within
                  such thirty (30) day period and provided further that the
                  defaulting party (or Borrower on behalf of Bloomberg) shall
                  have commenced to cure such Bloomberg Default within such
                  thirty (30) day period and thereafter diligently proceeds to
                  cure the same, such thirty (30) day period shall be extended
                  for such time as is reasonably necessary for the defaulting
                  party (or Borrower on behalf of Bloomberg) in the exercise of
                  due diligence to cure such Bloomberg Default, such additional
                  period not to exceed (A) ninety (90) days in the case of a
                  default under the Bloomberg Lease which does not require
                  Borrower to take possession of the Property, and (B) one
                  hundred and twenty (120) days in the case of any other default
                  under the Bloomberg Lease; or

                                    (xxvii)  if Borrower shall continue to be in
                  Default under any of the other terms, covenants or conditions
                  of this Agreement or of any Loan Document not specified in
                  subsections (i) to (xxvi) above, for thirty (30) days after
                  notice from Lender; provided, however, that if such Default is
                  susceptible of cure but cannot reasonably be cured within such
                  thirty (30) day period and provided further that Borrower
                  shall have commenced to cure such Default within such thirty
                  (30) day period and thereafter diligently proceeds to cure the
                  same, such thirty (30) day period shall be extended for such
                  time as is reasonably necessary for Borrower in the exercise
                  of due diligence to cure such Default, such additional period
                  not to exceed one hundred twenty (120) days.

                           (b)      Unless waived in writing by Lender, upon the
         occurrence of an Event of Default and at any time thereafter Lender
         may, in addition to any other rights or remedies available to it
         pursuant to this Agreement and the other

         Loan Documents or at law or in equity, Lender may take such action,
         without notice or demand, that Lender deems advisable to protect and
         enforce its rights against Borrower and in the Property, including,
         without limitation, (i) declaring immediately due and payable the
         entire Principal Amount together with interest thereon and all other
         sums due by Borrower under the Loan Documents, (ii) collecting interest
         on the Principal Amount at the Default Rate whether or not Lender
         elects to accelerate this Note and (iii) enforcing or availing itself
         of any or all rights or remedies set forth in the Loan Documents
         against Borrower and the Property, including, without limitation, all
         rights or remedies available at law or in equity; and upon any Event of
         Default described in subsections (a)(vi) or(a)(vii) above, the
         Indebtedness and all other obligations of Borrower hereunder and under
         the other Loan Documents shall immediately and automatically become due
         and payable, without notice or demand, and Borrower hereby expressly
         waives any such notice or demand, anything contained herein or in any
         other Loan Document to the contrary notwithstanding. The foregoing
         provisions shall not be construed as a waiver by Lender of its right to
         pursue any other remedies available to it under this Agreement, the
         Security Instrument or any other Loan Document. Any payment hereunder
         may be enforced and recovered in whole or in part at such time by one
         or more of the remedies provided to Lender in the Loan Documents.

                  SECTION 17.2      REMEDIES.

                           (a)      Unless waived in writing by Lender, upon and
         during the occurrence and continuance of an Event of Default, all or
         any one or more of the rights, powers, privileges and other remedies
         available to Lender against Borrower under this Agreement or any of the
         other Loan Documents executed and delivered by, or applicable to,
         Borrower or at law or in equity may be exercised by Lender at any time
         and from time to time, whether or not all or any of the Indebtedness
         shall be declared due and payable, and whether or not Lender shall have
         commenced any foreclosure proceeding or other action for the
         enforcement of its rights and remedies under any of the Loan Documents
         with respect to the Property. Any such actions taken by Lender shall be
         cumulative and concurrent and may be pursued independently, singly,
         successively, together or otherwise, at such time and in such order as
         Lender may determine in its sole discretion, to the fullest extent
         permitted by law, without impairing or otherwise affecting the other
         rights and remedies of Lender permitted by law, equity or contract or
         as set forth herein or in the other Loan Documents. Without limiting
         the generality of the foregoing, Borrower agrees that if an Event of
         Default is continuing (i) Lender is not subject to any one action or
         election of remedies law or rule, and (ii) all liens and other rights,
         remedies or privileges provided to Lender shall remain in full force
         and effect until Lender has exhausted all of its remedies against the
         Property and the Security Instrument has been foreclosed, sold and/or
         otherwise realized upon in satisfaction of the Indebtedness or the
         Indebtedness has been paid in full.

                           (b)      Upon the occurrence and during the
         continuance of an Event of Default, with respect to the Account
         Collateral, the Lender may:

                                    (i)      without notice to Borrower, except
                  as required by law, and at any time or from time to time,
                  charge, set-off and otherwise apply all or any part of the
                  Account Collateral against the Obligations, Operating Expenses
                  and/or capital expenditures for the Property or any part
                  thereof;

                                    (ii)     in Lender's sole discretion, at any
                  time and from time to time, exercise any and all rights and
                  remedies available to it under this Agreement, and/or as a
                  secured party under the UCC;

                                    (iii)    demand, collect, take possession of
                  or receipt for, settle, compromise, adjust, sue for, foreclose
                  or realize upon the Account Collateral (or any portion
                  thereof) as Lender may determine in its sole discretion; and

                                    (iv)     take all other actions provided in,
                  or contemplated by, this Agreement.

                           (c)      With respect to Borrower, the Account
         Collateral, and the Property, nothing contained herein or in any other
         Loan Document shall be construed as requiring Lender to resort to the
         Property for the satisfaction of any of the Indebtedness, and Lender
         may seek satisfaction out of the Property or any part thereof, in its
         absolute discretion in respect of the Indebtedness. In addition, Lender
         shall have the right from time to time to partially foreclose this
         Agreement and the Security Instrument in any manner and for any amounts
         secured by this Agreement or the Security Instrument then due and
         payable as determined by Lender in its sole discretion including,
         without limitation, the following circumstances: (i) in the event
         Borrower defaults beyond any applicable grace period in the payment of
         one or more scheduled payments of principal and interest, Lender may
         foreclose this Agreement and the Security Instrument to recover such
         delinquent payments, or (ii) in the event Lender elects to accelerate
         less than the entire outstanding principal balance of the Loan, Lender
         may foreclose this Agreement and the Security Instrument to recover so
         much of the principal balance of the Loan as Lender may accelerate and
         such other sums secured by this Agreement or the Security Instrument as
         Lender may elect. Notwithstanding one or more partial foreclosures, the
         Property shall remain subject to this Agreement and the Security
         Instrument to secure payment of sums secured by this Agreement and the
         Security Instrument and not previously recovered.

                           (d)      Notwithstanding any term set forth herein or
         in any of the other Loan Documents, (i) Lender covenants not to
         complete a foreclosure or exercise any remedies with respect to with
         respect to Office Unit 2 unless Borrower has defaulted in any of its
         obligations under Section 15 and/or Section 13(h) (in a manner that
         relates to Office Unit 2) of the Security Instrument (an

         OFFICE UNIT 2 DEFAULT) and (ii) subject to the terms of Section 15(a)
         of the Security Instrument, prior to the occurrence and continuance of
         an Office Unit 2 Default, Borrower may collect and use all Rent payable
         with respect to Office Unit 2 without having to deposit (or causing to
         be deposited) any such Rent derived therefrom that is not attributable
         to the Bloomberg Lease into the Collection Account. Additionally,
         except with respect to (i) Borrower's strict compliance with the
         covenants imposed upon Borrower pursuant to the terms of Section 13(h)
         (in a manner that relates to Office Unit 2) and Section 15 of the
         Security Instrument and (ii) Borrower's grant of the lien and security
         interest set forth herein to Lender in all its right, title and
         interest in and to the Property (including, without limitation, in and
         to Office Unit 2), Lender agrees that Borrower shall not be obligated
         to comply with any of the covenants imposed by the terms of the Loan
         Documents solely as such covenants relate to Office Unit 2 except that
         Borrower shall be required to comply with such covenants for any
         portion of Office Unit 2 that Borrower leases to Tenant pursuant to the
         terms of the Bloomberg Lease. Notwithstanding anything to the contrary
         set forth herein or in any of the other Loan Documents, any reference
         to the Property in the representations that Borrower makes as of the
         date hereof shall be deemed to be a reference only to Office Unit 1
         (except to the extent such representations relate to (i) Borrower's
         ownership interests in Office Unit 2 and/or (ii) Lender's liens and
         security interests in Office Unit 2).

                  SECTION 17.3      REMEDIES CUMULATIVE; WAIVERS. The rights,
powers and remedies of Lender under this Agreement and the Security Instrument
shall be cumulative and not exclusive of any other right, power or remedy which
Lender may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to Borrower or any Guarantor shall not be
construed to be a waiver of any subsequent Default or Event of Default by
Borrower or any Guarantor or to impair any remedy, right or power consequent
thereon.

                  SECTION 17.4      COSTS OF COLLECTION. In the event that after
an Event of Default: (i) the Note or any of the Loan Documents is placed in the
hands of an attorney for collection or enforcement or is collected or enforced
through any legal proceeding; (ii) an attorney is retained to represent Lender
in any bankruptcy, reorganization, receivership, or other proceedings affecting
creditors' rights and involving a claim under this Note or any of the Loan
Documents; or (iii) an attorney is retained to protect or enforce the lien or
any of the terms of this Agreement, the Security Instrument or any of the Loan
Documents; then Borrower shall pay to Lender all reasonable attorney's fees,
costs and expenses actually incurred in connection therewith, including costs of
appeal, together with interest on any judgment obtained by Lender in respect of
such fees, costs and expenses at the Default Rate.

                  XVIII.   SPECIAL PROVISIONS

                  SECTION 18.1      EXCULPATION.

                           18.1.1   EXCULPATED PARTIES. Except as set forth in
this Section 18.1 and the Environmental Indemnity, no personal liability shall
be asserted, sought or obtained by Lender or enforceable against (i) Borrower,
(ii) any Affiliate of Borrower, (iii) any Person owning, directly or indirectly,
any legal or beneficial interest in Borrower or any Affiliate of Borrower or
(iv) any direct or indirect partner, member, principal, officer, Controlling
Person, beneficiary, trustee, advisor, shareholder, employee, agent, Affiliate
or director of any Persons described in clauses (i) through (iii) above
(collectively, the EXCULPATED PARTIES) and none of the Exculpated Parties shall
have any personal liability (whether by suit deficiency judgment or otherwise)
in respect of the Obligations, this Agreement, the Security Instrument, the
Note, the Property or any other Loan Document, or the making, issuance or
transfer thereof, all such liability, if any, being expressly waived by Lender.
The foregoing limitation shall not in any way limit or affect Lender's right to
any of the following and Lender shall not be deemed to have waived any of the
following:

                           (a)      Foreclosure of the lien of this Agreement
         and the Security Instrument in accordance with the terms and provisions
         set forth herein and in the Security Instrument;

                           (b)      Action against any other security at any
         time given to secure the payment of the Note and the other Obligations;

                           (c)      Exercise of any other remedy set forth in
         this Agreement or in any other Loan Document which is not inconsistent
         with the terms of this Section 18.1;

                           (d)      Any right which Lender may have under
         Sections 506(a), 506(b), 1111(b) or any other provisions of the
         Bankruptcy Code to file a claim for the full amount of the Indebtedness
         secured by this Agreement and the Security Instrument or to require
         that all collateral shall continue to secure all of the Indebtedness
         owing to Lender in accordance with the Loan Documents; or

                           (e)      The liability of any given Exculpated Party
         with respect to any separate written agreement given by any such
         Exculpated Party in connection with the Loan (including, without
         limitation and the Environmental Indemnity).

                           18.1.2   CARVEOUTS FROM NON-RECOURSE LIMITATIONS.
Notwithstanding the foregoing or anything in this Agreement or any of the Loan
Documents to the contrary, there shall at no time be any limitation on
Borrower's liability for the payment, in accordance with the terms of this
Agreement, the Note, the Security Instrument and the other Loan Documents, to
Lender of:

                           (a)      any Losses incurred by or on behalf of
         Lender by reason of the fraudulent acts of Borrower or any Affiliate of
         Borrower;

                           (b)      Proceeds which Borrower or any Affiliate of
         Borrower has received and intentionally misapplied (it being agreed
         that Borrower shall not be deemed to have misapplied Proceeds unless
         same are received by Borrower and not paid to Lender, in a circumstance
         in which Lender is expressly entitled to receive same from Borrower
         and/or any Affiliate pursuant to the terms of this Agreement or any of
         the Loan Documents to be applied toward payment of the Indebtedness, or
         used for the repair or replacement of the Property in accordance with
         the provisions of this Agreement);

                           (c)      all Losses incurred by Lender and arising
         from (i) any intentional misrepresentation of Borrower or any Affiliate
         of Borrower and/or (ii) Borrower's failure, after the occurrence of a
         Casualty Event, to cause Guarantor to deliver the Completion Guaranty
         to Lender in accordance with the terms and time periods set forth in
         Section 6.2.4 hereof, including, without limitation, any Losses
         incurred by or on behalf of Lender as a result of Lender's failure to
         make any Proceeds available to Borrower to restore the Property;

                           (d)      any misappropriation of Rents or security
         deposits by Borrower or any Affiliate of Borrower;

                           (e)      any Losses incurred by or on behalf of
         Lender by reason of all or any part of the Property or the Account
         Collateral being encumbered by a Lien (other than this Agreement and
         the Security Instrument) in violation of the Loan Documents;

                           (f)      after the occurrence and during the
         continuance of an Event of Default, any Rents, issues, profits and/or
         income collected by Borrower or any Affiliate of Borrower (other than
         Rent sent to the Collection Account or paid directly to Lender pursuant
         to any notice of direction delivered to tenants of the Property) and
         not applied to payment of the Obligations or used to pay normal and
         verifiable Operating Expenses of the Property or otherwise applied in a
         manner permitted under the Loan Documents;

                           (g)      any Losses incurred by or on behalf of
         Lender by reason of physical damage to the Property from intentional
         waste committed by Borrower or any Affiliate of Borrower;

                           (h)      any Losses incurred by or on behalf of
         Lender by reason of the intentional failure of Borrower to comply with
         any of the provisions of Article XII;

                           (i)      any Losses incurred by or on behalf of
         Lender by reason of the occurrence of any of the following events:

         (1) Borrower fails to comply with the material Single Purpose Entity
         requirements of this Agreement (other than solely clause (xvii) of the
         definition of "Single Purpose Entity" set forth herein); (2) Borrower
         fails to comply with any of the provisions of Section 8.1 and/or
         Section 8.5; (3) Borrower files a voluntary

         petition under the Bankruptcy Code or any other Federal or state
         bankruptcy or insolvency law; (4) an Affiliate, officer, director, or
         representative which controls, directly or indirectly, Borrower files,
         or joins in the filing of, an involuntary petition against Borrower
         under the Bankruptcy Code or any other Federal or state bankruptcy or
         insolvency law, or solicits or causes to be solicited petitioning
         creditors for any involuntary petition against Borrower from any
         Person; (5) Borrower files an answer consenting to or otherwise
         acquiescing in or joining in any involuntary petition filed against it,
         by any other Person under the Bankruptcy Code or any other Federal or
         state bankruptcy or insolvency law, or solicits or causes to be
         solicited petitioning creditors for any involuntary petition from any
         Person; (6) any Affiliate, officer, director, or representative which
         controls Borrower consents to or acquiesces in or joins in an
         application for the appointment of a custodian, receiver, trustee, or
         examiner for Borrower or any portion of the Property; or (7) Borrower
         makes an assignment for the benefit of creditors, or admits, in writing
         or in any legal proceeding, its insolvency or inability to pay its
         debts as they become due;

                           (j)      any Losses incurred by or on behalf of
         Lender as a result of (i) the failure of any or all of Borrower, any
         its Affiliates and/or any other owner of the Upper Option Space and/or
         Lower Option Space (as each such term is defined in the Bloomberg
         Lease) (other then Lender or any Affiliate of Lender), to comply with
         the terms of Article 36 (Option Space) of the Bloomberg Lease (or,
         following a foreclosure of the lien secured by the Security Instrument
         or a deed in lieu of foreclosure, Lender's inability to comply with the
         terms of Article 36 of the Bloomberg Lease as a result of such Person's
         failure to comply with the terms of such Article) (an EXPANSION SPACE
         DEFAULT), (ii) the exercise of any rights that Bloomberg may have as a
         result of any Expansion Space Default (whether pursuant to the
         Bloomberg Lease, at law or in equity), including, without limitation,
         any rights to set off any payments required under the Bloomberg Lease
         and/or (iii) paying any amount or performing any obligation with
         respect to the Upper Option Space and/or Lower Option Space after the
         occurrence of an Expansion Space Default;

                           (k)      any Losses incurred by or on behalf of
         Lender as a result of the failure by Borrower and/or any of its
         Affiliates to comply in any respect with the terms of Section 15 of the
         Security Instrument; and/or

                           (l)      reasonable attorney's fees and expenses
         incurred by Lender in connection with any successful suit filed on
         account of any of the foregoing clauses (a) through (k).

                  The term "Losses" means any and all losses, damages, costs,
expenses, liabilities, claims or other obligations reasonably incurred by Lender
(including reasonable attorneys' fees and costs but excluding any punitive
damages and lost profits).

                  Notwithstanding anything to the contrary in this Agreement,
the Note or any of the Loan Documents, Lender shall not be deemed to have waived
any right which

Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of
the Bankruptcy Code to file a claim for the full amount of the Indebtedness or
to require that all collateral shall continue to secure all of the Indebtedness
owing to Lender in accordance with the Loan Documents.

                  XIX.     MISCELLANEOUS

                  SECTION 19.1      SURVIVAL. This Agreement and all covenants,
indemnifications, agreements, representations and warranties made herein and in
the certificates delivered pursuant hereto shall survive the making by Lender of
the Loan and the execution and delivery to Lender of the Note, and shall
continue in full force and effect so long as all or any of the Indebtedness is
outstanding and unpaid unless a longer period is expressly set forth herein or
in the other Loan Documents. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the legal
representatives, successors and assigns of such party. All covenants, promises
and agreements in this Agreement, by or on behalf of Borrower, shall inure to
the benefit of the legal representatives, successors and assigns of Lender.

                  SECTION 19.2      LENDER'S DISCRETION. Whenever pursuant to
this Agreement, Lender exercises any right given to it to approve or disapprove,
or any arrangement or term is to be satisfactory to Lender, the decision of
Lender to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.

                  SECTION 19.3      GOVERNING LAW.

                  (A)      THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW
YORK, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW
YORK WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES
AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER AND LENDER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY CLAIM TO
ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE
NOTE. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.

                  (B)      ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER
OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN
ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT
TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER AND
LENDER WAIVE ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND LENDER
AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

                  CORPORATION SERVICE COMPANY
                  80 STATE STREET
                  ALBANY, NEW YORK  12207 2543

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREE THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS) , AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

                  SECTION 19.4      MODIFICATION, WAIVER IN WRITING. No
modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, or of the Note, or of any other Loan Document, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought (and, if a Securitization shall have occurred, a Rating
Agency Confirmation is obtained), and then such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to, or demand on,
Borrower shall entitle Borrower to any other or future notice or demand in the
same, similar or other circumstances.

                  SECTION 19.5      DELAY NOT A WAIVER. Neither any failure nor
any delay on the part of Lender in insisting upon strict performance of any
term, condition, covenant or

agreement, or exercising any right, power, remedy or privilege hereunder, or
under the Note or under any other Loan Document, or any other instrument given
as security therefor, shall operate as or constitute a waiver thereof, nor shall
a single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement, the Note or any other Loan Document, Lender shall
not be deemed to have waived any right either to require prompt payment when due
of all other amounts due under this Agreement, the Note or the other Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount.

                  SECTION 19.6      NOTICES. All notices, consents, approvals
and requests required or permitted hereunder or under any other Loan Document
shall be given in writing and shall be effective for all purposes if hand
delivered or sent by (a) certified or registered United States mail, postage
prepaid, return receipt requested or (b) expedited prepaid delivery service,
either commercial or United States Postal Service, with proof of attempted
delivery, or (c) by telecopier (with answer back acknowledged), addressed as
follows (or at such other address and Person as shall be designated from time to
time by any party hereto, as the case may be, in a written notice to the other
parties hereto in the manner provided for in this Section and given at least
twenty (20) days prior to the effective date of such change of address):

                  If to Lender:     German American Capital Corporation
                                    60 Wall Street
                                    New York, New York 10005
                                    Attention: Eric Schwartz and General Counsel
                                    Facsimile:  (212) 250-7210
                                    Confirmation No.  (212) 250-2500

                  With a copy to
                  Servicer:         GMAC Commercial Mortgage Corporation
                                    200 Witmer Road
                                    Horsham, Pennsylvania 19044
                                    Attention: Managing Director, Global
                                    Facsimile:  (215).328.3478
                                    Confirmation No.:  215.328.1030

                  With a copy to:   Skadden, Arps, Slate, Meagher & Flom LLP
                                    Four Times Square
                                    New York, New York 10036
                                    Attention: Harvey R. Uris, Esq.
                                    Facsimile: (917) 777-2212
                                    Confirmation No.  (212) 735-3000

                  If to Borrower:   731 Office One LLC
                                    c/o Alexander's Inc.

                                    888 Seventh Avenue
                                    New York, New York 10106
                                    Attention: Wendy Silverstein
                                    Facsimile: (212) 894-7073
                                    Confirmation No. (212) 894-7000

                  With a copy to:   Proskauer Rose LLP
                                    1585 Broadway
                                    New York, New York 10036
                                    Attention: Ronald D. Sernau, Esq.
                                    Facsimile: (212) 969 2900
                                    Confirmation No.  (212) 969 3785

All notices, elections, requests and demands under this Agreement shall be
effective and deemed received upon the earliest of (i) the actual receipt of the
same by personal delivery or otherwise, (ii) one (1) Business Day after being
deposited with a nationally recognized overnight courier service as required
above, (iii) three (3) Business Days after being deposited in the United States
mail as required above, or (iv) on the day sent if sent by facsimile with
confirmation on or before 5:00 p.m. New York time on any Business Day or on the
next Business Day if so delivered after 5:00 p.m. New York time or on any day
other than a Business Day. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the notice, election, request, or
demand sent.

                  SECTION 19.7      TRIAL BY JURY. BORROWER AND LENDER AND ALL
PERSONS CLAIMING BY, THROUGH OR UNDER BORROWER OR LENDER, HEREBY EXPRESSLY,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT,
THE SECURITY INSTRUMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT, INCLUDING, WITHOUT
LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS AGREEMENT, THE SECURITY INSTRUMENT, THE NOTE OR
ANY OTHER LOAN DOCUMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND BORROWER AND LENDER HEREBY AGREE
AND CONSENT THAT AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION MAY BE FILED
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT HERETO TO THE WAIVER OF ANY
RIGHT TO TRIAL BY JURY. EACH OF LENDER AND BORROWER ACKNOWLEDGES

THAT IT HAS CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER
AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF
THE LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.

                  SECTION 19.8      HEADINGS. The Article and/or Section
headings and the Table of Contents in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.

                  SECTION 19.9      SEVERABILITY. Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

                  SECTION 19.10     PREFERENCES. To the extent Borrower makes a
payment or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.

                  SECTION 19.11     WAIVER OF NOTICE. Borrower shall not be
entitled to any notices of any nature whatsoever from Lender except with respect
to matters for which this Agreement or the other Loan Documents specifically and
expressly provide for the giving of notice by Lender to Borrower and except with
respect to matters for which Borrower is not, pursuant to applicable Legal
Requirements, permitted to waive the giving of notice. Borrower hereby expressly
waives the right to receive any notice from Lender with respect to any matter
for which this Agreement or the other Loan Documents do not specifically and
expressly provide for the giving of notice by Lender to Borrower.

                  SECTION 19.12     EXPENSES; INDEMNITY.

                           (a)      Except as otherwise provided to the contrary
         in this Agreement, Borrower covenants and agrees to pay or, if Borrower
         fails to pay, to reimburse, Lender upon receipt of written notice from
         Lender for all reasonable out-of-pocket costs and expenses (including
         reasonable attorneys' fees and disbursements) incurred by Lender in
         connection with (i) the preparation, negotiation, execution and
         delivery of this Agreement and the other Loan Documents and the
         consummation of the transactions contemplated hereby and thereby and
         all the costs of furnishing all opinions by counsel for Borrower
         (including without limitation any opinions requested by Lender pursuant
         to this Agreement); (ii) Lender's ongoing performance and compliance
         with all agreements and conditions contained in this Agreement and the
         other Loan

         Documents on its part to be performed or complied with after the
         Closing Date; (iii) the negotiation, preparation, execution, delivery
         and administration of any consents, amendments, waivers or other
         modifications to this Agreement and the other Loan Documents requested
         by Borrower and any other documents or matters as required herein or
         under the other Loan Documents; (iv) securing Borrower's compliance
         with any requests made pursuant to the provisions of this Agreement;
         (v) the filing and recording fees and expenses, mortgage recording
         taxes, title insurance and reasonable fees and expenses of counsel for
         providing to Lender all required legal opinions, and other similar
         expenses incurred in creating and perfecting the Lien in favor of
         Lender pursuant to this Agreement and the other Loan Documents; (vi)
         enforcing or preserving any rights, in response to third party claims
         or the prosecuting or defending of any action or proceeding or other
         litigation, in each case against, under or affecting Borrower, this
         Agreement, the other Loan Documents, the Property, or any other
         security given for the Loan; (vii) enforcing any obligations of or
         collecting any payments due from Borrower under this Agreement, the
         other Loan Documents or with respect to the Property or in connection
         with any refinancing or restructuring of the credit arrangements
         provided under this Agreement in the nature of a work-out or of any
         insolvency or bankruptcy proceedings and (viii) procuring insurance
         policies pursuant to Section 6.1.11; provided, however, that Borrower
         shall not be liable for the payment of any such costs and expenses to
         the extent the same arise by reason of the gross negligence, illegal
         acts, fraud or willful misconduct of Lender. Any cost and expenses due
         and payable to Lender may be paid from any amounts in the Collection
         Account or the Holding Account in accordance with Section 3.1.6(c).

                           (b)      Subject to the non-recourse provisions of
         Section 18.1, Borrower will protect, indemnify and save harmless
         Lender, and all officers, directors, stockholders, members, partners,
         employees, agents, successors and assigns thereof (collectively, the
         INDEMNIFIED PARTIES) from and against all liabilities, obligations,
         claims, damages, penalties, causes of action, costs and expenses
         (including all reasonable attorneys' fees and expenses actually
         incurred) imposed upon or incurred by or asserted against the
         Indemnified Parties or the Property or any part of its interest therein
         (by Persons other than any Affiliate of an Indemnified Party), by
         reason of the occurrence or existence of any of the following (to the
         extent Proceeds payable on account of the following shall be
         inadequate; it being understood that in no event will the Indemnified
         Parties be required to actually pay or incur any costs or expenses as a
         condition to the effectiveness of the foregoing indemnity) prior to (i)
         the acceptance by Lender or its designee of a deed-in-lieu of
         foreclosure with respect to the Property, or (ii) an Indemnified Party
         or its designee taking possession or control of the Property or (iii)
         the foreclosure of the Security Instrument, except to the extent caused
         by the actual willful misconduct or gross negligence of the Indemnified
         Parties (other than such willful misconduct or gross negligence imputed
         to the Indemnified Parties because of their interest in the Property):
         (1) ownership of Borrower's interest in the Property, or any interest
         therein, or receipt of any Rents or other sum therefrom, (2) any
         accident, injury to or death of any persons or loss of or damage to
         property occurring on or about the Property or any appurtenances

         thereto, (3) any design, construction, operation, repair, maintenance,
         use, non-use or condition of the Property or Appurtenances thereto,
         including claims or penalties arising from violation of any Legal
         Requirement or Insurance Requirement, as well as any claim based on any
         patent or latent defect, whether or not discoverable by Lender, any
         claim the insurance as to which is inadequate, and any Environmental
         Claim, (4) any Default under this Agreement or any of the other Loan
         Documents or any failure on the part of Borrower to perform or comply
         with any of the terms of any Lease the Condominium Declaration or the
         By-Laws within the applicable notice or grace periods, (5) any
         performance of any labor or services or the furnishing of any materials
         or other property in respect of the Property or any part thereof, (6)
         any negligence or tortious act or omission on the part of Borrower or
         any of its agents, contractors, servants, employees, sublessees,
         licensees or invitees, (7) any contest referred to in Section 7.3
         hereof, (8) any obligation or undertaking relating to the performance
         or discharge of any of the terms, covenants and conditions of the
         landlord contained in the Bloomberg Lease, the By-Laws or the
         Condominium Declaration, or (9) the presence at, in or under the
         Property or the Improvements of any Hazardous Substances in violation
         of any Environmental Law. Any amounts the Indemnified Parties are
         legally entitled to receive under this Section 19.12(b) which are not
         paid within fifteen (15) Business Days after written demand therefor by
         the Indemnified Parties or Lender, setting forth in reasonable detail
         the amount of such demand and the basis therefor, shall bear interest
         from the date of demand at the Default Rate, and shall, together with
         such interest, be part of the Indebtedness and secured by the Security
         Instrument. In case any action, suit or proceeding is brought against
         the Indemnified Parties by reason of any such occurrence, the
         Indemnified Parties shall provide prompt notice of any such action,
         suit or proceeding and Borrower shall, at Borrower's expense resist and
         defend such action, suit or proceeding or will cause the same to be
         resisted and defended by counsel at Borrower's reasonable expense for
         the insurer of the liability or by counsel designated by Borrower
         (unless reasonably disapproved by Lender promptly after Lender has been
         notified of such counsel); provided, however, that nothing herein shall
         compromise the right of Lender (or any Indemnified Party) to appoint
         its own counsel at Borrower's expense for its defense with respect to
         any action which in its reasonable opinion presents a conflict or
         potential conflict between Lender and Borrower that would make such
         separate representation advisable; provided further that if Lender
         shall have appointed separate counsel pursuant to the foregoing,
         Borrower shall not be responsible for the expense of additional
         separate counsel of any Indemnified Party unless in the reasonable
         opinion of Lender a conflict or potential conflict exists between such
         Indemnified Party and Lender. So long as Borrower is resisting and
         defending such action, suit or proceeding as provided above in a
         prudent and commercially reasonable manner, Lender and the Indemnified
         Parties shall not be entitled to settle such action, suit or proceeding
         without Borrower's consent which shall not be unreasonably withheld or
         delayed, and claim the benefit of this Section 19.12(b) with respect to
         such action, suit or proceeding and Lender agrees that it will not
         settle any such action, suit or proceeding without the consent of
         Borrower;

         provided, however, that if Borrower is not diligently defending such
         action, suit or proceeding in a prudent and commercially reasonable
         manner as provided above, and Lender has provided Borrower with thirty
         (30) days' prior written notice, or shorter period if mandated by the
         requirements of applicable law, and opportunity to correct such
         determination, Lender may settle such action, suit or proceeding and
         claim the benefit of this Section 19.12(b) with respect to settlement
         of such action, suit or proceeding. Any Indemnified Party will give
         Borrower prompt notice after such Indemnified Party obtains actual
         knowledge of any potential claim by such Indemnified Party for
         indemnification hereunder.

                  SECTION 19.13     EXHIBITS AND SCHEDULES INCORPORATED. The
Exhibits and Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as if set forth in the body hereof.

                  SECTION 19.14     OFFSETS, COUNTERCLAIMS AND DEFENSES. Any
assignee of Lender's interest in and to this Agreement, the Note and the other
Loan Documents shall take the same free and clear of all offsets, counterclaims
or defenses which are unrelated to such documents which Borrower may otherwise
have against any assignor of such documents, and no such unrelated counterclaim
or defense shall be interposed or asserted by Borrower or in any action or
proceeding brought by any such assignee upon such documents and any such right
to interpose or assert any such unrelated offset, counterclaim or defense in any
such action or proceeding is hereby expressly waived by Borrower .

                  SECTION 19.15     LIABILITY OF ASSIGNEES OF LENDER. No
assignee of Lender shall have any personal liability, directly or indirectly,
under or in connection with this Agreement or any other Loan Document or any
amendment or amendments hereto made at any time or times, heretofore or
hereafter, any different than the liability of Lender hereunder. In addition, no
assignee shall have at any time or times hereafter any personal liability,
directly or indirectly, under or in connection with or secured by any agreement,
lease, instrument, encumbrance, claim or right affecting or relating to the
Property or to which the Property is now or hereafter subject any different than
the liability of Lender hereunder. The limitation of liability provided in this
Section 19.15 is (i) in addition to, and not in limitation of, any limitation of
liability applicable to the assignee provided by law or by any other contract,
agreement or instrument, and (ii) shall not apply to any assignee's gross
negligence or willful misconduct.

                  SECTION 19.16     NO JOINT VENTURE OR PARTNERSHIP; NO THIRD
PARTY BENEFICIARIES.

                           (a)      Borrower and Lender intend that the
         relationships created hereunder and under the other Loan Documents be
         solely that of borrower and lender. Nothing herein or therein is
         intended to create a joint venture, partnership, tenancy-in-common, or
         joint tenancy relationship between Borrower and Lender nor to grant
         Lender any interest in the Property other than that of mortgagee,
         beneficiary or lender.

                           (b)      This Agreement and the other Loan Documents
         are solely for the benefit of Lender and Borrower and nothing contained
         in this Agreement or the other Loan Documents shall be deemed to confer
         upon anyone other than Lender or Borrower any right to insist upon or
         to enforce the performance or observance of any of the obligations
         contained herein or therein. All conditions to the obligations of
         Lender to make the Loan hereunder are imposed solely and exclusively
         for the benefit of Lender and no other Person shall have standing to
         require satisfaction of such conditions in accordance with their terms
         or be entitled to assume that Lender will refuse to make the Loan in
         the absence of strict compliance with any or all thereof and no other
         Person shall under any circumstances be deemed to be a beneficiary of
         such conditions, any or all of which may be freely waived in whole or
         in part by Lender if, in Lender's sole discretion, Lender deems it
         advisable or desirable to do so.

                  SECTION 19.17     PUBLICITY. All news releases, publicity or
advertising by Borrower, Lender or their Affiliates through any media intended
to reach the general public which refers to the Loan Documents or the financing
evidenced by the Loan Documents, shall be subject to the reasonable prior
written approval of Lender and Borrower.

                  SECTION 19.18     WAIVER OF MARSHALLING OF ASSETS. To the
fullest extent permitted by law, Borrower, for itself and its successors and
assigns, waives all rights to a marshalling of the assets of Borrower,
Borrower's members and others with interests in Borrower and of the Property,
and agrees not to assert any right under any laws pertaining to the marshalling
of assets, the sale in inverse order of alienation, homestead exemption, the
administration of estates of decedents, or any other matters whatsoever to
defeat, reduce or affect the right of Lender under the Loan Documents to a sale
of the Property for the collection of the Indebtedness without any prior or
different resort for collection or of the right of Lender to the payment of the
Indebtedness out of the net proceeds of the Property in preference to every
other claimant whatsoever.

                  SECTION 19.19     WAIVER OF COUNTERCLAIM AND OTHER ACTIONS.
Borrower hereby expressly and unconditionally waives, in connection with any
suit, action or proceeding brought by Lender on this Agreement, the Note, the
Security Instrument or any Loan Document, any and every right it may have to (i)
interpose any counterclaim therein (other than a counterclaim which can only be
asserted in the suit, action or proceeding brought by Lender on this Agreement,
the Note, the Security Instrument or any Loan Document and cannot be maintained
in a separate action) and (ii) have any such suit, action or proceeding
consolidated with any other or separate suit, action or proceeding.

                  SECTION 19.20     CONFLICT; CONSTRUCTION OF DOCUMENTS;
RELIANCE. In the event of any conflict between the provisions of this Agreement
and any of the other Loan Documents, the provisions of this Agreement shall
control. The parties hereto acknowledge that they were represented by counsel in
connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted

same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely
solely on its own judgment and advisors in entering into the Loan without
relying in any manner on any statements, representations or recommendations of
Lender or any parent, subsidiary or Affiliate of Lender. Lender shall not be
subject to any limitation whatsoever in the exercise of any rights or remedies
available to it under any of the Loan Documents or any other agreements or
instruments which govern the Loan by virtue of the ownership by it or any
parent, subsidiary or Affiliate of Lender of any equity interest any of them may
acquire in Borrower, and Borrower hereby irrevocably waives the right to raise
any defense or take any action on the basis of the foregoing with respect to
Lender's exercise of any such rights or remedies. Borrower acknowledges that
Lender engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive
with the business of Borrower or their Affiliates.

                  SECTION 19.21     PRIOR AGREEMENTS. This Agreement and the
other Loan Documents contain the entire agreement of the parties hereto and
thereto in respect of the transactions contemplated hereby and thereby, and all
prior agreements among or between such parties, whether oral or written, are
superseded by the terms of this Agreement and the other Loan Documents and
unless specifically set forth in a writing contemporaneous herewith the terms,
conditions and provisions of any and all such prior agreements do not survive
execution of this Agreement.

                  SECTION 19.22     USA PATRIOT ACT NOTIFICATION. The following
notification is provided to Borrower pursuant to Section 326 of the USA Patriot
Act of 2001, 31 U.S.C. Section 5318: IMPORTANT INFORMATION ABOUT PROCEDURES FOR
OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and
money laundering activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each person or entity
that opens an account, including any deposit account, treasury management
account, loan, other extension of credit, or other financial services product.
What this means for Borrower: When Borrower opens an account, if Borrower is an
individual, the Administrative Agent will ask for Borrower's name, taxpayer
identification number, residential address, date of birth, and other information
that will allow Lender to identify Borrower, and, if Borrower is not an
individual, Lender will ask for Borrower's name, taxpayer identification number,
business address, and other information that will allow Lender to identify
Borrower. Lender may also ask, if Borrower is an individual, to see Borrower's
driver's license or other identifying documents, and, if Borrower is not an
individual, to see Borrower's legal organizational documents or other
identifying documents.

                  SECTION 19.23     TAX TREATMENT. Lender (and each employee,
representative or other agent of Lender) may disclose to any and all Persons,
without limitation of any kind, the "tax treatment" and "tax structure" (in each
case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are or have been provided to Lender
relating to such tax treatment or tax structure, other than information or
materials for which nondisclosure is reasonably necessary in order to comply
with applicable securities laws so long as disclosure is not otherwise limited.

                  SECTION 19.24     COUNTERPARTS. This Agreement may be executed
in multiple counterparts, each of which shall constitute an original, but all of
which shall constitute one document.

                         [NO FURTHER TEXT ON THIS PAGE]

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.

                                BORROWER:

                                731 OFFICE ONE LLC, a Delaware limited
                                liability company

                                By:   731 OFFICE ONE HOLDING LLC, a
                                Delaware limited liability company, its sole
                                member

                                      By:   ALEXANDER'S INC., a Delaware
                                      corporation, its sole member

                                      By:   /s/    Brian Kurtz
                                            ------------------------------------
                                            Name:  Brian Kurtz
                                            Title: Assistant Secretary

                                LENDER:

                                GERMAN AMERICAN CAPITAL CORPORATION, a
                                Maryland corporation

                                By:   /s/    Christopher Tognola
                                      -----------------------------------------
                                      Name:  Christopher Tognola
                                      Title: Vice President

                                By:   /s/    Thomas R. Traynor
                                      -----------------------------------------
                                      Name:  Thomas R. Traynor
                                      Title: Authorized Signatory

                                                                   Exhibit 10.21

                       AMENDED, RESTATED AND CONSOLIDATED
                     MORTGAGE, SECURITY AGREEMENT, FINANCING
                       STATEMENT AND ASSIGNMENT OF LEASES,
                           RENTS AND SECURITY DEPOSITS

                                 by and between

                               731 OFFICE ONE LLC
                                   as Borrower

                      having an address for notice purposes
                              c/o Alexander's Inc.
                               888 Seventh Avenue
                            New York, New York 10019

                                       and

                      GERMAN AMERICAN CAPITAL CORPORATION,
                                    as Lender

                              having an address at
                                 60 Wall Street
                            New York, New York 10005

Street Address:    731 Lexington Avenue
                   New York, New York

County:            New York
Section:
Block:             1313
Lot:               1002 and 1003

                          Dated as of February 13, 2004

                       Prepared By, Record and Return to:
                    Skadden, Arps, Slate, Meagher & Flom LLP
                                Four Times Square
                          New York, New York 10036-6522
                         Attention: Harvey R. Uris, Esq.

                                TABLE OF CONTENTS

                                                                           Page
                                                                        
RECITALS.............................................................        1
RESTATEMENT OF MORTGAGE..............................................        2
SECURED INDEBTEDNESS.................................................        3
GRANTING CLAUSES.....................................................        4
HABENDUM.............................................................        8
1.  DEFINITIONS......................................................        8
2.  WARRANTY.........................................................       10
3.  AFFIRMATIVE COVENANTS............................................       10
4.  NEGATIVE COVENANTS...............................................       12
5.  LICENSE TO COLLECT RENTS.........................................       13
6.  SECURITY AGREEMENT...............................................       13
7.  LEASE SUBORDINATION AND ATTORNMENT...............................       14
8.  PROTECTION OF SECURITY; COSTS AND EXPENSES.......................       16
9.  LENDER'S RIGHT TO PERFORM........................................       16
10.  REMEDIES........................................................       16
11.  APPLICATION OF PROCEEDS.........................................       22
12.  ASSIGNMENT OF CONDOMINIUM RIGHTS................................       23
13.  MISCELLANEOUS...................................................       24
14.  STATE LAW PROVISIONS............................................       27
EXHIBIT A-1..........................................................      A-1
EXHIBIT A-2..........................................................      A-2
SCHEDULE 1...........................................................      1-1
SCHEDULE 2...........................................................      2-1

                       AMENDED, RESTATED AND CONSOLIDATED
                     MORTGAGE, SECURITY AGREEMENT, FINANCING
                       STATEMENT AND ASSIGNMENT OF LEASES,
                           RENTS AND SECURITY DEPOSITS

            AMENDED, RESTATED AND CONSOLIDATED MORTGAGE, SECURITY AGREEMENT,
FINANCING STATEMENT AND ASSIGNMENT OF LEASES, RENTS AND SECURITY DEPOSITS, dated
as of February 13, 2004 (together with all amendments and supplements, this
SECURITY INSTRUMENT), is made by and between 731 OFFICE ONE LLC, a Delaware
limited liability company (BORROWER), having an address for notice purposes c/o
Alexander's Inc. at 888 Seventh Avenue, New York, New York 10019, and GERMAN
AMERICAN CAPITAL CORPORATION, a Maryland corporation, having an address for
notice purposes at 60 Wall Street, New York, New York 10005 (together with its
successors and assigns, LENDER).

                                    RECITALS

            WHEREAS, Borrower is the owner of (i) the real property commonly
known as Office Unit 1 of the Beacon Court Condominium located at 731 Lexington
Avenue in the City of New York, County of New York and State of New York such
ownership interest being comprised of a fee simple interest in the real property
described in EXHIBIT A-1 attached hereto and made a part hereof (the CONDOMINIUM
UNIT), (ii) the real property commonly known as Office Unit 2 of the Beacon
Court Condominium located at 731 Lexington Avenue in the City of New York,
County of New York and State of New York such ownership interest being comprised
of a fee simple interest in the real property referred to as "Office Unit 2" (as
defined in the Condominium Documents) and described in EXHIBIT A-2 attached
hereto and made a part hereof (the OFFICE UNIT 2 or UPPER OPTION SPACE, together
with the Condominium Unit, collectively the COMMERCIAL UNITS) and (iii) title to
the Improvements (as hereinafter defined);

            WHEREAS, Lender is the present owner and holder of the promissory
note described on SCHEDULE 1 attached hereto and made a part hereof (the
EXISTING NOTE), which Existing Note evidences an indebtedness of Borrower to
Lender in the outstanding principal amount of $400,000,000;

            WHEREAS, the Existing Note is secured by the mortgage described on
SCHEDULE 2 attached hereto and made a part hereof (the EXISTING MORTGAGE), which
Existing Mortgage constitutes a lien on the Property (as hereinafter defined)
securing the outstanding principal sum of $400,000,000;

            WHEREAS, pursuant to that certain Loan and Security Agreement (the
LOAN AGREEMENT), dated the date hereof, Lender has agreed to make a loan to
Borrower in the maximum principal amount of $400,000,000, such loan to be
comprised of the outstanding principal amount of the Existing Note;

            WHEREAS, in accordance with the terms and conditions of the Loan
Agreement, Borrower and Lender are entering into an Amended, Restated and
Consolidated Note, dated as of the date hereof (together with all extensions,
renewals, modifications, consolidations, substitutions, exchanges replacements
and restatements thereof, the NOTE) pursuant to which the terms and conditions
of the Existing Note are being modified, amended, restated and consolidated in
their entirety;

            WHEREAS, the Note shall constitute a single indebtedness (the LOAN)
in the maximum principal amount of $400,000,000 (the PRINCIPAL AMOUNT) payable
in accordance with the terms of the Note and the Loan Agreement;

            WHEREAS, Borrower and Lender have agreed in the manner hereinafter
set forth to amend, modify and restate in their entirety the terms and
provisions of the Existing Mortgage on the terms and conditions hereinafter set
forth; and

            WHEREAS, Borrower and Lender intend these Recitals to be a material
part of this Security Instrument.

                             RESTATEMENT OF MORTGAGE

            The Existing Mortgage and the lien thereof is hereby modified so
that it shall constitute in law one mortgage, a single first priority lien,
covering the Property and securing a portion of the indebtedness evidenced by
the Note in the principal sum of $400,000,000, together with interest thereon as
provided in the Note, and the terms, covenants, conditions and provisions of the
Existing Mortgage, as so modified are hereby modified, amended, restated and
consolidated in their entirety so that henceforth the terms, covenants,
conditions and provisions of the Existing Mortgage shall read and be as set
forth in this Security Instrument and Borrower agrees to comply with and be
subject to all of the terms, covenants and conditions of this Security
Instrument.

            Borrower hereby certifies that this Security Instrument secures the
same indebtedness evidenced by the Existing Note (as modified, amended, restated
and increased by the Note) and secured by the Existing Mortgage (as modified
pursuant the immediately preceding paragraph) and secures no further or other
indebtedness or obligation. Neither this Security Instrument nor anything
contained herein shall be construed as a substitution or novation of Borrower's
indebtedness to Lender or of the Existing Mortgage, which shall remain in full
force and effect as hereby confirmed, modified, restated and superseded.

            This Security Instrument is an extension and continuation of the
existing indebtedness evidenced and secured by the Existing Note and the
Existing Mortgage and as increased pursuant to the Note and secured hereby.

            NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECURITY
INSTRUMENT, THE MAXIMUM PRINCIPAL AMOUNT OF INDEBTEDNESS SECURED BY THIS
SECURITY INSTRUMENT AT EXECUTION OR WHICH UNDER ANY CONTINGENCY MAY BE SECURED
HEREBY AT ANY TIME HEREAFTER IS $400,000,000.

                                       2

            The Existing Mortgage, as modified, amended, restated and
consolidated in its entirety pursuant to this Security Instrument, and the
obligations of Borrower hereunder, are hereby ratified and confirmed, and shall
remain in full force and effect until the payment in full of the Indebtedness
(as hereinafter defined).

                              SECURED INDEBTEDNESS

            NOW, THEREFORE, in consideration of the Loan to Borrower evidenced
by the Note and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower hereby agrees as follows:

            TO SECURE:

            (i) payment and performance of all covenants, conditions,
      liabilities and obligations of Borrower to Lender contained in the Loan
      Agreement and the other Loan Documents; and

            (ii) payment of the indebtedness evidenced by, the Note plus all
      interest and all fees, payable thereunder; and

            (iii) payment and performance of all covenants, conditions,
      liabilities and obligations contained in this Security Instrument and any
      extensions, renewals or modifications hereof; and

            (iv) payment and performance of all covenants, conditions,
      liabilities and obligations of Borrower contained in the Assignment of
      Leases, Rents and Security Deposits, dated as of the date hereof (together
      with any extensions, renewals or modifications thereof, the ASSIGNMENT OF
      LEASES), between Borrower, as assignor, and Lender, as assignee; and

            (v) payment and performance of all covenants, conditions,
      liabilities and obligations of Borrower contained in each of the other
      Loan Documents (as defined below); and

            (vi) without limiting the foregoing, payment of all indebtedness,
      liabilities, and amounts from time to time incurred by Lender pursuant to
      the Note, this Security Instrument, the Loan Agreement or such other Loan
      Documents, even if the aggregate amount of the monetary obligation
      outstanding at any one time exceeds the face amount of the Note (all of
      the foregoing indebtedness, monetary liabilities and obligations set forth
      in clauses (i) through (v) above and this clause (vi), collectively, the
      INDEBTEDNESS); and

            (vii) payment of the Indebtedness together with the payment and
      performance of all other covenants, conditions, liabilities and
      obligations described and set forth in clauses (i) through (vi) above and
      in this clause (vii), collectively, the OBLIGATIONS.

                                       3

                            GRANTING CLAUSES

            NOW, THEREFORE, THIS SECURITY INSTRUMENT WITNESSETH: that Borrower,
in consideration of the premises, the Indebtedness evidenced by the Note, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged (a) has mortgaged, warranted, granted, bargained, sold,
alienated, released, confirmed, conveyed, pledged and assigned, and (b) by these
presents does hereby irrevocably grant and create a first priority Lien (as
defined below) on and security interest in, subject to the Permitted
Encumbrances and the provisions hereof and of the other Loan Documents, and does
hereby MORTGAGE, GRANT A SECURITY INTEREST IN AND PLEDGE to Lender and its
successors and assigns forever, all Borrower's estate, right, title and interest
now owned or hereafter acquired in, to and under any and all the property
(collectively, the PROPERTY) described in the following Granting Clauses:

            (A) the Commercial Units;

            (B) all lands, estates, development rights and appurtenant interest
      now or hereafter acquired by Borrower for use in connection with the
      Commercial Units and the development of the Commercial Units, and all
      additional lands and estates therein which may, from time to time, by
      supplemental mortgage or otherwise, be expressly made subject to the lien
      of this Security Instrument;

            (C) all of Borrower's right, title and interest in and to the
      buildings, foundations, structures, improvements and fixtures now or
      hereafter located or erected on the Commercial Units (the IMPROVEMENTS);

            (D) all of Borrower's right, title and interest in and to (i) all
      streets, avenues, roads, alleys, passages, places, sidewalks, strips and
      gores of land and ways, existing or proposed, public or private, adjacent
      to the Commercial Units, and all reversionary rights with respect to the
      vacation of said streets, avenues, roads, alleys, passages, places,
      sidewalks and ways in the land lying thereunder; (ii) all air, light,
      lateral support, development, drainage, oil, gas and mineral rights,
      options to purchase or lease, waters, water courses and riparian rights
      now or hereafter pertaining to or used in connection with the Commercial
      Units and/or the Improvements; (iii) all and singular, the tenements,
      hereditaments, rights of way, easements, appendages and appurtenances and
      property now or hereafter belonging or in any way appertaining to the
      Commercial Units and/or the Improvements; and (iv) all estate, right,
      title, claim or demand whatsoever, either at law or in equity, in
      possession or expectancy, of, in and to the Commercial Units and/or the
      Improvements (collectively, the APPURTENANCES);

            (E) all of Borrower's right, title and interest in and to the
      machinery, appliances, apparatus, equipment, fittings, fixtures,
      materials,

                                       4

      articles of personal property and goods of every kind and nature
      whatsoever used in connection with the Commercial Units and/or the
      Improvements and all additions to and renewals and replacements thereof,
      and all substitutions therefor, now or hereafter affixed to, attached to,
      placed upon or located upon or in the Commercial Units and/or the
      Improvements, or any part thereof, and used in connection with the use,
      ownership, management, maintenance, enjoyment or operation of the
      Commercial Units and/or the Improvements in any present or future
      occupancy or use thereof and now owned or leased (to the extent permitted
      by the applicable lease) or hereafter owned or leased by Borrower,
      including, but without limiting the generality of the foregoing, all
      heating, lighting, laundry, cooking, incinerating, loading, unloading and
      power equipment, boilers, dynamos, engines, pipes, pumps, tanks, motors,
      conduits, switchboards, plumbing, lifting, cleaning, fire prevention, fire
      extinguishing, refrigerating, ventilating and communications apparatus,
      air cooling and air conditioning apparatus, building materials and
      equipment, elevators, escalators, carpeting, shades, draperies, awnings,
      screens, doors and windows, blinds, furnishings (other than equipment and
      personal property of tenants or invitees to the Commercial Units and/or
      the Improvements, or any part thereof) (collectively called BUILDING
      EQUIPMENT);

            (F) all of Borrower's right, title and interest as lessor or
      licensor, as the case may be, in, to and under any lease, sublease or
      subsublease, letting, license, concession or other agreement (whether
      written or oral and whether now or hereafter in effect) pursuant to which
      any Person is granted a possessory interest by Borrower, Manager,
      Guarantor or any of their Affiliates in, or right to use or occupy all or
      any portion of, any space in the Property, and every modification,
      amendment or other agreement relating to such lease, sublease,
      subsublease, or other agreement entered into by Borrower, Manager,
      Guarantor or any of their Affiliates in connection with such lease,
      sublease, subsublease, or other agreement and every guarantee of the
      performance and observance of the covenants, conditions and agreements to
      be performed and observed by the other party thereto, including, without
      limitation, any cash and securities deposited thereunder (collectively,
      LEASES), the grant of such cash and securities hereunder being expressly
      subject to the provisions of the applicable Leases and all of Borrower's
      right, title and interest, subject to the provisions of Section 5, in the
      right to receive and collect the revenues, income, rents, issues, profits,
      royalties and other benefits payable under any of the Leases
      (collectively, RENTS), and all revenues, income, rents, issues and profits
      otherwise arising from the use or enjoyment of all or any portion of the
      Property;

            (G) subject to the provisions of Section 6.2 of the Loan Agreement,
      all of Borrower's right, title and interest in and to all proceeds,
      judgments, claims, compensation, awards or payments hereafter made to

                                       5

      Borrower for the taking, whether permanent or temporary, by condemnation,
      eminent domain, or for any conveyance made in lieu of such taking, of the
      whole or any part of the Property, including, without limitation, all
      proceeds, judgments, claims, compensation awards or payments for changes
      of grade of streets or any other injury to or decrease in the value of the
      Property, whether direct or consequential, which awards and payments are,
      subject to the provisions of Article VI of the Loan Agreement, hereby
      assigned to Lender, who is hereby authorized to collect and receive the
      proceeds thereof and to give proper receipts and acquittances therefor,
      and to apply the same toward the payment of the Indebtedness in such order
      as Lender may determine in accordance with the provisions of this Security
      Instrument and the Loan Agreement without regard to the adequacy of
      Lender's security hereunder and notwithstanding the fact that the amount
      thereof may not then be due and payable, and toward the payment of
      reasonable counsel fees, costs and disbursements incurred by Lender in
      connection with the collection of such awards or payments; and Borrower
      hereby agrees, upon reasonable request, to make, execute and deliver any
      and all further assignments and other instruments sufficient for the
      purpose of confirming this assignment of said proceeds, judgments, claims,
      compensation awards or payments to Lender, free, clear and discharged of
      any encumbrances of any kind or nature whatsoever other than the Permitted
      Encumbrances (as defined in the Loan Agreement);

            (H) subject to the provisions of Section 6.2 of the Loan Agreement,
      all of Borrower's right, title and interest in and to all unearned
      premiums paid under insurance policies now or hereafter obtained by
      Borrower to the extent the same insure the Property and any other
      insurance policies obtained by Borrower required to be maintained pursuant
      to Section 6.1 of the Loan Agreement to the extent the same insure the
      Property, including, without limitation, liability insurance policies and
      Borrower's interest in and to all proceeds of the conversion and the
      interest payable thereon, voluntary or involuntary, of] the Property, or
      any part thereof, into cash or liquidated claims including, without
      limitation, proceeds of casualty insurance, title insurance or any other
      insurance maintained on or with respect to the Property (other than
      liability insurance);

            (I) all right, title and interest of Borrower in and to all
      extensions, improvements, betterments, renewals, substitutes and
      replacements of, and all additions and Appurtenances to, the Property,
      hereafter acquired by or released to Borrower or constructed, assembled or
      placed by Borrower on the Property, and all conversions of the security
      constituted thereby; immediately upon such acquisition, release,
      construction, assembling, placement or conversion, as the case may be, and
      in each such case, to the extent permitted by law, without any further
      mortgage, conveyance, assignment or other act by Borrower, all such

                                       6

      extensions, improvements, betterments, renewals, substitutes and
      replacements shall become subject to the Lien of this Security Instrument
      as fully and completely, and with the same effect, as though now owned by
      Borrower and specifically described herein;

            (J) all of Borrower's right, title and interest in, to and under, to
      the extent the same may be encumbered or assigned by Borrower pursuant to
      the terms thereof and to the extent permitted by applicable law, and
      without impairment of the validity or enforceability thereof, (i) the
      Condominium Declaration and the By-Laws (as defined in the Loan Agreement)
      and all contracts and agreements relating to the Property (other than the
      Leases), and other documents, books and records related to the ownership
      and operation of the Property; (ii) to the extent permitted by law all
      Licenses (including, to the extent permitted by law, any licenses held by
      Borrower permitting the sale of liquor at any of the Property the transfer
      and/or assignment of which is permitted by law without filing or other
      qualification), warranties, guaranties, building permits and government
      approvals relating to or required for the construction, completion,
      occupancy and operation of the Property; (iii) all plans and
      specifications for the construction of the Improvements, including,
      without limitation, installations of curbs, sidewalks, gutters,
      landscaping, utility connections and all fixtures and equipment necessary
      for the construction, operation and occupancy of the Improvements; (iv)
      all such other contracts and agreements (other than the Leases) from time
      to time executed by Borrower relating to the ownership, leasing,
      construction, maintenance, operation, occupancy or sale of the Property,
      together with all rights of Borrower to compel performance of the terms of
      such contracts and agreements; and (v) subject to the terms of the Loan
      Agreement, the Collateral Accounts (as defined in the Loan Agreement) and
      any funds in such Collateral Accounts from time to time (it being
      understood that at such time as Borrower shall withdraw any amounts from
      any Collateral Accounts in accordance with the provisions of the Loan
      Agreement, the same shall cease to constitute part of the Property);

            (K) to the extent the same may be encumbered or assigned by Borrower
      pursuant to the terms thereof and to the extent permitted by law, all of
      Borrower's right, title and interest in, to and under credit card
      receivables, escrows, documents, instruments, and general intangibles, as
      the foregoing terms are defined in the UCC (as hereinafter defined), in
      any case which now or hereafter relate to, are derived from, or are used
      in connection with the Property, and all contract rights, franchises,
      books, records, plans, specifications, Licenses, actions and causes of
      action which now or hereafter relate to, are derived from or used in
      connection with the Property or the use, operation, maintenance, occupancy
      or enjoyment thereof or the conduct of any business or activities thereon
      (collectively, the property described in the foregoing paragraphs (F),
      (G), (H), (I) and this paragraph (K), the INTANGIBLES); and

                                       7

            (L) all of Borrower's right, title and interest in all proceeds,
      both cash and noncash, of the foregoing which may be sold or otherwise be
      disposed of pursuant to the terms hereof.

            UPON CONDITION that, if no Event of Default (as hereinafter defined)
has occurred and is continuing, Borrower shall be permitted to possess and use
the Property, and to use the rents, issues, profits, revenues and other income
of the Property as provided in this Security Instrument, the Loan Agreement and
the other Loan Documents (as hereinafter defined).

                                    HABENDUM

            TO HAVE AND TO HOLD THE PROPERTY hereby conveyed, or mentioned and
intended so to be, whether now owned or held or hereafter acquired, subject only
to the Permitted Encumbrances and the terms hereof, unto Lender, its successors
and assigns, forever, upon the terms and conditions set forth herein and to
secure the performance of, and compliance with, the obligations, covenants and
conditions of this Security Instrument and the other Loan Documents all as
herein set forth.

      1. DEFINITIONS. Wherever used in this Security Instrument, the following
terms, and the singular and plural thereof, shall have the following meanings.
All capitalized terms used but not otherwise defined herein shall have the
meanings assigned to them in the Loan Agreement:

            APPURTENANCES: Shall have the meaning provided in Granting Clause
(D).

            ASSIGNMENT OF LEASES: Shall have the meaning provided in the
Recitals.

            BLOOMBERG SNDA: Shall mean that certain Subordination,
Non-Disturbance, Attornment Estoppel and Lease Modification Agreement, dated as
of the date hereof, by and between Lender, Borrower and Bloomberg.

            BORROWER: Shall have the meaning provided in the Introductory
Paragraph.

            BUILDING EQUIPMENT: Shall have the meaning provided in Granting
Clause (E).

            COMMERCIAL UNITS: Shall have the meaning provided in the Recitals.

            CONDOMINIUM UNIT: Shall have the meaning provided in the Recitals.

            CLOSING DATE: Shall mean the date of this Security Instrument.

            EVENTS OF DEFAULT: Shall mean the occurrence of an "Event of
Default" pursuant to the Loan Agreement or a default, beyond applicable notice
and cure periods, in any other Loan Document.

                                       8

            IMPROVEMENTS: Shall have the meaning provided in Granting Clause
(C).

            INDEBTEDNESS: Shall have the meaning provided in Recitals.

            INTANGIBLES: Shall have the meaning provided in Granting Clause (K).

            LEASES: Shall have the meaning provided in Granting Clause (F).

            LENDER: Shall have the meaning provided in the Recitals.

            LICENSES: Shall mean all certifications, permits, licenses and
approvals, including without limitation, liquor licenses, certificates of
completion and occupancy permits required of Borrower for the legal use,
occupancy and operation of the Property as a Class A office building as used,
occupied and operated on the date hereof.

            LOAN: Shall have the meaning provided in the Recitals.

            LOAN AGREEMENT: Shall have the meaning provided in the Recitals.

            NOTE: Shall have the meaning provided in the Recitals.

            OFFICE UNIT 2: Shall have the meaning provided in the Condominium
Documents.

            PRINCIPAL AMOUNT: Shall have the meaning provided in the Recitals.

            PROPERTY: Shall have the meaning provided in the recitals to the
Granting Clause.

            RENTS: Shall have the meaning provided in Granting Clause (F).

            UPPER OPTION SPACE: Shall have the meaning provided in the Bloomberg
Lease.

            The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Security Instrument shall refer to this Security
Instrument as a whole and not to any particular provision of this Security
Instrument, and section, schedule and exhibit references are to this Security
Instrument unless otherwise specified. The words "includes" and "including" are
not limiting and mean "including without limitation."

            In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including;" the words "to"
and "until" each mean "to but excluding," and the word "through" means "to and
including."

            References to agreements and other documents shall be deemed to
include all subsequent amendments and other modifications thereto executed in
writing by all of the parties thereto and, if Lender's consent was required for
the original of any such document, consented to by Lender. All references in
this Security Instrument to the plural of any document described herein shall
mean all of such documents collectively.

                                       9

            References to statutes or regulations are to be construed as
including all statutory and regulatory provisions consolidating, amending, or
replacing the statute or regulation.

            The captions and headings of this Security Instrument are for
convenience of reference only and shall not affect the construction of this
Security Instrument.

            Borrower represents and warrants to, and covenants and agrees with,
Lender as follows:

      2. WARRANTY.

            (a) TITLE. Borrower represents and warrants that Borrower owns good,
and insurable fee simple title to the Commercial Units and good title to the
balance of the Property, subject only to the Permitted Encumbrances. This
Security Instrument, upon its due execution and proper recordation, is and will
remain a valid and enforceable (and, with respect to all personalty as to which
security interests are governed by Article 9 of the UCC (and the applicable
definitions and cross referenced sections set forth in said Article), upon
proper recordation and the filing of a financing statement and any necessary
continuation statements required under the UCC) perfected first Lien on and
security interest on Borrower's right, title and interest in and to Property
subject to the Permitted Encumbrances.

            (b) ALL PROPERTY. The Property constitutes all of the real property,
personal property, equipment and fixtures currently (i) owned by Borrower or
(ii) used in the operation of the business located on the Property, other than
items owned by any Manager or Bloomberg.

            (c) ENFORCEABILITY OF SECURITY INSTRUMENT. This Security Instrument
is the legal, valid and binding obligation of Borrower, enforceable against
Borrower in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, moratorium or similar laws affecting the
enforcement of creditors rights generally and subject to general principles of
equity (regardless of whether enforcement is sought in a proceeding of equity or
at law).

      3. AFFIRMATIVE COVENANTS.

            (a) PAYMENT OF OBLIGATIONS. Borrower shall promptly pay when due the
principal of and interest on the Indebtedness and all other payment Obligations,
all in lawful money of the United States of America in accordance with the Note,
and shall further perform and in a timely manner all Obligations of Borrower.
All sums payable by Borrower hereunder shall be paid without demand (unless
otherwise provided hereunder or under the other Loan Documents), counterclaim
(other than mandatory counterclaims), offset, deduction (except as required by
law) or defense (other than the defense of payment). To the extent permitted by
law, Borrower waives all rights now or hereafter conferred by statute or
otherwise to any such demand (unless otherwise provided hereunder or under the
other Loan Documents), counterclaim (other than mandatory counterclaims),
setoff, deduction or defense (other than the defense of payment).

                                       10

            (b) PERFORMANCE AND OBSERVANCE OF LOAN AGREEMENT COVENANTS. Borrower
will duly perform, observe and comply with all of the affirmative and negative
covenants, agreements and obligations to be performed, observed and complied
with by Borrower, and all of the other terms and conditions applicable to
Borrower, under the terms of the Loan Agreement and any other Loan Document, as
if each such covenant, agreement, obligation, term and condition were expressly
set forth herein in full. Without limiting the generality of the foregoing,
Borrower will maintain the Property, pay Impositions and Other Charges, obtain,
pay and maintain insurance, keep the Property free of Liens (other than
Permitted Encumbrances), pay the utility charges for the Property, perform
alterations and repairs in respect of the Property, cause the Property to comply
with all Legal Requirements, fund the Collateral Accounts, each to the extent
required by the Loan Agreement, restore the Property upon any casualty or
Taking, and lease the Property as permitted by the Loan Agreement and the
Bloomberg Lease (for so long as such lease is in effect) all in accordance with
and subject to all of the applicable terms and conditions of this Security
Instrument, the Loan Agreement and the other Loan Documents.

            (c) INSURANCE. Borrower shall, at its sole cost and expense,
continuously keep and maintain insurance in respect of the Property and
Borrower's operations thereat, of the type and in the form and with insurers,
all to the extent provided in Section 6.1 of the Loan Agreement. All Proceeds to
which Borrower may be entitled resulting from damage to or destruction of the
Property or any part hereof by a casualty or a Taking shall be distributed and
applied towards restoration of the Property or repayment of the Obligations in
accordance with the provisions of Section 6.2 of the Loan Agreement.

            (d) MAINTENANCE OF VALIDITY AND RECORDING.

            (i) Borrower covenants that it will forthwith after the execution
      and delivery of this Security Instrument and thereafter as necessary from
      time to time cause this Security Instrument and the other Loan Documents
      and any continuation statement or similar instrument relating to any
      property subject thereto or to any property intended to be encumbered,
      granted, conveyed, transferred and assigned by this Security Instrument to
      be filed, registered and recorded in such manner and in such places as may
      be required by law in order to publish notice of and to protect the
      validity thereof or the grant thereby of the property subject thereto and
      the interest and rights of Lender therein. Borrower covenants that it has
      paid or will pay or cause to be paid all taxes and fees incident to such
      filing, registration and recording, and all reasonable expenses incident
      to the preparation, execution and acknowledgment thereof, and of any
      instrument of further assurance, and all federal or state stamp taxes or
      other charges arising out of or in connection with the execution and
      delivery of such instruments.

            (ii) Borrower shall maintain the validity, perfection, priority and
      effectiveness of this Security Instrument and the other Loan Documents.
      Unless otherwise permitted in this Security Instrument and the other Loan
      Documents,

                                       11

      Borrower will not take any action, will not permit action to be taken by
      others and will not omit to take any action, nor will Borrower give any
      notice, approval or consent or exercise, waive or modify any rights under
      or in respect of the Permitted Encumbrances, which action, omission,
      notice, approval, consent or exercise, waiver or modification of rights
      would release Borrower from, or reduce any of Borrower's obligations or
      liabilities under, or would result in the termination, surrender or
      assignment of, or the amendment or modification of, any of the Loan
      Documents, or would impair the validity of this Security Instrument or any
      of the other Loan Documents, or would affect the Property in any material
      adverse respect, without Lenders consent, and any attempt to do any of the
      foregoing without such consent shall be of no force and effect.

            (iii) Borrower, at its expense, will execute, acknowledge and
      deliver all such instruments and take all such actions as Lender from time
      to time reasonably may request or as may be reasonably necessary or proper
      for the better assuring to Lender of the properties and rights now or
      hereafter subject to the Lien hereof or intended so to be.

      4. NEGATIVE COVENANTS. Borrower covenants and agrees that, without
Lender's prior written consent, Borrower shall not:

            (a) incur, create or assume any Debt other than Permitted Debt or
Transfer or lease all or any part of the Property or any interest therein,
except as permitted in the Loan Agreement;

            (b) make advances or make loans to any Person, or hold any
investments, except as expressly permitted pursuant to the terms of this
Security Instrument or any other Loan Document;

            (c) partition the Property;

            (d) commingle its assets with the assets of any of its Affiliates;

            (e) guarantee any obligations of any Person; or

            (f) Transfer any asset other than in the ordinary course of business
except as permitted by the Loan Agreement .

      5. LICENSE TO COLLECT RENTS. Lender and Borrower hereby confirm that for
so long as no Event of Default shall have occurred and is continuing, Lender has
granted to Borrower a revocable license to collect and use the Rents as they
become due and payable in accordance with the provisions of the Loan Agreement
and the Assignment of Leases; provided that the existence of such right shall
not operate to subordinate the Assignment of Leases to any subsequent
assignment, in whole or in part by Borrower, and any such subsequent assignment
shall be subject to Lender's rights under this Security Instrument. Borrower
further agrees to execute and deliver such assignments of Leases and Rents as
Lender may from time to time reasonably request in order to better assure,
transfer and confirm to Lender the rights intended to be granted to

                                       12

Lender with respect thereto. In accordance with the provisions of the Assignment
of Leases, upon the occurrence and during the continuance of an Event of Default
Borrower agrees that, subject to applicable laws, Lender may, but shall not be
obligated to, assume the management of the Property, and collect the Rents,
applying the same upon the Obligations. Borrower hereby authorizes and directs
all tenants, purchasers or other persons occupying, utilizing or acquiring any
interest in any part of the Property to pay all Rents to Lender upon Lender's
request. In the event Lender actually receives such Rents after an Event of
Default, any application of the Rents by Lender shall not constitute a
misappropriation of the Rents by Borrower pursuant to Section 18.1 of the Loan
Agreement. Upon the occurrence and during the continuance of an Event of
Default, Lender shall have and hereby expressly reserves the right and privilege
(but assumes no obligation), to demand, collect, sue for, receive and recover
the Rents, or any part thereof, now existing or hereafter made, and apply the
same in accordance with this Security Instrument, the Assignment of Leases, and
applicable law. The terms of this Section 5 are in all respects subject to the
terms of Section 10(p) and Section 15(a) hereof.

      6. SECURITY AGREEMENT. This Security Instrument constitutes a financing
statement and, to the extent required under UCC 9-402(6) because portions of the
Property may constitute fixtures, this Security Instrument is to be filed in the
office where a mortgage for the Commercial Units would be recorded. Lender also
shall be entitled to proceed against all or portions of the Property in
accordance with the rights and remedies available under UCC 9-501(d). For the
purposes of this Security Instrument, Borrower is deemed to be the Debtor, and
Lender is deemed to be the Secured Party, as those terms are defined and used in
the UCC. Borrower agrees that the Indebtedness and Obligations secured by this
Security Instrument are further secured by security interests in all of
Borrower's right, title and interest in and to fixtures, equipment, and other
personal property covered by the UCC, if any, which are used upon, in, or about
the Commercial Units or the Improvements (or any part thereof) or which are used
by Borrower or any other person in connection with the Property. Borrower grants
to Lender a valid and effective first priority security interest (subject to any
Permitted Encumbrances) in all of Borrower's right, title and interest in and to
such personal property (but only to the extent permitted in the case of leased
personal property), together with all replacements, additions, and proceeds.
Except for Permitted Encumbrances, Borrower agrees that, without the written
consent of Lender, no other security interest will be created under the
provisions of the UCC and no lease will be entered into with respect to any
goods, fixtures, equipment, appliances, or articles of personal property now
attached to or used or to be attached to or used in connection with the Property
except as otherwise permitted hereunder or in any other Loan Document. Borrower
agrees that all property of every nature and description covered by the Lien and
charge of this Security Instrument together with all such property and interests
covered by this security interest are encumbered as a unit, and upon and during
the continuance of an Event of Default by Borrower, all of the Property, at
Lender's option, may be foreclosed upon or sold in the same or different
proceedings or at the same or different time, subject to the provisions of
applicable law. The filing of any financing statement relating to any such
property or rights or interests shall not be construed to diminish or alter any
of Lender's rights of priorities under this Security Instrument.

                                       13

      7. LEASE SUBORDINATION AND ATTORNMENT.

            (a) LEASES TO BE SUBORDINATE. All Modified Leases entered into by
Borrower after the date hereof shall by their express terms be subject and
subordinate to this Security Instrument, the Loan Agreement and each of the
other Loan Documents (through a subordination provision contained in such Lease
or otherwise) and shall provide that the Person holding any rights thereunder
shall attorn to Lender or any other Person succeeding to the interests of Lender
upon the exercise of its remedies hereunder or any transfer in lieu thereof on
the terms set forth in this Security Instrument.

            (b) ATTORNMENT. Subject to the terms of the Bloomberg SNDA (which
shall supercede any conflicting provisions of this Section), each Modified Lease
entered into from and after the date hereof shall provide that in the event of
the enforcement by Lender of any remedy under the Loan Agreement or this
Security Instrument, Bloomberg under such Lease shall, at the option of Lender
or of any other Person succeeding to the interest of Lender as a result of such
enforcement, attorn to Lender or to such Person and shall recognize Lender or
such successor in the interest as lessor under such Lease without change in the
provisions thereof; provided, however, Lender or such successor in interest
shall not: (1) be liable for any previous act or omission of Borrower under the
Bloomberg Lease except to the extent that such act or omission first arises
under the Bloomberg Lease from and after the date that Successor-Landlord (as
such term is defined in the Bloomberg Lease) succeeds to the interest of
Borrower; (2) be subject to any off-set, credit, defense or counterclaim which
shall have theretofore accrued to Bloomberg against Borrower; (3) be bound by
(a) any modification of the Bloomberg Lease entered into without Lender's
consent after Bloomberg has, subject to the terms of Section 6 of the Bloomberg
SNDA, received written notice of Lender's existence, address and relation to
Borrower, or (b) any previous prepayment of rent or additional rent for more
than one (1) month which Bloomberg might have paid to Borrower other than as
required by the terms of the Bloomberg Lease; (4) be bound by any obligation to
make any payments to Bloomberg except to the extent that such obligation first
arises under the Bloomberg Lease from and after the date that Successor-Landlord
succeeds to the interest of Borrower; and (5) be bound by any obligation to
perform any work or to make improvements to the Commercial Units, except for (i)
repairs and maintenance pursuant to the provisions of Articles 4, 5 and 6 of the
Bloomberg Lease, the need for which repairs and maintenance first arises after
the date upon which Lender is entitled to possession of the Commercial Units,
(ii) repairs to the Commercial Units or any part thereof as a result of damage
by fire or other casualty pursuant to Article 10 of the Bloomberg Lease, but
only to the extent that such repairs can be reasonably made from the net
proceeds of any insurance actually made available to Lender (with the
understanding, however, that (I) nothing contained in this clause (ii) limits
Bloomberg's rights to terminate the Bloomberg Lease after the occurrence of a
fire or other casualty under Section 10.1(B) of the Bloomberg Lease, and (II)
Lender shall have the right to avoid being so bound by Borrower's covenant to
rebuild the Landlord Restoration Items (as such term

                                       14

is defined in the Bloomberg Lease) after the occurrence of a fire or other
casualty (regardless of the availability of insurance proceeds therefor) only by
giving notice to Bloomberg of the election of Lender not to so rebuild earlier
than the later to occur of (X) the date that Lender is required to give the
Casualty Statement (as such term is defined in the Bloomberg Lease) for such
fire or other casualty to Bloomberg, and (Y) the thirtieth (30th) day after the
date that Lender succeeds to the interest of Borrower under the Bloomberg
Lease), and (iii) repairs to the Commercial Units as a result of a partial
condemnation pursuant to Article 11 of the Bloomberg Lease, but only to the
extent that such repairs can be reasonably made from the net proceeds of any
award made available to Lender (with the understanding that nothing contained in
this clause (iii) shall limit Bloomberg's right to terminate the Bloomberg Lease
after the occurrence of a complete or partial condemnation under Section 11.1 of
the Bloomberg Lease). Bloomberg, upon the reasonable request by Lender or such
successor in interest, shall execute and deliver an instrument or instruments
confirming such attornment.

            (c) NON-DISTURBANCE AGREEMENTS. Lender shall enter into, and, if
required by applicable law to provide constructive notice or requested by
Bloomberg or any tenant in Office Unit 2, record in the county where the subject
Property is located, a subordination, attornment and non-disturbance agreement,
in form and substance substantially similar to the form attached to the Loan
Agreement as EXHIBIT F (a NON-DISTURBANCE AGREEMENT) with such commercially
reasonably changes as may be required by a tenant that are reasonably acceptable
to Lender, with any tenant of Office Unit 2 with respect to any leases or with
Bloomberg regarding a Modified Lease for which Lender's prior written consent is
required by Section 8.8 of the Loan Agreement within ten (10) Business Days
after written request therefor by Borrower, provided that, except with respect
to leases of Office Unit 2, such request is accompanied by an Officer's
Certificate stating that such Lease complies in all material respects with
Section 8.8 of the Loan Agreement. All reasonable third party costs and expenses
incurred by Lender in connection with the negotiation, preparation, execution
and delivery of any Non-Disturbance Agreement, including, without limitation,
reasonable attorneys' fees and disbursements, shall be paid by Borrower (in
advance, if requested by Lender).

      8. PROTECTION OF SECURITY; COSTS AND EXPENSES. Borrower shall appear in
and defend any action or proceeding of which it has notice purporting to affect
the security hereof or the rights or powers of Lender hereunder and shall pay
all reasonable out of pocket costs and expenses actually incurred by Lender,
including, without limitation, cost of evidence of title and reasonable
attorneys' fees and disbursements, in any such action or proceeding, and in any
suit brought by Lender to foreclose this Security Instrument or to enforce or
establish any other rights or remedies of Lender hereunder upon the occurrence
and during the continuance of an Event of Default. If an Event of Default occurs
and is continuing under this Security Instrument or the Loan Agreement, or if
any action or proceeding is commenced in which it becomes necessary to defend or
uphold the Lien or priority of this Security Instrument or which adversely
affects Lender or Lender's interest in the Property or any part thereof,
including, without limitation, eminent domain, enforcement of, or proceedings of
any nature whatsoever under any Legal Requirement affecting the Property or
involving Borrower's bankruptcy, insolvency, arrangement, reorganization or
other form of debtor relief, then Lender, upon reasonable notice to Borrower,
may, but without obligation to do so and without releasing Borrower from any
obligation hereunder, make such appearances, disburse such reasonable sums and
take such action as Lender reasonably deems necessary or appropriate to protect
Lender's interest in the Property, including, but not

                                       15

limited to, disbursement of reasonable attorneys' fees, entry upon the Property
to make repairs or take other action to protect the security hereof, and
payment, purchase, contest or compromise of any encumbrance, charge or lien
which in the reasonable judgment of Lender appears to be prior or superior
hereto; provided, however, that the foregoing shall be subject to Borrower's
rights to contest under Section 7.3 of the Loan Agreement and, provided no Event
of Default shall have occurred and is then continuing, Lender shall not pay or
discharge any lien, encumbrance or charge being contested by Borrower in
accordance with Section 7.3 of the Loan Agreement.

      9. LENDER'S RIGHT TO PERFORM. Upon the occurrence and during the
continuance of an Event of Default with respect to the performance of any of the
Obligations contained herein, Lender may, without waiving or releasing Borrower
from any Obligation or Default under this Security Instrument, but shall not be
obligated to, at any time perform the Obligations giving rise to such Event of
Default, and the cost thereof, with interest at the Default Rate from the date
of payment by Lender to the date such amount is paid by Borrower, shall
immediately be due from Borrower to Lender and the same shall be secured by this
Security Instrument and shall be a Lien on the Property prior to any right,
title to, interest in or claim upon the Property attaching subsequent to the
Lien of this Security Instrument (subject to the provisions of Article VIII of
the Loan Agreement). No payment or advance of money by Lender under this Section
9 shall be deemed or construed to cure Borrower's Event of Default or waive any
right or remedy of Lender hereunder.

      10. REMEDIES. Subject in all respects to the terms of Section 10(p)
hereof, upon the occurrence and during the continuation of an Event of Default
hereunder or the Loan Agreement, Lender may take such actions against Borrower,
subject to Section 12 hereof, and/or against the Property or any portion thereof
as Lender reasonably determines is necessary to protect and enforce its rights
hereunder, without notice or demand except as set forth below or as required
under applicable law. Any such actions taken by Lender shall be cumulative and
concurrent and may be pursued independently, singly, successively, together or
otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan Documents.
Lender's determination of appropriate action may be based on an appropriate real
estate or other consultant and/or counsel, and Lender may rely conclusively on
such advice, but no such advice shall be binding on Borrower or shall increase
or in any way modify or affect Borrower's rights hereunder or at law. Borrower
shall pay such reasonable consultants' fees and reasonable attorneys' fees and
expenses incurred by Lender pursuant to this Section 10. Such actions may
include, without limitation, the following:

            (a) ACCELERATION. Subject to any applicable provisions of the Note
and the other Loan Documents, Lender may declare all or any portion of the
unpaid principal balance under the Note, together with all accrued and unpaid
interest thereon, and all other unpaid Indebtedness, to be immediately due and
payable.

                                       16

            (b) ENTRY. Subject to the provisions and restrictions of applicable
law and of the Bloomberg Lease, Lender, personally, or by its agents or
attorneys, at Lender's election, may enter into and upon all or any part of the
Property (including, but not limited to, the Commercial Units and Improvements
and any part thereof), and may exclude Borrower, its agents and servants
therefrom (but such entry shall be subject to any Non-Disturbance Agreements
then in effect and the rights of tenants); and Lender, having and holding the
same, may use, operate, manage and control the Property or any part thereof and
conduct the business thereof, either personally or by its superintendents,
managers, agents, servants, attorneys or receiver. Upon every such entry, Lender
may, at the reasonable expense of the Property and/or Borrower, from time to
time, either by purchase, repair or construction, maintain and restore the
Property or any part thereof, and may insure and reinsure the same in such
amount and in such manner as may seem to them to be advisable. Similarly, from
time to time, Lender may, at the expense of Borrower (which amounts may be
disbursed by Lender from the Property on behalf of Borrower), except to the
extent Bloomberg is required to cover such expense under the Bloomberg Lease,
and, in any event, subject to the Bloomberg Lease, make all necessary or proper
repairs, renewals, replacements, alterations, additions, betterments and
improvements to and on the Property or any part thereof as it may seem
advisable. Subject to the Bloomberg Lease, Lender or its designee shall also
have the right to manage and operate the Property or any part thereof and to
carry on the business thereof and exercise all rights and powers of Borrower
with respect thereto, either in the name of Borrower or otherwise, as may seem
to them to be advisable. In confirmation of the grant made in Granting Clause
(F) hereof, in the case of the occurrence and continuation of an Event of
Default, Lender shall be entitled to collect and receive all Rents to be applied
in the order of priorities and amounts as shall be provided for in Section 11
hereof. Lender shall be liable to account only for Rents and other proceeds
actually received by Lender.

            (c) PHASE I ENVIRONMENTAL REPORT. Subject to the terms of Article 12
of the Loan Agreement, Lender may at its option obtain, in each instance, at
Borrower's reasonable expense, a new phase I environmental report with respect
to the Property, and such additional environmental studies as may be recommended
in such phase I reports.

            (d) FORECLOSURE.

            (i) Lender, with or without entry, personally or by its agents or
      attorneys, insofar as applicable, and in addition to any and every other
      remedy, may (i) sell to the extent permitted by law and pursuant to the
      power of sale granted herein, all and singular, the Property, and all
      estate, right, title and interest, claim and demand therein, and right of
      redemption thereof, at one or more sales, as an entirety or in parcels,
      and at such times and places as required or permitted by law and as are
      customary in the county in which the Property is located and upon such
      terms as Lender may fix and specify in the notice of sale to be given to
      Borrower (and on such other notice published or otherwise given as
      provided by law), or as may be required by law; (ii) institute proceedings
      for the complete or partial foreclosure of this Security Instrument under
      the provisions of the laws of the jurisdiction or jurisdictions in which
      the Property or any part thereof is located,

                                       17

      or under any other applicable provision of law; or (iii) take all steps to
      protect and enforce the rights of Lender, whether by action, suit or
      proceeding in equity or at law (for the specific performance of any
      covenant, condition or agreement contained in this Security Instrument, or
      in aid of the execution of any power herein granted, or for any
      foreclosure hereunder, or for the enforcement of any other appropriate
      legal or equitable remedy), or otherwise, as Lender, being advised by
      counsel and its financial advisor, shall deem advisable to protect and
      enforce any of their rights or duties hereunder.

            (ii) Lender may conduct any number of sales from time to time. The
      power of sale shall not be exhausted by any one or more such sales as to
      any part of the Property remaining unsold, but shall continue unimpaired
      until the entire Property shall have been sold.

            (iii) Upon taking title to the Commercial Units and the Improvements
      (whether by foreclosure, deed in lieu or otherwise) by Lender or any other
      purchaser or assignee of the Commercial Units and the Improvements after
      an Event of Default, Borrower shall assign and transfer all of its right,
      title and interest in and to all other portions of the Property to Lender.

            (e) SPECIFIC PERFORMANCE. Subject to Section 18.1 of the Loan
      Agreement, Lender, in its sole and absolute discretion, may institute an
      action, suit or proceeding at law or in equity for the specific
      performance of any covenant, condition or agreement contained herein or in
      the Note or any other Loan Document, or in aid of the execution of any
      power granted hereunder or for the enforcement of any other appropriate
      legal or equitable remedy.

            (f) ENFORCEMENT OF NOTE. Subject to Section 18.1 of the Loan
      Agreement, and to the extent permitted under the provisions of applicable
      law, Lender may recover judgment on the Note (or any portion of the
      Indebtedness evidenced thereby), either before, during or after any
      proceedings for the foreclosure (or partial foreclosure) or enforcement of
      this Security Instrument.

            (g) SALE OF PROPERTY

            (i) Lender may postpone any sale of all or any part of the Property
      to be made under or by virtue of this Section 10 by public announcement at
      the time and place of such sale, or by publication, if required by law,
      and, from time to time, thereafter, may further postpone such sale by
      public announcement made at the time of sale fixed by the preceding
      postponement.

            (ii) Upon the completion of any sale made by Lender under or by
      virtue of this Section 10, Lender shall execute and deliver to the
      accepted purchaser or purchasers a good and sufficient deed or deeds or
      other appropriate instruments, conveying, assigning and transferring all
      its estate, right, title and interest in and to the property and rights so
      sold. Borrower shall, nevertheless, if so requested in writing by Lender,
      ratify and confirm any such sale or sales by

                                       18

      executing and delivering to Lender or to such purchaser or purchasers all
      such instruments as may be advisable (which shall be subject to the
      limitations on recourse contained in Section 18 of the Loan Agreement), in
      the judgment of Lender, for such purposes and as may be designated in such
      request. Any such sale or sales made under or by virtue of this Section 10
      shall operate to divest all the estate, right, title, interest, claim and
      demand, whether at law or in equity, of Borrower in and to the property
      and rights so sold, and shall be a perpetual bar, at law and in equity,
      against Borrower, its successors and assigns and any Person claiming
      through or under Borrower and its successors and assigns.

            (iii) The receipt of Lender for the purchase money paid as a result
      of any such sale shall be a sufficient discharge therefor to any purchaser
      of the property or rights, or any part thereof, so sold. No such
      purchaser, after paying such purchase money and receiving such receipt,
      shall be bound to see to the application of such purchase money upon or
      for any trust or purpose of this Security Instrument, or shall be
      answerable, in any manner, for any loss, misapplication or non-application
      of any such purchase money or any part thereof, nor shall any such
      purchaser be bound to inquire as to the authorization, necessity,
      expediency or regularity of such sale.

            (iv) Upon any sale made under or by virtue of this Section 10,
      Lender may bid for and acquire the Property or any part thereof and, in
      lieu of paying cash therefor, may make settlement for the purchase price
      by crediting upon the Note secured by this Security Instrument the net
      proceeds of sale, after deducting therefrom the expense of the sale and
      the costs of the action and any other sums which Lender is authorized to
      deduct under this Security Instrument. The person making such sale shall
      accept such settlement without requiring the production of the Note or
      this Security Instrument, and there shall be deemed credited to the
      Indebtedness and Obligations under this Security Instrument the net
      proceeds of such sale. Lender, upon acquiring the Property or any part
      thereof, shall be entitled to own, hold, lease, rent, operate, manage or
      sell the same in any manner permitted by applicable laws.

      (h) VOLUNTARY APPEARANCE; RECEIVERS. After the happening, and during the
continuance of, any Event of Default hereunder or pursuant to the Loan
Agreement, and promptly upon commencement of (i) any action, suit or other legal
proceeding by Lender to obtain judgment for the principal and interest on the
Note and any other sums required to be paid pursuant to this Security
Instrument, or (ii) any action, suit or other legal proceeding by Lender of any
other nature in aid of the enforcement of the Loan Documents or any of them,
Borrower will (a) enter their voluntary appearance in such action, suit or
proceeding, and (b) if required by Lender, consent to the appointment, of one or
more receivers of the Property and all of the Rents. After the happening and
during the continuance of any Event of Default, or upon the filing of a bill in
equity to foreclose this Security Instrument or to enforce the specific
performance hereof or in aid thereof, or upon the commencement of any other
judicial proceeding to enforce any right of Lender, Lender shall be entitled, as
a matter of right, if it shall so elect, without notice to any other party and
without regard to the adequacy of the security

                                       19

of the Property, forthwith, either before or after declaring the principal and
interest on the Note to be due and payable, to the appointment of such a
receiver or receivers. Any receiver or receivers so appointed shall have such
powers as a court or courts shall confer, which may include, without limitation,
any or all of the powers which Lender is authorized to exercise by the
provisions of this Section 10, and shall have the right to incur such
obligations and to issue such certificates therefor as the court shall
authorize. Notwithstanding the foregoing, after the occurrence, and during the
continuance of, any Event of Default hereunder or pursuant to the Loan
Agreement, Lender as a matter of right may appoint or secure the appointment of
a receiver, trustee, liquidator or similar official of the Property or any
portion thereof, and Borrower hereby irrevocably consents and agrees to such
appointment, without notice to Borrower and without regard to the value of the
Property or adequacy of the security for the Indebtedness and without regard to
the solvency of the Borrower or any other Person liable for the payment of the
Indebtedness, and such receiver or other official shall have all rights and
powers permitted by applicable law and such other rights and powers as the court
making such appointment may confer, but the appointment of such receiver or
other official shall not impair or in any manner prejudice the rights of Lender
to receive the Rents pursuant to this Security Instrument or the Assignment of
Leases.

            (i) UCC REMEDIES. Lender may exercise any or all of the remedies
granted to a secured party under the UCC, specifically including, without
limitation, the right to recover the reasonable attorneys' fees and
disbursements and other expenses incurred by Lender in the enforcement of this
Security Instrument or in connection with Borrower's redemption of the
Improvements or Building Equipment or Intangibles. Lender may exercise its
rights under this Security Instrument independently of any other collateral or
guaranty that Borrower may have granted or provided to Lender in order to secure
payment and performance of the Obligations, and Lender shall be under no
obligation or duty to foreclose or levy upon any other collateral given by
Borrower to secure any Obligation or to proceed against any guarantor before
enforcing its rights under this Security Instrument.

            (j) LEASES. Lender may, at its option, before any proceeding for the
foreclosure (or partial foreclosure) or enforcement of this Security Instrument,
treat any Lease which is subordinate by its terms to the Lien of this Security
Instrument (and with respect to which Non-Disturbance Agreement exists and is in
full force and effect without any default on the part of the Tenant thereunder
or under the Lease relating thereto beyond the expiration of applicable notice
and cure periods), as either subordinate or superior to the Lien of this
Security Instrument.

            (k) OTHER RIGHTS. Lender may pursue against Borrower any other
rights and remedies of Lender permitted by law, equity or contract or as set
forth herein or in the other Loan Documents, subject to the provisions of
Section 18.1 of the Loan Agreement.

            (l) RETENTION OF POSSESSION. Notwithstanding the appointment of any
receiver, liquidator or trustee of Borrower, or any of its property, or of the
Property or any part thereof, Lender, to the extent permitted by law, shall be
entitled to retain

                                       20

possession and control of all property now or hereafter granted to or held by
Lender under this Security Instrument.

            (m) SUITS BY LENDER. All rights of action under this Security
Instrument may be enforced by Lender without the possession of the Note and
without the production thereof or this Security Instrument at any trial or other
proceeding relative thereto, provided, however, Lender shall in any event be,
and shall certify that it is, the current holder of the Note. Any such suit or
proceeding instituted by Lender shall be brought in the name of Lender and any
recovery of judgment shall be subject to the rights of Lender.

            (n) REMEDIES CUMULATIVE. Subject to Section 18.1 of the Loan
Agreement, no remedy herein (or pursuant to the Loan Agreement or any Loan
Document) conferred upon or reserved to Lender shall exclude any other remedy,
and each such remedy shall be cumulative and in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity. No delay or
omission of Lender to exercise any right or power accruing upon any Event of
Default shall impair any such right or power, or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein. Every power and
remedy given to Lender by this Security Instrument or any other Loan Document
may be exercised from time to time and as often as Lender may deem expedient.
Nothing in this Security Instrument shall affect Borrower's obligations to pay
the principal of, and interest on, the Note in the manner and at the time and
place expressed in the Note.

            (o) WAIVER OF RIGHTS. Borrower agrees that, to the fullest extent
permitted by law, it will not at any time, (1) insist upon, plead or claim or
take any benefit or advantage of any stay, extension or moratorium law, wherever
enacted, now or at any time hereafter in force, which may affect the covenants
and terms of performance of this Security Instrument or any Loan Document, (2)
claim, take or insist upon any benefit or advantage of any law, now or at any
time hereafter in force, providing for valuation or appraisal of the Property,
or any part thereof, prior to any sale or sales thereof which may be made
pursuant to any provision herein contained, or pursuant to the decree, judgment
or order of any court of competent jurisdiction, or (3) after any such sale or
sales, claim or exercise any right under any statute heretofore or hereafter
enacted by the United States or any State or otherwise to redeem the property
and rights sold pursuant to such sale or sales or any part thereof. Borrower
hereby expressly waives all benefits and advantages of such laws, and covenants,
to the fullest extent permitted by law, not to hinder, delay or impede the
execution of any power herein granted or delegated to Lender, but will suffer
and permit the execution of every power as though no such laws had been made or
enacted. Borrower for itself and all who may claim through or under it, waives,
to the extent it lawfully may do so, any and all homestead rights and, any and
all rights to reinstatement, any and all right to have the property comprising
the Property marshaled upon any foreclosure of the Lien hereof.

            (p) REMEDIES AGAINST OFFICE UNIT 2. Notwithstanding any term set
forth herein or in any of the other Loan Documents, (i) Lender covenants not to
complete a foreclosure or exercise any remedies with respect to with respect to
Office Unit 2 unless

                                       21

Borrower has defaulted in any of its obligations under Section 15 hereof and/or
Section 13(h) (in a manner that relates to Office Unit 2) hereof (an OFFICE UNIT
2 DEFAULT) and (ii) subject to the terms of Section 15(a) hereof, prior to the
occurrence and continuance of an Office Unit 2 Default, Borrower may collect and
use all Rent payable with respect to Office Unit 2 without having to deposit (or
causing to be deposited) any such Rent derived therefrom that is not
attributable to the Bloomberg Lease into the Collection Account. Additionally,
except with respect to (i) Borrower's strict compliance with the covenants
imposed upon Borrower pursuant to the terms of Section 13(h) (in a manner that
relates to Office Unit 2) and Section 15 hereof and (ii) Borrower's grant of the
lien and security interest set forth herein to Lender in all its right, title
and interest in and to the Property (including, without limitation, in and to
Office Unit 2), Lender agrees that Borrower shall not be obligated to comply
with any of the covenants imposed by the terms of the Loan Documents solely as
such covenants relate to Office Unit 2 except that Borrower shall be required to
comply with such covenants for any portion of Office Unit 2 that Borrower leases
to Tenant pursuant to the terms of the Bloomberg Lease. Notwithstanding anything
to the contrary set forth herein or in any of the other Loan Documents, any
reference to the Property in the representations that Borrower makes as of the
date hereof shall be deemed to be a reference only to Office Unit 1 (except to
the extent such representations relate to (i) Borrower's ownership interests in
Office Unit 2 and/or (ii) Lender's liens and security interests in Office Unit
2).

      11. APPLICATION OF PROCEEDS.

            (a) SALE PROCEEDS. The proceeds of any sale or foreclosure of the
Property or any portion thereof shall be applied to the following in the
following order of priority: (i) the payment of the costs and expenses of the
foreclosure proceedings with respect to such Property (including reasonable
counsel fees and disbursements actually incurred and advertising costs and
expenses), liabilities and advances made or incurred under this Security
Instrument or any Loan Document, and reasonable receivers' and trustees' fees
and commissions and fees and expenses incurred by Lender, together with interest
at the Default Rate to the extent payable, (ii) payment of any other sums
advanced by Lender (or any advancing agent on its behalf) in accordance with the
terms hereof and not repaid to it by Borrower, together with interest at the
Default Rate to the extent payable, (iii) payment of all sums due under the Note
and the Loan Documents in such order and priority as Lender shall elect in its
sole and absolute discretion; and (iv) payment of any remaining Obligations and
(v) any surplus to Borrower or other party legally entitled thereto.

            (b) OTHER PROCEEDS. All other proceeds or other amounts collected by
Lender following an Event of Default shall be applied (1) first, to reimburse
any reasonable expenses related to such collection, and (2) thereafter, as
provided in Section 11(a) hereof.

      12. ASSIGNMENT OF CONDOMINIUM RIGHTS.

            (a) This Article constitutes a present, absolute, effective,
irrevocable and completed assignment by Borrower to Lender of all of Borrower's
right, title and interest in and to the Condominium Declaration and any and all
rights, remedies and powers of Borrower thereunder, including, but not limited
to the right to exercise any voting rights under the Condominium Declaration,
the rights under Section 6.3.4 of the By-Laws and the right to appoint members
of the board of trustees (collectively, the CONDOMINIUM RIGHTS); it being
intended by Borrower that this assignment constitutes a

                                       22

present, absolute assignment and not an assignment for additional security only.
Subject to the terms of Section 12(c) hereof, Lender hereby assumes all of
Borrower's right, title and interest in and to the Condominium Declaration and
the rights to exercise the Condominium Rights. Nevertheless, subject to the
terms of the Proxy, Lender grants to Borrower a revocable license to exercise
the Condominium Rights, subject, however, to compliance with the provisions of
this Security Instrument and the other Loan Documents.

            (b) During the continuance of an Event of Default, a casualty and/or
condemnation, the license granted in Section 12(a) above shall, to the extent
permitted by law, immediately cease and terminate, without waiver of such Event
of Default, with or without notice, and without any action or proceeding or the
intervention of a receiver appointed by a court, and Lender or an agent or
receiver appointed by Lender may, to the extent permitted by law, without regard
for the adequacy of the security for the Obligations, the commission of waste or
the solvency of Borrower, without limiting any of the Lender's rights and
remedies under any of the Loan Documents or otherwise available at law or in
equity and subject to applicable statutory requirements, if any, immediately be
entitled to exercise all of the Condominium Rights, whether or not Lender enters
upon or takes control of the Property.

            (c) Until such time as Lender has taken actual possession and title
of the Property, this Article shall not be construed to bind Lender to the
performance of any of the covenants, conditions or provisions contained in the
Condominium Declaration, the By-Laws or otherwise impose any obligation upon
Lender. From and after the date Lender has taken actual possession and title of
the Property, any liability imposed upon Lender with respect to the Condominium
Declaration shall be limited in all respects to its then current interest in the
Property. Nothing in this Article shall be construed as constituting Lender a
"mortgagee in possession" in the absence of the taking of actual possession and
title of the Property by Lender or any of its agents.

            (d) In addition to any other rights Lender may be granted pursuant
to this Article and notwithstanding anything to the contrary contained in this
Article, Lender shall be a Permitted Mortgagee (as such term is defined in the
Condominium Declaration) for all purposes under the Condominium Declaration and
By-Laws and shall be entitled to exercise any and all rights granted therein to
a Permitted Mortgagee.

            (e) Notwithstanding anything to the contrary contained herein,
Borrower hereby grants to Lender an irrevocable proxy and power of attorney,
coupled with an interest, to be used by Lender, in its sole and absolute
discretion, in connection with any vote or solicitation of consents of the Unit
Owners (as such term is defined in the Bloomberg Lease) for the purpose of
resolving whether to proceed with the repair or restoration of the Building as
provided in Section 6.3.4 of the By-Laws.

      13. MISCELLANEOUS.

            (A) CERTAIN WAIVERS. TO INDUCE LENDER TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THE NOTE AND THIS SECURITY INSTRUMENT, AND FOR OTHER GOOD AND

                                       23

VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY
ACKNOWLEDGED, EACH OF LENDER, BORROWER AND EACH SPE ENTITY EXPRESSLY AND
IRREVOCABLY HEREBY, IN ADDITION TO AND NOT IN DEROGATION OF ALL OTHER WAIVERS
CONTAINED IN THE NOTE, THIS SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS,
WAIVE AND SHALL WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY, OR
COUNTERCLAIM ASSERTED BY LENDER, BORROWER OR ANY SPE ENTITY WHICH ACTION,
PROCEEDING OR COUNTERCLAIM ARISES OUT OF OR IS CONNECTED WITH THIS SECURITY
INSTRUMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT.

            (b) NOTICES. Any notice, election, request, demand, report or
statement which by any provision of this Security Instrument is required or
permitted to be given or served hereunder shall be in writing and shall be given
or served in the manner and to the Persons required by Section 19.6 of the Loan
Agreement.

            (c) NO ORAL MODIFICATION. This Security Instrument may not be
waived, altered, amended, modified, changed, discharged or terminated orally but
only by a written agreement signed by the party against which enforcement is
sought.

            (d) PARTIAL INVALIDITY. In the event any one or more of the
provisions contained in this Security Instrument shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof, but each shall
be construed as if such invalid, illegal or unenforceable provision had never
been included hereunder.

            (e) SUCCESSORS AND ASSIGNS. All covenants of Borrower contained in
this Security Instrument are imposed solely and exclusively for the benefit of
Lender and its successors and assigns, and no other Person shall have standing
to require compliance with such covenants or be deemed, under any circumstances,
to be a beneficiary of such covenants, any or all of which may be freely waived
in whole or in part by Lender at any time if in its sole discretion it deems it
advisable to do so. All such covenants of Borrower shall run with the land and
bind Borrower, the successors and assigns of Borrower (and each of them) and all
subsequent owners, encumbrances and Tenants of the Property, and shall inure to
the benefit of Lender, its successors and assigns.

            (f) GOVERNING LAW.

            (i) THIS SECURITY INSTRUMENT WAS NEGOTIATED IN THE STATE OF NEW
      YORK, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF
      NEW YORK WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO
      THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL
      RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
      MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY
      INSTRUMENT AND

                                       24

      THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN
      ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
      MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT
      OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE
      FULLEST EXTENT PERMITTED BY LAW, BORROWER AND LENDER HEREBY
      UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY CLAIM TO ASSERT THAT THE LAW OF
      ANY OTHER JURISDICTION GOVERNS THIS SECURITY INSTRUMENT AND THE NOTE. THIS
      SECURITY INSTRUMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
      THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW
      YORK GENERAL OBLIGATIONS LAW.

            (ii) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
      ARISING OUT OF OR RELATING TO SECURITY INSTRUMENT SHALL BE INSTITUTED IN
      ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK,
      PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
      BORROWER AND LENDER WAIVE ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER
      HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION
      OR PROCEEDING, AND LENDER AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
      JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER
      DOES HEREBY DESIGNATE AND APPOINT:

                  CORPORATION SERVICE COMPANY
                  80 STATE STREET
                  ALBANY, NEW YORK  12207 2543

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREE THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS) , AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF

                                       25

ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR.

            (g) NO WAIVER. No failure by Lender to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof shall constitute a waiver of any such term or
right, power or remedy or of any such breach. No waiver of any breach shall
affect or alter this Security Instrument, which shall continue in full force and
effect, or shall affect or alter the rights of Lender with respect to any other
then existing or subsequent breach.

            (h) FURTHER ASSURANCES. Borrower, at its own expense, will execute,
acknowledge and deliver all such reasonable further documents or instruments
including, without limitation, (i) security agreements on any building equipment
included or to be included in the Property, and (ii) such other documents as
Lender from time to time may reasonably request to better assure, transfer and
confirm unto Lender the rights now or hereafter intended to be granted to Lender
under this Security Instrument or the other Loan Documents. Borrower shall
notify Lender in writing no less than thirty (30) days prior to a change of
address.

            (i) COUNTERPARTS. This Security Instrument may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.

            (j) MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS OF
LENDER. Any Person into which Lender may be merged or converted or with which it
may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which Lender shall be a party, or any Person succeeding to all
or substantially all the business of Lender, shall be the successor of Lender
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto.

            (k) NO ENDORSEMENT. Lender shall not become or be considered to be
an endorser, co-maker or co-obligor on the Note or on any other Obligation of
Borrower secured by this Security Instrument or otherwise.

            (l) NON-RECOURSE. Recourse with respect to any claims arising under
or in connection with this Security Instrument shall be limited to the extent
provided in Article XVIII of the Loan Agreement and the terms, covenants and
conditions of Article XVIII of the Loan Agreement are hereby incorporated by
reference as if fully set forth in this Security Instrument.

            14. STATE LAW PROVISIONS

            Notwithstanding anything to the contrary elsewhere in this Security
Instrument:

            (a) MAXIMUM PRINCIPAL SUM. THE PARTIES HERETO INTEND THAT THIS
SECURITY INSTRUMENT SHALL SECURE UNPAID

                                       26

BALANCES OF THE INDEBTEDNESS SECURED HEREBY WHETHER INCURRED BY BORROWER AT THE
DATE HEREOF OR AFTER THIS SECURITY INSTRUMENT IS DELIVERED FOR RECORDATION IN
THE OFFICIAL RECORDS OF THE COUNTY IN WHICH THE PROPERTY IS LOCATED. THE MAXIMUM
PRINCIPAL AMOUNT OF INDEBTEDNESS WHICH IS OR UNDER ANY CONTINGENCY MAY BE
SECURED AT THE DATE OF EXECUTION HEREOF OR AT ANY TIME THEREAFTER BY THIS
SECURITY INSTRUMENT IS $400,000,000.

            (b) Trust Fund for Advances. That in compliance with Section 13 of
the Lien Law of the State of New York, the Borrower will receive the advances
secured by this Security Instrument and will hold the right to receive such
advances as a trust fund to be applied first for the purpose of paying the cost
of the building(s) and other improvements located on the Property before using
any part of the total of the same for any other purpose. Borrower will indemnify
and hold Lender harmless against any loss, liability, cost or expense, including
any judgments, attorneys' fees, costs of appeal bonds or printing costs, arising
out of or relating to any proceedings instituted by any claimant alleging a
violation by the Borrower of Article 3-A of the New York Lien Law.

            (c) New York Real Property Law Article 4-A. If this Security
Instrument shall be deemed to constitute a "mortgage investment" as defined by
New York Real Property Law Section 125, then this Security Instrument shall and
hereby does (i) confer upon the Lender the powers and (ii) impose upon the
Lender the duties of trustees set forth in New York Real Property Law Section
126.

            (d) Statement in Accordance with Section 253.1a(a) of the New York
Tax Law. This Security Instrument does not cover real property principally
improved or to be improved by one or more structures containing in the aggregate
not more than six (6) residential dwelling units, each having separate cooking
facilities.

            (e) Statement in Accordance with Section 274-a of the New York Real
Property Law. The Lender shall, within fifteen (15) days after written request,
provide the Borrower with the statement required by Section 274-a of the New
York Real Property Law.

            (f) Section 291-f of New York Real Property Law. Lender shall have
all of the rights set forth in Section 291-f of the Real Property Law of New
York. For purposes of Section 291-f of the New York Real Property Law, all
existing tenants and every tenant or subtenant who after the recording of this
Security Instrument, enters into a Lease upon the premises of any of the
Property or who acquires by instrument of assignment or by operation of law a
leasehold estate upon the Property is hereby notified that Borrower shall not,
without obtaining Lender's prior consent in each instance, cancel, abridge or
otherwise modify any Leases or accept prepayments for more than thirty (30) days
of installments of rent to become due with respect to any Lease thereof having
an unexpired term on the date of this Security Instrument of five (5) years or
more, except as expressly permitted under the Loan Agreement and the Bloomberg
SNDA, and that any such cancellation, abridgement, modification or prepayment
made by any such tenant or

                                       27

subtenant without either being expressly permitted under this Security
Instrument or receiving Lender's prior consent shall be voidable by Lender at
its option.

            (g) Sections 254, 271, 272 and 291-f of New York Real Property Law.
All covenants of the Borrower herein contained shall be construed, to the extent
not inconsistent with the terms of this Security Instrument, as affording to
Lender rights additional to and not exclusive of the rights conferred under the
provisions of Sections 254, 271, 272 and 291-f of the Real Property Law of New
York.

            (h) Real Property Law. Sections 3(c) hereof and Article VI of the
Loan Agreement shall be construed according to subdivision 4 of Section 254 of
the New York Real Property Law as amended by Chapter 886 of the Laws of 1945 but
not as amended by Chapter 830 of the Laws of 1965 or as otherwise thereafter
amended.

            (i) RPAPL. If an Event of Default shall occur and be continuing,
Lender may elect to sell (and, in the case of any default of any purchaser,
resell) the Property or any part thereof by exercise of the power of foreclosure
or of sale granted to Lender by Articles 13 or 14 of the New York Real Property
Actions and Proceedings Law (the RPAPL). In such case, Lender may commence a
civil action to foreclose this Security Instrument pursuant to Article 13 of the
RPAPL, or it may proceed and sell the Property pursuant to Article 14 of the
RPAPL to satisfy the Note and all other amounts secured hereby.

      15. UPPER OPTION SPACE RESTRICTIONS AND AGREEMENTS

            (a) Lease of Option Space to Bloomberg. Notwithstanding anything to
the contrary set forth herein, including, without limitation, the terms of
Section 10(p) hereof, if Borrower leases any Upper Option Space to Bloomberg
under the Bloomberg Lease, (i) all rents, issue and profits received by Borrower
from Bloomberg with respect to such Upper Option space shall constitute Rent
hereunder and shall be deposited directly into the Collection Account to be
applied in accordance with the terms of the Loan Documents and (ii) Borrower
shall cause the Condominium Documents to be amended to transfer such space from
Office Unit 2 to the Condominium Unit in a manner reasonably satisfactory to
Lender.

            (b) Conditions Precedent to Transfer of Upper Option Space: Borrower
agrees that it may not Transfer (other than leasing in strict accordance with
the terms of Section 15(c) hereof) all or any portion of its interest in the
Upper Option Space until Lender delivers to Borrower an instrument in recordable
form releasing the lien of this Security Instrument with respect to the Upper
Option Space (or if applicable, a partial lien release with respect to a release
of the portion of the Upper Option Space subject to the Transfer). Lender will
deliver any such release within ten (10) Business Days after the occurrence of a
Release Event with respect to the Upper Option Space (or portion thereof subject
to the Transfer). A RELEASE EVENT shall mean the occurrence of the following:
(i) (x) Borrower (together with Bloomberg) shall enter into a severance
agreement with respect to the Bloomberg Lease in a manner reasonably
satisfactory to Lender to exclude the Upper Option Space (or the applicable
portion thereof subject to

                                       28

the Transfer with respect to which Bloomberg has exercised its option) and a
separate and distinct lease for such space that is not cross-defaulted nor
cross-collateralized with the Bloomberg Lease shall be entered into between
Bloomberg, as lessee and a separate bankruptcy remote single purpose entity
(which may be an Affiliate of Borrower), as lessor (and in connection with which
a separate condominium unit comprising such space is conveyed to such separate
entity) or (y) Bloomberg forever waives or relinquishes in writing (a copy of
which must be delivered to Lender) its right to lease the applicable Upper
Option Space (or portion thereof subject to the Transfer) pursuant to the
Bloomberg Lease, (ii) Borrower provides at least thirty (30) days prior written
notice of such Transfer to Lender and (iii) Borrower complies with the terms of
Section 15(e) hereof and takes (or causes to be taken) all other actions
reasonably requested by Lender in connection with the foregoing, including
without limitation, obtaining and delivering to Lender evidence reasonably
satisfactory to Lender confirming Lender's lien on the remaining portions of the
Property, and executes and delivers to Lender any and all modifications or
confirmatory amendments to the Loan Documents reasonably required by Lender to
effectuate the terms of this Section (all at Borrower's sole cost and expense).

            (c) Lease of Upper Option Space to Parties other than Bloomberg:
Without in any way limiting the terms of Section 15(b) hereof, Borrower agrees
that if Bloomberg shall at any time (ie. after the initial leasing in accordance
with the terms of Article 36 of the Bloomberg Lease) have the right pursuant to
the terms of the Bloomberg Lease to lease all or any portion of the Upper Option
Space that has not been released pursuant to a Release Event in accordance with
the terms of Section 15(b) hereof (the APPLICABLE SPACE) (i) to provide written
notice thereof to Lender and (ii) prior to the earlier of (x) the date Bloomberg
waives or relinquishes in writing its right forever to lease such space (a copy
of which must be delivered to Lender by Borrower) in accordance with the terms
of Article 36 of the Bloomberg Lease or (y) the time period available to
Bloomberg to exercise such rights has lapsed in accordance with the terms of
Article 36 of the Bloomberg Lease, Borrower may not lease any portion of such
space to any other person (the occurrence of any event in foregoing clause (x)
or (y), an OPTION TERMINATION EVENT). At least ten (10) days prior to leasing
any Applicable Space to a party other than Bloomberg, Borrower must first
deliver a certificate (the CERTIFICATE) to Lender confirming (i) that Bloomberg
has been given written notice of its right to lease such space (a copy of which
shall be attached to the Certificate) to the extent Bloomberg is entitled
thereto under the Bloomberg Lease and (ii) that an Option Termination Event has
occurred (together with reasonable back-up documentation evidencing or
describing the Option Termination Event). Notwithstanding the applicability of
this Section 15(c), Borrower agrees that in no event shall any Transfer (except
leasing in strict accordance with the terms of this Section) of any Upper Option
Space occur until Lender delivers a lien release with respect to such Option
Space in accordance with the terms of Section 15(b) hereof.

            (d) Lender's Ability to Cure Defaults: Lender shall have the right,
but not the obligation, to cure any default in the obligations of Borrower to
Bloomberg with respect to all or any portion of the Upper Option Space and has
not been released pursuant to a Release Event in accordance with the terms of
Section 15(b) hereof. Borrower hereby irrevocably constitutes and appoints
Lender as its true and lawful

                                       29

attorney-in-fact, with full power of substitution, to execute, acknowledge and
deliver any instruments and to exercise and enforce every right, power, remedy,
option and privilege of Borrower with respect to such Upper Option Space, and do
in the name, place and stead of Borrower, all such acts, things and deeds for
and on behalf of and in the name of Borrower, which Borrower could or might do
or which Lender may deem necessary or desirable to more fully vest in Lender the
rights and remedies provided for in this Section 15(d) and/or Section 10(p)
herein and to accomplish the purposes of this Section 15(d) and/or Section 10(p)
herein. The foregoing powers of attorney are irrevocable and coupled with an
interest. Upon the occurrence and during the continuance of any default by
Borrower with respect to any such Upper Option Space, Lender may perform or
cause performance of any such agreement, and Borrower agrees that any expenses
of Lender incurred in connection therewith shall be paid by Borrower.

            (e) Section 15 Costs and Expenses: All reasonable costs and expenses
incurred to effectuate any of the terms of this Section 15 shall be promptly
paid by Borrower (and in advance if requested by Lender), including, without
limitation, Lender's reasonable costs and expenses (including reasonable
attorney's fees and disbursements).

                         [NO FURTHER TEXT ON THIS PAGE]

                                       30

            IN WITNESS WHEREOF, this Security Instrument has been duly executed
by Borrower and Lender on the date first hereinabove written.

                              BORROWER:

                              731 OFFICE ONE LLC, a Delaware limited liability
                              company

                              By:   731 OFFICE ONE HOLDING LLC, a Delaware
                              limited liability company, its sole member

                                 By:   ALEXANDER'S INC., a Delaware corporation,
                                       its sole member

                                 By:   /s/ Brian Kurtz
                                       ------------------------------
                                             Name:   Brian Kurtz
                                             Title:  Assistant Secretary

                              LENDER:

                              GERMAN AMERICAN CAPITAL CORPORATION,
                              a Maryland corporation

                              By:   /s/ Christopher Tognola
                                    ------------------------------
                                    Name: Christopher Tognola
                                    Title: Vice President

                              By:   /s/ Thomas R. Traynor
                                    ------------------------------------
                                    Name: Thomas R. Traynor
                                    Title: Authorized Signatory

                               Mortgage Execution

 STATE OF NEW YORK.     )
                        ) ss.
COUNTY OF NEW YORK      )

            On June __, 2004 before me, the undersigned, a notary public in and
for said state, personally appeared _______________________, personally known to
me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity, and that by
his/her/their signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.

            -------------------------------------
            Notary Public

[Notary Seal]                 My commission expires:

STATE OF NEW YORK.      )
                        ) ss.
COUNTY OF NEW YORK      )

            On June __, 2004 before me, the undersigned, a notary public in and
for said state, personally appeared ___________________________, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their capacity, and that by
his/her/their signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.

            -------------------------------------
            Notary Public

[Notary Seal]                 My commission expires:

STATE OF NEW YORK.      )
                        ) ss.
COUNTY OF NEW YORK      )

            On the ____ day of ___________ in the year 2004 before me, the
undersigned, a notary public in and for said state, personally appeared
___________________________, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity, and that by his/her/their signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.

            -------------------------------------
            Notary Public

[Notary Seal]            My commission expires:

                                    EXHIBIT A

                                 (Office Unit 1)

The Condominium Unit (the "Unit") in the premises known as Beacon Court
Condominium and by the street number by the street number 151 East 58th Street,
Borough of Manhattan, City, County and State of New York, said Unit being
designated and described as "Office Unit 1" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1002
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

      TOGETHER with an undivided 49.0559% percentage interest in the General
Common Elements (as such term is defined in the Declaration);

      TOGETHER with the appurtenances and all the estate and rights in and to
the Unit;

      TOGETHER with, and subject to, the rights, obligations, easements,
restrictions and other provisions set forth in the Declaration and the By-Laws,
all of which constitute covenants running with the Land and will bind any person
having at any time any interest or estate in (any of) the Unit, as though
recited and stipulated at length herein;

The premises within which the Unit is located is more particularly described as:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
borough of Manhattan, County, City and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the southerly side of East
59th Street and the westerly side of Third Avenue;

RUNNING THENCE southerly, along the westerly side of Third Avenue, 200'-10" to
the northerly side of East 58th Street;

THENCE westerly, along the northerly side of East 58th Street 420' to the
easterly side of Lexington Avenue;

THENCE northerly along the easterly side of Lexington Avenue, 200'-10" to the
southerly side of East 59th Street;

THENCE easterly, along the southerly side of East 59th Street, 420' to the point
or place of BEGINNING.

TOGETHER with the benefits and SUBJECT to the burdens of the easements set forth
in the deed made by Seven Thirty One Limited Partnership to 59th Street
Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339 Page 1100.

                                      A-1

                                   EXHIBIT A-2

                                ((Office Unit 2)

The Condominium Unit (the "Unit") in the premises known as Beacon Court
Condominium and by the street number by the street number 151 East 58th Street,
Borough of Manhattan, City, County and State of New York, said Unit being
designated and described as "Office Unit 2" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1003
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

TOGETHER with an undivided 14.0095% percentage interest in the General Common
Elements (as such term is defined in the Declaration);

TOGETHER with the appurtenances and all the estate and rights in and to the
Unit;

TOGETHER with, and subject to, the rights, obligations, easements, restrictions
and other provisions set forth in the Declaration and the By-Laws, all of which
constitute covenants running with the Land and will bind any person having at
any time any interest or estate in (any of) the Unit, as though recited and
stipulated at length herein;

The premises within which the Unit is located is more particularly described as:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
borough of Manhattan, County, City and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the southerly side of East
59th Street and the westerly side of Third Avenue;

RUNNING THENCE southerly, along the westerly side of Third Avenue, 200'-10" to
the northerly side of East 58th Street;

THENCE westerly, along the northerly side of East 58th Street 420' to the
easterly side of Lexington Avenue;

THENCE northerly along the easterly side of Lexington Avenue, 200'-10" to the
southerly side of East 59th Street;

THENCE easterly, along the southerly side of East 59th Street, 420' to the point
or place of BEGINNING.

TOGETHER with the benefits and SUBJECT to the burdens of the easements set forth
in the deed made by Seven Thirty One Limited Partnership to 59th Street
Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339 Page 1100.

                                      A-2

                                   SCHEDULE 1

                                 EXISTING NOTES

1. Consolidated, Amended and Restated Supplemental Loan Note (No. 3) in the
original principal amount of $22,940,962, dated January 28, 2004, by 731
Commercial LLC and 731 Residential LLC in favor of Hypo Real Estate Capital
Corporation.

2. Consolidated, Amended and Restated Project Loan Note (No. 3) in the original
principal amount of $15,587,546, dated January 28, 2004, by 731 Commercial LLC
and 731 Residential LLC in favor of Hypo Real Estate Capital Corporation.

3. Substitute Subordinate Building Loan Note in the original principal amount of
$125,000,000, dated February __, 2004, by 731 Commercial LLC and 731 Residential
LLC in favor of Hypo Real Estate Capital Corporation.

4. Substitute Mortgage Note C (No. 3) in the original principal amount of
$236,471,492, dated January 28, 2004, by 731 Commercial LLC and 731 Residential
LLC in favor of Hypo Real Estate Capital Corporation.

                                  Schedule 1-1

                                   SCHEDULE 2

                                MORTGAGE SCHEDULE

      1. Mortgage, Assignment of Leases and Security Agreement made by Seven
      Thirty One Limited Partnership and Alexander's Department Stores of
      Lexington Avenue, Inc. to First Fidelity Bank (NA) in the amount of
      $30,000,000.00, dated as of 3/15/1995 and recorded on 3/20/1995 in Reel
      2192 Page 1291, which mortgage was modified by virtue of a Mortgage
      Modification and Extension Agreement made between Seven Thirty One Limited
      Partnership and Alexander's Department Stores of Lexington Avenue, Inc.
      and First Union National Bank (formerly known as Fidelity Bank, N.A.)
      dated as of 3/15/1998 and recorded on 2/16/1999 in Reel 2819 Page 1988;
      which Mortgage was modified and severed by that certain Note and Mortgage
      Modification and Severance Agreement made between Alexander's of Fordham
      Road Inc., Alexander's of Third Avenue Inc., Alexander's Rego Park Center,
      Inc. Alexander's of Rego Park II, Inc., Alexander's of Rego Park III,
      Inc., Seven Thirty One Limited Partnership, Alexander's Department Stores
      of Lexington Avenue, Inc., Alexander's of Brooklyn, Inc., Alexander's
      Department Stores of New Jersey Inc. and First Union National Bank
      (formerly known as Fidelity Bank, National Association) dated as of
      6/18/1998 and recorded on 9/10/1998 in Reel 2703 Page 1797, which
      Agreement severed Mortgage No. 1 into two separate liens as follows:

            Substitute Note A in the amount of $10,000,000.00, which was secured
            by a Mortgage on premises in Kings County only (does not affect
            premises insured herein) and

            Substitute Note B in the area of $20,000,000.00, secured by Mortgage
      No. 1 above, and which Mortgage was modified by virtue of Mortgage
      Modification and Extension Agreement made by Alexander's of Fordham Road
      Inc., Alexander's Inc., Alexander's of Third Avenue Inc., Alexander's Rego
      Park Center, Inc. Alexander's of Rego Park II, Inc., Alexander's of Rego
      Park III, Inc., Seven Thirty One Limited Partnership, Alexander's
      Department Stores of Lexington Avenue, Inc., Alexander's of Brooklyn,
      Inc., Alexander's Department Stores of New Jersey Inc. and First Union
      National Bank (formerly known as Fidelity Bank, National Association)
      dated as of 3/29/1999 and recorded on 4/20/1999 in Reel 2859 Page 174, and
      which Mortgage was further modified by virtue of a Mortgage Modification
      and Extension Agreement made between Alexander's of Fordham Road Inc.,
      Alexander's Inc., Alexander's of Third Avenue Inc., Alexander's of Rego
      Park II, Inc., Alexander's of Rego Park III, Inc., Seven Thirty One
      Limited Partnership, Alexander's Department Stores of Lexington Avenue,
      Inc., Alexander's Department Stores of New Jersey Inc. and First Union
      National Bank (formerly known as Fidelity Bank, National Association)
      dated as of 4/14/2000 and recorded on 4/3/2001 in Reel 3265 Page 1882, and
      which Mortgage was further modified by a Mortgage Modification and
      Extension Agreement made between Alexander's Inc., Alexander's of Third
      Avenue Inc., Alexander's of Rego Park II, Inc., Alexander's of Rego Park
      III,

                                  Schedule 2-1

      Inc., Seven Thirty One Limited Partnership, Alexander's Department Stores
      of Lexington Avenue, Inc., Alexander's Department Stores of New Jersey
      Inc. and First Union National Bank (formerly known as Fidelity Bank,
      National Association) dated as of 4/27/2001 and recorded on 5/21/2001 in
      Reel 3291 Page 1269, and which Mortgage was further modified by a Mortgage
      Modification and Extension Agreement made between Alexander's Inc.,
      Alexander's of Third Avenue Inc., Alexander's of Rego Park II, Inc.,
      Alexander's of Rego Park III, Inc., Seven Thirty One Limited Partnership,
      Alexander's Department Stores of Lexington Avenue, Inc., 59th Street
      Corporation and First Union National Bank (formerly known as Fidelity
      Bank, National Association) dated as of 3/15/2002 and recorded on
      6/24/2002 in Reel 3545 Page 2045, which Mortgage was assigned by
      Assignment of Mortgage made by Wachovia Bank, National Association (f/k/a
      First Union National Bank, f/k/a as Fidelity Bank, National Association)
      to Bayerische Hypo-Und Vereinsbank, AG, New York Branch as Agent, dated
      6/24/2002 and recorded on 9/25/2002 in Reel 3617 Page 2001.

      2. Mortgage made by Seven Thirty One Limited Partnership and Alexander's
      Department Stores of Lexington Avenue, Inc. to Vornado Lending Corp. in
      the amount of $45,000,000.00, dated as of 3/15/1995 and recorded on
      3/20/1995 in Reel 2193 Page 966, which Mortgage was modified by Mortgage
      Modification and Extension Agreement made between Seven Thirty One Limited
      Partnership and Alexander's Department Stores of Lexington Avenue, Inc.
      and Vornado Lending LLC (formerly known as Vornado Lending Corp.), dated
      as of 3/15/1998 and recorded on 2/16/1999 in Reel 2819 Page 1998, and
      which Mortgage was further modified by a Second Mortgage Modification and
      Extension Agreement made between Seven Thirty One Limited Partnership and
      Alexander's Department Stores of Lexington Avenue, Inc. and Vornado
      Lending LLC (formerly known as Vornado Lending Corp.), dated as of
      3/29/1999 and recorded on 4/20/1999 in Reel 2859 Page 251, and which
      Mortgage was further modified by a Third Mortgage Modification and
      Extension Agreement made between Seven Thirty One Limited Partnership and
      Alexander's Department Stores of Lexington Avenue, Inc. and Vornado
      Lending LLC (formerly known as Vornado Lending Corp.), dated as of
      3/15/2000 and recorded on 1/11/2001 in Reel 3220 Page 2176, and which
      Mortgage was assigned by Assignment of Mortgage made by Vornado Lending
      LLC (formerly known as Vornado Lending Corp.),to Bayerische Hypo-Und
      Vereinsbank, AG, New York Branch as Agent, dated 6/24/2002 and recorded on
      9/25/2002 in Reel 3617 Page 2007.

      3. Gap Mortgage made by 731 Commercial LLC and 731 Residential LLC to
      Bayerische Hypo-Und Vereinsbank, AG, New York Branch as Agent, in the sum
      of $500,000.00 dated 7/3/2002 and recorded on 9/25/2002 in Reel 3617 Page
      2013, which Mortgage was consolidated with Mortgages 1 and 2 to form a
      single lien of $55,500,000.00 by virtue of a Consolidated, Amended and
      Restated Building Loan Mortgage, Assignment of Leases and Rents and
      Security Agreement (Series No. 1) made by 731 Commercial LLC and 731
      Residential

                                  Schedule 2-2

      LLC to Bayerische Hypo-Und Vereinsbank, AG, New York Branch as Agent,
      dated 7/3/2002 and recorded on 9/25/2002 in Reel 3617 Page 2024.

      4. Mortgage made by 731 Commercial LLC and 731 Residential LLC to
      Bayerische Hypo-Und Vereinsbank, AG, New York Branch as Agent, in the
      amount of $159,500,000.00 dated as of 3/5/2003 and recorded on 5/1/2003
      under CRFN 2003000112521, which Mortgage was consolidated with Mortgages
      1, 2 and 3 above to form a single lien of $215,000,000.00 by virtue of a
      Consolidated, Amended and Restated Building Loan Mortgage, Assignment of
      Leases and Rents and Security Agreement made by 731 Commercial LLC and 731
      Residential LLC and Bayerische Hypo-Und Vereinsbank, AG, New York Branch
      as Agent, dated as of 3/5/2003 and recorded on 5/1/2003 under CRFN
      20030001132522, which Mortgage was severed by Note and Mortgage
      Modification and Severance Agreement dated February __, 2004 made by and
      between 731 Commercial LLC, 731 Residential LLC and Hypo Real Estate
      Capital Corporation and being tendered for recording with said Register's
      Office, which severs and splits said Mortgage into 2 liens as follows:

      $90,000,000.00, which does not affect the premises herein and

      $125,000,000.00 affecting the premises herein as evidenced by that certain
      Substitute Subordinate Building Loan Mortgage dated as of February __,
      2004 by and between 731 Commercial LLC and 731 Residential LLC and Hypo
      Real Estate Capital Corporation, and being tendered for recording with
      said Register's Office, which was assigned by Assignment of Substitute
      Subordinate Building Loan Mortgage dated February __, 2004, from Hypo Real
      Estate Capital Corporation to German American Capital Corporation, and
      being tendered for recording with said Register's Office.

      5. Substitute Supplemental Loan Mortgage, Assignment of Leases and Rents
      and Security Agreement (No. 1) made by 731 Commercial LLC and 731
      Residential LLC to Bayerische Hypo-Und Vereinsbank, AG, New York Branch as
      lender (Hypo #1) in the amount of $2,265,962.00, dated as of 11/26/2003
      and being tendered for recording with the Office of the City Register, New
      York County, which Mortgage was created by the Note and Mortgage
      Modification and Severance Agreement (No. 1) dated as of 11/26/2003 and
      being tendered for recording with said Register's Office, which Mortgage
      was assigned by virtue of an Assignment of Mortgage made by Bayerische
      Hypo-Und Vereinsbank, AG, New York Branch as lender (Hypo #1) to
      Bayerische Hypo-Und Vereinsbank, AG, New York Branch as agent for itself
      and other co-lenders, dated as of 11/26/2003 and being tendered for
      recording with said Register's Office, which Mortgage was modified by an
      Amended and Restated Supplemental Loan Mortgage, Assignment of Leases and
      Rents and Security Agreement (No. 1) made between 731 Commercial LLC and
      731 Residential LLC and Bayerische Hypo-Und Vereinsbank, AG, New York
      Branch as agent for itself and other co-lenders, dated as of 11/26/2003
      and being tendered for recording with said Register's

                                  Schedule 2-3

      Office, and which Mortgage was assigned by a certain Assignment of
      Mortgage made by Bayerische Hypo-Und Vereinsbank, AG, New York Branch as
      agent to Hypo Real Estate Capital Corporation, dated as of 12/4/2003 and
      being tendered for recording with said Register's Office.

      6. Substitute Supplemental Loan Mortgage, Assignment of Leases and Rents
      and Security Agreement (No. 2) made by 731 Commercial LLC and 731
      Residential LLC to Hypo Real Estate Capital Corporation, as agent, in the
      amount of $9,375,000.00 dated as of 12/29/2003 and being tendered for
      recording with said Register's Office which Mortgage was created by the
      Note and Mortgage Modification and Severance Agreement (No. 2) dated as of
      12/29/2003 and being tendered for recording with said Register's Office,
      which Mortgage was consolidated with Mortgage 5 above to form a single
      lien of $11,640,962.00 by virtue of a Consolidated, Amended and Restated
      Supplemental Loan Mortgage, Assignment of Leases and Rents and Security
      Agreement (No. 2) made between 731 Commercial LLC and 731 Residential LLC
      and Hypo Real Estate Capital Corporation, as agent, dated as of 12/29/2003
      and being tendered for recording with said Register's Office.

      7. Substitute Supplemental Loan Mortgage, Assignment of Leases and Rents
      and Security Agreement (No. 3) made by 731 Commercial LLC and 731
      Residential LLC to Hypo Real Estate Capital Corporation, as agent, in the
      amount of $11,300,000.00 dated as of 1/28/2004 and being tendered for
      recording with said Register's Office, which Mortgage was created by the
      Note and Mortgage Modification and Severance Agreement (No. 3) dated as of
      1/28/2004 and being tendered for recording with said Register's Office,
      which Mortgage was consolidated with Mortgages 5 and 6 to form a single
      lien of $22,940,962.00 by virtue of Consolidated, Amended and Restated
      Supplemental Loan Mortgage, Assignment of Leases and Rents and Security
      Agreement (No. 3) made by 731 Commercial LLC and 731 Residential LLC and
      Hypo Real Estate Capital Corporation, as agent, dated as of 1/28/2004 and
      being tendered for recording with said Register's Office, which Mortgage
      was assigned by virtue of an Assignment of Consolidated, Amended and
      Restated Supplemental Loan Mortgage, Assignment of Leases and Rents and
      Security Agreement (No. 3) made by Hypo Real Estate Capital Corporation,
      as agent, to German American Capital Corporation dated as of February __,
      2004 and to be recorded in the Office of the City Register, New York
      County.

      8. Project Loan Mortgage, Assignment of Leases and Rents and Security
      Agreement made by 731 Commercial LLC and 731 Residential LLC to Bayerische
      Hypo-Und Vereinsbank, AG, New York Branch, in the amount of $10,000,000.00
      dated as of 3/5/2003 and recorded on 5/1/2003 under CRFN 2003000112524.

      9. Substitute Project Loan Mortgage, Assignment of Leases and Rents and
      Security Agreement (No. 1) made by 731 Commercial LLC and 731 Residential

                                  Schedule 2-4

      LLC to Bayerische Hypo-Und Vereinsbank, AG, New York Branch, in the amount
      of $702,546.00 dated as of 11/26/2003 and being tendered for recording
      with said Register's Office which Mortgage was created by the Note and
      Mortgage Modification and Severance Agreement (No. 1) dated as of
      11/26/2003 and being tendered for recording with said Register's Office,
      which Mortgage was assigned by virtue of an Assignment of Mortgage made by
      Bayerische Hypo-Und Vereinsbank, AG, New York Branch, to Bayerische
      Hypo-Und Vereinsbank, AG, New York Branch, as agent, dated as of
      11/26/2003 and being tendered for recording with said Register's Office,
      which Mortgage was consolidated with Mortgage 8 above to form a single
      lien of $10,702,546.00, which Mortgage was assigned by virtue of an
      Consolidated, Amended and Restated Project Loan Mortgage, Assignment of
      Leases and Rents and Security Agreement made between 731 Commercial LLC
      and 731 Residential LLC and Bayerische Hypo-Und Vereinsbank, AG, New York
      Branch, as agent, dated as of 11/26/2003 and being tendered for recording
      with said Register's Office, which Mortgages were assigned by virtue of an
      Assignment of Mortgage made by Bayerische Hypo-Und Vereinsbank, AG, New
      York Branch, as agent, to Hypo Real Estate Capital Corporation, dated as
      of 12/4/2003 and being tendered for recording with said Register's Office.

      10. Substitute Project Loan Mortgage, Assignment of Leases and Rents and
      Security Agreement (No. 2) made by 731 Commercial LLC and 731 Residential
      LLC to Hypo Real Estate Capital Corporation, in the amount of
      $3,555,000.00, dated as of 12/29/2003 and being tendered for recording
      with said Register's Office, which Mortgage was created by the Note and
      Mortgage Modification and Severance Agreement (No. 2) dated as of
      12/29/2003 and being tendered for recording with said Register's Office,
      which Mortgage was assigned by virtue of an Assignment of Mortgage made by
      Hypo Real Estate Capital Corporation to Hypo Real Estate Capital
      Corporation, as agent, dated as of 12/29/2003 and being tendered for
      recording with said Register's Office, which Mortgage was consolidated
      with Mortgages 8 and 9 above to form a single lien of $14,257,546.00 by
      virtue of a Consolidated, Amended and Restated Supplemental Loan Mortgage,
      Assignment of Leases and Rents and Security Agreement (No. 2) made between
      731 Commercial LLC and 731 Residential LLC and Hypo Real Estate Capital
      Corporation, as agent, dated as of 12/29/2003 and being tendered for
      recording with said Register's Office.

      11. Substitute Project Loan Mortgage, Assignment of Leases and Rents and
      Security Agreement (No. 3) made by 731 Commercial LLC and 731 Residential
      LLC to Hypo Real Estate Capital Corporation, in the amount of
      $1,330,000.00 dated as of 1/28/2004 and being tendered for recording with
      said Register's Office, which Mortgage was created by the Note and
      Mortgage Modification and Severance Agreement (No. 3) dated as of
      1/28/2004 and being tendered for recording with said Register's Office,
      which Mortgage was assigned by virtue of an Assignment of Mortgage made by
      Hypo Real Estate Capital Corporation to Hypo Real Estate Capital
      Corporation, as agent, dated as of 12/29/2003 and being

                                  Schedule 2-5

      tendered for recording with said Register's Office, which Mortgage was
      consolidated with Mortgages 8, 9 and 10 to form a single lien of
      $15,587,546.00 by virtue of a Consolidated, Amended and Restated Project
      Loan Mortgage, Assignment of Leases and Rents and Security Agreement (No.
      3) made between 731 Commercial LLC and 731 Residential LLC and Hypo Real
      Estate Capital Corporation, as agent, dated as of 1/28/2004 and being
      tendered for recording with said Register's Office, which Mortgage is
      being assigned by Assignment of Consolidated, Amended and Restated Project
      Loan Mortgage dated February __, 2004 from Hypo Real Estate Capital
      Corporation, as agent, to German American Capital Corporation, and being
      tendered for recording with said Register's Office.

      12. Substitute Mortgage, Assignment of Leases and Rents and Security
      Agreement C (No. 3) made by 731 Commercial LLC and 731 Residential LLC to
      Hypo Real Estate Capital Corporation, in the amount of $236,471,492.00
      dated as of 1/28/2004 and being tendered for recording with said
      Register's Office, which Mortgage was assigned by virtue of an Assignment
      of Mortgage made by Hypo Real Estate Capital Corporation, to German
      American Capital Corporation dated as of February __, 2004 and being
      tendered for recording in said Register's Office, which Mortgage was
      consolidated with Mortgages 1 through 11 to form a single lien of
      $400,000,000.00 by Amended, Restated and Consolidate Mortgage, Security
      Agreement, Financing Statement and Assignment of Leases, Rents and
      Security Deposits dated February __, 2004 made by 731 Office One LLC and
      German American Capital Corporation and being tendered for recording with
      said Register's Office.

                                  Schedule 2-6

                     AMENDED, RESTATED AND CONSOLIDATED NOTE

New York, New York
$400,000,000                                                   February 13, 2004

         AMENDED, RESTATED AND CONSOLIDATED NOTE, dated as of February 13, 2004
(this NOTE), by 731 OFFICE ONE LLC, a Delaware limited liability company
(BORROWER), having an address for notice purposes c/o Alexander's Inc., 888
Seventh Avenue, New York, New York 10019, in favor of GERMAN AMERICAN CAPITAL
CORPORATION, a Maryland corporation (together with its successors and assigns,
LENDER), having an office at 60 Wall Street, New York, New York 10005.

         WHEREAS, Lender is the present owner and holder of that certain
promissory note described on EXHIBIT A attached hereto and incorporated herein
(collectively, the EXISTING NOTE), which Existing Note evidences an indebtedness
of Borrower to Lender in the current outstanding principal amount of
$400,000,000 (the EXISTING DEBT);

         WHEREAS, on the date hereof and pursuant to the terms of this Note and
the Loan Agreement (as defined below), Lender has agreed to make a loan (the
LOAN) to Borrower in the maximum principal amount of $400,000,000, such Loan to
be comprised of the Existing Debt so that the principal balance of on the date
hereof is $400,000,000;

         WHEREAS, in connection with the foregoing, Borrower and Lender have
agreed in the manner hereinafter set forth to (i) combine and consolidate the
Existing Note and the indebtedness evidenced thereby with the New Loan and (ii)
amend, modify and restate in their entirety the terms and provisions of the
Existing Note on the terms and conditions hereinafter set forth; and

         WHEREAS, Lender and Borrower intend these Recitals to be a material
part of this Note.

         NOW THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender agree as follows:

         I.       The Existing Debt is combined and consolidated together with
the New Loan so that together they shall constitute in law but one indebtedness
in the maximum principal amount of $400,000,000, (such amount, or so much
thereof as may be outstanding from time to time under this Note, the PRINCIPAL
AMOUNT), together with interest thereon as hereinafter provided. The terms,
covenants, conditions and provisions of the Existing Note are hereby modified,
amended, restated and consolidated in their entirety so that henceforth the
terms, covenants, conditions and provisions of the Existing Note shall read and
be as set forth in this Note and Borrower agrees to comply with and be subject
to all of the terms, covenants and conditions of this Note.

         II.      The parties hereto certify that this Note evidences the
Existing Debt evidenced by the Existing Note, as increased by the New Loan, and
evidences no further or other principal indebtedness. Neither this Note nor
anything contained herein shall be construed as a novation of Borrower's
indebtedness to Lender evidenced by the Existing Note or of the Existing Note,
which shall remain in full force and effect as hereby confirmed, modified,
amended, restated and consolidated.

         III.     This Note is an extension and continuation of the Existing
Debt evidenced by the Existing Note, as increased by the New Loan, and, as to
the Existing Debt, is issued in replacement of and substitution for the Existing
Note.

         IV.      The Existing Note, as modified and restated in its entirety
pursuant to this Note, and the obligations of Borrower thereunder, as increased
by the New Loan, is hereby ratified and confirmed, and shall remain in full
force and effect until the full performance and satisfaction of all obligations
of Borrower under this Note.

         NOW, THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the
order of Lender the Principal Amount, together with interest from the date
hereof, and other fees, expenses and charges as provided in this Note.

1.       DEFINED TERMS.

         a.       Capitalized terms used but not otherwise defined herein shall
                  have the respective meanings given thereto in the Loan
                  Agreement (as defined below), unless otherwise expressly
                  provided herein. All references to sections shall be deemed to
                  be references to sections of this Note, unless otherwise
                  indicated.

         b.       The following terms shall have the meaning ascribed thereto:

         ADDITIONAL INTEREST STRIP shall mean, with respect to each Interest
         Period from and after the Anticipated Repayment Date, the excess of
         interest accrued at the Revised Interest Rate over interest accrued at
         the Stated Interest Rate (but shall not include the Post ARD Default
         Interest Strip).

         ANTICIPATED REPAYMENT DATE shall mean March 1, 2014.

         APPLICABLE INTEREST RATE shall mean (i) from the date hereof through
         and including the Anticipated Repayment Date, the Stated Interest Rate,
         and (ii) from the day after the Anticipated Repayment Date through and
         including the Maturity Date, the Revised Interest Rate.

         BORROWER shall have the meaning provided in the first paragraph hereof.

         DEFAULT RATE shall mean, a rate per annum equal to the lesser of (a)
         the Maximum Legal Rate and (b) five percent (5%) above the Applicable
         Interest Rate.

                                       2

         DEFEASANCE LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on the earlier to occur of (i) two years after the
         "startup day," within the meaning of Section 860G(a)(9) of the Internal
         Revenue Code of 1986, as amended from time to time or any successor
         statute (the "Code"), of a "real estate mortgage investment conduit,"
         ("REMIC") within the meaning of Section 860D of the Code, with respect
         to the last portion of the debt evidenced by this Note and the Security
         Instrument and (ii) four (4) years from the date hereof.

         DEFERRED INTEREST shall mean the Additional Interest Strip and the Post
         ARD Default Interest Strip, collectively.

         EXISTING DEBT shall have the meaning set forth in the Recitals.

         EXISTING NOTE shall have the meaning set forth in the Recitals.

         INTEREST PERIOD shall have the meaning provided in Section 2.

         LENDER shall have the meaning provided in the first paragraph hereof.

         LIQUIDATED DAMAGES AMOUNT shall have the meaning set forth in Section
         4(e).

         LOAN shall have the meaning provided in the Recitals to this Note.

         LOAN AGREEMENT shall mean the Loan and Security Agreement, dated the
         date hereof, between Borrower and Lender.

         MATURITY DATE shall mean March 1, 2029, or such earlier date on which
         the final payment of principal of this Note becomes due and payable as
         provided in the Loan Agreement or this Note, whether at such stated
         maturity date, by declaration of acceleration, or otherwise.

         MATURITY DATE PAYMENT shall have the meaning set forth in Section 3(e).

         MONTHLY AMOUNT shall have the meaning provided in Section 3(a).

         NOTE shall have the meaning provided in the first paragraph hereof.

         PAYMENT DATE shall be the first (1st) calendar day of each calendar
         month, whether or not such day is a Business Day, commencing on April
         1, 2004 and continuing to and including the Maturity Date.

         POST ARD DEFAULT INTEREST STRIP shall mean, with respect to each
         Interest Period from and after the Anticipated Repayment Date, default
         interest accrued at a rate equal to the lesser of (x) 5.0% and (y) the
         amount by which the Maximum Legal Rate exceeds the Applicable Interest
         Rate.

         PREPAYMENT DATE shall have the meaning provided in Section 4(a)(i).

                                        3

         PREPAYMENT LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on December 1, 2013.

         PREPAYMENT NOTICE shall have the meaning provided in Section 4(a)(i).

         PRINCIPAL AMOUNT shall have the meaning set forth in the Recitals.

         REVISED INTEREST RATE shall mean, with respect to each Interest Period,
         a rate per annum equal to two percent (2%) above the Stated Interest
         Rate applicable to such Interest Period.

         STATED INTEREST RATE shall mean, with respect to each Interest Period,
         the rate of interest set forth on SCHEDULE A hereto for such Interest
         Period.

         TREASURY RATE shall mean, as of any Payment Date, the yield, calculated
         by linear interpolation (rounded to the nearest one-thousandth of one
         percent) of the yields of noncallable United States Treasury
         obligations with terms (one longer and one shorter) most nearly
         approximating the period from such Payment Date to the Anticipated
         Repayment Date (and converted to a monthly equivalent yield), as
         determined by Lender on the basis of Federal Reserve Statistical
         Release H.15 Selected Interest Rates under the heading U.S.
         Governmental Security/Treasury Constant Maturities or, if such
         publication is unavailable, such other recognized source of financial
         market information as shall be selected by Lender for the week prior to
         such Payment Date.

         YIELD MAINTENANCE PREMIUM shall mean an amount equal to the product of:
         (a) the positive difference (expressed as a percentage of the
         outstanding Principal Amount before any prepayment), if any, as of the
         date of determination between (i) the present value of all future
         scheduled payments of interest and principal, including the principal
         amount due on the Anticipated Repayment Date, to be made on this Note
         before the prepayment in question, discounted at an interest rate per
         annum equal to the Treasury Rate, and (ii) the outstanding Principal
         Amount immediately before such prepayment; and (b) the Principal Amount
         being prepaid.

2.       INTEREST.

         a.       Prior to the Anticipated Repayment Date, interest shall accrue
                  on the Principal Amount at the Stated Interest Rate. In the
                  event that Borrower does not repay the Principal Amount in
                  full on or before the Anticipated Repayment Date, then, from
                  and after the Anticipated Repayment Date, interest shall
                  accrue on the Principal Amount at the Revised Interest Rate.
                  From and after the occurrence and during the continuance of
                  any Event of Default, interest shall accrue at the Default
                  Rate.

         b.       Interest on the principal sum of this Note shall be calculated
                  based on the Applicable Interest Rate on the basis of a
                  fraction, the denominator of which shall be 360 and the
                  numerator of which shall be the actual number

                                       4

                  of days in the relevant Interest Period, except that interest
                  due and payable for a period less than a full month shall be
                  calculated by multiplying the actual number of days elapsed in
                  such period by a daily rate based on said 360 day year.
                  Interest shall accrue from, and including, the first (1st) day
                  of the prior month and ending on the last day of the prior
                  month (an INTEREST PERIOD); in each case without adjustment
                  for any Business Day convention; provided that the first
                  accrual period shall commence on March 1, 2004.

         c.       Except as expressly set forth in the Loan Agreement to the
                  contrary, interest shall accrue on all amounts advanced by
                  Lender pursuant to the Loan Documents (other than the
                  Principal Amount, which shall accrue interest in accordance
                  with clauses a. and b. above) at the Default Rate.

         d.       The provisions of this Section 2 are subject in all events to
                  the provisions of Section 2.2.4 of the Loan Agreement.

3.       PAYMENTS OF PRINCIPAL AND INTEREST.

         a.       Interest and principal under this Note shall be payable as
                  follows:

                  i.       interest accruing from the date hereof to and
                           including February 29, 2004 shall be paid on the date
                           hereof; and

                  ii.      commencing on April 1, 2004 and on each and every
                           Payment Date thereafter until the Maturity Date,
                           monthly installments of interest payable on this
                           Note, in arrears, and scheduled principal
                           amortization in the amounts (the MONTHLY AMOUNTS) set
                           forth on SCHEDULE A hereto (subject to adjustment as
                           provided in Section 4(f)).

         b.       From and after the Anticipated Repayment Date, unless the
                  Indebtedness has been repaid in full, Borrower shall continue
                  to make payments of accrued interest and Monthly Amounts on
                  each Payment Date. From and after the Anticipated Repayment
                  Date, unless the Indebtedness has been repaid in full, all
                  Excess Cash Flow shall be applied to repayment of the Loan on
                  each Payment Date as a partial prepayment of the outstanding
                  principal Indebtedness. Deferred Interest shall be payable
                  after all principal and other amounts due hereunder have been
                  paid in full.

         c.       All payments made by Borrower hereunder or under any of the
                  Loan Documents shall be made on or before 2:00 p.m. New York
                  City time or such later time as Lender or its servicer shall
                  apply amounts on deposit in the Holding Account in accordance
                  the terms of the Loan Documents. Any payments received after
                  such time shall be credited to the next following Business
                  Day.

                                       5

         d.       All amounts advanced by Lender pursuant to the Loan Documents,
                  other than the Principal Amount, or other charges provided in
                  the Loan Documents, shall be due and payable as provided in
                  the Loan Documents. In the event any such advance or charge is
                  not so repaid by Borrower, Lender may, at its option, first
                  apply any payments received under this Note to repay such
                  advances, together with any interest thereon, or other charges
                  as provided in the Loan Documents, and the balance, if any,
                  shall be applied in payment of any installment of interest or
                  principal then due and payable.

         e.       The entire Principal Amount of this Note, all unpaid accrued
                  interest, all interest that would accrue on the Principal
                  Amount through the end of the Interest Period during which the
                  Maturity Date occurs and all other fees and sums then payable
                  hereunder or under the Loan Documents (collectively, the
                  MATURITY DATE PAYMENT), shall be due and payable in full on
                  the Maturity Date.

         f.       Amounts due on this Note shall be payable, without any
                  counterclaim, setoff or deduction whatsoever, at the office of
                  Lender or its agent or designee at the address set forth on
                  the first page of this Note or at such other place as Lender
                  or its agent or designee may from time to time designate in
                  writing.

         g.       All amounts due under this Note, including, without
                  limitation, interest and the Principal Amount, shall be due
                  and payable in lawful money of the United States.

         h.       To the extent that Borrower makes a payment or Lender receives
                  any payment or proceeds for Borrower's benefit, which are
                  subsequently invalidated, declared to be fraudulent or
                  preferential, set aside or required to be repaid to a trustee,
                  debtor in possession, receiver, custodian or any other party
                  under any bankruptcy law, common law or equitable cause, then,
                  to such extent, the obligations of Borrower hereunder intended
                  to be satisfied shall be revived and continue as if such
                  payment or proceeds had not been received by Lender.

4.       PREPAYMENTS. Except as permitted in Sections 4(a), 4(b), 4(c) and 4(d)
         hereof, the outstanding Principal Amount may not be prepaid in whole or
         in part. Any Principal Amount prepaid pursuant to this Section 4 may
         not be reborrowed hereunder.

         a.       VOLUNTARY PREPAYMENTS. Borrower shall not have the right to
                  prepay, in whole or in part, the Principal Amount due
                  hereunder prior to the Anticipated Repayment Date (other than
                  with respect to the application of Proceeds pursuant to
                  Section 6.2 of the Loan Agreement); provided, however,
                  Borrower shall be entitled to make a prepayment of all of the
                  Principal Amount on any Business Day occurring after the
                  expiration of

                                       6

                  the Prepayment Lockout Period, without any premium or penalty
                  upon satisfaction of the following conditions:

                  i.       Borrower shall provide prior irrevocable written
                           notice (the PREPAYMENT NOTICE) to Lender specifying
                           the proposed Business Day on which the prepayment is
                           to be made, which Business Day shall be no earlier
                           than thirty (30) days after the date of such
                           Prepayment Notice and no later than ninety (90) days
                           after the date of such Prepayment Notice (the date of
                           such prepayment pursuant to this Section 4(a) and
                           Section 4(b) below being the PREPAYMENT DATE); and

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(c) and Section 4(d) of this Note.

                  iii.     In connection with any voluntary prepayment, other
                           than payments from Excess Cash Flow as set forth in
                           Section 3(b), Borrower shall concurrently repay all
                           of the other Indebtedness in full.

                  iv.      Borrower agrees that all Excess Cash Flow shall be
                           applied in accordance with the terms of the Loan
                           Agreement, including, without limitation, Article III
                           and Section 16.5 of the Loan Agreement and the
                           provisions of Section 3(b) hereof.

         b.       DEFEASANCE. From and after expiration of the Defeasance
                  Lockout Period and prior to the Anticipated Repayment Date,
                  Borrower shall have the right to defease the Loan pursuant to
                  the provisions of Article IX of the Loan Agreement. In no
                  event shall a prepayment of this Note in accordance with
                  Sections 4(a) or 4(c) trigger or result in any defeasance
                  liability under this Note or the other Loan Documents.

         c.       MANDATORY PREPAYMENTS.

                  i.       On the next occurring Payment Date following the date
                           on which Borrower actually receives any Proceeds, if
                           Lender is not obligated pursuant to the terms of the
                           Loan Agreement to make such Proceeds available to
                           Borrower for the restoration of the Property,
                           Borrower shall use such Proceeds to prepay the
                           outstanding principal balance of this Note as set
                           forth in Section 6.2.3 of the Loan Agreement; and

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(d) and Section 4(e) of this Note
                           (provided, however, that the Liquidated Damages
                           Amount and the Yield Maintenance Premium shall not
                           apply to prepayments made from the receipt of
                           Proceeds).

         d.       PAYMENTS IN CONNECTION WITH A PREPAYMENT.

                                       7

                  i.       On the date on which a prepayment, voluntary,
                           involuntary or mandatory, is made under this Note or
                           as required under the Loan Agreement, Borrower shall,
                           unless such prepayment is made on a Payment Date, pay
                           to Lender all unpaid interest on the Principal Amount
                           prepaid through the end of the Interest Period during
                           which such prepayment is made.

                  ii.      On the Business Day on which a prepayment is made,
                           Borrower shall pay to Lender all other sums (not
                           including scheduled interest and principal payments)
                           then due and payable under this Note, the Loan
                           Agreement, the Security Instrument, and the other
                           Loan Documents;

                  iii.     Borrower shall pay (without duplication) all
                           reasonable costs and expenses of Lender incurred in
                           connection with the prepayment (including without
                           limitation, any reasonable costs and expenses
                           associated with a release or assignment of the Lien
                           of the related Security Instrument as set forth in
                           Section 2.3.3 of the Loan Agreement as well as
                           reasonable attorneys' fees and expenses); and

                  iv.      In the event of a prepayment made after an
                           acceleration of the Loan, Borrower shall also pay to
                           Lender the Yield Maintenance Premium to the extent
                           such prepayment is made prior to expiration of the
                           Prepayment Lockout Period.

         e.       LIQUIDATED DAMAGES AMOUNT. IF NOTWITHSTANDING THE PROHIBITIONS
                  OF THIS SECTION 4, THE LOAN IS VOLUNTARILY OR INVOLUNTARILY
                  REPAID DURING THE PREPAYMENT LOCKOUT PERIOD (EXCLUDING
                  PREPAYMENTS MADE (I) IN ACCORDANCE WITH SECTION 4(C) OF THIS
                  NOTE AND (II) FROM A DEFEASANCE OF THE LOAN IN ACCORDANCE WITH
                  THE TERMS OF THE LOAN DOCUMENTS AFTER EXPIRATION OF THE
                  DEFEASANCE LOCKOUT PERIOD), INCLUDING, BUT NOT LIMITED TO, AS
                  A RESULT OF AN ACCELERATED MATURITY DATE, THEN BORROWER SHALL
                  PAY TO LENDER, AS LIQUIDATED DAMAGES FOR SUCH DEFAULT AND NOT
                  AS A PENALTY, AND IN ADDITION TO ANY AND ALL OTHER SUMS AND
                  FEES PAYABLE UNDER THIS NOTE AND THE OTHER LOAN DOCUMENTS, AN
                  AMOUNT EQUAL TO THE GREATER OF (A) FIVE PERCENT (5%) OF THE
                  PRINCIPAL AMOUNT BEING REPAID HEREUNDER AND (B) THE YIELD
                  MAINTENANCE PREMIUM (THE LIQUIDATED DAMAGES AMOUNT).
                  NOTWITHSTANDING THE FOREGOING, THE LIQUIDATED DAMAGES AMOUNT
                  SHALL NOT BE APPLIED TOWARD ANY PREPAYMENTS FROM PROCEEDS.

         f.       MODIFICATION OF MONTHLY AMOUNTS.

                                       8

                  i.       In the event that any partial prepayment of principal
                           occurs before the Anticipated Repayment Date (other
                           than in connection with an acceleration of the Loan),
                           the Payment Dates shall remain the same and Lender
                           shall recalculate the amount of subsequent Monthly
                           Amounts to reflect the same proportionate
                           amortization as in effect prior to such recalculation
                           for each remaining Payment Date, taking into account
                           the reduction in the Principal Amount.

                  ii.      In the event that any partial prepayment of principal
                           occurs after the Anticipated Repayment Date (other
                           than in connection with an acceleration of the Loan)
                           or Excess Cash Flow is applied to the prepayment of
                           principal after the Anticipated Repayment Date, the
                           Payment Dates shall remain the same and Lender shall
                           recalculate the amount of subsequent Monthly Amounts
                           to reflect the reduction of the Principal Amount.
                           Deferred Interest accrued pursuant to Section 3(b) of
                           this Note shall not result in any increase in the
                           Monthly Amounts or the Stated Interest Rate.

5.       MISCELLANEOUS.

         a.       WAIVER. Borrower and all endorsers, sureties and guarantors
                  hereby jointly and severally waive all applicable exemption
                  rights, valuation and appraisement, presentment for payment,
                  demand, notice of demand, notice of nonpayment or dishonor,
                  protest and notice of protest of this Note, and, except as
                  otherwise expressly provided in the Loan Documents, all other
                  notices in connection with the delivery, acceptance,
                  performance, default or enforcement of the payment of this
                  Note. Borrower consents to any and all extensions of time,
                  renewals, waivers or modifications that may be granted by
                  Lender with respect to the payment or other provisions of this
                  Note and to the release of the collateral securing this Note
                  or any part thereof, with or without substitution, and agrees
                  that additional makers may become parties hereto without
                  notice to them or affecting their liability under this Note.

         b.       NON-RECOURSE. Recourse with respect to any claims arising
                  under or in connection with this Note shall be limited to the
                  extent provided in Article XVIII of the Loan Agreement and the
                  terms, covenants and conditions of Article XVIII of the Loan
                  Agreement are hereby incorporated by reference as if fully set
                  forth in this Note.

         c.       NOTE SECURED. This Note and all obligations of Borrower
                  hereunder are secured by the Loan Agreement, the Security
                  Instrument and the other Loan Documents.

         d.       NOTICES. Any notice, election, request or demand which by any
                  provision of this Note is required or permitted to be given or
                  served hereunder shall

                                       9

                  be given or served in the manner required for the delivery of
                  notices pursuant to the Loan Agreement.

         e.       ENTIRE AGREEMENT. This Note, together with the other Loan
                  Documents, constitutes the entire and final agreement between
                  Borrower and Lender with respect to the subject matter hereof
                  and thereof and may only be changed, amended, modified or
                  waived by an instrument in writing signed by Borrower and
                  Lender.

         f.       NO WAIVER. No waiver of any term or condition of this Note,
                  whether by delay, omission or otherwise, shall be effective
                  unless in writing and signed by the party sought to be
                  charged, and then such waiver shall be effective only in the
                  specific instance and for the purpose for which given. No
                  notice to, or demand on, Borrower shall entitle Borrower to
                  any other or future notice or demand in the same, similar or
                  other circumstances.

         g.       SUCCESSORS AND ASSIGNS. This Note shall be binding upon and
                  inure to the benefit of Borrower and Lender and their
                  respective successors and permitted assigns. Upon any
                  endorsement, assignment, or other transfer of this Note by
                  Lender or by operation of law, the term "Lender" as used
                  herein, shall mean such endorsee, assignee, or other
                  transferee or successor to Lender then becoming the holder of
                  this Note. The term "Borrower" as used herein shall include
                  the respective successors and assigns, legal and personal
                  representatives, executors, administrators, devisees, legatees
                  and heirs of Borrower, if any.

         h.       CAPTIONS. All paragraph, section, exhibit and schedule
                  headings and captions herein are used for reference only and
                  in no way limit or describe the scope or intent of, or in any
                  way affect, this Note.

         i.       COUNTERPARTS. This Note may be executed in counterparts, each
                  of which shall be an original and all of which, when taken
                  together, shall constitute one binding Note.

         j.       SEVERABILITY. The provisions of this Note are severable, and
                  if any one clause or provision hereof shall be held invalid or
                  unenforceable in whole or in part, then such invalidity or
                  unenforceability shall affect only such clause or provision,
                  or part thereof, and not any other clause or provision of this
                  Note.

         k.       GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
                  IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
                  TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW,
                  WITHOUT REGARD TO CHOICE OF LAW RULES. BORROWER AGREES THAT
                  ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OTHER LOAN
                  DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE

                                       10

                  STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND
                  CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND
                  THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON
                  BORROWER IN THE MANNER AND AT THE ADDRESS SPECIFIED FOR
                  NOTICES IN THE LOAN AGREEMENT. BORROWER HEREBY WAIVES ANY
                  OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
                  ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT
                  IN AN INCONVENIENT COURT.

         l.       JURY TRIAL WAIVER. BORROWER, LENDER AND ALL PERSONS CLAIMING
                  BY, THROUGH OR UNDER BORROWER OR LENDER, HEREBY EXPRESSLY,
                  KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO
                  TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
                  (I) ARISING UNDER THIS NOTE, INCLUDING, WITHOUT LIMITATION,
                  ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY
                  CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
                  PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS NOTE (AS
                  NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT
                  OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR
                  THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
                  WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW
                  EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
                  CONTRACT OR TORT OR OTHERWISE; AND BORROWER AND LENDER HEREBY
                  AGREE AND CONSENT THAT AN ORIGINAL COUNTERPART OR A COPY OF
                  THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE
                  OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY
                  JURY. EACH OF BORROWER AND LENDER ACKNOWLEDGES THAT IT HAS
                  CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS
                  WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL
                  INDUCEMENT FOR THE MAKING OF THE LOAN. THIS WAIVER SHALL
                  SURVIVE THE REPAYMENT OF THE LOAN.

         m.       COUNTERCLAIMS AND OTHER ACTIONS. Borrower hereby expressly and
                  unconditionally waives, in connection with any suit, action or
                  proceeding brought by Lender on this Note, any and every right
                  it may have to (i) interpose any counterclaim therein (other
                  than a mandatory or compulsory counterclaim which can only be
                  asserted in the suit, action or proceeding brought by Lender
                  on this Note and cannot be maintained in a separate action)
                  and (ii) have any such suit, action or proceeding consolidated
                  with any other or separate suit, action or proceeding.

                                       11

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       12

         IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered as of the day and year first above written.

                                       BORROWER:

                                       731 OFFICE ONE LLC, a Delaware limited
                                       liability company

                                       By: 731 OFFICE ONE HOLDING LLC, a
                                       Delaware limited liability company, its
                                       sole member

                                           By: ALEXANDER'S INC., a Delaware
                                           corporation, its sole member

                                           By: /s/ Brian Kurtz
                                               ---------------------------------
                                               Name:  Brian Kurtz
                                               Title: Assistant Secretary

                                    EXHIBIT A
                                 EXISTING NOTES

1. Consolidated, Amended and Restated Supplemental Loan Note (No. 3) in the
original principal amount of $22,940,962, dated January 28, 2004, by 731
Commercial LLC and 731 Residential LLC in favor of Hypo Real Estate Capital
Corporation.

2. Consolidated, Amended and Restated Project Loan Note (No. 3) in the original
principal amount of $15,587,546, dated January 28, 2004, by 731 Commercial LLC
and 731 Residential LLC in favor of Hypo Real Estate Capital Corporation.

3. Substitute Subordinate Building Loan Note in the original principal amount of
$125,000,000, dated February 13, 2004, by 731 Commercial LLC and 731 Residential
LLC in favor of Hypo Real Estate Capital Corporation.

4. Substitute Mortgage Note C (No. 3) in the original principal amount of
$236,471,492, dated January 28, 2004, by 731 Commercial LLC and 731 Residential
LLC in favor of Hypo Real Estate Capital Corporation.

                                   SCHEDULE A
                                CONSOLIDATED NOTE

Interest Period Commencing  Stated Interest Rate  Payment Date  Scheduled Principal Amortization  Ending Balance
                                                                                      
         2/13/2004                5.3300%
          3/1/2004                5.3300%             3/1/04                                      400,000,000.00
          4/1/2004                5.3300%             4/1/04                          -           400,000,000.00
          5/1/2004                5.3300%             5/1/04                          -           400,000,000.00
          6/1/2004                5.3300%             6/1/04                          -           400,000,000.00
          7/1/2004                5.3300%             7/1/04                          -           400,000,000.00
          8/1/2004                5.3300%             8/1/04                          -           400,000,000.00
          9/1/2004                5.3300%             9/1/04                          -           400,000,000.00
         10/1/2004                5.3300%            10/1/04                          -           400,000,000.00
         11/1/2004                5.3300%            11/1/04                          -           400,000,000.00
         12/1/2004                5.3300%            12/1/04                          -           400,000,000.00
          1/1/2005                5.3300%             1/1/05                          -           400,000,000.00
          2/1/2005                5.3300%             2/1/05                          -           400,000,000.00
          3/1/2005                5.3300%             3/1/05                          -           400,000,000.00
          4/1/2005                5.3300%             4/1/05                          -           400,000,000.00
          5/1/2005                5.3300%             5/1/05                          -           400,000,000.00
          6/1/2005                5.3300%             6/1/05                          -           400,000,000.00
          7/1/2005                5.3300%             7/1/05                          -           400,000,000.00
          8/1/2005                5.3300%             8/1/05                          -           400,000,000.00
          9/1/2005                5.3300%             9/1/05                          -           400,000,000.00
         10/1/2005                5.3300%            10/1/05                          -           400,000,000.00
         11/1/2005                5.3300%            11/1/05                          -           400,000,000.00
         12/1/2005                5.3300%            12/1/05                          -           400,000,000.00
          1/1/2006                5.3300%             1/1/06                          -           400,000,000.00
          2/1/2006                5.3300%             2/1/06                          -           400,000,000.00
          3/1/2006                5.3300%             3/1/06                          -           400,000,000.00
          4/1/2006                5.3300%             4/1/06                 712,217.29           399,287,782.71
          5/1/2006                5.3300%             5/1/06                 774,602.94           398,513,179.77
          6/1/2006                5.3300%             6/1/06                 719,041.38           397,794,138.39
          7/1/2006                5.3300%             7/1/06                 781,237.21           397,012,901.18
          8/1/2006                5.3300%             8/1/06                 725,927.24           396,286,973.94
          9/1/2006                5.3300%             9/1/06                 729,259.05           395,557,714.89
         10/1/2006                5.3300%            10/1/06                 791,170.66           394,766,544.23

                                        2

                                                                             
11/1/2006                5.3300%            11/1/06                 736,237.40           394,030,306.84
12/1/2006                5.3300%            12/1/06                 797,954.90           393,232,351.94
 1/1/2007                5.3300%             1/1/07                 743,278.91           392,489,073.03
 2/1/2007                5.3300%             2/1/07                 746,690.36           391,742,382.67
 3/1/2007                5.3300%             3/1/07                 924,116.37           390,818,266.31
 4/1/2007                5.3300%             4/1/07                 754,358.89           390,063,907.41
 5/1/2007                5.3300%             5/1/07                 815,572.32           389,248,335.09
 6/1/2007                5.3300%             6/1/07                 761,564.44           388,486,770.65
 7/1/2007                5.3300%             7/1/07                 822,577.44           387,664,193.21
 8/1/2007                5.3300%             8/1/07                 768,835.21           386,895,358.00
 9/1/2007                5.3300%             9/1/07                 772,363.95           386,122,994.05
10/1/2007                5.3300%            10/1/07                 833,076.54           385,289,917.50
11/1/2007                5.3300%            11/1/07                 779,732.48           384,510,185.02
12/1/2007                5.3300%            12/1/07                 840,240.10           383,669,944.92
 1/1/2008                5.3300%             1/1/08                 787,167.70           382,882,777.21
 2/1/2008                5.3300%             2/1/08                 790,780.59           382,091,996.63
 3/1/2008                5.3300%             3/1/08                 907,551.73           381,184,444.89
 4/1/2008                5.3300%             4/1/08                 798,575.46           380,385,869.44
 5/1/2008                5.3300%             5/1/08                 858,558.94           379,527,310.50
 6/1/2008                5.3300%             6/1/08                 806,181.25           378,721,129.25
 7/1/2008                5.3300%             7/1/08                 865,953.16           377,855,176.09
 8/1/2008                5.3300%             8/1/08                 813,855.88           377,041,320.21
 9/1/2008                5.3300%             9/1/08                 817,591.25           376,223,728.96
10/1/2008                5.3300%            10/1/08                 877,045.78           375,346,683.18
11/1/2008                5.3300%            11/1/08                 825,369.16           374,521,314.02
12/1/2008                5.3300%            12/1/08                 884,607.34           373,636,706.68
 1/1/2009                5.3300%             1/1/09                 833,217.48           372,803,489.20
 2/1/2009                5.3300%             2/1/09                 837,041.72           371,966,447.48
 3/1/2009                5.3300%             3/1/09               1,006,098.60           370,960,348.88
 4/1/2009                5.3300%             4/1/09                 845,501.22           370,114,847.66
 5/1/2009                5.3300%             5/1/09                 904,179.39           369,210,668.26
 6/1/2009                5.3300%             6/1/09                 853,531.77           368,357,136.50
 7/1/2009                5.3300%             7/1/09                 911,986.56           367,445,149.93
 8/1/2009                5.3300%             8/1/09                 861,635.01           366,583,514.93
 9/1/2009                5.3300%             9/1/09                 865,589.67           365,717,925.26
10/1/2009                5.3300%            10/1/09                 923,709.06           364,794,216.20
11/1/2009                5.3300%            11/1/09                 873,802.06           363,920,414.14
12/1/2009                5.3300%            12/1/09                 931,693.00           362,988,721.14
 1/1/2010                5.3300%             1/1/10                 882,088.78           362,106,632.36
 2/1/2010                5.3300%             2/1/10                 886,137.32           361,220,495.04
 3/1/2010                5.3300%             3/1/10               1,050,646.55           360,169,848.50
 4/1/2010                5.3300%             4/1/10                 895,026.62           359,274,821.88
 5/1/2010                5.3300%             5/1/10                 952,327.18           358,322,494.70
 6/1/2010                5.3300%             6/1/10                 903,505.46           357,418,989.24
 7/1/2010                5.3300%             7/1/10                 960,570.17           356,458,419.08
 8/1/2010                5.3300%             8/1/10                 912,061.05           355,546,358.03
 9/1/2010                5.3300%             9/1/10                 916,247.16           354,630,110.87
10/1/2010                5.3300%            10/1/10                 972,957.43           353,657,153.44
11/1/2010                5.3300%            11/1/10                 924,918.08           352,732,235.36
12/1/2010                5.3300%            12/1/10                 981,387.16           351,750,848.19
 1/1/2011                5.3300%             1/1/11                 933,667.49           350,817,180.70
 2/1/2011                5.3300%             2/1/11                 937,952.77           349,879,227.94

                                        3

                                                                             
 3/1/2011                5.3300%             3/1/11               1,097,662.40           348,781,565.54
 4/1/2011                5.3300%             4/1/11                 947,295.67           347,834,269.86
 5/1/2011                5.3300%             5/1/11               1,003,142.29           346,831,127.57
 6/1/2011                5.3300%             6/1/11                 956,247.64           345,874,879.93
 7/1/2011                5.3300%             7/1/11               1,011,845.25           344,863,034.67
 8/1/2011                5.3300%             8/1/11                 965,280.64           343,897,754.03
 9/1/2011                5.3300%             9/1/11                 969,711.01           342,928,043.02
10/1/2011                5.3300%            10/1/11               1,024,934.12           341,903,108.90
11/1/2011                5.3300%            11/1/11                 978,865.88           340,924,243.02
12/1/2011                5.3300%            12/1/11               1,033,834.33           339,890,408.69
 1/1/2012                5.3300%             1/1/12                 988,103.61           338,902,305.08
 2/1/2012                5.3300%             2/1/12                 992,638.74           337,909,666.34
 3/1/2012                5.3300%             3/1/12               1,097,253.48           336,812,412.86
 4/1/2012                5.3300%             4/1/12               1,002,230.76           335,810,182.10
 5/1/2012                5.3300%             5/1/12               1,056,549.28           334,753,632.82
 6/1/2012                5.3300%             6/1/12               1,011,679.99           333,741,952.83
 7/1/2012                5.3300%             7/1/12               1,065,735.67           332,676,217.16
 8/1/2012                5.3300%             8/1/12               1,021,214.75           331,655,002.41
 9/1/2012                5.3300%             9/1/12               1,025,901.84           330,629,100.57
10/1/2012                5.3300%            10/1/12               1,079,561.92           329,549,538.65
11/1/2012                5.3300%            11/1/12               1,035,565.34           328,513,973.31
12/1/2012                5.3300%            12/1/12               1,088,956.61           327,425,016.70
 1/1/2013                5.3300%             1/1/13               1,045,316.30           326,379,700.40
 2/1/2013                5.3300%             2/1/13               1,050,114.01           325,329,586.39
 3/1/2013                5.3300%             3/1/13               1,199,434.30           324,130,152.09
 4/1/2013                5.3300%             4/1/13               1,060,438.81           323,069,713.27
 5/1/2013                5.3300%             5/1/13               1,113,138.20           321,956,575.07
 6/1/2013                5.3300%             6/1/13               1,070,414.93           320,886,160.14
 7/1/2013                5.3300%             7/1/13               1,122,836.81           319,763,323.33
 8/1/2013                5.3300%             8/1/13               1,080,481.35           318,682,841.98
 9/1/2013                5.3300%             9/1/13               1,085,440.45           317,597,401.53
10/1/2013                5.3300%            10/1/13               1,137,444.38           316,459,957.14
11/1/2013                5.3300%            11/1/13               1,095,642.88           315,364,314.27
12/1/2013                5.3300%            12/1/13               1,147,363.01           314,216,951.25
 1/1/2014                5.3300%             1/1/14               1,105,937.65           313,111,013.60
 2/1/2014                5.3300%             2/1/14               1,111,013.60           312,000,000.00
 3/1/2014                5.3300%             3/1/14               1,254,692.84           310,745,307.16
 4/1/2014                5.3300%             4/1/14               1,121,871.53           309,623,435.62
 5/1/2014                5.3300%             5/1/14               1,172,862.08           308,450,573.54
 6/1/2014                5.3300%             6/1/14               1,132,403.72           307,318,169.81
 7/1/2014                5.3300%             7/1/14               1,183,101.31           306,135,068.51
 8/1/2014                5.3300%             8/1/14               1,143,031.25           304,992,037.26
 9/1/2014                5.3300%             9/1/14               1,148,277.45           303,843,759.81
10/1/2014                5.3300%            10/1/14               1,198,533.48           302,645,226.34
11/1/2014                5.3300%            11/1/14               1,159,048.66           301,486,177.68
12/1/2014                5.3300%            12/1/14               1,209,005.07           300,277,172.61
 1/1/2015                5.3300%             1/1/15               1,169,917.36           299,107,255.25
 2/1/2015                5.3300%             2/1/15               1,175,286.96           297,931,968.29
 3/1/2015                5.3300%             3/1/15               1,313,012.65           296,618,955.64
 4/1/2015                5.3300%             4/1/15               1,186,707.56           295,432,248.07
 5/1/2015                5.3300%             5/1/15               1,235,894.61           294,196,353.47
 6/1/2015                5.3300%             6/1/15               1,197,826.64           292,998,526.83

                                        4

                                                                             
 7/1/2015                5.3300%             7/1/15               1,246,704.39           291,751,822.45
 8/1/2015                5.3300%             8/1/15               1,209,046.35           290,542,776.09
 9/1/2015                5.3300%             9/1/15               1,214,595.54           289,328,180.55
10/1/2015                5.3300%            10/1/15               1,263,006.84           288,065,173.71
11/1/2015                5.3300%            11/1/15               1,225,967.05           286,839,206.66
12/1/2015                5.3300%            12/1/15               1,274,062.03           285,565,144.63
 1/1/2016                5.3300%             1/1/16               1,237,441.49           284,327,703.14
 2/1/2016                5.3300%             2/1/16               1,243,121.00           283,084,582.15
 3/1/2016                5.3300%             3/1/16               1,332,651.07           281,751,931.08
 4/1/2016                5.3300%             4/1/16               1,254,943.08           280,496,988.00
 5/1/2016                5.3300%             5/1/16               1,302,232.05           279,194,755.94
 6/1/2016                5.3300%             6/1/16               1,266,679.80           277,928,076.14
 7/1/2016                5.3300%             7/1/16               1,313,642.30           276,614,433.84
 8/1/2016                5.3300%             8/1/16               1,278,522.76           275,335,911.08
 9/1/2016                5.3300%             9/1/16               1,284,390.83           274,051,520.25
10/1/2016                5.3300%            10/1/16               1,330,860.67           272,720,659.58
11/1/2016                5.3300%            11/1/16               1,296,394.10           271,424,265.47
12/1/2016                5.3300%            12/1/16               1,342,530.06           270,081,735.41
 1/1/2017                5.3300%             1/1/17               1,308,506.03           268,773,229.37
 2/1/2017                5.3300%             2/1/17               1,314,511.71           267,458,717.66
 3/1/2017                5.3300%             3/1/17               1,439,341.20           266,019,376.46
 4/1/2017                5.3300%             4/1/17               1,327,151.13           264,692,225.33
 5/1/2017                5.3300%             5/1/17               1,372,431.54           263,319,793.78
 6/1/2017                5.3300%             6/1/17               1,339,541.47           261,980,252.32
 7/1/2017                5.3300%             7/1/17               1,384,477.22           260,595,775.09
 8/1/2017                5.3300%             8/1/17               1,352,043.96           259,243,731.14
 9/1/2017                5.3300%             9/1/17               1,358,249.46           257,885,481.68
10/1/2017                5.3300%            10/1/17               1,402,664.83           256,482,816.85
11/1/2017                5.3300%            11/1/17               1,370,921.29           255,111,895.56
12/1/2017                5.3300%            12/1/17               1,414,984.17           253,696,911.38
 1/1/2018                5.3300%             1/1/18               1,383,707.82           252,313,203.56
 2/1/2018                5.3300%             2/1/18               1,390,058.66           250,923,144.90
 3/1/2018                5.3300%             3/1/18               1,507,890.34           249,415,254.56
 4/1/2018                5.3300%             4/1/18               1,403,359.44           248,011,895.12
 5/1/2018                5.3300%             5/1/18               1,446,520.01           246,565,375.11
 6/1/2018                5.3300%             6/1/18               1,416,439.59           245,148,935.52
 7/1/2018                5.3300%             7/1/18               1,459,236.32           243,689,699.19
 8/1/2018                5.3300%             8/1/18               1,429,638.15           242,260,061.05
 9/1/2018                5.3300%             9/1/18               1,436,199.79           240,823,861.26
10/1/2018                5.3300%            10/1/18               1,478,446.86           239,345,414.40
11/1/2018                5.3300%            11/1/18               1,449,577.21           237,895,837.19
12/1/2018                5.3300%            12/1/18               1,491,452.17           236,404,385.02
 1/1/2019                5.3300%             1/1/19               1,463,075.72           234,941,309.30
 2/1/2019                5.3300%             2/1/19               1,469,790.83           233,471,518.48
 3/1/2019                5.3300%             3/1/19               1,580,237.03           231,891,281.45
 4/1/2019                5.3300%             4/1/19               1,483,789.61           230,407,491.84
 5/1/2019                5.3300%             5/1/19               1,524,712.90           228,882,778.94
 6/1/2019                5.3300%             6/1/19               1,497,597.80           227,385,181.14
 7/1/2019                5.3300%             7/1/19               1,538,137.00           225,847,044.15
 8/1/2019                5.3300%             8/1/19               1,511,530.98           224,335,513.17
 9/1/2019                5.3300%             9/1/19               1,518,468.49           222,817,044.68
10/1/2019                5.3300%            10/1/19               1,558,427.14           221,258,617.54

                                        5

                                                                             
11/1/2019                5.3300%            11/1/19               1,532,590.58           219,726,026.96
12/1/2019                5.3300%            12/1/19               1,572,156.41           218,153,870.56
 1/1/2020                5.3300%             1/1/20               1,546,840.51           216,607,030.05
 2/1/2020                5.3300%             2/1/20               1,553,940.08           215,053,089.97
 3/1/2020                5.3300%             3/1/20               1,624,751.84           213,428,338.13
 4/1/2020                5.3300%             4/1/20               1,568,529.39           211,859,808.74
 5/1/2020                5.3300%             5/1/20               1,607,095.53           210,252,713.21
 6/1/2020                5.3300%             6/1/20               1,583,104.63           208,669,608.59
 7/1/2020                5.3300%             7/1/20               1,621,265.33           207,048,343.26
 8/1/2020                5.3300%             8/1/20               1,597,811.79           205,450,531.46
 9/1/2020                5.3300%             9/1/20               1,605,145.31           203,845,386.16
10/1/2020                5.3300%            10/1/20               1,642,692.92           202,202,693.24
11/1/2020                5.3300%            11/1/20               1,620,051.98           200,582,641.25
12/1/2020                5.3300%            12/1/20               1,657,184.94           198,925,456.31
 1/1/2021                5.3300%             1/1/21               1,635,093.59           197,290,362.72
 2/1/2021                5.3300%             2/1/21               1,642,598.21           195,647,764.51
 3/1/2021                5.3300%             3/1/21               1,737,037.50           193,910,727.01
 4/1/2021                5.3300%             4/1/21               1,658,109.80           192,252,617.20
 5/1/2021                5.3300%             5/1/21               1,694,184.13           190,558,433.07
 6/1/2021                5.3300%             6/1/21               1,673,495.90           188,884,937.17
 7/1/2021                5.3300%             7/1/21               1,709,142.25           187,175,794.92
 8/1/2021                5.3300%             8/1/21               1,689,021.27           185,486,773.65
 9/1/2021                5.3300%             9/1/21               1,696,773.41           183,790,000.24
10/1/2021                5.3300%            10/1/21               1,731,772.26           182,058,227.98
11/1/2021                5.3300%            11/1/21               1,712,509.48           180,345,718.50
12/1/2021                5.3300%            12/1/21               1,747,070.61           178,598,647.89
 1/1/2022                5.3300%             1/1/22               1,728,387.99           176,870,259.90
 2/1/2022                5.3300%             2/1/22               1,736,320.81           175,133,939.08
 3/1/2022                5.3300%             3/1/22               1,822,078.70           173,311,860.38
 4/1/2022                5.3300%             4/1/22               1,752,652.88           171,559,207.50
 5/1/2022                5.3300%             5/1/22               1,786,097.36           169,773,110.14
 6/1/2022                5.3300%             6/1/22               1,768,894.76           168,004,215.38
 7/1/2022                5.3300%             7/1/22               1,801,887.45           166,202,327.93
 8/1/2022                5.3300%             8/1/22               1,785,283.66           164,417,044.27
 9/1/2022                5.3300%             9/1/22               1,793,477.61           162,623,566.65
10/1/2022                5.3300%            10/1/22               1,825,786.50           160,797,780.15
11/1/2022                5.3300%            11/1/22               1,810,089.03           158,987,691.12
12/1/2022                5.3300%            12/1/22               1,841,935.85           157,145,755.27
 1/1/2023                5.3300%             1/1/23               1,826,850.81           155,318,904.46
 2/1/2023                5.3300%             2/1/23               1,835,235.55           153,483,668.91
 3/1/2023                5.3300%             3/1/23               1,911,831.10           151,571,837.81
 4/1/2023                5.3300%             4/1/23               1,852,433.54           149,719,404.27
 5/1/2023                5.3300%             5/1/23               1,883,102.49           147,836,301.78
 6/1/2023                5.3300%             6/1/23               1,869,578.62           145,966,723.16
 7/1/2023                5.3300%             7/1/23               1,899,770.65           144,066,952.52
 8/1/2023                5.3300%             8/1/23               1,886,878.88           142,180,073.63
 9/1/2023                5.3300%             9/1/23               1,895,539.13           140,284,534.50
10/1/2023                5.3300%            10/1/23               1,925,009.04           138,359,525.46
11/1/2023                5.3300%            11/1/23               1,913,074.39           136,446,451.08
12/1/2023                5.3300%            12/1/23               1,942,056.52           134,504,394.55
 1/1/2024                5.3300%             1/1/24               1,930,768.37           132,573,626.19
 2/1/2024                5.3300%             2/1/24               1,939,630.06           130,633,996.13

                                        6

                                                                             
 3/1/2024                5.3300%             3/1/24               1,987,214.60           128,646,781.53
 4/1/2024                5.3300%             4/1/24               1,957,653.18           126,689,128.35
 5/1/2024                5.3300%             5/1/24               1,985,395.30           124,703,733.05
 6/1/2024                5.3300%             6/1/24               1,975,750.68           122,727,982.37
 7/1/2024                5.3300%             7/1/24               2,002,989.39           120,724,992.98
 8/1/2024                5.3300%             8/1/24               1,994,011.99           118,730,980.98
 9/1/2024                5.3300%             9/1/24               2,003,163.95           116,727,817.03
10/1/2024                5.3300%            10/1/24               2,029,640.12           114,698,176.91
11/1/2024                5.3300%            11/1/24               2,021,673.40           112,676,503.50
12/1/2024                5.3300%            12/1/24               2,047,634.71           110,628,868.80
 1/1/2025                5.3300%             1/1/25               2,040,350.40           108,588,518.40
 2/1/2025                5.3300%             2/1/25               2,049,715.04           106,538,803.36
 3/1/2025                5.3300%             3/1/25               2,106,443.65           104,432,359.71
 4/1/2025                5.3300%             4/1/25               2,068,790.65           102,363,569.06
 5/1/2025                5.3300%             5/1/25               2,093,441.32           100,270,127.73
 6/1/2025                5.3300%             6/1/25               2,087,894.14            98,182,233.59
 7/1/2025                5.3300%             7/1/25               2,112,013.42            96,070,220.17
 8/1/2025                5.3300%             8/1/25               2,107,170.55            93,963,049.61
 9/1/2025                5.3300%             9/1/25               2,116,841.88            91,846,207.74
10/1/2025                5.3300%            10/1/25               2,140,155.94            89,706,051.80
11/1/2025                5.3300%            11/1/25               2,136,380.32            87,569,671.48
12/1/2025                5.3300%            12/1/25               2,159,150.89            85,410,520.60
 1/1/2026                5.3300%             1/1/26               2,156,095.61            83,254,424.98
 2/1/2026                5.3300%             2/1/26               2,165,991.49            81,088,433.49
 3/1/2026                5.3300%             3/1/26               2,211,949.57            78,876,483.92
 4/1/2026                5.3300%             4/1/26               2,186,085.03            76,690,398.90
 5/1/2026                5.3300%             5/1/26               2,207,472.99            74,482,925.91
 6/1/2026                5.3300%             6/1/26               2,206,250.24            72,276,675.67
 7/1/2026                5.3300%             7/1/26               2,227,077.28            70,049,598.40
 8/1/2026                5.3300%             8/1/26               2,226,597.98            67,823,000.42
 9/1/2026                5.3300%             9/1/26               2,236,817.44            65,586,182.98
10/1/2026                5.3300%            10/1/26               2,256,794.21            63,329,388.76
11/1/2026                5.3300%            11/1/26               2,257,441.87            61,071,946.89
12/1/2026                5.3300%            12/1/26               2,276,844.95            58,795,101.94
 1/1/2027                5.3300%             1/1/27               2,278,252.99            56,516,848.95
 2/1/2027                5.3300%             2/1/27               2,288,709.54            54,228,139.41
 3/1/2027                5.3300%             3/1/27               2,323,300.41            51,904,839.00
 4/1/2027                5.3300%             4/1/27               2,309,877.38            49,594,961.62
 5/1/2027                5.3300%             5/1/27               2,327,821.89            47,267,139.73
 6/1/2027                5.3300%             6/1/27               2,331,163.13            44,935,976.60
 7/1/2027                5.3300%             7/1/27               2,348,515.55            42,587,461.05
 8/1/2027                5.3300%             8/1/27               2,352,641.56            40,234,819.49
 9/1/2027                5.3300%             9/1/27               2,363,439.53            37,871,379.96
10/1/2027                5.3300%            10/1/27               2,379,894.13            35,491,485.83
11/1/2027                5.3300%            11/1/27               2,385,210.12            33,106,275.71
12/1/2027                5.3300%            12/1/27               2,401,059.13            30,705,216.58
 1/1/2028                5.3300%             1/1/28               2,407,177.76            28,298,038.82
 2/1/2028                5.3300%             2/1/28               2,418,226.04            25,879,812.78
 3/1/2028                5.3300%             3/1/28               2,436,988.32            23,442,824.45
 4/1/2028                5.3300%             4/1/28               2,440,510.12            21,002,314.33
 5/1/2028                5.3300%             5/1/28               2,454,820.90            18,547,493.43
 6/1/2028                5.3300%             6/1/28               2,462,978.33            16,084,515.10

                                        7

                                                                              
 7/1/2028                5.3300%             7/1/28               2,476,664.12            13,607,850.98
 8/1/2028                5.3300%             8/1/28               2,485,649.92            11,122,201.06
 9/1/2028                5.3300%             9/1/28               2,497,058.36             8,625,142.69
10/1/2028                5.3300%            10/1/28               2,509,796.17             6,115,346.53
11/1/2028                5.3300%            11/1/28               2,520,038.43             3,595,308.09
12/1/2028                5.3300%            12/1/28               2,532,137.02             1,063,171.08
 1/1/2029                5.3300%             1/1/29               1,063,171.08
 2/1/2029                5.3300%             2/1/29                          -

                                        8

                                                                   Exhibit 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

                 Street Address:      731 Lexington Avenue
                                      New York, New York

                         County:      New York
                        Section:

                          Block:      1313
                            Lot:      1002 and 1003

                              Record and Return to:
                    Skadden, Arps, Slate, Meagher & Flom LLP
                                Four Times Square
                            New York, New York 10036
                         Attention: Harvey R. Uris, Esq.

                              ASSIGNMENT OF LEASES,
                           RENTS AND SECURITY DEPOSITS

         This ASSIGNMENT OF LEASES, RENTS AND SECURITY DEPOSITS, dated as of
February 13, 2004 (this ASSIGNMENT), from 731 OFFICE ONE LLC, a Delaware limited
liability company, (Borrower), having an address for notice purposes c/o
Alexander's Inc., 888 Seventh Avenue, New York, New York 10019, to GERMAN
AMERICAN CAPITAL CORPORATION, a Maryland corporation (together with its
successors and assigns, LENDER), having an address at 60 Wall Street, New York,
New York 10005.

                              W I T N E S S E T H :

         WHEREAS, Borrower is the owner of a fee simple interest in the real
property commonly known as Office Unit 1 and Office Unit 2 of the Beacon Court
Condominium located at 731 Lexington Avenue, New York, New York, and more
particularly described on Exhibit A attached hereto and incorporated herein (the
PROPERTY);

         WHEREAS, on the date hereof, in accordance with the terms of a Loan and
Security Agreement, dated as of the date hereof (as the same may be amended and
supplemented from time to time, the LOAN AGREEMENT), between Lender, as lender,
and Borrower, as borrower, Lender is making a loan to Borrower in the principal
amount of $400,000,000 (the LOAN), which Loan is evidenced by that certain
Amended, Restated and Consolidated Note, dated as of the date hereof (as the
same may be amended, substitued, replaced, exchanged and supplemented from time
to time, the NOTE), made by and between Borrower and Lender and secured by that
certain Amended, Restated and Consolidated Mortgage, Security Agreement,
Financing Statement and Assignment of Leases, Rents and Security Deposits, dated
as of the date hereof (as the same may be amended and supplemented from time to
time, the SECURITY INSTRUMENT), by and between Borrower and Lender and the other
Loan Documents (as defined in the Loan Agreement);

         WHEREAS, as a condition to making the Loan, Lender has required that
Borrower deliver this Assignment for the benefit of Lender;

         WHEREAS, the forgoing recitals are intended to form an integral part of
this Assignment.

         NOW, THEREFORE, Borrower, in consideration of the Loan, foregoing
premises, Ten Dollars ($10.00) paid in hand, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Borrower agrees as follows:

         Section 1. Definitions

                (a) The following terms shall have the meaning ascribed thereto:

ASSIGNMENT: Shall have the meaning provided in the first paragraph.

                                       2

BORROWER: Shall have the meaning provided in the first paragraph.

LENDER: Shall have the meaning provided in the first paragraph.

LOAN AGREEMENT: Shall have the meaning provided in the Recitals.

NOTE: Shall have the meaning provided in the Recitals.

SECURITY INSTRUMENT: Shall have the meaning provided in the Recitals.

                (b) Capitalized terms used but not otherwise defined herein
shall have the respective meanings given thereto in the Loan Agreement, unless
otherwise expressly provided herein. All references to sections shall be deemed
to be references to sections of this Agreement, unless otherwise indicated.

         Section 2. Assignment.

                (a) Borrower hereby assigns, transfers and sets over unto
Lender, subject to the terms hereof, all of the right, title and interest of
Borrower in and to all Leases, Rents and Security Deposits, it being understood
that, as of the date hereof, the only Lease is the Bloomberg Lease, the only
Rents are the Rents under the Bloomberg Lease and there are no Security
Deposits.

                (b) This Assignment is an absolute, present and irrevocable
assignment made for the purpose of securing (i) the payment and performance by
Borrower of all Obligations; (ii) the payment of all sums with interest thereon
becoming due and payable to Lender under this Assignment; and (iii) the
performance and discharge of each and every obligation, covenant,
representation, warranty, indemnity and agreement of Borrower under this
Assignment.

         Section 3. License to Collect Rent.

                (a) Prior to the occurrence of an Event of Default and subject
to the provisions of the Section 3.1 of the Loan Agreement, Lender has granted
Borrower a license to cause the Rents to be collected and deposited in the
Collection Account in accordance with the terms of Section 3.1 of the Loan
Agreement. The foregoing license granted to Borrower shall terminate upon the
occurrence and during the continuance of an Event of Default.

                (b) Any time after the occurrence and during the continuance of
an Event of Default, Lender, without in any way waiving such Event of Default,
at its option and without regard to the adequacy of the security for Obligations
and the other obligations secured hereby and by any Loan Document, either in
person or by agent or by a receiver appointed by a court, may enter upon and
take possession of the Property and have, hold, manage, lease and operate the
same on such terms and for such period of time as Lender may deem proper,
subject to the Bloomberg Lease. At any time after the occurrence and during the
continuance of an Event of Default, Lender, with or without taking possession of
the Property, may, to the extent not prohibited by applicable Legal

                                       3

Requirements, and, subject to the Bloomberg Lease, demand, sue for or otherwise
collect and receive all Rents, and Security Deposits, including any Rent past
due and unpaid, and to apply such Rents to the payment of: (i) all reasonable
expenses of managing the Property, including, without limitation, the reasonable
salaries, fees and wages of any manager or managing agent and such other
employees as Lender may deem necessary in Lender's sole and absolute discretion
and all expenses of operating and maintaining the Property, including, without
limitation, all rents, taxes, charges, claims, assessments, water rents, sewer
rents and any other liens, and premiums for all insurance which are due and
payable and the cost of all alterations, renovations, repairs or replacements
for the Property, the fees and expenses provided for under the Management
Agreement, provided such fees and expenses shall be subject and subordinate to
the Loan, and all expenses incident to taking and retaining possession and
managing the Property, including, without limitation, attorneys fees and
disbursements; and (ii) the Obligations. The terms of this Section 3 are in all
respects subject to the terms of Section 10(p) and Section 15(a) of the Security
Instrument.

                (c) The exercise by Lender of the right to collect the Rents and
the application thereof as herein provided shall not be considered a waiver of
any Event of Default under the this Assignment or any other Loan Document.
Borrower agrees that the exercise by Lender of one or more of its rights and
remedies hereunder shall in no way be deemed or construed to make Lender a
mortgagee-in-possession unless and until such time as Lender takes actual
possession of the Property.

         Section 4. No Other Assignment.

                (a) Borrower represents and warrants that (i) Borrower has not
executed any, and there is no existing, assignment of the Leases, Rents or
Security Deposits, except for the Security Instrument and (ii) Borrower has not
performed any act or executed any instrument, assignment or agreement, and there
is no existing instrument, assignment or agreement, which might prevent Lender
from exercising its rights under any of the terms and conditions of this
Assignment or which would limit Lender in such exercise in any material way.

                (b) Borrower shall not (i) execute any assignment of the Leases,
Rents or Security Deposits to any person other than Lender and (ii) perform any
act or execute any instrument, assignment or agreement which might prevent
Lender from exercising its rights under any of the terms and conditions of this
Assignment or which would limit Lender in such exercise in any material way. Any
of the foregoing acts done without the prior written consent of Lender shall be
null and void.

         Section 5. Covenants.

                (a) Borrower will duly perform, observe and comply with all of
the affirmative and negative covenants, agreements and obligations to be
performed, observed and complied with by Borrower, and all of the other terms
and conditions applicable to Borrower, under the terms of Section 8.8 of the
Loan Agreement and

                                       4

Section 5 of the Security Instrument as if each such covenant, agreement,
obligation, term and condition were expressly set forth herein in full.

                (b) Borrower shall from time to time, at the request of Lender,
deliver to Lender certified copies of each and every Lease then affecting all or
any part of the Property not previously delivered to Lender or unobtainable from
Bloomberg, together with assignments of any such Lease to which Borrower is a
party to the extent not previously assigned hereunder. Such assignments shall be
on forms reasonably approved by Borrower and Lender or its designee, and
Borrower agrees to pay all reasonable costs reasonably incurred in connection
with the execution and recording of such assignments or any other related
reasonably documents, including, without limitation, Lender's reasonable
attorneys fees and expenses.

         Section 6. No Liability. Subject to the terms of the Bloomberg Lease,
Lender shall not be liable for any loss sustained by Borrower resulting from
Lender's failure to let Property or any portion thereof or any other act or
omission of Lender either in collecting the Rents or, if Lender shall have taken
possession of the premises described in the Leases and/or the Security
Instrument, in managing such premises after any such Event of Default, unless
such loss is caused by the gross negligence or willful misconduct of Lender, its
employees, officers, agents or representatives. Lender shall not be obligated to
perform or discharge, nor does Lender hereby undertake to perform or discharge,
any obligation, duty or liability under any Lease prior to the time that Lender
or any Affiliate, nominee or designee of Lender becomes a
mortgagee-in-possession or owner of the Property or otherwise takes possession
of the Property and Borrower shall, and does hereby agree to, indemnify Lender
for, and to hold Lender harmless from any and all liability, loss or damage
which Lender may incur as a result of or related to the exercise of its remedies
hereunder and under the other Loan Documents and from any and all claims and
demands whatsoever which may be asserted against Lender by reason of any alleged
obligations or undertakings on its part to perform or discharge any of the
terms, covenants or agreements contained in said Leases prior to the time that
Lender or any Affiliate, nominee or designee of Lender becomes a
mortgagee-in-possession or owner of the Property or otherwise takes possession
of the Property. Should Lender incur any such liability under said Leases or in
defense of any such claims or demands, the amount thereof, including reasonable
costs and expenses and reasonable attorneys' fees and expenses actually
incurred, shall be secured hereby, and Borrower shall reimburse Lender therefor
immediately upon demand, and upon the failure of Borrower to do so Lender may,
at its option, exercise Lender's remedies under the Security Instrument as the
same relates to the Property. It is further understood that unless and until
Lender or its Affiliate, nominee or designee shall become a
mortgagee-in-possession or the owner of the Property, or any portion thereof, or
otherwise takes possession or control of the Property, or any portion thereof,
this Assignment shall not operate to place responsibility for the control, care,
management or repair of said premises upon Lender, nor for the carrying out of
any of the terms and conditions of any Lease; nor shall it operate to make
Lender responsible or liable for any waste committed on the Property by the
tenants or any other parties, or for any dangerous or defective condition of
such premises, or for any negligence in the management, upkeep, repair or
control of said premises resulting in loss or injury or death to any tenant,
licensee, employee or stranger

                                       5

other than any of the foregoing arising from the gross negligence or willful
misconduct of Lender, its employees, officers, agents or representatives.

         Section 7. Tenant Notices. Borrower hereby authorizes and directs all
current and future Tenants, upon receipt from Lender of written notice to the
effect that Lender is then the holder of the Security Instrument and that an
Event of Default exists thereunder or under any other Loan Document, to pay over
to Lender, to the extent not prohibited by applicable Legal Requirements, all
Rents and Security Deposits and to continue so to do until otherwise notified by
Lender. Lender agrees, at Borrower's sole cost and expense, to promptly notify
all Tenants that they are no longer obligated to make such payments to Lender
upon the curing of any Event of Default.

         Section 8. Miscellaneous.

                (a) Assignments by Lender. No consent by Borrower shall be
required for any assignment or reassignment of the rights of Lender under this
Assignment to any purchaser of the Loan or any interest in or portion of the
Loan.

                (b) No Release. Lender may take or release other security for
the payment of said principal sum, interest and indebtedness, may release any
party primarily or secondarily liable therefor and may apply any other security
held by it to the satisfaction of such principal sum, interest or indebtedness
without prejudice to any of its rights under this Assignment.

                (c) Conflicts. In the event that any terms or provisions of this
Assignment and the Loan Agreement conflict, the terms and provisions of the Loan
Agreement shall control.

                (d) Expenses. Borrower shall pay to Lender and/or Lender's
counsel, on demand, from time to time, all reasonable costs and expenses,
including, without limitation, reasonable attorneys' fees and disbursements, of,
or incidental to, this Assignment or in any way relating to the enforcement,
protection or preservation of the rights or remedies of Lender under this
Assignment or any other Loan Document.

                (e) Further Assurances. Borrower shall execute and acknowledge
(or cause to be executed and acknowledged) and deliver to Lender all documents,
and take all actions, reasonably required by Lender from time to time to confirm
the rights created or now or hereafter intended to be created under this
Assignment and the other Loan Documents and any security interest created or
purported to be created thereunder, to protect and further the validity,
priority and enforceability of this Assignment and the other Loan Documents, to
subject to the Loan Documents any property of Borrower intended by the terms of
any one or more of the Loan Documents to be encumbered by the Loan Documents, or
otherwise carry out the purposes of the Loan Documents and the transactions
contemplated thereunder.

                (f) Notices. Any notice, election, request or demand which by
any provision of this Assignment is required or permitted to be given or served
hereunder

                                       6

shall be in the manner required for the delivery of notices pursuant to Section
19.6 of the Loan Agreement.

                (g) Entire Agreement. This Assignment and the Loan Documents
constitute the entire and final agreement between Borrower and Lender with
respect to the subject matter hereof and may only be changed, amended, modified
or waived by an instrument in writing signed by Borrower and Lender.

                (h) No Waiver. No waiver of any term or condition of this
Assignment, whether by delay, omission or otherwise, shall be effective unless
in writing and signed by the party sought to be charged, and then such waiver
shall be effective only in the specific instance and for the purpose for which
given. No notice to, or demand on, Borrower shall entitle Borrower to any other
or future notice or demand in the same, similar or other circumstances. A waiver
of one event shall not be construed as continuing or as a bar to or waiver of
any right or remedy to a subsequent event. Nothing contained in this Assignment
and no act done or omitted by Lender pursuant to the powers and rights granted
it hereunder shall be deemed to be a waiver by Lender of any of Lender's rights
and remedies under any other Loan Document. This Assignment is made and accepted
without prejudice to any of such rights and remedies possessed by Lender to
collect the Obligations or any amounts secured hereby and to enforce any other
security therefor held by it, and said rights and remedies may be exercised by
Lender either prior to, simultaneously with, or subsequent to any action taken
by it hereunder.

                (i) Successors and Assigns. This Assignment shall be binding
upon and inure to the benefit of Borrower and Lender and their respective
successors and permitted assigns.

                (j) Captions. All paragraph, section, exhibit and schedule
headings and captions herein are used for reference only and in no way limit or
describe the scope or intent of, or in any way affect, this Assignment.

                (k) Severability. The provisions of this Assignment are
severable, and if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, and not any other
clause or provision of this Assignment.

                (l) GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW, WITHOUT REGARD TO CHOICE OF LAW RULES.
BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OTHER LOAN
DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL
COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH
COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER IN
THE MANNER AND AT THE ADDRESS SPECIFIED FOR NOTICES IN THE LOAN AGREEMENT.
BORROWER

                                       7

HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
COURT.

                (m) JURY TRIAL WAIVER; VENUE. BORROWER AND LENDER AND ALL
PERSONS CLAIMING BY, THROUGH OR UNDER BORROWER AND LENDER, HEREBY EXPRESSLY,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS ASSIGNMENT,
INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR
(II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS ASSIGNMENT (AS NOW OR
HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO,
IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE; AND BORROWER AND LENDER HEREBY AGREE AND CONSENT THAT AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY JURY. EACH
OF BORROWER AND LENDER ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL COUNSEL
REGARDING THE MEANING OF THIS WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN
ESSENTIAL INDUCEMENT FOR THE MAKING OF THE LOAN. THIS WAIVER SHALL SURVIVE THE
REPAYMENT OF THE LOAN. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO
SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER AND LENDER
WAIVE ANY OBJECTIONS WHICH THEY MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR
FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND LENDER AND
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY
SUIT, ACTION OR PROCEEDING.

                                       8

                (n) Counterclaims and other Actions. Borrower hereby expressly
and unconditionally waives, in connection with any suit, action or proceeding
brought by Lender on this Assignment, any and every right it may have to (i)
interpose any counterclaim therein (other than a counterclaim which can only be
asserted in the suit, action or proceeding brought by Lender on this Assignment
and cannot be maintained in a separate action) and (ii) have any such suit,
action or proceeding consolidated with any other or separate suit, action or
proceeding.

                (o) Non-Recourse. Recourse with respect to any claims arising
under or in connection with this Assignment shall be limited to the extent
provided in Article XVIII of the Loan Agreement and the terms, covenants and
conditions of Article XVIII of the Loan Agreement are hereby incorporated by
reference as if fully set forth in this Assignment.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

IN WITNESS WHEREOF, Borrower has duly executed this Assignment of Leases, Rents
and Security Deposits as of the date first hereinabove written.

                              BORROWER:

                              731 OFFICE ONE LLC, a Delaware limited
                              liability company

                              By:  731 OFFICE ONE HOLDING LLC, a
                                   Delaware limited liability company,
                                   its sole member

                                       By:  ALEXANDER'S INC., a Delaware
                                            corporation, its sole member

                                       By:  /s/         Brian Kurtz
                                            -------------------------------
                                                Name:   Brian Kurtz
                                                Title:  Assistant Secretary

STATE OF NEW YORK          )
                           ) ss:
COUNTY OF NEW YORK         )

         On February 13, 2004 before me, the undersigned, a notary public in and
for said state, personally appeared Brian Kurt, personally known to me or proved
to me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity, and that by his/her/their signature
on the instrument, the individual, or the person upon behalf of which the
individual acted, executed the instrument.

                                        /s/ Michael Eden
                                        -------------------------------------
                                        Notary Public

[Notary Seal]                           My commission expires: March 19, 2007

                                    EXHIBIT A

                                 (Office Unit 1)

The Condominium Unit (the "Unit") in the premises known as Beacon Court
Condominium and by the street number by the street number 151 East 58th Street,
Borough of Manhattan, City, County and State of New York, said Unit being
designated and described as "Office Unit 1" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1002
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

         TOGETHER with an undivided 49.0559% percentage interest in the General
Common Elements (as such term is defined in the Declaration);

         TOGETHER with the appurtenances and all the estate and rights in and to
the Unit;

         TOGETHER with, and subject to, the rights, obligations, easements,
restrictions and other provisions set forth in the Declaration and the By-Laws,
all of which constitute covenants running with the Land and will bind any person
having at any time any interest or estate in (any of) the Unit, as though
recited and stipulated at length herein;

The premises within which the Unit is located is more particularly described as:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
borough of Manhattan, County, City and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the southerly side of East
59th Street and the westerly side of Third Avenue;

RUNNING THENCE southerly, along the westerly side of Third Avenue, 200'-10" to
the northerly side of East 58th Street;

THENCE westerly, along the northerly side of East 58th Street 420' to the
easterly side of Lexington Avenue;

THENCE northerly along the easterly side of Lexington Avenue, 200'-10" to the
southerly side of East 59th Street;

THENCE easterly, along the southerly side of East 59th Street, 420' to the point
or place of BEGINNING.

TOGETHER with the benefits and SUBJECT to the burdens of the easements set forth
in the deed made by Seven Thirty One Limited Partnership to 59th Street
Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339 Page 1100.

                                 (Office Unit 2)

The Condominium Unit (the "Unit") in the premises known as Beacon Court
Condominium and by the street number by the street number 151 East 58th Street,
Borough of Manhattan, City, County and State of New York, said Unit being
designated and described as "Office Unit 2" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1003
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

TOGETHER with an undivided 14.0095% percentage interest in the General Common
Elements (as such term is defined in the Declaration);

TOGETHER with the appurtenances and all the estate and rights in and to the
Unit;

TOGETHER with, and subject to, the rights, obligations, easements, restrictions
and other provisions set forth in the Declaration and the By-Laws, all of which
constitute covenants running with the Land and will bind any person having at
any time any interest or estate in (any of) the Unit, as though recited and
stipulated at length herein;

The premises within which the Unit is located is more particularly described as:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
borough of Manhattan, County, City and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the southerly side of East
59th Street and the westerly side of Third Avenue;

RUNNING THENCE southerly, along the westerly side of Third Avenue, 200'-10" to
the northerly side of East 58th Street;

THENCE westerly, along the northerly side of East 58th Street 420' to the
easterly side of Lexington Avenue;

THENCE northerly along the easterly side of Lexington Avenue, 200'-10" to the
southerly side of East 59th Street;

THENCE easterly, along the southerly side of East 59th Street, 420' to the point
or place of BEGINNING.

TOGETHER with the benefits and SUBJECT to the burdens of the easements set forth
in the deed made by Seven Thirty One Limited Partnership to 59th Street
Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339 Page 1100.

                          ACCOUNT AND CONTROL AGREEMENT

                  This ACCOUNT AND CONTROL AGREEMENT, is made as of February 13,
2004 (this AGREEMENT), by and among GERMAN AMERICAN CAPITAL CORPORATION, a
Maryland corporation (LENDER), having an office at 60 Wall Street, New York, New
York 10005, 731 OFFICE ONE LLC, a Delaware limited liability company (BORROWER),
having an address for notice purposes c/o Alexander's Inc., 888 Seventh Avenue,
New York, New York 10019 and JP MORGAN CHASE, a New York banking organization
(CASH MANAGEMENT BANK), having an office at 4 New York Plaza, 13th Floor, New
York, New York 10004.

                  WHEREAS, Borrower is a party to that certain Loan and Security
Agreement, dated as of the date hereof, (as amended, supplemented or otherwise
modified from time to time, the Loan Agreement), pursuant to which Borrower
agreed to establish and maintain certain Collateral Accounts (as defined herein)
as further collateral for a loan (the LOAN) from Lender to Borrower;

                  WHEREAS, as required by the Loan Agreement, and in order to
further effectuate the security interest granted to Lender thereunder, Borrower
established pursuant to the Loan Agreement, the Collateral Accounts with Cash
Management Bank and, pursuant to the Loan Agreement, has granted to Lender a
perfected first priority security interests therein, which Collateral Accounts
are described on SCHEDULE 1A and 1B attached hereto; and

                  WHEREAS, as a condition to making the Loan, Lender is
requiring Borrower and Cash Management Bank to deliver this Agreement to further
effectuate the terms of the Loan Agreement.

                  NOW, THEREFORE, in consideration of foregoing premises, the
establishment of the Collateral Accounts, Ten Dollars ($10.00) paid in hand and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

1.       DEFINITIONS. Capitalized terms used but not otherwise defined herein
shall have the respective meanings given thereto in the Loan Agreement, unless
otherwise expressly provided herein. All references to sections shall be deemed
to be references to sections of this Agreement, unless otherwise indicated. In
the event that the Uniform Commercial Code as in effect in the State of New York
is revised subsequent to the date hereof, all references herein to sections of
the UCC shall be deemed to be references to the successor provisions and
requirements.

         APPROVED BANK shall mean a bank or other financial institution which
         has a minimum long-term unsecured debt rating of at least "A" and a
         minimum short-term unsecured debt rating of at least "A-1" by each of
         the Rating Agencies (one of which must be S&P), or if any such bank or
         other financial institution is not rated by all the Rating Agencies,
         then a minimum long-term rating of at least "A" and a minimum
         short-term unsecured debt rating of at least "A-1", or their respective
         equivalents, by two of the Rating Agencies, but in any event one of the
         two Rating Agencies shall be S&P.

         COLLATERAL ACCOUNTS shall mean the accounts specified on SCHEDULES 1A
         and 1B hereto and any other account established by the Cash Management
         Bank pursuant to and in accordance with the provisions of this
         Agreement or the Loan Agreement.

         ELIGIBLE ACCOUNT shall mean (i) a segregated trust account or accounts
         maintained with the corporate trust department of a federal depository
         institution or state-chartered depository institution subject to
         regulations regarding fiduciary funds on deposit similar to Title 12 of
         the Code of Federal Regulations Section 9.10(b) which, in either case,
         has corporate trust powers, acting in its fiduciary capacity or (ii) a
         segregated account maintained at an Approved Bank.

         PERMITTED INVESTMENTS shall mean the following, subject to
         qualifications hereinafter set forth:

              (i)      obligations of, or obligations guaranteed as to principal
         and interest by, the U.S. government or any agency or instrumentality
         thereof, when such obligations are backed by the full faith and credit
         of the United States of America;

              (ii)     federal funds, unsecured certificates of deposit, time
         deposits, banker's acceptances, and repurchase agreements having
         maturities of not more than 365 days of any bank, the short-term debt
         obligations of which are rated A-1+ (or the equivalent) by each of the
         Rating Agencies, it being understood that the A-1+ benchmark rating and
         other benchmark ratings in this Agreement are intended to be the
         ratings, or the equivalent of ratings, issued by S&P

              (iii)    deposits that are fully insured by the Federal Deposit
         Insurance Corp.;

              (iv)     debt obligations that are rated AA (or the equivalent)
         by each of the Rating Agencies;

              (v)      commercial paper rated A - 1+ (or the equivalent) by
         each of the Rating Agencies;

              (vi)     investment in money market funds rated AAm or AAm - G
         (or the equivalent) by each of the Rating Agencies; and

              (vii)    such other investments as to which Lender shall have
         received a Rating Agency Confirmation.

         Notwithstanding the foregoing, PERMITTED INVESTMENTS (i) shall exclude
         any security with the S&P's "r" symbol (or any other Rating Agency's
         corresponding symbol) attached to the rating (indicating high
         volatility or dramatic fluctuations in their expected returns because
         of market risk), as well as any mortgage-backed securities and any
         security of the type commonly known as "strips"; (ii) shall not have
         maturities in excess of one year; (iii) shall be limited to those
         instruments that have a predetermined fixed dollar of principal due at
         maturity that cannot vary or change; and (iv) shall exclude any
         investment where the right to receive principal and interest derived
         from the underlying investment provides a yield to maturity in excess
         of 120% of the yield to maturity at par

                                       2

         of such underlying investment. Interest may either be fixed or
         variable, and any variable interest must be tied to a single interest
         rate index plus a single fixed spread (if any), and move
         proportionately with that index. No investment shall be made which
         requires a payment above par for an obligation if the obligation may be
         prepaid at the option of the issuer thereof prior to its maturity. All
         investments shall mature or be redeemable upon the option of the holder
         thereof on or prior to the earlier of (x) three months from the date of
         their purchase or (y) the Business Day preceding the day before the
         date such amounts are required to be applied hereunder.

         UCC shall mean the Uniform Commercial Code as in effect from time to
         time in the State of New York.

2.       ESTABLISHMENT AND MAINTENANCE OF THE COLLATERAL ACCOUNTS. The Cash
Management Bank hereby confirms and agrees that:

         a.       DEPOSIT ACCOUNT. It has established the Collection Account
                  identified on SCHEDULE 1A hereto in the name specified in
                  SCHEDULE 1A (such account(s) being referred to herein as the
                  DEPOSIT ACCOUNT). The Collection Account has been established
                  and shall be maintained by Cash Management Bank as a "deposit
                  account" as such term is defined in Section 9-102(a)(29) of
                  the UCC.

         b.       SECURITIES ACCOUNTS.

                  i.       It has established the Holding Account and the
                           Sub-Accounts as required pursuant to the Loan
                           Agreement, identified on SCHEDULE 1B hereto in the
                           names specified in SCHEDULE 1B (such account and the
                           sub-accounts referred to in SCHEDULE 1B hereof being
                           referred to herein as the SECURITIES ACCOUNTS). The
                           Holding Account and the Sub-Accounts will be, if
                           established pursuant to the Loan Agreement,
                           maintained by Cash Management Bank as one or more
                           "securities accounts" as such term is defined in
                           Section 8-501(a) of the UCC. The Sub-Accounts (i) may
                           be ledger or book entry accounts and need not be
                           actual accounts, (ii) shall be linked to the Holding
                           Account and (iii) shall be an Eligible Account to
                           which certain funds shall be allocated and from which
                           disbursements shall be made pursuant to the terms of
                           this Agreement. Except for any funds credited to the
                           Deposit Account, all property delivered to the Cash
                           Management Bank pursuant to the Loan Agreement and
                           all Permitted Investments shall be credited to the
                           Holding Account or one of the Sub-Accounts on the
                           Business Day following any deposit into the Deposit
                           Account. Each item of property (whether investment
                           property, financial asset, security, instrument, cash
                           or otherwise) credited to the Securities Accounts
                           shall be treated as a "financial asset" within the
                           meaning of Section 8-102(a)(9) of the UCC. All
                           securities or other property underlying any
                           "financial assets" (as defined in Section 8-102(a)(9)
                           of the UCC) credited to the Securities Accounts shall
                           be registered in the name of Cash Management Bank,
                           indorsed to Cash Management Bank or indorsed in blank
                           or credited to a securities account in the name of
                           the

                                       3

                           Cash Management Bank. In no case shall any financial
                           asset credited to the Collateral Accounts be
                           registered in the name of Borrower, payable to the
                           order of Borrower or specially endorsed to Borrower
                           except to the extent the foregoing have been
                           specially endorsed to Cash Management Bank or in
                           blank.

         c.       CHANGES TO ACCOUNTS. It shall not change the name or account
                  number of any Collateral Account without the express written
                  consent of the Lender.

3.       PERMITTED INVESTMENTS. Any amounts held in any of the Securities
Accounts shall be invested, liquidated and reinvested in Permitted Investments
and disbursed as directed in writing by Lender in accordance with this Agreement
(or in accordance with such other instructions as Borrower may from time to time
direct, which other instructions from Borrower shall be countersigned by Lender,
unless an Event of Default shall have occurred and be continuing, in which event
all amounts held in any of the Securities Accounts shall be invested, liquidated
and reinvested at Lender's direction in Lender's sole discretion); provided,
however, that the maturity of an adequate portion of the Permitted Investments
on deposit in the Securities Accounts shall be no later than the Business Day
immediately preceding the date on which such funds are required to be withdrawn
therefrom pursuant to this Agreement and no Permitted Investment shall be
liquidated at a loss at the direction of Borrower except to the extent necessary
to make a required payment to Lender on a Payment Date. All Permitted
Investments shall identify Lender as the secured party having the benefit of a
collateral assignment of such Permitted Investments. Amounts held in the
Securities Accounts may be commingled for purposes of purchasing Permitted
Investments and Cash Management Bank shall maintain a record of amounts
allocated to each Securities Account. In no event shall Lender or Cash
Management Bank have any responsibility or liability for the types of
investments that Borrower may direct Lender to direct Cash Management Bank to
make, nor shall they have any duty or responsibility to confirm that the same
are in fact Permitted Investments.

4.       CONTROL OF ACCOUNTS.

         a.       RIGHTS OF LENDER. Borrower hereby irrevocably authorizes
                  Lender to exercise any and all rights of Borrower in respect
                  of the Collateral Accounts and to give Cash Management Bank
                  instructions, directions and entitlement orders in respect of
                  the Collateral Accounts as Lender shall deem necessary or
                  desirable in order to effectuate the provisions of this
                  Agreement and the Loan Agreement, provided that such
                  instructions are in accordance with the terms and provisions
                  hereof and of the Loan Agreement. Borrower hereby irrevocably
                  authorizes and instructs Cash Management Bank to execute any
                  such instructions, directions or entitlement orders Cash
                  Management Bank receives from Lender. Cash Management Bank
                  shall, subject to the terms of this Agreement, treat Lender as
                  entitled to exercise the rights that comprise any financial
                  asset credited to the Collateral Accounts. Cash Management
                  Bank acknowledges that it has received instructions to
                  transfer, and Cash Management Bank covenants that it shall
                  transfer, on a daily basis, all collected funds held in the
                  Collection Account to the Holding Account. Borrower is
                  responsible for monitoring the services provided hereunder and
                  shall notify Cash Management Bank of any errors within thirty
                  (30)

                                       4

                  calendar days after receipt of any report, statement or other
                  material containing or reflecting the error including an
                  account analysis statement, or such greater time period as may
                  be required by law.

         b.       LENDER CONTROL AND PERFECTION. Notwithstanding any other
                  provision of this Agreement, in addition to and not in
                  limitation of Lender's other rights: (i) with respect to each
                  Collateral Account that is a "securities account" within the
                  meaning of Section 8-501 of the UCC (including without
                  limitation the Securities Accounts and to the extent that
                  notwithstanding the intention of the parties the Deposit
                  Account is determined to be a securities account, the Deposit
                  Account), the Cash Management Bank shall comply with all
                  "entitlement orders" (as defined in the UCC) issued by the
                  Lender in accordance with the provisions of Section 4.a.
                  hereof without further consent by the Borrower or any other
                  Person; (ii) with respect to each Collateral Account that is a
                  "deposit account" within the meaning of Section 9-102(a)(29)
                  of the UCC (including, without limitation, the Deposit Account
                  and to the extent that notwithstanding the intention of the
                  parties any of the Securities Accounts are determined to be a
                  deposit account, the Securities Accounts), the Cash Management
                  Bank shall comply with all instruction issued by the Lender in
                  accordance with the provisions of Section 4.a. hereof
                  directing the disposition of funds in such accounts without
                  further consent by the Borrower or any other Person; and (iii)
                  except for the Borrower's right to select Permitted
                  Investments to the extent specified in Section 3 hereof, the
                  Cash Management Bank shall not honor any request of Borrower
                  for the withdrawal, transfer or other disposition of any
                  funds, investment property or other assets on deposit or
                  credited to any Collateral Account without the express prior
                  consent of Lender. The Cash Management Bank has not and will
                  not without Lender's prior express written consent enter into
                  any agreement or understanding with any other Person relating
                  to the Collateral Accounts. For purposes of perfecting the
                  Lender's security interest, the Cash Management Bank confirms
                  that any property (including, without limitation, Permitted
                  Investments) held by it is held as agent for the Lender.

         c.       DESIGNATION OF SERVICER. Borrower and Cash Management Bank
                  each hereby acknowledge that Lender has appointed and
                  designated GMAC Commercial Mortgage Corporation (SERVICER), as
                  agent of Lender, to administer and service the Loan and to
                  exercise Lender's rights under this Agreement and the Loan
                  Agreement. Lender may appoint and designate a replacement
                  servicer to execute Lender's rights with respect to the
                  Collateral Accounts at any time by delivering a notice of such
                  replacement, on or prior to the effective date of such
                  replacement, to Borrower and Cash Management Bank and Borrower
                  and Cash Management Bank shall recognize such replacement.

5.       ACCOUNT FEES; WAIVER OF SET-OFF AND LIENS; ADVERSE CLAIMS.

         a.       ACCOUNT FEES. The Borrower hereby agrees to pay the Cash
                  Management Bank reasonable compensation for the services to be
                  rendered hereunder, as such fees are identified in SCHEDULE 2.
                  Borrower shall separately pay the fees and expenses

                                       5

                  identified in the invoice and Cash Management Bank shall not
                  charge the Collateral Accounts for such fee.

         b.       WAIVER OF CLAIMS. In no event shall Cash Management Bank
                  obtain whether by agreement, operation of law or otherwise a
                  security interest in any of the Collateral Accounts or any
                  security entitlement or funds credited thereto, and to the
                  extent permitted by applicable law, Cash Management Bank
                  hereby agrees that such security interest shall be null and
                  void. To the extent any such security interest arises by
                  operation of law and cannot be waived, the Cash Management
                  Bank hereby subordinates such security interest to the
                  security interest of the Lender. Cash Management Bank hereby
                  waives all existing and future claims, rights of set-off and
                  liens, including, without limitation, banker's liens, against
                  the Collateral Accounts and all items and proceeds thereof
                  that come into Cash Management Bank's possession in connection
                  with the Collateral Accounts and all securities entitlements
                  or funds credited thereto; provided, that Cash Management Bank
                  shall have the right to charge the Collateral Accounts for (i)
                  all items deposited in, and credited to, the Collateral
                  Accounts after the date hereof and subsequently returned to
                  Cash Management Bank unpaid; (ii) overdrafts in the Collateral
                  Accounts; (iii) interest on overdrafts in the Collateral
                  Accounts; and (iv) interest and fees on any items deposited in
                  the Collateral Accounts and returned unpaid. If sufficient
                  funds are not available in the account, the Cash Management
                  Bank shall look to the Borrower for immediate reimbursement,
                  and the Borrower shall comply. Upon the indefeasible repayment
                  in full of the Loan and all Indebtedness and the termination
                  of this Agreement, the foregoing waiver of claims, rights of
                  set-off and liens shall terminate.

         c.       ADVERSE CLAIMS. Except for the claims and interest of Lender
                  and of Borrower in the Collateral Accounts, Cash Management
                  Bank does not know of any claim to, or interest in, the
                  Collateral Accounts or in any "financial asset" (as defined in
                  Section 8-102(a) of the UCC) credited thereto. If any Person
                  asserts any lien, encumbrance or adverse claim (including any
                  writ, garnishment, judgment, warrant of attachment, execution
                  or similar process) against the Collateral Accounts or in any
                  funds or financial asset carried therein, Cash Management Bank
                  shall promptly notify Lender and Borrower thereof and may
                  thereafter respond to such service in any manner authorized by
                  law or regulation, without further obligation to Lender or
                  Borrower.

6.       DEPOSITS; ACCOUNTS RECORDS.

         a.       DEPOSITS. Cash Management Bank shall receive and process, on a
                  daily basis, any deposits presented or sent to Cash Management
                  Bank for deposit in the Collection Account. Cash Management
                  Bank shall send to Servicer and Borrower: (i) copies of daily
                  credit advices specifying all amounts deposited in the
                  Collateral Accounts on a monthly basis as described in Section
                  6(b) below, (ii) any other advices or reports typically
                  furnished by Cash Management Bank in connection with accounts
                  similar to the Collateral Accounts and (iii) any other reports
                  reasonably requested by Borrower, Lender and Servicer.

                                       6

         b.       MONTHLY STATEMENTS. Cash Management Bank shall maintain a
                  record of all transfers to and from the Accounts and furnish
                  to Borrower, Lender and Servicer (i) a monthly statement of
                  the Collateral Accounts and (ii) promptly following request by
                  either Borrower, Lender and Servicer therefor, interim reports
                  on transfers to and from the Collateral Accounts.

         c.       NOTICE OF INSUFFICIENCY. Cash Management Bank shall notify
                  Borrower, Lender and Servicer promptly in the event that there
                  are insufficient funds on deposit in the Collection Account or
                  the Holding Account to make any of the transfers or
                  withdrawals directed by Lender or Servicer.

7.       CASH MANAGEMENT BANK NOT LIABLE; INDEMNITY.

         a.       NO LIABILITY. The Cash Management Bank shall not be liable for
                  acts or omissions caused by events beyond its reasonable
                  control including, without limitation, fire, casualty, failure
                  of equipment, telecommunications or data processing services,
                  lockout, strike, unavoidable accidents, acts of God, acts of
                  terrorists, riots, war or the issuance or operation of any
                  adverse governmental law, ruling, regulation, order or decree,
                  or an emergency that prevents the Cash Management Bank from
                  operating normally, except for its own gross negligence or
                  willful misconduct. The Cash Management Bank may rely and
                  shall be protected in acting or refraining from acting upon
                  any notice (including, without limitation, electronically
                  confirmed facsimiles of such notice) reasonably believed by
                  the Cash Management Bank in good faith to be genuine and to
                  have been signed or presented by the proper party or parties.

         b.       INDEMNITY. Borrower shall indemnify, defend and save harmless
                  the Cash Management Bank from all claims, actions, suits,
                  losses, damages, costs, expenses or liability of any nature
                  and type (including the reasonable fees and expenses of
                  outside counsel) arising out of or in connection with its
                  execution and performance of this Agreement, except to the
                  extent that such loss, liability or expense is due to the
                  gross negligence or willful misconduct of the Cash Management
                  Bank, its directors, officers, agents or employees. Anything
                  in this Agreement to the contrary notwithstanding, in no event
                  shall the Cash Management Bank be entitled to or liable for
                  special, indirect or consequential loss or damage of any kind
                  whatsoever (including but not limited to lost profits). Cash
                  Management Bank hereby acknowledges that any right of
                  indemnification from Borrower shall be subject and subordinate
                  in all respects to Borrower's obligations to Lender in
                  connection with the Loan.

8.       TERMINATION.

         a.       TERMINATION BY CASH MANAGEMENT BANK. Cash Management Bank may
                  resign from its responsibilities of this Agreement upon thirty
                  (30) days' prior written notice to Lender and Borrower,
                  provided, that in no event shall Cash Management Bank be
                  released of its obligations hereunder unless and until a
                  substitute Cash Management Bank has been designated and
                  assumed the

                                       7

                  obligations of Cash Management Bank under this Agreement in
                  writing. Borrower shall use its commercially reasonable
                  efforts to designate such a Cash Management Bank promptly
                  after receipt of notice of resignation from Cash Management
                  Bank and to cause such designated successor promptly to assume
                  the obligations of Cash Management Bank hereunder. Any such
                  replacement Cash Management Bank must be approved by Lender in
                  writing, which, provided such replacement Cash Management Bank
                  is an Approved Bank and executes and delivers to Lender a
                  replacement Account Agreement, such approval shall not be
                  unreasonably withheld, conditioned or delayed. If the Cash
                  Management Bank has resigned and a successor to the Cash
                  Management Bank has not been designated within thirty (30)
                  days after the date of the Cash Management Bank's resignation,
                  all funds in the Cash Management Account, checks payable to
                  the Cash Management Account and other materials received by
                  Cash Management Bank shall be delivered to Lender, or pursuant
                  to Lender's instructions, and the Cash Management Bank shall
                  have no further obligation act hereunder.

         b.       TERMINATION BY BORROWER AND LENDER. This Agreement may be
                  terminated upon delivery to Cash Management Bank of a notice
                  jointly signed by Lender and Borrower and shall automatically
                  terminate upon the indefeasible repayment in full of the Loan
                  and all Indebtedness (as defined in the Security Instrument).

         c.       CONTINUING OF OBLIGATIONS. Upon any termination of this
                  Agreement, Cash Management Bank shall continue to hold all
                  funds then held in the Collateral Accounts, or thereafter
                  presented to Cash Management Bank or received for deposit in
                  the Collateral Accounts, in accordance with this Agreement
                  until Cash Management Bank receives written instructions from
                  each of Lender and, provided no Event of Default has occurred
                  and is then continuing, Borrower, concerning the disposition
                  of such funds. Upon the termination of this Agreement, Cash
                  Management Bank shall transfer all funds and securities held
                  in the Collateral Accounts in accordance with such written
                  instructions of Lender and, provided no Event of Default has
                  occurred and is then continuing, Borrower.

9.       MISCELLANEOUS.

         a.       NOTICES. All notices, consents, approvals and requests
                  required or permitted hereunder shall be given in writing and
                  shall be effective for all purposes if hand delivered or sent
                  by (a) certified or registered United States mail, postage
                  prepaid, return receipt requested or (b) expedited prepaid
                  delivery service, either commercial or United States Postal
                  Service, with proof of attempted delivery, or (c) by
                  telecopier (with answer back acknowledged), addressed as
                  follows (or at such other address and Person as shall be
                  designated from time to time by any party hereto, as the case
                  may be, in a written notice to the other parties hereto in the
                  manner provided for in this Section and given at least twenty
                  (20) days prior to the effective date of such change of
                  address).

                                       8

                  If to Borrower:           731 Office One LLC
                                            c/o Alexander's, Inc.
                                            888 Seventh Avenue
                                            New York, New York 10019
                                            Attention: Ms. Wendy Silverstein
                                            Facsimile: (212) 894-7073
                                            Confirmation No. (212) 894-7000

                  with a copy (other than account reports and credit advices)
                  to:

                                            Proskauer Rose LLP
                                            1585 Broadway
                                            New York, New York 10036-8299
                                            Attention: Ronald D. Sernau, Esq.
                                            Facsimile: (212) 969 2900
                                            Confirmation No.: (212) 969-3000

                  If to Cash Management Bank:

                                            JP Morgan Chase
                                            ITS - Collateral Management
                                            4 New York Plaza, 13th Floor
                                            New York, New York 10004
                                            Attention: Bruce Vecchio, Vice
                                             President
                                            Facsimile: (212) 623-2802
                                            Confirmation No.: (212) 623-0431

                  and

                  If to Lender:

                                            German American Capital Corporation
                                            60 Wall Street
                                            New York, New York  10005
                                            Attention: General Counsel
                                            Facsimile: (212) 250-7210
                                            Confirmation No.: (212) 250-2500

                  with a copy to:

                                            GMAC Commercial Mortgage Corporation
                                            200 Witmer Road
                                            Horsham, Pennsylvania 19044
                                            Attention: Managing Director, Global
                                            Facsimile: (215) 328-3478
                                            Confirmation No.: (215) 328-1030

                                       9

                  with a copy (other than account reports and credit advices)
                  to:

                                            Skadden, Arps, Slate, Meagher & Flom
                                             LLP
                                            Four Times Square
                                            New York, New York 10036-6522
                                            Attention:  Harvey R. Uris, Esq.
                                            Facsimile: (212) 735-2000
                                            Confirmation No.: (212) 735-3000

All notices, elections, requests and demands under this Agreement shall be
effective and deemed received upon the earliest of (i) the actual receipt (or
rejection of receipt) of the same by personal delivery or otherwise, (ii) one
(1) Business Day after being deposited with a nationally recognized overnight
courier service as required above, (iii) upon delivery or rejection of delivery
after being deposited in the United States mail as required above or (iv) on the
day sent if sent by facsimile with confirmation on or before 5:00 p.m. New York
time on any Business Day or on the next Business Day if so delivered after 5:00
p.m. New York time or on any day other than a Business Day. Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given as herein required shall be deemed to be receipt of
the notice, election, request, or demand sent.

         b.       ENTIRE AGREEMENT. This Agreement constitutes the entire and
                  final agreement between Borrower and Lender with respect to
                  the subject matter hereof and may only be changed, amended,
                  modified or waived by an instrument in writing signed by
                  Borrower, Lender and Cash Management Bank.

         c.       NO WAIVER. No waiver of any term or condition of this
                  Agreement, whether by delay, omission or otherwise, shall be
                  effective unless in writing and signed by the party sought to
                  be charged and consented to in writing by Lender, and then
                  such waiver shall be effective only in the specific instance
                  and for the purpose for which given.

         d.       SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
                  and inure to the benefit of Borrower, Lender and Cash
                  Management Bank, their respective successors and permitted
                  assigns.

         e.       CAPTIONS. All paragraph, section, exhibit and schedule
                  headings and captions herein are used for reference only and
                  in no way limit or describe the scope or intent of, or in any
                  way affect, this Agreement.

         f.       COUNTERPARTS. This Agreement may be executed in counterparts,
                  each of which shall be an original and all of which when taken
                  together shall constitute one binding Agreement.

         g.       CONFLICTS. To the extent that any agreements other than the
                  Loan Agreement, currently existing, are inconsistent with this
                  Agreement, this Agreement shall supersede any other agreement
                  relating to the matters referred to herein. In the event of a
                  conflict between the terms an conditions of this Agreement and
                  the

                                       10

                  terms and conditions of the Loan Agreement, the terms and
                  conditions of the Loan Agreement shall control.

         h.       SEVERABILITY. The provisions of this Agreement are severable,
                  and if any one clause or provision hereof shall be held
                  invalid or unenforceable in whole or in part, then such
                  invalidity or unenforceability shall affect only such clause
                  or provision, or part thereof, and not any other clause or
                  provision of this Agreement.

         i.       FURTHER ASSURANCES. Borrower agrees that at any time and from
                  time to time, at the reasonable expense of Borrower, Borrower
                  will promptly execute and deliver all further instruments and
                  documents and take all further action, that may be reasonably
                  necessary or desirable, or that Lender may reasonably request,
                  in order to perfect and protect any security interest granted
                  or purported to be granted in the Loan Agreement, including,
                  without limitation, any security interests in and to any
                  Permitted Investments, or to enable Lender to exercise and
                  enforce its rights and remedies under the Loan Agreement or
                  hereunder with respect to any Account Collateral.

         j.       RELIANCE. The Cash Management Bank may rely and shall be
                  protected in acting or refraining from acting upon any written
                  notice, instruction or request furnished to it hereunder and
                  reasonably believed by it to be genuine and to have been
                  signed or presented by the proper party or parties. The Cash
                  Management Bank shall be under no duty to inquire into or
                  investigate the validity, accuracy or content of any such
                  document. The Cash Management Bank shall have no duty to
                  solicit any payments which may be due it hereunder.

         k.       COMMUNICATION. In the event funds transfer instructions are
                  given (other than in writing at the time of execution of the
                  Agreement), whether in writing, by telecopier or otherwise,
                  the Cash Management Bank is authorized to seek confirmation of
                  such instructions by telephone call-back, and the Cash
                  Management Bank may rely upon the confirmations of anyone
                  purporting to be the person or persons so designated. The
                  persons and telephone numbers for call-backs may be changed
                  only in a writing actually received and acknowledged by the
                  Cash Management Bank. The parties to this Agreement
                  acknowledge that such security procedure is commercially
                  reasonable.

         l.       ACCOUNT NUMBERS. It is understood that the Cash Management
                  Bank and the Lender's bank, with respect to any funds
                  transfer, may rely solely upon any account numbers or similar
                  identifying number provided by either of the other parties
                  hereto to identify (i) the Lender, (ii) the Lender's bank, or
                  (iii) an intermediary bank. The Cash Management Bank may apply
                  any of the reserved funds for any payment order it executes
                  using any such identifying number, even where its use may
                  result in a person other than the beneficiary being paid, or
                  the transfer of funds to a bank other than the beneficiary's
                  bank, or an intermediary bank designated.

                                       11

         m.       GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
                  IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
                  TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW,
                  WITHOUT REGARD TO CHOICE OF LAW RULES. BORROWER AGREES THAT
                  ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OTHER LOAN
                  DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW
                  YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
                  NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
                  PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER IN THE
                  MANNER AND AT THE ADDRESS SPECIFIED FOR NOTICES IN THE LOAN
                  AGREEMENT. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY
                  NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
                  SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
                  COURT.

         n.       JURY TRIAL WAIVER. EACH OF BORROWER, LENDER AND CASH
                  MANAGEMENT BANK, FOR ITSELF AND ALL PERSONS CLAIMING BY,
                  THROUGH OR UNDER IT, HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY
                  AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
                  CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER
                  THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR
                  FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY CONNECTED WITH
                  OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
                  OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT (AS NOW OR
                  HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
                  AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
                  TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
                  SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING
                  OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT
                  OR OTHERWISE; AND EACH OF BORROWER, LENDER AND CASH MANAGEMENT
                  BANK HEREBY AGREES AND CONSENTS THAT AN ORIGINAL COUNTERPART
                  OR A COPY OF THIS SECTION MAY BE FILED WITH ANY COURT AS
                  WRITTEN EVIDENCE OF THE CONSENT HERETO TO THE WAIVER OF ANY
                  RIGHT TO TRIAL BY JURY. EACH OF BORROWER, LENDER AND CASH
                  MANAGEMENT BANK ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL
                  COUNSEL REGARDING THE MEANING OF THIS WAIVER AND ACKNOWLEDGES
                  THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE OTHER
                  EXECUTING THIS AGREEMENT AND LENDER MAKING THE LOAN. THIS
                  WAIVER SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.

         o.       ADDITIONAL CASH MANAGEMENT BANK PROVISIONS.

                                       12

                  i.       The duties and responsibilities of the Cash
                           Management Bank hereunder shall be determined solely
                           by the express provisions of this Agreement, and no
                           other or further duties or responsibilities shall be
                           implied. The Cash Management Bank shall not have any
                           liability under, nor duty to inquire into the terms
                           and provisions of any agreement or instructions,
                           other than outlined in the Agreement. Cash Management
                           Bank shall not be under any obligation or duty to
                           perform any act which would involve it in expense or
                           liability or to institute or defend any suit in
                           respect hereof, or to advance any of its own monies.
                           The Cash Management Bank may execute any of its
                           powers and perform any of its duties hereunder
                           directly or through agents or attorneys (and shall be
                           liable only for the careful selection of any such
                           agent or attorney) and may consult with counsel,
                           accountants and other skilled persons to be selected
                           and retained by it. In the event that the Cash
                           Management Bank shall be uncertain as to its duties
                           or rights hereunder or shall receive instructions,
                           claims or demands from any party hereto which, in its
                           opinion, conflict with any of the provisions of this
                           Agreement, it shall be entitled to refrain from
                           taking any action and its sole obligation shall be to
                           keep safely all property held in escrow until it
                           shall be directed otherwise in writing by all of the
                           other parties hereto or by a final order or judgment
                           of a court of competent jurisdiction.

                  ii.      Any corporation into which the Cash Management Bank
                           in its individual capacity may be merged or converted
                           or with which it may be consolidated, or any
                           corporation resulting from any merger, conversion or
                           consolidation to which the Cash Management Bank in
                           its individual capacity shall be a party, or any
                           corporation to which substantially all the corporate
                           trust business of the Cash Management Bank in its
                           individual capacity may be transferred, shall be the
                           Cash Management Bank under this Agreement without
                           further act.

                  iii.     The parties hereto acknowledge that the foregoing
                           indemnities in Section 7(b) shall survive the
                           resignation or removal of the Cash Management Bank or
                           the termination of this Agreement.

                  iv.      The Borrower represents that the correct Taxpayer
                           Identification Number of 731 Office One LLC is
                           06-1716800. All interest or other income earned under
                           this Agreement shall be allocated to Borrower and
                           reported by Alexander's Inc. to the Internal Revenue
                           Service. Notwithstanding such written directions,
                           Cash Management Bank shall report and, as required,
                           withhold any taxes as it determines may be required
                           by any law or regulation in effect at the time of the
                           distribution. In addition, Cash Management Bank shall
                           withhold any taxes required by applicable law and
                           shall remit such taxes to the appropriate
                           authorities.

                  v.       The person executing this Agreement on its party's
                           behalf has been duly and properly authorized to do
                           so.

                                       13

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       14

                  IN WITNESS WHEREOF, Borrower, Cash Management Bank and Lender
have duly executed this Account Agreement as of the day and year first above
written.

                                    BORROWER:

                                    731 OFFICE ONE LLC, a Delaware limited
                                    liability company

                                    By: 731 OFFICE ONE HOLDING LLC, a Delaware
                                    limited liability company, its sole member

                                        By: ALEXANDER'S INC., a Delaware
                                            corporation, its sole member

                                            By: /s/ Brian Kurtz
                                                --------------------------------
                                                Name:  Brian Kurtz
                                                Title: Assistant Secretary

                                    CASH MANAGEMENT BANK:

                                    JP MORGAN CHASE, a New York banking
                                    organization

                                    By: /s/ Sylvia Gosha
                                        ----------------------------------------
                                        Name:  Sylvia Gosha
                                        Title: Assistant Vice President

                                    LENDER:

                                    GERMAN AMERICAN CAPITAL CORPORATION,
                                    a Maryland corporation

                                    By: /s/ Christopher Tognola
                                        ----------------------------------------
                                        Name:  Christopher Tognola
                                        Title: Vice President

                                    By: /s/ Thomas R. Traynor
                                        ----------------------------------------
                                        Name:  Thomas R. Traynor
                                        Title: Authorized Signatory

                                   SCHEDULE 1A

                               COLLECTION ACCOUNT

"731 Office One LLC f/b/o German American Capital Corporation, as secured party,
Collection Account" (Account Number 323962033).

                                   Schedule 1A

                                   SCHEDULE 1B

                         HOLDING ACCOUNT AND SUBACCOUNTS

"731 Office One LLC f/b/o German American Capital Corporation, as secured party,
Holding Account" (Account Number 323962025) and the following sub-accounts of
the Holding Account:

         i.       "731 Office One LLC f/b/o German American Capital Corporation,
as secured party, Debt Service Reserve Account" (Account Number 323962025-01);

         ii.      "731 Office One LLC f/b/o German American Capital Corporation,
as secured party, Tax Reserve Account" (Account Number 323962025-02);

         iii.     "731 Office One LLC f/b/o German American Capital Corporation,
as secured party, Insurance Reserve Account" (Account Number 323962025-03);

         iv.      "731 Office One LLC f/b/o German American Capital Corporation,
as secured party, Structural Reserve Account" (Account Number 323962025-04);

         v.       "731 Office One LLC f/b/o German American Capital Corporation,
as secured party, Proceeds Reserve Account" (Account Number 323962025-05);

         vi.      "731 Office One LLC f/b/o German American Capital Corporation,
as secured party, Alterations Reserve Account" (Account Number 323962025-06);

         vii.     "731 Office One LLC f/b/o German American Capital Corporation,
as secured party, Operating Expense Reserve Account" (Account Number
323962025-07);

         viii.    "731 Office One LLC f/b/o German American Capital Corporation,
as secured party, Additional Debt Service Reserve Account" (Account Number
323962025-08); and

         ix.      "731 Office One LLC f/b/o German American Capital Corporation,
as secured party, Cash Trap Reserve Account" (Account Number 323962025-09).

                                   Schedule 1B

                                   SCHEDULE 2

                                [JP MORGAN LOGO]

                  SCHEDULE OF FEES FOR SERVICES RELATED TO THE

                             731 OFFICE ONE LLC AND
                       GERMAN AMERICAN CAPITAL CORPORATION
                          ACCOUNT AND CONTROL AGREEMENT

I.       INITIAL FEE                                                    Waived

This fee covers the acceptance of the appointment, commenting
on the agreement and supporting documentation, setting up
Master Demand Deposit Account(s) and appropriate Sub-Accounts.
Payable upon closing.

II.      MONTHLY ADMINISTRATION FEE                                     $1,500

Covers the normal administration of the transaction including the
monitoring of the cash flows and the maintenance of the accounts
and sub-accounts as described in the transaction documents.
Payable each month in advance.

III.     ACTIVITY FEES (AS APPLICABLE):

Wire Transfer Fees:                               $25 per wire, in excess of 10
Investment Fees:                                                         Waived*

*Investment Processing Fees are waived if funds are maintained in the JPMorgan
Cash Escrow Service. If applicable, and unless instructed otherwise, all funds
shall be maintained as a Cash Escrow deposit on the Trust Ledger of JPMorgan
Chase Bank. The JPMorgan Chase Trust Cash Escrow service has a return rate,
based upon the average daily balance maintained during each month, of LIBOR less
50 basis points.

IV.      LEGAL FEES / OUT-OF-POCKET EXPENSES                            AT COST

It is not our intention to utilize counsel. However, to the extent that counsel
is deemed necessary, their fees and expenses will be passed on at cost.
Out-of-pocket expenses, if applicable, will be billed at cost, including but not
limited to, telephone, faxes, postage, stationary, delivery expenses, etc.

FEE SCHEDULE ASSUMPTIONS:

1.  JPMorgan Chase Bank is not responsible for providing tax reporting services.

2.  A Demand Deposit Account will be established to receive funds from a
    Commercial Property.

3.  JPMorgan Chase Bank may receive instructions from a Servicer, acceptable to
    us.

4.  Lockbox arrangements, if applicable, will be established through the
    JPMorgan Chase Bank Treasury Services Group. The fees for the lockbox will
    be in addition to those quoted above and agreed upon between the Borrower
    and the Treasury Services Group.

IMPORTANT NOTE: TO HELP IN THE FIGHT AGAINST THE FUNDING OF TERRORISM AND MONEY
LAUNDERING ACTIVITIES WE ARE REQUIRED ALONG WITH ALL FINANCIAL INSTITUTIONS TO
OBTAIN, VERIFY, AND RECORD INFORMATION THAT IDENTIFIES EACH PERSON WHO OPENS AN
ACCOUNT. WHEN YOU OPEN AN ACCOUNT, WE WILL ASK FOR INFORMATION THAT WILL ALLOW
US TO IDENTIFY YOU.

                                   Schedule 2

                       MANAGER'S CONSENT AND SUBORDINATION
                             OF MANAGEMENT AGREEMENT

                  This MANAGER'S CONSENT AND SUBORDINATION OF MANAGEMENT
AGREEMENT, is made as of February 13, 2004 (this AGREEMENT), by 731 oFFICE One
LLC, a Delaware limited liability company (BORROWER), having an address for
notice purposes c/o Alexander's Inc., 888 Seventh Avenue, New York, New York
10019, and ALEXANDER'S MANAGEMENT LLC, a New York limited liability company
(MANAGER), having an address at 888 Seventh Avenue, New York, New York 10019, to
and for the benefit of GERMAN AMERICAN CAPITAL CORPORATION, a Maryland
corporation (together with its successors and assigns, LENDER), having an
address at 60 Wall Street, New York, New York 10005.

                              W I T N E S S E T H:

                  WHEREAS, Borrower is the owner of a fee simple interest in the
real property commonly known as Office Unit 1 and Office Unit 2 of the Beacon
Court Condominium located at 731 Lexington Avenue, New York, New York, and more
particularly described on Exhibit A attached hereto and incorporated herein (the
PROPERTY);

                  WHEREAS, on the date hereof, in accordance with the terms of a
Loan and Security Agreement, dated as of the date hereof (as the same may be
amended and supplemented from time to time, the LOAN AGREEMENT), between Lender,
as lender, and Borrower, as borrower, Lender is making a loan to Borrower in the
principal amount of $400,000,000 (the LOAN), which Loan is evidenced by that
certain Amended, Restated and Consolidated Note, dated as of the date hereof (as
the same may be amended, substituted, replaced, exchanged and supplemented from
time to time, the NOTE), made by and between Borrower and Lender and secured by
that certain Amended, Restated and Consolidated Mortgage, Security Agreement,
Financing Statement and Assignment of Leases, Rents and Security Deposits, dated
as of the date hereof (as the same may be amended and supplemented from time to
time, the SECURITY INSTRUMENT), by and between Borrower and Lender and the other
Loan Documents (as defined in the Loan Agreement);

                  WHEREAS, Manager has been retained by Borrower to act as the
manager of the Properties and will derive substantial benefit from the making of
the Loan;

                  WHEREAS, as a condition to making the Loan, Lender has
required Borrower and Manager to deliver this Agreement for the benefit of
Lender; and

                  WHEREAS, the forgoing recitals are intended to form an
integral part of this Agreement.

                  NOW, THEREFORE, in consideration of the Loan, foregoing
premises, Ten Dollars ($10.00) paid in hand, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower and Manager agree as follows:

                  Section 1.        Definitions.

                           (a)      The following terms shall have the meaning
                  ascribed thereto:

                  Agreement: Shall have the meaning provided in the first
                  paragraph.

                  Borrower: Shall have the meaning provided in the first
                  paragraph.

                  Lender: Shall have the meaning provided in the first
                  paragraph.

                  Loan: Shall have the meaning provided in the Recitals.

                  Loan Agreement: Shall have the meaning provided in the
                  Recitals.

                  Management Agreement: Shall mean that certain Management
                  Agreement between Borrower and Manager dated of even date
                  herewith.

                  Manager: Shall have the meaning provided in the first
                  paragraph.

                  Note: Shall have the meaning provided in the Recitals.

                  Security Instrument: Shall have the meaning provided in the
                  Recitals.

                           (b)      Capitalized terms used but not otherwise
defined herein shall have the respective meanings given thereto in the Loan
Agreement, unless otherwise expressly provided herein. All references to
sections shall be deemed to be references to sections of this Agreement, unless
otherwise indicated.

                  Section  2. Assignment of Management Agreement. Borrower
hereby conditionally transfers, assigns and delivers unto Lender, and grants
Lender a security interest in, all of its right, title and interest in and to,
but none of its obligations under, the Management Agreement, said transfer and
assignment to automatically become a present, unconditional assignment, at
Lender's election by written notice to the Borrower, upon the occurrence and
during the continuance of an Event of Default. Manager hereby consents to the
assignment set forth in this paragraph. Notwithstanding the foregoing, upon
notice to Borrower and Manager transmitted after the occurrence and during the
continuance of an Event of Default, the foregoing assignment and transfer shall
automatically become a present, unconditional assignment, at Lender's option.

                  Section  3. Subordination of Management Agreement to Lien of
Security Instrument.

                                       2

                           (a)      Subordination of Rights. Any and all liens,
rights and interests, whether choate or inchoate and including, without
limitation, all mechanic's and materialman's liens, owned, claimed or held, or
to be owned, claimed or held, by Manager pursuant to the Management Agreement in
and to the Properties, are and shall be, and are hereby made, in all respects
subordinate, subject and inferior to the liens and security interests created or
to be created for the benefit of Lender, its successors and assigns, and
securing the repayment and performance of the Obligations. Any indemnification
or other rights or claims of Manager against Borrower under or in connection
with the Management Agreement shall be fully subordinated to the Obligations.

                           (b)      Governed by Loan Documents. Manager agrees
that until such time as the Indebtedness has been repaid in full, the terms and
provisions of this Agreement and the other Loan Documents shall be superior to
the terms and provisions of the Management Agreement with respect to the payment
of any management fees thereunder and termination of the Management Agreement,
and to the extent that there are any inconsistencies between the Management
Agreement and this Agreement and the Loan Documents with respect to such terms
and provisions, the terms, provisions and conditions in this Agreement and the
Loan Documents shall govern in all respects. In the event of any inconsistency
between the terms of this Agreement and the terms of the Loan Agreement, the
terms of the Loan Agreement shall prevail. Without limiting the preceding
sentence, nothing in this Agreement shall modify the terms of the Loan Agreement
which (a) permit Borrower to amend, modify, cancel or terminate the Management
Agreement, (b) do not require a written management agreement and (c) permit
Borrower to replace Manager with a Qualified Manager in accordance with the
terms of the Loan Agreement.

                  Section 4.        Obligations and Rights of Lender.

                           (a)      Lender Not Obligated Under Management
Agreement. Manager agrees that, except as provided in this Section, nothing in
this Agreement shall impose upon Lender, and Lender shall not have, any
obligation for payment or performance in favor of Manager with respect to the
Management Agreement or the Property. In the event that Lender notifies Manager
in writing after the occurrence and during the continuance of an Event of
Default that Lender has elected to assert Borrower's rights under the Management
Agreement, Lender shall pay Manager the sums due Manager under the terms of the
Management Agreement for the period commencing on the effective date of Lender's
notice to Manager and ending on the expiration date or earlier termination of
the Management Agreement.

                           (b)      Continued Performance by Manager. Upon the
occurrence and during the continuance of an Event of Default, Manager shall, at
the request of Lender, continue performance, on behalf of Lender, of all of
Manager's obligations under the terms of the Management Agreement with respect
to the Property, provided that Lender gives Manager the notice provided for in
this Section and Lender or Borrower performs or causes to be performed the
obligations of Borrower to Manager under the

                                       3

Management Agreement accruing or arising from and after, and with respect to the
period commencing upon, the effective date of such notice.

                           (c)      Right to Terminate. Notwithstanding anything
contained in the Management Agreement to the contrary, Lender, or Borrower at
Lender's direction, shall have the right to terminate the Management Agreement
(i) upon, or at any time after the occurrence and during the continuance of a
monetary Event of Default, (ii) with respect to any Manager that is not an
Affiliate of Borrower, upon, or at any time after the occurrence and during the
continuance of a material default (as determined by Lender in its sole and
absolute discretion) under the terms of the Management Agreement, (iii) upon, or
at any time after, a forty-nine percent (49%) or more change in control of the
ownership of Manager, unless Manager is a publicly traded company or a direct or
indirect wholly owned subsidiary of such publicly traded company (to the extent
such change in control in excess of forty-nine percent (49%) or more results in
a change in control of forty-nine percent (49%) or more in the publicly traded
company), (iv) at any time following the Manager becoming insolvent, or (v) at
any time following any act of gross negligence, fraud, misapplication of funds,
violation of the standard of care, or any other violation of its duties pursuant
to the Management Agreement beyond applicable notice and grace periods, if any,
thereunder, by giving Manager thirty (30) days prior written notice of such
termination, in which event Manager shall resign as manager of the Property
effective upon the end of such thirty (30) day period.

                           (d)      No Joint Venture. Lender has no obligation
to Manager with respect to the Loan and Manager shall not be a third party
beneficiary with respect to any of Lender's obligations to Borrower set forth in
the Loan Documents. The relationship of Lender to Borrower is one of a creditor
to a debtor, and Lender is not a joint venturer or partner of Borrower or
Manager.

                  Section 5.        Manager's Representations. Manager warrants
and represents to Lender that the following are true, complete and correct:

                                    (i)     Manager has agreed to act as
         property manager of the Property pursuant to the Management Agreement.

                                    (ii)    A true, correct and complete copy of
         the Management Agreement is attached as Exhibit B.

                                    (iii)   The Management Agreement is in full
         force and effect and has not been amended, modified or supplemented.

                                    (iv)    The entire agreement between Manager
         and Borrower for the management of the Property is evidenced by the
         Management Agreement.

                                    (v)     The Management Agreement constitutes
         the legal, valid and binding agreement of Manager, enforceable against
         Manager in accordance with its terms.

                                       4

                                    (vi)    Manager is qualified and has full
         power and authority to perform all of its obligations under the
         Management Agreement and this Agreement.

                                    (vii)   Neither Manager nor, to Manager's
         best knowledge, Borrower is in default in the performance of any of
         their respective obligations under the Management Agreement and there
         is no condition which, with the giving of notice and/or the passing of
         time, would constitute a default under the Management Agreement.

                                    (viii)  Except for sums not currently due
         and payable that have been incurred in the ordinary course of business
         of the operation of the Property, no amounts are due to Manager under
         the Management Agreement on the date hereof.

                                    (ix)    Manager has not assigned, pledged or
         otherwise transferred or subcontracted its rights and/or obligations
         under the Management Agreement.

                                    (x)     Manager has all permits, licenses
         and other governmental authorizations necessary for it to perform its
         obligations under the Management Agreement.

                                    (xi)    Manager has received and reviewed a
         copy of the Loan Agreement.

                  Section 6.        Manager's Agreements.

                           (a)      Notice of Default. Manager shall give Lender
prompt written notice of any other default beyond applicable grace and cure
periods by Borrower under the Management Agreement.

                           (b)      No Termination of Management Agreement.
Manager shall not terminate the Management Agreement without first obtaining
Lender's prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed. Notwithstanding the foregoing, Manager shall
have the right to terminate the Management Agreement for default by Borrower
beyond applicable grace and cure periods with respect to non-payment of the
management fee due thereunder by giving Lender ten (10) days' prior written
notice of such termination. In the event Lender shall cure such non-payment
default in the aforesaid ten (10) day period, then any such termination notice
shall be deemed to void and of no further force or effect.

                           (c)      No Claim Against Lender. Manager shall not
look to, or make any claim against, Lender for payment of any accrued but unpaid
fees, including, without limitation, any termination fees, relating to the
Property or the Management Agreement pursuant to this Agreement or otherwise.

                                       5

                           (d)      No Amendments. Manager shall not terminate
or materially amend or modify the Management Agreement without the prior written
consent of Lender, not to be unreasonably withheld, delayed or conditioned. In
the event Manager fails to secure such approval, the Management Agreement shall,
for the purposes of Manager's obligations to Lender pursuant to this Agreement,
including Manager's aforesaid obligation to continue performance thereunder for
Lender's benefit pursuant to the terms of this Agreement, be deemed not to have
been modified by such amendment.

                           (e)      Delivery of Rent Roll and Service Contracts.
Without duplication of any items actually delivered by Borrower, when such
delivery is required, pursuant to Article XI of the Loan Agreement, within ten
(10) business days of a request from Lender, such request not to be made more
than once per calendar month, Manager shall furnish to Lender a current rent
roll of all tenants of the Property, including a list of which tenants are in
default under their respective Leases, and a schedule of all other entities with
whom Manager has entered into contracts or other agreements relating to the
Property, together with copies of all such Leases, contracts or agreements.
Without duplication of any items actually delivered by Borrower, when such
delivery is required, pursuant to Article XI of the Loan Agreement, Manager
shall furnish Lender with copies of all reports, budgets and other information
that Borrower is entitled to receive under the Management Agreement. Upon
reasonable advance notice from Lender and during normal business hours, Manager
shall cooperate with Lender's representative in any inspection of the Property,
subject in all instances to the rights of Tenants and provided that neither
Lender nor any such Persons shall unreasonably interfere with the operation of
business on the Property.

                  Section 7.        Assignment of Rents and Leases. Manager
acknowledges that, in connection with the Loan, Borrower has pledged and
assigned to Lender pursuant to the Loan Documents, among other things, all of
Borrower's right, title and interest in and to all of the Leases now or
hereafter affecting the Property, including, without limitation, any of
Borrower's rights in and to any Security Deposits thereunder. To the extent
permitted under applicable law, Manager shall deliver to Lender for application
in accordance with the terms and conditions of the Loan Documents, all proceeds
relating to the Property from time to time being held by Manager and all Rents,
Security Deposits and other proceeds received from and after the date hereof
from any and all Tenants or other parties occupying or using any portion of the
Property.

                  Section 8.        Borrower Consent. Borrower has joined herein
to evidence its consent to all the covenants, acknowledgments and agreements of
Manager contained in this Agreement.

                  Section 9.        Miscellaneous.

                           (a)      Assignment. Lender shall have the right to
transfer, sell and assign its interest in this Agreement to any Person.

                           (b)      Further Assurances. Borrower and Manager
shall execute and acknowledge (or cause to be executed and acknowledged) and
deliver to Lender all

                                       6

documents, and take all actions, reasonably required by Lender from time to time
to confirm the rights created or intended to be created under this Agreement, to
protect and further the validity, priority and enforceability of this Agreement
or otherwise carry out the purposes of this Agreement and the transactions
contemplated thereunder.

                           (c)      Notices. Any notice, election, request,
demand, report or statement which by any provision of this Agreement is required
or permitted to be given or served hereunder shall be in writing and shall be
given or served (i) by certified mail return receipt requested, postage prepaid
or (ii) in the manner required by the Loan Agreement provided that any such
notice shall be given to the Manager at the address set forth herein in the
recitals.

                           (d)      Entire Agreement. This Agreement constitutes
the entire and final agreement between Borrower, Manager and Lender with respect
to the subject matter hereof and may only be changed, amended, modified or
waived by an instrument in writing signed by Borrower, Manager and Lender.

                           (e)      No Waiver. No waiver of any term or
condition of this Agreement, whether by delay, omission or otherwise, shall be
effective unless in writing and signed by the party sought to be charged, and
then such waiver shall be effective only in the specific instance and for the
purpose for which given. No delay on Lender's part in exercising any right,
power or privilege under this Agreement or any other Loan Document shall operate
as a waiver of any privilege, power or right hereunder.

                           (f)      Successors and Assigns. This Agreement shall
be binding upon Borrower and Manager and their respective successors and assigns
and shall inure to the benefit of Lender and its successors and permitted
assigns. If Borrower consists of more than one person, the obligations and
liabilities of each such person hereunder and under the other Loan Documents
shall be joint and several.

                           (g)      Captions. All paragraph, section, exhibit
and schedule headings and captions herein are used for reference only and in no
way limit or describe the scope or intent of, or in any way affect, this
Agreement.

                           (h)      Counterparts. This Agreement may be executed
in counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one binding Agreement.

                           (i)      Severability. The provisions of this
Agreement are severable, and if any one clause or provision hereof shall be held
invalid or unenforceable in whole or in part, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
and not any other clause or provision of this Agreement.

                           (j)      Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CHOICE OF LAW RULES. EACH OF BORROWER AND MANAGER AGREES THAT
ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT SHALL BE BROUGHT IN THE COURTS

                                       7

OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON BORROWER OR MANAGER IN THE MANNER AND AT THE ADDRESS
SPECIFIED FOR NOTICES IN THIS AGREEMENT. EACH OF BORROWER AND MANAGER HEREBY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.

                           (k)      JURY TRIAL WAIVER. EACH OF LENDER, BORROWER
AND MANAGER AND ALL PERSONS CLAIMING BY, THROUGH OR UNDER IT, HEREBY EXPRESSLY,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR
(II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
BORROWER, MANAGER OR LENDER WITH RESPECT TO THIS AGREEMENT (AS NOW OR HEREAFTER
MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH
CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
EACH OF LENDER, BORROWER AND MANAGER HEREBY AGREES AND CONSENTS THAT AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY JURY. EACH
OF LENDER, BORROWER AND MANAGER ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL
COUNSEL REGARDING THE MEANING OF THIS WAIVER AND EACH OF BORROWER AND MANAGER
ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE
LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.

                           (l)      Counterclaims and Other Actions. Each of
Borrower and Manager hereby expressly and unconditionally waives, in connection
with any suit, action or proceeding brought by Lender on this Agreement, any and
every right it may have to (i) interpose any counterclaim therein (other than a
counterclaim which can only be asserted in the suit, action or proceeding
brought by Lender on this Agreement and cannot be maintained in a separate
action) and (ii) have any such suit, action or proceeding consolidated with any
other or separate suit, action or proceeding.

                           (m)      Termination of Agreement. Except as set
forth in Section 9(k), this Agreement shall terminate upon full repayment of the
Loan and all Indebtedness.

                                       8

                           (n)      Non-Recourse. Recourse with respect to any
claims arising under or in connection with this Agreement shall be limited to
the extent provided in Article XVIII of the Loan Agreement and the terms,
covenants and conditions of Article XVIII of the Loan Agreement are hereby
incorporated by reference as if fully set forth in this Agreement.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       9

                  IN WITNESS WHEREOF, Borrower and Manager have duly executed
this Manager's Consent and Subordination of Management Agreement as of the date
first above written.

                                    BORROWER:

                                    731 OFFICE ONE LLC, a Delaware limited
                                    liability company

                                    By: 731 OFFICE ONE HOLDING LLC, a Delaware
                                        limited liability company, its sole
                                        member

                                        By: ALEXANDER'S INC., a Delaware
                                        corporation, its sole member

                                        By: /s/ Brian Kurtz
                                            ------------------------------------
                                            Name:  Brian Kurtz
                                            Title: Assistant Secretary

                                    MANAGER:

                                    ALEXANDER'S MANAGEMENT LLC, a New York
                                    limited liability company

                                    By: /s/ Brian Kurtz
                                        ----------------------------------------
                                        Name:  Brian Kurtz
                                        Title: Assistant Secretary

                                    LENDER:

                                    GERMAN AMERICAN CAPITAL CORPORATION, a
                                    Maryland corporation

                                    By: /s/ Christopher Tognola
                                        ----------------------------------------
                                        Name:  Christopher Tognola
                                        Title: Vice President

                                    By: /s/ Thomas R. Traynor
                                        ----------------------------------------
                                        Name:  Thomas R. Traynor
                                        Title: Authorized Signatory

                                    EXHIBIT A

                                 (Office Unit 1)

The Condominium Unit (the "Unit") in the premises known as Beacon Court
Condominium and by the street number by the street number 151 East 58th Street,
Borough of Manhattan, City, County and State of New York, said Unit being
designated and described as "Office Unit 1" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1002
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

         TOGETHER with an undivided 49.0559% percentage interest in the General
Common Elements (as such term is defined in the Declaration);

         TOGETHER with the appurtenances and all the estate and rights in and to
the Unit;

         TOGETHER with, and subject to, the rights, obligations, easements,
restrictions and other provisions set forth in the Declaration and the By-Laws,
all of which constitute covenants running with the Land and will bind any person
having at any time any interest or estate in (any of) the Unit, as though
recited and stipulated at length herein;

The premises within which the Unit is located is more particularly described as:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
borough of Manhattan, County, City and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the southerly side of East
59th Street and the westerly side of Third Avenue;

RUNNING THENCE southerly, along the westerly side of Third Avenue, 200'-10" to
the northerly side of East 58th Street;

THENCE westerly, along the northerly side of East 58th Street 420' to the
easterly side of Lexington Avenue;

THENCE northerly along the easterly side of Lexington Avenue, 200'-10" to the
southerly side of East 59th Street;

THENCE easterly, along the southerly side of East 59th Street, 420' to the point
or place of BEGINNING.

TOGETHER with the benefits and SUBJECT to the burdens of the easements set forth
in the deed made by Seven Thirty One Limited Partnership to 59th Street
Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339 Page 1100.

                                 (Office Unit 2)

The Condominium Unit (the "Unit") in the premises known as Beacon Court
Condominium and by the street number by the street number 151 East 58th Street,
Borough of Manhattan, City, County and State of New York, said Unit being
designated and described as "Office Unit 2" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1003
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

TOGETHER with an undivided 14.0095% percentage interest in the General Common
Elements (as such term is defined in the Declaration);

TOGETHER with the appurtenances and all the estate and rights in and to the
Unit;

TOGETHER with, and subject to, the rights, obligations, easements, restrictions
and other provisions set forth in the Declaration and the By-Laws, all of which
constitute covenants running with the Land and will bind any person having at
any time any interest or estate in (any of) the Unit, as though recited and
stipulated at length herein;

The premises within which the Unit is located is more particularly described as:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
borough of Manhattan, County, City and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the southerly side of East
59th Street and the westerly side of Third Avenue;

RUNNING THENCE southerly, along the westerly side of Third Avenue, 200'-10" to
the northerly side of East 58th Street;

THENCE westerly, along the northerly side of East 58th Street 420' to the
easterly side of Lexington Avenue;

THENCE northerly along the easterly side of Lexington Avenue, 200'-10" to the
southerly side of East 59th Street;

THENCE easterly, along the southerly side of East 59th Street, 420' to the point
or place of BEGINNING.

TOGETHER with the benefits and SUBJECT to the burdens of the easements set forth
in the deed made by Seven Thirty One Limited Partnership to 59th Street
Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339 Page 1100.

                                    EXHIBIT B

                          COPY OF MANAGEMENT AGREEMENT

                                 (see attached)

                               PROMISSORY NOTE A-X

New York, New York
$86,000,000 (initial and maximum notional amount)              February 13, 2004

         PROMISSORY NOTE A-X, dated as of February 13, 2004 (this NOTE), by 731
Office One LLC, a Delaware limited liability company (BORROWER), having an
address for notice purposes c/o Alexander's Inc., 888 Seventh Avenue, New York,
New York 10019, in favor of GERMAN AMERICAN CAPITAL CORPORATION, a Maryland
corporation (together with its successors and assigns, LENDER), having an office
at 60 Wall Street, New York, New York 10005.

         WHEREAS, Lender made a loan to Borrower in the original principal
amount of $400,000,000 (the LOAN);

         WHEREAS, Lender is the present owner and holder of that certain
Consolidated Amended and Restated Note, dated as of February 13, 2004, made by
Borrower in favor of Lender (the EXISTING NOTE), which Existing Note evidences
an indebtedness of Borrower to Lender in the original and current outstanding
principal amount of $400,000,000 (the EXISTING DEBT);

         WHEREAS, pursuant to the Loan Agreement (as hereinafter defined),
Borrower and Lender desire to sever the Existing Note into six (6) newly issued
substitute promissory notes in an aggregate principal amount equal to the
Existing Debt;

         WHEREAS, from and after the date hereof, the Existing Note shall be
amended, restated and superseded and the Loan shall be evidenced by (i) this
Promissory Note A-X, in the notional principal amount of $86,000,000; (ii) that
certain Promissory Note A-1, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $90,000,000 (NOTE A-1); (iii) that
certain Promissory Note A-2, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $95,000,000 (NOTE A-2); (iv) that
certain Promissory Note A-3, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $35,000,000 (NOTE A-3); (v) that
certain Promissory Note A-4, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $94,000,000 (NOTE A-4); and (vi)
that certain Promissory Note B, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $86,000,000 (NOTE B); and

         WHEREAS, Lender and Borrower intend these Recitals to be a material
part of this Note.

         NOW, THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the
order of Lender the interest and other fees, expenses and charges provided in
this Note.

1.       DEFINED TERMS.

         a.       Capitalized terms used but not otherwise defined herein shall
                  have the respective meanings given thereto in the Loan
                  Agreement (as defined below), unless otherwise expressly
                  provided herein. All references to sections shall be deemed to
                  be references to sections of this Note, unless otherwise
                  indicated.

         b.       The following terms shall have the meaning ascribed thereto:

         ANTICIPATED REPAYMENT DATE shall mean March 1, 2014.

         BORROWER shall have the meaning provided in the first paragraph hereof.

         EXISTING DEBT shall have the meaning provided in the Recitals to this
         Note.

         EXISTING NOTE shall have the meaning provided in the Recitals to this
         Note.

         INTEREST PERIOD shall have the meaning provided in Section 2.

         LENDER shall have the meaning provided in the first paragraph hereof.

         LOAN shall have the meaning provided in the Recitals to this Note.

         LOAN AGREEMENT shall mean the Loan and Security Agreement, dated the
         date hereof, between Borrower and Lender.

         MATURITY DATE shall mean March 1, 2029, or such earlier date on which
         the final payment of principal of Note B becomes due and payable as
         provided in the Loan Agreement or Note B, whether at such stated
         maturity date, by declaration of acceleration, or otherwise.

         MATURITY DATE PAYMENT shall have the meaning set forth in Section 3(e).

         MONTHLY AMOUNTS shall have the meaning provided in Section 3(a).

         NOTE shall have the meaning provided in the first paragraph hereof.

         NOTE A-1 shall have the meaning provided in the Recitals to this Note.

         NOTE A-2 shall have the meaning provided in the Recitals to this Note.

         NOTE A-3 shall have the meaning provided in the Recitals to this Note.

         NOTE A-4 shall have the meaning provided in the Recitals to this Note.

         NOTE B shall have the meaning provided in the Recitals to this Note.

                                       2

         PAYMENT DATE shall be the first (1st) calendar day of each calendar
         month, whether or not such day is a Business Day, commencing on April
         1, 2014 and continuing to and including the Maturity Date.

         NOTIONAL AMOUNT shall mean $86,000,000 or so much of the aggregate
         principal amount that is outstanding under Note B from time to time.

         STATED INTEREST RATE shall mean the rate of 00.11875% per annum.

2.       INTEREST.

         a.       From and after the Anticipated Repayment Date, interest shall
                  accrue on the Notional Amount at the Stated Interest Rate.

         b.       Interest on the Notional Amount shall be calculated based on
                  the Stated Interest Rate on the basis of a fraction, the
                  denominator of which shall be 360 and the numerator of which
                  shall be the actual number of days in the relevant Interest
                  Period, except that interest due and payable for a period less
                  than a full month shall be calculated by multiplying the
                  actual number of days elapsed in such period by a daily rate
                  based on said 360 day year. Interest shall accrue from, and
                  including, the first (1st) day of the prior month and ending
                  on the last day of the prior month (an INTEREST PERIOD); in
                  each case without adjustment for any Business Day convention;
                  provided that the first accrual period shall commence on the
                  Anticipated Repayment Date.

         c.       The provisions of this Section 2 are subject in all events to
                  the provisions of Section 2.2.4 of the Loan Agreement.

3.       PAYMENTS.

         a.       Commencing on April 1, 2014 and on each and every Payment Date
                  thereafter until the Maturity Date, Borrower shall pay to
                  Lender interest accruing hereunder for the entire Interest
                  Period immediately preceding the month in which said Payment
                  Date occurs. There shall be no required payments of principal
                  under this Note.

         b.       All payments made by Borrower hereunder or under any of the
                  Loan Documents shall be made on or before 2:00 p.m. New York
                  City time or such later time as Lender or its servicer shall
                  apply amounts on deposit in the Holding Account in accordance
                  the terms of the Loan Documents. Any payments received after
                  such time shall be credited to the next following Business
                  Day.

         c.       All amounts advanced by Lender pursuant to the Loan Documents,
                  other than the principal amount of the Loan, or other charges
                  provided in the Loan Documents, shall be due and payable as
                  provided in the Loan Documents. In the event any such advance
                  or charge is not so repaid by

                                       3

                  Borrower, Lender may, at its option, first apply any payments
                  received under this Note to repay such advances, together with
                  any interest thereon, or other charges as provided in the Loan
                  Documents, and the balance, if any, shall be applied in
                  payment of any installment of interest or principal then due
                  and payable.

         d.       All unpaid accrued interest, all interest that would accrue on
                  the Notional Amount through the end of the Interest Period
                  during which the Maturity Date occurs and all other fees and
                  sums then payable hereunder or under the Loan Documents
                  (collectively, the MATURITY DATE PAYMENT), shall be due and
                  payable in full on the Maturity Date.

         e.       Amounts due on this Note shall be payable, without any
                  counterclaim, setoff or deduction whatsoever, at the office of
                  Lender or its agent or designee at the address set forth on
                  the first page of this Note or at such other place as Lender
                  or its agent or designee may from time to time designate in
                  writing.

         f.       All amounts due under this Note shall be due and payable in
                  lawful money of the United States.

         g.       To the extent that Borrower makes a payment or Lender receives
                  any payment or proceeds for Borrower's benefit, which are
                  subsequently invalidated, declared to be fraudulent or
                  preferential, set aside or required to be repaid to a trustee,
                  debtor in possession, receiver, custodian or any other party
                  under any bankruptcy law, common law or equitable cause, then,
                  to such extent, the obligations of Borrower hereunder intended
                  to be satisfied shall be revived and continue as if such
                  payment or proceeds had not been received by Lender.

4.       MISCELLANEOUS.

         a.       WAIVER. Borrower and all endorsers, sureties and guarantors
                  hereby jointly and severally waive all applicable exemption
                  rights, valuation and appraisement, presentment for payment,
                  demand, notice of demand, notice of nonpayment or dishonor,
                  protest and notice of protest of this Note, and, except as
                  otherwise expressly provided in the Loan Documents, all other
                  notices in connection with the delivery, acceptance,
                  performance, default or enforcement of the payment of this
                  Note. Borrower consents to any and all extensions of time,
                  renewals, waivers or modifications that may be granted by
                  Lender with respect to the payment or other provisions of this
                  Note and to the release of the collateral securing this Note
                  or any part thereof, with or without substitution, and agrees
                  that additional makers may become parties hereto without
                  notice to them or affecting their liability under this Note.

                                       4

         b.       NON-RECOURSE. Recourse with respect to any claims arising
                  under or in connection with this Note shall be limited to the
                  extent provided in Article XVIII of the Loan Agreement and the
                  terms, covenants and conditions of Article XVIII of the Loan
                  Agreement are hereby incorporated by reference as if fully set
                  forth in this Note.

         c.       NOTE SECURED. This Note and all obligations of Borrower
                  hereunder are secured by the Loan Agreement, the Security
                  Instrument and the other Loan Documents.

         d.       NOTICES. Any notice, election, request or demand which by any
                  provision of this Note is required or permitted to be given or
                  served hereunder shall be given or served in the manner
                  required for the delivery of notices pursuant to the Loan
                  Agreement.

         e.       ENTIRE AGREEMENT. This Note, together with the other Loan
                  Documents, constitutes the entire and final agreement between
                  Borrower and Lender with respect to the subject matter hereof
                  and thereof and may only be changed, amended, modified or
                  waived by an instrument in writing signed by Borrower and
                  Lender.

         f.       NO WAIVER. No waiver of any term or condition of this Note,
                  whether by delay, omission or otherwise, shall be effective
                  unless in writing and signed by the party sought to be
                  charged, and then such waiver shall be effective only in the
                  specific instance and for the purpose for which given. No
                  notice to, or demand on, Borrower shall entitle Borrower to
                  any other or future notice or demand in the same, similar or
                  other circumstances.

         g.       SUCCESSORS AND ASSIGNS. This Note shall be binding upon and
                  inure to the benefit of Borrower and Lender and their
                  respective successors and permitted assigns. Upon any
                  endorsement, assignment, or other transfer of this Note by
                  Lender or by operation of law, the term "Lender" as used
                  herein, shall mean such endorsee, assignee, or other
                  transferee or successor to Lender then becoming the holder of
                  this Note. The term "Borrower" as used herein shall include
                  the respective successors and assigns, legal and personal
                  representatives, executors, administrators, devisees, legatees
                  and heirs of Borrower, if any.

         h.       CAPTIONS. All paragraph, section, exhibit and schedule
                  headings and captions herein are used for reference only and
                  in no way limit or describe the scope or intent of, or in any
                  way affect, this Note.

         i.       COUNTERPARTS. This Note may be executed in counterparts, each
                  of which shall be an original and all of which, when taken
                  together, shall constitute one binding Note.

         j.       SEVERABILITY. The provisions of this Note are severable, and
                  if any one clause or provision hereof shall be held invalid or
                  unenforceable in whole

                                       5

                  or in part, then such invalidity or unenforceability shall
                  affect only such clause or provision, or part thereof, and not
                  any other clause or provision of this Note.

         k.       GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
                  IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
                  TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW,
                  WITHOUT REGARD TO CHOICE OF LAW RULES. BORROWER AGREES THAT
                  ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OTHER LOAN
                  DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW
                  YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
                  NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
                  PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER IN THE
                  MANNER AND AT THE ADDRESS SPECIFIED FOR NOTICES IN THE LOAN
                  AGREEMENT. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY
                  NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
                  SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
                  COURT.

         l.       JURY TRIAL WAIVER. BORROWER, LENDER AND ALL PERSONS CLAIMING
                  BY, THROUGH OR UNDER BORROWER OR LENDER, HEREBY EXPRESSLY,
                  KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO
                  TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
                  (I) ARISING UNDER THIS NOTE, INCLUDING, WITHOUT LIMITATION,
                  ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY
                  CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
                  PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS NOTE (AS
                  NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT
                  OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR
                  THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
                  WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW
                  EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
                  CONTRACT OR TORT OR OTHERWISE; AND BORROWER AND LENDER HEREBY
                  AGREE AND CONSENT THAT AN ORIGINAL COUNTERPART OR A COPY OF
                  THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE
                  OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY
                  JURY. EACH OF BORROWER AND LENDER ACKNOWLEDGES THAT IT HAS
                  CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS
                  WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL
                  INDUCEMENT FOR THE MAKING OF

                                       6

                  THE LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.

         m.       COUNTERCLAIMS AND OTHER ACTIONS. Borrower hereby expressly and
                  unconditionally waives, in connection with any suit, action or
                  proceeding brought by Lender on this Note, any and every right
                  it may have to (i) interpose any counterclaim therein (other
                  than a mandatory or compulsory counterclaim which can only be
                  asserted in the suit, action or proceeding brought by Lender
                  on this Note and cannot be maintained in a separate action)
                  and (ii) have any such suit, action or proceeding consolidated
                  with any other or separate suit, action or proceeding.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       7

         IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered as of the day and year first above written.

                                    BORROWER:

                                    731 OFFICE ONE LLC, a Delaware limited
                                    liability company

                                    By: 731 OFFICE ONE HOLDING LLC, a Delaware
                                        limited liability company, its sole
                                        member

                                        By: ALEXANDER'S INC., a Delaware
                                            corporation, its sole member

                                        By: /s/ Brian Kurtz
                                            ------------------------------------
                                            Name:  Brian Kurtz
                                            Title: Assistant Secretary

                             NOTE EXCHANGE AGREEMENT

         THIS NOTE EXCHANGE AGREEMENT (this "AGREEMENT") made as of the 13 day
of February, 2004, by and between 731 oFFICE One LLC, a Delaware limited
liability company (BORROWER), having an office at c/o Alexander's Inc., 888
Seventh Avenue, New York, New York 10019 and German American Capital
Corporation, a Maryland corporation (together with its successors and assigns,
"LENDER"), having an address at 60 Wall Street, New York, New York 10005.

                              W I T N E S S E T H:

         WHEREAS, Lender is (a) the lawful owner and holder of that certain
Amended Restated and Consolidated Note, dated as of February __, 2004, made by
Borrower in favor of Lender (the "ORIGINAL NOTE"), (b) the lender under that
certain Loan and Security Agreement, dated as of February __, 2004, as amended,
between Borrower and Lender (the "LOAN AGREEMENT") and (c) the mortgagee under
the Security Instrument (as defined in the Loan Agreement);

         WHEREAS, the total aggregate original principal amount of the Original
Note is Four Hundred Million Dollars ($400,000,000); and

         WHEREAS, Lender, as the holder of the Original Note, and Borrower, as
the Borrower under the Original Note, have agreed, that the indebtedness
evidenced by the Original Note shall be exchanged and replaced in its entirety
for indebtedness evidenced by four (4) separate newly issued notes as follows:

                  (a) a Promissory Note A-1 to be dated as of the date hereof in
the original principal amount of Ninety Million and No/100 Dollars ($90,000,000)
("NOTE A-1") and issued in favor of German American Capital Corporation;

                  (b) a Promissory Note A-2 to be dated as of the date hereof in
the original principal amount of Ninety Five Million and No/100 Dollars
($95,000,000) ("NOTE A-2") and issued in favor of German American Capital
Corporation;

                  (c) a Promissory Note A-3 to be dated as of the date hereof in
the original principal amount of Thirty Five Million and No/100 Dollars
($35,000,000) ("NOTE A-3") and issued in favor of German American Capital
Corporation;

                  (d) a Promissory Note A-4 to be dated as of the date hereof in
the original principal amount of Ninety Four Million and No/100 Dollars
($94,000,000) ("NOTE A-4") and issued in favor of German American Capital
Corporation;

                  (e) a Note A-X to be dated as of the date hereof in the
original notional amount of Eighty Six Million and No/100 Dollars ($86,000,000)
("NOTE A-X") and issued in favor of German American Capital Corporation; and

                  (f) a Promissory Note B to be dated as of the date hereof in
the original principal amount of Eighty Six Million and No/100 Dollars
($86,000,000) ("NOTE B") and issued in favor of German American Capital
Corporation.

         NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

1. On and after the date hereof, the principal indebtedness of Four Hundred
Million Dollars ($400,000,000) evidenced by the Original Note, of which
$400,000,000 is outstanding, shall be, and hereby is, exchanged and replaced in
its entirety for the following:

         (i)      A principal indebtedness of Ninety Million and No/100 Dollars
         ($90,000,000) to be evidenced by Note A-1, which Note A-1 will be
         executed and delivered by Borrower to German American Capital
         Corporation simultaneously herewith;

         (ii)     A principal indebtedness of Ninety Five Million and No/100
         Dollars ($95,000,000) to be evidenced by Note A-2, which Note A-2 will
         be executed and delivered by Borrower to German American Capital
         Corporation simultaneously herewith;

         (iii)    A principal indebtedness of Thirty Five Million and No/100
         Dollars ($35,000,000) to be evidenced by Note A-3, which Note A-3 will
         be executed and delivered by Borrower to German American Capital
         Corporation simultaneously herewith;

         (iv)     A principal indebtedness of Ninety Four Million and No/100
         Dollars ($94,000,000) to be evidenced by Note A-4, which Note A-4 will
         be executed and delivered by Borrower to German American Capital
         Corporation simultaneously herewith;

         (v)      A notional indebtedness of Eighty Six Million and No/100
         Dollars ($86,000,000) to be evidenced by Note A-X, which Note A-X will
         be executed and delivered by Borrower to German American Capital
         Corporation simultaneously herewith; and

         (vi)     A principal indebtedness of Eighty Six Million and No/100
         Dollars ($86,000,000) to be evidenced by Note B, which Note B will be
         executed and delivered by Borrower to German American Capital
         Corporation simultaneously herewith.

                                      -2-

2. Note A-1, Note A-2, Note A-3, Note A-4, Note A-X and Note B (collectively,
the "Replacement Notes") will be executed and delivered simultaneously herewith,
in complete substitution and replacement for the Original Note and the Original
Note shall be tendered by Lender to the Borrower in exchange therefor. The
principal indebtedness evidenced by the Replacement Notes is, in the aggregate,
equal to the principal indebtedness evidenced by the Original Note and continues
to be secured by the Security Instrument.

3. Nothing contained in this Agreement or the Replacement Notes shall be deemed
to, alter the indebtedness evidenced by the Original Note which, pursuant to
this Agreement, is replaced with the Replacement Notes and continues to be
secured by the Security Instrument. Additionally, nothing contained in this
Agreement or the Replacement Notes shall be deemed a novation of the
indebtedness evidenced by the Original Note, which, pursuant to this Agreement,
is replaced in its entirety with the Replacement Notes and shall continue to be
secured by the Security Instrument.

4. This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York.

                         [NO FURTHER TEXT ON THIS PAGE]

                                      -3-

                  IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.

                              LENDER:

                              GERMAN AMERICAN CAPITAL CORPORATION, a
                              Maryland corporation

                              By: /s/    Christopher Tognola
                                  ------------------------------------------
                                  Name:  Christopher Tognola
                                  Title: Vice President

                              By: /s/    Thomas R. Traynor
                                  ------------------------------------------
                                  Name:  Thomas R. Traynor
                                  Title: Authorized Signatory

                                  BORROWER:

                                  731 OFFICE ONE LLC, a Delaware limited
                                  liability company

                                  By: 731 OFFICE ONE HOLDING LLC, a Delaware
                                  limited liability company, its sole member

                                      By:      ALEXANDER'S INC., a Delaware
                                      corporation, its sole member

                                               By:  /s/     Brian Kurtz
                                                    --------------------------
                                                    Name:   Brian Kurtz
                                                    Title:  Assistant Secretary

                               PROMISSORY NOTE A-1

New York, New York
$90,000,000.00                                                 February 13, 2004

         PROMISSORY NOTE A-1, dated as of February 13, 2004 (this NOTE), by 731
Office One LLC, a Delaware limited liability company (BORROWER), having an
address for notice purposes c/o Alexander's Inc., 888 Seventh Avenue, New York,
New York 10019, in favor of GERMAN AMERICAN CAPITAL CORPORATION, a Maryland
corporation (together with its successors and assigns, LENDER), having an office
at 60 Wall Street, New York, New York 10005.

         WHEREAS, Lender made a loan to Borrower in the original principal
amount of $400,000,000 (the LOAN);

         WHEREAS, Lender is the present owner and holder of that certain
Consolidated Amended and Restated Note, dated as of February [ ], 2004, made by
Borrower in favor of Lender (the EXISTING NOTE), which Existing Note evidences
an indebtedness of Borrower to Lender in the original and current outstanding
principal amount of $400,000,000 (the EXISTING DEBT);

         WHEREAS, pursuant to the Loan Agreement (as hereinafter defined),
Borrower and Lender desire to sever the Existing Note into six (6) newly issued
substitute promissory notes in an aggregate principal amount equal to the
Existing Debt;

         WHEREAS, from and after the date hereof, the Existing Note shall be
amended, restated and superseded and the Loan shall be evidenced by (i) this
Promissory Note A-1, in the principal amount of $90,000,000; (ii) that certain
Promissory Note A-2, dated as of the date hereof, made by Borrower in favor of
Lender, in the principal amount of $95,000,000 (NOTE A-2); (iii) that certain
Promissory Note A-3, dated as of the date hereof, made by Borrower in favor of
Lender, in the principal amount of $35,000,000 (NOTE A-3); (iv) that certain
Promissory Note A-4, dated as of the date hereof, made by Borrower in favor of
Lender, in the principal amount of $94,000,000 (NOTE A-4); (v) that certain
Promissory Note A-X, dated as of the date hereof, made by Borrower in favor of
Lender, in the notional principal amount of $86,000,000 (NOTE A-X); and (vi)
that certain Promissory Note B, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $86,000,000 (NOTE B);

         WHEREAS, this Note, individually, evidences a portion of the Loan in
the principal amount of NINETY MILLION DOLLARS ($90,000,000); and

         WHEREAS, Lender and Borrower intend these Recitals to be a material
part of this Note.

         NOW, THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the
order of Lender the Principal Amount, together with interest from the date
hereof, and other fees, expenses and charges as provided in this Note.

1.       DEFINED TERMS.

         a.       Capitalized terms used but not otherwise defined herein shall
                  have the respective meanings given thereto in the Loan
                  Agreement (as defined below), unless otherwise expressly
                  provided herein. All references to sections shall be deemed to
                  be references to sections of this Note, unless otherwise
                  indicated.

         b.       The following terms shall have the meaning ascribed thereto:

         A-1 A NOTE PROPORTIONATE SHARE shall mean, with respect to any date of
         determination, a fraction, expressed as a percentage, the numerator of
         which is the Principal Amount of this Note and the denominator of which
         is the sum of the principal amounts of this Note, the A-2 Note, the A-3
         Note and the A-4 Note.

         A-1 LOAN PROPORTIONATE SHARE shall mean, with respect to any date of
         determination, a fraction, expressed as a percentage, the numerator of
         which is the Principal Amount of this Note and the denominator of which
         is the outstanding aggregate principal amount of the Loan.

         ADDITIONAL INTEREST STRIP shall mean, with respect to each Interest
         Period from and after the Anticipated Repayment Date, the excess of
         interest accrued at the Revised Interest Rate over interest accrued at
         the Stated Interest Rate (but shall not include the Post ARD Default
         Interest Strip).

         ANTICIPATED REPAYMENT DATE shall mean [March] 1, 2014.

         APPLICABLE INTEREST RATE shall mean (i) from the date hereof through
         and including the Anticipated Repayment Date, the Stated Interest Rate,
         and (ii) from the day after the Anticipated Repayment Date through and
         including the Maturity Date, the Revised Interest Rate.

         BORROWER shall have the meaning provided in the first paragraph hereof.

         DEFAULT RATE shall mean a rate per annum equal to the lesser of (a) the
         Maximum Legal Rate and (b) five percent (5%) above the Applicable
         Interest Rate.

         DEFEASANCE LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on the earlier to occur of (i) two years after the
         "startup day," within the meaning of Section 860G(a)(9) of the Internal
         Revenue Code of 1986, as amended from time to time or any successor
         statute (the "Code"), of a "real estate mortgage investment conduit,"
         ("REMIC") within the meaning of Section 860D of the Code, with respect
         to the last portion of the debt evidenced by the

                                       2

         Mortgage Notes and the Security Instrument and (ii) four (4) years from
         the date hereof.

         DEFERRED INTEREST shall mean the Additional Interest Strip and the Post
         ARD Default Interest Strip, collectively.

         EXISTING DEBT shall have the meaning provided in the Recitals to this
         Note.

         EXISTING NOTE shall have the meaning provided in the Recitals to this
         Note.

         INTEREST PERIOD shall have the meaning provided in Section 2.

         LENDER shall have the meaning provided in the first paragraph hereof.

         LIQUIDATED DAMAGES AMOUNT shall have the meaning set forth in Section
         4(e).

         LOAN shall have the meaning provided in the Recitals to this Note.

         LOAN AGREEMENT shall mean the Loan and Security Agreement, dated the
         date hereof, between Borrower and Lender.

         MATURITY DATE shall mean [March] 1, 2029, or such earlier date on which
         the final payment of principal of this Note becomes due and payable as
         provided in the Loan Agreement or this Note, whether at such stated
         maturity date, by declaration of acceleration, or otherwise.

         MATURITY DATE PAYMENT shall have the meaning set forth in Section 3(e).

         MONTHLY AMOUNTS shall have the meaning provided in Section 3(a).

         MORTGAGE NOTES shall mean, collectively, this Note, Note A-2, Note A-3,
         Note A-4, Note A-X, Note B and any amendments, restatements or
         replacements of any thereof.

         NOTE shall have the meaning provided in the first paragraph hereof.

         NOTE A-X shall have the meaning provided in the Recitals to this Note.

         NOTE A-2 shall have the meaning provided in the Recitals to this Note.

         NOTE A-3 shall have the meaning provided in the Recitals to this Note.

         NOTE A-4 shall have the meaning provided in the Recitals to this Note.

         NOTE B shall have the meaning provided in the Recitals to this Note.

         PAYMENT DATE shall be the first (1st) calendar day of each calendar
         month, whether or not such day is a Business Day, commencing on [April]
         1, 2004 and continuing to and including the Maturity Date.

                                       3

         POST ARD DEFAULT INTEREST STRIP shall mean, with respect to each
         Interest Period from and after the Anticipated Repayment Date, default
         interest accrued at a rate equal to the lesser of (x) 5.0% and (y) the
         amount by which the Maximum Legal Rate exceeds the Applicable Interest
         Rate.

         PREPAYMENT DATE shall have the meaning provided in Section 4(a)(i).

         PREPAYMENT LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on [December] 1, 2013.

         PREPAYMENT NOTICE shall have the meaning provided in Section 4(a)(i).

         PRINCIPAL AMOUNT shall mean $90,000,000 or so much of the aggregate
         principal amount that is outstanding under this Note from time to time.

         REVISED INTEREST RATE shall mean, with respect to each Interest Period,
         a rate per annum equal to two percent (2%) above the Stated Interest
         Rate applicable to such Interest Period.

         STATED INTEREST RATE shall mean, (i) with respect to each Interest
         Period prior to the Anticipated Repayment Date, the rate of interest
         set forth on Exhibit A hereto for such Interest Period, as such rate
         may be modified in accordance with Section 4(f) and (ii) with respect
         to each Interest Period from and after the Anticipated Repayment Date,
         [ ]% per annum.

         TREASURY RATE shall mean, as of any Payment Date, the yield, calculated
         by linear interpolation (rounded to the nearest one-thousandth of one
         percent) of the yields of noncallable United States Treasury
         obligations with terms (one longer and one shorter) most nearly
         approximating the period from such Payment Date to the Anticipated
         Repayment Date (and converted to a monthly equivalent yield), as
         determined by Lender on the basis of Federal Reserve Statistical
         Release H.15 Selected Interest Rates under the heading U.S.
         Governmental Security/Treasury Constant Maturities or, if such
         publication is unavailable, such other recognized source of financial
         market information as shall be selected by Lender for the week prior to
         such Payment Date.

         YIELD MAINTENANCE PREMIUM shall mean an amount equal to the product of:
         (a) the positive difference (expressed as a percentage of the
         outstanding Principal Amount before any prepayment), if any, as of the
         date of determination between (i) the present value of all future
         scheduled payments of interest and principal, including the principal
         amount due on the Anticipated Repayment Date, to be made on this Note
         before the prepayment in question, discounted at an interest rate per
         annum equal to the Treasury Rate, and (ii) the outstanding Principal
         Amount immediately before such prepayment; and (b) the Principal Amount
         being prepaid.

2.       INTEREST.

                                       4

         a.       Prior to the Anticipated Repayment Date, interest shall accrue
                  on the Principal Amount at the Stated Interest Rate. In the
                  event that Borrower does not repay the Principal Amount in
                  full on or before the Anticipated Repayment Date, then, from
                  and after the Anticipated Repayment Date, interest shall
                  accrue on the Principal Amount at the Revised Interest Rate.
                  From and after the occurrence and during the continuance of
                  any Event of Default, interest shall accrue at the Default
                  Rate.

         b.       Interest on the principal sum of this Note shall be calculated
                  based on the Applicable Interest Rate on the basis of a
                  fraction, the denominator of which shall be 360 and the
                  numerator of which shall be the actual number of days in the
                  relevant Interest Period, except that interest due and payable
                  for a period less than a full month shall be calculated by
                  multiplying the actual number of days elapsed in such period
                  by a daily rate based on said 360 day year. Interest shall
                  accrue from, and including, the first (1st) day of the prior
                  month and ending on the last day of the prior month (an
                  INTEREST PERIOD); in each case without adjustment for any
                  Business Day convention; provided that the first accrual
                  period shall commence on [March] 1, 2004.

         c.       Except as expressly set forth in the Loan Agreement to the
                  contrary, interest shall accrue on all amounts advanced by
                  Lender pursuant to the Loan Documents (other than the
                  Principal Amount, which shall accrue interest in accordance
                  with clauses a. and b. above) at the Default Rate.

         d.       The provisions of this Section 2 are subject in all events to
                  the provisions of Section 2.2.4 of the Loan Agreement.

3.       PAYMENTS OF PRINCIPAL AND INTEREST.

         a.       Interest and principal under this Note shall be payable as
                  follows:

                  i.       interest accruing from the date hereof to and
                           including [February 29], 2004 shall be paid on the
                           date hereof; and

                  ii.      commencing on [April] 1, 2004 and on each and every
                           Payment Date thereafter until the Maturity Date,
                           monthly installments of interest and principal
                           payable on this Note, in arrears, in the amounts (the
                           MONTHLY AMOUNTS) set forth on Exhibit A hereto
                           (subject to adjustment as provided in Section 4(f)),
                           to be applied first, to interest accrued at the
                           Applicable Interest Rate and second, to principal.

         b.       From and after the Anticipated Repayment Date, unless the
                  Indebtedness has been repaid in full, Borrower shall continue
                  to make payments of the Monthly Amounts on each Payment Date.
                  From and after the Anticipated Repayment Date, unless the
                  Indebtedness has been repaid in full, all Excess Cash Flow
                  shall be applied to repayment of the Loan on each

                                       5

                  Payment Date and the A-1 Loan Proportionate Share thereof
                  shall be applied as a partial prepayment of the outstanding
                  Principal Amount. Deferred Interest shall be payable after all
                  principal and other amounts due hereunder have been paid in
                  full.

         c.       All payments made by Borrower hereunder or under any of the
                  Loan Documents shall be made on or before 2:00 p.m. New York
                  City time or such later time as Lender or its servicer shall
                  apply amounts on deposit in the Holding Account in accordance
                  the terms of the Loan Documents. Any payments received after
                  such time shall be credited to the next following Business
                  Day.

         d.       All amounts advanced by Lender pursuant to the Loan Documents,
                  other than the Principal Amount, or other charges provided in
                  the Loan Documents, shall be due and payable as provided in
                  the Loan Documents. In the event any such advance or charge is
                  not so repaid by Borrower, Lender may, at its option, first
                  apply any payments received under this Note to repay such
                  advances, together with any interest thereon, or other charges
                  as provided in the Loan Documents, and the balance, if any,
                  shall be applied in payment of any installment of interest or
                  principal then due and payable.

         e.       The entire Principal Amount of this Note, all unpaid accrued
                  interest, all interest that would accrue on the Principal
                  Amount through the end of the Interest Period during which the
                  Maturity Date occurs and all other fees and sums then payable
                  hereunder or under the Loan Documents (collectively, the
                  MATURITY DATE PAYMENT), shall be due and payable in full on
                  the Maturity Date.

         f.       Amounts due on this Note shall be payable, without any
                  counterclaim, setoff or deduction whatsoever, at the office of
                  Lender or its agent or designee at the address set forth on
                  the first page of this Note or at such other place as Lender
                  or its agent or designee may from time to time designate in
                  writing.

         g.       All amounts due under this Note, including, without
                  limitation, interest and the Principal Amount, shall be due
                  and payable in lawful money of the United States.

         h.       To the extent that Borrower makes a payment or Lender receives
                  any payment or proceeds for Borrower's benefit, which are
                  subsequently invalidated, declared to be fraudulent or
                  preferential, set aside or required to be repaid to a trustee,
                  debtor in possession, receiver, custodian or any other party
                  under any bankruptcy law, common law or equitable cause, then,
                  to such extent, the obligations of Borrower hereunder intended
                  to be satisfied shall be revived and continue as if such
                  payment or proceeds had not been received by Lender.

                                       6

4.       PREPAYMENTS. Except as permitted in Sections 4(a), 4(b), 4(c) and 4(d)
         hereof, the outstanding Principal Amount may not be prepaid in whole or
         in part. Any Principal Amount prepaid pursuant to this Section 4 may
         not be reborrowed hereunder.

         a.       VOLUNTARY PREPAYMENTS. Borrower shall not have the right to
                  prepay, in whole or in part, the Principal Amount due
                  hereunder prior to the Anticipated Repayment Date (other than
                  with respect to the application of Proceeds pursuant to
                  Section 6.2 of the Loan Agreement); provided, however,
                  Borrower shall be entitled to make a prepayment of all of the
                  Principal Amount on any Business Day occurring after the
                  expiration of the Prepayment Lockout Period, without any
                  premium or penalty upon satisfaction of the following
                  conditions:

                  i.       Borrower shall provide prior irrevocable written
                           notice (the PREPAYMENT NOTICE) to Lender specifying
                           the proposed Business Day on which the prepayment is
                           to be made, which Business Day shall be no earlier
                           than thirty (30) days after the date of such
                           Prepayment Notice and no later than ninety (90) days
                           after the date of such Prepayment Notice (the date of
                           such prepayment pursuant to this Section 4(a) and
                           Section 4(b) below being the PREPAYMENT DATE); and

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(c) and Section 4(d) of this Note.

                  iii.     Borrower agrees that all Excess Cash Flow shall be
                           applied in accordance with the terms of the Loan
                           Agreement, including, without limitation, Article III
                           and Section 16.5 of the Loan Agreement and the
                           provisions of .

         b.       DEFEASANCE. From and after expiration of the Defeasance
                  Lockout Period and prior to the Anticipated Repayment Date,
                  Borrower shall have the right to defease the Loan pursuant to
                  the provisions of Article IX of the Loan Agreement. In no
                  event shall a prepayment of this Note in accordance with
                  Sections 4(a) or 4(c) trigger or result in any defeasance
                  liability under this Note or the other Loan Documents.

         c.       MANDATORY PREPAYMENTS.

                  i.       On the next occurring Payment Date following the date
                           on which Borrower actually receives any Proceeds, if
                           Lender is not obligated pursuant to the terms of the
                           Loan Agreement to make such Proceeds available to
                           Borrower for the restoration of the Property,
                           Borrower shall use such Proceeds to prepay the
                           outstanding principal balance of the Note as set
                           forth in Section 6.2.3 of the Loan Agreement; and

                                       7

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(d) and Section 4(e) of this Note
                           (provided, however, that the Liquidated Damages
                           Amount and the Yield Maintenance Premium shall not
                           apply to prepayments made from the receipt of
                           Proceeds).

         d.       PAYMENTS IN CONNECTION WITH A PREPAYMENT.

                  i.       On the date on which a prepayment, voluntary,
                           involuntary or mandatory, is made under this Note or
                           as required under the Loan Agreement, Borrower shall,
                           unless such prepayment is made on a Payment Date, pay
                           to Lender all unpaid interest on the Principal Amount
                           prepaid through the end of the Interest Period during
                           which such prepayment is made.

                  ii.      On the Business Day on which a prepayment is made,
                           Borrower shall pay to Lender all other sums (not
                           including scheduled interest and principal payments)
                           then due and payable under the Note, the Loan
                           Agreement, the Security Instrument, and the other
                           Loan Documents;

                  iii.     Borrower shall pay all reasonable costs and expenses
                           of Lender incurred in connection with the prepayment
                           (including without limitation, any reasonable costs
                           and expenses associated with a release or assignment
                           of the Lien of the related Security Instrument as set
                           forth in Section 2.3.3 of the Loan Agreement as well
                           as reasonable attorneys' fees and expenses); and

                  iv.      In the event of a prepayment made after an
                           acceleration of the Loan, Borrower shall also pay to
                           Lender the Yield Maintenance Premium to the extent
                           such prepayment is made prior to expiration of the
                           Prepayment Lockout Period.

         e.       LIQUIDATED DAMAGES AMOUNT. IF NOTWITHSTANDING THE PROHIBITIONS
                  OF THIS SECTION 4, THE LOAN IS VOLUNTARILY OR INVOLUNTARILY
                  REPAID DURING THE PREPAYMENT LOCKOUT PERIOD (EXCLUDING
                  PREPAYMENTS MADE (I) IN ACCORDANCE WITH SECTION 4(C) OF THIS
                  NOTE AND (II) FROM A DEFEASANCE OF THE LOAN IN ACCORDANCE WITH
                  THE TERMS OF THE LOAN DOCUMENTS AFTER EXPIRATION OF THE
                  DEFEASANCE LOCKOUT PERIOD), INCLUDING, BUT NOT LIMITED TO, AS
                  A RESULT OF AN ACCELERATED MATURITY DATE, THEN BORROWER SHALL
                  PAY TO LENDER, AS LIQUIDATED DAMAGES FOR SUCH DEFAULT AND NOT
                  AS A PENALTY, AND IN ADDITION TO ANY AND ALL OTHER SUMS AND
                  FEES PAYABLE UNDER THIS NOTE AND THE OTHER LOAN DOCUMENTS, AN
                  AMOUNT EQUAL TO THE GREATER OF (A) FIVE PERCENT (5%) OF THE
                  PRINCIPAL

                                       8

                  AMOUNT BEING REPAID HEREUNDER AND (B) THE YIELD MAINTENANCE
                  PREMIUM (THE LIQUIDATED DAMAGES AMOUNT). NOTWITHSTANDING THE
                  FOREGOING, THE LIQUIDATED DAMAGES AMOUNT SHALL NOT BE APPLIED
                  TOWARD ANY PREPAYMENTS FROM PROCEEDS.

         f.       MODIFICATION OF MONTHLY AMOUNTS.

                  i.       In the event that any partial prepayment of principal
                           occurs before the Anticipated Repayment Date (other
                           than in connection with an acceleration of the Loan),
                           the Payment Dates shall remain the same and Lender
                           shall recalculate the amount of subsequent Monthly
                           Amounts (including the Stated Interest Rate
                           applicable thereto) to reflect the reduction of the
                           Principal Amount, based on the following:

                           (A) the amount of principal payable with respect to
                           each Interest Period shall be adjusted to reflect the
                           same proportionate amortization for each remaining
                           Interest Period as in effect prior to such
                           modification, assuming a twenty-five year
                           amortization schedule, taking into account the
                           reduction in the Principal Amount; and

                           (B) the Stated Interest Rate for each Interest Period
                           shall be re-calculated based on the A-1 Proportionate
                           Share of an amount equal to (x) the interest that
                           would be payable on a loan in the aggregate notional
                           principal amount of the Loan, assuming an interest
                           rate of [      ]% per annum, less (y) the interest
                           that would actually be payable on the outstanding
                           principal amount of Note B, assuming an interest rate
                           thereon of [     ]% (in each case, after giving
                           effect to all scheduled payments and prepayments of
                           principal with respect to this Note, Note A-2, Note
                           A-3, Note A-4 and Note B).

                  ii.      In the event that any partial prepayment of principal
                           occurs after the Anticipated Repayment Date (other
                           than in connection with an acceleration of the Loan)
                           or Excess Cash Flow is applied to the prepayment of
                           principal after the Anticipated Repayment Date, the
                           Payment Dates shall remain the same, Lender shall
                           recalculate the amount of subsequent Monthly Amounts
                           and the Stated Interest Rate to reflect the reduction
                           of the Principal Amount (as described in clause (i)
                           above) and Lender shall take into account the
                           reduction of the Monthly Amounts when applying
                           payments against interest and principal. Deferred
                           Interest accrued pursuant to Section 3(b) of this
                           Note shall not result in any increase in the Monthly
                           Amounts.

                                       9

5.       MISCELLANEOUS.

         a.       WAIVER. Borrower and all endorsers, sureties and guarantors
                  hereby jointly and severally waive all applicable exemption
                  rights, valuation and appraisement, presentment for payment,
                  demand, notice of demand, notice of nonpayment or dishonor,
                  protest and notice of protest of this Note, and, except as
                  otherwise expressly provided in the Loan Documents, all other
                  notices in connection with the delivery, acceptance,
                  performance, default or enforcement of the payment of this
                  Note. Borrower consents to any and all extensions of time,
                  renewals, waivers or modifications that may be granted by
                  Lender with respect to the payment or other provisions of this
                  Note and to the release of the collateral securing this Note
                  or any part thereof, with or without substitution, and agrees
                  that additional makers may become parties hereto without
                  notice to them or affecting their liability under this Note.

         b.       NON-RECOURSE. Recourse with respect to any claims arising
                  under or in connection with this Note shall be limited to the
                  extent provided in Article XVIII of the Loan Agreement and the
                  terms, covenants and conditions of Article XVIII of the Loan
                  Agreement are hereby incorporated by reference as if fully set
                  forth in this Note.

         c.       NOTE SECURED. This Note and all obligations of Borrower
                  hereunder are secured by the Loan Agreement, the Security
                  Instrument and the other Loan Documents.

         d.       NOTICES. Any notice, election, request or demand which by any
                  provision of this Note is required or permitted to be given or
                  served hereunder shall be given or served in the manner
                  required for the delivery of notices pursuant to the Loan
                  Agreement.

         e.       ENTIRE AGREEMENT. This Note, together with the other Loan
                  Documents, constitutes the entire and final agreement between
                  Borrower and Lender with respect to the subject matter hereof
                  and thereof and may only be changed, amended, modified or
                  waived by an instrument in writing signed by Borrower and
                  Lender.

         f.       NO WAIVER. No waiver of any term or condition of this Note,
                  whether by delay, omission or otherwise, shall be effective
                  unless in writing and signed by the party sought to be
                  charged, and then such waiver shall be effective only in the
                  specific instance and for the purpose for which given. No
                  notice to, or demand on, Borrower shall entitle Borrower to
                  any other or future notice or demand in the same, similar or
                  other circumstances.

         g.       SUCCESSORS AND ASSIGNS. This Note shall be binding upon and
                  inure to the benefit of Borrower and Lender and their
                  respective successors and permitted assigns. Upon any
                  endorsement, assignment, or other transfer of

                                       10

                  this Note by Lender or by operation of law, the term "Lender"
                  as used herein, shall mean such endorsee, assignee, or other
                  transferee or successor to Lender then becoming the holder of
                  this Note. The term "Borrower" as used herein shall include
                  the respective successors and assigns, legal and personal
                  representatives, executors, administrators, devisees, legatees
                  and heirs of Borrower, if any.

         h.       CAPTIONS. All paragraph, section, exhibit and schedule
                  headings and captions herein are used for reference only and
                  in no way limit or describe the scope or intent of, or in any
                  way affect, this Note.

         i.       COUNTERPARTS. This Note may be executed in counterparts, each
                  of which shall be an original and all of which, when taken
                  together, shall constitute one binding Note.

         j.       SEVERABILITY. The provisions of this Note are severable, and
                  if any one clause or provision hereof shall be held invalid or
                  unenforceable in whole or in part, then such invalidity or
                  unenforceability shall affect only such clause or provision,
                  or part thereof, and not any other clause or provision of this
                  Note.

         k.       GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
                  IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
                  TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW,
                  WITHOUT REGARD TO CHOICE OF LAW RULES. BORROWER AGREES THAT
                  ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OTHER LOAN
                  DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW
                  YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
                  NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
                  PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER IN THE
                  MANNER AND AT THE ADDRESS SPECIFIED FOR NOTICES IN THE LOAN
                  AGREEMENT. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY
                  NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
                  SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
                  COURT.

         l.       JURY TRIAL WAIVER. BORROWER, LENDER AND ALL PERSONS CLAIMING
                  BY, THROUGH OR UNDER BORROWER OR LENDER, HEREBY EXPRESSLY,
                  KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO
                  TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
                  (I) ARISING UNDER THIS NOTE, INCLUDING, WITHOUT LIMITATION,
                  ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY
                  CONNECTED WITH OR RELATED

                                       11

                  OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
                  THEM WITH RESPECT TO THIS NOTE (AS NOW OR HEREAFTER MODIFIED)
                  OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
                  DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED
                  HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND,
                  ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER
                  ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
                  OTHERWISE; AND BORROWER AND LENDER HEREBY AGREE AND CONSENT
                  THAT AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION MAY BE
                  FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT HERETO
                  TO THE WAIVER OF ANY RIGHT TO TRIAL BY JURY. EACH OF BORROWER
                  AND LENDER ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL
                  COUNSEL REGARDING THE MEANING OF THIS WAIVER AND ACKNOWLEDGES
                  THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF
                  THE LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.

         m.       COUNTERCLAIMS AND OTHER ACTIONS. Borrower hereby expressly and
                  unconditionally waives, in connection with any suit, action or
                  proceeding brought by Lender on this Note, any and every right
                  it may have to (i) interpose any counterclaim therein (other
                  than a mandatory or compulsory counterclaim which can only be
                  asserted in the suit, action or proceeding brought by Lender
                  on this Note and cannot be maintained in a separate action)
                  and (ii) have any such suit, action or proceeding consolidated
                  with any other or separate suit, action or proceeding.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       12

         IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered as of the day and year first above written.

                                    BORROWER:

                                    731 OFFICE ONE LLC, a Delaware limited
                                    liability company

                                    By: 731 OFFICE ONE HOLDING LLC, a Delaware
                                    limited liability company, its sole member

                                        By: ALEXANDER'S INC., a Delaware
                                        corporation, its sole member

                                        By: /s/ Brian Kurtz
                                            ------------------------------------
                                            Name:  Brian Kurtz
                                            Title: Assistant Secretary

                                    EXHIBIT A
                               PROMISSORY NOTE A-1
                                 MONTHLY AMOUNTS

                                       SCHEDULED PRINCIPAL
INTEREST PERIOD  STATED INTEREST RATE      AMORTIZATION     INTEREST PAYMENT
- ---------------  --------------------  -------------------  ----------------
                                                   
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                                       2

                                       SCHEDULED PRINCIPAL
INTEREST PERIOD  STATED INTEREST RATE      AMORTIZATION     INTEREST PAYMENT
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                                        3

                                       SCHEDULED PRINCIPAL
INTEREST PERIOD  STATED INTEREST RATE      AMORTIZATION     INTEREST PAYMENT
- ---------------  --------------------  -------------------  ----------------
                                                   
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                                       4

                                       SCHEDULED PRINCIPAL
INTEREST PERIOD  STATED INTEREST RATE      AMORTIZATION     INTEREST PAYMENT
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                                        5

                                       SCHEDULED PRINCIPAL
INTEREST PERIOD  STATED INTEREST RATE      AMORTIZATION     INTEREST PAYMENT
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                                        6

                                       SCHEDULED PRINCIPAL
INTEREST PERIOD  STATED INTEREST RATE      AMORTIZATION     INTEREST PAYMENT
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                                        7

                                       SCHEDULED PRINCIPAL
INTEREST PERIOD  STATED INTEREST RATE      AMORTIZATION     INTEREST PAYMENT
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                                       8

                                       SCHEDULED PRINCIPAL
INTEREST PERIOD  STATED INTEREST RATE      AMORTIZATION     INTEREST PAYMENT
- ---------------  --------------------  -------------------  ----------------
                                                   
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                                        9

                                       SCHEDULED PRINCIPAL
INTEREST PERIOD  STATED INTEREST RATE      AMORTIZATION     INTEREST PAYMENT
- ---------------  --------------------  -------------------  ----------------
                                                   
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                                       10

                               PROMISSORY NOTE A-2

New York, New York
$95,000,000.00                                                 February 13, 2004

         PROMISSORY NOTE A-2, dated as of February 13, 2004 (this NOTE), by 731
Office One LLC, a Delaware limited liability company (BORROWER), having an
address for notice purposes c/o Alexander's Inc., 888 Seventh Avenue, New York,
New York 10019, in favor of GERMAN AMERICAN CAPITAL CORPORATION, a Maryland
corporation (together with its successors and assigns, LENDER), having an office
at 60 Wall Street, New York, New York 10005.

         WHEREAS, Lender made a loan to Borrower in the original principal
amount of $400,000,000 (the LOAN);

         WHEREAS, Lender is the present owner and holder of that certain
Consolidated Amended and Restated Note, dated as of February 13, 2004, made by
Borrower in favor of Lender (the EXISTING NOTE), which Existing Note evidences
an indebtedness of Borrower to Lender in the original and current outstanding
principal amount of $400,000,000 (the EXISTING DEBT);

         WHEREAS, pursuant to the Loan Agreement (as hereinafter defined),
Borrower and Lender desire to sever the Existing Note into six (6) newly issued
substitute promissory notes in an aggregate principal amount equal to the
Existing Debt;

         WHEREAS, from and after the date hereof, the Existing Note shall be
amended, restated and superseded and the Loan shall be evidenced by (i) that
certain Promissory Note A-1, in the principal amount of $90,000,000 (NOTE A-1);
(ii) this Promissory Note A-2, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $95,000,000; (iii) that certain
Promissory Note A-3, dated as of the date hereof, made by Borrower in favor of
Lender, in the principal amount of $35,000,000 (NOTE A-3); (iv) that certain
Promissory Note A-4, dated as of the date hereof, made by Borrower in favor of
Lender, in the principal amount of $94,000,000 (NOTE A-4); (v) that certain
Promissory Note A-X, dated as of the date hereof, made by Borrower in favor of
Lender, in the notional principal amount of $86,000,000 (NOTE A-X); and (vi)
that certain Promissory Note B, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $86,000,000 (NOTE B);

         WHEREAS, this Note, individually, evidences a portion of the Loan in
the principal amount of NINETY-FIVE MILLION DOLLARS ($95,000,000); and

         WHEREAS, Lender and Borrower intend these Recitals to be a material
part of this Note.

         NOW, THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the
order of Lender the Principal Amount, together with interest from the date
hereof, and other fees, expenses and charges as provided in this Note.

1.       DEFINED TERMS.

         a.       Capitalized terms used but not otherwise defined herein shall
                  have the respective meanings given thereto in the Loan
                  Agreement (as defined below), unless otherwise expressly
                  provided herein. All references to sections shall be deemed to
                  be references to sections of this Note, unless otherwise
                  indicated.

         b.       The following terms shall have the meaning ascribed thereto:

         A-2 PROPORTIONATE SHARE shall mean, with respect to any date of
         determination, a fraction, expressed as a percentage, the numerator of
         which is the Principal Amount of this Note and the denominator of which
         is the outstanding aggregate principal amount of the Mortgage Notes.

         A NOTE PROPORTIONATE SHARE shall mean, with respect to any date of
         determination, a fraction, expressed as a percentage, the numerator of
         which is the Principal Amount of this Note and the denominator of which
         is the sum of the principal amounts of this Note, the A-1 Note, the A-3
         Note and the A-4 Note.

         ADDITIONAL INTEREST STRIP shall mean, with respect to each Interest
         Period from and after the Anticipated Repayment Date, the excess of
         interest accrued at the Revised Interest Rate over interest accrued at
         the Stated Interest Rate (but shall not include the Post ARD Default
         Interest Strip).

         ANTICIPATED REPAYMENT DATE shall mean March 1, 2014.

         APPLICABLE INTEREST RATE shall mean (i) from the date hereof through
         and including the Anticipated Repayment Date, the Stated Interest Rate,
         and (ii) from the day after the Anticipated Repayment Date through and
         including the Maturity Date, the Revised Interest Rate.

         BORROWER shall have the meaning provided in the first paragraph hereof.

         DEFAULT RATE shall mean a rate per annum equal to the lesser of (a) the
         Maximum Legal Rate and (b) five percent (5%) above the Applicable
         Interest Rate.

         DEFEASANCE LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on the earlier to occur of (i) two years after the
         "startup day," within the meaning of Section 860G(a)(9) of the Internal
         Revenue Code of 1986, as amended from time to time or any successor
         statute (the "Code"), of a "real estate mortgage investment conduit,"
         ("REMIC") within the meaning of Section 860D of the Code, with respect
         to the last portion of the debt evidenced by the

                                       2

         Mortgage Notes and the Security Instrument and (ii) four (4) years from
         the date hereof.

         DEFERRED INTEREST shall mean the Additional Interest Strip and the Post
         ARD Default Interest Strip, collectively.

         EXISTING DEBT shall have the meaning provided in the Recitals to this
         Note.

         EXISTING NOTE shall have the meaning provided in the Recitals to this
         Note.

         INTEREST PERIOD shall have the meaning provided in Section 2.

         LENDER shall have the meaning provided in the first paragraph hereof.

         LIQUIDATED DAMAGES AMOUNT shall have the meaning set forth in Section
         4(e).

         LOAN shall have the meaning provided in the Recitals to this Note.

         LOAN AGREEMENT shall mean the Loan and Security Agreement, dated the
         date hereof, between Borrower and Lender.

         MATURITY DATE shall mean March 1, 2029, or such earlier date on which
         the final payment of principal of this Note becomes due and payable as
         provided in the Loan Agreement or this Note, whether at such stated
         maturity date, by declaration of acceleration, or otherwise.

         MATURITY DATE PAYMENT shall have the meaning set forth in Section 3(e).

         MONTHLY AMOUNTS shall have the meaning provided in Section 3(a).

         MORTGAGE NOTES shall mean, collectively, this Note, Note A-1, Note A-3,
         Note A-4, Note A-X, Note B and any amendments, restatements or
         replacements of any thereof.

         NOTE shall have the meaning provided in the first paragraph hereof.

         NOTE A-X shall have the meaning provided in the Recitals to this Note.

         NOTE A-1 shall have the meaning provided in the Recitals to this Note.

         NOTE A-3 shall have the meaning provided in the Recitals to this Note.

         NOTE A-4 shall have the meaning provided in the Recitals to this Note.

         NOTE B shall have the meaning provided in the Recitals to this Note.

         PAYMENT DATE shall be the first (1st) calendar day of each calendar
         month, whether or not such day is a Business Day, commencing on April
         1, 2004 and continuing to and including the Maturity Date.

                                       3

         POST ARD DEFAULT INTEREST STRIP shall mean, with respect to each
         Interest Period from and after the Anticipated Repayment Date, default
         interest accrued at a rate equal to the lesser of (x) 5.0% and (y) the
         amount by which the Maximum Legal Rate exceeds the Applicable Interest
         Rate.

         PREPAYMENT DATE shall have the meaning provided in Section 4(a)(i).

         PREPAYMENT LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on December 1, 2013.

         PREPAYMENT NOTICE shall have the meaning provided in Section 4(a)(i).

         PRINCIPAL AMOUNT shall mean $95,000,000 or so much of the aggregate
         principal amount that is outstanding under this Note from time to time.

         REVISED INTEREST RATE shall mean, with respect to each Interest Period,
         a rate per annum equal to two percent (2%) above the Stated Interest
         Rate applicable to such Interest Period.

         STATED INTEREST RATE shall mean, with respect to each Interest Period,
         the rate of interest set forth on EXHIBIT A hereto for such Interest
         Period.

         TREASURY RATE shall mean, as of any Payment Date, the yield, calculated
         by linear interpolation (rounded to the nearest one-thousandth of one
         percent) of the yields of noncallable United States Treasury
         obligations with terms (one longer and one shorter) most nearly
         approximating the period from such Payment Date to the Anticipated
         Repayment Date (and converted to a monthly equivalent yield), as
         determined by Lender on the basis of Federal Reserve Statistical
         Release H.15 Selected Interest Rates under the heading U.S.
         Governmental Security/Treasury Constant Maturities or, if such
         publication is unavailable, such other recognized source of financial
         market information as shall be selected by Lender for the week prior to
         such Payment Date.

         YIELD MAINTENANCE PREMIUM shall mean an amount equal to the product of:
         (a) the positive difference (expressed as a percentage of the
         outstanding Principal Amount before any prepayment), if any, as of the
         date of determination between (i) the present value of all future
         scheduled payments of interest and principal, including the principal
         amount due on the Anticipated Repayment Date, to be made on this Note
         before the prepayment in question, discounted at an interest rate per
         annum equal to the Treasury Rate, and (ii) the outstanding Principal
         Amount immediately before such prepayment; and (b) the Principal Amount
         being prepaid.

2.       INTEREST.

         a.       Prior to the Anticipated Repayment Date, interest shall accrue
                  on the Principal Amount at the Stated Interest Rate. In the
                  event that Borrower does not repay the Principal Amount in
                  full on or before the Anticipated

                                       4

         Repayment Date, then, from and after the Anticipated Repayment Date,
         interest shall accrue on the Principal Amount at the Revised Interest
         Rate. From and after the occurrence and during the continuance of any
         Event of Default, interest shall accrue at the Default Rate.

         b.       Interest on the principal sum of this Note shall be calculated
                  based on the Applicable Interest Rate on the basis of a
                  fraction, the denominator of which shall be 360 and the
                  numerator of which shall be the actual number of days in the
                  relevant Interest Period, except that interest due and payable
                  for a period less than a full month shall be calculated by
                  multiplying the actual number of days elapsed in such period
                  by a daily rate based on said 360 day year. Interest shall
                  accrue from, and including, the first (1st) day of the prior
                  month and ending on the last day of the prior month (an
                  INTEREST PERIOD); in each case without adjustment for any
                  Business Day convention; provided that the first accrual
                  period shall commence on March 1, 2004.

         c.       Except as expressly set forth in the Loan Agreement to the
                  contrary, interest shall accrue on all amounts advanced by
                  Lender pursuant to the Loan Documents (other than the
                  Principal Amount, which shall accrue interest in accordance
                  with clauses a. and b. above) at the Default Rate.

         d.       The provisions of this Section 2 are subject in all events to
                  the provisions of Section 2.2.4 of the Loan Agreement.

3.       PAYMENTS OF PRINCIPAL AND INTEREST.

         a.       Interest and principal under this Note shall be payable as
                  follows:

                  i.       interest accruing from the date hereof to and
                           including February 29, 2004 shall be paid on the date
                           hereof; and

                  ii.      commencing on April 1, 2004 and on each and every
                           Payment Date thereafter until the Maturity Date,
                           monthly installments of interest payable on this
                           Note, in arrears, and scheduled principal
                           amortization in the amounts (the MONTHLY AMOUNTS) set
                           forth on EXHIBIT A hereto (subject to adjustment as
                           provided in Section 4(f)).

         b.       From and after the Anticipated Repayment Date, unless the
                  Indebtedness has been repaid in full, Borrower shall continue
                  to make payments of accrued interest and Monthly Amounts on
                  each Payment Date. From and after the Anticipated Repayment
                  Date, unless the Indebtedness has been repaid in full, all
                  Excess Cash Flow shall be applied to repayment of the Loan on
                  each Payment Date and the A Note Proportionate Share thereof
                  shall be applied as a partial prepayment of the outstanding
                  Principal Amount. Deferred Interest shall be payable after all
                  principal and other amounts due under the Loan have been paid
                  in full.

                                       5

         c.       All payments made by Borrower hereunder or under any of the
                  Loan Documents shall be made on or before 2:00 p.m. New York
                  City time or such later time as Lender or its servicer shall
                  apply amounts on deposit in the Holding Account in accordance
                  the terms of the Loan Documents. Any payments received after
                  such time shall be credited to the next following Business
                  Day.

         d.       All amounts advanced by Lender pursuant to the Loan Documents,
                  other than the Principal Amount, or other charges provided in
                  the Loan Documents, shall be due and payable as provided in
                  the Loan Documents. In the event any such advance or charge is
                  not so repaid by Borrower, Lender may, at its option, first
                  apply any payments received under this Note to repay such
                  advances, together with any interest thereon, or other charges
                  as provided in the Loan Documents, and the balance, if any,
                  shall be applied in payment of any installment of interest or
                  principal then due and payable.

         e.       The entire Principal Amount of this Note, all unpaid accrued
                  interest, all interest that would accrue on the Principal
                  Amount through the end of the Interest Period during which the
                  Maturity Date occurs and all other fees and sums then payable
                  hereunder or under the Loan Documents (collectively, the
                  MATURITY DATE PAYMENT), shall be due and payable in full on
                  the Maturity Date.

         f.       Amounts due on this Note shall be payable, without any
                  counterclaim, setoff or deduction whatsoever, at the office of
                  Lender or its agent or designee at the address set forth on
                  the first page of this Note or at such other place as Lender
                  or its agent or designee may from time to time designate in
                  writing.

         g.       All amounts due under this Note, including, without
                  limitation, interest and the Principal Amount, shall be due
                  and payable in lawful money of the United States.

         h.       To the extent that Borrower makes a payment or Lender receives
                  any payment or proceeds for Borrower's benefit, which are
                  subsequently invalidated, declared to be fraudulent or
                  preferential, set aside or required to be repaid to a trustee,
                  debtor in possession, receiver, custodian or any other party
                  under any bankruptcy law, common law or equitable cause, then,
                  to such extent, the obligations of Borrower hereunder intended
                  to be satisfied shall be revived and continue as if such
                  payment or proceeds had not been received by Lender.

4.       PREPAYMENTS. Except as permitted in Sections 4(a), 4(b), 4(c) and 4(d)
         hereof, the outstanding Principal Amount may not be prepaid in whole or
         in part. Any Principal Amount prepaid pursuant to this Section 4 may
         not be reborrowed hereunder.

                                       6

         a.       VOLUNTARY PREPAYMENTS. Borrower shall not have the right to
                  prepay, in whole or in part, the Principal Amount due
                  hereunder prior to the Anticipated Repayment Date (other than
                  with respect to the application of Proceeds pursuant to
                  Section 6.2 of the Loan Agreement); provided, however,
                  Borrower shall be entitled to make a prepayment of all of the
                  Principal Amount on any Business Day occurring after the
                  expiration of the Prepayment Lockout Period, without any
                  premium or penalty upon satisfaction of the following
                  conditions:

                  i.       Borrower shall provide prior irrevocable written
                           notice (the PREPAYMENT NOTICE) to Lender specifying
                           the proposed Business Day on which the prepayment is
                           to be made, which Business Day shall be no earlier
                           than thirty (30) days after the date of such
                           Prepayment Notice and no later than ninety (90) days
                           after the date of such Prepayment Notice (the date of
                           such prepayment pursuant to this Section 4(a) and
                           Section 4(b) below being the PREPAYMENT DATE); and

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(c) and Section 4(d) of this Note.

                  iii.     In connection with any voluntary prepayment, other
                           than payments from Excess Cash Flow as set forth in
                           Section 3(b), Borrower shall concurrently repay all
                           of the other Indebtedness in full.

                  iv.      Borrower agrees that all Excess Cash Flow shall be
                           applied in accordance with the terms of the Loan
                           Agreement, including, without limitation, Article III
                           and Section 16.5 of the Loan Agreement and the
                           provisions of Section 3(b) hereof.

         b.       DEFEASANCE. From and after expiration of the Defeasance
                  Lockout Period and prior to the Anticipated Repayment Date,
                  Borrower shall have the right to defease the Loan pursuant to
                  the provisions of Article IX of the Loan Agreement. In no
                  event shall a prepayment of this Note in accordance with
                  Sections 4(a) or 4(c) trigger or result in any defeasance
                  liability under this Note or the other Loan Documents.

         c.       MANDATORY PREPAYMENTS.

                  i.       On the next occurring Payment Date following the date
                           on which Borrower actually receives any Proceeds, if
                           Lender is not obligated pursuant to the terms of the
                           Loan Agreement to make such Proceeds available to
                           Borrower for the restoration of the Property,
                           Borrower shall use the A-2 Proportionate Share of
                           such Proceeds to prepay the outstanding principal
                           balance of this Note as set forth in Section 6.2.3 of
                           the Loan Agreement; and

                                       7

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(d) and Section 4(e) of this Note
                           (provided, however, that the Liquidated Damages
                           Amount and the Yield Maintenance Premium shall not
                           apply to prepayments made from the receipt of
                           Proceeds).

         d.       PAYMENTS IN CONNECTION WITH A PREPAYMENT.

                  i.       On the date on which a prepayment, voluntary,
                           involuntary or mandatory, is made under this Note or
                           as required under the Loan Agreement, Borrower shall,
                           unless such prepayment is made on a Payment Date, pay
                           to Lender all unpaid interest on the Principal Amount
                           prepaid through the end of the Interest Period during
                           which such prepayment is made.

                  ii.      On the Business Day on which a prepayment is made,
                           Borrower shall pay to Lender all other sums (not
                           including scheduled interest and principal payments)
                           then due and payable under the Note, and the A-2
                           Proportionate Share of all other sums then due and
                           payable under the Loan Agreement, the Security
                           Instrument, and the other Loan Documents;

                  iii.     Borrower shall pay (without duplication) all
                           reasonable costs and expenses of Lender incurred in
                           connection with the prepayment (including without
                           limitation, any reasonable costs and expenses
                           associated with a release or assignment of the Lien
                           of the related Security Instrument as set forth in
                           Section 2.3.3 of the Loan Agreement as well as
                           reasonable attorneys' fees and expenses); and

                  iv.      In the event of a prepayment made after an
                           acceleration of the Loan, Borrower shall also pay to
                           Lender the Yield Maintenance Premium to the extent
                           such prepayment is made prior to expiration of the
                           Prepayment Lockout Period.

         e.       LIQUIDATED DAMAGES AMOUNT. IF NOTWITHSTANDING THE PROHIBITIONS
                  OF THIS SECTION 4, THE LOAN IS VOLUNTARILY OR INVOLUNTARILY
                  REPAID DURING THE PREPAYMENT LOCKOUT PERIOD (EXCLUDING
                  PREPAYMENTS MADE (I) IN ACCORDANCE WITH SECTION 4(C) OF THIS
                  NOTE AND (II) FROM A DEFEASANCE OF THE LOAN IN ACCORDANCE WITH
                  THE TERMS OF THE LOAN DOCUMENTS AFTER EXPIRATION OF THE
                  DEFEASANCE LOCKOUT PERIOD), INCLUDING, BUT NOT LIMITED TO, AS
                  A RESULT OF AN ACCELERATED MATURITY DATE, THEN BORROWER SHALL
                  PAY TO LENDER, AS LIQUIDATED DAMAGES FOR SUCH DEFAULT AND NOT
                  AS A PENALTY, AND IN ADDITION TO ANY AND ALL OTHER SUMS AND
                  FEES PAYABLE UNDER THIS NOTE AND THE OTHER LOAN DOCUMENTS, AN
                  AMOUNT EQUAL TO

                                       8

                  THE GREATER OF (A) FIVE PERCENT (5%) OF THE PRINCIPAL AMOUNT
                  BEING REPAID HEREUNDER AND (B) THE YIELD MAINTENANCE PREMIUM
                  (THE LIQUIDATED DAMAGES AMOUNT). NOTWITHSTANDING THE
                  FOREGOING, THE LIQUIDATED DAMAGES AMOUNT SHALL NOT BE APPLIED
                  TOWARD ANY PREPAYMENTS FROM PROCEEDS.

         f.       MODIFICATION OF MONTHLY AMOUNTS.

                  i.       In the event that any partial prepayment of principal
                           occurs before the Anticipated Repayment Date (other
                           than in connection with an acceleration of the Loan),
                           the Payment Dates shall remain the same and Lender
                           shall recalculate the amount of subsequent Monthly
                           Amounts to reflect the same proportionate
                           amortization as in effect prior to such recalculation
                           for each remaining Payment Date, taking into account
                           the reduction in the Principal Amount.

                  ii.      In the event that any partial prepayment of principal
                           occurs after the Anticipated Repayment Date (other
                           than in connection with an acceleration of the Loan)
                           or Excess Cash Flow is applied to the prepayment of
                           principal after the Anticipated Repayment Date, the
                           Payment Dates shall remain the same and Lender shall
                           recalculate the amount of subsequent Monthly Amounts
                           to reflect the reduction of the Principal Amount.
                           Deferred Interest accrued pursuant to Section 3(b) of
                           this Note shall not result in any increase in the
                           Monthly Amounts or the Stated Interest Rate.

5.       MISCELLANEOUS.

         a.       WAIVER. Borrower and all endorsers, sureties and guarantors
                  hereby jointly and severally waive all applicable exemption
                  rights, valuation and appraisement, presentment for payment,
                  demand, notice of demand, notice of nonpayment or dishonor,
                  protest and notice of protest of this Note, and, except as
                  otherwise expressly provided in the Loan Documents, all other
                  notices in connection with the delivery, acceptance,
                  performance, default or enforcement of the payment of this
                  Note. Borrower consents to any and all extensions of time,
                  renewals, waivers or modifications that may be granted by
                  Lender with respect to the payment or other provisions of this
                  Note and to the release of the collateral securing this Note
                  or any part thereof, with or without substitution, and agrees
                  that additional makers may become parties hereto without
                  notice to them or affecting their liability under this Note.

         b.       NON-RECOURSE. Recourse with respect to any claims arising
                  under or in connection with this Note shall be limited to the
                  extent provided in Article XVIII of the Loan Agreement and the
                  terms, covenants and conditions of

                                       9

                  Article XVIII of the Loan Agreement are hereby incorporated by
                  reference as if fully set forth in this Note.

         c.       NOTE SECURED. This Note and all obligations of Borrower
                  hereunder are secured by the Loan Agreement, the Security
                  Instrument and the other Loan Documents.

         d.       NOTICES. Any notice, election, request or demand which by any
                  provision of this Note is required or permitted to be given or
                  served hereunder shall be given or served in the manner
                  required for the delivery of notices pursuant to the Loan
                  Agreement.

         e.       ENTIRE AGREEMENT. This Note, together with the other Loan
                  Documents, constitutes the entire and final agreement between
                  Borrower and Lender with respect to the subject matter hereof
                  and thereof and may only be changed, amended, modified or
                  waived by an instrument in writing signed by Borrower and
                  Lender.

         f.       NO WAIVER. No waiver of any term or condition of this Note,
                  whether by delay, omission or otherwise, shall be effective
                  unless in writing and signed by the party sought to be
                  charged, and then such waiver shall be effective only in the
                  specific instance and for the purpose for which given. No
                  notice to, or demand on, Borrower shall entitle Borrower to
                  any other or future notice or demand in the same, similar or
                  other circumstances.

         g.       SUCCESSORS AND ASSIGNS. This Note shall be binding upon and
                  inure to the benefit of Borrower and Lender and their
                  respective successors and permitted assigns. Upon any
                  endorsement, assignment, or other transfer of this Note by
                  Lender or by operation of law, the term "Lender" as used
                  herein, shall mean such endorsee, assignee, or other
                  transferee or successor to Lender then becoming the holder of
                  this Note. The term "Borrower" as used herein shall include
                  the respective successors and assigns, legal and personal
                  representatives, executors, administrators, devisees, legatees
                  and heirs of Borrower, if any.

         h.       CAPTIONS. All paragraph, section, exhibit and schedule
                  headings and captions herein are used for reference only and
                  in no way limit or describe the scope or intent of, or in any
                  way affect, this Note.

         i.       COUNTERPARTS. This Note may be executed in counterparts, each
                  of which shall be an original and all of which, when taken
                  together, shall constitute one binding Note.

         j.       SEVERABILITY. The provisions of this Note are severable, and
                  if any one clause or provision hereof shall be held invalid or
                  unenforceable in whole or in part, then such invalidity or
                  unenforceability shall affect only such clause or provision,
                  or part thereof, and not any other clause or provision of this
                  Note.

                                       10

         k.       GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
                  IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
                  TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW,
                  WITHOUT REGARD TO CHOICE OF LAW RULES. BORROWER AGREES THAT
                  ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OTHER LOAN
                  DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW
                  YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
                  NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
                  PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER IN THE
                  MANNER AND AT THE ADDRESS SPECIFIED FOR NOTICES IN THE LOAN
                  AGREEMENT. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY
                  NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
                  SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
                  COURT.

         l.       JURY TRIAL WAIVER. BORROWER, LENDER AND ALL PERSONS CLAIMING
                  BY, THROUGH OR UNDER BORROWER OR LENDER, HEREBY EXPRESSLY,
                  KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO
                  TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
                  (I) ARISING UNDER THIS NOTE, INCLUDING, WITHOUT LIMITATION,
                  ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY
                  CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
                  PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS NOTE (AS
                  NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT
                  OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR
                  THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
                  WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW
                  EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
                  CONTRACT OR TORT OR OTHERWISE; AND BORROWER AND LENDER HEREBY
                  AGREE AND CONSENT THAT AN ORIGINAL COUNTERPART OR A COPY OF
                  THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE
                  OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY
                  JURY. EACH OF BORROWER AND LENDER ACKNOWLEDGES THAT IT HAS
                  CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS
                  WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL
                  INDUCEMENT FOR THE MAKING OF THE LOAN. THIS WAIVER SHALL
                  SURVIVE THE REPAYMENT OF THE LOAN.

                                       11

         m.       COUNTERCLAIMS AND OTHER ACTIONS. Borrower hereby expressly and
                  unconditionally waives, in connection with any suit, action or
                  proceeding brought by Lender on this Note, any and every right
                  it may have to (i) interpose any counterclaim therein (other
                  than a mandatory or compulsory counterclaim which can only be
                  asserted in the suit, action or proceeding brought by Lender
                  on this Note and cannot be maintained in a separate action)
                  and (ii) have any such suit, action or proceeding consolidated
                  with any other or separate suit, action or proceeding.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       12

         IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered as of the day and year first above written.

                                    BORROWER:

                                    731 OFFICE ONE LLC, a Delaware limited
                                    liability company

                                    By: 731 OFFICE ONE HOLDING LLC, a
                                    Delaware limited liability company, its sole
                                    member

                                          By:  ALEXANDER'S INC., a Delaware
                                          corporation, its sole member

                                          By:  /s/ Brian Kurtz
                                               ---------------------------------
                                               Name:  Brian Kurtz
                                               Title: Assistant Secretary

                                    EXHIBIT A
                               PROMISSORY NOTE A-2

                                                                      MONTHLY AMOUNT
INTEREST PERIOD                                                    (SCHEDULED PRINCIPAL
 COMMENCING            STATED INTEREST RATE      PAYMENT DATE         AMORTIZATION)           ENDING BALANCE
                                                                                  
2/15/2004                  5.36252388%
3/1/2004                   5.36252388%            3/1/2004                      -              95,000,000.00

4/1/2004                   5.36252388%            4/1/2004                      -              95,000,000.00

5/1/2004                   5.36252388%            5/1/2004                      -              95,000,000.00

6/1/2004                   5.36252388%            6/1/2004                      -              95,000,000.00

7/1/2004                   5.36252388%            7/1/2004                      -              95,000,000.00

8/1/2004                   5.36252388%            8/1/2004                      -              95,000,000.00

9/1/2004                   5.36252388%            9/1/2004                      -              95,000,000.00

10/1/2004                  5.36252388%            10/1/2004                     -              95,000,000.00

11/1/2004                  5.36252388%            11/1/2004                     -              95,000,000.00

12/1/2004                  5.36252388%            12/1/2004                     -              95,000,000.00

1/1/2005                   5.36252388%            1/1/2005                      -              95,000,000.00

2/1/2005                   5.36252388%            2/1/2005                      -              95,000,000.00

3/1/2005                   5.36252388%            3/1/2005                      -              95,000,000.00

4/1/2005                   5.36252388%            4/1/2005                      -              95,000,000.00

5/1/2005                   5.36252388%            5/1/2005                      -              95,000,000.00

6/1/2005                   5.36252388%            6/1/2005                      -              95,000,000.00

7/1/2005                   5.36252388%            7/1/2005                      -              95,000,000.00

8/1/2005                   5.36252388%            8/1/2005                      -              95,000,000.00

9/1/2005                   5.36252388%            9/1/2005                      -              95,000,000.00

10/1/2005                  5.36252388%            10/1/2005                     -              95,000,000.00

11/1/2005                  5.36252388%            11/1/2005                     -              95,000,000.00

12/1/2005                  5.36252388%            12/1/2005                     -              95,000,000.00

1/1/2006                   5.36252388%            1/1/2006                      -              95,000,000.00

2/1/2006                   5.36252388%            2/1/2006                      -              95,000,000.00

3/1/2006                   5.36252388%            3/1/2006                      -              95,000,000.00

4/1/2006                   5.36259782%            4/1/2006             215,479.75              94,784,520.25

5/1/2006                   5.36267862%            5/1/2006             234,354.39              94,550,165.85

                                       2

                                                                                   
6/1/2006                   5.36275398%            6/1/2006              217,544.37             94,332,621.49

7/1/2006                   5.36283625%            7/1/2006              236,361.58             94,096,259.91

8/1/2006                   5.36291308%            8/1/2006              219,627.67             93,876,632.24

9/1/2006                   5.36299061%            9/1/2006              220,635.70             93,655,996.54

10/1/2006                  5.36307515%            10/1/2006             239,366.92             93,416,629.63

11/1/2006                  5.36315420%            11/1/2006             222,746.98             93,193,882.64

12/1/2006                  5.36324031%            12/1/2006             241,419.48             92,952,463.17

1/1/2007                   5.36332092%            1/1/2007              224,877.38             92,727,585.79

2/1/2007                   5.36340230%            2/1/2007              225,909.50             92,501,676.29

3/1/2007                   5.36350356%            3/1/2007              279,589.35             92,222,086.94

4/1/2007                   5.36358668%            4/1/2007              228,229.60             91,993,857.34

5/1/2007                   5.36367701%            5/1/2007              246,749.59             91,747,107.75

6/1/2007                   5.36376180%            6/1/2007              230,409.62             91,516,698.13

7/1/2007                   5.36385386%            7/1/2007              248,868.97             91,267,829.16

8/1/2007                   5.36394037%            8/1/2007              232,609.38             91,035,219.78

9/1/2007                   5.36402771%            9/1/2007              233,676.99             90,801,542.78

10/1/2007                  5.36412243%            10/1/2007             252,045.45             90,549,497.33

11/1/2007                  5.36421156%            11/1/2007             235,906.32             90,313,591.01

12/1/2007                  5.36430813%            12/1/2007             254,212.77             90,059,378.24

1/1/2008                   5.36439909%            1/1/2008              238,155.83             89,821,222.41

2/1/2008                   5.36449096%            2/1/2008              239,248.90             89,581,973.50

3/1/2008                   5.36459701%            3/1/2008              274,577.75             89,307,395.75

4/1/2008                   5.36469086%            4/1/2008              241,607.22             89,065,788.52

5/1/2008                   5.36479233%            5/1/2008              259,755.09             88,806,033.43

6/1/2008                   5.36488815%            6/1/2008              243,908.34             88,562,125.09

7/1/2008                   5.36499166%            7/1/2008              261,992.20             88,300,132.89

8/1/2008                   5.36508951%            8/1/2008              246,230.28             88,053,902.61

9/1/2008                   5.36518837%            9/1/2008              247,360.41             87,806,542.20

10/1/2008                  5.36529503%            10/1/2008             265,348.25             87,541,193.96

11/1/2008                  5.36539599%            11/1/2008             249,713.60             87,291,480.36

12/1/2008                  5.36550485%            12/1/2008             267,635.98             87,023,844.38

                                       3

                                                                                   
1/1/2009                   5.36560800%            1/1/2009              252,088.09             86,771,756.29

2/1/2009                   5.36571223%            2/1/2009              253,245.11             86,518,511.18

3/1/2009                   5.36583831%            3/1/2009              304,392.89             86,214,118.29

4/1/2009                   5.36594497%            4/1/2009              255,804.51             85,958,313.78

5/1/2009                   5.36605972%            5/1/2009              273,557.46             85,684,756.32

6/1/2009                   5.36616873%            6/1/2009              258,234.13             85,426,522.19

7/1/2009                   5.36628593%            7/1/2009              275,919.50             85,150,602.69

8/1/2009                   5.36639736%            8/1/2009              260,685.75             84,889,916.94

9/1/2009                   5.36650999%            9/1/2009              261,882.23             84,628,034.71

10/1/2009                  5.36663096%            10/1/2009             279,466.12             84,348,568.59

11/1/2009                  5.36674613%            11/1/2009             264,366.86             84,084,201.73

12/1/2009                  5.36686973%            12/1/2009             281,881.64             83,802,320.09

1/1/2010                   5.36698752%            1/1/2010              266,873.99             83,535,446.10

2/1/2010                   5.36710661%            2/1/2010              268,098.87             83,267,347.23

3/1/2010                   5.36724880%            3/1/2010              317,870.77             82,949,476.46

4/1/2010                   5.36737080%            4/1/2010              270,788.31             82,678,688.15

5/1/2010                   5.36750149%            5/1/2010              288,124.46             82,390,563.68

6/1/2010                   5.36762632%            6/1/2010              273,353.56             82,117,210.12

7/1/2010                   5.36775996%            7/1/2010              290,618.36             81,826,591.76

8/1/2010                   5.36788773%            8/1/2010              275,942.04             81,550,649.72

9/1/2010                   5.36801695%            9/1/2010              277,208.53             81,273,441.19

10/1/2010                  5.36815515%            10/1/2010             294,366.10             80,979,075.08

11/1/2010                  5.36828746%            11/1/2010             279,831.90             80,699,243.18

12/1/2010                  5.36842885%            12/1/2010             296,916.50             80,402,326.68

1/1/2011                   5.36856434%            1/1/2011              282,479.02             80,119,847.66

2/1/2011                   5.36870141%            2/1/2011              283,775.52             79,836,072.15

3/1/2011                   5.36886307%            3/1/2011              332,095.31             79,503,976.83

4/1/2011                   5.36900367%            4/1/2011              286,602.19             79,217,374.64

5/1/2011                   5.36915368%            5/1/2011              303,498.46             78,913,876.18

6/1/2011                   5.36929775%            6/1/2011              289,310.59             78,624,565.58

7/1/2011                   5.36945136%            7/1/2011              306,131.53             78,318,434.06

                                       4

                                                                                   
8/1/2011                   5.36959902%            8/1/2011             292,043.51              78,026,390.55

9/1/2011                   5.36974848%            9/1/2011             293,383.91              77,733,006.65

10/1/2011                  5.36990768%            10/1/2011            310,091.53              77,422,915.11

11/1/2011                  5.37006092%            11/1/2011            296,153.69              77,126,761.42

12/1/2011                  5.37022404%            12/1/2011            312,784.27              76,813,977.15

1/1/2012                   5.37038120%            1/1/2012             298,948.55              76,515,028.61

2/1/2012                   5.37054032%            2/1/2012             300,320.64              76,214,707.97

3/1/2012                   5.37071768%            3/1/2012             331,971.59              75,882,736.38

4/1/2012                   5.37088103%            4/1/2012             303,222.68              75,579,513.69

5/1/2012                   5.37105467%            5/1/2012             319,656.63              75,259,857.06

6/1/2012                   5.37122232%            6/1/2012             306,081.53              74,953,775.54

7/1/2012                   5.37140042%            7/1/2012             322,435.95              74,631,339.59

8/1/2012                   5.37157253%            8/1/2012             308,966.25              74,322,373.34

9/1/2012                   5.37174687%            9/1/2012             310,384.32              74,011,989.03

10/1/2012                  5.37193192%            10/1/2012            326,619.05              73,685,369.97

11/1/2012                  5.37211097%            11/1/2012            313,307.98              73,372,061.99

12/1/2012                  5.37230091%            12/1/2012            329,461.40              73,042,600.59

1/1/2013                   5.37248486%            1/1/2013             316,258.12              72,726,342.48

2/1/2013                   5.37267128%            2/1/2013             317,709.65              72,408,632.82

3/1/2013                   5.37288621%            3/1/2013             362,886.17              72,045,746.65

4/1/2013                   5.37307804%            4/1/2013             320,833.40              71,724,913.25

5/1/2013                   5.37328126%            5/1/2013             336,777.48              71,388,135.77

6/1/2013                   5.37347850%            6/1/2013             323,851.65              71,064,284.12

7/1/2013                   5.37368734%            7/1/2013             339,711.78              70,724,572.34

8/1/2013                   5.37389021%            8/1/2013             326,897.22              70,397,675.12

9/1/2013                   5.37409591%            9/1/2013             328,397.59              70,069,277.53

10/1/2013                  5.37431355%            10/1/2013            344,131.26              69,725,146.27

11/1/2013                  5.37452523%            11/1/2013            331,484.31              69,393,661.96

12/1/2013                  5.37474908%            12/1/2013            347,132.12              69,046,529.84

1/1/2014                   5.37496699%            1/1/2014             334,598.97              68,711,930.87

2/1/2014                   5.37518805%            2/1/2014             336,134.69              68,375,796.18

                                       5

                                                                                   
3/1/2014                   5.33000000%            3/1/2014             379,604.52              67,996,191.66

4/1/2014                   5.33000000%            4/1/2014             339,419.73              67,656,771.92

5/1/2014                   5.33000000%            5/1/2014             354,846.81              67,301,925.12

6/1/2014                   5.33000000%            6/1/2014             342,606.22              66,959,318.89

7/1/2014                   5.33000000%            7/1/2014             357,944.66              66,601,374.23

8/1/2014                   5.33000000%            8/1/2014             345,821.56              66,255,552.67

9/1/2014                   5.33000000%            9/1/2014             347,408.78              65,908,143.89

10/1/2014                  5.33000000%            10/1/2014            362,613.63              65,545,530.26

11/1/2014                  5.33000000%            11/1/2014            350,667.59              65,194,862.67

12/1/2014                  5.33000000%            12/1/2014            365,781.79              64,829,080.89

1/1/2015                   5.33000000%            1/1/2015             353,955.89              64,475,125.00

2/1/2015                   5.33000000%            2/1/2015             355,580.45              64,119,544.55

3/1/2015                   5.33000000%            3/1/2015             397,249.05              63,722,295.50

4/1/2015                   5.33000000%            4/1/2015             359,035.73              63,363,259.77

5/1/2015                   5.33000000%            5/1/2015             373,917.16              62,989,342.61

6/1/2015                   5.33000000%            6/1/2015             362,399.78              62,626,942.83

7/1/2015                   5.33000000%            7/1/2015             377,187.63              62,249,755.20

8/1/2015                   5.33000000%            8/1/2015             365,794.28              61,883,960.92

9/1/2015                   5.33000000%            9/1/2015             367,473.17              61,516,487.75

10/1/2015                  5.33000000%            10/1/2015            382,119.90              61,134,367.84

11/1/2015                  5.33000000%            11/1/2015            370,913.60              60,763,454.25

12/1/2015                  5.33000000%            12/1/2015            385,464.63              60,377,989.62

1/1/2016                   5.33000000%            1/1/2016             374,385.16              60,003,604.45

2/1/2016                   5.33000000%            2/1/2016             376,103.49              59,627,500.97

3/1/2016                   5.33000000%            3/1/2016             403,190.61              59,224,310.36

4/1/2016                   5.33000000%            4/1/2016             379,680.23              58,844,630.13

5/1/2016                   5.33000000%            5/1/2016             393,987.41              58,450,642.72

6/1/2016                   5.33000000%            6/1/2016             383,231.15              58,067,411.57

7/1/2016                   5.33000000%            7/1/2016             397,439.55              57,669,972.02

8/1/2016                   5.33000000%            8/1/2016             386,814.21              57,283,157.81

9/1/2016                   5.33000000%            9/1/2016             388,589.58              56,894,568.23

                                       6

                                                                                   
10/1/2016                  5.33000000%            10/1/2016            402,648.93              56,491,919.30

11/1/2016                  5.33000000%            11/1/2016            392,221.15              56,099,698.15

12/1/2016                  5.33000000%            12/1/2016            406,179.48              55,693,518.67

1/1/2017                   5.33000000%            1/1/2017             395,885.58              55,297,633.09

2/1/2017                   5.33000000%            2/1/2017             397,702.59              54,899,930.50

3/1/2017                   5.33000000%            3/1/2017             435,469.47              54,464,461.03

4/1/2017                   5.33000000%            4/1/2017             401,526.62              54,062,934.41

5/1/2017                   5.33000000%            5/1/2017             415,226.10              53,647,708.31

6/1/2017                   5.33000000%            6/1/2017             405,275.28              53,242,433.03

7/1/2017                   5.33000000%            7/1/2017             418,870.50              52,823,562.53

8/1/2017                   5.33000000%            8/1/2017             409,057.88              52,414,504.64

9/1/2017                   5.33000000%            9/1/2017             410,935.35              52,003,569.30

10/1/2017                  5.33000000%            10/1/2017            424,373.12              51,579,196.18

11/1/2017                  5.33000000%            11/1/2017            414,769.18              51,164,427.00

12/1/2017                  5.33000000%            12/1/2017            428,100.31              50,736,326.69

1/1/2018                   5.33000000%            1/1/2018             418,637.72              50,317,688.97

2/1/2018                   5.33000000%            2/1/2018             420,559.15              49,897,129.83

3/1/2018                   5.33000000%            3/1/2018             456,208.86              49,440,920.97

4/1/2018                   5.33000000%            4/1/2018             424,583.27              49,016,337.70

5/1/2018                   5.33000000%            5/1/2018             437,641.40              48,578,696.29

6/1/2018                   5.33000000%            6/1/2018             428,540.64              48,150,155.65

7/1/2018                   5.33000000%            7/1/2018             441,488.70              47,708,666.95

8/1/2018                   5.33000000%            8/1/2018             432,533.83              47,276,133.12

9/1/2018                   5.33000000%            9/1/2018             434,519.04              46,841,614.07

10/1/2018                  5.33000000%            10/1/2018            447,300.80              46,394,313.27

11/1/2018                  5.33000000%            11/1/2018            438,566.35              45,955,746.92

12/1/2018                  5.33000000%            12/1/2018            451,235.53              45,504,511.39

1/1/2019                   5.33000000%            1/1/2019             442,650.30              45,061,861.10

2/1/2019                   5.33000000%            2/1/2019             444,681.94              44,617,179.16

3/1/2019                   5.33000000%            3/1/2019             478,097.19              44,139,081.97

4/1/2019                   5.33000000%            4/1/2019             448,917.24              43,690,164.73

                                       7

                                                                                   
5/1/2019                   5.33000000%            5/1/2019              461,298.49             43,228,866.24

6/1/2019                   5.33000000%            6/1/2019              453,094.88             42,775,771.36

7/1/2019                   5.33000000%            7/1/2019              465,359.92             42,310,411.45

8/1/2019                   5.33000000%            8/1/2019              457,310.33             41,853,101.12

9/1/2019                   5.33000000%            9/1/2019              459,409.26             41,393,691.86

10/1/2019                  5.33000000%            10/1/2019             471,498.66             40,922,193.21

11/1/2019                  5.33000000%            11/1/2019             463,681.86             40,458,511.34

12/1/2019                  5.33000000%            12/1/2019             475,652.42             39,982,858.93

1/1/2020                   5.33000000%            1/1/2020              467,993.15             39,514,865.78

2/1/2020                   5.33000000%            2/1/2020              470,141.11             39,044,724.67

3/1/2020                   5.33000000%            3/1/2020              491,565.05             38,553,159.63

4/1/2020                   5.33000000%            4/1/2020              474,555.07             38,078,604.56

5/1/2020                   5.33000000%            5/1/2020              486,223.17             37,592,381.39

6/1/2020                   5.33000000%            6/1/2020              478,964.78             37,113,416.61

7/1/2020                   5.33000000%            7/1/2020              490,510.21             36,622,906.40

8/1/2020                   5.33000000%            8/1/2020              483,414.40             36,139,492.00

9/1/2020                   5.33000000%            9/1/2020              485,633.13             35,653,858.87

10/1/2020                  5.33000000%            10/1/2020             496,993.08             35,156,865.79

11/1/2020                  5.33000000%            11/1/2020             490,143.12             34,666,722.67

12/1/2020                  5.33000000%            12/1/2020             501,377.61             34,165,345.06

1/1/2021                   5.33000000%            1/1/2021              494,693.92             33,670,651.14

2/1/2021                   5.33000000%            2/1/2021              496,964.43             33,173,686.71

3/1/2021                   5.33000000%            3/1/2021              525,536.82             32,648,149.89

4/1/2021                   5.33000000%            4/1/2021              501,657.42             32,146,492.47

5/1/2021                   5.33000000%            5/1/2021              512,571.63             31,633,920.83

6/1/2021                   5.33000000%            6/1/2021              506,312.45             31,127,608.38

7/1/2021                   5.33000000%            7/1/2021              517,097.18             30,610,511.20

8/1/2021                   5.33000000%            8/1/2021              511,009.62             30,099,501.58

9/1/2021                   5.33000000%            9/1/2021              513,355.01             29,586,146.57

10/1/2021                  5.33000000%            10/1/2021             523,943.84             29,062,202.73

11/1/2021                  5.33000000%            11/1/2021             518,115.93             28,544,086.81

                                       8

                                                                                   
12/1/2021                  5.33000000%            12/1/2021            528,572.32              28,015,514.49

1/1/2022                   5.33000000%            1/1/2022             522,919.93              27,492,594.56

2/1/2022                   5.33000000%            2/1/2022             525,319.99              26,967,274.56

3/1/2022                   5.33000000%            3/1/2022             551,265.85              26,416,008.71

4/1/2022                   5.33000000%            4/1/2022             530,261.22              25,885,747.49

5/1/2022                   5.33000000%            5/1/2022             540,379.78              25,345,367.72

6/1/2022                   5.33000000%            6/1/2022             535,175.17              24,810,192.55

7/1/2022                   5.33000000%            7/1/2022             545,157.03              24,265,035.52

8/1/2022                   5.33000000%            8/1/2022             540,133.59              23,724,901.93

9/1/2022                   5.33000000%            9/1/2022             542,612.65              23,182,289.27

10/1/2022                  5.33000000%            10/1/2022            552,387.64              22,629,901.64

11/1/2022                  5.33000000%            11/1/2022            547,638.40              22,082,263.24

12/1/2022                  5.33000000%            12/1/2022            557,273.58              21,524,989.65

1/1/2023                   5.33000000%            1/1/2023             552,709.64              20,972,280.01

2/1/2023                   5.33000000%            2/1/2023             555,246.42              20,417,033.59

3/1/2023                   5.33000000%            3/1/2023             578,420.24              19,838,613.35

4/1/2023                   5.33000000%            4/1/2023             560,449.64              19,278,163.71

5/1/2023                   5.33000000%            5/1/2023             569,728.46              18,708,435.25

6/1/2023                   5.33000000%            6/1/2023             565,636.84              18,142,798.41

7/1/2023                   5.33000000%            7/1/2023             574,771.37              17,568,027.03

8/1/2023                   5.33000000%            8/1/2023             570,871.00              16,997,156.04

9/1/2023                   5.33000000%            9/1/2023             573,491.14              16,423,664.90

10/1/2023                  5.33000000%            10/1/2023            582,407.19              15,841,257.70

11/1/2023                  5.33000000%            11/1/2023            578,796.39              15,262,461.31

12/1/2023                  5.33000000%            12/1/2023            587,564.87              14,674,896.44

1/1/2024                   5.33000000%            1/1/2024             584,149.67              14,090,746.78

2/1/2024                   5.33000000%            2/1/2024             586,830.75              13,503,916.03

3/1/2024                   5.33000000%            3/1/2024             601,227.35              12,902,688.68

4/1/2024                   5.33000000%            4/1/2024             592,283.61              12,310,405.07

5/1/2024                   5.33000000%            5/1/2024             600,676.92              11,709,728.15

6/1/2024                   5.33000000%            6/1/2024             597,758.96              11,111,969.19

                                       9

                                                                                   
7/1/2024                   5.33000000%            7/1/2024             605,999.97              10,505,969.21

8/1/2024                   5.33000000%            8/1/2024             603,283.88               9,902,685.33

9/1/2024                   5.33000000%            9/1/2024             606,052.79               9,296,632.54

10/1/2024                  5.33000000%            10/1/2024            614,063.09               8,682,569.45

11/1/2024                  5.33000000%            11/1/2024            611,652.78               8,070,916.66

12/1/2024                  5.33000000%            12/1/2024            619,507.32               7,451,409.35

1/1/2025                   5.33000000%            1/1/2025             617,303.46               6,834,105.88

2/1/2025                   5.33000000%            2/1/2025             620,136.72               6,213,969.17

3/1/2025                   5.33000000%            3/1/2025             637,299.83               5,576,669.34

4/1/2025                   5.33000000%            4/1/2025             625,908.00               4,950,761.34

5/1/2025                   5.33000000%            5/1/2025             633,366.01               4,317,395.33

6/1/2025                   5.33000000%            6/1/2025             631,687.72               3,685,707.61

7/1/2025                   5.33000000%            7/1/2025             638,984.95               3,046,722.66

8/1/2025                   5.33000000%            8/1/2025             637,519.75               2,409,202.91

9/1/2025                   5.33000000%            9/1/2025             640,445.79               1,768,757.12

10/1/2025                  5.33000000%            10/1/2025            647,499.41               1,121,257.71

11/1/2025                  5.33000000%            11/1/2025            646,357.10                 474,900.61

12/1/2025                  0.00000000%            12/1/2025            474,900.61                          -

1/1/2026 and               0.00000000%            1/1/2026                      -                          -
thereafter

                                       10

                               PROMISSORY NOTE A-3

New York, New York
$35,000,000.00                                                 February 13, 2004

         PROMISSORY NOTE A-3, dated as of February 13, 2004 (this NOTE), by 731
Office One LLC, a Delaware limited liability company (BORROWER), having an
address for notice purposes c/o Alexander's Inc., 888 Seventh Avenue, New York,
New York 10019, in favor of GERMAN AMERICAN CAPITAL CORPORATION, a Maryland
corporation (together with its successors and assigns, LENDER), having an office
at 60 Wall Street, New York, New York 10005.

         WHEREAS, Lender made a loan to Borrower in the original principal
amount of $400,000,000 (the LOAN);

         WHEREAS, Lender is the present owner and holder of that certain
Consolidated Amended and Restated Note, dated as of February 13, 2004, made by
Borrower in favor of Lender (the EXISTING NOTE), which Existing Note evidences
an indebtedness of Borrower to Lender in the original and current outstanding
principal amount of $400,000,000 (the EXISTING DEBT);

         WHEREAS, pursuant to the Loan Agreement (as hereinafter defined),
Borrower and Lender desire to sever the Existing Note into six (6) newly issued
substitute promissory notes in an aggregate principal amount equal to the
Existing Debt;

         WHEREAS, from and after the date hereof, the Existing Note shall be
amended, restated and superseded and the Loan shall be evidenced by (i) that
certain Promissory Note A-1, in the principal amount of $90,000,000 (NOTE A-1);
(ii) that certain Promissory Note A-2, dated as of the date hereof, made by
Borrower in favor of Lender, in the principal amount of $95,000,000 (NOTE A-2);
(iii) this Promissory Note A-3, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $35,000,000; (iv) that certain
Promissory Note A-4, dated as of the date hereof, made by Borrower in favor of
Lender, in the principal amount of $94,000,000 (NOTE A-4); (v) that certain
Promissory Note A-X, dated as of the date hereof, made by Borrower in favor of
Lender, in the notional principal amount of $86,000,000 (NOTE A-X); and (vi)
that certain Promissory Note B, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $86,000,000 (NOTE B);

         WHEREAS, this Note, individually, evidences a portion of the Loan in
the principal amount of THIRTY-FIVE MILLION DOLLARS ($35,000,000); and

         WHEREAS, Lender and Borrower intend these Recitals to be a material
part of this Note.

         NOW, THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the
order of Lender the Principal Amount, together with interest from the date
hereof, and other fees, expenses and charges as provided in this Note.

1.       DEFINED TERMS.

         a.       Capitalized terms used but not otherwise defined herein shall
                  have the respective meanings given thereto in the Loan
                  Agreement (as defined below), unless otherwise expressly
                  provided herein. All references to sections shall be deemed to
                  be references to sections of this Note, unless otherwise
                  indicated.

         b.       The following terms shall have the meaning ascribed thereto:

         A-3 PROPORTIONATE SHARE shall mean, with respect to any date of
         determination, a fraction, expressed as a percentage, the numerator of
         which is the Principal Amount of this Note and the denominator of which
         is the outstanding aggregate principal amount of the Mortgage Notes.

         A NOTE PROPORTIONATE SHARE shall mean, with respect to any date of
         determination, a fraction, expressed as a percentage, the numerator of
         which is the Principal Amount of this Note and the denominator of which
         is the sum of the principal amounts of this Note, the A-1 Note, the A-2
         Note and the A-4 Note.

         ADDITIONAL INTEREST STRIP shall mean, with respect to each Interest
         Period from and after the Anticipated Repayment Date, the excess of
         interest accrued at the Revised Interest Rate over interest accrued at
         the Stated Interest Rate (but shall not include the Post ARD Default
         Interest Strip).

         ANTICIPATED REPAYMENT DATE shall mean March 1, 2014.

         APPLICABLE INTEREST RATE shall mean (i) from the date hereof through
         and including the Anticipated Repayment Date, the Stated Interest Rate,
         and (ii) from the day after the Anticipated Repayment Date through and
         including the Maturity Date, the Revised Interest Rate.

         BORROWER shall have the meaning provided in the first paragraph hereof.

         DEFAULT RATE shall mean a rate per annum equal to the lesser of (a) the
         Maximum Legal Rate and (b) five percent (5%) above the Applicable
         Interest Rate.

         DEFEASANCE LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on the earlier to occur of (i) two years after the
         "startup day," within the meaning of Section 860G(a)(9) of the Internal
         Revenue Code of 1986, as amended from time to time or any successor
         statute (the "Code"), of a "real estate mortgage investment conduit,"
         ("REMIC") within the meaning of Section 860D of the Code, with respect
         to the last portion of the debt evidenced by the

                                       2

         Mortgage Notes and the Security Instrument and (ii) four (4) years from
         the date hereof.

         DEFERRED INTEREST shall mean the Additional Interest Strip and the Post
         ARD Default Interest Strip, collectively.

         EXISTING DEBT shall have the meaning provided in the Recitals to this
         Note.

         EXISTING NOTE shall have the meaning provided in the Recitals to this
         Note.

         INTEREST PERIOD shall have the meaning provided in Section 2.

         LENDER shall have the meaning provided in the first paragraph hereof.

         LIQUIDATED DAMAGES AMOUNT shall have the meaning set forth in Section
         4(e).

         LOAN shall have the meaning provided in the Recitals to this Note.

         LOAN AGREEMENT shall mean the Loan and Security Agreement, dated the
         date hereof, between Borrower and Lender.

         MATURITY DATE shall mean March 1, 2029, or such earlier date on which
         the final payment of principal of this Note becomes due and payable as
         provided in the Loan Agreement or this Note, whether at such stated
         maturity date, by declaration of acceleration, or otherwise.

         MATURITY DATE PAYMENT shall have the meaning set forth in Section 3(e).

         MONTHLY AMOUNTS shall have the meaning provided in Section 3(a).

         MORTGAGE NOTES shall mean, collectively, this Note, Note A-1, Note A-2,
         Note A-4, Note A-X, Note B and any amendments, restatements or
         replacements of any thereof.

         NOTE shall have the meaning provided in the first paragraph hereof.

         NOTE A-X shall have the meaning provided in the Recitals to this Note.

         NOTE A-1 shall have the meaning provided in the Recitals to this Note.

         NOTE A-2 shall have the meaning provided in the Recitals to this Note.

         NOTE A-4 shall have the meaning provided in the Recitals to this Note.

         NOTE B shall have the meaning provided in the Recitals to this Note.

         PAYMENT DATE shall be the first (1st) calendar day of each calendar
         month, whether or not such day is a Business Day, commencing on April
         1, 2004 and continuing to and including the Maturity Date.

                                       3

         POST ARD DEFAULT INTEREST STRIP shall mean, with respect to each
         Interest Period from and after the Anticipated Repayment Date, default
         interest accrued at a rate equal to the lesser of (x) 5.0% and (y) the
         amount by which the Maximum Legal Rate exceeds the Applicable Interest
         Rate.

         PREPAYMENT DATE shall have the meaning provided in Section 4(a)(i).

         PREPAYMENT LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on December 1, 2013.

         PREPAYMENT NOTICE shall have the meaning provided in Section 4(a)(i).

         PRINCIPAL AMOUNT shall mean $35,000,000 or so much of the aggregate
         principal amount that is outstanding under this Note from time to time.

         REVISED INTEREST RATE shall mean, with respect to each Interest Period,
         a rate per annum equal to two percent (2%) above the Stated Interest
         Rate applicable to such Interest Period.

         STATED INTEREST RATE shall mean, with respect to each Interest Period,
         the rate of interest set forth on EXHIBIT A hereto for such Interest
         Period.

         TREASURY RATE shall mean, as of any Payment Date, the yield, calculated
         by linear interpolation (rounded to the nearest one-thousandth of one
         percent) of the yields of noncallable United States Treasury
         obligations with terms (one longer and one shorter) most nearly
         approximating the period from such Payment Date to the Anticipated
         Repayment Date (and converted to a monthly equivalent yield), as
         determined by Lender on the basis of Federal Reserve Statistical
         Release H.15 Selected Interest Rates under the heading U.S.
         Governmental Security/Treasury Constant Maturities or, if such
         publication is unavailable, such other recognized source of financial
         market information as shall be selected by Lender for the week prior to
         such Payment Date.

         YIELD MAINTENANCE PREMIUM shall mean an amount equal to the product of:
         (a) the positive difference (expressed as a percentage of the
         outstanding Principal Amount before any prepayment), if any, as of the
         date of determination between (i) the present value of all future
         scheduled payments of interest and principal, including the principal
         amount due on the Anticipated Repayment Date, to be made on this Note
         before the prepayment in question, discounted at an interest rate per
         annum equal to the Treasury Rate, and (ii) the outstanding Principal
         Amount immediately before such prepayment; and (b) the Principal Amount
         being prepaid.

2.       INTEREST.

         a.       Prior to the Anticipated Repayment Date, interest shall accrue
                  on the Principal Amount at the Stated Interest Rate. In the
                  event that Borrower does not repay the Principal Amount in
                  full on or before the Anticipated

                                       4

                  Repayment Date, then, from and after the Anticipated Repayment
                  Date, interest shall accrue on the Principal Amount at the
                  Revised Interest Rate. From and after the occurrence and
                  during the continuance of any Event of Default, interest shall
                  accrue at the Default Rate.

         b.       Interest on the principal sum of this Note shall be calculated
                  based on the Applicable Interest Rate on the basis of a
                  fraction, the denominator of which shall be 360 and the
                  numerator of which shall be the actual number of days in the
                  relevant Interest Period, except that interest due and payable
                  for a period less than a full month shall be calculated by
                  multiplying the actual number of days elapsed in such period
                  by a daily rate based on said 360 day year. Interest shall
                  accrue from, and including, the first (1st) day of the prior
                  month and ending on the last day of the prior month (an
                  INTEREST PERIOD); in each case without adjustment for any
                  Business Day convention; provided that the first accrual
                  period shall commence on March 1, 2004.

         c.       Except as expressly set forth in the Loan Agreement to the
                  contrary, interest shall accrue on all amounts advanced by
                  Lender pursuant to the Loan Documents (other than the
                  Principal Amount, which shall accrue interest in accordance
                  with clauses a. and b. above) at the Default Rate.

         d.       The provisions of this Section 2 are subject in all events to
                  the provisions of Section 2.2.4 of the Loan Agreement.

3.       PAYMENTS OF PRINCIPAL AND INTEREST.

         a.       Interest and principal under this Note shall be payable as
                  follows:

                  i.       interest accruing from the date hereof to and
                           including February 29, 2004 shall be paid on the date
                           hereof; and

                  ii.      commencing on April 1, 2004 and on each and every
                           Payment Date thereafter until the Maturity Date,
                           monthly installments of interest payable on this
                           Note, in arrears, and scheduled principal
                           amortization in the amounts (the MONTHLY AMOUNTS) set
                           forth on EXHIBIT A hereto (subject to adjustment as
                           provided in Section 4(f)).

         b.       From and after the Anticipated Repayment Date, unless the
                  Indebtedness has been repaid in full, Borrower shall continue
                  to make payments of accrued interest and Monthly Amounts on
                  each Payment Date. From and after the Anticipated Repayment
                  Date, unless the Indebtedness has been repaid in full, all
                  Excess Cash Flow shall be applied to repayment of the Loan on
                  each Payment Date and the A Note Proportionate Share thereof
                  shall be applied as a partial prepayment of the outstanding
                  Principal Amount. Deferred Interest shall be payable after all
                  principal and other amounts due under the Loan have been paid
                  in full.

                                       5

         c.       All payments made by Borrower hereunder or under any of the
                  Loan Documents shall be made on or before 2:00 p.m. New York
                  City time or such later time as Lender or its servicer shall
                  apply amounts on deposit in the Holding Account in accordance
                  the terms of the Loan Documents. Any payments received after
                  such time shall be credited to the next following Business
                  Day.

         d.       All amounts advanced by Lender pursuant to the Loan Documents,
                  other than the Principal Amount, or other charges provided in
                  the Loan Documents, shall be due and payable as provided in
                  the Loan Documents. In the event any such advance or charge is
                  not so repaid by Borrower, Lender may, at its option, first
                  apply any payments received under this Note to repay such
                  advances, together with any interest thereon, or other charges
                  as provided in the Loan Documents, and the balance, if any,
                  shall be applied in payment of any installment of interest or
                  principal then due and payable.

         e.       The entire Principal Amount of this Note, all unpaid accrued
                  interest, all interest that would accrue on the Principal
                  Amount through the end of the Interest Period during which the
                  Maturity Date occurs and all other fees and sums then payable
                  hereunder or under the Loan Documents (collectively, the
                  MATURITY DATE PAYMENT), shall be due and payable in full on
                  the Maturity Date.

         f.       Amounts due on this Note shall be payable, without any
                  counterclaim, setoff or deduction whatsoever, at the office of
                  Lender or its agent or designee at the address set forth on
                  the first page of this Note or at such other place as Lender
                  or its agent or designee may from time to time designate in
                  writing.

         g.       All amounts due under this Note, including, without
                  limitation, interest and the Principal Amount, shall be due
                  and payable in lawful money of the United States.

         h.       To the extent that Borrower makes a payment or Lender receives
                  any payment or proceeds for Borrower's benefit, which are
                  subsequently invalidated, declared to be fraudulent or
                  preferential, set aside or required to be repaid to a trustee,
                  debtor in possession, receiver, custodian or any other party
                  under any bankruptcy law, common law or equitable cause, then,
                  to such extent, the obligations of Borrower hereunder intended
                  to be satisfied shall be revived and continue as if such
                  payment or proceeds had not been received by Lender.

4.       PREPAYMENTS. Except as permitted in Sections 4(a), 4(b), 4(c) and 4(d)
         hereof, the outstanding Principal Amount may not be prepaid in whole or
         in part. Any Principal Amount prepaid pursuant to this Section 4 may
         not be reborrowed hereunder.

                                       6

         a.       VOLUNTARY PREPAYMENTS. Borrower shall not have the right to
                  prepay, in whole or in part, the Principal Amount due
                  hereunder prior to the Anticipated Repayment Date (other than
                  with respect to the application of Proceeds pursuant to
                  Section 6.2 of the Loan Agreement); provided, however,
                  Borrower shall be entitled to make a prepayment of all of the
                  Principal Amount on any Business Day occurring after the
                  expiration of the Prepayment Lockout Period, without any
                  premium or penalty upon satisfaction of the following
                  conditions:

                  i.       Borrower shall provide prior irrevocable written
                           notice (the PREPAYMENT NOTICE) to Lender specifying
                           the proposed Business Day on which the prepayment is
                           to be made, which Business Day shall be no earlier
                           than thirty (30) days after the date of such
                           Prepayment Notice and no later than ninety (90) days
                           after the date of such Prepayment Notice (the date of
                           such prepayment pursuant to this Section 4(a) and
                           Section 4(b) below being the PREPAYMENT DATE); and

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(c) and Section 4(d) of this Note.

                  iii.     In connection with any voluntary prepayment, other
                           than payments from Excess Cash Flow as set forth in
                           Section 3(b), Borrower shall concurrently repay all
                           of the other Indebtedness in full.

                  iv.      Borrower agrees that all Excess Cash Flow shall be
                           applied in accordance with the terms of the Loan
                           Agreement, including, without limitation, Article III
                           and Section 16.5 of the Loan Agreement and the
                           provisions of Section 3(b) hereof.

         b.       DEFEASANCE. From and after expiration of the Defeasance
                  Lockout Period and prior to the Anticipated Repayment Date,
                  Borrower shall have the right to defease the Loan pursuant to
                  the provisions of Article IX of the Loan Agreement. In no
                  event shall a prepayment of this Note in accordance with
                  Sections 4(a) or 4(c) trigger or result in any defeasance
                  liability under this Note or the other Loan Documents.

         c.       MANDATORY PREPAYMENTS.

                  i.       On the next occurring Payment Date following the date
                           on which Borrower actually receives any Proceeds, if
                           Lender is not obligated pursuant to the terms of the
                           Loan Agreement to make such Proceeds available to
                           Borrower for the restoration of the Property,
                           Borrower shall use the A-3 Proportionate Share of
                           such Proceeds to prepay the outstanding principal
                           balance of this Note as set forth in Section 6.2.3 of
                           the Loan Agreement; and

                                       7

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(d) and Section 4(e) of this Note
                           (provided, however, that the Liquidated Damages
                           Amount and the Yield Maintenance Premium shall not
                           apply to prepayments made from the receipt of
                           Proceeds).

         d.       PAYMENTS IN CONNECTION WITH A PREPAYMENT.

                  i.       On the date on which a prepayment, voluntary,
                           involuntary or mandatory, is made under this Note or
                           as required under the Loan Agreement, Borrower shall,
                           unless such prepayment is made on a Payment Date, pay
                           to Lender all unpaid interest on the Principal Amount
                           prepaid through the end of the Interest Period during
                           which such prepayment is made.

                  ii.      On the Business Day on which a prepayment is made,
                           Borrower shall pay to Lender all other sums (not
                           including scheduled interest and principal payments)
                           then due and payable under the Note, and the A-3
                           Proportionate Share of all other sums then due and
                           payable under the Loan Agreement, the Security
                           Instrument, and the other Loan Documents;

                  iii.     Borrower shall pay (without duplication) all
                           reasonable costs and expenses of Lender incurred in
                           connection with the prepayment (including without
                           limitation, any reasonable costs and expenses
                           associated with a release or assignment of the Lien
                           of the related Security Instrument as set forth in
                           Section 2.3.3 of the Loan Agreement as well as
                           reasonable attorneys' fees and expenses); and

                  iv.      In the event of a prepayment made after an
                           acceleration of the Loan, Borrower shall also pay to
                           Lender the Yield Maintenance Premium to the extent
                           such prepayment is made prior to expiration of the
                           Prepayment Lockout Period.

         e.       LIQUIDATED DAMAGES AMOUNT. IF NOTWITHSTANDING THE PROHIBITIONS
                  OF THIS SECTION 4, THE LOAN IS VOLUNTARILY OR INVOLUNTARILY
                  REPAID DURING THE PREPAYMENT LOCKOUT PERIOD (EXCLUDING
                  PREPAYMENTS MADE (I) IN ACCORDANCE WITH SECTION 4(C) OF THIS
                  NOTE AND (II) FROM A DEFEASANCE OF THE LOAN IN ACCORDANCE WITH
                  THE TERMS OF THE LOAN DOCUMENTS AFTER EXPIRATION OF THE
                  DEFEASANCE LOCKOUT PERIOD), INCLUDING, BUT NOT LIMITED TO, AS
                  A RESULT OF AN ACCELERATED MATURITY DATE, THEN BORROWER SHALL
                  PAY TO LENDER, AS LIQUIDATED DAMAGES FOR SUCH DEFAULT AND NOT
                  AS A PENALTY, AND IN ADDITION TO ANY AND ALL OTHER SUMS AND
                  FEES PAYABLE UNDER THIS NOTE AND THE OTHER LOAN DOCUMENTS, AN
                  AMOUNT EQUAL TO

                                       8

                  THE GREATER OF (A) FIVE PERCENT (5%) OF THE PRINCIPAL AMOUNT
                  BEING REPAID HEREUNDER AND (B) THE YIELD MAINTENANCE PREMIUM
                  (THE LIQUIDATED DAMAGES AMOUNT). NOTWITHSTANDING THE
                  FOREGOING, THE LIQUIDATED DAMAGES AMOUNT SHALL NOT BE APPLIED
                  TOWARD ANY PREPAYMENTS FROM PROCEEDS.

         f.       MODIFICATION OF MONTHLY AMOUNTS.

                  i.       In the event that any partial prepayment of principal
                           occurs before the Anticipated Repayment Date (other
                           than in connection with an acceleration of the Loan),
                           the Payment Dates shall remain the same and Lender
                           shall recalculate the amount of subsequent Monthly
                           Amounts to reflect the same proportionate
                           amortization as in effect prior to such recalculation
                           for each remaining Payment Date, taking into account
                           the reduction in the Principal Amount.

                  ii.      In the event that any partial prepayment of principal
                           occurs after the Anticipated Repayment Date (other
                           than in connection with an acceleration of the Loan)
                           or Excess Cash Flow is applied to the prepayment of
                           principal after the Anticipated Repayment Date, the
                           Payment Dates shall remain the same and Lender shall
                           recalculate the amount of subsequent Monthly Amounts
                           to reflect the reduction of the Principal Amount.
                           Deferred Interest accrued pursuant to Section 3(b) of
                           this Note shall not result in any increase in the
                           Monthly Amounts or the Stated Interest Rate.

5.       MISCELLANEOUS.

         a.       WAIVER. Borrower and all endorsers, sureties and guarantors
                  hereby jointly and severally waive all applicable exemption
                  rights, valuation and appraisement, presentment for payment,
                  demand, notice of demand, notice of nonpayment or dishonor,
                  protest and notice of protest of this Note, and, except as
                  otherwise expressly provided in the Loan Documents, all other
                  notices in connection with the delivery, acceptance,
                  performance, default or enforcement of the payment of this
                  Note. Borrower consents to any and all extensions of time,
                  renewals, waivers or modifications that may be granted by
                  Lender with respect to the payment or other provisions of this
                  Note and to the release of the collateral securing this Note
                  or any part thereof, with or without substitution, and agrees
                  that additional makers may become parties hereto without
                  notice to them or affecting their liability under this Note.

         b.       NON-RECOURSE. Recourse with respect to any claims arising
                  under or in connection with this Note shall be limited to the
                  extent provided in Article XVIII of the Loan Agreement and the
                  terms, covenants and conditions of

                                       9

                  Article XVIII of the Loan Agreement are hereby incorporated by
                  reference as if fully set forth in this Note.

         c.       NOTE SECURED. This Note and all obligations of Borrower
                  hereunder are secured by the Loan Agreement, the Security
                  Instrument and the other Loan Documents.

         d.       NOTICES. Any notice, election, request or demand which by any
                  provision of this Note is required or permitted to be given or
                  served hereunder shall be given or served in the manner
                  required for the delivery of notices pursuant to the Loan
                  Agreement.

         e.       ENTIRE AGREEMENT. This Note, together with the other Loan
                  Documents, constitutes the entire and final agreement between
                  Borrower and Lender with respect to the subject matter hereof
                  and thereof and may only be changed, amended, modified or
                  waived by an instrument in writing signed by Borrower and
                  Lender.

         f.       NO WAIVER. No waiver of any term or condition of this Note,
                  whether by delay, omission or otherwise, shall be effective
                  unless in writing and signed by the party sought to be
                  charged, and then such waiver shall be effective only in the
                  specific instance and for the purpose for which given. No
                  notice to, or demand on, Borrower shall entitle Borrower to
                  any other or future notice or demand in the same, similar or
                  other circumstances.

         g.       SUCCESSORS AND ASSIGNS. This Note shall be binding upon and
                  inure to the benefit of Borrower and Lender and their
                  respective successors and permitted assigns. Upon any
                  endorsement, assignment, or other transfer of this Note by
                  Lender or by operation of law, the term "Lender" as used
                  herein, shall mean such endorsee, assignee, or other
                  transferee or successor to Lender then becoming the holder of
                  this Note. The term "Borrower" as used herein shall include
                  the respective successors and assigns, legal and personal
                  representatives, executors, administrators, devisees, legatees
                  and heirs of Borrower, if any.

         h.       CAPTIONS. All paragraph, section, exhibit and schedule
                  headings and captions herein are used for reference only and
                  in no way limit or describe the scope or intent of, or in any
                  way affect, this Note.

         i.       COUNTERPARTS. This Note may be executed in counterparts, each
                  of which shall be an original and all of which, when taken
                  together, shall constitute one binding Note.

         j.       SEVERABILITY. The provisions of this Note are severable, and
                  if any one clause or provision hereof shall be held invalid or
                  unenforceable in whole or in part, then such invalidity or
                  unenforceability shall affect only such clause or provision,
                  or part thereof, and not any other clause or provision of this
                  Note.

                                       10

         k.       GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
                  IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
                  TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW,
                  WITHOUT REGARD TO CHOICE OF LAW RULES. BORROWER AGREES THAT
                  ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OTHER LOAN
                  DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW
                  YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
                  NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
                  PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER IN THE
                  MANNER AND AT THE ADDRESS SPECIFIED FOR NOTICES IN THE LOAN
                  AGREEMENT. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY
                  NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
                  SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
                  COURT.

         l.       JURY TRIAL WAIVER. BORROWER, LENDER AND ALL PERSONS CLAIMING
                  BY, THROUGH OR UNDER BORROWER OR LENDER, HEREBY EXPRESSLY,
                  KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO
                  TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
                  (I) ARISING UNDER THIS NOTE, INCLUDING, WITHOUT LIMITATION,
                  ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY
                  CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
                  PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS NOTE (AS
                  NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT
                  OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR
                  THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
                  WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW
                  EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
                  CONTRACT OR TORT OR OTHERWISE; AND BORROWER AND LENDER HEREBY
                  AGREE AND CONSENT THAT AN ORIGINAL COUNTERPART OR A COPY OF
                  THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE
                  OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY
                  JURY. EACH OF BORROWER AND LENDER ACKNOWLEDGES THAT IT HAS
                  CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS
                  WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL
                  INDUCEMENT FOR THE MAKING OF THE LOAN. THIS WAIVER SHALL
                  SURVIVE THE REPAYMENT OF THE LOAN.

                                       11

         m.       COUNTERCLAIMS AND OTHER ACTIONS. Borrower hereby expressly and
                  unconditionally waives, in connection with any suit, action or
                  proceeding brought by Lender on this Note, any and every right
                  it may have to (i) interpose any counterclaim therein (other
                  than a mandatory or compulsory counterclaim which can only be
                  asserted in the suit, action or proceeding brought by Lender
                  on this Note and cannot be maintained in a separate action)
                  and (ii) have any such suit, action or proceeding consolidated
                  with any other or separate suit, action or proceeding.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       12

         IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered as of the day and year first above written.

                                    BORROWER:

                                    731 OFFICE ONE LLC, a Delaware limited
                                    liability company

                                    By: 731 OFFICE ONE HOLDING LLC, a
                                    Delaware limited liability company, its sole
                                    member

                                             By: ALEXANDER'S INC., a Delaware
                                             corporation, its sole member

                                             By:  /s/ Brian Kurtz
                                                  ------------------------------
                                                  Name:  Brian Kurtz
                                                  Title: Assistant Secretary

                                    EXHIBIT A
                               PROMISSORY NOTE A-3

                                                                     MONTHLY AMOUNT
INTEREST PERIOD                                                   (SCHEDULED PRINCIPAL
COMMENCING              STATED INTEREST RATE     PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
2/15/2004                   5.36252388%

3/1/2004                    5.36252388%            3/1/2004                   -              35,000,000.00

4/1/2004                    5.36252388%            4/1/2004                   -              35,000,000.00

5/1/2004                    5.36252388%            5/1/2004                   -              35,000,000.00

6/1/2004                    5.36252388%            6/1/2004                   -              35,000,000.00

7/1/2004                    5.36252388%            7/1/2004                   -              35,000,000.00

8/1/2004                    5.36252388%            8/1/2004                   -              35,000,000.00

9/1/2004                    5.36252388%            9/1/2004                   -              35,000,000.00

10/1/2004                   5.36252388%            10/1/2004                  -              35,000,000.00

11/1/2004                   5.36252388%            11/1/2004                  -              35,000,000.00

12/1/2004                   5.36252388%            12/1/2004                  -              35,000,000.00

1/1/2005                    5.36252388%            1/1/2005                   -              35,000,000.00

2/1/2005                    5.36252388%            2/1/2005                   -              35,000,000.00

3/1/2005                    5.36252388%            3/1/2005                   -              35,000,000.00

4/1/2005                    5.36252388%            4/1/2005                   -              35,000,000.00

5/1/2005                    5.36252388%            5/1/2005                   -              35,000,000.00

6/1/2005                    5.36252388%            6/1/2005                   -              35,000,000.00

7/1/2005                    5.36252388%            7/1/2005                   -              35,000,000.00

8/1/2005                    5.36252388%            8/1/2005                   -              35,000,000.00

9/1/2005                    5.36252388%            9/1/2005                   -              35,000,000.00

10/1/2005                   5.36252388%            10/1/2005                  -              35,000,000.00

11/1/2005                   5.36252388%            11/1/2005                  -              35,000,000.00

12/1/2005                   5.36252388%            12/1/2005                  -              35,000,000.00

1/1/2006                    5.36252388%            1/1/2006                   -              35,000,000.00

2/1/2006                    5.36252388%            2/1/2006                   -              35,000,000.00

3/1/2006                    5.36252388%            3/1/2006                   -              35,000,000.00

4/1/2006                    5.36259782%            4/1/2006           79,387.28              34,920,612.72

5/1/2006                    5.36267862%            5/1/2006           86,341.09              34,834,271.63

6/1/2006                    5.36275398%            6/1/2006           80,147.92              34,754,123.71

                                       2

                                                                     MONTHLY AMOUNT
INTEREST PERIOD                                                   (SCHEDULED PRINCIPAL
COMMENCING              STATED INTEREST RATE     PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
7/1/2006                    5.36283625%            7/1/2006           87,080.58              34,667,043.13

8/1/2006                    5.36291308%            8/1/2006           80,915.46              34,586,127.67

9/1/2006                    5.36299061%            9/1/2006           81,286.84              34,504,840.83

10/1/2006                   5.36307515%            10/1/2006          88,187.81              34,416,653.02

11/1/2006                   5.36315420%            11/1/2006          82,064.68              34,334,588.34

12/1/2006                   5.36324031%            12/1/2006          88,944.02              34,245,644.32

1/1/2007                    5.36332092%            1/1/2007           82,849.56              34,162,794.76

2/1/2007                    5.36340230%            2/1/2007           83,229.82              34,079,564.95

3/1/2007                    5.36350356%            3/1/2007          103,006.60              33,976,558.35

4/1/2007                    5.36358668%            4/1/2007           84,084.59              33,892,473.76

5/1/2007                    5.36367701%            5/1/2007           90,907.74              33,801,566.01

6/1/2007                    5.36376180%            6/1/2007           84,887.76              33,716,678.26

7/1/2007                    5.36385386%            7/1/2007           91,688.57              33,624,989.69

8/1/2007                    5.36394037%            8/1/2007           85,698.19              33,539,291.50

9/1/2007                    5.36402771%            9/1/2007           86,091.52              33,453,199.97

10/1/2007                   5.36412243%            10/1/2007          92,858.85              33,360,341.12

11/1/2007                   5.36421156%            11/1/2007          86,912.86              33,273,428.27

12/1/2007                   5.36430813%            12/1/2007          93,657.34              33,179,770.93

1/1/2008                    5.36439909%            1/1/2008           87,741.62              33,092,029.31

2/1/2008                    5.36449096%            2/1/2008           88,144.33              33,003,884.97

3/1/2008                    5.36459701%            3/1/2008          101,160.23              32,902,724.75

4/1/2008                    5.36469086%            4/1/2008           89,013.19              32,813,711.56

5/1/2008                    5.36479233%            5/1/2008           95,699.24              32,718,012.32

6/1/2008                    5.36488815%            6/1/2008           89,860.97              32,628,151.35

7/1/2008                    5.36499166%            7/1/2008           96,523.44              32,531,627.91

8/1/2008                    5.36508951%            8/1/2008           90,716.42              32,440,911.49

9/1/2008                    5.36518837%            9/1/2008           91,132.78              32,349,778.71

10/1/2008                   5.36529503%            10/1/2008          97,759.88              32,252,018.83

11/1/2008                   5.36539599%            11/1/2008          91,999.75              32,160,019.08

12/1/2008                   5.36550485%            12/1/2008          98,602.73              32,061,416.35

                                       3

                                                                     MONTHLY AMOUNT
INTEREST PERIOD                                                   (SCHEDULED PRINCIPAL
COMMENCING              STATED INTEREST RATE     PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
1/1/2009                    5.36560800%            1/1/2009                92,874.56         31,968,541.79

2/1/2009                    5.36571223%            2/1/2009                93,300.83         31,875,240.96

3/1/2009                    5.36583831%            3/1/2009               112,144.75         31,763,096.21

4/1/2009                    5.36594497%            4/1/2009                94,243.77         31,668,852.45

5/1/2009                    5.36605972%            5/1/2009               100,784.33         31,568,068.12

6/1/2009                    5.36616873%            6/1/2009                95,138.89         31,472,929.23

7/1/2009                    5.36628593%            7/1/2009               101,654.55         31,371,274.67

8/1/2009                    5.36639736%            8/1/2009                96,042.12         31,275,232.56

9/1/2009                    5.36650999%            9/1/2009                96,482.93         31,178,749.63

10/1/2009                   5.36663096%            10/1/2009              102,961.20         31,075,788.43

11/1/2009                   5.36674613%            11/1/2009               97,398.32         30,978,390.11

12/1/2009                   5.36686973%            12/1/2009              103,851.13         30,874,538.98

1/1/2010                    5.36698752%            1/1/2010                98,322.00         30,776,216.98

2/1/2010                    5.36710661%            2/1/2010                98,773.27         30,677,443.72

3/1/2010                    5.36724880%            3/1/2010               117,110.28         30,560,333.43

4/1/2010                    5.36737080%            4/1/2010                99,764.11         30,460,569.32

5/1/2010                    5.36750149%            5/1/2010               106,151.12         30,354,418.20

6/1/2010                    5.36762632%            6/1/2010               100,709.21         30,253,708.99

7/1/2010                    5.36775996%            7/1/2010               107,069.92         30,146,639.07

8/1/2010                    5.36788773%            8/1/2010               101,662.86         30,044,976.21

9/1/2010                    5.36801695%            9/1/2010               102,129.46         29,942,846.75

10/1/2010                   5.36815515%            10/1/2010              108,450.67         29,834,396.08

11/1/2010                   5.36828746%            11/1/2010              103,095.96         29,731,300.12

12/1/2010                   5.36842885%            12/1/2010              109,390.29         29,621,909.83

1/1/2011                    5.36856434%            1/1/2011               104,071.22         29,517,838.61

2/1/2011                    5.36870141%            2/1/2011               104,548.88         29,413,289.74

3/1/2011                    5.36886307%            3/1/2011               122,350.90         29,290,938.83

4/1/2011                    5.36900367%            4/1/2011               105,590.28         29,185,348.55

5/1/2011                    5.36915368%            5/1/2011               111,815.22         29,073,533.33

6/1/2011                    5.36929775%            6/1/2011               106,588.11         28,966,945.21

                                       4

                                                                     MONTHLY AMOUNT
INTEREST PERIOD                                                   (SCHEDULED PRINCIPAL
COMMENCING              STATED INTEREST RATE     PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
7/1/2011                    5.36945136%            7/1/2011               112,785.30         28,854,159.92

8/1/2011                    5.36959902%            8/1/2011               107,594.98         28,746,564.94

9/1/2011                    5.36974848%            9/1/2011               108,088.81         28,638,476.13

10/1/2011                   5.36990768%            10/1/2011              114,244.25         28,524,231.88

11/1/2011                   5.37006092%            11/1/2011              109,109.25         28,415,122.63

12/1/2011                   5.37022404%            12/1/2011              115,236.31         28,299,886.32

1/1/2012                    5.37038120%            1/1/2012               110,138.94         28,189,747.38

2/1/2012                    5.37054032%            2/1/2012               110,644.45         28,079,102.94

3/1/2012                    5.37071768%            3/1/2012               122,305.32         27,956,797.61

4/1/2012                    5.37088103%            4/1/2012               111,713.62         27,845,083.99

5/1/2012                    5.37105467%            5/1/2012               117,768.23         27,727,315.76

6/1/2012                    5.37122232%            6/1/2012               112,766.88         27,614,548.88

7/1/2012                    5.37140042%            7/1/2012               118,792.19         27,495,756.69

8/1/2012                    5.37157253%            8/1/2012               113,829.67         27,381,927.02

9/1/2012                    5.37174687%            9/1/2012               114,352.12         27,267,574.90

10/1/2012                   5.37193192%            10/1/2012              120,333.34         27,147,241.57

11/1/2012                   5.37211097%            11/1/2012              115,429.26         27,031,812.31

12/1/2012                   5.37230091%            12/1/2012              121,380.51         26,910,431.80

1/1/2013                    5.37248486%            1/1/2013               116,516.15         26,793,915.65

2/1/2013                    5.37267128%            2/1/2013               117,050.92         26,676,864.72

3/1/2013                    5.37288621%            3/1/2013               133,694.91         26,543,169.82

4/1/2013                    5.37307804%            4/1/2013               118,201.78         26,424,968.04

5/1/2013                    5.37328126%            5/1/2013               124,075.91         26,300,892.13

6/1/2013                    5.37347850%            6/1/2013               119,313.77         26,181,578.36

7/1/2013                    5.37368734%            7/1/2013               125,156.97         26,056,421.39

8/1/2013                    5.37389021%            8/1/2013               120,435.82         25,935,985.57

9/1/2013                    5.37409591%            9/1/2013               120,988.59         25,814,996.99

10/1/2013                   5.37431355%            10/1/2013              126,785.20         25,688,211.78

11/1/2013                   5.37452523%            11/1/2013              122,125.80         25,566,085.98

12/1/2013                   5.37474908%            12/1/2013              127,890.78         25,438,195.20

                                       5

                                                                     MONTHLY AMOUNT
INTEREST PERIOD                                                   (SCHEDULED PRINCIPAL
COMMENCING              STATED INTEREST RATE     PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
1/1/2014                    5.37496699%            1/1/2014               123,273.31         25,314,921.90

2/1/2014                    5.37518805%            2/1/2014               123,839.10         25,191,082.80

3/1/2014                    5.33000000%            3/1/2014               139,854.30         25,051,228.50

4/1/2014                    5.33000000%            4/1/2014               125,049.37         24,926,179.13

5/1/2014                    5.33000000%            5/1/2014               130,733.03         24,795,446.10

6/1/2014                    5.33000000%            6/1/2014               126,223.35         24,669,222.75

7/1/2014                    5.33000000%            7/1/2014               131,874.35         24,537,348.40

8/1/2014                    5.33000000%            8/1/2014               127,407.94         24,409,940.46

9/1/2014                    5.33000000%            9/1/2014               127,992.71         24,281,947.75

10/1/2014                   5.33000000%            10/1/2014              133,594.50         24,148,353.25

11/1/2014                   5.33000000%            11/1/2014              129,193.32         24,019,159.93

12/1/2014                   5.33000000%            12/1/2014              134,761.71         23,884,398.22

1/1/2015                    5.33000000%            1/1/2015               130,404.80         23,753,993.42

2/1/2015                    5.33000000%            2/1/2015               131,003.32         23,622,990.10

3/1/2015                    5.33000000%            3/1/2015               146,354.91         23,476,635.18

4/1/2015                    5.33000000%            4/1/2015               132,276.32         23,344,358.86

5/1/2015                    5.33000000%            5/1/2015               137,758.95         23,206,599.91

6/1/2015                    5.33000000%            6/1/2015               133,515.71         23,073,084.20

7/1/2015                    5.33000000%            7/1/2015               138,963.86         22,934,120.34

8/1/2015                    5.33000000%            8/1/2015               134,766.31         22,799,354.02

9/1/2015                    5.33000000%            9/1/2015               135,384.85         22,663,969.17

10/1/2015                   5.33000000%            10/1/2015              140,781.02         22,523,188.15

11/1/2015                   5.33000000%            11/1/2015              136,652.38         22,386,535.77

12/1/2015                   5.33000000%            12/1/2015              142,013.28         22,244,522.49

1/1/2016                    5.33000000%            1/1/2016               137,931.38         22,106,591.11

2/1/2016                    5.33000000%            2/1/2016               138,564.44         21,968,026.67

3/1/2016                    5.33000000%            3/1/2016               148,543.91         21,819,482.76

4/1/2016                    5.33000000%            4/1/2016               139,882.19         21,679,600.57

5/1/2016                    5.33000000%            5/1/2016               145,153.25         21,534,447.32

6/1/2016                    5.33000000%            6/1/2016               141,190.42         21,393,256.90

                                       6

                                                                     MONTHLY AMOUNT
INTEREST PERIOD                                                   (SCHEDULED PRINCIPAL
COMMENCING              STATED INTEREST RATE     PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
7/1/2016                    5.33000000%            7/1/2016               146,425.10         21,246,831.80

8/1/2016                    5.33000000%            8/1/2016               142,510.50         21,104,321.30

9/1/2016                    5.33000000%            9/1/2016               143,164.58         20,961,156.72

10/1/2016                   5.33000000%            10/1/2016              148,344.34         20,812,812.37

11/1/2016                   5.33000000%            11/1/2016              144,502.53         20,668,309.85

12/1/2016                   5.33000000%            12/1/2016              149,645.07         20,518,664.77

1/1/2017                    5.33000000%            1/1/2017               145,852.58         20,372,812.19

2/1/2017                    5.33000000%            2/1/2017               146,522.01         20,226,290.19

3/1/2017                    5.33000000%            3/1/2017               160,436.12         20,065,854.06

4/1/2017                    5.33000000%            4/1/2017               147,930.86         19,917,923.21

5/1/2017                    5.33000000%            5/1/2017               152,978.04         19,764,945.17

6/1/2017                    5.33000000%            6/1/2017               149,311.95         19,615,633.22

7/1/2017                    5.33000000%            7/1/2017               154,320.71         19,461,312.51

8/1/2017                    5.33000000%            8/1/2017               150,705.54         19,310,606.97

9/1/2017                    5.33000000%            9/1/2017               151,397.23         19,159,209.74

10/1/2017                   5.33000000%            10/1/2017              156,347.99         19,002,861.75

11/1/2017                   5.33000000%            11/1/2017              152,809.70         18,850,052.05

12/1/2017                   5.33000000%            12/1/2017              157,721.17         18,692,330.89

1/1/2018                    5.33000000%            1/1/2018               154,234.95         18,538,095.94

2/1/2018                    5.33000000%            2/1/2018               154,942.84         18,383,153.09

3/1/2018                    5.33000000%            3/1/2018               168,076.95         18,215,076.15

4/1/2018                    5.33000000%            4/1/2018               156,425.42         18,058,650.73

5/1/2018                    5.33000000%            5/1/2018               161,236.31         17,897,414.42

6/1/2018                    5.33000000%            6/1/2018               157,883.39         17,739,531.03

7/1/2018                    5.33000000%            7/1/2018               162,653.73         17,576,877.30

8/1/2018                    5.33000000%            8/1/2018               159,354.57         17,417,522.73

9/1/2018                    5.33000000%            9/1/2018               160,085.96         17,257,436.76

10/1/2018                   5.33000000%            10/1/2018              164,795.03         17,092,641.73

11/1/2018                   5.33000000%            11/1/2018              161,577.08         16,931,064.65

12/1/2018                   5.33000000%            12/1/2018              166,244.67         16,764,819.99

                                       7

                                                                     MONTHLY AMOUNT
INTEREST PERIOD                                                   (SCHEDULED PRINCIPAL
COMMENCING              STATED INTEREST RATE     PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
1/1/2019                    5.33000000%            1/1/2019               163,081.69         16,601,738.30

2/1/2019                    5.33000000%            2/1/2019               163,830.19         16,437,908.11

3/1/2019                    5.33000000%            3/1/2019               176,141.07         16,261,767.04

4/1/2019                    5.33000000%            4/1/2019               165,390.56         16,096,376.48

5/1/2019                    5.33000000%            5/1/2019               169,952.07         15,926,424.40

6/1/2019                    5.33000000%            6/1/2019               166,929.69         15,759,494.71

7/1/2019                    5.33000000%            7/1/2019               171,448.39         15,588,046.32

8/1/2019                    5.33000000%            8/1/2019               168,482.75         15,419,563.57

9/1/2019                    5.33000000%            9/1/2019               169,256.04         15,250,307.53

10/1/2019                   5.33000000%            10/1/2019              173,710.03         15,076,597.50

11/1/2019                   5.33000000%            11/1/2019              170,830.16         14,905,767.34

12/1/2019                   5.33000000%            12/1/2019              175,240.36         14,730,526.97

1/1/2020                    5.33000000%            1/1/2020               172,418.53         14,558,108.44

2/1/2020                    5.33000000%            2/1/2020               173,209.88         14,384,898.56

3/1/2020                    5.33000000%            3/1/2020               181,102.91         14,203,795.65

4/1/2020                    5.33000000%            4/1/2020               174,836.08         14,028,959.57

5/1/2020                    5.33000000%            5/1/2020               179,134.85         13,849,824.72

6/1/2020                    5.33000000%            6/1/2020               176,460.71         13,673,364.01

7/1/2020                    5.33000000%            7/1/2020               180,714.29         13,492,649.73

8/1/2020                    5.33000000%            8/1/2020               178,100.04         13,314,549.69

9/1/2020                    5.33000000%            9/1/2020               178,917.47         13,135,632.21

10/1/2020                   5.33000000%            10/1/2020              183,102.71         12,952,529.50

11/1/2020                   5.33000000%            11/1/2020              180,579.04         12,771,950.46

12/1/2020                   5.33000000%            12/1/2020              184,718.07         12,587,232.39

1/1/2021                    5.33000000%            1/1/2021               182,255.65         12,404,976.74

2/1/2021                    5.33000000%            2/1/2021               183,092.16         12,221,884.58

3/1/2021                    5.33000000%            3/1/2021               193,618.83         12,028,265.75

4/1/2021                    5.33000000%            4/1/2021               184,821.16         11,843,444.59

5/1/2021                    5.33000000%            5/1/2021               188,842.18         11,654,602.41

6/1/2021                    5.33000000%            6/1/2021               186,536.17         11,468,066.24

                                       8

                                                                     MONTHLY AMOUNT
INTEREST PERIOD                                                   (SCHEDULED PRINCIPAL
COMMENCING              STATED INTEREST RATE     PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
7/1/2021                    5.33000000%            7/1/2021               190,509.49         11,277,556.76

8/1/2021                    5.33000000%            8/1/2021               188,266.70         11,089,290.06

9/1/2021                    5.33000000%            9/1/2021               189,130.79         10,900,159.26

10/1/2021                   5.33000000%            10/1/2021              193,031.94         10,707,127.32

11/1/2021                   5.33000000%            11/1/2021              190,884.81         10,516,242.51

12/1/2021                   5.33000000%            12/1/2021              194,737.17         10,321,505.34

1/1/2022                    5.33000000%            1/1/2022               192,654.71         10,128,850.63

2/1/2022                    5.33000000%            2/1/2022               193,538.94          9,935,311.68

3/1/2022                    5.33000000%            3/1/2022               203,097.94          9,732,213.74

4/1/2022                    5.33000000%            4/1/2022               195,359.40          9,536,854.34

5/1/2022                    5.33000000%            5/1/2022               199,087.29          9,337,767.05

6/1/2022                    5.33000000%            6/1/2022               197,169.80          9,140,597.26

7/1/2022                    5.33000000%            7/1/2022               200,847.33          8,939,749.93

8/1/2022                    5.33000000%            8/1/2022               198,996.59          8,740,753.34

9/1/2022                    5.33000000%            9/1/2022               199,909.93          8,540,843.42

10/1/2022                   5.33000000%            10/1/2022              203,511.23          8,337,332.18

11/1/2022                   5.33000000%            11/1/2022              201,761.52          8,135,570.67

12/1/2022                   5.33000000%            12/1/2022              205,311.32          7,930,259.35

1/1/2023                    5.33000000%            1/1/2023               203,629.87          7,726,629.48

2/1/2023                    5.33000000%            2/1/2023               204,564.47          7,522,065.01

3/1/2023                    5.33000000%            3/1/2023               213,102.19          7,308,962.81

4/1/2023                    5.33000000%            4/1/2023               206,481.45          7,102,481.37

5/1/2023                    5.33000000%            5/1/2023               209,899.96          6,892,581.41

6/1/2023                    5.33000000%            6/1/2023               208,392.52          6,684,188.89

7/1/2023                    5.33000000%            7/1/2023               211,757.87          6,472,431.01

8/1/2023                    5.33000000%            8/1/2023               210,320.89          6,262,110.12

9/1/2023                    5.33000000%            9/1/2023               211,286.21          6,050,823.91

10/1/2023                   5.33000000%            10/1/2023              214,571.07          5,836,252.84

11/1/2023                   5.33000000%            11/1/2023              213,240.78          5,623,012.06

12/1/2023                   5.33000000%            12/1/2023              216,471.27          5,406,540.79

                                       9

                                                                     MONTHLY AMOUNT
INTEREST PERIOD                                                   (SCHEDULED PRINCIPAL
COMMENCING              STATED INTEREST RATE     PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
1/1/2024                    5.33000000%            1/1/2024               215,213.03          5,191,327.76

2/1/2024                    5.33000000%            2/1/2024               216,200.80          4,975,126.96

3/1/2024                    5.33000000%            3/1/2024               221,504.81          4,753,622.14

4/1/2024                    5.33000000%            4/1/2024               218,209.75          4,535,412.40

5/1/2024                    5.33000000%            5/1/2024               221,302.02          4,314,110.37

6/1/2024                    5.33000000%            6/1/2024               220,226.99          4,093,883.38

7/1/2024                    5.33000000%            7/1/2024               223,263.15          3,870,620.24

8/1/2024                    5.33000000%            8/1/2024               222,262.48          3,648,357.75

9/1/2024                    5.33000000%            9/1/2024               223,282.61          3,425,075.15

10/1/2024                   5.33000000%            10/1/2024              226,233.77          3,198,841.38

11/1/2024                   5.33000000%            11/1/2024              225,345.76          2,973,495.61

12/1/2024                   5.33000000%            12/1/2024              228,239.54          2,745,256.08

1/1/2025                    5.33000000%            1/1/2025               227,427.59          2,517,828.48

2/1/2025                    5.33000000%            2/1/2025               228,471.42          2,289,357.06

3/1/2025                    5.33000000%            3/1/2025               234,794.67          2,054,562.39

4/1/2025                    5.33000000%            4/1/2025               230,597.68          1,823,964.70

5/1/2025                    5.33000000%            5/1/2025               233,345.37          1,590,619.33

6/1/2025                    5.33000000%            6/1/2025               232,727.05          1,357,892.28

7/1/2025                    5.33000000%            7/1/2025               235,415.51          1,122,476.77

8/1/2025                    5.33000000%            8/1/2025               234,875.70            887,601.07

9/1/2025                    5.33000000%            9/1/2025               235,953.71            651,647.36

10/1/2025                   5.33000000%            10/1/2025              238,552.41            413,094.95

11/1/2025                   5.33000000%            11/1/2025              238,131.56            174,963.38

2/1/2025                    0.00000000%            12/1/2025              174,963.38                     -

1/1/2026 and thereafter     0.00000000%            1/1/2026                        -

                                       10

                               PROMISSORY NOTE A-4

New York, New York
$94,000,000.00                                                 February 13, 2004

         PROMISSORY NOTE A-4, dated as of February 13, 2004 (this NOTE), by 731
Office One LLC, a Delaware limited liability company (BORROWER), having an
address for notice purposes c/o Alexander's Inc., 888 Seventh Avenue, New York,
New York 10019, in favor of GERMAN AMERICAN CAPITAL CORPORATION, a Maryland
corporation (together with its successors and assigns, LENDER), having an office
at 60 Wall Street, New York, New York 10005.

         WHEREAS, Lender made a loan to Borrower in the original principal
amount of $400,000,000 (the LOAN);

         WHEREAS, Lender is the present owner and holder of that certain
Consolidated Amended and Restated Note, dated as of February 13, 2004, made by
Borrower in favor of Lender (the EXISTING NOTE), which Existing Note evidences
an indebtedness of Borrower to Lender in the original and current outstanding
principal amount of $400,000,000 (the EXISTING DEBT);

         WHEREAS, pursuant to the Loan Agreement (as hereinafter defined),
Borrower and Lender desire to sever the Existing Note into six (6) newly issued
substitute promissory notes in an aggregate principal amount equal to the
Existing Debt;

         WHEREAS, from and after the date hereof, the Existing Note shall be
amended, restated and superseded and the Loan shall be evidenced by (i) that
certain Promissory Note A-1, in the principal amount of $90,000,000 (NOTE A-1);
(ii) that certain Promissory Note A-2, dated as of the date hereof, made by
Borrower in favor of Lender, in the principal amount of $95,000,000 (NOTE A-2);
(iii) that certain Promissory Note A-3, dated as of the date hereof, made by
Borrower in favor of Lender, in the principal amount of $35,000,000 (NOTE A-3);
(iv) this Promissory Note A-4, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $94,000,000; (v) that certain
Promissory Note A-X, dated as of the date hereof, made by Borrower in favor of
Lender, in the notional principal amount of $86,000,000 (NOTE A-X); and (vi)
that certain Promissory Note B, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $86,000,000 (NOTE B);

         WHEREAS, this Note, individually, evidences a portion of the Loan in
the principal amount of NINETY-FOUR MILLION DOLLARS ($94,000,000); and

         WHEREAS, Lender and Borrower intend these Recitals to be a material
part of this Note.

         NOW, THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the
order of Lender the Principal Amount, together with interest from the date
hereof, and other fees, expenses and charges as provided in this Note.

1.       DEFINED TERMS.

         a.       Capitalized terms used but not otherwise defined herein shall
                  have the respective meanings given thereto in the Loan
                  Agreement (as defined below), unless otherwise expressly
                  provided herein. All references to sections shall be deemed to
                  be references to sections of this Note, unless otherwise
                  indicated.

         b.       The following terms shall have the meaning ascribed thereto:

         A-4 PROPORTIONATE SHARE shall mean, with respect to any date of
         determination, a fraction, expressed as a percentage, the numerator of
         which is the Principal Amount of this Note and the denominator of which
         is the outstanding aggregate principal amount of the Mortgage Notes.

         A NOTE PROPORTIONATE SHARE shall mean, with respect to any date of
         determination, a fraction, expressed as a percentage, the numerator of
         which is the Principal Amount of this Note and the denominator of which
         is the sum of the principal amounts of this Note, the A-2 Note, the A-3
         Note and the A-1 Note.

         ADDITIONAL INTEREST STRIP shall mean, with respect to each Interest
         Period from and after the Anticipated Repayment Date, the excess of
         interest accrued at the Revised Interest Rate over interest accrued at
         the Stated Interest Rate (but shall not include the Post ARD Default
         Interest Strip).

         ANTICIPATED REPAYMENT DATE shall mean March 1, 2014.

         APPLICABLE INTEREST RATE shall mean (i) from the date hereof through
         and including the Anticipated Repayment Date, the Stated Interest Rate,
         and (ii) from the day after the Anticipated Repayment Date through and
         including the Maturity Date, the Revised Interest Rate.

         BORROWER shall have the meaning provided in the first paragraph hereof.

         DEFAULT RATE shall mean a rate per annum equal to the lesser of (a) the
         Maximum Legal Rate and (b) five percent (5%) above the Applicable
         Interest Rate.

         DEFEASANCE LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on the earlier to occur of (i) two years after the
         "startup day," within the meaning of Section 860G(a)(9) of the Internal
         Revenue Code of 1986, as amended from time to time or any successor
         statute (the "Code"), of a "real estate mortgage investment conduit,"
         ("REMIC") within the meaning of Section 860D of the Code, with respect
         to the last portion of the debt evidenced by the

                                       2

         Mortgage Notes and the Security Instrument and (ii) four (4) years from
         the date hereof.

         DEFERRED INTEREST shall mean the Additional Interest Strip and the Post
         ARD Default Interest Strip, collectively.

         EXISTING DEBT shall have the meaning provided in the Recitals to this
         Note.

         EXISTING NOTE shall have the meaning provided in the Recitals to this
         Note.

         INTEREST PERIOD shall have the meaning provided in Section 2.

         LENDER shall have the meaning provided in the first paragraph hereof.

         LIQUIDATED DAMAGES AMOUNT shall have the meaning set forth in Section
         4(e).

         LOAN shall have the meaning provided in the Recitals to this Note.

         LOAN AGREEMENT shall mean the Loan and Security Agreement, dated the
         date hereof, between Borrower and Lender.

         MATURITY DATE shall mean March 1, 2029, or such earlier date on which
         the final payment of principal of this Note becomes due and payable as
         provided in the Loan Agreement or this Note, whether at such stated
         maturity date, by declaration of acceleration, or otherwise.

         MATURITY DATE PAYMENT shall have the meaning set forth in Section 3(e).

         MONTHLY AMOUNTS shall have the meaning provided in Section 3(a).

         MORTGAGE NOTES shall mean, collectively, this Note, Note A-1, Note A-2,
         Note A-3, Note A-X, Note B and any amendments, restatements or
         replacements of any thereof.

         NOTE shall have the meaning provided in the first paragraph hereof.

         NOTE A-X shall have the meaning provided in the Recitals to this Note.

         NOTE A-1 shall have the meaning provided in the Recitals to this Note.

         NOTE A-2 shall have the meaning provided in the Recitals to this Note.

         NOTE A-3 shall have the meaning provided in the Recitals to this Note.

         NOTE B shall have the meaning provided in the Recitals to this Note.

         PAYMENT DATE shall be the first (1st) calendar day of each calendar
         month, whether or not such day is a Business Day, commencing on April
         1, 2004 and continuing to and including the Maturity Date.

                                       3

         POST ARD DEFAULT INTEREST STRIP shall mean, with respect to each
         Interest Period from and after the Anticipated Repayment Date, default
         interest accrued at a rate equal to the lesser of (x) 5.0% and (y) the
         amount by which the Maximum Legal Rate exceeds the Applicable Interest
         Rate.

         PREPAYMENT DATE shall have the meaning provided in Section 4(a)(i).

         PREPAYMENT LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on December 1, 2013.

         PREPAYMENT NOTICE shall have the meaning provided in Section 4(a)(i).

         PRINCIPAL AMOUNT shall mean $94,000,000 or so much of the aggregate
         principal amount that is outstanding under this Note from time to time.

         REVISED INTEREST RATE shall mean, with respect to each Interest Period,
         a rate per annum equal to two percent (2%) above the Stated Interest
         Rate applicable to such Interest Period.

         STATED INTEREST RATE shall mean, with respect to each Interest Period,
         the rate of interest set forth on EXHIBIT A hereto for such Interest
         Period.

         TREASURY RATE shall mean, as of any Payment Date, the yield, calculated
         by linear interpolation (rounded to the nearest one-thousandth of one
         percent) of the yields of noncallable United States Treasury
         obligations with terms (one longer and one shorter) most nearly
         approximating the period from such Payment Date to the Anticipated
         Repayment Date (and converted to a monthly equivalent yield), as
         determined by Lender on the basis of Federal Reserve Statistical
         Release H.15 Selected Interest Rates under the heading U.S.
         Governmental Security/Treasury Constant Maturities or, if such
         publication is unavailable, such other recognized source of financial
         market information as shall be selected by Lender for the week prior to
         such Payment Date.

         YIELD MAINTENANCE PREMIUM shall mean an amount equal to the product of:
         (a) the positive difference (expressed as a percentage of the
         outstanding Principal Amount before any prepayment), if any, as of the
         date of determination between (i) the present value of all future
         scheduled payments of interest and principal, including the principal
         amount due on the Anticipated Repayment Date, to be made on this Note
         before the prepayment in question, discounted at an interest rate per
         annum equal to the Treasury Rate, and (ii) the outstanding Principal
         Amount immediately before such prepayment; and (b) the Principal Amount
         being prepaid.

2.       INTEREST.

         a.       Prior to the Anticipated Repayment Date, interest shall accrue
                  on the Principal Amount at the Stated Interest Rate. In the
                  event that Borrower does not repay the Principal Amount in
                  full on or before the Anticipated

                                       4

                  Repayment Date, then, from and after the Anticipated Repayment
                  Date, interest shall accrue on the Principal Amount at the
                  Revised Interest Rate. From and after the occurrence and
                  during the continuance of any Event of Default, interest shall
                  accrue at the Default Rate.

         b.       Interest on the principal sum of this Note shall be calculated
                  based on the Applicable Interest Rate on the basis of a
                  fraction, the denominator of which shall be 360 and the
                  numerator of which shall be the actual number of days in the
                  relevant Interest Period, except that interest due and payable
                  for a period less than a full month shall be calculated by
                  multiplying the actual number of days elapsed in such period
                  by a daily rate based on said 360 day year. Interest shall
                  accrue from, and including, the first (1st) day of the prior
                  month and ending on the last day of the prior month (an
                  INTEREST PERIOD); in each case without adjustment for any
                  Business Day convention; provided that the first accrual
                  period shall commence on March 1, 2004.

         c.       Except as expressly set forth in the Loan Agreement to the
                  contrary, interest shall accrue on all amounts advanced by
                  Lender pursuant to the Loan Documents (other than the
                  Principal Amount, which shall accrue interest in accordance
                  with clauses a. and b. above) at the Default Rate.

         d.       The provisions of this Section 2 are subject in all events to
                  the provisions of Section 2.2.4 of the Loan Agreement.

3.       PAYMENTS OF PRINCIPAL AND INTEREST.

         a.       Interest and principal under this Note shall be payable as
                  follows:

                  i.       interest accruing from the date hereof to and
                           including February 29, 2004 shall be paid on the date
                           hereof; and

                  ii.      commencing on April 1, 2004 and on each and every
                           Payment Date thereafter until the Maturity Date,
                           monthly installments of interest payable on this
                           Note, in arrears, and scheduled principal
                           amortization in the amounts (the MONTHLY AMOUNTS) set
                           forth on EXHIBIT A hereto (subject to adjustment as
                           provided in Section 4(f)).

         b.       From and after the Anticipated Repayment Date, unless the
                  Indebtedness has been repaid in full, Borrower shall continue
                  to make payments of accrued interest and Monthly Amounts on
                  each Payment Date. From and after the Anticipated Repayment
                  Date, unless the Indebtedness has been repaid in full, all
                  Excess Cash Flow shall be applied to repayment of the Loan on
                  each Payment Date and the A Note Proportionate Share thereof
                  shall be applied as a partial prepayment of the outstanding
                  Principal Amount. Deferred Interest shall be payable after all
                  principal and other amounts due under the Loan have been paid
                  in full.

                                       5

         c.       All payments made by Borrower hereunder or under any of the
                  Loan Documents shall be made on or before 2:00 p.m. New York
                  City time or such later time as Lender or its servicer shall
                  apply amounts on deposit in the Holding Account in accordance
                  the terms of the Loan Documents. Any payments received after
                  such time shall be credited to the next following Business
                  Day.

         d.       All amounts advanced by Lender pursuant to the Loan Documents,
                  other than the Principal Amount, or other charges provided in
                  the Loan Documents, shall be due and payable as provided in
                  the Loan Documents. In the event any such advance or charge is
                  not so repaid by Borrower, Lender may, at its option, first
                  apply any payments received under this Note to repay such
                  advances, together with any interest thereon, or other charges
                  as provided in the Loan Documents, and the balance, if any,
                  shall be applied in payment of any installment of interest or
                  principal then due and payable.

         e.       The entire Principal Amount of this Note, all unpaid accrued
                  interest, all interest that would accrue on the Principal
                  Amount through the end of the Interest Period during which the
                  Maturity Date occurs and all other fees and sums then payable
                  hereunder or under the Loan Documents (collectively, the
                  MATURITY DATE PAYMENT), shall be due and payable in full on
                  the Maturity Date.

         f.       Amounts due on this Note shall be payable, without any
                  counterclaim, setoff or deduction whatsoever, at the office of
                  Lender or its agent or designee at the address set forth on
                  the first page of this Note or at such other place as Lender
                  or its agent or designee may from time to time designate in
                  writing.

         g.       All amounts due under this Note, including, without
                  limitation, interest and the Principal Amount, shall be due
                  and payable in lawful money of the United States.

         h.       To the extent that Borrower makes a payment or Lender receives
                  any payment or proceeds for Borrower's benefit, which are
                  subsequently invalidated, declared to be fraudulent or
                  preferential, set aside or required to be repaid to a trustee,
                  debtor in possession, receiver, custodian or any other party
                  under any bankruptcy law, common law or equitable cause, then,
                  to such extent, the obligations of Borrower hereunder intended
                  to be satisfied shall be revived and continue as if such
                  payment or proceeds had not been received by Lender.

4.       PREPAYMENTS. Except as permitted in Sections 4(a), 4(b), 4(c) and 4(d)
         hereof, the outstanding Principal Amount may not be prepaid in whole or
         in part. Any Principal Amount prepaid pursuant to this Section 4 may
         not be reborrowed hereunder.

                                       6

         a.       VOLUNTARY PREPAYMENTS. Borrower shall not have the right to
                  prepay, in whole or in part, the Principal Amount due
                  hereunder prior to the Anticipated Repayment Date (other than
                  with respect to the application of Proceeds pursuant to
                  Section 6.2 of the Loan Agreement); provided, however,
                  Borrower shall be entitled to make a prepayment of all of the
                  Principal Amount of this Note on any Business Day occurring
                  after the expiration of the Prepayment Lockout Period, without
                  any premium or penalty upon satisfaction of the following
                  conditions:

                  i.       Borrower shall provide prior irrevocable written
                           notice (the PREPAYMENT NOTICE) to Lender specifying
                           the proposed Business Day on which the prepayment is
                           to be made, which Business Day shall be no earlier
                           than thirty (30) days after the date of such
                           Prepayment Notice and no later than ninety (90) days
                           after the date of such Prepayment Notice (the date of
                           such prepayment pursuant to this Section 4(a) and
                           Section 4(b) below being the PREPAYMENT DATE); and

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(c) and Section 4(d) of this Note.

                  iii.     In connection with any voluntary prepayment, other
                           than payments from Excess Cash Flow as set forth in
                           Section 3(b), Borrower shall concurrently repay all
                           of the other Indebtedness in full.

                  iv.      Borrower agrees that all Excess Cash Flow shall be
                           applied in accordance with the terms of the Loan
                           Agreement, including, without limitation, Article III
                           and Section 16.5 of the Loan Agreement and the
                           provisions of Section 3(b) hereof.

         b.       DEFEASANCE. From and after expiration of the Defeasance
                  Lockout Period and prior to the Anticipated Repayment Date,
                  Borrower shall have the right to defease the Loan pursuant to
                  the provisions of Article IX of the Loan Agreement. In no
                  event shall a prepayment of this Note in accordance with
                  Sections 4(a) or 4(c) trigger or result in any defeasance
                  liability under this Note or the other Loan Documents.

         c.       MANDATORY PREPAYMENTS.

                  i.       On the next occurring Payment Date following the date
                           on which Borrower actually receives any Proceeds, if
                           Lender is not obligated pursuant to the terms of the
                           Loan Agreement to make such Proceeds available to
                           Borrower for the restoration of the Property,
                           Borrower shall use the A-4 Proportionate Share of
                           such Proceeds to prepay the outstanding principal
                           balance of this Note as set forth in Section 6.2.3 of
                           the Loan Agreement; and

                                       7

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(d) and Section 4(e) of this Note
                           (provided, however, that the Liquidated Damages
                           Amount and the Yield Maintenance Premium shall not
                           apply to prepayments made from the receipt of
                           Proceeds).

         d.       PAYMENTS IN CONNECTION WITH A PREPAYMENT.

                  i.       On the date on which a prepayment, voluntary,
                           involuntary or mandatory, is made under this Note or
                           as required under the Loan Agreement, Borrower shall,
                           unless such prepayment is made on a Payment Date, pay
                           to Lender all unpaid interest on the Principal Amount
                           prepaid through the end of the Interest Period during
                           which such prepayment is made.

                  ii.      On the Business Day on which a prepayment is made,
                           Borrower shall pay to Lender all other sums (not
                           including scheduled interest and principal payments)
                           then due and payable under the Note, and the A-4
                           Proportionate Share of all other sums then due and
                           payable under the Loan Agreement, the Security
                           Instrument, and the other Loan Documents;

                  iii.     Borrower shall pay (without duplication) all
                           reasonable costs and expenses of Lender incurred in
                           connection with the prepayment (including without
                           limitation, any reasonable costs and expenses
                           associated with a release or assignment of the Lien
                           of the related Security Instrument as set forth in
                           Section 2.3.3 of the Loan Agreement as well as
                           reasonable attorneys' fees and expenses); and

                  iv.      In the event of a prepayment made after an
                           acceleration of the Loan, Borrower shall also pay to
                           Lender the Yield Maintenance Premium to the extent
                           such prepayment is made prior to expiration of the
                           Prepayment Lockout Period.

         e.       LIQUIDATED DAMAGES AMOUNT. IF NOTWITHSTANDING THE PROHIBITIONS
                  OF THIS SECTION 4, THE LOAN IS VOLUNTARILY OR INVOLUNTARILY
                  REPAID DURING THE PREPAYMENT LOCKOUT PERIOD (EXCLUDING
                  PREPAYMENTS MADE (I) IN ACCORDANCE WITH SECTION 4(C) OF THIS
                  NOTE AND (II) FROM A DEFEASANCE OF THE LOAN IN ACCORDANCE WITH
                  THE TERMS OF THE LOAN DOCUMENTS AFTER EXPIRATION OF THE
                  DEFEASANCE LOCKOUT PERIOD), INCLUDING, BUT NOT LIMITED TO, AS
                  A RESULT OF AN ACCELERATED MATURITY DATE, THEN BORROWER SHALL
                  PAY TO LENDER, AS LIQUIDATED DAMAGES FOR SUCH DEFAULT AND NOT
                  AS A PENALTY, AND IN ADDITION TO ANY AND ALL OTHER SUMS AND
                  FEES PAYABLE UNDER THIS NOTE AND THE OTHER LOAN DOCUMENTS, AN
                  AMOUNT EQUAL TO

                                       8

                  THE GREATER OF (A) FIVE PERCENT (5%) OF THE PRINCIPAL AMOUNT
                  BEING REPAID HEREUNDER AND (B) THE YIELD MAINTENANCE PREMIUM
                  (THE LIQUIDATED DAMAGES AMOUNT). NOTWITHSTANDING THE
                  FOREGOING, THE LIQUIDATED DAMAGES AMOUNT SHALL NOT BE APPLIED
                  TOWARD ANY PREPAYMENTS FROM PROCEEDS.

         f.       MODIFICATION OF MONTHLY AMOUNTS.

                  i.       In the event that any partial prepayment of principal
                           occurs before the Anticipated Repayment Date (other
                           than in connection with an acceleration of the Loan),
                           the Payment Dates shall remain the same and Lender
                           shall recalculate the amount of subsequent Monthly
                           Amounts to reflect the same proportionate
                           amortization as in effect prior to such recalculation
                           for each remaining Payment Date, taking into account
                           the reduction in the Principal Amount.

                  ii.      In the event that any partial prepayment of principal
                           occurs after the Anticipated Repayment Date (other
                           than in connection with an acceleration of the Loan)
                           or Excess Cash Flow is applied to the prepayment of
                           principal after the Anticipated Repayment Date, the
                           Payment Dates shall remain the same and Lender shall
                           recalculate the amount of subsequent Monthly Amounts
                           to reflect the reduction of the Principal Amount.
                           Deferred Interest accrued pursuant to Section 3(b) of
                           this Note shall not result in any increase in the
                           Monthly Amounts or the Stated Interest Rate.

5.       MISCELLANEOUS.

         a.       WAIVER. Borrower and all endorsers, sureties and guarantors
                  hereby jointly and severally waive all applicable exemption
                  rights, valuation and appraisement, presentment for payment,
                  demand, notice of demand, notice of nonpayment or dishonor,
                  protest and notice of protest of this Note, and, except as
                  otherwise expressly provided in the Loan Documents, all other
                  notices in connection with the delivery, acceptance,
                  performance, default or enforcement of the payment of this
                  Note. Borrower consents to any and all extensions of time,
                  renewals, waivers or modifications that may be granted by
                  Lender with respect to the payment or other provisions of this
                  Note and to the release of the collateral securing this Note
                  or any part thereof, with or without substitution, and agrees
                  that additional makers may become parties hereto without
                  notice to them or affecting their liability under this Note.

         b.       NON-RECOURSE. Recourse with respect to any claims arising
                  under or in connection with this Note shall be limited to the
                  extent provided in Article XVIII of the Loan Agreement and the
                  terms, covenants and conditions of

                                       9

                  Article XVIII of the Loan Agreement are hereby incorporated by
                  reference as if fully set forth in this Note.

         c.       NOTE SECURED. This Note and all obligations of Borrower
                  hereunder are secured by the Loan Agreement, the Security
                  Instrument and the other Loan Documents.

         d.       NOTICES. Any notice, election, request or demand which by any
                  provision of this Note is required or permitted to be given or
                  served hereunder shall be given or served in the manner
                  required for the delivery of notices pursuant to the Loan
                  Agreement.

         e.       ENTIRE AGREEMENT. This Note, together with the other Loan
                  Documents, constitutes the entire and final agreement between
                  Borrower and Lender with respect to the subject matter hereof
                  and thereof and may only be changed, amended, modified or
                  waived by an instrument in writing signed by Borrower and
                  Lender.

         f.       NO WAIVER. No waiver of any term or condition of this Note,
                  whether by delay, omission or otherwise, shall be effective
                  unless in writing and signed by the party sought to be
                  charged, and then such waiver shall be effective only in the
                  specific instance and for the purpose for which given. No
                  notice to, or demand on, Borrower shall entitle Borrower to
                  any other or future notice or demand in the same, similar or
                  other circumstances.

         g.       SUCCESSORS AND ASSIGNS. This Note shall be binding upon and
                  inure to the benefit of Borrower and Lender and their
                  respective successors and permitted assigns. Upon any
                  endorsement, assignment, or other transfer of this Note by
                  Lender or by operation of law, the term "Lender" as used
                  herein, shall mean such endorsee, assignee, or other
                  transferee or successor to Lender then becoming the holder of
                  this Note. The term "Borrower" as used herein shall include
                  the respective successors and assigns, legal and personal
                  representatives, executors, administrators, devisees, legatees
                  and heirs of Borrower, if any.

         h.       CAPTIONS. All paragraph, section, exhibit and schedule
                  headings and captions herein are used for reference only and
                  in no way limit or describe the scope or intent of, or in any
                  way affect, this Note.

         i.       COUNTERPARTS. This Note may be executed in counterparts, each
                  of which shall be an original and all of which, when taken
                  together, shall constitute one binding Note.

         j.       SEVERABILITY. The provisions of this Note are severable, and
                  if any one clause or provision hereof shall be held invalid or
                  unenforceable in whole or in part, then such invalidity or
                  unenforceability shall affect only such clause or provision,
                  or part thereof, and not any other clause or provision of this
                  Note.

                                       10

         k.       GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
                  IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
                  TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW,
                  WITHOUT REGARD TO CHOICE OF LAW RULES. BORROWER AGREES THAT
                  ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OTHER LOAN
                  DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW
                  YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
                  NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
                  PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER IN THE
                  MANNER AND AT THE ADDRESS SPECIFIED FOR NOTICES IN THE LOAN
                  AGREEMENT. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY
                  NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
                  SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
                  COURT.

         l.       JURY TRIAL WAIVER. BORROWER, LENDER AND ALL PERSONS CLAIMING
                  BY, THROUGH OR UNDER BORROWER OR LENDER, HEREBY EXPRESSLY,
                  KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO
                  TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
                  (I) ARISING UNDER THIS NOTE, INCLUDING, WITHOUT LIMITATION,
                  ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY
                  CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
                  PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS NOTE (AS
                  NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT
                  OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR
                  THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
                  WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW
                  EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
                  CONTRACT OR TORT OR OTHERWISE; AND BORROWER AND LENDER HEREBY
                  AGREE AND CONSENT THAT AN ORIGINAL COUNTERPART OR A COPY OF
                  THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE
                  OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY
                  JURY. EACH OF BORROWER AND LENDER ACKNOWLEDGES THAT IT HAS
                  CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS
                  WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL
                  INDUCEMENT FOR THE MAKING OF THE LOAN. THIS WAIVER SHALL
                  SURVIVE THE REPAYMENT OF THE LOAN.

                                       11

         m.       COUNTERCLAIMS AND OTHER ACTIONS. Borrower hereby expressly and
                  unconditionally waives, in connection with any suit, action or
                  proceeding brought by Lender on this Note, any and every right
                  it may have to (i) interpose any counterclaim therein (other
                  than a mandatory or compulsory counterclaim which can only be
                  asserted in the suit, action or proceeding brought by Lender
                  on this Note and cannot be maintained in a separate action)
                  and (ii) have any such suit, action or proceeding consolidated
                  with any other or separate suit, action or proceeding.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       12

         IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered as of the day and year first above written.

                                    BORROWER:

                                    731 OFFICE ONE LLC, a Delaware limited
                                    liability company

                                    By: 731 OFFICE ONE HOLDING LLC, a
                                    Delaware limited liability company, its sole
                                    member

                                             By: ALEXANDER'S INC., a Delaware
                                             corporation, its sole member

                                             By: /s/ Brian Kurtz
                                                 -------------------------------
                                                 Name:  Brian Kurtz
                                                 Title: Assistant Secretary

                                    EXHIBIT A
                               PROMISSORY NOTE A-4

                                                                      MONTHLY AMOUNT
INTEREST PERIOD                                                    (SCHEDULED PRINCIPAL
 COMMENCING            STATED INTEREST RATE      PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
2/15/2004                   5.36252388%
3/1/2004                    5.36252388%            3/1/2004                        -         94,000,000.00

4/1/2004                    5.36252388%            4/1/2004                        -         94,000,000.00

5/1/2004                    5.36252388%            5/1/2004                        -         94,000,000.00

6/1/2004                    5.36252388%            6/1/2004                        -         94,000,000.00

7/1/2004                    5.36252388%            7/1/2004                        -         94,000,000.00

8/1/2004                    5.36252388%            8/1/2004                        -         94,000,000.00

9/1/2004                    5.36252388%            9/1/2004                        -         94,000,000.00

10/1/2004                   5.36252388%            10/1/2004                       -         94,000,000.00

11/1/2004                   5.36252388%            11/1/2004                       -         94,000,000.00

12/1/2004                   5.36252388%            12/1/2004                       -         94,000,000.00

1/1/2005                    5.36252388%            1/1/2005                        -         94,000,000.00

2/1/2005                    5.36252388%            2/1/2005                        -         94,000,000.00

3/1/2005                    5.36252388%            3/1/2005                        -         94,000,000.00

4/1/2005                    5.36252388%            4/1/2005                        -         94,000,000.00

5/1/2005                    5.36252388%            5/1/2005                        -         94,000,000.00

6/1/2005                    5.36252388%            6/1/2005                        -         94,000,000.00

7/1/2005                    5.36252388%            7/1/2005                        -         94,000,000.00

8/1/2005                    5.36252388%            8/1/2005                        -         94,000,000.00

9/1/2005                    5.36252388%            9/1/2005                        -         94,000,000.00

10/1/2005                   5.36252388%            10/1/2005                       -         94,000,000.00

11/1/2005                   5.36252388%            11/1/2005                       -         94,000,000.00

12/1/2005                   5.36252388%            12/1/2005                       -         94,000,000.00

1/1/2006                    5.36252388%            1/1/2006                        -         94,000,000.00

2/1/2006                    5.36252388%            2/1/2006                        -         94,000,000.00

3/1/2006                    5.36252388%            3/1/2006                        -         94,000,000.00

4/1/2006                    5.36259782%            4/1/2006               213,211.54         93,786,788.46

5/1/2006                    5.36267862%            5/1/2006               231,887.50         93,554,900.95

                                       2

                                                                      MONTHLY AMOUNT
INTEREST PERIOD                                                    (SCHEDULED PRINCIPAL
 COMMENCING            STATED INTEREST RATE      PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
6/1/2006                    5.36275398%            6/1/2006               215,254.43         93,339,646.52

7/1/2006                    5.36283625%            7/1/2006               233,873.56         93,105,772.96

8/1/2006                    5.36291308%            8/1/2006               217,315.80         92,888,457.17

9/1/2006                    5.36299061%            9/1/2006               218,313.22         92,670,143.95

10/1/2006                   5.36307515%            10/1/2006              236,847.27         92,433,296.68

11/1/2006                   5.36315420%            11/1/2006              220,402.28         92,212,894.40

12/1/2006                   5.36324031%            12/1/2006              238,878.22         91,974,016.19

1/1/2007                    5.36332092%            1/1/2007               222,510.25         91,751,505.94

2/1/2007                    5.36340230%            2/1/2007               223,531.51         91,527,974.43

3/1/2007                    5.36350356%            3/1/2007               276,646.30         91,251,328.13

4/1/2007                    5.36358668%            4/1/2007               225,827.18         91,025,500.95

5/1/2007                    5.36367701%            5/1/2007               244,152.22         90,781,348.72

6/1/2007                    5.36376180%            6/1/2007               227,984.26         90,553,364.46

7/1/2007                    5.36385386%            7/1/2007               246,249.30         90,307,115.17

8/1/2007                    5.36394037%            8/1/2007               230,160.86         90,076,954.31

9/1/2007                    5.36402771%            9/1/2007               231,217.23         89,845,737.07

10/1/2007                   5.36412243%            10/1/2007              249,392.34         89,596,344.73

11/1/2007                   5.36421156%            11/1/2007              233,423.10         89,362,921.63

12/1/2007                   5.36430813%            12/1/2007              251,536.85         89,111,384.78

1/1/2008                    5.36439909%            1/1/2008               235,648.93         88,875,735.85

2/1/2008                    5.36449096%            2/1/2008               236,730.49         88,639,005.36

3/1/2008                    5.36459701%            3/1/2008               271,687.46         88,367,317.90

4/1/2008                    5.36469086%            4/1/2008               239,063.99         88,128,253.91

5/1/2008                    5.36479233%            5/1/2008               257,020.83         87,871,233.08

6/1/2008                    5.36488815%            6/1/2008               241,340.88         87,629,892.20

7/1/2008                    5.36499166%            7/1/2008               259,234.39         87,370,657.81

8/1/2008                    5.36508951%            8/1/2008               243,638.38         87,127,019.43

9/1/2008                    5.36518837%            9/1/2008               244,756.62         86,882,262.81

10/1/2008                   5.36529503%            10/1/2008              262,555.11         86,619,707.70

11/1/2008                   5.36539599%            11/1/2008              247,085.04         86,372,622.67

                                       3

                                                                      MONTHLY AMOUNT
INTEREST PERIOD                                                    (SCHEDULED PRINCIPAL
 COMMENCING            STATED INTEREST RATE      PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
12/1/2008                   5.36550485%            12/1/2008              264,818.76         86,107,803.91

1/1/2009                    5.36560800%            1/1/2009               249,434.53         85,858,369.38

2/1/2009                    5.36571223%            2/1/2009               250,579.37         85,607,790.01

3/1/2009                    5.36583831%            3/1/2009               301,188.75         85,306,601.26

4/1/2009                    5.36594497%            4/1/2009               253,111.83         85,053,489.43

5/1/2009                    5.36605972%            5/1/2009               270,677.91         84,782,811.52

6/1/2009                    5.36616873%            6/1/2009               255,515.88         84,527,295.64

7/1/2009                    5.36628593%            7/1/2009               273,015.09         84,254,280.55

8/1/2009                    5.36639736%            8/1/2009               257,941.69         83,996,338.86

9/1/2009                    5.36650999%            9/1/2009               259,125.57         83,737,213.29

10/1/2009                   5.36663096%            10/1/2009              276,524.37         83,460,688.93

11/1/2009                   5.36674613%            11/1/2009              261,584.05         83,199,104.87

12/1/2009                   5.36686973%            12/1/2009              278,914.47         82,920,190.40

1/1/2010                    5.36698752%            1/1/2010               264,064.79         82,656,125.61

2/1/2010                    5.36710661%            2/1/2010               265,276.78         82,390,848.83

3/1/2010                    5.36724880%            3/1/2010               314,524.76         82,076,324.07

4/1/2010                    5.36737080%            4/1/2010               267,937.91         81,808,386.17

5/1/2010                    5.36750149%            5/1/2010               285,091.57         81,523,294.59

6/1/2010                    5.36762632%            6/1/2010               270,476.16         81,252,818.44

7/1/2010                    5.36775996%            7/1/2010               287,559.22         80,965,259.21

8/1/2010                    5.36788773%            8/1/2010               273,037.38         80,692,221.83

9/1/2010                    5.36801695%            9/1/2010               274,290.55         80,417,931.28

10/1/2010                   5.36815515%            10/1/2010              291,267.51         80,126,663.77

11/1/2010                   5.36828746%            11/1/2010              276,886.30         79,849,777.46

12/1/2010                   5.36842885%            12/1/2010              293,791.06         79,555,986.40

1/1/2011                    5.36856434%            1/1/2011               279,505.55         79,276,480.85

2/1/2011                    5.36870141%            2/1/2011               280,788.41         78,995,692.44

3/1/2011                    5.36886307%            3/1/2011               328,599.57         78,667,092.87

4/1/2011                    5.36900367%            4/1/2011               283,585.33         78,383,507.54

                                       4

                                                                      MONTHLY AMOUNT
INTEREST PERIOD                                                    (SCHEDULED PRINCIPAL
 COMMENCING            STATED INTEREST RATE      PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
5/1/2011                    5.36915368%            5/1/2011               300,303.74         78,083,203.79

6/1/2011                    5.36929775%            6/1/2011               286,265.22         77,796,938.58

7/1/2011                    5.36945136%            7/1/2011               302,909.09         77,494,029.49

8/1/2011                    5.36959902%            8/1/2011               288,969.36         77,205,060.12

9/1/2011                    5.36974848%            9/1/2011               290,295.65         76,914,764.47

10/1/2011                   5.36990768%            10/1/2011              306,827.41         76,607,937.06

11/1/2011                   5.37006092%            11/1/2011              293,036.28         76,314,900.78

12/1/2011                   5.37022404%            12/1/2011              309,491.81         76,005,408.97

1/1/2012                    5.37038120%            1/1/2012               295,801.72         75,709,607.25

2/1/2012                    5.37054032%            2/1/2012               297,159.37         75,412,447.89

3/1/2012                    5.37071768%            3/1/2012               328,477.16         75,083,970.73

4/1/2012                    5.37088103%            4/1/2012               300,030.86         74,783,939.87

5/1/2012                    5.37105467%            5/1/2012               316,291.82         74,467,648.04

6/1/2012                    5.37122232%            6/1/2012               302,859.61         74,164,788.43

7/1/2012                    5.37140042%            7/1/2012               319,041.89         73,845,746.54

8/1/2012                    5.37157253%            8/1/2012               305,713.97         73,540,032.57

9/1/2012                    5.37174687%            9/1/2012               307,117.11         73,232,915.46

10/1/2012                   5.37193192%            10/1/2012              323,180.96         72,909,734.50

11/1/2012                   5.37211097%            11/1/2012              310,010.00         72,599,724.50

12/1/2012                   5.37230091%            12/1/2012              325,993.38         72,273,731.11

1/1/2013                    5.37248486%            1/1/2013               312,929.08         71,960,802.03

2/1/2013                    5.37267128%            2/1/2013               314,365.34         71,646,436.69

3/1/2013                    5.37288621%            3/1/2013               359,066.32         71,287,370.37

4/1/2013                    5.37307804%            4/1/2013               317,456.21         70,969,914.16

5/1/2013                    5.37328126%            5/1/2013               333,232.45         70,636,681.71

6/1/2013                    5.37347850%            6/1/2013               320,442.69         70,316,239.02

7/1/2013                    5.37368734%            7/1/2013               336,135.86         69,980,103.16

8/1/2013                    5.37389021%            8/1/2013               323,456.20         69,656,646.96

9/1/2013                    5.37409591%            9/1/2013               324,940.77         69,331,706.19

10/1/2013                   5.37431355%            10/1/2013              340,508.83         68,991,197.36

                                       5

                                                                      MONTHLY AMOUNT
INTEREST PERIOD                                                    (SCHEDULED PRINCIPAL
 COMMENCING            STATED INTEREST RATE      PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
11/1/2013                   5.37452523%            11/1/2013              327,995.00         68,663,202.36

12/1/2013                   5.37474908%            12/1/2013              343,478.10         68,319,724.26

1/1/2014                    5.37496699%            1/1/2014               331,076.88         67,988,647.38

2/1/2014                    5.37518805%            2/1/2014               332,596.43         67,656,050.96

3/1/2014                    5.33000000%            3/1/2014               375,608.69         67,280,442.27

4/1/2014                    5.33000000%            4/1/2014               335,846.89         66,944,595.38

5/1/2014                    5.33000000%            5/1/2014               351,111.58         66,593,483.80

6/1/2014                    5.33000000%            6/1/2014               338,999.84         66,254,483.96

7/1/2014                    5.33000000%            7/1/2014               354,176.82         65,900,307.13

8/1/2014                    5.33000000%            8/1/2014               342,181.33         65,558,125.80

9/1/2014                    5.33000000%            9/1/2014               343,751.85         65,214,373.96

10/1/2014                   5.33000000%            10/1/2014              358,796.65         64,855,577.31

11/1/2014                   5.33000000%            11/1/2014              346,976.35         64,508,600.96

12/1/2014                   5.33000000%            12/1/2014              361,931.45         64,146,669.51

1/1/2015                    5.33000000%            1/1/2015               350,230.04         63,796,439.47

2/1/2015                    5.33000000%            2/1/2015               351,837.50         63,444,601.97

3/1/2015                    5.33000000%            3/1/2015               393,067.48         63,051,534.49

4/1/2015                    5.33000000%            4/1/2015               355,256.40         62,696,278.09

5/1/2015                    5.33000000%            5/1/2015               369,981.19         62,326,296.90

6/1/2015                    5.33000000%            6/1/2015               358,585.04         61,967,711.85

7/1/2015                    5.33000000%            7/1/2015               373,217.24         61,594,494.62

8/1/2015                    5.33000000%            8/1/2015               361,943.81         61,232,550.80

9/1/2015                    5.33000000%            9/1/2015               363,605.03         60,868,945.77

10/1/2015                   5.33000000%            10/1/2015              378,097.59         60,490,848.18

11/1/2015                   5.33000000%            11/1/2015              367,009.24         60,123,838.94

12/1/2015                   5.33000000%            12/1/2015              381,407.11         59,742,431.83

1/1/2016                    5.33000000%            1/1/2016               370,444.27         59,371,987.57

2/1/2016                    5.33000000%            2/1/2016               372,144.50         58,999,843.06

3/1/2016                    5.33000000%            3/1/2016               398,946.50         58,600,896.56

                                       6

                                                                      MONTHLY AMOUNT
INTEREST PERIOD                                                    (SCHEDULED PRINCIPAL
 COMMENCING            STATED INTEREST RATE      PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
4/1/2016                    5.33000000%            4/1/2016               375,683.60         58,225,212.97

5/1/2016                    5.33000000%            5/1/2016               389,840.17         57,835,372.80

6/1/2016                    5.33000000%            6/1/2016               379,197.14         57,456,175.66

7/1/2016                    5.33000000%            7/1/2016               393,255.98         57,062,919.68

8/1/2016                    5.33000000%            8/1/2016               382,742.48         56,680,177.20

9/1/2016                    5.33000000%            9/1/2016               384,499.16         56,295,678.04

10/1/2016                   5.33000000%            10/1/2016              398,410.52         55,897,267.52

11/1/2016                   5.33000000%            11/1/2016              388,092.50         55,509,175.01

12/1/2016                   5.33000000%            12/1/2016              401,903.90         55,107,271.11

1/1/2017                    5.33000000%            1/1/2017               391,718.37         54,715,552.74

2/1/2017                    5.33000000%            2/1/2017               393,516.25         54,322,036.50

3/1/2017                    5.33000000%            3/1/2017               430,885.58         53,891,150.91

4/1/2017                    5.33000000%            4/1/2017               397,300.02         53,493,850.89

5/1/2017                    5.33000000%            5/1/2017               410,855.30         53,082,995.59

6/1/2017                    5.33000000%            6/1/2017               401,009.23         52,681,986.36

7/1/2017                    5.33000000%            7/1/2017               414,461.33         52,267,525.03

8/1/2017                    5.33000000%            8/1/2017               404,752.01         51,862,773.02

9/1/2017                    5.33000000%            9/1/2017               406,609.71         51,456,163.30

10/1/2017                   5.33000000%            10/1/2017              419,906.03         51,036,257.27

11/1/2017                   5.33000000%            11/1/2017              410,403.19         50,625,854.08

12/1/2017                   5.33000000%            12/1/2017              423,593.99         50,202,260.10

1/1/2018                    5.33000000%            1/1/2018               414,231.00         49,788,029.09

2/1/2018                    5.33000000%            2/1/2018               416,132.21         49,371,896.88

3/1/2018                    5.33000000%            3/1/2018               451,406.66         48,920,490.22

4/1/2018                    5.33000000%            4/1/2018               420,113.97         48,500,376.25

5/1/2018                    5.33000000%            5/1/2018               433,034.65         48,067,341.59

6/1/2018                    5.33000000%            6/1/2018               424,029.69         47,643,311.91

7/1/2018                    5.33000000%            7/1/2018               436,841.45         47,206,470.46

8/1/2018                    5.33000000%            8/1/2018               427,980.85         46,778,489.61

9/1/2018                    5.33000000%            9/1/2018               429,945.16         46,348,544.45

                                       7

                                                                      MONTHLY AMOUNT
INTEREST PERIOD                                                    (SCHEDULED PRINCIPAL
 COMMENCING            STATED INTEREST RATE      PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
10/1/2018                   5.33000000%            10/1/2018              442,592.37         45,905,952.08

11/1/2018                   5.33000000%            11/1/2018              433,949.87         45,472,002.22

12/1/2018                   5.33000000%            12/1/2018              446,485.68         45,025,516.54

1/1/2019                    5.33000000%            1/1/2019               437,990.82         44,587,525.72

2/1/2019                    5.33000000%            2/1/2019               440,001.08         44,147,524.64

3/1/2019                    5.33000000%            3/1/2019               473,064.59         43,674,460.05

4/1/2019                    5.33000000%            4/1/2019               444,191.79         43,230,268.26

5/1/2019                    5.33000000%            5/1/2019               456,442.72         42,773,825.54

6/1/2019                    5.33000000%            6/1/2019               448,325.46         42,325,500.09

7/1/2019                    5.33000000%            7/1/2019               460,461.39         41,865,038.69

8/1/2019                    5.33000000%            8/1/2019               452,496.54         41,412,542.16

9/1/2019                    5.33000000%            9/1/2019               454,573.37         40,957,968.79

10/1/2019                   5.33000000%            10/1/2019              466,535.51         40,491,433.28

11/1/2019                   5.33000000%            11/1/2019              458,801.00         40,032,632.28

12/1/2019                   5.33000000%            12/1/2019              470,645.55         39,561,986.73

1/1/2020                    5.33000000%            1/1/2020               463,066.90         39,098,919.82

2/1/2020                    5.33000000%            2/1/2020               465,192.25         38,633,727.57

3/1/2020                    5.33000000%            3/1/2020               486,390.68         38,147,336.89

4/1/2020                    5.33000000%            4/1/2020               469,559.75         37,677,777.14

5/1/2020                    5.33000000%            5/1/2020               481,105.03         37,196,672.11

6/1/2020                    5.33000000%            6/1/2020               473,923.04         36,722,749.07

7/1/2020                    5.33000000%            7/1/2020               485,346.95         36,237,402.12

8/1/2020                    5.33000000%            8/1/2020               478,325.82         35,759,076.30

9/1/2020                    5.33000000%            9/1/2020               480,521.21         35,278,555.09

10/1/2020                   5.33000000%            10/1/2020              491,761.57         34,786,793.52

11/1/2020                   5.33000000%            11/1/2020              484,983.71         34,301,809.80

12/1/2020                   5.33000000%            12/1/2020              496,099.95         33,805,709.85

1/1/2021                    5.33000000%            1/1/2021               489,486.62         33,316,223.24

2/1/2021                    5.33000000%            2/1/2021               491,733.22         32,824,490.01

                                       8

                                                                      MONTHLY AMOUNT
INTEREST PERIOD                                                    (SCHEDULED PRINCIPAL
 COMMENCING            STATED INTEREST RATE      PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
3/1/2021                    5.33000000%            3/1/2021               520,004.86         32,304,485.16

4/1/2021                    5.33000000%            4/1/2021               496,376.82         31,808,108.34

5/1/2021                    5.33000000%            5/1/2021               507,176.14         31,300,932.19

6/1/2021                    5.33000000%            6/1/2021               500,982.85         30,799,949.34

7/1/2021                    5.33000000%            7/1/2021               511,654.05         30,288,295.29

8/1/2021                    5.33000000%            8/1/2021               505,630.57         29,782,664.72

9/1/2021                    5.33000000%            9/1/2021               507,951.28         29,274,713.45

10/1/2021                   5.33000000%            10/1/2021              518,428.64         28,756,284.81

11/1/2021                   5.33000000%            11/1/2021              512,662.07         28,243,622.74

12/1/2021                   5.33000000%            12/1/2021              523,008.40         27,720,614.34

1/1/2022                    5.33000000%            1/1/2022               517,415.51         27,203,198.82

2/1/2022                    5.33000000%            2/1/2022               519,790.31         26,683,408.52

3/1/2022                    5.33000000%            3/1/2022               545,463.05         26,137,945.46

4/1/2022                    5.33000000%            4/1/2022               524,679.52         25,613,265.94

5/1/2022                    5.33000000%            5/1/2022               534,691.57         25,078,574.37

6/1/2022                    5.33000000%            6/1/2022               529,541.74         24,549,032.63

7/1/2022                    5.33000000%            7/1/2022               539,418.54         24,009,614.09

8/1/2022                    5.33000000%            8/1/2022               534,447.97         23,475,166.12

9/1/2022                    5.33000000%            9/1/2022               536,900.94         22,938,265.18

10/1/2022                   5.33000000%            10/1/2022              546,573.03         22,391,692.15

11/1/2022                   5.33000000%            11/1/2022              541,873.79         21,849,818.36

12/1/2022                   5.33000000%            12/1/2022              551,407.55         21,298,410.81

1/1/2023                    5.33000000%            1/1/2023               546,891.64         20,751,519.17

2/1/2023                    5.33000000%            2/1/2023               549,401.72         20,202,117.45

3/1/2023                    5.33000000%            3/1/2023               572,331.60         19,629,785.84

4/1/2023                    5.33000000%            4/1/2023               554,550.17         19,075,235.67

5/1/2023                    5.33000000%            5/1/2023               563,731.32         18,511,504.35

6/1/2023                    5.33000000%            6/1/2023               559,682.77         17,951,821.58

7/1/2023                    5.33000000%            7/1/2023               568,721.15         17,383,100.43

8/1/2023                    5.33000000%            8/1/2023               564,861.83         16,818,238.60

                                       9

                                                                      MONTHLY AMOUNT
INTEREST PERIOD                                                    (SCHEDULED PRINCIPAL
 COMMENCING            STATED INTEREST RATE      PAYMENT DATE         AMORTIZATION)          ENDING BALANCE
                                                                                 
9/1/2023                    5.33000000%            9/1/2023               567,454.39         16,250,784.21

10/1/2023                   5.33000000%            10/1/2023              576,276.59         15,674,507.62

11/1/2023                   5.33000000%            11/1/2023              572,703.80         15,101,803.83

12/1/2023                   5.33000000%            12/1/2023              581,379.98         14,520,423.85

1/1/2024                    5.33000000%            1/1/2024               578,000.72         13,942,423.13

2/1/2024                    5.33000000%            2/1/2024               580,653.58         13,361,769.54

3/1/2024                    5.33000000%            3/1/2024               594,898.64         12,766,870.90

4/1/2024                    5.33000000%            4/1/2024               586,049.04         12,180,821.86

5/1/2024                    5.33000000%            5/1/2024               594,354.01         11,586,467.85

6/1/2024                    5.33000000%            6/1/2024               591,466.76         10,995,001.09

7/1/2024                    5.33000000%            7/1/2024               599,621.03         10,395,380.06

8/1/2024                    5.33000000%            8/1/2024               596,933.53          9,798,446.54

9/1/2024                    5.33000000%            9/1/2024               599,673.29          9,198,773.25

10/1/2024                   5.33000000%            10/1/2024              607,599.27          8,591,173.98

11/1/2024                   5.33000000%            11/1/2024              605,214.33          7,985,959.65

12/1/2024                   5.33000000%            12/1/2024              612,986.19          7,372,973.46

1/1/2025                    5.33000000%            1/1/2025               610,805.53          6,762,167.93

2/1/2025                    5.33000000%            2/1/2025               613,608.96          6,148,558.97

3/1/2025                    5.33000000%            3/1/2025               630,591.41          5,517,967.56

4/1/2025                    5.33000000%            4/1/2025               619,319.50          4,898,648.06

5/1/2025                    5.33000000%            5/1/2025               626,698.99          4,271,949.07

6/1/2025                    5.33000000%            6/1/2025               625,038.37          3,646,910.69

7/1/2025                    5.33000000%            7/1/2025               632,258.80          3,014,651.90

8/1/2025                    5.33000000%            8/1/2025               630,809.02          2,383,842.88

9/1/2025                    5.33000000%            9/1/2025               633,704.26          1,750,138.62

10/1/2025                   5.33000000%            10/1/2025              640,683.62          1,109,455.00

11/1/2025                   5.33000000%            11/1/2025              639,553.34            469,901.65

12/1/2025                   0.00000000%            12/1/2025              469,901.65                     -

1/1/2026 and thereafter     0.00000000%            1/1/2026                        -                     -

                                       10

                                       11

                                                                   Exhibit 10.31

                               PROMISSORY NOTE A-X

New York, New York
$86,000,000 (initial and maximum notional amount)              February 13, 2004

         PROMISSORY NOTE A-X, dated as of February 13, 2004 (this NOTE), by 731
OFFICE ONE LLC, a Delaware limited liability company (BORROWER), having an
address for notice purposes c/o Alexander's Inc., 888 Seventh Avenue, New York,
New York 10019, in favor of GERMAN AMERICAN CAPITAL CORPORATION, a Maryland
corporation (together with its successors and assigns, LENDER), having an office
at 60 Wall Street, New York, New York 10005.

         WHEREAS, Lender made a loan to Borrower in the original principal
amount of $400,000,000 (the LOAN);

         WHEREAS, Lender is the present owner and holder of that certain
Consolidated Amended and Restated Note, dated as of February 13, 2004, made by
Borrower in favor of Lender (the EXISTING NOTE), which Existing Note evidences
an indebtedness of Borrower to Lender in the original and current outstanding
principal amount of $400,000,000 (the EXISTING DEBT);

         WHEREAS, pursuant to the Loan Agreement (as hereinafter defined),
Borrower and Lender desire to sever the Existing Note into six (6) newly issued
substitute promissory notes in an aggregate principal amount equal to the
Existing Debt;

         WHEREAS, from and after the date hereof, the Existing Note shall be
amended, restated and superseded and the Loan shall be evidenced by (i) this
Promissory Note A-X, in the notional principal amount of $86,000,000; (ii) that
certain Promissory Note A-1, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $90,000,000 (NOTE A-1); (iii) that
certain Promissory Note A-2, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $95,000,000 (NOTE A-2); (iv) that
certain Promissory Note A-3, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $35,000,000 (NOTE A-3); (v) that
certain Promissory Note A-4, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $94,000,000 (NOTE A-4); and (vi)
that certain Promissory Note B, dated as of the date hereof, made by Borrower in
favor of Lender, in the principal amount of $86,000,000 (NOTE B); and

         WHEREAS, Lender and Borrower intend these Recitals to be a material
part of this Note.

         NOW, THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the
order of Lender the interest and other fees, expenses and charges provided in
this Note.

1.       DEFINED TERMS.

         a.       Capitalized terms used but not otherwise defined herein shall
                  have the respective meanings given thereto in the Loan
                  Agreement (as defined below), unless otherwise expressly
                  provided herein. All references to sections shall be deemed to
                  be references to sections of this Note, unless otherwise
                  indicated.

         b.       The following terms shall have the meaning ascribed thereto:

         ANTICIPATED REPAYMENT DATE shall mean March 1, 2014.

         BORROWER shall have the meaning provided in the first paragraph hereof.

         EXISTING DEBT shall have the meaning provided in the Recitals to this
         Note.

         EXISTING NOTE shall have the meaning provided in the Recitals to this
         Note.

         INTEREST PERIOD shall have the meaning provided in Section 2.

         LENDER shall have the meaning provided in the first paragraph hereof.

         LOAN shall have the meaning provided in the Recitals to this Note.

         LOAN AGREEMENT shall mean the Loan and Security Agreement, dated the
         date hereof, between Borrower and Lender.

         MATURITY DATE shall mean March 1, 2029, or such earlier date on which
         the final payment of principal of Note B becomes due and payable as
         provided in the Loan Agreement or Note B, whether at such stated
         maturity date, by declaration of acceleration, or otherwise.

         MATURITY DATE PAYMENT shall have the meaning set forth in Section 3(e).

         MONTHLY AMOUNTS shall have the meaning provided in Section 3(a).

         NOTE shall have the meaning provided in the first paragraph hereof.

         NOTE A-1 shall have the meaning provided in the Recitals to this Note.

         NOTE A-2 shall have the meaning provided in the Recitals to this Note.

         NOTE A-3 shall have the meaning provided in the Recitals to this Note.

         NOTE A-4 shall have the meaning provided in the Recitals to this Note.

         NOTE B shall have the meaning provided in the Recitals to this Note.

                                       2

         PAYMENT DATE shall be the first (1st) calendar day of each calendar
         month, whether or not such day is a Business Day, commencing on April
         1, 2014 and continuing to and including the Maturity Date.

         NOTIONAL AMOUNT shall mean $86,000,000 or so much of the aggregate
         principal amount that is outstanding under Note B from time to time.

         STATED INTEREST RATE shall mean the rate of 00.11875% per annum.

2.       INTEREST.

         a.       From and after the Anticipated Repayment Date, interest shall
                  accrue on the Notional Amount at the Stated Interest Rate.

         b.       Interest on the Notional Amount shall be calculated based on
                  the Stated Interest Rate on the basis of a fraction, the
                  denominator of which shall be 360 and the numerator of which
                  shall be the actual number of days in the relevant Interest
                  Period, except that interest due and payable for a period less
                  than a full month shall be calculated by multiplying the
                  actual number of days elapsed in such period by a daily rate
                  based on said 360 day year. Interest shall accrue from, and
                  including, the first (1st) day of the prior month and ending
                  on the last day of the prior month (an INTEREST PERIOD); in
                  each case without adjustment for any Business Day convention;
                  provided that the first accrual period shall commence on the
                  Anticipated Repayment Date.

         c.       The provisions of this Section 2 are subject in all events to
                  the provisions of Section 2.2.4 of the Loan Agreement.

3.       PAYMENTS.

         a.       Commencing on April 1, 2014 and on each and every Payment Date
                  thereafter until the Maturity Date, Borrower shall pay to
                  Lender interest accruing hereunder for the entire Interest
                  Period immediately preceding the month in which said Payment
                  Date occurs. There shall be no required payments of principal
                  under this Note.

         b.       All payments made by Borrower hereunder or under any of the
                  Loan Documents shall be made on or before 2:00 p.m. New York
                  City time or such later time as Lender or its servicer shall
                  apply amounts on deposit in the Holding Account in accordance
                  the terms of the Loan Documents. Any payments received after
                  such time shall be credited to the next following Business
                  Day.

         c.       All amounts advanced by Lender pursuant to the Loan Documents,
                  other than the principal amount of the Loan, or other charges
                  provided in the Loan Documents, shall be due and payable as
                  provided in the Loan Documents. In the event any such advance
                  or charge is not so repaid by

                                       3

                  Borrower, Lender may, at its option, first apply any payments
                  received under this Note to repay such advances, together with
                  any interest thereon, or other charges as provided in the Loan
                  Documents, and the balance, if any, shall be applied in
                  payment of any installment of interest or principal then due
                  and payable.

         d.       All unpaid accrued interest, all interest that would accrue on
                  the Notional Amount through the end of the Interest Period
                  during which the Maturity Date occurs and all other fees and
                  sums then payable hereunder or under the Loan Documents
                  (collectively, the MATURITY DATE PAYMENT), shall be due and
                  payable in full on the Maturity Date.

         e.       Amounts due on this Note shall be payable, without any
                  counterclaim, setoff or deduction whatsoever, at the office of
                  Lender or its agent or designee at the address set forth on
                  the first page of this Note or at such other place as Lender
                  or its agent or designee may from time to time designate in
                  writing.

         f.       All amounts due under this Note shall be due and payable in
                  lawful money of the United States.

         g.       To the extent that Borrower makes a payment or Lender receives
                  any payment or proceeds for Borrower's benefit, which are
                  subsequently invalidated, declared to be fraudulent or
                  preferential, set aside or required to be repaid to a trustee,
                  debtor in possession, receiver, custodian or any other party
                  under any bankruptcy law, common law or equitable cause, then,
                  to such extent, the obligations of Borrower hereunder intended
                  to be satisfied shall be revived and continue as if such
                  payment or proceeds had not been received by Lender.

4.       MISCELLANEOUS.

         A.       WAIVER. Borrower and all endorsers, sureties and guarantors
                  hereby jointly and severally waive all applicable exemption
                  rights, valuation and appraisement, presentment for payment,
                  demand, notice of demand, notice of nonpayment or dishonor,
                  protest and notice of protest of this Note, and, except as
                  otherwise expressly provided in the Loan Documents, all other
                  notices in connection with the delivery, acceptance,
                  performance, default or enforcement of the payment of this
                  Note. Borrower consents to any and all extensions of time,
                  renewals, waivers or modifications that may be granted by
                  Lender with respect to the payment or other provisions of this
                  Note and to the release of the collateral securing this Note
                  or any part thereof, with or without substitution, and agrees
                  that additional makers may become parties hereto without
                  notice to them or affecting their liability under this Note.

                                       4

         B.       NON-RECOURSE. Recourse with respect to any claims arising
                  under or in connection with this Note shall be limited to the
                  extent provided in Article XVIII of the Loan Agreement and the
                  terms, covenants and conditions of Article XVIII of the Loan
                  Agreement are hereby incorporated by reference as if fully set
                  forth in this Note.

         C.       NOTE SECURED. This Note and all obligations of Borrower
                  hereunder are secured by the Loan Agreement, the Security
                  Instrument and the other Loan Documents.

         D.       NOTICES. Any notice, election, request or demand which by any
                  provision of this Note is required or permitted to be given or
                  served hereunder shall be given or served in the manner
                  required for the delivery of notices pursuant to the Loan
                  Agreement.

         E.       ENTIRE AGREEMENT. This Note, together with the other Loan
                  Documents, constitutes the entire and final agreement between
                  Borrower and Lender with respect to the subject matter hereof
                  and thereof and may only be changed, amended, modified or
                  waived by an instrument in writing signed by Borrower and
                  Lender.

         F.       NO WAIVER. No waiver of any term or condition of this Note,
                  whether by delay, omission or otherwise, shall be effective
                  unless in writing and signed by the party sought to be
                  charged, and then such waiver shall be effective only in the
                  specific instance and for the purpose for which given. No
                  notice to, or demand on, Borrower shall entitle Borrower to
                  any other or future notice or demand in the same, similar or
                  other circumstances.

         G.       SUCCESSORS AND ASSIGNS. This Note shall be binding upon and
                  inure to the benefit of Borrower and Lender and their
                  respective successors and permitted assigns. Upon any
                  endorsement, assignment, or other transfer of this Note by
                  Lender or by operation of law, the term "Lender" as used
                  herein, shall mean such endorsee, assignee, or other
                  transferee or successor to Lender then becoming the holder of
                  this Note. The term "Borrower" as used herein shall include
                  the respective successors and assigns, legal and personal
                  representatives, executors, administrators, devisees, legatees
                  and heirs of Borrower, if any.

         H.       CAPTIONS. All paragraph, section, exhibit and schedule
                  headings and captions herein are used for reference only and
                  in no way limit or describe the scope or intent of, or in any
                  way affect, this Note.

         I.       COUNTERPARTS. This Note may be executed in counterparts, each
                  of which shall be an original and all of which, when taken
                  together, shall constitute one binding Note.

         J.       SEVERABILITY. The provisions of this Note are severable, and
                  if any one clause or provision hereof shall be held invalid or
                  unenforceable in whole

                                       5

                  or in part, then such invalidity or unenforceability shall
                  affect only such clause or provision, or part thereof, and not
                  any other clause or provision of this Note.

         K.       GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
                  IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
                  TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW,
                  WITHOUT REGARD TO CHOICE OF LAW RULES. BORROWER AGREES THAT
                  ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OTHER LOAN
                  DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW
                  YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
                  NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
                  PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER IN THE
                  MANNER AND AT THE ADDRESS SPECIFIED FOR NOTICES IN THE LOAN
                  AGREEMENT. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY
                  NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
                  SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
                  COURT.

         L.       JURY TRIAL WAIVER. BORROWER, LENDER AND ALL PERSONS CLAIMING
                  BY, THROUGH OR UNDER BORROWER OR LENDER, HEREBY EXPRESSLY,
                  KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO
                  TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
                  (I) ARISING UNDER THIS NOTE, INCLUDING, WITHOUT LIMITATION,
                  ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY
                  CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
                  PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS NOTE (AS
                  NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT
                  OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR
                  THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
                  WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW
                  EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
                  CONTRACT OR TORT OR OTHERWISE; AND BORROWER AND LENDER HEREBY
                  AGREE AND CONSENT THAT AN ORIGINAL COUNTERPART OR A COPY OF
                  THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE
                  OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY
                  JURY. EACH OF BORROWER AND LENDER ACKNOWLEDGES THAT IT HAS
                  CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS
                  WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL
                  INDUCEMENT FOR THE MAKING OF

                                       6

                  THE LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.

         M.       COUNTERCLAIMS AND OTHER ACTIONS. Borrower hereby expressly and
                  unconditionally waives, in connection with any suit, action or
                  proceeding brought by Lender on this Note, any and every right
                  it may have to (i) interpose any counterclaim therein (other
                  than a mandatory or compulsory counterclaim which can only be
                  asserted in the suit, action or proceeding brought by Lender
                  on this Note and cannot be maintained in a separate action)
                  and (ii) have any such suit, action or proceeding consolidated
                  with any other or separate suit, action or proceeding.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       7

         IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered as of the day and year first above written.

                                         BORROWER:

                                         731 OFFICE ONE LLC, a Delaware limited
                                         liability company

                                         By:  731 OFFICE ONE HOLDING LLC, a
                                              Delaware limited liability
                                              company, its sole member

                                              By:  ALEXANDER'S INC., a
                                                   Delaware corporation, its
                                                   sole member

                                              By:  /s/      Brian Kurtz
                                                   --------------------------
                                                   Name:   Brian Kurtz
                                                   Title:  Assistant Secretary

                                PROMISSORY NOTE B

New York, New York
$86,000,000.00                                                 February 13, 2004

         PROMISSORY NOTE B, dated as of February 13, 2004 (this NOTE), by 731
Office One LLC, a Delaware limited liability company (BORROWER), having an
address for notice purposes c/o Alexander's Inc., 888 Seventh Avenue, New York,
New York 10019, in favor of GERMAN AMERICAN CAPITAL CORPORATION, a Maryland
corporation (together with its successors and assigns, LENDER), having an office
at 60 Wall Street, New York, New York 10005.

         WHEREAS, Lender made a loan to Borrower in the original principal
amount of $400,000,000 (the LOAN);

         WHEREAS, Lender is the present owner and holder of that certain
Consolidated Amended and Restated Note, dated as of February 13, 2004, made by
Borrower in favor of Lender (the EXISTING NOTE), which Existing Note evidences
an indebtedness of Borrower to Lender in the original and current outstanding
principal amount of $400,000,000 (the EXISTING DEBT);

         WHEREAS, pursuant to the Loan Agreement (as hereinafter defined),
Borrower and Lender desire to sever the Existing Note into six (6) newly issued
substitute promissory notes in an aggregate principal amount equal to the
Existing Debt;

         WHEREAS, from and after the date hereof, the Existing Note shall be
amended, restated and superseded and the Loan shall be evidenced by (i) that
certain Promissory Note A-1, in the principal amount of $90,000,000 (NOTE A-1);
(ii) that certain Promissory Note A-2, dated as of the date hereof, made by
Borrower in favor of Lender, in the principal amount of $95,000,000 (NOTE A-2);
(iii) that certain Promissory Note A-3, dated as of the date hereof, made by
Borrower in favor of Lender, in the principal amount of $35,000,000 (NOTE A-3);
(iv) that certain Promissory Note A-4, dated as of the date hereof, made by
Borrower in favor of Lender, in the principal amount of $94,000,000 (NOTE A-4);
(v) that certain Promissory Note A-X, dated as of the date hereof, made by
Borrower in favor of Lender, in the notional principal amount of $86,000,000
(NOTE A-X); and (vi) this Promissory Note B, dated as of the date hereof, made
by Borrower in favor of Lender, in the principal amount of $86,000,000;

         WHEREAS, this Note, individually, evidences a portion of the Loan in
the principal amount of EIGHTY-SIX MILLION DOLLARS ($86,000,000); and

         WHEREAS, Lender and Borrower intend these Recitals to be a material
part of this Note.

         NOW, THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the
order of Lender the Principal Amount, together with interest from the date
hereof, and other fees, expenses and charges as provided in this Note.

1.       DEFINED TERMS.

         a.       Capitalized terms used but not otherwise defined herein shall
                  have the respective meanings given thereto in the Loan
                  Agreement (as defined below), unless otherwise expressly
                  provided herein. All references to sections shall be deemed to
                  be references to sections of this Note, unless otherwise
                  indicated.

         b.       The following terms shall have the meaning ascribed thereto:

         ADDITIONAL INTEREST STRIP shall mean, with respect to each Interest
         Period from and after the Anticipated Repayment Date, the excess of
         interest accrued at the Revised Interest Rate over interest accrued at
         the Stated Interest Rate (but shall not include the Post ARD Default
         Interest Strip).

         ANTICIPATED REPAYMENT DATE shall mean March 1, 2014.

         APPLICABLE INTEREST RATE shall mean (i) from the date hereof through
         and including the Anticipated Repayment Date, the Stated Interest Rate,
         and (ii) from the day after the Anticipated Repayment Date through and
         including the Maturity Date, the Revised Interest Rate.

         B NOTE PROPORTIONATE SHARE shall mean, with respect to any date of
         determination, a fraction, expressed as a percentage, the numerator of
         which is the Principal Amount of this Note and the denominator of which
         is the outstanding aggregate principal amount of the Mortgage Notes.

         BORROWER shall have the meaning provided in the first paragraph hereof.

         DEFAULT RATE shall mean a rate per annum equal to the lesser of (a) the
         Maximum Legal Rate and (b) five percent (5%) above the Applicable
         Interest Rate.

         DEFEASANCE LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on the earlier to occur of (i) two years after the
         "startup day," within the meaning of Section 860G(a)(9) of the Internal
         Revenue Code of 1986, as amended from time to time or any successor
         statute (the "Code"), of a "real estate mortgage investment conduit,"
         ("REMIC") within the meaning of Section 860D of the Code, with respect
         to the last portion of the debt evidenced by the Mortgage Notes and the
         Security Instrument and (ii) four (4) years from the date hereof.

         DEFERRED INTEREST shall mean the Additional Interest Strip and the Post
         ARD Default Interest Strip, collectively.

                                       2

         EXISTING DEBT shall have the meaning provided in the Recitals to this
         Note.

         EXISTING NOTE shall have the meaning provided in the Recitals to this
         Note.

         INTEREST PERIOD shall have the meaning provided in Section 2.

         LENDER shall have the meaning provided in the first paragraph hereof.

         LIQUIDATED DAMAGES AMOUNT shall have the meaning set forth in Section
         4(e).

         LOAN shall have the meaning provided in the Recitals to this Note.

         LOAN AGREEMENT shall mean the Loan and Security Agreement, dated the
         date hereof, between Borrower and Lender.

         MATURITY DATE shall mean March 1, 2029, or such earlier date on which
         the final payment of principal of this Note becomes due and payable as
         provided in the Loan Agreement or this Note, whether at such stated
         maturity date, by declaration of acceleration, or otherwise.

         MATURITY DATE PAYMENT shall have the meaning set forth in Section 3(e).

         MONTHLY AMOUNT shall have the meaning provided in Section 3(a).

         MORTGAGE NOTES shall mean, collectively, this Note, Note A-1, Note A-2,
         Note A-3, Note A-4, Note A-X and any amendments, restatements or
         replacements of any thereof.

         NOTE shall have the meaning provided in the first paragraph hereof.

         NOTE A-X shall have the meaning provided in the Recitals to this Note.

         NOTE A-1 shall have the meaning provided in the Recitals to this Note.

         NOTE A-2 shall have the meaning provided in the Recitals to this Note.

         NOTE A-3 shall have the meaning provided in the Recitals to this Note.

         NOTE A-4 shall have the meaning provided in the Recitals to this Note.

         PAYMENT DATE shall be the first (1st) calendar day of each calendar
         month, whether or not such day is a Business Day, commencing on April
         1, 2004 and continuing to and including the Maturity Date.

         POST ARD DEFAULT INTEREST STRIP shall mean, with respect to each
         Interest Period from and after the Anticipated Repayment Date, default
         interest accrued at a rate equal to the lesser of (x) 5.0% and (y) the
         amount by which the Maximum Legal Rate exceeds the Applicable Interest
         Rate.

                                       3

         PREPAYMENT DATE shall have the meaning provided in Section 4(a)(i).

         PREPAYMENT LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on December 1, 2013.

         PREPAYMENT NOTICE shall have the meaning provided in Section 4(a)(i).

         PRINCIPAL AMOUNT shall mean $86,000,000 or so much of the aggregate
         principal amount that is outstanding under this Note from time to time.

         REVISED INTEREST RATE shall mean, with respect to each Interest Period,
         a rate per annum equal to two percent (2%) above the Stated Interest
         Rate applicable to such Interest Period.

         STATED INTEREST RATE shall mean, with respect to each Interest Period,
         the rate of interest set forth on EXHIBIT A hereto for such Interest
         Period.

         TREASURY RATE shall mean, as of any Payment Date, the yield, calculated
         by linear interpolation (rounded to the nearest one-thousandth of one
         percent) of the yields of noncallable United States Treasury
         obligations with terms (one longer and one shorter) most nearly
         approximating the period from such Payment Date to the Anticipated
         Repayment Date (and converted to a monthly equivalent yield), as
         determined by Lender on the basis of Federal Reserve Statistical
         Release H.15 Selected Interest Rates under the heading U.S.
         Governmental Security/Treasury Constant Maturities or, if such
         publication is unavailable, such other recognized source of financial
         market information as shall be selected by Lender for the week prior to
         such Payment Date.

         YIELD MAINTENANCE PREMIUM shall mean an amount equal to the product of:
         (a) the positive difference (expressed as a percentage of the
         outstanding Principal Amount before any prepayment), if any, as of the
         date of determination between (i) the present value of all future
         scheduled payments of interest and principal, including the principal
         amount due on the Anticipated Repayment Date, to be made on this Note
         before the prepayment in question, discounted at an interest rate per
         annum equal to the Treasury Rate, and (ii) the outstanding Principal
         Amount immediately before such prepayment; and (b) the Principal Amount
         being prepaid.

2.       INTEREST.

         a.       Prior to the Anticipated Repayment Date, interest shall accrue
                  on the Principal Amount at the Stated Interest Rate. In the
                  event that Borrower does not repay the Principal Amount in
                  full on or before the Anticipated Repayment Date, then, from
                  and after the Anticipated Repayment Date, interest shall
                  accrue on the Principal Amount at the Revised Interest Rate.
                  From and after the occurrence and during the continuance of
                  any Event of Default, interest shall accrue at the Default
                  Rate.

                                       4

         b.       Interest on the principal sum of this Note shall be calculated
                  based on the Applicable Interest Rate on the basis of a
                  fraction, the denominator of which shall be 360 and the
                  numerator of which shall be the actual number of days in the
                  relevant Interest Period, except that interest due and payable
                  for a period less than a full month shall be calculated by
                  multiplying the actual number of days elapsed in such period
                  by a daily rate based on said 360 day year. Interest shall
                  accrue from, and including, the first (1st) day of the prior
                  month and ending on the last day of the prior month (an
                  INTEREST PERIOD); in each case without adjustment for any
                  Business Day convention; provided that the first accrual
                  period shall commence on March 1, 2004.

         c.       Except as expressly set forth in the Loan Agreement to the
                  contrary, interest shall accrue on all amounts advanced by
                  Lender pursuant to the Loan Documents (other than the
                  Principal Amount, which shall accrue interest in accordance
                  with clauses a. and b. above) at the Default Rate.

         d.       The provisions of this Section 2 are subject in all events to
                  the provisions of Section 2.2.4 of the Loan Agreement.

3.       PAYMENTS OF PRINCIPAL AND INTEREST.

         a.       Interest and principal under this Note shall be payable as
                  follows:

                  i.       interest accruing from the date hereof to and
                           including February 29, 2004 shall be paid on the date
                           hereof; and

                  ii.      commencing on April 1, 2004 and on each and every
                           Payment Date thereafter until the Maturity Date,
                           monthly installments of interest payable on this
                           Note, in arrears, and scheduled principal
                           amortization in the amounts (if any) (the MONTHLY
                           AMOUNTS) set forth on EXHIBIT A hereto (subject to
                           adjustment as provided in Section 4(f)).

         b.       From and after the Anticipated Repayment Date, unless the
                  Indebtedness has been repaid in full, Borrower shall continue
                  to make payments of the accrued interest and Monthly Amounts
                  on each Payment Date. From and after the Anticipated Repayment
                  Date, unless the Indebtedness has been repaid in full, all
                  Excess Cash Flow remaining after application thereof to Note
                  A-1, Note A-2, Note A-3 and Note A-4 in accordance with the
                  terms of such Mortgage Notes, shall be applied as a partial
                  prepayment of the outstanding Principal Amount. Deferred
                  Interest shall be payable after all principal and other
                  amounts due under the Loan have been paid in full.

         c.       All payments made by Borrower hereunder or under any of the
                  Loan Documents shall be made on or before 2:00 p.m. New York
                  City time or such later time as Lender or its servicer shall
                  apply amounts on deposit in the Holding Account in accordance
                  the terms of the Loan Documents.

                                       5

                  Any payments received after such time shall be credited to the
                  next following Business Day.

         d.       All amounts advanced by Lender pursuant to the Loan Documents,
                  other than the Principal Amount, or other charges provided in
                  the Loan Documents, shall be due and payable as provided in
                  the Loan Documents. In the event any such advance or charge is
                  not so repaid by Borrower, Lender may, at its option, first
                  apply any payments received under this Note to repay such
                  advances, together with any interest thereon, or other charges
                  as provided in the Loan Documents, and the balance, if any,
                  shall be applied in payment of any installment of interest or
                  principal then due and payable.

         e.       The entire Principal Amount of this Note, all unpaid accrued
                  interest, all interest that would accrue on the Principal
                  Amount through the end of the Interest Period during which the
                  Maturity Date occurs and all other fees and sums then payable
                  hereunder or under the Loan Documents (collectively, the
                  MATURITY DATE PAYMENT), shall be due and payable in full on
                  the Maturity Date.

         f.       Amounts due on this Note shall be payable, without any
                  counterclaim, setoff or deduction whatsoever, at the office of
                  Lender or its agent or designee at the address set forth on
                  the first page of this Note or at such other place as Lender
                  or its agent or designee may from time to time designate in
                  writing.

         g.       All amounts due under this Note, including, without
                  limitation, interest and the Principal Amount, shall be due
                  and payable in lawful money of the United States.

         h.       To the extent that Borrower makes a payment or Lender receives
                  any payment or proceeds for Borrower's benefit, which are
                  subsequently invalidated, declared to be fraudulent or
                  preferential, set aside or required to be repaid to a trustee,
                  debtor in possession, receiver, custodian or any other party
                  under any bankruptcy law, common law or equitable cause, then,
                  to such extent, the obligations of Borrower hereunder intended
                  to be satisfied shall be revived and continue as if such
                  payment or proceeds had not been received by Lender.

4.       PREPAYMENTS. Except as permitted in Sections 4(a), 4(b), 4(c) and 4(d)
         hereof, the outstanding Principal Amount may not be prepaid in whole or
         in part. Any Principal Amount prepaid pursuant to this Section 4 may
         not be reborrowed hereunder.

         a.       VOLUNTARY PREPAYMENTS. Borrower shall not have the right to
                  prepay, in whole or in part, the Principal Amount due
                  hereunder prior to the Anticipated Repayment Date (other than
                  with respect to the application of

                                       6

                  Proceeds pursuant to Section 6.2 of the Loan Agreement);
                  provided, however, Borrower shall be entitled to make a
                  prepayment of all of the Principal Amount on any Business Day
                  occurring after the expiration of the Prepayment Lockout
                  Period, without any premium or penalty upon satisfaction of
                  the following conditions:

                  i.       Borrower shall provide prior irrevocable written
                           notice (the PREPAYMENT NOTICE) to Lender specifying
                           the proposed Business Day on which the prepayment is
                           to be made, which Business Day shall be no earlier
                           than thirty (30) days after the date of such
                           Prepayment Notice and no later than ninety (90) days
                           after the date of such Prepayment Notice (the date of
                           such prepayment pursuant to this Section 4(a) and
                           Section 4(b) below being the PREPAYMENT DATE); and

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(c) and Section 4(d) of this Note.

                  iii.     In connection with any voluntary prepayment, other
                           than payments from Excess Cash Flow as set forth in
                           Section 3(b), Borrower shall concurrently repay all
                           of the other Indebtedness in full.

                  iv.      Borrower agrees that all Excess Cash Flow shall be
                           applied in accordance with the terms of the Loan
                           Agreement, including, without limitation, Article III
                           and Section 16.5 of the Loan Agreement and the
                           provisions of Section 3(b) hereof.

         b.       DEFEASANCE. From and after expiration of the Defeasance
                  Lockout Period and prior to the Anticipated Repayment Date,
                  Borrower shall have the right to defease the Loan pursuant to
                  the provisions of Article IX of the Loan Agreement. In no
                  event shall a prepayment of this Note in accordance with
                  Sections 4(a) or 4(c) trigger or result in any defeasance
                  liability under this Note or the other Loan Documents.

         c.       MANDATORY PREPAYMENTS.

                  i.       On the next occurring Payment Date following the date
                           on which Borrower actually receives any Proceeds, if
                           Lender is not obligated pursuant to the terms of the
                           Loan Agreement to make such Proceeds available to
                           Borrower for the restoration of the Property,
                           Borrower shall use the B Note Proportionate Share of
                           such Proceeds to prepay the outstanding principal
                           balance of this Note as set forth in Section 6.2.3 of
                           the Loan Agreement; and

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(d) and Section 4(e) of this Note
                           (provided, however, that the Liquidated Damages
                           Amount and the Yield Maintenance Premium shall not
                           apply to prepayments made from the receipt of
                           Proceeds).

                                       7

         d.       PAYMENTS IN CONNECTION WITH A PREPAYMENT.

                  i.       On the date on which a prepayment, voluntary,
                           involuntary or mandatory, is made under this Note or
                           as required under the Loan Agreement, Borrower shall,
                           unless such prepayment is made on a Payment Date, pay
                           to Lender all unpaid interest on the Principal Amount
                           prepaid through the end of the Interest Period during
                           which such prepayment is made.

                  ii.      On the Business Day on which a prepayment is made,
                           Borrower shall pay to Lender all other sums (not
                           including scheduled interest and principal payments)
                           then due and payable under the Note, and the B Note
                           Proportionate Share of all other sums then due and
                           payable under the Loan Agreement, the Security
                           Instrument, and the other Loan Documents;

                  iii.     Borrower shall pay (without duplication) all
                           reasonable costs and expenses of Lender incurred in
                           connection with the prepayment (including without
                           limitation, any reasonable costs and expenses
                           associated with a release or assignment of the Lien
                           of the related Security Instrument as set forth in
                           Section 2.3.3 of the Loan Agreement as well as
                           reasonable attorneys' fees and expenses); and

                  iv.      In the event of a prepayment made after an
                           acceleration of the Loan, Borrower shall also pay to
                           Lender the Yield Maintenance Premium to the extent
                           such prepayment is made prior to expiration of the
                           Prepayment Lockout Period.

         e.       LIQUIDATED DAMAGES AMOUNT. IF NOTWITHSTANDING THE PROHIBITIONS
                  OF THIS SECTION 4, THE LOAN IS VOLUNTARILY OR INVOLUNTARILY
                  REPAID DURING THE PREPAYMENT LOCKOUT PERIOD (EXCLUDING
                  PREPAYMENTS MADE (I) IN ACCORDANCE WITH SECTION 4(C) OF THIS
                  NOTE AND (II) FROM A DEFEASANCE OF THE LOAN IN ACCORDANCE WITH
                  THE TERMS OF THE LOAN DOCUMENTS AFTER EXPIRATION OF THE
                  DEFEASANCE LOCKOUT PERIOD), INCLUDING, BUT NOT LIMITED TO, AS
                  A RESULT OF AN ACCELERATED MATURITY DATE, THEN BORROWER SHALL
                  PAY TO LENDER, AS LIQUIDATED DAMAGES FOR SUCH DEFAULT AND NOT
                  AS A PENALTY, AND IN ADDITION TO ANY AND ALL OTHER SUMS AND
                  FEES PAYABLE UNDER THIS NOTE AND THE OTHER LOAN DOCUMENTS, AN
                  AMOUNT EQUAL TO THE GREATER OF (A) FIVE PERCENT (5%) OF THE
                  PRINCIPAL AMOUNT BEING REPAID HEREUNDER AND (B) THE YIELD
                  MAINTENANCE PREMIUM (THE LIQUIDATED DAMAGES AMOUNT).
                  NOTWITHSTANDING THE FOREGOING, THE

                                       8

                  LIQUIDATED DAMAGES AMOUNT SHALL NOT BE APPLIED TOWARD ANY
                  PREPAYMENTS FROM PROCEEDS.

         f.       MODIFICATION OF MONTHLY AMOUNTS. In the event that any partial
                  prepayment of principal occurs before the Anticipated
                  Repayment Date the Payment Dates shall remain the same and
                  Lender shall recalculate the amount of subsequent Monthly
                  Amounts to reflect the reduction of the Principal Amount. In
                  the event that any partial prepayment of principal occurs
                  after the Anticipated Repayment Date or Excess Cash Flow is
                  applied to the prepayment of principal after the Anticipated
                  Repayment Date, the Payment Dates shall remain the same,
                  Lender shall recalculate the amount of subsequent Monthly
                  Amounts to reflect the reduction of the Principal Amount.
                  Deferred Interest accrued pursuant to Section 3(b) of this
                  Note shall not result in any increase in the Monthly Amounts
                  or the Stated Interest Rate.

5.       MISCELLANEOUS.

         a.       WAIVER. Borrower and all endorsers, sureties and guarantors
                  hereby jointly and severally waive all applicable exemption
                  rights, valuation and appraisement, presentment for payment,
                  demand, notice of demand, notice of nonpayment or dishonor,
                  protest and notice of protest of this Note, and, except as
                  otherwise expressly provided in the Loan Documents, all other
                  notices in connection with the delivery, acceptance,
                  performance, default or enforcement of the payment of this
                  Note. Borrower consents to any and all extensions of time,
                  renewals, waivers or modifications that may be granted by
                  Lender with respect to the payment or other provisions of this
                  Note and to the release of the collateral securing this Note
                  or any part thereof, with or without substitution, and agrees
                  that additional makers may become parties hereto without
                  notice to them or affecting their liability under this Note.

         b.       NON-RECOURSE. Recourse with respect to any claims arising
                  under or in connection with this Note shall be limited to the
                  extent provided in Article XVIII of the Loan Agreement and the
                  terms, covenants and conditions of Article XVIII of the Loan
                  Agreement are hereby incorporated by reference as if fully set
                  forth in this Note.

         c.       NOTE SECURED. This Note and all obligations of Borrower
                  hereunder are secured by the Loan Agreement, the Security
                  Instrument and the other Loan Documents.

         d.       NOTICES. Any notice, election, request or demand which by any
                  provision of this Note is required or permitted to be given or
                  served hereunder shall be given or served in the manner
                  required for the delivery of notices pursuant to the Loan
                  Agreement.

                                       9

         e.       ENTIRE AGREEMENT. This Note, together with the other Loan
                  Documents, constitutes the entire and final agreement between
                  Borrower and Lender with respect to the subject matter hereof
                  and thereof and may only be changed, amended, modified or
                  waived by an instrument in writing signed by Borrower and
                  Lender.

         f.       NO WAIVER. No waiver of any term or condition of this Note,
                  whether by delay, omission or otherwise, shall be effective
                  unless in writing and signed by the party sought to be
                  charged, and then such waiver shall be effective only in the
                  specific instance and for the purpose for which given. No
                  notice to, or demand on, Borrower shall entitle Borrower to
                  any other or future notice or demand in the same, similar or
                  other circumstances.

         g.       SUCCESSORS AND ASSIGNS. This Note shall be binding upon and
                  inure to the benefit of Borrower and Lender and their
                  respective successors and permitted assigns. Upon any
                  endorsement, assignment, or other transfer of this Note by
                  Lender or by operation of law, the term "Lender" as used
                  herein, shall mean such endorsee, assignee, or other
                  transferee or successor to Lender then becoming the holder of
                  this Note. The term "Borrower" as used herein shall include
                  the respective successors and assigns, legal and personal
                  representatives, executors, administrators, devisees, legatees
                  and heirs of Borrower, if any.

         h.       CAPTIONS. All paragraph, section, exhibit and schedule
                  headings and captions herein are used for reference only and
                  in no way limit or describe the scope or intent of, or in any
                  way affect, this Note.

         i.       COUNTERPARTS. This Note may be executed in counterparts, each
                  of which shall be an original and all of which, when taken
                  together, shall constitute one binding Note.

         j.       SEVERABILITY. The provisions of this Note are severable, and
                  if any one clause or provision hereof shall be held invalid or
                  unenforceable in whole or in part, then such invalidity or
                  unenforceability shall affect only such clause or provision,
                  or part thereof, and not any other clause or provision of this
                  Note.

         k.       GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
                  IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
                  TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW,
                  WITHOUT REGARD TO CHOICE OF LAW RULES. BORROWER AGREES THAT
                  ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OTHER LOAN
                  DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW
                  YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
                  NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF

                                       10

                  PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER IN THE
                  MANNER AND AT THE ADDRESS SPECIFIED FOR NOTICES IN THE LOAN
                  AGREEMENT. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY
                  NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
                  SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
                  COURT.

         l.       JURY TRIAL WAIVER. BORROWER, LENDER AND ALL PERSONS CLAIMING
                  BY, THROUGH OR UNDER BORROWER OR LENDER, HEREBY EXPRESSLY,
                  KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO
                  TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
                  (I) ARISING UNDER THIS NOTE, INCLUDING, WITHOUT LIMITATION,
                  ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY
                  CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
                  PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS NOTE (AS
                  NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT
                  OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR
                  THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
                  WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW
                  EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
                  CONTRACT OR TORT OR OTHERWISE; AND BORROWER AND LENDER HEREBY
                  AGREE AND CONSENT THAT AN ORIGINAL COUNTERPART OR A COPY OF
                  THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE
                  OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY
                  JURY. EACH OF BORROWER AND LENDER ACKNOWLEDGES THAT IT HAS
                  CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS
                  WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL
                  INDUCEMENT FOR THE MAKING OF THE LOAN. THIS WAIVER SHALL
                  SURVIVE THE REPAYMENT OF THE LOAN.

         m.       COUNTERCLAIMS AND OTHER ACTIONS. Borrower hereby expressly and
                  unconditionally waives, in connection with any suit, action or
                  proceeding brought by Lender on this Note, any and every right
                  it may have to (i) interpose any counterclaim therein (other
                  than a mandatory or compulsory counterclaim which can only be
                  asserted in the suit, action or proceeding brought by Lender
                  on this Note and cannot be maintained in a separate action)
                  and (ii) have any such suit, action or proceeding consolidated
                  with any other or separate suit, action or proceeding.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       11

         IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered as of the day and year first above written.

                                  BORROWER:

                                  731 OFFICE ONE LLC, a Delaware limited
                                  liability company

                                  By:  731 OFFICE ONE HOLDING LLC, a Delaware
                                  limited liability company, its sole member

                                       By:  ALEXANDER'S INC., a Delaware
                                       corporation, its sole member

                                       By:  /s/      Brian Kurtz
                                            ------------------------------------
                                            Name:    Brian Kurtz
                                            Title:   Assistant Secretary

                                    EXHIBIT A
                                PROMISSORY NOTE B

                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE                    AMORTIZATION)        ENDING BALANCE
                                                                                           
2/15/2004                     5.21125000%

3/1/2004                      5.21125000%         3/1/2004                           -                 86,000,000.00

4/1/2004                      5.21125000%         4/1/2004                           -                 86,000,000.00

5/1/2004                      5.21125000%         5/1/2004                           -                 86,000,000.00

6/1/2004                      5.21125000%         6/1/2004                           -                 86,000,000.00

7/1/2004                      5.21125000%         7/1/2004                           -                 86,000,000.00

8/1/2004                      5.21125000%         8/1/2004                           -                 86,000,000.00

9/1/2004                      5.21125000%         9/1/2004                           -                 86,000,000.00

10/1/2004                     5.21125000%         10/1/2004                          -                 86,000,000.00

11/1/2004                     5.21125000%         11/1/2004                          -                 86,000,000.00

12/1/2004                     5.21125000%         12/1/2004                          -                 86,000,000.00

1/1/2005                      5.21125000%         1/1/2005                           -                 86,000,000.00

2/1/2005                      5.21125000%         2/1/2005                           -                 86,000,000.00

3/1/2005                      5.21125000%         3/1/2005                           -                 86,000,000.00

4/1/2005                      5.21125000%         4/1/2005                           -                 86,000,000.00

5/1/2005                      5.21125000%         5/1/2005                           -                 86,000,000.00

6/1/2005                      5.21125000%         6/1/2005                           -                 86,000,000.00

7/1/2005                      5.21125000%         7/1/2005                           -                 86,000,000.00

8/1/2005                      5.21125000%         8/1/2005                           -                 86,000,000.00

9/1/2005                      5.21125000%         9/1/2005                           -                 86,000,000.00

10/1/2005                     5.21125000%         10/1/2005                          -                 86,000,000.00

11/1/2005                     5.21125000%         11/1/2005                          -                 86,000,000.00

12/1/2005                     5.21125000%         12/1/2005                          -                 86,000,000.00

1/1/2006                      5.21125000%         1/1/2006                           -                 86,000,000.00

2/1/2006                      5.21125000%         2/1/2006                           -                 86,000,000.00

3/1/2006                      5.21125000%         3/1/2006                           -                 86,000,000.00

4/1/2006                      5.21125000%         4/1/2006                           -                 86,000,000.00

5/1/2006                      5.21125000%         5/1/2006                           -                 86,000,000.00

                                        2

                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE   PAYMENT DATE                     AMORTIZATION)       ENDING BALANCE
                                                                                          
6/1/2006                      5.21125000%         6/1/2006                           -                 86,000,000.00

7/1/2006                      5.21125000%         7/1/2006                           -                 86,000,000.00

8/1/2006                      5.21125000%         8/1/2006                           -                 86,000,000.00

9/1/2006                      5.21125000%         9/1/2006                           -                 86,000,000.00

10/1/2006                     5.21125000%         10/1/2006                          -                 86,000,000.00

11/1/2006                     5.21125000%         11/1/2006                          -                 86,000,000.00

12/1/2006                     5.21125000%         12/1/2006                          -                 86,000,000.00

1/1/2007                      5.21125000%         1/1/2007                           -                 86,000,000.00

2/1/2007                      5.21125000%         2/1/2007                           -                 86,000,000.00

3/1/2007                      5.21125000%         3/1/2007                           -                 86,000,000.00

4/1/2007                      5.21125000%         4/1/2007                           -                 86,000,000.00

5/1/2007                      5.21125000%         5/1/2007                           -                 86,000,000.00

6/1/2007                      5.21125000%         6/1/2007                           -                 86,000,000.00

7/1/2007                      5.21125000%         7/1/2007                           -                 86,000,000.00

8/1/2007                      5.21125000%         8/1/2007                           -                 86,000,000.00

9/1/2007                      5.21125000%         9/1/2007                           -                 86,000,000.00

10/1/2007                     5.21125000%         10/1/2007                          -                 86,000,000.00

11/1/2007                     5.21125000%         11/1/2007                          -                 86,000,000.00

12/1/2007                     5.21125000%         12/1/2007                          -                 86,000,000.00

1/1/2008                      5.21125000%         1/1/2008                           -                 86,000,000.00

2/1/2008                      5.21125000%         2/1/2008                           -                 86,000,000.00

3/1/2008                      5.21125000%         3/1/2008                           -                 86,000,000.00

4/1/2008                      5.21125000%         4/1/2008                           -                 86,000,000.00

5/1/2008                      5.21125000%         5/1/2008                           -                 86,000,000.00

6/1/2008                      5.21125000%         6/1/2008                           -                 86,000,000.00

7/1/2008                      5.21125000%         7/1/2008                           -                 86,000,000.00

8/1/2008                      5.21125000%         8/1/2008                           -                 86,000,000.00

9/1/2008                      5.21125000%         9/1/2008                           -                 86,000,000.00

10/1/2008                     5.21125000%         10/1/2008                          -                 86,000,000.00

11/1/2008                     5.21125000%         11/1/2008                          -                 86,000,000.00

                                       3

                                                                                MONTHLY AMOUNT
INTEREST PERIOD                                                              (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE                   AMORTIZATION)         ENDING BALANCE
                                                                                           
12/1/2008                     5.21125000%         12/1/2008                          -                 86,000,000.00

1/1/2009                      5.21125000%         1/1/2009                           -                 86,000,000.00

2/1/2009                      5.21125000%         2/1/2009                           -                 86,000,000.00

3/1/2009                      5.21125000%         3/1/2009                           -                 86,000,000.00

4/1/2009                      5.21125000%         4/1/2009                           -                 86,000,000.00

5/1/2009                      5.21125000%         5/1/2009                           -                 86,000,000.00

6/1/2009                      5.21125000%         6/1/2009                           -                 86,000,000.00

7/1/2009                      5.21125000%         7/1/2009                           -                 86,000,000.00

8/1/2009                      5.21125000%         8/1/2009                           -                 86,000,000.00

9/1/2009                      5.21125000%         9/1/2009                           -                 86,000,000.00

10/1/2009                     5.21125000%         10/1/2009                          -                 86,000,000.00

11/1/2009                     5.21125000%         11/1/2009                          -                 86,000,000.00

12/1/2009                     5.21125000%         12/1/2009                          -                 86,000,000.00

1/1/2010                      5.21125000%         1/1/2010                           -                 86,000,000.00

2/1/2010                      5.21125000%         2/1/2010                           -                 86,000,000.00

3/1/2010                      5.21125000%         3/1/2010                           -                 86,000,000.00

4/1/2010                      5.21125000%         4/1/2010                           -                 86,000,000.00

5/1/2010                      5.21125000%         5/1/2010                           -                 86,000,000.00

6/1/2010                      5.21125000%         6/1/2010                           -                 86,000,000.00

7/1/2010                      5.21125000%         7/1/2010                           -                 86,000,000.00

8/1/2010                      5.21125000%         8/1/2010                           -                 86,000,000.00

9/1/2010                      5.21125000%         9/1/2010                           -                 86,000,000.00

10/1/2010                     5.21125000%         10/1/2010                          -                 86,000,000.00

11/1/2010                     5.21125000%         11/1/2010                          -                 86,000,000.00

12/1/2010                     5.21125000%         12/1/2010                          -                 86,000,000.00

1/1/2011                      5.21125000%         1/1/2011                           -                 86,000,000.00

2/1/2011                      5.21125000%         2/1/2011                           -                 86,000,000.00

3/1/2011                      5.21125000%         3/1/2011                           -                 86,000,000.00

4/1/2011                      5.21125000%         4/1/2011                           -                 86,000,000.00

                                       4

                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE   PAYMENT DATE                     AMORTIZATION)        ENDING BALANCE
                                                                                           
5/1/2011                      5.21125000%         5/1/2011                            -                86,000,000.00

6/1/2011                      5.21125000%         6/1/2011                            -                86,000,000.00

7/1/2011                      5.21125000%         7/1/2011                            -                86,000,000.00

8/1/2011                      5.21125000%         8/1/2011                            -                86,000,000.00

9/1/2011                      5.21125000%         9/1/2011                            -                86,000,000.00

10/1/2011                     5.21125000%         10/1/2011                           -                86,000,000.00

11/1/2011                     5.21125000%         11/1/2011                           -                86,000,000.00

12/1/2011                     5.21125000%         12/1/2011                           -                86,000,000.00

1/1/2012                      5.21125000%         1/1/2012                            -                86,000,000.00

2/1/2012                      5.21125000%         2/1/2012                            -                86,000,000.00

3/1/2012                      5.21125000%         3/1/2012                            -                86,000,000.00

4/1/2012                      5.21125000%         4/1/2012                            -                86,000,000.00

5/1/2012                      5.21125000%         5/1/2012                            -                86,000,000.00

6/1/2012                      5.21125000%         6/1/2012                            -                86,000,000.00

7/1/2012                      5.21125000%         7/1/2012                            -                86,000,000.00

8/1/2012                      5.21125000%         8/1/2012                            -                86,000,000.00

9/1/2012                      5.21125000%         9/1/2012                            -                86,000,000.00

10/1/2012                     5.21125000%         10/1/2012                           -                86,000,000.00

11/1/2012                     5.21125000%         11/1/2012                           -                86,000,000.00

12/1/2012                     5.21125000%         12/1/2012                           -                86,000,000.00

1/1/2013                      5.21125000%         1/1/2013                            -                86,000,000.00

2/1/2013                      5.21125000%         2/1/2013                            -                86,000,000.00

3/1/2013                      5.21125000%         3/1/2013                            -                86,000,000.00

4/1/2013                      5.21125000%         4/1/2013                            -                86,000,000.00

5/1/2013                      5.21125000%         5/1/2013                            -                86,000,000.00

6/1/2013                      5.21125000%         6/1/2013                            -                86,000,000.00

7/1/2013                      5.21125000%         7/1/2013                            -                86,000,000.00

8/1/2013                      5.21125000%         8/1/2013                            -                86,000,000.00

9/1/2013                      5.21125000%         9/1/2013                            -                86,000,000.00

10/1/2013                     5.21125000%         10/1/2013                           -                86,000,000.00

                                       5

                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE                    AMORTIZATION)        ENDING BALANCE
                                                                                           
11/1/2013                     5.21125000%         11/1/2013                            -               86,000,000.00

12/1/2013                     5.21125000%         12/1/2013                            -               86,000,000.00

1/1/2014                      5.21125000%         1/1/2014                             -               86,000,000.00

2/1/2014                      5.21125000%         2/1/2014                             -               86,000,000.00

3/1/2014                      5.21125000%         3/1/2014                             -               86,000,000.00

4/1/2014                      5.21125000%         4/1/2014                             -               86,000,000.00

5/1/2014                      5.21125000%         5/1/2014                             -               86,000,000.00

6/1/2014                      5.21125000%         6/1/2014                             -               86,000,000.00

7/1/2014                      5.21125000%         7/1/2014                             -               86,000,000.00

8/1/2014                      5.21125000%         8/1/2014                             -               86,000,000.00

9/1/2014                      5.21125000%         9/1/2014                             -               86,000,000.00

10/1/2014                     5.21125000%         10/1/2014                            -               86,000,000.00

11/1/2014                     5.21125000%         11/1/2014                            -               86,000,000.00

12/1/2014                     5.21125000%         12/1/2014                            -               86,000,000.00

1/1/2015                      5.21125000%         1/1/2015                             -               86,000,000.00

2/1/2015                      5.21125000%         2/1/2015                             -               86,000,000.00

3/1/2015                      5.21125000%         3/1/2015                             -               86,000,000.00

4/1/2015                      5.21125000%         4/1/2015                             -               86,000,000.00

5/1/2015                      5.21125000%         5/1/2015                             -               86,000,000.00

6/1/2015                      5.21125000%         6/1/2015                             -               86,000,000.00

7/1/2015                      5.21125000%         7/1/2015                             -               86,000,000.00

8/1/2015                      5.21125000%         8/1/2015                             -               86,000,000.00

9/1/2015                      5.21125000%         9/1/2015                             -               86,000,000.00

10/1/2015                     5.21125000%         10/1/2015                            -               86,000,000.00

11/1/2015                     5.21125000%         11/1/2015                            -               86,000,000.00

12/1/2015                     5.21125000%         12/1/2015                            -               86,000,000.00

1/1/2016                      5.21125000%         1/1/2016                             -               86,000,000.00

2/1/2016                      5.21125000%         2/1/2016                             -               86,000,000.00

3/1/2016                      5.21125000%         3/1/2016                             -               86,000,000.00

                                       6

                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE                    AMORTIZATION)        ENDING BALANCE
                                                                                           
4/1/2016                      5.21125000%         4/1/2016                            -                86,000,000.00

5/1/2016                      5.21125000%         5/1/2016                            -                86,000,000.00

6/1/2016                      5.21125000%         6/1/2016                            -                86,000,000.00

7/1/2016                      5.21125000%         7/1/2016                            -                86,000,000.00

8/1/2016                      5.21125000%         8/1/2016                            -                86,000,000.00

9/1/2016                      5.21125000%         9/1/2016                            -                86,000,000.00

10/1/2016                     5.21125000%         10/1/2016                           -                86,000,000.00

11/1/2016                     5.21125000%         11/1/2016                           -                86,000,000.00

12/1/2016                     5.21125000%         12/1/2016                           -                86,000,000.00

1/1/2017                      5.21125000%         1/1/2017                            -                86,000,000.00

2/1/2017                      5.21125000%         2/1/2017                            -                86,000,000.00

3/1/2017                      5.21125000%         3/1/2017                            -                86,000,000.00

4/1/2017                      5.21125000%         4/1/2017                            -                86,000,000.00

5/1/2017                      5.21125000%         5/1/2017                            -                86,000,000.00

6/1/2017                      5.21125000%         6/1/2017                            -                86,000,000.00

7/1/2017                      5.21125000%         7/1/2017                            -                86,000,000.00

8/1/2017                      5.21125000%         8/1/2017                            -                86,000,000.00

9/1/2017                      5.21125000%         9/1/2017                            -                86,000,000.00

10/1/2017                     5.21125000%         10/1/2017                           -                86,000,000.00

11/1/2017                     5.21125000%         11/1/2017                           -                86,000,000.00

12/1/2017                     5.21125000%         12/1/2017                           -                86,000,000.00

1/1/2018                      5.21125000%         1/1/2018                            -                86,000,000.00

2/1/2018                      5.21125000%         2/1/2018                            -                86,000,000.00

3/1/2018                      5.21125000%         3/1/2018                            -                86,000,000.00

4/1/2018                      5.21125000%         4/1/2018                            -                86,000,000.00

5/1/2018                      5.21125000%         5/1/2018                            -                86,000,000.00

6/1/2018                      5.21125000%         6/1/2018                            -                86,000,000.00

7/1/2018                      5.21125000%         7/1/2018                            -                86,000,000.00

8/1/2018                      5.21125000%         8/1/2018                            -                86,000,000.00

9/1/2018                      5.21125000%         9/1/2018                            -                86,000,000.00

                                       7

                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE                    AMORTIZATION)        ENDING BALANCE
                                                                                           
10/1/2018                     5.21125000%         10/1/2018                            -               86,000,000.00

11/1/2018                     5.21125000%         11/1/2018                            -               86,000,000.00

12/1/2018                     5.21125000%         12/1/2018                            -               86,000,000.00

1/1/2019                      5.21125000%         1/1/2019                             -               86,000,000.00

2/1/2019                      5.21125000%         2/1/2019                             -               86,000,000.00

3/1/2019                      5.21125000%         3/1/2019                             -               86,000,000.00

4/1/2019                      5.21125000%         4/1/2019                             -               86,000,000.00

5/1/2019                      5.21125000%         5/1/2019                             -               86,000,000.00

6/1/2019                      5.21125000%         6/1/2019                             -               86,000,000.00

7/1/2019                      5.21125000%         7/1/2019                             -               86,000,000.00

8/1/2019                      5.21125000%         8/1/2019                             -               86,000,000.00

9/1/2019                      5.21125000%         9/1/2019                             -               86,000,000.00

10/1/2019                     5.21125000%         10/1/2019                            -               86,000,000.00

11/1/2019                     5.21125000%         11/1/2019                            -               86,000,000.00

12/1/2019                     5.21125000%         12/1/2019                            -               86,000,000.00

1/1/2020                      5.21125000%         1/1/2020                             -               86,000,000.00

2/1/2020                      5.21125000%         2/1/2020                             -               86,000,000.00

3/1/2020                      5.21125000%         3/1/2020                             -               86,000,000.00

4/1/2020                      5.21125000%         4/1/2020                             -               86,000,000.00

5/1/2020                      5.21125000%         5/1/2020                             -               86,000,000.00

6/1/2020                      5.21125000%         6/1/2020                             -               86,000,000.00

7/1/2020                      5.21125000%         7/1/2020                             -               86,000,000.00

8/1/2020                      5.21125000%         8/1/2020                             -               86,000,000.00

9/1/2020                      5.21125000%         9/1/2020                             -               86,000,000.00

10/1/2020                     5.21125000%         10/1/2020                            -               86,000,000.00

11/1/2020                     5.21125000%         11/1/2020                            -               86,000,000.00

12/1/2020                     5.21125000%         12/1/2020                            -               86,000,000.00

1/1/2021                      5.21125000%         1/1/2021                             -               86,000,000.00

2/1/2021                      5.21125000%         2/1/2021                             -               86,000,000.00

                                       8

                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE                    AMORTIZATION)        ENDING BALANCE
                                                                                           
3/1/2021                      5.21125000%         3/1/2021                             -               86,000,000.00

4/1/2021                      5.21125000%         4/1/2021                             -               86,000,000.00

5/1/2021                      5.21125000%         5/1/2021                             -               86,000,000.00

6/1/2021                      5.21125000%         6/1/2021                             -               86,000,000.00

7/1/2021                      5.21125000%         7/1/2021                             -               86,000,000.00

8/1/2021                      5.21125000%         8/1/2021                             -               86,000,000.00

9/1/2021                      5.21125000%         9/1/2021                             -               86,000,000.00

10/1/2021                     5.21125000%         10/1/2021                            -               86,000,000.00

11/1/2021                     5.21125000%         11/1/2021                            -               86,000,000.00

12/1/2021                     5.21125000%         12/1/2021                            -               86,000,000.00

1/1/2022                      5.21125000%         1/1/2022                             -               86,000,000.00

2/1/2022                      5.21125000%         2/1/2022                             -               86,000,000.00

3/1/2022                      5.21125000%         3/1/2022                             -               86,000,000.00

4/1/2022                      5.21125000%         4/1/2022                             -               86,000,000.00

5/1/2022                      5.21125000%         5/1/2022                             -               86,000,000.00

6/1/2022                      5.21125000%         6/1/2022                             -               86,000,000.00

7/1/2022                      5.21125000%         7/1/2022                             -               86,000,000.00

8/1/2022                      5.21125000%         8/1/2022                             -               86,000,000.00

9/1/2022                      5.21125000%         9/1/2022                             -               86,000,000.00

10/1/2022                     5.21125000%         10/1/2022                            -               86,000,000.00

11/1/2022                     5.21125000%         11/1/2022                            -               86,000,000.00

12/1/2022                     5.21125000%         12/1/2022                            -               86,000,000.00

1/1/2023                      5.21125000%         1/1/2023                             -               86,000,000.00

2/1/2023                      5.21125000%         2/1/2023                             -               86,000,000.00

3/1/2023                      5.21125000%         3/1/2023                             -               86,000,000.00

4/1/2023                      5.21125000%         4/1/2023                             -               86,000,000.00

5/1/2023                      5.21125000%         5/1/2023                             -               86,000,000.00

6/1/2023                      5.21125000%         6/1/2023                             -               86,000,000.00

7/1/2023                      5.21125000%         7/1/2023                             -               86,000,000.00

8/1/2023                      5.21125000%         8/1/2023                             -               86,000,000.00

                                       9

                                                                            MONTHLY AMOUNT
INTEREST PERIOD                                                          (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE               AMORTIZATION)            ENDING BALANCE
                                                                                          
9/1/2023                      5.21125000%         9/1/2023                             -               86,000,000.00

10/1/2023                     5.21125000%         10/1/2023                            -               86,000,000.00

11/1/2023                     5.21125000%         11/1/2023                            -               86,000,000.00

12/1/2023                     5.21125000%         12/1/2023                            -               86,000,000.00

1/1/2024                      5.21125000%         1/1/2024                             -               86,000,000.00

2/1/2024                      5.21125000%         2/1/2024                             -               86,000,000.00

3/1/2024                      5.21125000%         3/1/2024                             -               86,000,000.00

4/1/2024                      5.21125000%         4/1/2024                             -               86,000,000.00

5/1/2024                      5.21125000%         5/1/2024                             -               86,000,000.00

6/1/2024                      5.21125000%         6/1/2024                             -               86,000,000.00

7/1/2024                      5.21125000%         7/1/2024                             -               86,000,000.00

8/1/2024                      5.21125000%         8/1/2024                             -               86,000,000.00

9/1/2024                      5.21125000%         9/1/2024                             -               86,000,000.00

10/1/2024                     5.21125000%         10/1/2024                            -               86,000,000.00

11/1/2024                     5.21125000%         11/1/2024                            -               86,000,000.00

12/1/2024                     5.21125000%         12/1/2024                            -               86,000,000.00

1/1/2025                      5.21125000%         1/1/2025                             -               86,000,000.00

2/1/2025                      5.21125000%         2/1/2025                             -               86,000,000.00

3/1/2025                      5.21125000%         3/1/2025                             -               86,000,000.00

4/1/2025                      5.21125000%         4/1/2025                             -               86,000,000.00

5/1/2025                      5.21125000%         5/1/2025                             -               86,000,000.00

6/1/2025                      5.21125000%         6/1/2025                             -               86,000,000.00

7/1/2025                      5.21125000%         7/1/2025                             -               86,000,000.00

8/1/2025                      5.21125000%         8/1/2025                             -               86,000,000.00

9/1/2025                      5.21125000%         9/1/2025                             -               86,000,000.00

10/1/2025                     5.21125000%         10/1/2025                            -               86,000,000.00

11/1/2025                     5.21125000%         11/1/2025                            -               86,000,000.00

12/1/2025                     5.21125000%         12/1/2025                   589,479.40               85,410,520.60

1/1/2026                      5.21125000%         1/1/2026                  2,156,095.61               83,254,424.98

                                       10

                                                                          MONTHLY AMOUNT
INTEREST PERIOD                                                        (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE             AMORTIZATION)              ENDING BALANCE
                                                                                          
2/1/2026                      5.21125000%         2/1/2026                  2,165,991.49              81,088,433.49

3/1/2026                      5.21125000%         3/1/2026                  2,211,949.57              78,876,483.92

4/1/2026                      5.21125000%         4/1/2026                  2,186,085.03              76,690,398.90

5/1/2026                      5.21125000%         5/1/2026                  2,207,472.99              74,482,925.91

6/1/2026                      5.21125000%         6/1/2026                  2,206,250.24              72,276,675.67

7/1/2026                      5.21125000%         7/1/2026                  2,227,077.28              70,049,598.40

8/1/2026                      5.21125000%         8/1/2026                  2,226,597.98              67,823,000.42

9/1/2026                      5.21125000%         9/1/2026                  2,236,817.44              65,586,182.98

10/1/2026                     5.21125000%         10/1/2026                 2,256,794.21              63,329,388.76

11/1/2026                     5.21125000%         11/1/2026                 2,257,441.87              61,071,946.89

12/1/2026                     5.21125000%         12/1/2026                 2,276,844.95              58,795,101.94

1/1/2027                      5.21125000%         1/1/2027                  2,278,252.99              56,516,848.95

2/1/2027                      5.21125000%         2/1/2027                  2,288,709.54              54,228,139.41

3/1/2027                      5.21125000%         3/1/2027                  2,323,300.41              51,904,839.00

4/1/2027                      5.21125000%         4/1/2027                  2,309,877.38              49,594,961.62

5/1/2027                      5.21125000%         5/1/2027                  2,327,821.89              47,267,139.73

6/1/2027                      5.21125000%         6/1/2027                  2,331,163.13              44,935,976.60

7/1/2027                      5.21125000%         7/1/2027                  2,348,515.55              42,587,461.05

8/1/2027                      5.21125000%         8/1/2027                  2,352,641.56              40,234,819.49

9/1/2027                      5.21125000%         9/1/2027                  2,363,439.53              37,871,379.96

10/1/2027                     5.21125000%         10/1/2027                 2,379,894.13              35,491,485.83

11/1/2027                     5.21125000%         11/1/2027                 2,385,210.12              33,106,275.71

12/1/2027                     5.21125000%         12/1/2027                 2,401,059.13              30,705,216.58

1/1/2028                      5.21125000%         1/1/2028                  2,407,177.76              28,298,038.82

2/1/2028                      5.21125000%         2/1/2028                  2,418,226.04              25,879,812.78

3/1/2028                      5.21125000%         3/1/2028                  2,436,988.32              23,442,824.45

4/1/2028                      5.21125000%         4/1/2028                  2,440,510.12              21,002,314.33

5/1/2028                      5.21125000%         5/1/2028                  2,454,820.90              18,547,493.43

6/1/2028                      5.21125000%         6/1/2028                  2,462,978.33              16,084,515.10

7/1/2028                      5.21125000%         7/1/2028                  2,476,664.12              13,607,850.98

                                       11

                                                                          MONTHLY AMOUNT
INTEREST PERIOD                                                        (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE             AMORTIZATION)              ENDING BALANCE
                                                                                          
8/1/2028                      5.21125000%         8/1/2028                  2,485,649.92               11,122,201.06

9/1/2028                      5.21125000%         9/1/2028                  2,497,058.36                8,625,142.69

10/1/2028                     5.21125000%         10/1/2028                 2,509,796.17                6,115,346.53

11/1/2028                     5.21125000%         11/1/2028                 2,520,038.43                3,595,308.09

12/1/2028                     5.21125000%         12/1/2028                 2,532,137.02                1,063,171.08

1/1/2029                      5.21125000%         1/1/2029                  1,063,171.08                        0.00

2/1/2029                      5.21125000%         2/1/2029                             -                        0.00

                                       12

                        GUARANTY OF RECOURSE OBLIGATIONS

                  This GUARANTY OF RECOURSE OBLIGATIONS, is made as of February
13, 2004 (this AGREEMENT), by ALEXANDER'S INC., a Delaware corporation
(GUARANTOR), having an address for notice purposes c/o 888 Seventh Avenue, New
York, New York 10019, to and for the benefit of GERMAN AMERICAN CAPITAL
CORPORATION, a Maryland corporation (together with its successors and assigns,
the LENDER), having an office at 60 Wall Street, New York, New York 10005.

                              W I T N E S S E T H:

                  WHEREAS, 731 Office One LLC (BORROWER) is the owner of a fee
simple interest in the real property commonly known as Office Unit 1 and Office
Unit 2 of the Beacon Court Condominium located at 731 Lexington Avenue, New
York, New York;

                  WHEREAS, on the date hereof, in accordance with the terms of a
Loan and Security Agreement, dated as of the date hereof (as the same may be
amended and supplemented from time to time, the LOAN AGREEMENT), between Lender,
as lender, and Borrower, as borrower, Lender is making a loan to Borrower in the
principal amount of $400,000,000 (the LOAN), which Loan is evidenced by that
certain Amended, Restated and Consolidated Note, dated as of the date hereof (as
the same may be amended, substituted, replaced, exchanged and supplemented from
time to time, the NOTE), made by and between Borrower and Lender and secured by
that certain Amended, Restated and Consolidated Mortgage, Security Agreement,
Financing Statement and Assignment of Leases, Rents and Security Deposits, dated
as of the date hereof (as the same may be amended and supplemented from time to
time, the SECURITY INSTRUMENT), by and between Borrower and Lender and the other
Loan Documents (as defined in the Loan Agreement);

                  WHEREAS, Guarantor is an affiliate of Borrower and will derive
substantial benefit from the Loan;

                  WHEREAS, as a condition to making the Loan, Lender has
required Guarantor to deliver this Agreement for the benefit of Lender;

                  WHEREAS, the forgoing recitals are intended to form an
integral part of this Agreement.

                  NOW, THEREFORE, in consideration of the foregoing premises,
Ten Dollars ($10.00) paid in hand, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Guarantor agrees as
follows:

                  Section 1. Definitions. Capitalized terms used herein and not
defined shall have the meaning provided in the Note or in the Loan Agreement if
no definition is provided in the Note.

                  Section 2. Guaranty. Guarantor hereby absolutely and
unconditionally guarantees to Lender the prompt and unconditional payment of all
obligations and liabilities of Borrower for which Borrower shall be personally
liable pursuant to the following (collectively, the GUARANTEED OBLIGATIONS):

                           (a)      any Losses incurred by or on behalf of
         Lender by reason of the fraudulent acts of Borrower or any Affiliate of
         Borrower;

                           (b)      Proceeds which Borrower or any Affiliate of
         Borrower has received and intentionally misapplied (it being agreed
         that Borrower shall not be deemed to have misapplied Proceeds unless
         same are received by Borrower and not paid to Lender, in a circumstance
         in which Lender is expressly entitled to receive same from Borrower
         pursuant to the terms of the Loan Agreement or any of the Loan
         Documents to be applied toward payment of the Indebtedness, or used for
         the repair or replacement of the Property in accordance with the
         provisions of the Loan Agreement);

                           (c)      all Losses incurred by Lender and arising
         from (i) any intentional misrepresentation of Borrower or any Affiliate
         of Borrower and/or (ii) Borrower's failure, after the occurrence of a
         Casualty Event, to cause Guarantor to deliver the Completion Guaranty
         to Lender in accordance with the terms and time periods set forth in
         Section 6.2.4 of the Loan Agreement, including, without limitation, any
         Losses incurred by or on behalf of Lender as a result of Lender's
         failure to make any Proceeds available to Borrower to restore the
         Property;

                           (d)      any misappropriation of Rents or security
         deposits by Borrower or any Affiliate of Borrower;

                           (e)      any Losses incurred by or on behalf of
         Lender by reason of all or any part of the Property or the Account
         Collateral being encumbered by a Lien (other than the Loan Agreement
         and the Security Instrument) in violation of the Loan Documents;

                           (f)      after the occurrence and during the
         continuance of an Event of Default, any Rents, issues, profits and/or
         income collected by Borrower or any Affiliate of Borrower (other than
         Rent sent to the Collection Account or paid directly to Lender pursuant
         to any notice of direction delivered to tenants of the Property) and
         not applied to payment of the Obligations or used to pay normal and
         verifiable Operating Expenses of the Property or otherwise applied in a
         manner permitted under the Loan Documents;

                           (g)      any Losses incurred by or on behalf of
         Lender by reason of physical damage to the Property from intentional
         waste committed by Borrower or any Affiliate of Borrower;

                           (h)      any Losses incurred by or on behalf of
         Lender by reason of the intentional failure of Borrower to comply with
         any of the provisions of Article XII of the Loan Agreement;

                                       2

                           (i)      any Losses incurred by or on behalf of
         Lender by reason of the occurrence of any of the following events:

         (1) Borrower fails to comply with the material Single Purpose Entity
         requirements of the Loan Agreement (other than solely clause (xvii) of
         the definition of "Single Purpose Entity" set forth in the Loan
         Agreement); (2) Borrower fails to comply with any of the provisions of
         Section 8.1 and/or Section 8.5 of the Loan Agreement; (3) Borrower
         files a voluntary petition under the Bankruptcy Code or any other
         Federal or state bankruptcy or insolvency law; (4) an Affiliate,
         officer, director, or representative which controls, directly or
         indirectly, Borrower files, or joins in the filing of, an involuntary
         petition against Borrower under the Bankruptcy Code or any other
         Federal or state bankruptcy or insolvency law, or solicits or causes to
         be solicited petitioning creditors for any involuntary petition against
         Borrower from any Person; (5) Borrower files an answer consenting to or
         otherwise acquiescing in or joining in any involuntary petition filed
         against it, by any other Person under the Bankruptcy Code or any other
         Federal or state bankruptcy or insolvency law, or solicits or causes to
         be solicited petitioning creditors for any involuntary petition from
         any Person; (6) any Affiliate, officer, director, or representative
         which controls Borrower consents to or acquiesces in or joins in any
         application for the appointment of a custodian, receiver, trustee, or
         examiner for Borrower or any portion of the Property; or (7) Borrower
         makes an assignment for the benefit of creditors, or admits, in writing
         or in any legal proceeding, its insolvency or inability to pay its
         debts as they become due;

                           (j)      any Losses incurred by or on behalf of
         Lender as a result of (i) the failure of any or all of Borrower, any
         its Affiliates and/or any other owner of the Upper Option Space and/or
         Lower Option Space (as each such term is defined in the Bloomberg
         Lease) (other then Lender or any Affiliate of Lender), to comply with
         the terms of Article 36 (Option Space) of the Bloomberg Lease (or,
         following a foreclosure of the lien secured by the Security Instrument
         or a deed in lieu of foreclosure, Lender's inability to comply with the
         terms of Article 36 of the Bloomberg Lease as a result of such Person's
         failure to comply with the terms of such Article) (an EXPANSION SPACE
         DEFAULT), (ii) the exercise of any rights that Bloomberg may have as a
         result of any Expansion Space Default (whether pursuant to the
         Bloomberg Lease, at law or in equity), including, without limitation,
         any rights to set off any payments required under the Bloomberg Lease
         and/or (iii) paying any amount or performing any obligation with
         respect to the Upper Option Space and/or Lower Option Space after the
         occurrence of an Expansion Space Default;

                           (k)      any Losses incurred by or on behalf of
         Lender as a result of the failure by Borrower and/or any of its
         Affiliates to comply in any respect with the terms of Section 15 of the
         Security Instrument; and/or

                           (l)      reasonable attorneys' fees and expenses
         incurred by Lender in connection with any successful suit filed on
         account of any of the foregoing clauses (a) through (k).

                                       3

                  The term "Losses" means any and all losses, damages, costs,
expenses, liabilities, claims or other obligations reasonably incurred by Lender
(including reasonable attorneys' fees and costs but excluding any punitive
damages and lost profits).

                  Notwithstanding anything to the contrary in the Loan
Agreement, the Note or any of the Loan Documents, Lender shall not be deemed to
have waived any right which Lender may have under Section 506(a), 506(b),
1111(b) or any other provisions of the Bankruptcy Code to file a claim for the
full amount of the Indebtedness or to require that all collateral shall continue
to secure all of the Indebtedness owing to Lender in accordance with the Loan
Documents.

                  Section 3. Guaranty of Payment. This Agreement is a guaranty
of payment and not merely a guaranty of collection and upon any failure of
Borrower to pay the Guaranteed Obligations under the Note, Lender may, at its
option, proceed directly and at once, without notice to Borrower, against
Guarantor to collect and recover the full amount of the liability to pay the
Guaranteed Obligations hereunder or any portion thereof, without proceeding
against Borrower or any other Person, or foreclosing upon, selling, or otherwise
disposing of or collecting or applying against any of the collateral that is
security for the Loan.

                  Section 4. Continuing Guaranty. This is a continuing guaranty
and the obligations of Guarantor hereunder are and shall be absolute under any
and all circumstances, including, without limitation, following a foreclosure of
the lien secured by the Security Instrument or a deed in lieu of foreclosure,
without regard to the validity, regularity or enforceability of the Note, the
Loan Agreement, the Security Instrument or any other Loan Document, a true copy
of each of said documents Guarantor hereby acknowledges having received and
reviewed.

                  Section 5. Obligations Deferred. Any indebtedness of Borrower
to Guarantor now or hereafter existing, including, without limitation, any
rights to subrogation which Guarantor may have as a result of any payment by
Guarantor under this Agreement, together with any interest thereon, shall be,
and such indebtedness is, hereby deferred, postponed and subordinated to the
prior payment in full of the Guaranteed Obligations. Until payment in full of
the principal, interest, Yield Maintenance Premium (if applicable) and the
Liquidated Damages Amount (if applicable) payable by Borrower pursuant to the
terms of the Note, including interest accruing on the Note after the
commencement of a proceeding by or against Borrower under the Bankruptcy Code
which interest the parties agree shall remain a claim that is prior and superior
to any claim of Guarantor notwithstanding any contrary practice, custom or
ruling in cases under the Bankruptcy Code generally, Guarantor agrees not to
accept any payment or satisfaction of any kind of indebtedness of Borrower to
Guarantor and hereby assigns such indebtedness to Lender, including the right to
file proof of claim and to vote thereon in connection with any such proceeding
under the Bankruptcy Code, including the right to vote on any plan of
reorganization. In no event shall "indebtedness" of the Borrower to Guarantor
include normal and customary member distributions that Guarantor is entitled to
receive pursuant to the terms of Borrower's operating agreement provided such
distributions are not evidenced by a note or similar debt document.

                                       4

                  Section 6. Expenses. Guarantor agrees that, promptly after
notice or demand, Guarantor will reimburse Lender, to the extent that such
reimbursement is not made by Borrower, for all reasonable out of pocket
expenses, including, without limitation, reasonable counsel fees and
disbursements, incurred by Lender in connection with the collection of the
Guaranteed Obligations or any portion thereof.

                  Section 7. Waivers.

                           (a)      Guarantor hereby waives notice of the
acceptance hereof, presentment, demand for payment, protest, notice of protest,
or any and all notice of non-payment, non-performance or non-observance, or
other proof, or notice or demand, except as otherwise required hereunder.

                           (b)      Guarantor agrees that the validity of this
Agreement and the obligations of Guarantor hereunder shall in no way be
terminated, affected or impaired by reason of (i) the assertion by Lender of any
rights or remedies which it may have under or with respect to any of the Note,
the Loan Agreement, the Security Instrument or any other Loan Documents against
any Person obligated thereunder; (ii) any failure to file or record any of such
instruments or to take or perfect any security intended to be provided thereby;
(iii) the release or exchange of any property or interest covered by the Loan
Agreement or the Security Instrument or any other collateral for the Loan; (iv)
Lender's failure to exercise, or delay in exercising, any such right or remedy
or any right or remedy which Lender may have hereunder or in respect to this
Agreement; (v) the commencement of a case under the Bankruptcy Code by or
against any Person obligated under the Note, Loan Agreement, the Security
Instrument or any other Loan Document; (vi) any payment made on the Guaranteed
Obligations or any other indebtedness arising under the Note, the Loan
Agreement, the Security Instrument or any other Loan Document, whether made by
Borrower or Guarantor or any other Person, which is required to be refunded
pursuant to any bankruptcy or insolvency law; it being understood that no
payment so refunded shall be considered as a payment of any portion of the
Guaranteed Obligations, nor shall it have the effect of reducing the liability
of Guarantor hereunder. It is further understood that if Borrower shall have
taken advantage of, or be subject to the protection of, any provision in the
Bankruptcy Code, the effect of which is to prevent or delay Lender from taking
any remedial action against Borrower, including the exercise of any option
Lender has to declare the Guaranteed Obligations due and payable on the
happening of any default or event by which under the terms of the Note, the Loan
Agreement the Security Instrument or any other Loan Document, the Guaranteed
Obligations shall become due and payable then Lender may, as against Guarantor,
declare the Guaranteed Obligations to be due and payable and enforce any or all
of its rights and remedies against Guarantor provided for herein.

                           (c)      This Agreement shall remain and continue in
full force and effect as to any modification, extension or renewal of the Note,
the Loan Agreement, the Security Instrument or any other Loan Document and
Lender shall not be under a duty to protect, secure or insure any security or
lien provided by the Loan Agreement or the Security Instrument or other such
collateral, and that other indulgences or forbearance

                                       5

may be granted under any or all of such documents, all of which may be made,
done or suffered without notice to, or further consent of, Guarantor.

                           (d)      Guarantor hereby waives the pleading of any
statute of limitations as a defense to the obligation hereunder.

                  Section 8. Miscellaneous.

                           (a)      Marshalling. GUARANTOR WAIVES ANY RIGHT OR
CLAIM OF RIGHT TO CAUSE A MARSHALLING OF BORROWER'S ASSETS OR TO CAUSE LENDER TO
PROCEED AGAINST ANY OF THE SECURITY FOR THE LOAN BEFORE PROCEEDING UNDER THIS
AGREEMENT AGAINST BORROWER OR TO PROCEED AGAINST GUARANTOR IN ANY PARTICULAR
ORDER. GUARANTOR AGREES THAT ANY PAYMENTS REQUIRED TO BE MADE HEREUNDER SHALL
BECOME DUE AND PAYABLE TEN (10) DAYS AFTER DEMAND. EXCEPT AS PERMITTED PURSUANT
TO SECTION 5 HEREOF, GUARANTOR EXPRESSLY WAIVES AND RELINQUISHES ALL RIGHTS AND
REMEDIES (INCLUDING ANY RIGHTS OF SUBROGATION) ACCORDED BY APPLICABLE LAW TO
GUARANTOR.

                           (b)      Joint and Several Obligation. If Guarantor
consists of more than one Person or entity, each shall be jointly and severally
liable to perform the obligations of Guarantor hereunder. Any one of Borrower or
one or more parties constituting Guarantor or any other party liable upon or in
respect of this Agreement or the Loan may be released without affecting the
liability of any party not so released.

                           (c)      Further Assurances. Guarantor shall execute
and acknowledge (or cause to be executed and acknowledged) and deliver to Lender
all documents, and take all actions, reasonably required by Lender from time to
time to confirm the rights created or now or hereafter intended to be created
under this Agreement, to protect and further the validity, priority and
enforceability of this Agreement or otherwise carry out the purposes of this
Agreement and the transactions contemplated thereunder.

                           (d)      Notices. All notices, consents, approvals
and requests required or permitted hereunder shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested or (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, or (c) by telecopier (with answer
back acknowledged), addressed as follows (or at such other address and Person as
shall be designated from time to time by any party hereto, as the case may be,
in a written notice to the other parties hereto in the manner provided for in
this Section and given at least twenty (20) days prior to the effective date of
such change of address).

If to Guarantor:                    Alexander's Inc.
                                    888 Seventh Avenue

                                       6

                                    New York, New York 10019
                                    Attention: Wendy Silverstein
                                    Facsimile: (212) 894-7073
                                    Confirmation No.: (212) 894-7000

with a copy to:                     Proskauer Rose LLP
                                    1585 Broadway
                                    New York, New York 10036-8299
                                    Attention: Ronald D. Sernau, Esq.
                                    Facsimile: (212) 969 2900
                                    Confirmation No.: (212) 969-3000

If to Lender:                       German American Capital Corporation
                                    60 Wall Street
                                    New York, New York  10005
                                    Attention: Eric Schwartz and General Counsel
                                    Facsimile: (212) 250-7210
                                    Confirmation No.: (212) 250-2500

with a copy
to the Servicer:                    GMAC Commercial Mortgage Corporation
                                    200 Witmer Road
                                    Horsham, Pennsylvania 19044
                                    Attention: Managing Director, Global
                                    Facsimile: (215).328.3478
                                    Confirmation No.: 215.328.1030

and copy to:                        Skadden, Arps, Slate, Meagher & Flom LLP
                                    Four Times Square
                                    New York, NY 10036
                                    Attention: Harvey R. Uris, Esq.
                                    Facsimile: (212) 735-2000
                                    Confirmation No.: (212) 735-3000

All notices, elections, requests and demands required or permitted under this
Agreement shall be in the English language. All notices, elections, requests and
demands under this Agreement shall be effective and deemed received upon the
earliest of (i) the actual receipt of the same by personal delivery or
otherwise, (ii) one (1) Business Day after being deposited with a nationally
recognized overnight courier service as required above, (iii) upon delivery or
rejection of delivery after being deposited in the United States mail as
required above, or (iv) on the day sent if sent by facsimile with confirmation
on or before 5:00 p.m. New York time on any Business Day or on the next Business
Day if so delivered after 5:00 p.m. New York time or on any day other than a
Business Day. Rejection or other refusal to accept or the inability to deliver
because of changed address of

                                       7

which no notice was given as herein required shall be deemed to be receipt of
the notice, election, request, or demand sent.

                           (e)      Entire Agreement. This Agreement constitutes
the entire and final agreement between Guarantor and Lender with respect to the
subject matter hereof and may only be changed, amended, modified or waived by an
instrument in writing signed by Guarantor and Lender.

                           (f)      No Waiver. No waiver of any term or
condition of this Agreement, whether by delay, omission or otherwise, shall be
effective unless in writing and signed by the party sought to be charged, and
then such waiver shall be effective only in the specific instance and for the
purpose for which given. No delay on Lender's part in exercising any right,
power or privilege under this Agreement or any other Loan Document shall operate
as a waiver of any privilege, power or right hereunder.

                           (g)      Successors and Assigns. This Agreement shall
be binding upon Guarantor and its successors and assigns of this Agreement and
shall inure to the benefit of Lender and its successors and permitted assigns of
the Loan Documents. Guarantor, without the prior written consent of Lender in
each instance, may assign, transfer or set over to another, in whole or in part,
all or any part of its benefits, rights, duties and obligations hereunder,
including, but not limited to, performance of and compliance with conditions
hereof, provided that such assignment shall not release Guarantor of its
obligations hereunder.

                           (h)      Captions. All paragraph, section, exhibit
and schedule headings and captions herein are used for reference only and in no
way limit or describe the scope or intent of, or in any way affect, this
Agreement.

                           (i)      Counterparts. This Agreement may be executed
in counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one binding Agreement.

                           (j)      Severability. The provisions of this
Agreement are severable, and if any one clause or provision hereof shall be held
invalid or unenforceable in whole or in part, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
and not any other clause or provision of this Agreement.

                           (k)      GOVERNING LAW. THIS NOTE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WITHOUT REGARD TO
CHOICE OF LAW RULES. BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING
MADE UPON BORROWER IN THE MANNER AND AT THE

                                       8

ADDRESS SPECIFIED FOR NOTICES IN THE LOAN AGREEMENT. BORROWER HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.

                           (l)      JURY TRIAL WAIVER. GUARANTOR AND LENDER AND
ALL PERSONS CLAIMING BY, THROUGH OR UNDER THEM, HEREBY EXPRESSLY, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF GUARANTOR OR
LENDER WITH RESPECT TO THIS AGREEMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND GUARANTOR
AND LENDER HEREBY AGREE AND CONSENT THAT AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY JURY. EACH OF GUARANTOR AND LENDER
ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF
THIS WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE
MAKING OF THE LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.

                           (m)      Counterclaims and Other Actions. Guarantor
hereby expressly and unconditionally waives, in connection with any suit, action
or proceeding brought by Lender in connection with this Agreement, any and every
right it may have to (i) interpose any counterclaim therein (other than a
counterclaim which can only be asserted in the suit, action or proceeding
brought by Lender on this Agreement and cannot be maintained in a separate
action) and (ii) have any such suit, action or proceeding consolidated with any
other or separate suit, action or proceeding.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       9

                  IN WITNESS WHEREOF, Guarantor has executed this Guaranty of
Recourse Obligations as of the date first set forth above.

                                        GUARANTOR:

                                        ALEXANDER'S INC., a Delaware corporation

                                        By: /s/    Brian Kurtz
                                            ------------------------------------
                                            Name:  Brian Kurtz
                                            Title: Assistant Secretary

                                       10

                             ENVIRONMENTAL INDEMNITY

                  This ENVIRONMENTAL INDEMNITY, is made as of February 13, 2004
(this AGREEMENT), by ALEXANDER'S INC., a Delaware corporation (GUARANTOR) and
731 Office One LLC, a Delaware limited liability company (BORROWER, and,
collectively with Guarantor, INDEMNITOR), each having an address for notice
purposes 888 Seventh Avenue, New York, New York 10019, for the benefit of GERMAN
AMERICAN CAPITAL CORPORATION, a Maryland corporation (LENDER), having an office
at 60 Wall Street, New York, New York 10005.

                              W I T N E S S E T H:

                  WHEREAS, Borrower is the owner of a fee simple interest in the
real property commonly known as Office Unit 1 and Office Unit 2 of the Beacon
Court Condominium located at 731 Lexington Avenue, New York, New York, and more
particularly described on Exhibit A attached hereto and incorporated herein (the
PROPERTY);

                  WHEREAS, on the date hereof, in accordance with the terms of a
Loan and Security Agreement, dated as of the date hereof (as the same may be
amended and supplemented from time to time, the LOAN AGREEMENT), between Lender,
as lender, and Borrower, as borrower, Lender is making a loan to Borrower in the
principal amount of $400,000,000 (the LOAN), which Loan is evidenced by that
certain Amended, Restated and Consolidated Note, dated as of the date hereof (as
the same may be amended, substituted, replaced, exchanged and supplemented from
time to time, the NOTE), made by and between Borrower and Lender and secured by
that certain Amended, Restated and Consolidated Mortgage, Security Agreement,
Financing Statement and Assignment of Leases, Rents and Security Deposits, dated
as of the date hereof (as the same may be amended and supplemented from time to
time, the SECURITY INSTRUMENT), by and between Borrower and Lender and the other
Loan Documents (as defined in the Loan Agreement);

                  WHEREAS, Guarantor is an affiliate of Borrower and will derive
substantial benefit from the Loan;

                  WHEREAS, as a condition to making the Loan, Lender has
required Indemnitor to deliver this Agreement for the benefit of Lender;

                  WHEREAS, the forgoing recitals are intended to form an
integral part of this Agreement.

                  NOW, THEREFORE, in consideration of the foregoing premises,
Ten Dollars ($10.00) paid in hand, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Indemnitor agrees
as follows:

                  Section 1. Definitions.

                           (a)      The following terms shall have the meaning
ascribed thereto:

                                       1

                  AGREEMENT: Shall have the meaning provided in the first
paragraph.

                  BORROWER:  Shall have the meaning provided in the Recitals.

                  ENVIRONMENTAL LAW: Shall have the meaning provided in the Loan
Agreement.

                  GUARANTOR: Shall have the meaning provided in the Recitals.

                  HAZARDOUS MATERIALS: Shall have the meaning provided in the
Loan Agreement.

                  INDEMNIFIED PARTIES: Shall mean Lender, its parent,
subsidiaries and affiliates, each of their respective shareholders, directors,
officers, employees and agents, and the successors and assigns of any of them;
and "Indemnified Party" shall mean any one of the Indemnified Parties.

                  INDEMNITOR: Shall have the meaning provided in the first
paragraph.

                  LENDER: Shall have the meaning provided in the first
paragraph.

                  LOAN AGREEMENT: Shall have the meaning provided in the
Recitals.

                  NOTE:  Shall have the meaning provided in the Recitals.

                  RELEASE: Shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
discarding, abandoning, or disposing into the environment in violation of
applicable Environmental Law.

                  SECURITY INSTRUMENT: Shall have the meaning provided in the
Recitals.

                  STORING: Shall mean any storing or burying of any Hazardous
Materials into the environment in violation of applicable Environmental Law.

                  TERMINATION EVENT: Shall mean the first to occur of:
satisfaction in full of the Obligations (as defined in the Security Instrument);
Lender or Lender's agents or any receiver appointed by or at the request of
Lender taking possession of the Property by foreclosure; or Lender or any Lender
nominee acquiring title to the Property by foreclosure, conveyance of a deed in
lieu of foreclosure or otherwise.

                  THREAT OF RELEASE: Shall mean a substantial likelihood of a
Release which requires action to prevent or mitigate damage to the environment
which may result from such Release.

                           (b)      Capitalized terms used but not otherwise
defined herein shall have the respective meanings given thereto in the Loan
Agreement, unless otherwise expressly provided herein. All references to
sections shall be deemed to be references to sections of this Agreement, unless
otherwise indicated.

                                       2

                  Section 2. Indemnity Agreement. Indemnitor covenants and
agrees, at its sole cost and expense, to indemnify, defend (at trial and
appellate levels and with attorneys, consultants and experts selected by
Indemnitor and reasonably acceptable to Lender) and hold each Indemnified Party
harmless against and from any and all liens, damages, losses, liabilities,
obligations, settlement payments, penalties, assessments, citations, directives,
claims, litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or of any nature whatsoever (including,
without limitation, but subject to the provisions hereof, reasonable attorneys',
consultants' and experts' fees and disbursements incurred in investigating,
defending against, settling or prosecuting any claim, litigation or proceeding
but excluding any lost profits) which may at any time be imposed upon, incurred
by or asserted or awarded against such Indemnified Party or the Property and,
and arising directly or indirectly from or out of: (A) the Release, Storing or
Threat of Release of any Hazardous Materials in, on or affecting all or any
portion of the Property or any surrounding areas, regardless of whether or not
caused by or within the control of Borrower or Indemnitor, first occurring prior
to (but need not be discovered prior to) a Termination Event; (B) the violation
of any applicable Environmental Laws relating to or affecting the Property or
Borrower, whether or not caused by or within the control of Borrower or
Indemnitor first occurring prior to (but need not be discovered prior to) a
Termination Event; (C) the failure of Indemnitor to comply with the terms and
conditions of this Agreement; (D) the violation of any applicable Environmental
Laws in connection with other real property of Borrower or Indemnitor which
gives or is reasonably likely to give rise to any rights whatsoever in any party
with respect to the Property by virtue of any Environmental Laws; or (E) the
enforcement of this indemnity, in a commercially reasonable manner, including,
without limitation, (i) the costs of assessment, containment and/or removal of
any and all Hazardous Materials from all or any portion of the Property or any
surrounding areas to the extent such Hazardous Materials existed (but need not
have been discovered) at the Property prior to a Termination Event and to the
extent required by any applicable Environmental Laws, (ii) the costs of any
actions required under Applicable Laws to be taken in response to a Release,
Storing or Threat of Release of any Hazardous Materials in, on or affecting all
or any portion of the Property or any surrounding areas to prevent or minimize
such Release, Storing or Threat of Release so that it does not migrate or
otherwise cause or threaten danger to present or future public health, safety,
welfare or the environment to the extent such Hazardous Materials existed (but
need not have been discovered) at the Property prior to a Termination Event, and
(iii) costs incurred to comply with applicable Environmental Laws in connection
with all or any portion of the Property or (to the extent any condition
originating on the Property requires compliance with applicable Environmental
Laws in connection with any surrounding areas) with any surrounding areas to the
extent Hazardous Materials existed (but need not have been discovered) at the
Property prior to a Termination Event. Indemnitor's obligations hereunder are
separate and distinct from its obligations under the Loan Documents, and
Lender's and the other Indemnified Parties' rights under this Agreement shall be
in addition to all rights of Lender under the Loan Documents. If any such action
or other proceeding shall be brought against Lender, upon written notice from
Indemnitor to Lender (given reasonably promptly following Lender's notice to
Indemnitor of such action or proceeding), Indemnitor shall be entitled to assume
the defense thereof, at

                                       3

Indemnitor's expense, with counsel reasonably acceptable to Lender; provided,
however, Lender may, at its own expense, retain separate counsel to participate
in such defense, but such participation shall not be deemed to give Lender a
right to control such defense, which right Indemnitor expressly retains.
Notwithstanding the foregoing, each Indemnified Party shall have the right to
employ separate counsel at Indemnitor's expense if, in the reasonable opinion of
legal counsel, a conflict or potential conflict exists between the Indemnified
Party and Indemnitor and/or the other Indemnified Parties, as the case may be,
that would make such separate representation advisable. Notwithstanding the
foregoing, Indemnitor shall have no liability under this Agreement if the liens,
damages, losses, liabilities, obligations, settlement payments, penalties,
assessments, citations, directives, claims, litigation, demands, defenses,
judgments, suits, proceedings, costs, disbursements or expenses of any kind or
of any nature whatsoever are due to the gross negligence or willful misconduct
of Lender.

                  Section 3. Survival.

                           (a)      This Agreement and the indemnities provided
herein shall survive the repayment of the Loan and, subject to the terms of such
indemnity, any exercise of any remedies under the Loan Documents, including
without limitation, any remedy in the nature of foreclosure for the period of
five (5) years immediately following a Termination Event, and shall not merge
with any assignment or conveyance given by Borrower to Lender in lieu of
foreclosure.

                           (b)      It is agreed and intended by Indemnitor and
Lender that this Agreement and the Indemnities provided herein may be assigned
or otherwise transferred by Lender to its successors and assigns and to any
subsequent purchaser of all or any portion of the Loan by, through or under
Lender, without notice to Indemnitor and without any further consent of
Indemnitor. To the extent consent of any such permitted assignment or transfer
is required by law, advance consent to any such assignment or transfer is hereby
given by Indemnitor in order to maximize the extent and effect of the indemnity
given hereby.

                  Section 4. Miscellaneous.

                           (a)      No Waiver. The liabilities of Indemnitor
under this Agreement shall in no way be limited or impaired by, and Indemnitor
hereby consents to and agrees to be bound by, any amendment or modification of
the provisions of the Loan Documents to or with Lender by Borrower or any Person
who succeeds Borrower or any other Person as owner of any portion of the
Property. In addition, notwithstanding any terms of any of the Loan Documents to
the contrary, the liability of Indemnitor under this Agreement shall in no way
be limited or impaired by: (i) any extensions of time for performance required
by any of the Loan Documents; (ii) any sale, assignment or foreclosure of the
Note or the Loan Documents or any sale or transfer of all or part of the
Property; (iii) any exculpatory provision in any of the Loan Documents limiting
Lender's recourse to property encumbered by the Loan Documents or to any other
security, or limiting Lender's rights to a deficiency judgment against Borrower;
(iv) the accuracy or inaccuracy of the representations and warranties made by
Borrower under any of the

                                       4

Loan Documents; (v) the release of Borrower or any other Person from performance
or observance of any of the agreements, covenants, terms or conditions contained
in the Loan Documents by operation of law, Lender's voluntary act, or otherwise;
(vi) the release or substitution, in whole or in part, of any security for the
Loan; or (vii) Lender's failure to record the Security Instrument or file any
UCC-1 financing statements (or Lender's improper recording or filing of any
thereof) or to otherwise perfect, protect, secure or insure any security
interest or lien given as security for the Loan; and, in any such case, whether
with or without notice to Indemnitor and with or without consideration.

                           (b)      Marshalling. INDEMNITOR WAIVES ANY RIGHT OR
CLAIM OF RIGHT TO CAUSE A MARSHALLING OF BORROWER'S ASSETS OR TO CAUSE LENDER TO
PROCEED AGAINST ANY OF THE SECURITY FOR THE LOAN BEFORE PROCEEDING UNDER THIS
AGREEMENT AGAINST BORROWER OR TO PROCEED AGAINST INDEMNITOR IN ANY PARTICULAR
ORDER. INDEMNITOR AGREES THAT ANY PAYMENTS REQUIRED TO BE MADE HEREUNDER SHALL
BECOME DUE AND PAYABLE TEN (10) DAYS AFTER DEMAND. INDEMNITOR EXPRESSLY WAIVES
AND RELINQUISHES ALL RIGHTS AND REMEDIES (INCLUDING ANY RIGHTS OF SUBROGATION)
ACCORDED BY APPLICABLE LAW TO INDEMNITOR, PRIOR TO THE EXPIRATION OF THE FIFTH
ANNIVERSARY OF THE OCCURRENCE OF A TERMINATION EVENT.

                           (c)      Joint and Several Obligation. If Indemnitor
consists of more than one Person or entity, each shall be jointly and severally
liable to perform the obligations of Indemnitor hereunder. Any one of Borrower
or one or more parties constituting Indemnitor or any other party liable upon or
in respect of this Agreement or the Loan may be released without affecting the
liability of any party not so released.

                           (d)      Further Assurances. Indemnitor shall execute
and acknowledge (or cause to be executed and acknowledged) and deliver to Lender
all documents, and take all actions, reasonably required by Lender from time to
time to confirm the rights created or now or hereafter intended to be created
under this Agreement, to protect and further the validity, priority and
enforceability of this Agreement or otherwise carry out the purposes of this
Agreement and the transactions contemplated thereunder.

                           (e)      Notices. All notices, consents, approvals
and requests required or permitted hereunder shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested or (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, or (c) by telecopier (with answer
back acknowledged), addressed as follows (or at such other address and Person as
shall be designated from time to time by any party hereto, as the case may be,
in a written notice to the other parties hereto in the manner provided for in
this Section and given at least twenty (20) days prior to the effective date of
such change of address).

                                       5

If to Indemnitor:                  731 Office One LLC
                                   c/o Alexander's Inc.
                                   888 Seventh Avenue
                                   New York, New York 10019
                                   Attention: Ms. Wendy Silverstein
                                   Facsimile: (212) 894-7073
                                   Confirmation No.: (212) 894-7000

and to:                            Alexander's Inc.
                                   888 Seventh Avenue
                                   New York, New York 10019
                                   Attention: Ms. Wendy Silverstein
                                   Facsimile: (212) 894-7073
                                   Confirmation No.: (212) 894-7000

with a copy to:                    Proskauer Rose LLP
                                   1585 Broadway
                                   New York, New York 10036-8299
                                   Attention: Ronald D. Sernau, Esq.
                                   Facsimile: (212) 969 2900
                                   Confirmation No.: (212) 969-3000

If to Lender:                      German American Capital Corporation
                                   60 Wall Street
                                   New York, New York  10005
                                   Attention: Eric Schwartz and General Counsel
                                   Facsimile:  (212) 250-7210
                                   Confirmation No.: (212) 250-2500

with a copy
to the Servicer:                   GMAC Commercial Mortgage Corporation
                                   200 Witmer Road
                                   Horsham, Pennsylvania 19044
                                   Attention: Managing Director, Global
                                   Facsimile: (215).328.3478
                                   Confirmation No.: 215.328.1030

with a copy to:                    Skadden, Arps, Slate, Meagher & Flom LLP
                                   Four Times Square
                                   New York, NY  10036
                                   Attention: Harvey R. Uris, Esq.
                                   Facsimile:  (212) 735-2000
                                   Confirmation No.: (212) 735-3000

                                       6

All notices, elections, requests and demands required or permitted under this
Agreement shall be in the English language. All notices, elections, requests and
demands under this Agreement shall be effective and deemed received upon the
earliest of (i) the actual receipt of the same by personal delivery or
otherwise, (ii) one (1) Business Day after being deposited with a nationally
recognized overnight courier service as required above, (iii) upon delivery or
rejection of delivery after being deposited in the United States mail as
required above, or (iv) on the day sent if sent by facsimile with confirmation
on or before 5:00 p.m. New York time on any Business Day or on the next Business
Day if so delivered after 5:00 p.m. New York time or on any day other than a
Business Day. Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given as herein required shall
be deemed to be receipt of the notice, election, request, or demand sent.

                           (f)      Entire Agreement. This Agreement constitutes
the entire and final agreement between Indemnitor and Lender with respect to the
subject matter hereof and may only be changed, amended, modified or waived by an
instrument in writing signed by Indemnitor and Lender.

                           (g)      No Waiver. No waiver of any term or
condition of this Agreement, whether by delay, omission or otherwise, shall be
effective unless in writing and signed by the party sought to be charged, and
then such waiver shall be effective only in the specific instance and for the
purpose for which given. No delay on Lender's part in exercising any right,
power or privilege under this Agreement or any other Loan Document shall operate
as a waiver of any privilege, power or right hereunder.

                           (h)      Successors and Assigns. This Agreement shall
be binding upon Indemnitor and its successors and assigns and shall inure to the
benefit of Lender and its successors and permitted assigns. Indemnitor, without
the prior written consent of Lender in each instance, may assign, transfer or
set over to another, in whole or in part, all or any part of its benefits,
rights, duties and obligations hereunder, including, but not limited to,
performance of and compliance with conditions hereof, provided that such
assignment shall not release Indemnitor of its obligations hereunder.

                           (i)      Captions. All paragraph, section, exhibit
and schedule headings and captions herein are used for reference only and in no
way limit or describe the scope or intent of, or in any way affect, this
Agreement.

                           (j)      Counterparts. This Agreement may be executed
in counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one binding Agreement.

                           (k)      Severability. The provisions of this
Agreement are severable, and if any one clause or provision hereof shall be held
invalid or unenforceable in whole or in part, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
and not any other clause or provision of this Agreement.

                                       7

                           (l)      GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WITHOUT
REGARD TO CHOICE OF LAW RULES. INDEMNITOR AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON INDEMNITOR IN THE MANNER AND AT THE
ADDRESS SPECIFIED FOR NOTICES ABOVE. INDEMNITOR HEREBY WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR
THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.

                           (m)      JURY TRIAL WAIVER. INDEMNITOR, LENDER AND
THE INDEMNIFIED PARTIES AND ALL PERSONS CLAIMING BY, THROUGH OR UNDER THEM,
HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE
MODIFICATION THEREOF OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF INDEMNITOR, LENDER OR ANY INDEMNITEE WITH RESPECT TO THIS
AGREEMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND INDEMNITOR, LENDER AND EACH INDEMNITEE HEREBY
AGREE AND CONSENT THAT AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION MAY BE
FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT HERETO TO THE WAIVER OF
ANY RIGHT TO TRIAL BY JURY. EACH OF INDEMNITOR AND LENDER ACKNOWLEDGES THAT IT
HAS CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER AND
ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE
LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.

                           (n)      Counterclaims and other Actions. Indemnitor
hereby expressly and unconditionally waives, in connection with any suit, action
or proceeding brought by Lender on this Agreement, any and every right it may
have to (i) interpose any counterclaim therein (other than a counterclaim which
can only be asserted in the suit, action or proceeding brought by Lender on this
Agreement and cannot be maintained in a separate action) and (ii) have any such
suit, action or proceeding consolidated with any other or separate suit, action
or proceeding.

                                       8

                           (o)      Non-Recourse. Recourse with respect to any
claims arising under or in connection with this Agreement shall be limited to
the extent provided in Article XVIII of the Loan Agreement and the terms,
covenants and conditions of Article XVIII of the Loan Agreement are hereby
incorporated by reference as if fully set forth in this Agreement.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       9

                  IN WITNESS WHEREOF, Indemnitor has executed this Environmental
Indemnity as of the day and year first written above.

                              INDEMNITOR:

                              731 OFFICE ONE LLC, a Delaware limited liability
                              company

                              By:   731 OFFICE ONE HOLDING LLC, a Delaware
                              limited liability company, its sole member

                                    By:   ALEXANDER'S INC., a Delaware
                                          corporation, its sole member

                                    By:   /s/     Brian Kurtz
                                          -----------------------------------
                                          Name:   Brian Kurtz
                                          Title:  Assistant Secretary

                              ALEXANDER'S INC., a Delaware corporation

                              By /s/    Brian Kurtz
                                 --------------------------------
                                 Name:  Brian Kurtz
                                 Title: Assistant Secretary

                                       10

                                    EXHIBIT A

                                 (Office Unit 1)

The Condominium Unit (the "Unit") in the premises known as Beacon Court
Condominium and by the street number by the street number 151 East 58th Street,
Borough of Manhattan, City, County and State of New York, said Unit being
designated and described as "Office Unit 1" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1002
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

         TOGETHER with an undivided 49.0559% percentage interest in the General
Common Elements (as such term is defined in the Declaration);

         TOGETHER with the appurtenances and all the estate and rights in and to
the Unit;

         TOGETHER with, and subject to, the rights, obligations, easements,
restrictions and other provisions set forth in the Declaration and the By-Laws,
all of which constitute covenants running with the Land and will bind any person
having at any time any interest or estate in (any of) the Unit, as though
recited and stipulated at length herein;

The premises within which the Unit is located is more particularly described as:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
borough of Manhattan, County, City and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the southerly side of East
59th Street and the westerly side of Third Avenue;

RUNNING THENCE southerly, along the westerly side of Third Avenue, 200'-10" to
the northerly side of East 58th Street;

THENCE westerly, along the northerly side of East 58th Street 420' to the
easterly side of Lexington Avenue;

THENCE northerly along the easterly side of Lexington Avenue, 200'-10" to the
southerly side of East 59th Street;

THENCE easterly, along the southerly side of East 59th Street, 420' to the point
or place of BEGINNING.

TOGETHER with the benefits and SUBJECT to the burdens of the easements set forth
in the deed made by Seven Thirty One Limited Partnership to 59th Street
Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339 Page 1100.

                                 (Office Unit 2)

The Condominium Unit (the "Unit") in the premises known as Beacon Court
Condominium and by the street number by the street number 151 East 58th Street,
Borough of Manhattan, City, County and State of New York, said Unit being
designated and described as "Office Unit 2" in the declaration (the
"Declaration") establishing a plan for condominium ownership of said premises
under Article 9-B of the Real Property Law of the State of New York (the
"Condominium Act"), dated December 4, 2003, and recorded in the New York County
office of the Register of The City of New York (the "City Register's Office") on
February 3, 2004, in CRFN No. 2004000064392, and also designated as Tax Lot 1003
in Block 1313 of Section 5 of the Borough of Manhattan on the Tax Map of the
Real Property Assessment Department of the City of New York and on the Floor
Plans of said building, certified by Peter Claman, Registered Architect, on
January 29, 2004, and filed in the Real Property Assessment Department of the
City of New York on January 30, 2004 as Condominium Plan No. 1350 also filed in
the City Register's Office on February 3, 2004 in CRFN No. 2004000064393. All
capitalized terms herein which are not separately defined herein will have the
meanings given to those terms in the Declaration or in the by-laws of Beacon
Court Condominium. (Said by-laws, as the same may be amended from time to time,
are hereinafter referred to as the "By-Laws.")

TOGETHER with an undivided 14.0095% percentage interest in the General Common
Elements (as such term is defined in the Declaration);

TOGETHER with the appurtenances and all the estate and rights in and to the
Unit;

TOGETHER with, and subject to, the rights, obligations, easements, restrictions
and other provisions set forth in the Declaration and the By-Laws, all of which
constitute covenants running with the Land and will bind any person having at
any time any interest or estate in (any of) the Unit, as though recited and
stipulated at length herein;

The premises within which the Unit is located is more particularly described as:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
borough of Manhattan, County, City and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the southerly side of East
59th Street and the westerly side of Third Avenue;

RUNNING THENCE southerly, along the westerly side of Third Avenue, 200'-10" to
the northerly side of East 58th Street;

THENCE westerly, along the northerly side of East 58th Street 420' to the
easterly side of Lexington Avenue;

THENCE northerly along the easterly side of Lexington Avenue, 200'-10" to the
southerly side of East 59th Street;

THENCE easterly, along the southerly side of East 59th Street, 420' to the point
or place of BEGINNING.

TOGETHER with the benefits and SUBJECT to the burdens of the easements set forth
in the deed made by Seven Thirty One Limited Partnership to 59th Street
Corporation dated as of 8/1/2001 and recorded 8/8/2001 in Reel 3339 Page 1100.

                                       2

                                                                               .
                                                                               .
                                                                               .

                                   EXHIBIT 12
                       ALEXANDER'S, INC. AND SUBSIDIARIES
                CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
                      (amounts in thousands except ratios)

                                                                                       Year Ended December 31,
                                                                       -------------------------------------------------------
                                                                         2003        2002        2001       2000        1999
                                                                       --------    --------    --------   --------    --------
                                                                                                       
Pretax income (loss) from continuing operations before fixed charges   $(18,948)   $ 12,400    $ 26,440   $  4,425    $  4,743
Fixed charges (1) ..................................................     13,830      23,027      22,608     21,563      17,786
                                                                       --------    --------    --------   --------    --------
Earnings ...........................................................   $ (5,118)   $ 35,427    $ 49,048   $ 25,988    $ 22,529
                                                                       ========    ========    ========   ========    ========
Fixed charges (2)
    Interest and debt expense ......................................   $ 13,691    $ 22,888    $ 22,469   $ 21,424    $ 17,647
    1/3 of rent expense - interest factor (3) ......................        139         139         139        139         139
                                                                       --------    --------    --------   --------    --------
                                                                         13,830      23,027      22,608     21,563      17,786
Capitalized interest ...............................................     37,516      23,788      19,259     16,731       9,352
                                                                       --------    --------    --------   --------    --------
                                                                       $ 51,346    $ 46,815    $ 41,867   $ 38,294    $ 27,138
                                                                       ========    ========    ========   ========    ========
Ratio of earnings to fixed charges .................................         --          --        1.17         --          --

Deficiency in earnings available to cover fixed charges ............   $(56,464)   $(11,388)   $     --   $(12,306)   $ (4,609)
                                                                       ========    ========    ========   ========    ========

- ----------------

(1)      For purposes of the calculation of the numerator, fixed charges does
         not include capitalized interest.
(2)      There were no preference securities outstanding during the periods
         shown.
(3)      This is the portion of operating lease rental expense deemed to
         represent the interest factor.

                                   EXHIBIT 21
                                ALEXANDER'S, INC.
                           SUBSIDIARIES OF REGISTRANT

Alexander's of Brooklyn, Inc.
Alexander's Kings, LLC
Alexander's Kings Plaza, LLC
Alexander's Paramus, LLC
Alexander's of Rego Park II, Inc.
Alexander's of Rego Park III, Inc.
Alexander's of Flushing, Inc.
Alexander's Department Stores of New Jersey, Inc.
Alexander's Department Stores of Brooklyn, Inc.
Kings Parking, LLC
Ownreal Inc.
Sakraf Wine & Liquor Store, Inc.
Alexander's Personnel Providers, Inc.
Alexander's Rego Shopping Center Inc.
731 Commercial Holding LLC
731 Commercial LLC
731 Residential Holding LLC
731 Residential LLC

                                   EXHIBIT 23

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation in Registration Statement No. 333-110673 of
Alexander's, Inc. on Form S-3 of our report dated March 2, 2004 (which report
expresses an unqualified opinion and includes an explanatory paragraph relating
to the Company's adoption of SFAS No. 144 on January 1, 2002) appearing in this
Annual Report on Form 10-K of Alexander's, Inc. for the year ended December 31,
2003, and to the reference to us under the heading "Experts" in the Prospectus,
which is part of such Registration Statement.

Deloitte & Touche LLP
Parsippany, New Jersey
March 2, 2004

                                                                    EXHIBIT 31.1

                                  CERTIFICATION

I, Steven Roth, certify that:

     1.   I have reviewed this Annual Report on Form 10-K of Alexander's, Inc.;

     2.   Based on my knowledge, this report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this report, fairly present in all material
          respects the financial condition, results of operations and cash flows
          of the registrant as of, and for, the periods presented in this
          report;

     4.   The registrant's other certifying officer and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
          registrant and have:

          a)   Designed such disclosure controls and procedures, or caused such
               disclosure controls and procedures to be designed under our
               supervision, to ensure that material information relating to the
               registrant, including its consolidated subsidiaries, is made
               known to us by others within those entities, particularly during
               the period in which this report is being prepared;

          b)   Evaluated the effectiveness of the registrant's disclosure
               controls and procedures and presented in this report our
               conclusions about the effectiveness of the disclosure controls
               and procedures, as of the end of the period covered by this
               report based on such evaluation; and

          c)   Disclosed in this report any change in the registrant's internal
               control over financial reporting that occurred during the
               registrant's most recent fiscal quarter (the registrant's fourth
               fiscal quarter in the case of an annual report) that has
               materially affected, or is reasonably likely to materially
               affect, the registrant's internal control over financial
               reporting; and

     5.   The registrant's other certifying officer and I have disclosed, based
          on our most recent evaluation of internal control over financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's board of directors (or persons performing the equivalent
          functions):

          a)   All significant deficiencies and material weaknesses in the
               design or operation of internal control over financial reporting
               which are reasonably likely to adversely affect the registrant's
               ability to record, process, summarize and report financial
               information; and

          b)   Any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal control over financial reporting.

March 2, 2004

/s/Steven Roth
- ----------------------------
Steven Roth
Chief Executive Officer

                                                                    EXHIBIT 31.2

                                  CERTIFICATION

I, Joseph Macnow, certify that:

     1.   I have reviewed this Annual Report on Form 10-K of Alexander's, Inc.;

     2.   Based on my knowledge, this report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this report, fairly present in all material
          respects the financial condition, results of operations and cash flows
          of the registrant as of, and for, the periods presented in this
          report;

     4.   The registrant's other certifying officer and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
          registrant and have:

          a)   Designed such disclosure controls and procedures, or caused such
               disclosure controls and procedures to be designed under our
               supervision, to ensure that material information relating to the
               registrant, including its consolidated subsidiaries, is made
               known to us by others within those entities, particularly during
               the period in which this report is being prepared;

          b)   Evaluated the effectiveness of the registrant's disclosure
               controls and procedures and presented in this report our
               conclusions about the effectiveness of the disclosure controls
               and procedures, as of the end of the period covered by this
               report based on such evaluation; and

          c)   Disclosed in this report any change in the registrant's internal
               control over financial reporting that occurred during the
               registrant's most recent fiscal quarter (the registrant's fourth
               fiscal quarter in the case of an annual report) that has
               materially affected, or is reasonably likely to materially
               affect, the registrant's internal control over financial
               reporting; and

     5.   The registrant's other certifying officer and I have disclosed, based
          on our most recent evaluation of internal control over financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's board of directors (or persons performing the equivalent
          functions):

          a)   All significant deficiencies and material weaknesses in the
               design or operation of internal control over financial reporting
               which are reasonably likely to adversely affect the registrant's
               ability to record, process, summarize and report financial
               information; and

          b)   Any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal control over financial reporting.

March 2, 2004

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

                                                                    EXHIBIT 32.1

                                  CERTIFICATION

            Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 (Subsection (a) and (b) of Section 1350, Chapter 63 of Title 18, United States
                                      Code)

         Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections
(a) and (b) of section 1350, chapter 63 of title 18, United States Code), the
undersigned officer of Alexander's, Inc. (the "Company"), hereby certifies, to
such officer's knowledge, that:

The Annual Report on Form 10-K for the year ended December 31, 2003 (the
"Report") of the Company fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.

March 2, 2004                                  /s/ Steven Roth
                                               -------------------------------
                                               Name: Steven Roth
                                               Title: Chief Executive Officer

                                                                    EXHIBIT 32.2

                                  CERTIFICATION

            Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 (Subsection (a) and (b) of Section 1350, Chapter 63 of Title 18, United States
                                      Code)

         Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections
(a) and (b) of section 1350, chapter 63 of title 18, United States Code), the
undersigned officer of Alexander's, Inc. (the "Company"), hereby certifies, to
such officer's knowledge, that:

The Annual Report on Form 10-K for the year ended December 31, 2003 (the
"Report") of the Company fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.

March 2, 2004                     /s/ Joseph Macnow
                                  -------------------------------------------
                                  Name: Joseph Macnow
                                  Title: Executive Vice President and Chief
                                         Financial Officer