UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31 | |
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Or | |
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 001-09279
ONE LIBERTY PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND | 13-3147497 |
60 Cutter Mill Road, Great Neck, New York | 11021 |
Registrant’s telephone number, including area code: (516) 466-3100
Securities registered pursuant to Section 12(b) of the Act:
| | | | |
Title of each class |
| Trading Symbol |
| Name of exchange on which registered |
Common Stock, par value $1.00 per share | | OLP | | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes ◻ No ⌧
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ◻ No ⌧
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 ⌧ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “small reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ | Smaller reporting company ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Ifsecurities areregistered pursuant toSection 12(b)oftheAct,indicate bycheckmarkwhether thefinancial statements oftheregistrant included inthefilingreflectthecorrection ofanerrortopreviously issued financial statements. ☐
Indicate bycheckmarkwhether anyofthoseerrorcorrectionsarerestatementsthatrequired arecoveryanalysis ofincentive-based compensation received byanyoftheregistrant’sexecutive officers during therelevant recovery period pursuant to§240.10D-1(b). ☐
Indicate by check mark whether registrant is a shell company (defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of June 30, 20212023 (the last business day of the registrant’s most recently completed second quarter), the aggregate market value of all common equity held by non-affiliates of the registrant, computed by reference to the price at which common equity was last sold on said date, was approximately $458329 million.
As of March 1, 2022,2024, the registrant had 21,120,93621,253,398 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the 20222024 annual meeting of stockholders of One Liberty Properties, Inc., to be filed pursuant to Regulation 14A not later than May 2, 2022,April 29, 2024, are incorporated by reference into Part III of this Annual Report on Form 10-K.
TABLE OF CONTENTS
Form 10-K
Explanatory Note
In the narrative portion of this Annual Report on Form 10-K, except as otherwise indicated or the context otherwise requires:
● | the information with respect to our consolidated joint ventures is generally described as if such ventures are our wholly owned subsidiaries and information with respect to unconsolidated joint ventures is generally separately described. |
● | (i) all references to joint ventures refer to unconsolidated joint ventures, (ii) all interest rates with respect to debt give effect to the related interest rate derivative, if any, (iii) amounts reflected as debt reflect the gross debt owed, without deducting deferred financing costs and (iv) references to industrial properties include properties (a) a portion of which may be used for office purposes and (b) that are used for distribution, warehouse and flex purposes. |
● | the term “standard carve-outs,” when used in describing mortgages or mortgage financings, refers to recourse items to an otherwise non-recourse mortgage. While carve-outs vary from lender to lender and transaction to transaction, the carve-outs may include, among other things, voluntary bankruptcy filings, environmental liabilities, the sale, financing or encumbrance of the property in violation of loan documents, damage to property as a result of intentional misconduct or gross negligence, failure to pay valid taxes and other claims which could create liens on the property and the conversion of security deposits, insurance proceeds or condemnation awards. The interest rate on most of our variable rate mortgage debt has been fixed through the use of interest rate swap agreements. In addition to our being liable for “standard carve-outs”, we may also be liable, at the parent company level, for swap breakage losses on otherwise non-recourse mortgage debt that is subject to an interest rate swap agreement, if such agreement is terminated prior to its stated expiration. See Note 9 to our consolidated financial statements. |
● | we present information regarding our |
● | our use of the term e-commerce includes the provision by the retail, restaurant, health and fitness and theater sectors of their goods and services through distribution channels other than traditional brick and mortar distribution channels. |
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K, together with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provision for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “could,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions or variations thereof and include, without limitation, statements regarding our future estimated contractual rental income, funds from operations, adjusted funds from operations and our dividend. Among other things, forward looking statements with respect to (i) estimates of rental income for 20222024 may exclude variable rent, (ii) anticipated property sales may not be completed during the period indicated or at all, and (iii) estimates of gains from property sales are subject to adjustment, among other things, because actual closing costs may
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differ from the estimated costs. You should not rely on forward-looking statements since they involve known and
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unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, performance or achievements.
Currently, a significant risk and uncertainty we face is the impact of the COVID-19 pandemic, the various governmental and non-governmental responses thereto, and the related economic consequences of the foregoing on (i) our and our tenants’ financial condition, results of operations, cash flows and performance, and (ii) the real estate market, global economy and financial markets. The extent to which COVID-19 impacts us, our tenants and the economy generally will depend on future developments, which are highly uncertain and cannot be predicted with confidence. Additional uncertainties, risks and factors which may cause actual results to differ materially from current expectations include, but are not limited to:
● | the financial failure of, or other default in payment by, tenants under their leases and the potential resulting vacancies; |
● | adverse changes and disruption in the retail, restaurant, theater and health and fitness sectors, which could impact our tenants’ ability to pay rent and expense reimbursement; |
● | loss or bankruptcy of one or more of our tenants, and bankruptcy laws that may limit our remedies if a tenant becomes bankrupt and rejects its lease; |
● | the level and volatility of interest rates; |
● | general economic and business conditions and developments, including those currently affecting or that may |
● | general and local real estate conditions, including any changes in the value of our real estate; |
● | our ability to renew or re-lease space as leases expire; |
● | our ability to pay dividends; |
● | changes in governmental laws and regulations relating to real estate and related investments; |
● | compliance with credit facility and mortgage debt covenants; |
● | the availability of, and costs associated with, sources of capital and liquidity; |
● | competition in our industry; |
● | technological changes, such as autonomous vehicles, reconfiguration of supply chains, robotics, 3D printing or other technologies; |
● | potential natural disasters, epidemics, pandemics or outbreak of infectious disease, such as COVID-19, and other potentially catastrophic events such as acts of war and/or terrorism; and |
● | the other risks, uncertainties and factors described in the reports and documents we file with the SEC including the risks, uncertainties and factors described under “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K, and in the Quarterly Reports on Form 10-Q and the other reports we file with the SEC. |
In light of the factors referred to above, the future events discussed or incorporated by reference in this report and other documents we file with the SEC may not occur, and actual results, performance or achievements could differ materially from those anticipated or implied in the forward-looking statements. Given these uncertainties, you should not rely on any forward-looking statements.
Except as may be required under the United States federal securities laws, we undertake no obligation to publicly update our forward-looking statements, whether as a result of new information, future events or
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otherwise. You are advised, however, to consult any further disclosures we make in our reports that are filed with or furnished to the SEC.
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PART I
Item 1. Business.
General
We are a self-administered and self-managed real estate investment trust, also known as a REIT. We acquire, own and manage a geographically diversified portfolio consisting primarily of industrial retail, restaurant, health and, fitness and theaterto a lesser extent, retail properties, many of which are subject to long-term leases. Most of our leases are “net leases” under which the tenant, directly or indirectly, is responsible for paying the real estate taxes, insurance and ordinary maintenance and repairs of the property. As of December 31, 2021,2023, we own 118108 properties and participate in joint ventures that own threetwo properties. These 121110 properties are located in 31 states and have an aggregate of approximately 10.9 million square feet (including an aggregate of approximately 365,000 square46,000 square feet at properties owned by our joint ventures).
As of December 31, 2021:2023:
● | our |
● | the occupancy rate of our properties is |
● | the weighted average remaining term of our mortgage debt is |
● | the weighted average remaining term of the leases generating our |
We maintain a website at www.1liberty.com. The reports and other documents that we electronically file with, or furnish to, the SEC pursuant to Section 13 or 15(d) of the Exchange Act can be accessed through this site, free of charge, as soon as reasonably practicable after we electronically file or furnish such reports. These filings are also available on the SEC’s website at www.sec.gov. The information on our website is not part of this report.
20212023 and Recent Developments
In 2021:2023, we:
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● | paid down our credit facility by approximately $21.8 million primarily through the use of net proceeds from property sales – as of December 31, 2023 and March 1, 2024, no amounts were outstanding on the |
● | acquired a multi-tenant industrial property |
● | through an unconsolidated joint venture in which we had a 50% equity interest, sold a multi-tenant shopping center located in Manahawkin, NJ for $36.5 million, of which our share was $18.3 million. In 2023, we recognized a $108,000 loss from the sale of this property. Our share of the net |
● |
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● |
Subsequent to December 31, 2021,2023, we:
● | entered into |
Our Business Objective
Our business objective is to increase stockholder value by:
● | identifying opportunistic and strategic property acquisitions consistent with our portfolio and our acquisition strategies; |
● | monitoring and maintaining our portfolio, and as appropriate, working with tenants to facilitate the continuation or expansion of their tenancies; |
● | managing our portfolio effectively, including opportunistic and strategic property sales; |
● | obtaining mortgage indebtedness (including refinancings) on favorable terms, ensuring that the cash flow generated by a property exceeds the debt service thereon and maintaining access to capital to finance property |
● | maintaining and, over time, increasing our dividend. |
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Acquisition Strategies
We seek to acquire properties throughout the United States that have locations, demographics and other investment attributes that we believe to be attractive. We believe that long-term leases provide a predictable income stream over the term of the lease, making fluctuations in market rental rates and in real estate values less significant to achieving our overall investment objectives. Our primary objective is to acquire single-tenant properties, and in particular, industrial properties, that are subject to long-term net leases that include periodic contractual rental increases or rent increases based on increases in the consumer price index. Periodic contractual rental increases provide reliable increases in future rent payments and rent increases based on the consumer price index provide protection against inflation. Historically, long-term leases have made it easier for us to obtain longer-term, fixed-rate mortgage financing with principal amortization, thereby moderating the interest rate risk associated with financing or refinancing our property portfolio and reducing the outstanding principal balance over time. We have, however, acquired properties, and may continue to acquire properties, that are subject to short-term leases when we believe that such properties represent a favorable opportunity for generating additional income from its re-lease or has significant residual value. Although the acquisition ofwe are focused on acquiring single-tenant properties subject to net leases, is the focus of our investment strategy, we also consider investments in, among other things, (i) properties that can be re-positioned or re-developed, and (ii) community shopping centers anchored by national or regional tenants and (iii) properties ground leased to operators of multi-family properties.tenants.
Generally, we hold the properties we acquire for an extended period of time. Our investment criteria are intended to identify properties from which increased asset value and overall return can be realized from an extended period of ownership. Although our investment criteria favor an extended period of ownership, we will dispose of a property if we regard the disposition of the property as an opportunity to realize the overall value of the property sooner or to avoid future risks by achieving a determinable return from the property.
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We identify properties through the network of contacts of our, senior management and our affiliates, senior management, which contacts include real estate brokers, private equity firms, banks and law firms. In addition, we attend industry conferences and engage in direct solicitations.
Our charter documents do not limit the number of properties in which we may invest, the amount or percentage of our assets that may be invested in any specific property or property type, or the concentration of investments in any region in the United States. We do not intend to acquire properties located outside of the United States. We will continue to form entities to acquire interests in real properties, either alone or with other investors, and we may acquire interests in joint ventures or other entities that own real property.
It is our policy, and the policy of our affiliated entities (as described below), that any investment opportunity presented to us or to any of our affiliated entities that involves the acquisition of a net leased property, a ground lease (other than a ground lease of a multi-family property) or a community shopping center, will first be offered to us and may not be pursued by any of our affiliated entities unless we decline the opportunity. Further, to the extent our affiliates are unable or unwilling to pursue an acquisition of a multi-family property (including a ground lease of a multi-family property), we may pursue such transaction if it meets our investment objectives. Our affiliated entities include Gould Investors L.P. (“Gould Investors”), a master limited partnership involved primarily in the ownership and operation of a diversified portfolio of real estate assets, BRT Apartments Corp., a NYSE listed multi-family REIT and Majestic Property Management Corp., a property management company, which is wholly-ownedwholly owned by Fredric H. Gould, our vice chairman.
Investment Evaluation
In evaluating potential investments, we consider, among other criteria, the following:
● | the current and projected cash flow of the property; |
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● | the estimated return on equity to us; |
● | an evaluation of the property and improvements, given its location and use; |
● | an evaluation of the credit quality of the tenant; |
● | alternate uses or tenants for the property; |
● | local demographics (population and rental trends); |
● | the purpose for which the property is used ( |
● | the terms of tenant leases, including co-tenancy provisions and the relationship between current rents and market rents; |
● | the potential to finance and/or refinance the property; |
● | the projected residual value of the property; |
● | the ability of a tenant, if a net leased property, or major tenants, if a multi-tenant property, to meet operational needs and lease obligations; |
● | potential for income and capital appreciation; |
● | occupancy of and demand for similar properties in the market area; and |
● | the ability of a tenant and the related property to |
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Typical Property Attributes
AsTable of December 31, 2021, the properties in our portfolio have the following attributes:Contents
Our Tenants
The following table sets forth information about the diversification of our tenants by industry sector as of December 31, 2021:2023:
| | | | | | | | | | |
|
| |
| |
| | |
| Percentage of |
|
| | Number of | | Number of | | 2022 Contractual | | 2022 Contractual |
| |
Type of Property | | Tenants | | Properties | | Rental Income(1) | | Rental Income |
| |
Industrial |
| 56 | | 49 | | $ | 39,476,238 |
| 57.8 | |
Retail—General |
| 51 | | 28 | |
| 11,799,104 |
| 17.3 | |
Retail—Furniture |
| 3 | | 14 | |
| 4,789,984 |
| 7.0 | |
Restaurant |
| 10 | | 14 | |
| 3,382,564 |
| 4.9 | |
Health & Fitness |
| 1 | | 3 | |
| 3,238,489 |
| 4.7 | |
Retail—Office Supply(2) |
| 1 | | 5 | |
| 2,085,527 |
| 3.1 | |
Theater |
| 1 | | 2 | |
| 1,899,760 |
| 2.8 | |
Other |
| 3 | | 3 | |
| 1,669,922 |
| 2.4 | |
|
| 126 |
| 118 | | $ | 68,341,588 |
| 100.0 | |
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| | | | | | | | | | |
|
| |
| |
| | |
| Percentage of |
|
| | Number of | | Number of | | 2024 Contractual | | 2024 Contractual |
| |
Type of Property | | Tenants | | Properties | | Rental Income (1) | | Rental Income |
| |
Industrial |
| 67 | | 55 | | $ | 47,114,698 |
| 66.1 | |
Retail—General |
| 53 | | 27 | |
| 11,160,441 |
| 15.7 | |
Retail—Furniture |
| 2 | | 10 | |
| 3,983,899 |
| 5.6 | |
Health & Fitness |
| 1 | | 3 | |
| 2,645,989 |
| 3.7 | |
Retail—Office Supply(2) |
| 1 | | 5 | |
| 2,085,527 |
| 2.9 | |
Other |
| 4 | | 3 | |
| 1,908,522 |
| 2.7 | |
Restaurant |
| 6 | | 3 | |
| 1,179,911 |
| 1.7 | |
Theater |
| 1 | | 2 | |
| 1,176,619 |
| 1.6 | |
|
| 135 |
| 108 | | $ | 71,255,606 |
| 100.0 | |
(1) | Our |
● | Includes an aggregate of |
● | Excludes an aggregate of |
(2) | Includes five properties which are net leased to Office Depot pursuant to five separate leases. Four of the Office Depot leases contain cross-default provisions. |
Many of our tenants (including franchisees of national chains) operate on a national basis including, among others, Advanced Auto, Applebees,Ashley Furniture, Burlington Coat Factory, Cargill, CVS, Famous Footwear, FedEx, Ferguson Enterprises, Hobby Lobby, Home Depot USA, LA Fitness, Marshalls, NARDA Holdings, Inc., Northern Tool, Office Depot, PetSmart, Regal Cinemas, Ross Stores, Shutterfly, TGI Friday’s, The Toro Company, US Lumber and Walgreens, and some of our tenants operate on a regional basis, including Havertys Furniture and Giant Food Stores.
Our Leases
Most of our leases are net leases under which the tenant, in addition to its rental obligation, typically is responsible, directly or indirectly for expenses attributable to the operation of the property, such as real estate taxes and assessments, insurance and ordinary maintenance and repairs. The tenant is also generally responsible for maintaining the property and for restoration following a casualty or partial condemnation. The tenant is typically obligated to indemnify us for claims arising from the property and is responsible for maintaining insurance coverage for the property it leases and naming us an additional insured. Under some net leases, we are responsible for structural repairs, including foundation and slab, roof repair or replacement and restoration following a casualty event, and at several properties we are responsible for certain expenses related to the operation and maintenance of the property.
Many6
Leases representing 69.2% of our leases2024 contractual rental income provide for either periodic contractual rent increases periodically throughout the term of the lease or fora rent increases pursuant to a formulaincrease based on the consumer price index. Some leases provide for minimum rents supplemented by additional payments based on sales derived from the property subject to the lease (i.e., percentage rent). Percentage rent contributed $70,000, $45,000$107,000, $85,000 and $43,000$70,000 of rental income in 2021, 20202023, 2022 and 2019,2021, respectively.
Generally, our strategy is to acquire properties that are subject to existing long-term leases or to enter into long-term leases with our tenants. Our leases generally provide the tenant with one or more renewal options.
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Table The weighted average remaining term of Contentsour leases was 5.5 years, 5.9 years and 6.0 years at December 31, 2023, 2022 and 2021, respectively.
The following table sets forth scheduled expirations of leases at our properties as of December 31, 2021:2023:
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|
| |
| Approximate |
| | |
| |
| | | | Square | | | | | Percentage of |
| | | | Footage | | 2022 Contractual | | 2022 Contractual | |
| | Number of | | Subject to | | Rental Income | | Rental Income | |
| | Expiring | | Expiring | | Under Expiring | | Represented by | |
Year of Lease Expiration(1) |
| Leases |
| Leases(2) |
| Leases |
| Expiring Leases | |
2022 |
| 10 | | 591,829 | | $ | 1,161,371 | | 1.7 |
2023 |
| 26 | | 1,408,951 | |
| 10,003,792 | | 14.6 |
2024 |
| 22 | | 802,919 | |
| 5,416,090 | | 7.9 |
2025 |
| 14 | | 521,249 | |
| 5,054,234 | | 7.4 |
2026 |
| 14 | | 792,030 | |
| 4,592,803 | | 6.7 |
2027 |
| 24 | | 1,848,912 | |
| 12,440,870 | | 18.2 |
2028 |
| 12 | | 1,079,647 | |
| 5,735,729 | | 8.4 |
2029 |
| 7 | | 1,202,121 | |
| 5,940,289 | | 8.7 |
2030 |
| 7 | | 225,326 | |
| 3,787,803 | | 5.5 |
2031 and thereafter |
| 29 | | 1,941,078 | |
| 14,208,607 | | 20.9 |
|
| 165 |
| 10,414,062 | | $ | 68,341,588 |
| 100.0 |
| | | | | | | | | |
| | | | | | | | | Percentage of |
| | | | Approximate | | | | 2024 Contractual | |
| | Number of | | Square Footage | | 2024 Contractual | | Rental Income | |
| | Expiring | | Subject to | | Rental Income Under | | Represented by | |
Year of Lease Expiration (1) |
| Leases |
| Expiring Leases (2) |
| Expiring Leases |
| Expiring Leases | |
2024 |
| 15 | | 647,889 | | $ | 2,575,111 | | 3.6 |
2025 |
| 15 | | 660,289 | |
| 5,477,987 | | 7.7 |
2026 |
| 19 | | 1,007,595 | |
| 6,229,965 | | 8.7 |
2027 |
| 35 | | 2,185,789 | |
| 14,520,670 | | 20.4 |
2028 |
| 22 | | 1,442,680 | |
| 9,831,127 | | 13.8 |
2029 |
| 13 | | 1,276,554 | |
| 7,174,637 | | 10.1 |
2030 |
| 13 | | 625,026 | |
| 6,679,464 | | 9.4 |
2031 |
| 7 | | 864,358 | |
| 4,320,061 | | 6.1 |
2032 |
| 9 | | 325,456 | |
| 3,250,054 | | 4.6 |
2033 | | 10 | | 860,631 | | | 7,533,634 | | 10.5 |
2034 and thereafter |
| 7 | | 829,976 | |
| 3,662,896 | | 5.1 |
|
| 165 |
| 10,726,243 | | $ | 71,255,606 |
| 100.0 |
(1) | Lease expirations do not give effect to the exercise of existing renewal options. |
(2) | Excludes an aggregate of |
Financing, Re-Renting and Disposition of Our Properties
Our credit facility provides us with a source of funds that may beis used to acquire properties, payoff existing mortgages, and to a more limited extent, invest in joint ventures, improve properties and for working capital purposes. NetGenerally, net proceeds received from the sale, financing or refinancing of properties are required to be used to repay amounts outstanding under our facility. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Facility”.
We mortgage specific properties on a non-recourse basis, subject to standard carve-outs to enhance the return on our investment in a specific property. TheGenerally, the proceeds of mortgage loans are first applied to reduce indebtedness on our credit facility and the balance may be used for other general purposes, including property acquisitions, investments in joint ventures or other entities that own real property, and working capital.
With respect to properties we acquire on a free and clear basis, we usually seek to obtain long-term fixed-rate mortgage financing, when available at acceptable terms, shortly after the acquisition of such property to avoid the risk of movement of interest rates and fluctuating supply and demand in the mortgage markets. We also will acquire a property that is subject to (and will assume) a fixed-rate mortgage. Substantially all of our mortgages provide for amortization of part of the principal balance during the term, thereby reducing the refinancing risk at maturity. Some of our properties may be financed on a cross-defaulted or cross-collateralized basis, and we may collateralize a single financing with more than one property.
After7
In advance of the termination or expiration of any lease relating to any of our properties, we will seek to re-rentexplore re-renting or sellselling such property in a manner that willto maximize theour return, to us, considering, among other factors, the income potential and market value of such property. We acquire properties for long-term investment for income purposes and do not typically engage in the turnover of investments. We will consider the sale of a property if a sale appears advantageous in view of our investment objectives. If there is a substantial tax gain, we may seek to enter into a tax deferred transaction and reinvest the proceeds in another property. Cash realized from the sale of properties, net of required payoffs of the related mortgage debt, if any, required paydowns of our credit facility, and distributions to stockholders, is available for general working capital purposes and the acquisition of additional properties.
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Our Joint Ventures
As of December 31, 2021,In 2023, we ownsold ten properties (i.e., seven restaurants and three retail) and an out-parcel at a 50% equity interest in three joint ventures that own properties with approximately 365,000 square feet of space. At December 31, 2021, our investment in these joint ventures was approximately $10.2 million and the occupancy rate atmulti-tenant retail property. Generally, we sold these properties based on square footage, was 59.1%. See “Item 2. Properties-Properties Owned by Joint Ventures” for information about, among other things, the occupancy rate at our joint venture properties.
Based on the leases in effect at December 31, 2021, we anticipate that our share of the base rent payable in 2022due to our joint ventures is approximately $1.6belief that such property had achieved its maximum potential value; our concern with respect to the long-term prospects for the tenant or the geographic sub-market; or our concern in our ability, on acceptable terms, to refinance the property’s mortgage debt or re-lease the property. We used a significant portion of these net proceeds to pay off $21.8 million (excluding our $121,000 share of the COVID-19 rent deferral payments payable by Regal Cinemas, at our multi-tenant community shopping center in Manahawkin, New Jersey). Our property in Manahawkin, New Jersey, which we refer to as the “Manahawkin Property”, is expected to contribute 85.3% of the aggregate base rent payable by all of our joint ventures in 2022. Base rent for leases accounting for 2.5%, 43.5% and 54.0% of the aggregate base rent payable to all of our joint ventures in 2022, is payable pursuant to leases expiring from 2022 to 2023, from 2024 to 2025, and thereafter, respectively. See “credit facility debt.Item 1A, Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information regarding our Manahawkin, New Jersey joint venture.
Competition
The U.S. commercial real estate investment market, and in particular, the market for industrial properties, is highly competitive. We compete with many entities engaged in the acquisition, developmentleasing and operation of commercial properties. As such, we compete with other investors for a limited supply of properties and financing for these properties. Competitors include traded and non-traded public REITs, private equity firms, institutional investment funds, insurance companies and private individuals, many of which have greater financial and other resources than we have and the ability or willingness to accept more risk than we believe appropriate. Thereappropriate for us. We can beprovide no assurance that we will be able to compete successfully with such entities in our acquisition, development and leasing activities in the future.commercial real estate industry.
Regulation
Environmental
Investments in real property create the potential for environmental liability on the part of the owner or operator of such real property. If hazardous substances are discovered on or emanating from a property, the owner or operator of the property may be held strictly liable for all costs and liabilities relating to such hazardous substances. We have obtainedgenerally obtain a Phase I environmental study (which involves inspection without soil sampling or ground water analysis) conducted by independent environmental consultants on each of our propertiesprior to acquiring a property and, in certain instances, have conducted additional investigations.
We do not believe that there are hazardous substances existing on our properties that would have a material adverse effect on our business, financial position or results of operations. We do not carry insurance coverage for the types of environmental risks described above.
We believe that we are in compliance, in all material respects, with all federal, state and local ordinances and regulations regarding hazardous or toxic substances. Furthermore, we have not been notified by any governmental authority of any noncompliance, liability or other claim in connection with any of our properties, that we believe would have a material adverse effect on our business, financial position or results of operations.
Americans with Disabilities Act of 1990
Our properties are required to comply with the Americans with Disabilities Act of 1990 and similar state and local laws and regulations (collectively, the “ADA”). The primary responsibility for complying with the ADA, (i.e., either us or our tenant) generally depends on the applicable lease, but we may incur costs if the tenant is responsible and does not comply. As of December 31, 2021,2023, we have not been notified by any governmental authority, nor are we otherwise aware, of any non-compliance with the ADA that we believe would have a material adverse effect on our business, financial position or results of operations.
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Other Regulations
State and local governmental authorities regulate the use of our properties. While many of our leases mandate that the tenant is primarily responsiberesponsible for complying with such regulations, the tenant’s failure to comply could result in the imposition of fines or awards of damages on us, as the property owner, or restrictions on the ability to conduct business on such properties.
Human Capital Resources
As of December 31, 2021,2023, we had nine10 full-time employees (including five5 full-time executive officers), who devote substantially all of their business time to our activities. In addition, certain (i) executive, administrative, legal, accounting, clerical, property management, property acquisition, consulting (i.e., sale, leasing, brokerage, and mortgage financing), and construction supervisory services, which we refer to collectively as the “Services”, and (ii) facilities and other resources, are provided pursuant to a compensation and services agreement between us and Majestic Property Management Corp., which we refer to as “Majestic Property.” Majestic Property is wholly ownedwholly-owned by the Vice Chairman of our vice chairmanBoard of the boardDirectors and it provides compensation tocompensates certain of our executive officers.
In 2021,2023, pursuant to the compensation and services agreement, we paid Majestic Property approximately $3.1$3.3 million for the Services plus $295,000$317,000 for our share of all direct office expenses, including rent, telephone, postage, computer services, internet usage and supplies. Included in the $3.1$3.3 million is $1.4$1.5 million for property management services—the amount for the property management services is based on 1.5% and 2.0% of the rental payments (including tenant reimbursements) actually received by us from net lease tenants and operating lease tenants, respectively. We do not pay Majestic Property with respect to properties managed by third parties. Based on our portfolio of properties at December 31, 2021,2023, we estimate that the property management fee in 20222024 will be approximately $1.3$1.4 million. See Notes 10 and 12 to our consolidated financial statements for information about the amounts paid to Majestic Property for the Services and equity awards to individuals performing Services.
We provide a competitive benefits program to help meet the needs of our employees. In addition to salaries, the program includes annual cash bonuses, stock awards, contributions to a pension plan, healthcare and insurance benefits, health savings accounts, paid time off, family leave and an education benefit. Employees are offered great flexibility to meet personal and family needs and regular opportunities to participate in professional development programs. Most of our employees have a long tenure with us, which we believe is indicative of our employees’ satisfaction with the work environment we provide.
We maintain a work environment that is free from discrimination or harassment on the basis of color, race, sex, national origin, ethnicity, religion, age, disability, sexual orientation, gender identification or expression or any other status protected by applicable law, and our employees are compensated without regard to any of the foregoing.
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Information About Ourabout our Executive Officers
Set forth below is a list of our executive officers whose terms expire at our 20222024 annual board of directors’ meeting. The business history of our executive officers, who are also directors, will be provided in our proxy statement to be filed pursuant to Regulation 14Awith the SEC not later than May 2, 2022.April 29, 2024:
NAME |
| AGE |
| POSITION WITH THE COMPANY |
Matthew J. Gould* | |
| | Chairman of the Board |
Fredric H. Gould* | |
| | Vice Chairman of the Board |
Patrick J. Callan, Jr. | |
| | President, Chief Executive Officer and Director |
Lawrence G. Ricketts, Jr. | |
| | Executive Vice President and Chief Operating Officer |
Jeffrey A. Gould* | |
| | Senior Vice President and Director |
| |
| | Senior Vice President and Chief Financial Officer |
David W. Kalish** | | 76 | | Senior Vice President—Financial Officer |
Mark H. Lundy | |
| | Senior Vice President |
Israel Rosenzweig | |
| | Senior Vice President |
| | 56 | | Senior Vice President |
Justin Clair | | 41 | | Executive Vice President |
Mili Mathew | | 40 | | Vice President—Financial |
Alysa Block | | 63 | |
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| Treasurer |
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* | Matthew J. Gould and Jeffrey A. Gould are Fredric H. Gould’s sons. |
** | Isaac Kalish is David W. Kalish’s son. |
Lawrence G. Ricketts, Jr. Mr. Ricketts has been our Chief Operating Officer since 2008, Executive Vice President since 2006 and served as Vice President from 1999 through 2006 and Executive2006.
Isaac Kalish. Mr. Kalish has served as our Chief Financial Officer since 2023, as Senior Vice President since 2006.2022 and as Vice President from 2013 through 2022. He has served as Treasurer of the managing general partner of Gould Investors since 2013 and as its Assistant Treasurer from 2012, as Senior Vice President since 2022, as Vice President and Treasurer of BRT Apartments Corp. since 2013 and 2014, respectively, and as its Assistant Treasurer from 2009 through 2013. He is a certified public accountant.
David W. Kalish. Mr. Kalish has served since 2023 as our Senior Vice PresidentPresident-Finance, and from 1990 to 2023, as Chief Financial Officer since 1990 and Senior Vice President. Since 1998, he has served as Senior Vice President, Finance and from 1990 to 1998, as Vice President of BRT Apartments Corp. since 1998.Apartments. Since 1990, he has served as Senior Vice President and Chief Financial Officer of the managing general partner of Gould Investors L.P.Investors. Mr. Kalish is a certified public accountant.
Mark H. Lundy. Mr. Lundy has served as our Vice President since 2000 and as our Senior Vice President since 2006 and as Vice President from 2000 through 2006. Mr. LundyHe has been aserved as Senior Vice President of BRT Apartments Corp.since 2006, and as its Vice President from 1993 to 2006, its Senior Vice2006. Mr. Lundy has served as President since 2006, a Vice Presidentand Chief Operating Officer of the managing general partner of Gould Investors since 2013 and as its Vice President from 1990 through 2012 and its President and Chief Operating Officer since 2013.2012. He is an attorney admitted to practice in New York and the District of Columbia.
Israel Rosenzweig. Mr. Rosenzweig has served as our Senior Vice President since 1997,1997. He has served as Chairman of the Board of Directors of BRT Apartments Corp. since 2013, as Vice Chairman of its Board of Directors from 2012 through 2013, and as its Senior Vice President from 1998 through 2012. HeSince 1997, he has beenserved as a Vice President of the managing general partner of Gould Investors since 1997.
Karen Dunleavy. Ms. Dunleavy has served as our Senior Vice President, Financial since 2019, as our Vice President, Financial from 1994 through 2019, and as Treasurer of the managing general partner of Gould Investors from 1986 through 2013. Ms. Dunleavy is a certified public accountant.
Alysa Block. Ms. Block has been our Treasurer since 2007, and served as Assistant Treasurer from 1997 to 2007. Ms. Block has also served as the Treasurer of BRT Apartments Corp. from 2008 through 2013, and served as its Assistant Treasurer from 1997 to 2008.Investors.
Richard M. Figueroa. Mr. Figueroa has served as our Senior Vice President since 2019, as Vice President from 2001 through 2019, as Vice President of BRT Apartments Corp. from 2002 through 2019 and as Vice President of the managing general partner of Gould Investors since 1999. Mr. Figueroa is an attorney admitted to practice in New York.
Isaac Kalish. Mr. Kalish has served as our Vice President since 2013, Assistant Treasurer since 2007, as Assistant Treasurer of the managing general partner of Gould Investors from 2012 through 2013, as Treasurer from 2013, as Vice President and Treasurer of BRT Apartments Corp. since 2013, and as its Assistant Treasurer from 2009 through 2013. Mr. Kalish is a certified public accountant.
Justin Clair. Mr. Clair has been employed by us since 2006, served as Assistant Vice President from 2010 through 2014, as Vice President from 2014 through 2019, and as Senior Vice President - Acquisitions, since 2019.
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Justin Clair. Mr. Clair has served as Executive Vice President since 2023, as Senior Vice President—Acquisitions from 2019 through 2023, as Vice President from 2014 through 2019, as Assistant Vice President from 2010 through 2014, and has been employed by us since 2006.
Mili Mathew. Ms. Mathew has served as Chief Accounting Officer since 2023, Vice President—Financial, since 2022, as Assistant Vice President—Financial, from 2020 through 2022, and has been employed by us since 2014.
Alysa Block. Ms. Block has been our Treasurer since 2007 and served as Assistant Treasurer from 1997 to 2007. Ms. Block also served as the Treasurer of BRT Apartments from 2008 through 2013, and as its Assistant Treasurer from 1997 to 2008.
Item 1A. Risk Factors.
Set forth below is a discussion of certain risks affecting our business. The categorization of risks set forth below is meant to help you better understand the risks facing our business and is not intended to limit your consideration of the possible effects of these risks to the listed categories. Any impacts from the realization of any of the risks discussed, including our financial condition and results of operations, may, and likely will, adversely affect many aspects of our business. In addition to the other information contained or incorporated by reference in this Form 10-K, readers should carefully consider the following risk factors:
Risks Related to the COVID-19 Pandemic
The COVID-19 pandemic and the governmental and non-governmental responses thereto have adversely impacted, and may in the future, adversely impact our business, income, cash flow, results of operations, financial condition, liquidity, prospects, ability to service our debt obligations, or our ability to pay cash dividends to our stockholders.
Our ability to lease our properties and collect rental revenues and expense reimbursements, and the ability of our tenants to fulfill their obligations to us, is dependent in part upon national, regional and local economic conditions. The pandemic and the measures taken to combat it caused significant economic and other dislocations. As a result, many of our tenants (and in particular, theater, health and fitness, restaurant and retail tenants), experienced severe financial distress and, in 2020 and early 2021, obtained rent relief from us.
At December 31, 2021, $1.8 million of deferred rent is owed by four tenants at six properties (including our $182,000 share of deferred rent from Regal Cinemas, a tenant at our Manahawkin, New Jersey property). Approximately 69.2% and 30.8% of such deferred rent is due in 2022 and 2023, respectively. Two tenants account for $1.8 million, or 99.1%, of such deferred rent (i.e., Regal Cinemas, $1.6 million, and LA Fitness, $157,000). The failure of the tenants to pay deferred rent will adversely impact our cash flow, net income, liquidity and ability to pay dividends.
The seesaw nature of the pandemic and its impact on the economy and financial markets present material risks and uncertainties. We are unable to predict the ultimate impact that the pandemic and the related dislocations will have on our business, financial condition, results of operation and cash flows, which will depend largely on various factors outside of our control. The pandemic and the related dislocations may result in, and in some cases has resulted in, among other things, (i) tenants being unable to satisfy their obligations to us (including obligations under deferral arrangements or extended leases) and as a result, may seek additional rent relief, may choose not to renew their leases or only renew on terms less favorable to us, (ii) adversely effect tenants that to date have not been so impacted, (iii) our rent collections at challenged properties may be insufficient, without an accommodation from the mortgage lender, to pay our debt service obligations with respect to such properties, (iv) the mortgage lenders for challenged properties being unwilling or unable to allow for accommodations or further accommodations with respect to our debt service obligations at such properties, (v) an acceleration of the trend toward e-commerce at the expense of the “bricks and mortar” commerce in which we have a significant presence, (vi) it being more difficult to obtain equity and debt financing, (vii) the abandonment or further delay of our re-development of the Manahawkin Property and (viii) it being more difficult to acquire properties to grow our business and dispose of underperforming assets. Our business, income, cash flow, results of operations, financial condition, liquidity, prospects, ability to service our debt, and ability to pay cash dividends to our stockholders, will be adversely effected upon the occurrence of any one or more of the foregoing.
Risks Related to Our Business
If we are unable to re-rent properties upon the expiration of our leases or if our tenants default or seek bankruptcy protection, our rental income will be reduced and we would incur additional costs.
Substantially all of our rental income is derived from rent paid by our tenants. From 20232024 through 2025,2029, the following leases with respect to 62 tenants that account for 29.9% of our 2022 contractual rental income, expire, including leases with seven tenants (i.e., City of New York, Shutterfly, Burlington Coat Factory, LA Fitness, Powerexpire:
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| Percentage of |
| | Number of | | 2024 Contractual | | 2024 Contractual | |
Leases Expiring December 31, | | Leases | | Rental Income | | Rental Income | |
2024 - 2026 | | 49 | | $ | 14,283,063 | | 20.0 |
2027 - 2029 | | 70 | | | 31,526,434 | | 44.3 |
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Distributors, Dufresne Spencer Group, and FedEx) at seven properties that account for 9.2% of 2022 contractual rental income. From 2026 through 2027, leases with respect to 38 tenants that account for 24.9% of our 2022 contractual rental income, expire. If our tenants, and in particular, our significant tenants, (i) do not renew their leases upon thelease expiration, of same, (ii) default on their obligations or (iii) seek rent relief, lease renegotiation or other accommodations, our revenues couldwould decline and, in certain cases, co-tenancy provisions (i.e., a tenant’s right to reduce their rent or terminate their lease if certain key tenants vacate a property) may be triggered possibly allowing other tenants at the same property to reduce their rental payments or terminate their leases. At the same time, we would remain responsible for the payment of the mortgage obligations with respect to the related properties, and would become responsible for the operating expenses related to these properties, including, among other things,(e.g., real estate taxes, maintenance and insurance. In addition, we mayinsurance) related to these properties, and, in the event of tenant defaults, would incur expenses in enforcing our rights as landlord. Our efforts to find replacement tenants may be challenged as there are a limited number of tenants interested in certain types of properties, such as our theaters (i.e., Regal Cinemas) and health and fitness centers (i.e., LA Fitness) which accounts in the aggregate for $3.8 million, or 5.4%, of 2024 contractual rental income and the cost of reconfiguring such properties to make them more attractive to a broader set of potential tenants may be prohibitive. Even if we find replacement tenants or renegotiate leases with current tenants, the terms of the new or renegotiated leases, includingafter giving effect to tenant concessions or the cost of required renovations or concessions to tenants, or the expense of the reconfiguration of a tenant’s space,renovations/ reconfigurations may be less favorable than current lease terms and could reduce the amount of cash available to meet expenses and pay dividends. If we are unable to re-rent properties on favorable terms with respect to properties at which tenants facing financial difficulties default on their rent obligation to pay rent or do not renew their leases at lease expiration, our results of operations, cash flow and financial condition maywill be adversely affected.
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Our portfolio of properties is concentrated in the industrial and retail real estate sectors, and our business would be adversely affected by an economic downturn in either of such sectors.
Approximately 66.1% and 24.2% of our 2024 contractual rental income is derived from industrial and retail tenants, respectively, and we are vulnerable to economic declines that negatively impact these sectors of the economy, which would have an adverse effect on our results of operations, liquidity and financial condition.
Traditional retail tenants account for 27.4%24.2% of our 20222024 contractual rental income and the competition that such tenants face from e-commerce retail sales could adversely affect our business.
Approximately 27.4%24.2% of our 20222024 contractual rental income is derived from retail tenants, including 7.0%5.6% from tenants engaged in selling furniture (i.e., Havertys Furniture accounts for 6.1%4.7% of 20222024 contractual rental income) and 3.1%2.9% from a tenant engaged in selling office supplies (i.e., Office Depot, a tenant at five properties, one of which one property is currently closed but for which the tenant continues to pay rent)rent and the lease expires in May 2025). Because e-commerce retailers (unlike “bricks and mortar” or “traditional” retailers) may be able to provide customers with better pricing and the ease, comfort and safety of shopping from their home or office, our retail tenants face increasingextensive competition from e-commerce retailers, which competition may continue to accelerate as a result of the pandemic. The accelerating growth of e-commerceretailers. E-commerce sales decreasesdecrease the need for traditional retail outlets and reduce retailers’ space and property requirements. This adversely impacts our ability to rent space at our retail properties and increases competition for retail tenants thereby reducing the rent we would receive at these properties and adversely affectaffecting our results of operations, cash flow and financial condition.
Approximately 24.5%22.3% of our 20222024 contractual rental income is derived from five tenants. The default, financial distress or failure of any of these tenants, or such tenant’s determination not to renew or extend their lease, couldwould significantly reduce our revenues.
FedEx, Havertys Furniture, FedEx, LA Fitness, Northern Tool, and NARDA Holdings, Inc. and LA Fitness account for approximately 6.1%, 5.2%5.5%, 4.7%, 4.4%4.3%, 4.1% and 4.1%3.7%, respectively, of our 20222024 contractual rental income.income, and the weighted average remaining lease term for such tenants is 3.7 years, 4.4 years, 5.3 years, 9.7 years and 7.0 years, respectively. The default, financial distress or bankruptcy of any of these or other significant tenants or such tenant’s determination not to renew or extend their lease, couldwould significantly reduce our revenues, would cause interruptions in the receipt of, or the loss of, a significant amount of rental income and would require us to pay operating expenses (including real estate taxes) currently paid by the tenant. This could also result in the vacancy of the property or properties occupied by the defaulting or non-renewing tenant, which would significantly reduce our rental revenues and net income until the re-rental of the property or properties and could decrease the ultimate sale value of the property.
Write-offs of unbilled rent receivables and intangible lease assets will reduce our net income, total assets and stockholders’ equity and may result in breaches of financial covenants under our credit facility.
At December 31, 2021,2023, the aggregate of our unbilled rent receivable and intangible lease assets is $35.0$31.3 million (including $20.7$14.7 million of intangible lease assets); five: six tenants (i.ei.e.,., Northern Tools, FedEx,Tool, Famous Footwear, ApplebeesNARDA Holdings, Inc., FedEx, Q.E.P. Co., Inc., and LA Fitness) account for 35.9%35.6% of such sum. We are required to assess the collectability of our unbilled rent receivables and the remaining useful lives of our intangible lease assets. Such assessments take into consideration, among other things, a tenant’s payment history, financial condition, and the likelihood of collectability of future rent. If we determine that the collectability of a tenant’s unbilled rent receivable is not probable or that the useful life of a tenant’s intangible lease asset has changed, write-offs would
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be required. Such write-offs result in a reduction of our net income, total assets and stockholders’ equity and in certain circumstances may result in the breach of our financial covenants under the credit facility.
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The concentration of our properties in certain states may makemakes our revenues and the value of our portfolio vulnerable to adverse changes in local economic conditions.
Some of the properties we own are located in the same or a limited number of geographic regions. Approximately 55.5%47.2% of our 20222024 contractual rental income is derived from properties located in eight states—six states — South Carolina (9.7%(12.0%), New York (9.5%(9.2%), Texas (7.8%(7.9%), Pennsylvania (6.7%), Georgia (5.7%), North Carolina (5.7%(7.6%), New Jersey (5.2%(5.3%) and Maryland (5.2%). As a result, a decline in the economic conditions in these states or in regions where our properties may beare concentrated, in the future, may have an adverse effect on the rental and occupancy rates for, and the property values of, these properties, which could lead to a reduction of our rental income and/or impairment charges.
Our portfolio of properties is concentrated in the industrial and retail real estate sectors, and our business would be adversely affected by an economic downturn in either of such sectors.
Approximately 57.8% and 27.4% of our 2022 contractual rental income is derived from industrial and retail tenants, respectively, and we are vulnerable to economic declines that negatively impact these sectors of the economy, which could have an adverse effect on our results of operations, liquidity and financial condition.
Declines in the value of our properties could result in impairment charges.
If we are presented with indicators of impairment in the value of a particular property or group of properties, we will be required to perform an impairment analysis for such property or properties. If we determine that any of our properties at which indicators of impairment exist have undiscounted cash flows below the net book value of such property, we will be required to recognize an impairment charge for the difference between the fair value and the book value during the quarter in which we make such determination. Any impairment charge would reduce our net income and stockholder’s equity.
Our ability to fully control the maintenance of our net-leased properties may be limited.
The tenants of our net-leased properties are responsible for maintenance and other day-to-day management of the properties. If a property is not adequately maintained in accordance with the terms of the applicable lease, we may incur expenses for deferred maintenance or other liabilities once the property is no longer leased. While we visit our properties on an intermittent basis, these visits are not comprehensive inspections and deferred maintenance items may go unnoticed. While our leases generally provide for recourse against the tenant in these instances, a bankrupt or financially-troubled tenant may be more likely to defer maintenance, and it may be more difficult to enforce remedies against such a tenant.
A significant portion of our leases are long-term and do not have fair market rental rate adjustments, which could negatively impact our income and reduce the amount of funds available to make distributions to stockholders.
A significant portion of our rental income comes from long-term net leases. There is an increased risk with long-term leases, which risk is heightened in an inflationary environment, that the contractual rental increases in future years will fail to result in fair market rental rates during those years. If we do not accurately judge the potential for increases in market rental rates when negotiating these long-term leases or if we are unable to obtain any increases in rental rates over the terms of our leases, significant increases in future property operating costs, to the extent not covered under the net leases, could result in us receiving less than fair value from these leases. As a result, our income and distributions to our stockholders could be lower than they would otherwise be if we did not engage in long-term net leases. In addition, increases in interest rates may also negatively impact the value of our properties that are subject to long-term leases. While a significant number of our net leases provide for annual escalations in the rental rate, the increase in interest rates may outpace the annual escalations.
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The pursuit of a re-development of a multi-tenant community shopping center located in Manahawkin, New Jersey owned by a joint venture may be unsuccessful or fail to meet our expectations.
A joint venture in which we are a 50% partner has been pursuing, since 2018, a re-development of the Manahawkin Property, a multi-tenant community shopping center located in Manahawkin, New Jersey. As a result of the related decrease in occupancy (i.e., an occupancy rate of 53.2% at December 31, 2021), the income and cash flow from this property is significantly lower than it was several years ago.
This re-development project may be unsuccessful or fail to meet our expectations due to a variety of risks and uncertainties including:
If this re-development is abandoned, further delayed or otherwise unsuccessful we may may be (i) required to take an impairment charge, including a write-off of capitalized soft costs of $571,000 related to the re-development and (ii) adversely affected. See “Item 2. Properties” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Re-development of the Manahawkin Property” for further information about the Manahawkin Property.
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Risks Related to Our Financing Activities, Indebtedness and Capital Resources
If we are unable to refinance our mortgage loans at maturity, we may be forced to sell properties at disadvantageous terms, which would result in the loss of revenues and in a decline in the value of our portfolio.
We had, as of December 31, 2021, $399.72023, $422.6 million in mortgage debt outstanding (all of which is non-recourse subject to standard carve-outs) and our debt is 35.8% of our total market capitalization.. The risks associated with our mortgage debt, include the risks that cash flow from properties securing the indebtedness and our available cash and cash equivalents will be insufficient to meet required payments of principal and interest.
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Generally, only a portion of the principal of our mortgage indebtedness will be repaid prior to or at maturity and we do not plan to retain sufficient cash to repay such indebtedness at maturity. Accordingly, to meet these obligations if they cannot be refinanced at maturity, we will have to use funds available under our credit facility, if any, and our available cash and cash equivalents to pay our mortgage debt or seek to raise funds through the financing of unencumbered properties, sale of properties or the issuance of additional equity. From 20222024 through 2026,2028, approximately $205.1$168.6 million of our mortgage debt matures—specifically, $44.8 million in 2022, $25.8 million in 2023, $62.6 million in 2024, $42.6 million in 2025 and $29.3 million in 2026.matures. If we are unsuccessful in refinancing or extending existing mortgage indebtedness or financing unencumbered properties, selling properties on favorable terms or raising additional equity, our cash flow will be insufficient to repay all maturing mortgage debt when payments become due, and we may be forced to dispose of properties on disadvantageous terms or convey properties secured by mortgages to the mortgagees, which would lower our revenues and the value of our portfolio.
We may find that the value of a property could be less than the mortgage secured by such property. We may also have to decide whether we should refinance or pay off a mortgage on a property at which the mortgage matures prior to lease expiration and the tenant may not renew the lease. In these types of situations, after evaluating various factors, including among other things, the tenant’s competitive position in the applicable sub-market, our and our tenant’s estimates of its prospects, consideration of alternative uses and opportunities to re-purpose or re-let the property, we may seek to renegotiate the terms of the mortgage, or to the extent that the loan is non-recourse and the terms of the mortgage cannot be satisfactorily renegotiated, forfeit the property by conveying it to the mortgagee and writing off our investment.
If our credit facility is not renewed,Volatile or increasing interest rates, increase or credit markets tighten,market tightening, may make it may be more difficult for us to secure financing, which may limit our ability to finance or refinance our real estate properties, reduce the number of properties we can acquire, sell certain properties, and decrease our stock price.
Our credit facility expires December 31, 2022. Among other things, we depend on the facility to allow us to acquire properties on an accelerated basis (hereby potentially making our offer to purchase a property more attractive than offers from competitors), without the delays that may be associated with traditional mortgage financing. We can provide no assurance that such facility will be renewedIncreases or that if renewed, that the terms thereof will not be less favorable than the terms of the current facility. The members of our lending consortium have agreed to merge with one another which, if completed, would reduce from four to two, the members of such consortium. The remaining two members of the lending consortium may, in connection with a renewal of the facility, be unwilling to maintain their current combined level of credit exposure to us and may reduce the amount available to be borrowed under the renewed facility. If this facility is not renewed on terms at least as favorable to us as currently in place, our liquidity and capital resource position may be adversely impacted.
Increasesvolatility in interest rates, or reduced access to credit markets, may make it difficult for us to obtain financing, refinance mortgage debt, limit the mortgage debt available on properties we wish to acquire and limit the properties we can acquire. Even in the event that we are able to secure mortgage debt on, or otherwise finance our real estate properties, due to increased costs associated with securing financing and other factors beyond our control, we may be unable to refinance the entire outstanding loan balance or be subject to unfavorable terms (such as higher loan fees, interest rates and periodic payments). In addition, an increase inincreasing interest rates could decrease the amount third parties are willing to pay for our assets, thereby limiting our ability to reposition our portfolio promptly in response to changes in economic or other conditions.
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Tabledispose of Contentsassets on more favorable terms.
Interest rates have become increasinglybeen volatile and during the three years ended December 31, 2021,as the interest rate on the 10-year treasury notes ranged from 0.38%0.90% to 2.80%.5.02% during the three years ended December 31, 2023. At March 1, 2022,2024, the interest rate on such notes was 1.73%4.19%. If we are required to refinance mortgage debt that matures over the next several years at higher interest rates than such mortgage debt currently bears, the funds available for dividends may be reduced. The following table sets forth, as of December 31, 2021,2023, the principal balance of the mortgage payments due at maturity on our properties and the weighted average interest rate thereon (dollars in thousands):
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| Principal |
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| | Balances | | Weighted Average | |
| | Due at | | Interest Rate | |
Year | | Maturity | | Percentage | |
2022 | | $ | 31,590 |
| 3.92 |
2023 | |
| 12,973 |
| 4.31 |
2024 | |
| 50,694 |
| 4.42 |
2025 | |
| 32,063 |
| 4.32 |
2026 | |
| 19,179 |
| 3.88 |
2027 and thereafter | |
| 145,609 |
| 4.08 |
| | | | | |
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| Principal |
| | |
| | Balances | | Weighted Average | |
| | Due at | | Interest Rate | |
Year | | Maturity | | Percentage | |
2024 | | $ | 49,906 | | 4.72 |
2025 | |
| 30,850 | | 4.32 |
2026 | |
| 19,179 | | 3.88 |
2027 | |
| 38,524 | | 3.64 |
2028 | |
| 30,155 | | 4.64 |
2029 and thereafter | |
| 168,560 | | 4.29 |
We manage a substantial portion of our exposure to interest rate risk by accessing debt with staggered maturities, obtaining fixed rate mortgage debt and by fixing the interest rate on substantially all of our variable rate debt through the use of interest rate swap agreements. However, no amount of hedging activity can fully insulate us from the risks associated with changes in interest rates. Swap agreements involve risk, including that counterparties may fail to honor their obligations under these arrangements, and these arrangements have caused
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us to pay higher interest rates on our debt obligations than would otherwise be the case. Failure to hedge effectively against interest rate risk could adversely affect our results of operations and financial condition.
Because REIT stocks are often perceived as high-yieldhigh-yield investments, investors may perceive less relative benefit to owning REIT stocks as interest rates and the yield on government treasuries and other bonds increase.increase or are especially volatile. Accordingly, the increaseincreases and volatility in interest rates over the past several months may reduce the amount investors are willing to pay for our common stock.
If our borrowings increase, the risk of default on our repayment obligations and our debt service requirements will also increase.
At December 31, 2021,2023, we had $411.4$422.6 million of debt outstanding including $399.7 million ofall related to our mortgage debt and $11.7 million ofno debt incurred pursuant tooutstanding on our credit facility. Increased leverage, whether pursuant to our credit facility or mortgage debt, could result in increased risk of default on our payment obligations related to borrowings and in an increase in debt service requirements, which could reduce our net income and the amount of cash available to meet expenses and to pay dividends.
A breach of our credit facility could occur if a significant number of our tenants default or fail to renew expiring leases, or we take impairment charges against our properties.
Our credit facility includes covenants that require us to maintain certain financial ratios and comply with other requirements. If our tenants default under their leases or fail to renew expiring leases, generally accepted accounting principleswe may require us to recognize impairment charges against our properties, and our financial position could be adversely affected causing us to be in breach of the financial covenants contained in our credit facility.
Failure to meet interest and other payment obligations under our revolving credit facility or a breach by us of the covenants to maintain the financial ratios wouldcould place us in default under our credit facility. In such event, if no amounts were outstanding under the facility, and, ifwe would not be entitled to draw on the banks called a default and requiredfacility which could impede our ability, among other things, to acquire properties or fund working capital requirements. If we defaulted on the facility while amounts were outstanding, the lenders could require us to repay the full amount outstanding, under the credit facility,and we might be required to rapidly dispose of our properties, which could have an adverse impact on the amounts we receive on such disposition.dispositions. If we are unable to dispose of our properties in a timely fashion to the satisfaction of the banks, the banks could foreclose on that portion of our collateral pledged to the banks, which could result in the disposition of our properties at below marketbelow-market values. The disposition of our properties at below our carrying value would adversely affect our net income, reduce our stockholders’ equity and adversely affect our ability to pay dividends.
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The phasing out of LIBOR may adversely affect our cash flow and financial results.
At December 31, 2021, our variable rate debt that bears interest at the one month LIBOR rate plus a negotiated spread is in principal amount of $68.6 million (i.e., $56.9 million of mortgage debt and $11.7 million of credit facility debt). We hedged our exposure to the fluctuating interest payments on this mortgage debt by entering into interest rate swaps with the counterparties (or their affiliates) to such debt – these swaps effectively fix our interest payments under the related debt. At December 31, 2021, we have 19 swaps with three separate counterparties and an aggregate notional amount of $56.9 million. The fluctuating interest payments on the credit facility debt are not hedged. The authority regulating LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after June 2023 and it is possible that LIBOR will become unavailable at an earlier date. Approximately $51.2 million of this mortgage debt and the related notional amount of interest rate swaps mature after June 2023. Accordingly, there is uncertainty as to how the interest rate on this mortgage debt, the related swaps and the credit facility debt will be determined when LIBOR is unavailable. Though these agreements, and instruments provide for alternative methods of calculating the interest rate if LIBOR is unavailable, such alternative rates may be unavailable (or the alternative rate provided for in the variable rate mortgage debt may be inconsistent with the alternative rate provided for by the related swap), in which case we may have to negotiate an alternative rate with the counterparties to such debt, the related swaps and the credit facility debt - we can provide no assurance that we and our counterparties will be able to agree to alternative rates. Even if alternative rates are available, the swaps may not effectively hedge our interest payment obligation on this variable rate mortgage debt and may result in fluctuating interest payments with respect to such debt. Our cash flow and financial results may be adversely affected if we are unable to arrange a mutually satisfactory alternative rate to LIBOR for our variable rate mortgage debt and the credit facility debt. Further, the absence of LIBOR or a generally acceptable alternative thereto may make it difficult to hedge our interest rate exposure on variable rate mortgage debt that we incur in the future which in turn may make it more difficult to acquire properties.
Certain of our net leases and our ground leases require us to pay property related expenses that are not the obligations of our tenants.
Under the terms of substantially all of our net leases, inIn addition to satisfying their rent obligations, our tenants are generally responsible for the payment of real estate taxes, insurance and ordinary maintenance and repairs. However, under the provisions of certain net and ground leases, we are required to pay some expenses, such as the costs of environmental liabilities, roof and structural repairs, insurance premiums, certain non-structural repairs and maintenance. If our properties incur significant expenses that must be paid by us under the terms of our leases, our business, financial condition and results of operations will be adversely affected and the amount of cash available to meet expenses and pay dividends may be reduced.
Our failure to comply with our obligations under our mortgages may reduce our stockholders’ equity, and adversely affect our net income and ability to pay dividends.
Several of our mortgages include covenants that require us to maintain certain financial ratios, including various coverage ratios, and comply with other requirements. Failure to meet interest and other payment obligations under these mortgages or a breach by us of the covenants to comply with certain financial ratios would place us in non-compliance under such mortgages. If a mortgagee called a default and required us to repay the full amount outstanding under such mortgage, we might be required to rapidly dispose of the property subject to such mortgage which could have an adverse impact on the amounts we receive on such disposition. If we are unable to satisfy the covenants of a mortgage, the mortgagee could exercise remedies available to it under the
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applicable mortgage and as otherwise provided by law, including the possible appointment of a receiver to manage the property, application of deposits or reserves maintained under the mortgage for payment of the debt, or foreclose and/or cause the forced sale of the property or asset securing such debt. A foreclosure or other forced disposition of our assets could result in the disposition of samesuch assets at below thesuch assets’ carrying value of such asset.values. The disposition of our properties or assets at below ourtheir carrying valuevalues may adversely affect our net income, reduce our stockholders’ equity and adversely affect our ability to pay dividends.
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Risks Related to Real Estate Investments
Our revenues and the value of our portfolio are affected by a number of factors that affect investments in leased real estate generally.
We are subject to the general risks of investing in leased real estate. These include the non-performance of lease obligations by tenants, leasehold improvements that will be costly or difficult to remove should it become necessary to re-rent the leased space for other uses, covenants in certain retail leases that limit the types of tenants to which available space can be rented (which may limit demand or reduce the rents realized on re-renting), rights to terminate leases due to co-tenancy provisions, events of casualty or condemnation affecting the leased space or the property or due to interruption of the tenant’s quiet enjoyment of the leased premises, obligations of a landlord to restore the leased premises or the property following events of casualty or condemnation, adverse changes in economic conditions and local conditions (e.g., changing demographics, retailing trends and traffic patterns), declines in rental rates, changes in the supply and price of quality properties and the market supply and demand of competing properties, the impact of environmental laws, security concerns, prepayment penalties applicable under mortgage financings, changes in tax, zoning, building code, fire safety and other laws and regulations, the type of insurance coverage available, and changes in the type, capacity and sophistication of building systems. The occurrence of any of these events could adversely impact our results of operations, liquidity and financial condition.
Real estate investments are relatively illiquid and their values may decline.
Real estate investments are relatively illiquid. Therefore, we will be limited in our ability to reconfigure our real estate portfolio in response to economic changes. We may encounter difficulty in disposing of properties when tenants vacate either at the expiration of the applicable lease or otherwise. If we decide to sell any of our properties, our ability to sell these properties and the prices we receive on their sale may be affected by many factors, including the number of potential buyers, the number of competing properties on the market and other market conditions, as well as whether the property is leased and if it is leased, the terms of the lease. As a result, we may be unable to sell our properties for an extended period of time without incurring a loss, which would adversely affect our results of operations, liquidity and financial condition.
Uninsured and underinsured losses may affect the revenues generated by, the value of, and the return from a property affected by a casualty or other claim.
Most of our tenants obtain, for our benefit, comprehensive insurance covering our properties in amounts that are intended to be sufficient to provide for the replacement of the improvements at each property. However, the amount of insurance coverage maintained for any property may be insufficient (i) to pay the full replacement cost of the improvements at the property following a casualty event or (ii) if coverage is provided pursuant to a blanket policy and the tenant’s other properties are subject to insurance claims. In addition, the rent loss coverage under the policy may not extend for the full period of time that a tenant may be entitled to a rent abatement as a result of, or that may be required to complete restoration following, a casualty event. In addition, there are certain types of losses, such as those arising from earthquakes, floods, hurricanes and terrorist attacks, that may be uninsurable or that may not be economically insurable. Changes in zoning, building codes and ordinances, environmental considerations and other factors also may make it impossible or impracticable for us to use insurance proceeds to replace damaged or destroyed improvements at a property. If restoration is not or cannot be completed to the extent, or within the period of time, specified in certain of our leases, the tenant may have the right to terminate the lease. If any of these or similar events occur, it may reduce our revenues, the value of, or our return from, an affected property.
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We have been, and will continue to be, subject to significant competition and we may not be able to compete successfully for investments.
We have been, and will continue to be, subject to significant competition for attractive investment opportunities, and in particular, opportunities for industrial properties which are the primary focus of our and many of our competitors acquisition efforts. Our competitors include publicly-traded REITs, non-traded REITs, insurance companies, commercial and investment banking firms, private institutional funds, hedge funds, private
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equity funds and other investors, many of whom have greater financial and other resources than we have. We may not be able to compete successfully for investments. If we pay higher prices for investments, our returns may be lower and the value of our assets may not increase or may decrease significantly below the amount we paid for such assets. If such events occur, we may experience lower returns on our investments.
Our current and future investments in joint ventures could be adversely affected by the lack of sole decision making authority, reliance on joint venture partners’ financial condition or insurance coverage, disputes that may arise between our joint venture partners and us and our reliance on one significant joint venture partner.
SixFive properties in which we have an interest are owned through consolidated joint ventures (three properties) and unconsolidated joint ventures (three(two properties). We may continue to acquire properties through joint ventures and/or contribute some of our properties to joint ventures. Investments in joint ventures may, under certain circumstances, involve risks not present when a third party is not involved, including the possibility that joint venture partners might file for bankruptcy protection, fail to fund their share of required capital contributions or obtain insurance coverage pursuant to a blanket policy as a result of which claims with respect to other properties covered by such policy and in which we have no interest could reduce or eliminate the coverage available with respect to the joint venture properties. Further, joint venture partners may have conflicting business interests or goals, and as a result there is the potential risk of impasses on decisions, such as a sale and the timing thereof. Any disputes that may arise between joint venture partners and us may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business. Consequently, actions by or disputes with joint venture partners might result in subjecting properties owned by the joint venture to additional risk. With respect to our (i) consolidated joint ventures, we own, with two joint venture partners and their respective affiliates, properties that account for 4.0%4.3% of 20222024 contractual rental income, and (ii) unconsolidated joint ventures, we own, with twoone joint venture partnerspartner and their affiliates, properties which account for our $1.6 million$235,000 share of 20222024 base rent payable. We may be adversely affected if we are unable to maintain a satisfactory working relationship with these joint venture partners or if any of these partners becomes financially distressed.
Regulatory and Tax Risks
Compliance with environmental regulations and associated costs could adversely affect our results of operations and liquidity.
Under various federal, state and local laws, ordinances and regulations, an owner or operator of real property may be required to investigate and clean up hazardous or toxic substances or petroleum product releases at the property and may be held liable to a governmental entity or to third parties for property damage and for investigation and cleanup costs incurred in connection with contamination. The cost of investigation, remediation or removal of hazardous or toxic substances may be substantial, and the presence of such substances, or the failure to properly remediate a property, may adversely affect our ability to sell or rent the property or to borrow money using the property as collateral. In connection with our ownership, operation and management of real properties, we may be considered an owner or operator of the properties and, therefore, potentially liable for removal or remediation costs, as well as certain other related costs, including governmental fines and liability for injuries to persons and property, not only with respect to properties we own now or may acquire, but also with respect to properties we have owned in the past.
We cannot provide any assurance that existing environmental studies with respect to any of our properties reveal all potential environmental liabilities, that any prior owner of a property did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist, or may not exist in the future, as to any one or more of our properties. If a material environmental condition does in
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fact exist, or exists in the future, the remediation costs could have a material adverse impact upon our results of operations, liquidity and financial condition.
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Compliance with the Americans with Disabilities Act could be costly.
Under the Americans with Disabilities Act of 1990, all public accommodations must meet Federal requirements for access and use by disabled persons. A determination that our properties do not comply with the Americans with Disabilities Act could result in liability for both governmental fines and damages. If we are required to make unanticipated major modifications to any of our properties to comply with the Americans with Disabilities Act, which are determined not to be the responsibility of our tenants, we could incur unanticipated expenses that could have an adverse impact upon our results of operations, liquidity and financial condition.
Legislative or regulatory tax changes could have an adverse effect on us.
There are a number of issues associated with an investment in a REIT that are related to the Federal income tax laws, including, but not limited to, the consequences of our failing to continue to qualify as a REIT. At any time, the Federal income tax laws governing REITs or the administrative interpretations of those laws may be amended or modified. Any new laws or interpretations may take effect retroactively and could adversely affect us or our stockholders.
Risks Related to OLP’s Organization, Structure and Ownership of Stock
Our transactions with affiliated entities involve conflicts of interest.
From time to time we have entered into transactions with persons and entities affiliated with us and with certain of our officers and directors. Such transactions involve a potential conflict of interest and entail a risk that we could have obtained more favorable terms if we had entered into such transaction with an unaffiliated third party. We are a party to a compensation and services agreement with Majestic Property effective as of January 1, 2007, as amended. Majestic Property is wholly-ownedwholly owned by the vice chairman of our board of directors and it provides compensation to certain of our part-time senior executive officers and other individuals performing services on our behalf. Pursuant to the compensation and services agreement, we pay an annual fee to Majestic Property which provides us with the Services. See “Item 1. Business – —Human Capital Resources”. In 20212023 we paid, and in 20222024 we anticipate paying, Majestic Property, (i) a fee of $3.1$3.3 million and $3.0$3.3 million, respectively, and (ii) $295,000$317,000 and $317,000,$336,000, respectively, for our share of all direct office expenses, including rent, telephone, postage, computer services, supplies, and internet usage. We also obtain our property insurance in conjunction with Gould Investors, L.P., our affiliate, and in 2021,2023, reimbursed Gould Investors $1.4$1.1 million for our share of the insurance premiums paid by Gould Investors. At December 31, 2021,2023, Gould Investors beneficially owns approximately 9.2%10.4% of our outstanding common stock and certain of our senior executive officers are also executive officers of the managing general partner of Gould Investors. See Note 10 of our consolidated financial statements for information regarding equity awards to individuals performing services on our behalf pursuant to the compensation and services agreement.
Our senior management and other key personnel, including those performing services on a part-time basis, are critical to our business and our future success depends on our ability to retain them.
We depend on the services of Matthew J. Gould, chairman of our board of directors, Fredric H. Gould, vice chairman of our board of directors, Patrick J. Callan, Jr., our president and chief executive officer, Lawrence G. Ricketts, Jr., our executive vice president and chief operating officer, Isaac Kalish, our chief financial officer and senior vice president and David W. Kalish, our senior vice president and chiefpresident- financial, officer, and other members of senior management to carry out our business and investment strategies. Of the foregoing executive officers, only Messrs. Callan and Ricketts, devote all of their business time to us. Other members of senior management provide services to us either on a full-time or part-time, as-needed basis. The loss of the services of any of our senior management or other key personnel, the inability or failure of the members of senior management providing services to us on a part-time basis to devote sufficient time or attention to our activities or our inability to recruit and retain qualified personnel in the future, could impair our ability to carry out our business and investment strategies.
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Certain provisions of our charter, our Bylaws, as amended, and Maryland law may inhibit a change in control that stockholders consider favorable and could also limit the market price of our common stock.
Certain provisions of our charter (the “Charter”), our Bylaws and Maryland law may impede, or prevent, a third party from acquiring control of us without the approval of our board of directors. These provisions:
● | provide for a staggered board of directors consisting of three classes, with one class of directors being elected each year and each class being elected for three-year terms and until their successors are duly elected and qualify; |
● | impose restrictions on ownership and transfer of our stock (such provisions being intended to, among other purposes, facilitate our compliance with certain requirements under the Code, relating to our qualification as a REIT under the Code); and |
● | provide that directors may be removed only for cause and only by the vote of at least a majority of all outstanding shares entitled to vote. |
Certain provisions of the Maryland General Corporation Law (the “MGCL”) may impede a third party from making a proposal to acquire us or inhibit a change of control under circumstances that otherwise could be in the best interest of holders of shares of our common stock, including:
● | “control share” provisions that provide that, subject to certain exceptions, holders of “control shares” of our company (defined as voting shares which, when aggregated with other shares controlled by the stockholder, entitle the holder to exercise voting power in the election of directors within one of three increasing ranges) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares,” subject to certain exceptions) have no voting rights with respect to the control shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares; and |
● | additionally, Title 3, Subtitle 8 of the MGCL permits our board of directors, without stockholder approval and regardless of what is currently provided in the Charter or the Bylaws, to implement certain corporate governance provisions. |
Ownership of less than 9.9% of our outstanding stock could violate the restrictions on ownership and transfer in our Charter, which would result in the shares owned or acquired in violation of such restrictions being designated as “excess shares” and transferred to a trust for the benefit of a charitable beneficiary and loss of the right to receive dividends and other distributions on, and the economic benefit of any appreciation of, such shares, and you may not have sufficient information to determine at any particular time whether an acquisition of our shares will result in a loss of the economic benefit of such shares.
In order for us to qualify as a real estate investment trust under the Code, no more than 50% of the value of the outstanding shares of our stock may be owned, directly or indirectly or through application of certain attribution rules, by five or fewer “individuals” (as defined in the Code) at any time during the last half of a taxable year. To facilitate our qualification as a REIT under the Code, among other purposes, the Charter generally prohibits any person other than Fredric H. Gould, currently vice chairman of our board of directors, from actually or constructively owning more than 9.9% of the outstanding shares of all classes and series of our stock, which we refer to as the “ownership limit.” In addition, the Charter prohibits any person from beneficially or constructively owning shares of our stock that would result in more than 50% of the value of the outstanding shares of our stock to be beneficially owned by five or fewer individuals, regardless of whether such ownership is during the last half of any taxable year, which we refer to as the “Five or Fewer Limit.” Shares transferred in violation of either of these restrictions will be designated automatically as “excess shares” and transferred to a trust for the benefit of a charitable beneficiary selected by us. The person that attempted to acquire the shares of our stock in violation of the restrictions in the Charter will not be entitled to any dividends or distributions paid after the date of the transfer to the trust and, upon a sale of such shares by the trust, will generally be entitled to receive only the lesser of the market value on the date of the event that resulted in the transfer to the trust or the net proceeds of the sale by the trust to a person who could own the shares without violating the ownership limits.
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Pursuant to the attribution rules under the Code, Fredric H. Gould, is our only stockholder that beneficially owned in excess of 9.9% of our capital stock on June 14, 2005, when the ownership limit became effective, and is the only person permitted to own and acquire shares of our capital stock, directly or indirectly, in excess of the ownership limit. Based on information supplied to us, as of December 31, 2021, Mr. Gould beneficially owns approximately 11.698% of the outstanding shares of our stock. As a result of Mr. Gould’s beneficial ownership of our stock, compliance with the 9.9% ownership limit will not ensure that your ownership of shares of our stock will not violate the Five or Fewer Limit or prevent shares of stock that you intended to acquire from being designated as “excess shares” and transferred to a charitable trust.
At December 31, 2021, if three other individuals unrelated to Mr. Gould were to beneficially own exactly 9.9% of our outstanding stock, no other individual may beneficially own 8.602% or more of our outstanding stock without violating the Five or Fewer Limit and causing the newly-acquired shares to be designated as “excess shares” and transferred to the charitable trust. However, there is no limitation on Mr. Gould acquiring additional shares of our stock or otherwise increasing his percentage of ownership of our stock, meaning that the amount of our stock that other persons or entities may acquire without potentially violating the Five or Fewer Limit could be reduced in the future and without notice. Our Board has exempted from the 9.9% ownership limit the ownership by Mr. Gould’s direct and indirect heirs of shares of our stock that they inherit from him, subject to the same conditions and limitations as apply to Mr. Gould.
Fredric H. Gould and his heirs will be required by the Exchange Act and regulations promulgated thereunder to report, with certain exceptions, their acquisition of additional shares of our stock within two days of such acquisitions, and all holders of our stock will be required to file reports of their acquisition of beneficial ownership (as defined in the Exchange Act) of more than 5% of our outstanding stock. However, beneficial ownership for purposes of the reporting requirements under the Exchange Act is calculated differently than beneficial ownership for purposes of determining compliance with the Five or Fewer Limit. As a result, you may not have enough information currently available to you at any time to determine the percentage of ownership of our stock that you can acquire without violating the Five or Fewer Limit and losing the economic benefit of the ownership of such newly-acquired shares.
Failure to qualify as a REIT could result in material adverse tax consequences and could significantly reduce cash available for distributions.
We operate so as to qualify as a REIT under the Code. Qualification as a REIT involves the application of technical and complex legal provisions for which there are limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. In addition, no assurance can be given that legislation, new regulations, administrative interpretations or court decisions will not significantly change the tax laws with respect to qualification as a REIT or the federal income tax consequences of such qualification. If we fail to quality as a REIT, we will be subject to federal, certain additional state and local income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates and would not be allowed a deduction in computing our taxable income for amounts distributed to stockholders. In addition, unless entitled to relief under certain statutory provisions, we would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification is lost. The additional tax would reduce significantly our net income and the cash available to pay dividends.
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We are subject to certain distribution requirements that may result in our having to borrow funds at unfavorable rates.
To obtain the favorable tax treatment associated with being a REIT, we generally are required, among other things, to distribute to our stockholders at least 90% of our ordinary taxable income (subject to certain adjustments) each year. To the extent that we satisfy these distribution requirements but distribute less than 100% of our taxable income we will be subject to Federal and state corporate tax on our undistributed taxable income.
As a result of differences in timing between the receipt of income and the payment of expenses, and the inclusion of such income and the deduction of such expenses in arriving at taxable income, and the effect of nondeductible capital expenditures and the timing of required debt service (including amortization) payments, we
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may need to borrow funds in order to make the distributions necessary to retain the tax benefits associated with qualifying as a REIT, even if we believe that then prevailing market conditions are not generally favorable for such borrowings. Such borrowings could reduce our net income and the cash available to pay dividends.
Compliance with REIT requirements may hinder our ability to maximize profits.
In order to qualify as a REIT for Federal income tax purposes, we must continually satisfy tests concerning, among other things, our sources of income, the amounts we distribute to our stockholders and the ownership of our stock. We may also be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. Accordingly, compliance with REIT requirements may hinderhinders our ability to operate solely on the basis of maximizing profits.
In order to qualify as a REIT, we must also ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and real estate assets. Any investment in securities cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, no more than 5% of the value of our assets can consist of the securities of any one issuer, other than a qualified REIT security. If we fail to comply with these requirements, we must dispose of such portion of these securities in excess of these percentages within 30 days after the end of the calendar quarter in order to avoid losing our REIT status and suffering adverse tax consequences. This requirement could cause us to dispose of assets for consideration that is less than their true value and could lead to an adverse impact on our results of operations and financial condition.
If we reduce or do not increase our dividend, the market value of our common stock may decline.
The level of our dividend is established by our board of directors from time to time based on a variety of factors, including our cash available for distribution, funds from operations, adjusted funds from operations and maintenance of our REIT status. Various factors could cause our board of directors to decrease or not increase our dividend, including tenant defaults or bankruptcies resulting in a material reduction in our funds from operations, a material loss resulting from an adverse change in the value of one or more of our properties, or insufficient income to cover our dividends. In 2020 and 2019, approximately 8.1% and 27.0%, respectively, of our dividends exceeded our “earnings and profits” (as determined pursuant to the Code) and therefor constituted a return of capital; accordingly, we were not required to pay dividends that exceeded such earnings and profits to maintain our REIT status. It is possible that a portion of the dividends we would pay in 20222023 would constitute a return of capital and in such event we would not be required to pay such sum to maintain our REIT status. If our board of directors determines to reduce or not increase our dividend for the foregoing or any other reason, the market value of our common stock could be adversely affected.
The stock market is volatile, and fluctuations in our operating results, removal from various indices and other factors could cause our stock price to decline.
The stock market has experienced, and may continue to experience, fluctuations that significantly impact the market prices of securities issued by many companies. Market fluctuations could adversely affect our stock price. These fluctuations have often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations, as well as general economic, systemic, political and market conditions, such as pandemics, recessions, loss of investor confidence, interest rate changes, government shutdowns, or trade wars, may negatively affect the market price of our common stock. Moreover, our operating results may fluctuate and vary from period to period due to the risk factors set forth herein.
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Although our common stock is quoted on the New York Stock Exchange, the volume of trades on any given day has been limited historically, as a result of which stockholders might not have been able to sell or purchase our common stock at the volume, price or time desired. Further, if our common stock is removed from the Russell 3000® Index because it does not meet the criteria for continued inclusion in such index, index funds, institutional investors, or other holders attempting to track the composition of that index may be required to sell our common stock, which would adversely impact the price and frequency at which it trades.
General Business Risks
Enhanced market and economic volatility due to adverse economic and geopolitical conditions, health crises or dislocations in the credit markets, could have a material adverse effect on our results of operations, financial condition and ability to pay dividends.
Our business may be adversely affected by market and economic volatility experienced by the U.S. and global economies, the real estate industry as a whole and/or the local economies in the markets in which our properties are located. Such adverse conditions may be due to, among other issues, rising inflation and interest rates, volatility in the public equity and debt markets, labor market challenges and international economic and other conditions, including pandemics, geopolitical instability (such as the war in Ukraine), sanctions and other conditions beyond our control. These current conditions, or similar conditions existing in the future, may adversely affect our results of operations, financial condition and ability to pay dividends as a result of one or more of the following, among other potential consequences:
• | the financial condition of our tenants may be adversely affected, which may result in lower rents or tenant defaults; |
• | current or potential tenants may delay or postpone entering into long-term net leases with us; |
• | the ability to borrow on acceptable terms and conditions may be limited or unavailable, which could reduce our ability to pursue acquisitions, dispositions and refinance existing debt, reduce our returns from acquisition and disposition activities, increase our future interest expense and reduce our ability to make cash distributions to our stockholders; |
• | our ability to access the capital markets may be restricted at a time when we would like, or need, to access those markets, which could have an impact on our flexibility to react to changing economic and business conditions; |
• | the recognition of impairment charges on or reduced values of our properties, which may adversely affect our results of operations or limit our ability to dispose of assets at attractive prices and may reduce the availability of financing; |
• | reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties; |
• | our line of credit lenders could refuse to fund their financing commitment to us or could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all; and |
• | one or more counterparties to our derivative financial instruments could default on their obligations to us, or could fail, increasing the risk that we may not realize the benefits of these instruments. |
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Breaches of information technology systems could materially harm our business and reputationreputation.
We collect and retain on information technology systems, certain financial, personal and other sensitive information provided by third parties, including tenants, vendors, employees and employees.joint venture partners. We also rely on information technology systems for the collection and distribution of funds. We have been, and continue to be, subject to cybersecurity attacks thoughalthough we have not incurred any significant loss therefrom. There can be no assurance that we will be able to prevent unauthorized access to sensitive information or the unauthorized distribution of funds. Any loss of this information or unauthorized distribution of funds as a result of a cybersecurity attack may result in loss of funds to which we are entitled, legal liability and costs (including damages and penalties), as well as damage to our reputation, that could materially and adversely affect our business.
Actual or threatened epidemics, pandemics, outbreaks, or other public health crises may adversely affect our tenants’ financial condition and the profitability of our properties.
Our business and the businesses of our tenants could be materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the COVID-19 pandemic. The risk, or public perception of the risk, of a pandemic or media coverage of infectious diseases could cause customers to avoid retail properties, and with respect to our properties generally,
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could cause temporary or long-term disruptions in our tenants’ supply chains and/or delays in the delivery of our tenants’ inventory. Moreover, an epidemic, pandemic, outbreak or other public health crisis, such as COVID-19, could cause the on-site employees of our tenants to avoid our tenants’ properties, which could adversely affect our tenants’ ability to adequately manage their businesses. Risks related to an epidemic, pandemic or other health crisis, such as COVID-19, could also lead to the complete or partial closure of one or more of our tenants’ stores or facilities. Such events could adversely impact our tenants’ sales and/or cause the temporary closure of our tenants’ businesses, which could severely disrupt their operations and the rental revenue we generate from our leases with them. The ultimate extent of the impact of any epidemic, pandemic or other health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic or other health crisis and actions taken to contain or prevent their further spread, among others. These and other potential impacts of an epidemic, pandemic or other health crisis, such as COVID-19, could therefore materially and adversely affect our business, financial condition and results of operations.
The failure of any bank in which we deposit our funds could have an adverse impact on our financial condition.
We have diversified our cash and cash equivalents between several banking institutions in an attempt to minimize exposure to any one of these entities. However, the Federal Deposit Insurance Corporation only insures accounts in amounts up to $250,000 per depositor per insured bank. We currently have cash and cash equivalents deposited in certain financial institutions significantly in excess of federally insured levels. If any of the banking institutions in which we have deposited funds ultimately fails, we may lose our deposits over $250,000. The loss of our deposits may have an adverse effect on our financial condition.
We are dependent on third party software for our billing and financial reporting processes.processes and systems.
We are dependent on third party software, and in particular, Yardi’s property management software, for generating tenant invoices, collecting receivables, paying payables and preparing financial reports. If the software failsdoes not perform as required (including a failurenon-performance resulting from such partiesthe software vendors’ unwillingness or inability to maintain or upgrade the functionality of the software), our ability to bill tenants and prepare financial reports couldconduct operations would be impaired which would adversely affect our business.affected.
22
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Our information technology, communication networks, enterprise applications, accounting and financial reporting platforms and related systems are integral to our operations. We use these systems, among others, for internal communications, for accounting and record-keeping functions, and for many other key aspects of our business. Our operations rely on securing, collecting, storing, transmitting, and processing of proprietary and confidential data.
We have deployed various safeguards designed to protect our information technology (“IT”) systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls. At the management level, these cybersecurity defense systems are overseen by our network administrator who performs services for us on a part-time basis pursuant to the Compensation and Services Agreement. Our network administrator has more than 20 years of experience with IT systems and holds various IT certifications. Our network administrator reports to, and is in regular contact with, our Chief Financial Officer and Senior Vice President-Financial. These officers do not have formal IT or cybersecurity training. In the event of a cybersecurity incident, among other things, the network administrator and these officers would consult with one another and, as needed or appropriate, other members of management to determine the appropriate course of action (including whether such incident should be reported to other members of management and/or the audit committee and whether public disclosure should, or is, required to be made).
Our internal auditor performs certain procedures to test the integrity and functionality of our IT systems (which includes a high-level review of our cybersecurity defenses). In addition, we have retained a third-party cybersecurity consulting firm that (i) advises us as to cybersecurity matters (including prevailing cybersecurity threats), (ii) performs, on a periodic basis, assessments of our cybersecurity defenses and (iii) on a continuous basis, monitors our IT systems for cybersecurity threats and intrusions.
We are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us. See “Item 1A. Risk Factors” in this Annual Report for additional discussion about cybersecurity-related risks.
To operate our business, we use certain third-party service providers to perform a variety of functions. We seek to engage reliable, reputable service providers that maintain cybersecurity programs and we generally rely on such providers to maintain appropriate cybersecurity practices.
At the Board level, our cybersecurity practices are overseen by the audit committee as part of its oversight of our risk management activities. The committee meets periodically with, among others, our internal auditor and network administrator to review and discuss cybersecurity matters.
Item 2. Properties.
As of December 31, 2021,2023, we own 118108 properties with an aggregate net book value of $678.2$682.0 million. Our occupancy rate, based on square footage, was 99.2%98.8%, 98.4%99.8%, and 98.1%99.2% as of December 31, 2021, 20202023, 2022 and 2019,2021, respectively.
At December 31, 2021,2023, we participated in joint ventures that owned threetwo properties and at such date, our investment in these unconsolidated joint ventures is $10.2$2.1 million. The occupancy rate of our joint venture properties, based on square footage, was 59.1%100%, 59.1%58.7%, and 59.3%59.1% as of December 31, 2023, 2022 and 2021, 2020 and 2019, respectively. For further information about the Manahawkin Property, including information about the related mortgage debt and re-development activities, see “—Properties Owned by Joint Ventures”, “—Mortgage Debt” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.��
Our principal executive office is located at 60 Cutter Mill Road, Suite 303, Great Neck, New York. We believe that this facility isour facilities are satisfactory for our current and projected needs.
2523
Our Properties
The following table details, as of December 31, 2021,2023, certain information about our properties (except as otherwise indicated, each property is tenanted by a single tenant):
| | | | | | | | | | | | | | | | | | |
| | | | Percentage of | | Approximate | | 2022 Contractual | | | | Percentage of | | Approximate | | 2024 Contractual | ||
| | | | 2022 Contractual | | Square Footage | | Rental Income | | | | 2024 Contractual | | Square Footage | | Rental Income | ||
Location | | Type of Property | | Rental Income | | of Building |
| per Square Foot | | Type of Property | | Rental Income | | of Building |
| per Square Foot | ||
Fort Mill, SC |
| Industrial |
| 4.4 | | 701,595 | | $ | 4.27 | | Industrial |
| 4.3 | | 701,595 | | $ | 4.40 |
Hauppauge, NY |
| Industrial |
| 4.1 | | 201,614 | |
| 13.91 | | Industrial |
| 4.1 | | 201,614 | | | 14.61 |
Baltimore, MD |
| Industrial |
| 3.5 | | 367,000 | |
| 6.59 | | Industrial |
| 3.5 | | 367,000 | | | 6.87 |
Royersford, PA(1) |
| Retail |
| 3.4 | | 194,600 | |
| 12.16 | |||||||||
Royersford, PA (1) | | Retail |
| 3.4 | | 194,600 | | | 12.52 | |||||||||
El Paso, TX |
| Industrial |
| 3.1 | | 419,821 | |
| 5.02 | | Industrial |
| 3.3 | | 419,821 | | | 5.55 |
Lebanon, TN |
| Industrial |
| 3.0 | | 540,200 | |
| 3.86 | | Industrial |
| 3.0 | | 540,200 | | | 3.91 |
Fort Mill, SC | | Industrial |
| 2.9 | | 303,188 | | | 6.75 | |||||||||
Littleton, CO (2) | | Retail |
| 2.3 | | 101,618 | | | 19.12 | |||||||||
Secaucus, NJ |
| Health & Fitness |
| 2.2 | | 44,863 | |
| 33.43 | | Health & Fitness |
| 2.1 | | 44,863 | | | 33.43 |
Delport, MO(2) |
| Industrial |
| 2.2 | | 339,094 | |
| 4.36 | |||||||||
Littleton, CO(3) |
| Retail |
| 2.0 | | 101,618 | |
| 16.54 | |||||||||
El Paso, TX(4) |
| Retail |
| 2.0 | | 110,179 | |
| 12.44 | |||||||||
St. Louis Park, MN(2) |
| Retail |
| 1.9 | | 131,710 | |
| 9.86 | |||||||||
Pittston, PA | | Industrial |
| 2.0 | | 249,600 | | | 5.81 | |||||||||
El Paso, TX (3) | | Retail |
| 2.0 | | 110,179 | | | 13.28 | |||||||||
McCalla, AL |
| Industrial |
| 1.9 | | 294,000 | |
| 4.39 | | Industrial |
| 1.9 | | 294,000 | | | 4.71 |
Brooklyn, NY |
| Office |
| 1.9 | | 66,000 | |
| 19.24 | | Office |
| 1.9 | | 66,000 | | | 20.39 |
Delport, MO (4) | | Industrial |
| 1.8 | | 339,094 | | | 3.68 | |||||||||
Lowell, AR | | Industrial | | 1.8 | | 248,370 | | | 4.95 | | Industrial |
| 1.7 | | 248,370 | | | 4.95 |
Fort Mill, SC |
| Industrial |
| 1.8 | | 303,188 | |
| 3.99 | |||||||||
Greensboro, NC |
| Theater |
| 1.7 | | 61,213 | |
| 19.02 | |||||||||
Moorestown, NJ | | Industrial |
| 1.7 | | 219,881 | | | 5.57 | |||||||||
Ankeny, IA (4) | | Industrial |
| 1.7 | | 208,234 | | | 5.76 | |||||||||
Joppa, MD |
| Industrial |
| 1.7 | | 258,710 | |
| 4.42 | | Industrial |
| 1.7 | | 258,710 | | | 4.60 |
Ankeny, IA(2) |
| Industrial |
| 1.6 | | 208,234 | |
| 5.26 | |||||||||
Moorestown, NJ(2) |
| Industrial |
| 1.6 | | 219,881 | |
| 4.92 | |||||||||
Englewood, CO |
| Industrial |
| 1.5 | | 63,882 | |
| 15.68 | | Industrial |
| 1.5 | | 63,882 | | | 16.47 |
Tucker, GA |
| Health & Fitness |
| 1.4 | | 58,800 | |
| 16.16 | | Health & Fitness |
| 1.4 | | 58,800 | | | 17.45 |
Pennsburg, PA(2) |
| Industrial |
| 1.4 | | 291,203 | |
| 3.23 | |||||||||
Hamilton, OH |
| Health & Fitness |
| 1.2 | | 38,000 | |
| 20.75 | |||||||||
Greenville, SC(5) |
| Industrial |
| 1.1 | | 142,200 | |
| 5.44 | |||||||||
Pennsburg, PA (4) | | Industrial |
| 1.4 | | 291,203 | | | 3.36 | |||||||||
St. Louis Park, MN (4) | | Retail |
| 1.3 | | 131,710 | | | 7.14 | |||||||||
Dalton, GA | | Industrial |
| 1.3 | | 212,740 | | | 4.33 | |||||||||
Indianapolis, IN |
| Theater |
| 1.1 | | 57,688 | |
| 12.75 | | Industrial |
| 1.2 | | 125,622 | | | 6.92 |
Greenville, SC (5) | | Industrial |
| 1.2 | | 142,200 | | | 5.83 | |||||||||
Bakersfield, CA |
| Industrial |
| 1.1 | | 218,116 | |
| 3.36 | | Industrial |
| 1.1 | | 218,116 | | | 3.71 |
Blythewood, SC (4) | | Industrial |
| 1.1 | | 177,040 | | | 4.55 | |||||||||
Ronkonkoma, NY | | Industrial |
| 1.0 | | 90,599 | | | 8.15 | |||||||||
Greenville, SC (5) | | Industrial |
| 1.0 | | 128,000 | | | 5.70 | |||||||||
Green Park, MO |
| Industrial |
| 1.1 | | 119,680 | |
| 6.02 | | Industrial |
| 1.0 | | 119,680 | | | 6.02 |
Ronkonkoma, NY |
| Industrial |
| 1.0 | | 90,599 | |
| 7.79 | |||||||||
Greenville, SC(5) |
| Industrial |
| 1.0 | | 128,000 | | | 5.44 | |||||||||
Indianapolis, IN |
| Industrial |
| 1.0 | | 125,622 | |
| 5.45 | |||||||||
Lehigh Acres, FL(2) | | Industrial | | 1.0 | | 103,044 | | | 6.35 | |||||||||
Lake Charles, LA(6) |
| Retail���Office Supply |
| 1.0 | | 54,229 | |
| 12.07 | |||||||||
Greensboro, NC | | Theater |
| 1.0 | | 61,213 | | | 11.41 | |||||||||
Huntersville, NC |
| Industrial |
| 0.9 | | 78,319 | |
| 8.27 | | Industrial |
| 1.0 | | 78,319 | | | 8.69 |
Ashland, VA | | Industrial | | 0.9 | | 88,003 | | | 7.29 | | Industrial |
| 0.9 | | 88,003 | | | 7.58 |
Tyler, TX |
| Retail—Furniture |
| 0.9 | | 50,810 | |
| 12.43 | |||||||||
Lake Charles, LA (5) | | Retail—Office Supply |
| 0.9 | | 54,229 | | | 12.07 | |||||||||
New Hope, MN (5) | | Industrial |
| 0.9 | | 123,892 | | | 5.28 | |||||||||
Memphis, TN |
| Industrial |
| 0.9 | | 224,749 | |
| 2.77 | | Industrial |
| 0.9 | | 224,749 | | | 2.88 |
Lehigh Acres, FL (4) | | Industrial |
| 0.9 | | 103,044 | | | 6.28 | |||||||||
Champaign, IL (4) | | Retail |
| 0.9 | | 50,940 | | | 25.50 | |||||||||
Chandler, AZ |
| Industrial |
| 0.9 | | 62,121 | |
| 9.84 | | Industrial |
| 0.9 | | 62,121 | | | 10.23 |
Kennesaw, GA |
| Retail |
| 0.9 | | 32,138 | |
| 18.90 | |||||||||
Northwood, OH (4) | | Industrial |
| 0.9 | | 123,500 | | | 5.14 | |||||||||
Moorestown, NJ | | Industrial |
| 0.9 | | 64,000 | | | 9.55 | |||||||||
Louisville, KY | | Industrial |
| 0.9 | | 125,370 | | | 4.87 | |||||||||
Chicago, IL |
| Retail—Office Supply |
| 0.9 | | 23,939 | |
| 24.37 | | Retail—Office Supply |
| 0.8 | | 23,939 | | | 24.37 |
Moorestown, NJ |
| Industrial |
| 0.8 | | 64,000 | |
| 9.05 | |||||||||
Nashville, TN(2) |
| Industrial |
| 0.8 | | 99,500 | |
| 5.81 | |||||||||
Melville, NY |
| Industrial |
| 0.8 | | 51,351 | |
| 10.89 | | Industrial |
| 0.8 | | 51,351 | | | 11.33 |
Omaha, NE | | Industrial | | 0.8 | | 101,584 | | | 5.37 | | Industrial |
| 0.8 | | 101,584 | | | 5.54 |
New Hope, MN(7) |
| Industrial |
| 0.8 | | 123,892 | |
| 4.89 | |||||||||
Wichita, KS | | Retail—Furniture |
| 0.8 | | 88,108 | | | 6.35 | |||||||||
Northwood, OH (6) | | Industrial |
| 0.8 | | 126,990 | | | 4.37 | |||||||||
Shakopee, MN |
| Industrial |
| 0.8 | | 114,000 | |
| 4.65 | | Industrial |
| 0.8 | | 114,000 | | | 4.86 |
Wichita, KS |
| Retail—Furniture |
| 0.8 | | 88,108 | |
| 5.94 | |||||||||
Monroe, NC | | Industrial | | 0.7 | | 93,170 | | | 5.53 | | Industrial |
| 0.8 | | 93,170 | | | 5.87 |
Greenville, SC | | Industrial |
| 0.8 | | 88,800 | | | 6.05 | |||||||||
Saco, ME |
| Industrial |
| 0.7 | | 131,400 | |
| 3.77 | | Industrial |
| 0.7 | | 131,400 | | | 3.92 |
Greenville, SC |
| Industrial |
| 0.7 | | 88,800 | |
| 5.55 | |||||||||
Cedar Park, TX | | Retail—Furniture |
| 0.7 | | 50,810 | | | 10.00 | |||||||||
New Hyde Park, NY | | Industrial |
| 0.7 | | 38,000 | | | 13.12 | |||||||||
Cary, NC |
| Retail—Office Supply |
| 0.7 | | 33,490 | |
| 14.62 | | Retail—Office Supply |
| 0.7 | | 33,490 | | | 14.62 |
Louisville, KY |
| Industrial |
| 0.7 | | 125,370 | |
| 3.81 | |||||||||
New Hyde Park, NY |
| Industrial |
| 0.7 | | 38,000 | | | 12.37 | |||||||||
Ft. Myers, FL |
| Retail |
| 0.7 | | 29,993 | |
| 15.43 | |||||||||
Bensalem, PA(5) |
| Industrial |
| 0.7 | | 85,663 | | | 5.33 | |||||||||
Cedar Park, TX |
| Retail—Furniture |
| 0.6 | | 72,000 | |
| 6.08 | |||||||||
Champaign, IL(2) |
| Retail |
| 0.6 | | 50,530 | |
| 8.65 | |||||||||
Rincon, GA |
| Industrial |
| 0.6 | | 95,000 | | | 4.60 | |||||||||
Tyler, TX | | Retail—Furniture |
| 0.7 | | 72,000 | | | 6.75 | |||||||||
Lexington, KY | | Industrial |
| 0.7 | | 74,150 | | | 6.46 | |||||||||
Indianapolis, IN | | Theater |
| 0.7 | | 57,688 | | | 8.28 |
2624
| | | | | | | | | | | | | | | | | | |
| | | | Percentage of | | Approximate | | 2022 Contractual | | | | Percentage of | | Approximate | | 2024 Contractual | ||
| | | | 2022 Contractual | | Square Footage | | Rental Income | | | | 2024 Contractual | | Square Footage | | Rental Income | ||
Location | | Type of Property | | Rental Income | | of Building | | per Square Foot | | Type of Property |
| Rental Income | | of Building | | per Square Foot | ||
Rincon, GA | | Industrial |
| 0.7 | | 95,000 | | $ | 4.95 | |||||||||
Fort Myers, FL | | Industrial |
| 0.7 | | 52,710 | | | 8.86 | |||||||||
Durham, NC | | Industrial |
| 0.6 | | 46,181 | | | 10.00 | |||||||||
Plymouth, MN |
| Industrial |
| 0.6 | | 82,565 | | $ | 5.26 | | Industrial |
| 0.6 | | 82,565 | | | 5.47 |
Highland Ranch, CO | | Retail |
| 0.6 | | 42,920 | | | 10.39 | |||||||||
Deptford, NJ | | Retail |
| 0.6 | | 25,358 | | | 16.90 | |||||||||
Eugene, OR |
| Retail—Office Supply |
| 0.6 | | 24,978 | | | 16.37 | | Retail—Office Supply |
| 0.6 | | 24,978 | | | 16.37 |
Deptford, NJ |
| Retail |
| 0.6 | | 25,358 | | | 15.98 | |||||||||
Newport, VA | | Retail—Furniture |
| 0.6 | | 49,865 | | | 8.19 | |||||||||
Amarillo, TX | | Retail—Furniture |
| 0.6 | | 72,027 | | | 5.64 | |||||||||
Newark, DE |
| Other |
| 0.6 | | 23,547 | | | 17.00 | | Other |
| 0.6 | | 23,547 | | | 17.00 |
Highland Ranch, CO |
| Retail |
| 0.6 | | 42,920 | | | 9.27 | |||||||||
Hillside, IL (4) | | Industrial |
| 0.6 | | 60,832 | | | 6.55 | |||||||||
Bensalem, PA (5) | | Industrial |
| 0.6 | | 85,663 | | | 4.61 | |||||||||
El Paso, TX |
| Retail—Office Supply |
| 0.5 | | 25,000 | | | 15.20 | | Retail—Office Supply |
| 0.5 | | 25,000 | | | 15.20 |
Amarillo, TX |
| Retail—Furniture |
| 0.5 | | 72,027 | | | 5.14 | |||||||||
Woodbury, MN |
| Retail |
| 0.5 | | 49,406 | | | 7.25 | |||||||||
Lexington, KY |
| Retail—Furniture |
| 0.5 | | 30,173 | | | 11.69 | | Retail—Furniture |
| 0.5 | | 30,173 | | | 12.48 |
Richmond, VA |
| Retail—Furniture |
| 0.5 | | 38,788 | | | 8.98 | | Retail—Furniture |
| 0.5 | | 38,788 | | | 9.12 |
Virginia Beach, VA |
| Retail—Furniture |
| 0.5 | | 58,937 | | | 5.74 | |||||||||
Woodbury, MN | | Retail |
| 0.5 | | 49,406 | | | 7.04 | |||||||||
LaGrange, GA |
| Industrial |
| 0.5 | | 80,000 | | | 4.14 | | Industrial |
| 0.5 | | 80,000 | | | 4.31 |
Newport, VA |
| Retail—Furniture |
| 0.5 | | 49,865 | | | 6.45 | |||||||||
Durham, NC |
| Industrial |
| 0.5 | | 46,181 | | | 6.95 | |||||||||
Duluth, GA |
| Retail—Furniture |
| 0.5 | | 50,260 | | | 6.19 | |||||||||
Greensboro, NC |
| Retail |
| 0.5 | | 12,950 | | | 24.00 | | Retail |
| 0.4 | | 12,950 | | | 24.00 |
Fayetteville, GA |
| Retail—Furniture |
| 0.4 | | 65,951 | |
| 4.64 | |||||||||
Somerville, MA | | Retail |
| 0.4 | | 12,054 | | | 25.72 | |||||||||
Gurnee, IL |
| Retail—Furniture |
| 0.4 | | 22,768 | | | 13.43 | | Retail—Furniture |
| 0.4 | | 22,768 | | | 13.43 |
Wauconda, IL |
| Industrial |
| 0.4 | | 53,750 | | | 5.65 | |||||||||
Selden, NY | | Retail |
| 0.4 | | 14,555 | | | 21.00 | |||||||||
Naples, FL |
| Retail—Furniture |
| 0.4 | | 15,912 | | | 18.70 | | Retail—Furniture |
| 0.4 | | 15,912 | | | 19.01 |
Selden, NY |
| Retail |
| 0.4 | | 14,555 | | | 20.25 | |||||||||
Somerville, MA |
| Retail |
| 0.4 | | 12,054 | | | 23.23 | |||||||||
Carrollton, GA |
| Restaurant |
| 0.4 | | 6,012 | | | 46.10 | |||||||||
Bluffton, SC | | Retail—Furniture |
| 0.4 | | 35,011 | | | 7.92 | |||||||||
Crystal Lake, IL | | Retail |
| 0.4 | | 32,446 | | | 8.25 | |||||||||
Pinellas Park, FL |
| Industrial |
| 0.4 | | 53,064 | | | 5.03 | | Industrial |
| 0.4 | | 53,064 | | | 5.03 |
Cartersville, GA |
| Restaurant |
| 0.4 | | 5,635 | | | 46.41 | |||||||||
Hauppauge, NY |
| Restaurant |
| 0.4 | | 7,000 | | | 36.11 | |||||||||
Richmond, VA |
| Restaurant |
| 0.4 | | 9,367 | | | 26.35 | |||||||||
Greensboro, NC |
| Restaurant |
| 0.4 | | 6,655 | | | 36.92 | |||||||||
Hyannis, MA |
| Retail |
| 0.4 | | 9,750 | | | 24.85 | | Retail |
| 0.3 | | 9,750 | | | 24.85 |
Myrtle Beach, SC | | Restaurant |
| 0.3 | | 6,734 | | | 34.85 | |||||||||
Chandler, AZ |
| Industrial |
| 0.3 | | 25,035 | | | 8.79 | | Industrial |
| 0.3 | | 25,035 | | | 9.30 |
Kennesaw, GA |
| Restaurant |
| 0.3 | | 4,051 | | | 53.00 | | Restaurant |
| 0.3 | | 4,051 | | | 54.34 |
Myrtle Beach, SC |
| Restaurant |
| 0.3 | | 6,734 | | | 31.68 | |||||||||
Bluffton, SC |
| Retail—Furniture |
| 0.3 | | 35,011 | | | 6.09 | |||||||||
Concord, NC | | Restaurant |
| 0.3 | | 4,749 | | | 46.24 | |||||||||
Miamisburg, OH | | Industrial |
| 0.3 | | 35,707 | | | 6.03 | |||||||||
Everett, MA |
| Retail |
| 0.3 | | 18,572 | | | 11.43 | | Retail |
| 0.3 | | 18,572 | | | 11.43 |
Lawrenceville, GA |
| Restaurant |
| 0.3 | | 4,025 | | | 51.12 | |||||||||
Bolingbrook, IL |
| Retail |
| 0.3 | | 33,111 | | | 6.10 | |||||||||
Concord, NC |
| Restaurant |
| 0.3 | | 4,749 | | | 42.04 | |||||||||
Cape Girardeau, MO |
| Retail |
| 0.3 | | 13,502 | | | 14.71 | | Retail |
| 0.3 | | 13,502 | | | 14.71 |
Miamisburg, OH |
| Industrial |
| 0.3 | | 35,707 | | | 5.48 | |||||||||
Marston, MA |
| Retail |
| 0.3 | | 8,775 | | | 21.00 | | Retail |
| 0.3 | | 8,775 | | | 22.00 |
Indianapolis, IN |
| Restaurant |
| 0.3 | | 12,820 | | | 14.14 | |||||||||
Pittston, PA(8) |
| Industrial |
| 0.2 | | 249,600 | |
| 0.67 | |||||||||
West Palm Beach, FL |
| Industrial |
| 0.2 | | 10,361 | | | 14.54 | | Industrial |
| 0.2 | | 10,634 | | | 14.74 |
Monroeville, PA | | Retail |
| 0.2 | | 6,051 | | | 25.74 | |||||||||
Batavia, NY |
| Retail |
| 0.2 | | 23,483 | | | 6.00 | | Retail |
| 0.2 | | 23,483 | | | 6.05 |
Palmyra, PA(9) |
| Restaurant |
| 0.2 | | 2,944 | | | 47.00 | |||||||||
Reading, PA(9) |
| Restaurant |
| 0.2 | | 2,702 | | | 50.59 | |||||||||
Reading, PA(9) |
| Restaurant |
| 0.2 | | 2,798 | | | 48.09 | |||||||||
Trexlertown, PA(9) |
| Restaurant |
| 0.2 | | 3,004 | | | 43.89 | |||||||||
Monroeville, PA |
| Retail |
| 0.2 | | 6,051 | | | 20.18 | |||||||||
Nashville, TN (7) | | Industrial |
| 0.2 | | 99,500 | | | 5.17 | |||||||||
Lawrence, KS | | Retail |
| 0.2 | | 8,600 | | | 14.04 | |||||||||
Cuyahoga Falls, OH |
| Retail |
| 0.2 | | 6,796 | | | 17.21 | | Retail |
| 0.2 | | 6,796 | | | 17.21 |
South Euclid, OH |
| Retail |
| 0.2 | | 11,672 | | | 9.94 | | Retail |
| 0.2 | | 11,672 | | | 9.94 |
Hamilton, OH | | Health & Fitness |
| 0.2 | | 38,000 | | | 3.16 | |||||||||
Hilliard, OH |
| Retail |
| 0.2 | | 6,751 | | | 15.55 | | Retail |
| 0.1 | | 6,751 | | | 15.55 |
Port Clinton, OH |
| Retail |
| 0.1 | | 6,749 | | | 15.19 | | Retail |
| 0.1 | | 6,749 | | | 15.19 |
Lawrence, KS |
| Retail |
| 0.1 | | 8,600 | | | 10.17 | |||||||||
Seattle, WA |
| Retail |
| 0.1 | | 3,053 | | | 26.06 | | Retail |
| 0.1 | | 3,053 | | | 27.50 |
Rosenberg, TX |
| Retail |
| 0.1 | | 8,000 | | | 9.61 | | Retail |
| 0.1 | | 8,000 | | | 10.20 |
Louisville, KY | | Industrial | | 0.1 | | 9,642 | | | 4.58 | | Industrial |
| 0.1 | | 9,642 | | | 6.67 |
Columbus, OH(10) |
| Retail—Furniture |
| — | | 96,924 | |
| 0.33 | |||||||||
Crystal Lake, IL(11) | | Retail | | — | | 32,446 | | | — | |||||||||
Beachwood, OH(12) |
| Land |
| — | | 349,999 | |
| — | |||||||||
Columbus, OH(13) |
| Industrial |
| — | | 105,191 | |
| — | |||||||||
Wauconda, IL (8) | | Industrial |
| — | | 53,750 | | | 0.49 | |||||||||
Bolingbrook, IL (8) | | Retail |
| — | | 33,111 | | | 0.51 | |||||||||
Kennesaw, GA (9) | | Retail |
| — | | 32,138 | | | — | |||||||||
Beachwood, OH (10) | | Land |
| — | | 349,999 | | | — | |||||||||
| | | | 100.0 | | 10,493,169 | | | | | | | 100.0 | | 10,851,596 | | | |
2725
(1) | This property, a community shopping center, is leased to |
(2) |
This property, a community shopping center, is leased to |
This property has four tenants. Contractual rental income per square foot excludes 2,395 square feet of vacant |
(4) | This property has two tenants. |
(5) | This property has three tenants. |
(6) | This property has |
(7) |
(8) |
(9) |
(10) |
This property is ground leased to a multi-unit apartment complex owner/operator. |
Properties Owned by Joint Ventures
As of December 31, 2023, we own a 50% equity interest in two joint ventures that own two properties. At December 31, 2023, our investment in these joint ventures was approximately $2.1 million and the occupancy rate at these properties, based on square footage, was 100%. Based on the leases in effect at December 31, 2023, we anticipate that our share of the base rent payable in 2024 to our joint ventures is approximately $235,000. The following table sets forth, as of December 31, 2021,2023, information about the properties owned by these joint ventures in which we are a venture partner:ventures:
| | | | | | | | | | | | | | | | | | |
|
| |
| Percentage of |
| |
| | |
| |
| Percentage of |
| |
| | |
| | | | Base Rent Payable | | | | | | | | | Base Rent Payable | | | | | |
| | | | in 2022 | | | | | | | | | in 2024 | | | | | |
| | | | Contributed by | | Approximate | | 2022 | | | | Contributed by | | Approximate | | 2024 | ||
| | Type of | | the Applicable | | Square Footage | | Base Rent | | Type of | | the Applicable | | Square Footage | | Base Rent | ||
Location |
| Property |
| Joint Venture(1) |
| of Building |
| per Square Foot |
| Property |
| Joint Venture (1) |
| of Building |
| per Square Foot | ||
Manahawkin, NJ(2) |
| Retail |
| 85.3 |
| 319,349 | | $ | 8.12 | |||||||||
Savannah, GA |
| Retail |
| 86.7 |
| 46,058 | | $ | 4.43 | |||||||||
Savannah, GA |
| Retail |
| 12.9 |
| 46,058 | |
| 4.52 |
| Restaurant |
| 13.3 |
| — | |
| — |
Savannah, GA(3) |
| Restaurant |
| 1.8 |
| — | |
| — | |||||||||
| | |
| 100.0 |
| 365,407 | | | | | |
| 100.0 |
| 46,058 | | | |
(1) | Represents our share of the base rent payable in |
(2) |
This property is |
2826
Geographic Concentration
As of December 31, 2021,2023, the 118108 properties owned by us are located in 31 states. The following table sets forth information, presented by state, related to our properties as of December 31, 2021:2023:
| | | | | | | | | |
|
| |
| | |
| Percentage of |
| |
| | | | 2022 | | 2022 | | | |
| | | | Contractual | | Contractual | | Approximate | |
| | Number of | | Rental | | Rental | | Building | |
State |
| Properties |
| Income |
| Income |
| Square Feet | |
South Carolina |
| 7 |
| $ | 6,592,772 | | 9.7 | | 1,405,528 |
New York |
| 8 |
| | 6,497,295 | | 9.5 | | 492,602 |
Texas |
| 7 |
| | 5,344,846 | | 7.8 | | 757,837 |
Pennsylvania |
| 9 |
| | 4,557,275 | | 6.7 | | 838,565 |
Georgia |
| 10 |
| | 3,902,187 | | 5.7 | | 401,872 |
North Carolina |
| 8 |
| | 3,894,843 | | 5.7 | | 336,727 |
New Jersey | | 4 | | | 3,567,078 | | 5.2 | | 354,102 |
Maryland |
| 2 |
| | 3,563,171 | | 5.2 | | 625,710 |
Tennessee |
| 3 |
| | 3,283,211 | | 4.8 | | 864,449 |
Minnesota |
| 5 |
| | 3,153,669 | | 4.6 | | 501,573 |
Colorado |
| 3 |
| | 2,800,305 | | 4.1 | | 208,420 |
Missouri |
| 3 |
| | 2,397,761 | | 3.5 | | 472,276 |
Virginia |
| 5 |
| | 1,896,260 | | 2.8 | | 244,960 |
Florida |
| 5 |
| | 1,832,532 | | 2.7 | | 212,374 |
Illinois |
| 6 |
| | 1,831,923 | | 2.7 | | 216,544 |
Indiana |
| 3 |
| | 1,601,233 | | 2.3 | | 196,130 |
Ohio |
| 9 |
| | 1,456,671 | | 2.1 | | 657,789 |
Alabama |
| 1 |
| | 1,289,979 | | 1.9 | | 294,000 |
Arkansas |
| 1 |
| | 1,230,498 | | 1.8 | | 248,370 |
Iowa |
| 1 |
| | 1,095,346 | | 1.6 | | 208,234 |
Massachusetts |
| 4 |
| | 918,849 | | 1.3 | | 49,151 |
Kentucky |
| 3 |
| | 874,438 | | 1.3 | | 165,185 |
Arizona |
| 2 |
| | 830,969 | | 1.2 | | 87,156 |
California |
| 1 |
| | 733,260 | | 1.1 | | 218,116 |
Louisiana | | 1 | | | 654,718 | | 1.0 | | 54,229 |
Kansas | | 2 | | | 611,119 | | 0.9 | | 96,708 |
Nebraska | | 1 | | | 545,916 | | 0.8 | | 101,584 |
Other (1) |
| 4 |
| | 1,383,464 | | 2.0 | | 182,978 |
|
| 118 | | $ | 68,341,588 |
| 100.0 |
| 10,493,169 |
| | | | | | | | | |
|
| |
| | |
| Percentage of |
| |
| | | | 2024 | | 2024 | | | |
| | | | Contractual | | Contractual | | Approximate | |
| | Number of | | Rental | | Rental | | Building | |
State |
| Properties |
| Income |
| Income |
| Square Feet | |
South Carolina |
| 8 |
| $ | 8,543,490 | | 12.0 | | 1,582,568 |
New York |
| 7 |
| | 6,558,674 | | 9.2 | | 485,602 |
Texas |
| 7 |
| | 5,623,532 | | 7.9 | | 757,837 |
Pennsylvania |
| 5 |
| | 5,394,302 | | 7.6 | | 827,117 |
New Jersey |
| 4 |
| | 3,763,401 | | 5.3 | | 354,102 |
Maryland |
| 2 |
| | 3,712,022 | | 5.2 | | 625,710 |
North Carolina | | 7 | | | 3,408,365 | | 4.8 | | 330,072 |
Colorado |
| 3 |
| | 3,160,873 | | 4.4 | | 208,420 |
Georgia |
| 6 |
| | 2,981,085 | | 4.2 | | 482,729 |
Minnesota |
| 5 |
| | 2,947,312 | | 4.1 | | 501,573 |
Tennessee |
| 3 |
| | 2,886,172 | | 4.1 | | 864,449 |
Illinois |
| 7 |
| | 2,242,092 | | 3.1 | | 277,786 |
Missouri |
| 3 |
| | 2,166,440 | | 3.0 | | 472,276 |
Ohio |
| 9 |
| | 1,965,547 | | 2.8 | | 706,164 |
Florida |
| 5 |
| | 1,840,120 | | 2.6 | | 235,364 |
Kentucky |
| 4 |
| | 1,530,082 | | 2.1 | | 239,335 |
Virginia |
| 3 |
| | 1,429,279 | | 2.0 | | 176,656 |
Alabama |
| 1 |
| | 1,383,326 | | 1.9 | | 294,000 |
Indiana |
| 2 |
| | 1,347,066 | | 1.9 | | 183,310 |
Arkansas |
| 1 |
| | 1,230,498 | | 1.7 | | 248,370 |
Iowa |
| 1 |
| | 1,200,437 | | 1.7 | | 208,234 |
Massachusetts |
| 4 |
| | 957,624 | | 1.3 | | 49,151 |
Arizona |
| 2 |
| | 868,490 | | 1.2 | | 87,156 |
California |
| 1 |
| | 809,642 | | 1.1 | | 218,116 |
Kansas | | 2 | | | 680,367 | | 1.0 | | 96,708 |
Louisiana | | 1 | | | 654,718 | | 0.9 | | 54,229 |
Nebraska | | 1 | | | 562,293 | | 0.8 | | 101,584 |
Other (1) |
| 4 |
| | 1,408,357 | | 2.1 | | 182,978 |
|
| 108 | | $ | 71,255,606 |
| 100.0 |
| 10,851,596 |
(1) | These properties are located in four states. |
The following table sets forth information, presented by state, related to the properties owned by our joint ventures as of December 31, 2021:2023:
| | | | | | | | | | | | | | |
|
| |
| Our Share |
| |
| |
| Our Share |
| | ||
| | | | of the | | | | | | of the | | | ||
| | | | Base Rent | | | | | | Base Rent | | | ||
| | | | Payable in 2022 | | Approximate | | | | Payable in 2024 | | Approximate | ||
| | Number of | | to these | | Building | | Number of | | to these | | Building | ||
State |
| Properties |
| Joint Ventures |
| Square Feet |
| Properties |
| Joint Ventures |
| Square Feet | ||
New Jersey |
| 1 | | $ | 1,379,562 |
| 319,349 | |||||||
Georgia |
| 2 | |
| 238,156 |
| 46,058 |
| 2 | | $ | 235,140 |
| 46,058 |
|
| 3 | | $ | 1,617,718 |
| 365,407 | |||||||
| | | | | | | |
2927
Mortgage Debt
At December 31, 2021,2023, we had:
● |
● | $ |
The following table sets forth scheduled principal mortgage payments due on our properties as of December 31, 20212023 (dollars in thousands):
| | | |
|
| PRINCIPAL | |
YEAR |
| PAYMENTS DUE | |
2022 | | $ | 44,843 |
2023 | |
| 25,774 |
2024 | |
| 62,634 |
2025 | |
| 42,615 |
2026 | |
| 29,277 |
Thereafter | |
| 194,517 |
Total | | $ | 399,660 |
At December 31, 2021, the first mortgage on the Manahawkin Property, the only joint venture property with mortgage debt, had an outstanding principal balance of $22.1 million, carries an annual interest rate of 4% and matures in July 2025. This mortgage contains a prepayment penalty. The following table sets forth the scheduled principal mortgage payments due for this property as of December 31, 2021 (dollars in thousands):
| | | | | | |
|
| PRINCIPAL |
| PRINCIPAL | ||
YEAR |
| PAYMENTS DUE |
| PAYMENTS DUE | ||
2022 | | $ | 802 | |||
2023 | |
| 834 | |||
2024 | |
| 868 | | $ | 61,779 |
2025 | |
| 19,601 | |
| 41,477 |
2026 | |
| — | |
| 29,670 |
2027 | |
| 47,923 | |||
2028 | |
| 38,873 | |||
Thereafter | |
| 202,843 | |||
Total | | $ | 22,105 | | $ | 422,565 |
The mortgages on our properties (including properties owned by joint ventures) are generally non-recourse, subject to standard carve-outs.
Item 3. Legal Proceedings.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
3028
Part II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our common stock is listed on the New York Stock Exchange under the symbol “OLP.” As of March 1, 2022,2024, there were approximately 243241 holders of record of our common stock.
We qualify as a REIT for Federal income tax purposes. In order to maintain that status, we are required to distribute to our stockholders at least 90% of our annual ordinary taxable income. The amount and timing of future distributions will be at the discretion of our board of directors and will depend upon our financial condition, earnings, business plan, cash flow and other factors. We intend to make distributions in an amount at least equal to that necessary for us to maintain our status as a real estate investment trust for Federal income tax purposes.
Issuer Purchases of Equity Securities
We did not repurchase any sharesAs of our outstanding common stock in 2021. WeMarch 1, 2024, we are authorized to repurchase up to $7.5$8.1 million inof shares of our common stock.stock through, among other things, open market or privately negotiated transactions. There is no stated expiration date for our stock repurchase program. Set forth below is a table describing the purchases we made in the quarter ended December 31, 2023:
| | | | | | | | | | |
| | | | | | | | | Approximate | |
| | | | | | | Total Number of | | Dollar Value | |
| | Total Number | | Average | | of Shares Purchased | | of Shares that May | ||
| | of Shares | | Price Paid | | as Part of Publicly | | Yet Be Purchased | ||
Period |
| Purchased |
| per Share | | Announced Programs | | Under the Programs | ||
October 1, 2023 - October 31, 2023 | | 133,667 | | $ | 18.40 | | 133,667 | | $ | 8,655,224 |
November 1, 2023 - November 30, 2023 | | 30,400 | | | 18.80 | | 30,400 | |
| 8,081,814 |
December 1, 2023 - December 31, 2023 | | — | | | — | | — | | | 8,081,814 |
Total | | 164,067 | | $ | 18.47 | | 164,067 | | | |
Item 6. [Reserved.]
3129
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We are a self-administered and self-managed REIT focused on acquiring, owning and managing a geographically diversified portfolio consisting of industrial retail, restaurant, health and, fitness and theaterto a lesser extent, retail properties, many of which are subject to long-term leases. Most of our leases are “net leases” under which the tenant, directly or indirectly, is responsible for paying the real estate taxes, insurance and ordinary maintenance and repairs of the property. As of December 31, 2021,2023, we own, in 31 states, 121110 properties, including three properties owned by consolidated joint ventures and threetwo properties owned through unconsolidated joint ventures.
Challenges and Uncertainties Related toas a Result of the COVID-19 PandemicVolatile Economic Environment
The COVID-19 pandemic had, and continues to have,
During the past two years, there has been a significant impact on the global economy, the U.S. economy, and the economies of the local markets in which our properties are located. The preventative measures taken to address the pandemic, and the economic consequences resulting therefrom, have affected, and will continue to affect, our tenants to varying degrees depending on,uncertainty due, among other things, to volatile interest rates and the location ofchallenges presented by an inflationary/potential recessionary environment. This uncertainty, volatility and the subject property,related causes may adversely impact us in the nature of the tenant and use of the property (i.e., industrial or non-industrial), with theater, health and fitness, restaurant and retail properties having been, and continuingfuture. Due to be, significantly adversely affected.
The pandemic and its impact on the economic, financial, and capital markets environments present material risks and uncertainties. We are unable to predict the ultimate impact that the pandemic and its direct and indirect consequences will have on us, which will depend largely on future developments relating to many factors outside of our control. Our business, income, cash flow, results of operations, financial condition, liquidity, prospects, ability to service our debt, and ability to pay cash dividends to our stockholders, has beenthis uncertainty, we were especially cautious in pursuing acquisition opportunities in 2023 and may continue to be cautious in pursuing such opportunities in the near future. As a result, our ability, in the near term, to grow revenue and net income through acquisitions may be adversely affected by the pandemic.affected.
General Challenges and Uncertainties
In addition to the challenges and uncertainties presented by the pandemic, and as also described under “Cautionary Note Regarding Forward-Looking Statements” and, “Item 1A. Risk Factors”, and “— Challenges and Uncertainties as a Result of the Volatile Economic Environment”, we, among other things, face additional challenges and uncertainties, which are heightened by the pandemic, including the possibility we will not be able to: lease our properties on terms favorable to us or at all; collect amounts owed to us by our tenants; renew or re-let,re-let, on acceptable terms, leases that are expiring or otherwise terminating; or acquire or dispose of properties on acceptable terms. Over the past several years,terms; or grow, through acquisitions or otherwise, our property portfolio so as to generate additional rental and net income. If we have sold more properties than we have acquired, the rental income generated by the acquired properties have not fully replaced the income generated by the sold properties and the return on investment on acquired properties has been less than that generated by the sold properties. Furthermore, many of the properties we have sold have been retail properties which generally have generated greater returns than the industrial properties we have been acquiring. As a result of, among other things, the foregoing, the portion of our dividends allocatedare unable to ordinary income (as opposed to capital gain and return of capital) has decreased from 88% in 2018 to 43% for 2021. See Note 15 to our consolidated financial statements. Ifaddress these trends continue over the longer-term,challenges successfully, we may be unable to sustain our current level of dividend payments.
WeOther than with respect to our continuing focus on acquiring industrial properties, we generally seek to manage the risk of our real property portfolio and the related financing arrangements by (i) diversifying among industries, locations, tenants, scheduled lease expirations, mortgage maturities and lenders, and types of properties (for example, industrial, retail, theaters, health and fitness, although over the past several years, we have focused on acquiring industrial properties), and (ii) minimizing our exposure to interest rate fluctuations. As a result, as of December 31, 2021:2023:
● | our |
● | there are |
● | there |
32
● | through |
● | after giving effect to interest rate swap agreements, substantially all of our mortgage debt bears interest at fixed rates, |
● | in |
30
● | there are three different counterparties to our portfolio of interest rate swaps: two counterparties, rated |
We monitor the risk of tenant non-payments through a variety of approaches tailored to the applicable situation. Generally, based on our assessment of the credit risk posed by our tenants, we monitor a tenant’s financial condition through one or more of the following actions: reviewing tenant financial statements or other financial information, obtaining other tenant related information, changes in tenant payment patterns, regular contact with tenant’s representatives, tenant credit checks and regular management reviews of our tenants. We may sell a property if the tenant’s financial condition is unsatisfactory.
We monitor, on an ongoing basis, our expiring leases and generally approach tenants with expiring leases (including those subject to renewal options) at least a year prior to lease expiration to determine their interest in renewing their leases. During the three years ending December 31, 2024, 582026, 49 leases for 5542 tenants at 4035 properties representing $16.6$14.3 million, or 24.2%20.0%, of 20222024 contractual rental income expire. The following table provides information, as of December 31, 2021, regarding the leases that expire during the three years ending December 31, 2024 (with respect to the multi-tenant shopping center in Lakewood, Colorado, which have both retail and restaurant tenants, we have allocated the property count and associated mortgage debt to the retail (and not restaurant) categories because this is a mixed-use property):
| | | | | | | | | | | | | | | |
| | | | | | Weighted Average | | | | | | | | | |
| | | | | | Remaining | | Percentage of | | Percentage of | | Percentage of | | | Mortgage |
| | Number of | | Number of | | Lease Term to | | 2022 Contractual | | 2021 Rental | | 2020 Rental | | | Debt |
Type of Property | | Properties | | Tenants | | Maturity (months) | | Rental Income | | Income (1) | | Income (1) | | | Outstanding |
Industrial |
| 23 | | 25 | | 22 | | 14.4 | | 14.6 | | 14.1 | | $ | 85,690 |
Retail (2) |
| 14 | | 26 | | 22 | | 6.3 | | 7.9 | | 7.8 | | | 60,059 |
Restaurant |
| 1 | | 2 | | 18 | | 0.5 | | 0.5 | | 0.5 | | | n/a |
Health & Fitness |
| 1 | | 1 | | 23 | | 1.1 | | 1.0 | | 1.0 | | | 4,282 |
Theater |
| n/a | | n/a | | n/a | | n/a | | n/a | | n/a | | | n/a |
Other |
| 1 | | 1 | | 22 | | 1.9 | | 1.6 | | 1.6 | | | n/a |
|
| 40 | | 55 | | | | 24.2 | | 25.6 | | 25.0 |
| $ | 150,031 |
__________
In acquiring properties, we balance an evaluation of the terms of the leases and the credit of the existing tenants with a fundamental analysis of the real estate to be acquired, which analysis takes into account, among other things, the estimated value of the property, local demographics and the ability to re-rent or dispose of the property on favorable terms upon lease expiration or early termination.
We are sensitive to the risks facing the retail industry as a result of the growth of e-commerce. Over the past several years,
At December 31, 2023, we have been addressing our exposure tounhedged variable rate mortgage debt in the retail industry by focusing on acquiring industrial properties (including warehouse and distribution facilities) and properties that we believe capitalize on e-commerce activities – since September 2016, we have not acquired any retail properties and have sold 16 retail properties. Asprincipal amount of $16.0 million of which bears a resultweighted average interest rate of the focus on industrial properties and the sale5.73%. The table below provides information about such debt as of retail properties, retail properties generated 30.2%, 32.9%, 35.2% and 41.9%, of rental income, net, in 2021, 2020, 2019 and 2018, respectively, and industrial properties generated 57.0%, 55.4%, 48.7% and 40.1%, of rental income, net, in 2021, 2020, 2019, and 2018, respectively.December 31, 2023.
| | | | | | | | | | |
| | | | | | | Current | | Interest Rate | |
Property | | Principal Amount | | Maturity Date | | Interest Rate | | Reset Date | ||
Lexington, Kentucky | | $ | 5,279,000 | | June 2047 | | 3.85 | % | | June 2029 |
Kennesaw, Georgia | | | 4,467,000 | | December 2041 | | 6.50 | | | December 2030 |
Hamilton, Ohio | | | 3,969,000 | | September 2024 | | 8.40 | | | n/a |
Deptford, NJ | | | 2,277,000 | | February 2041 | | 3.95 | | | February 2026 |
| | $ | 15,992,000 | | | | | | | |
3331
At December 31, 2021, we have variable rate debt in the principal amount of $68.6 million (i.e., $56.9 million of mortgage debt and $11.7 million of credit facility debt) that bear interest at the one-month LIBOR rate plus a negotiated spread. This mortgage debt is hedged through interest rate swaps and the credit facility debt is not hedged. The authority regulating LIBOR announced it intends to stop compelling banks to submit rates for the circulation of LIBOR after June 2023 and it is possible that LIBOR will become unavailable at an earlier date. As approximately $51.2 million of this mortgage debt and the related notional amount of the interest rate swaps mature after June 2023, there is uncertainty as to how the interest rate on this variable rate debt and the related swaps will be determined when LIBOR is unavailable.
Challenges and Uncertainties Facing Certain Properties and Tenants
Set forth below is a description of the challenges and uncertainties facing certain tenants or properties. If these challenges, and in particular, the challenges faced by Regal Cinemas, The Vue and LA Fitness, are not resolved in a satisfactory manner, we will be adversely affected.
Regal Cinemas
Regal Cinemas, or Regal, is a tenant at two properties. Regal’s parent, Cineworld Group plc, filed for Chapter 11 bankruptcy protection in September 2022 and as a result, we and Regal amended the leases at these properties to, among other things, shorten the lease terms and reduce the rent payable. Specifically, prior to the amendments, the leases were scheduled to expire in 2032 and 2035 and as of January 1, 2024, without giving effect to such amendments, would have provided for an aggregate base rent of $21.0 million through the remaining lease term. After giving effect to the amendments, the leases expire in 2030 and as of January 1, 2024 provide for an aggregate base rent of $7.7 million payable over the remaining lease term.
At December 31, 2023, our Indianapolis, Indiana property had mortgage debt, intangible lease liabilities and intangible lease assets of approximately $3.6 million, $527,000 and $476,000, respectively. There is no mortgage debt, intangible lease liabilities or intangible lease assets at the Greensboro, North Carolina property at which we lease the underlying fee and in turn lease the property to Regal. We estimate that the carrying costs for these two properties for the twelve months ending December 31, 2024, are approximately $1.3 million, including ground lease rent of $512,000 (which sum has historically been paid directly by Regal to the owner of the Greensboro property), real estate taxes of approximately $356,000, and debt service of $290,000. Regal is the primary obligor with respect to $460,000 of these carrying costs and we are responsible with respect to such amount if it is not paid by Regal.
Because the collection of amounts owed by Regal is deemed to be less than probable, we have not accrued Regal’s base rent (but have collected all base rent payable pursuant to the amended leases) and since October 2020, have been reporting same on a cash basis. If Regal continues to face financial challenges, it will be difficult and costly (due, among other things, to the limited number of exhibitors and the unique configuration of theater properties) to find a replacement tenant.
The Vue – Beachwood, Ohio
A multi-family complex, which we refer to as The Vue, ground leases from us the underlying land located in Beachwood, Ohio. For the past several years,Since 2018, the property has faced, and we anticipate that the property will continue to face, occupancy and financial challenges. As a result, the rental incomechallenges, and our tenant has not paid rent since October 2020 (i.e., an aggregate of $3.9 million that would have been due had it generated by the property has declined significantly over the past several years (i.e.specified levels of positive operating cash flow), from $1.4 million in 2018 to $0 in 2021). and we anticipate that it will not pay rent for an extended period. After giving effect to debt service, the property is operating on a negative cash flow basis, and we anticipate that such trend will continue for an extended period. The tenant has not paid the aggregate $1.7 million of rent for October 2020 through March 2022 that would have been due had it generated specified levels of positive operating cash flow and we anticipate this non-payment of rent trend will continue for an extended period. As a result of the challenges faced by this property, in November 2020, we agreed, subject to our discretion, to fund 78% of any operating expense shortfalls (including the tenant’s debt service payments) and capital expenditures required at the property. We estimate that in 2022, we will provide approximately $700,000 in funding for this property. DuringSince 2021 (through March 1, 2022)2024), we provided The Vue with $2.0an aggregate of $3.4 million to cover, among other things, operating cash flow shortfalls and capital expenditures.expenditures, and the amount to be funded in 2024, if any, has not been definitively determined. At December 31, 2021,2023, (i) there are no unbilled rent receivables, intangibles or tenant origination costs associated with this property and (ii) the net book value of our land subject to this ground lease is $15.8$17.3 million and is subordinate to $66.0$63.6 million of mortgage debt incurred by the owner/operator. Our cash flow will be adversely impacted by our funding of additional capital expenditures and operating expense shortfalls (including the tenant’s debt service payments) at the property the tenant’s continuing non-payment of rent or, if the tenant does not pay its debt service,(including our payment of the tenant’s debt service obligation. Weobligations) and the tenant’s continuing non-payment of rent. If we determine that under GAAP the property has been impaired, we may incur a substantial impairment charge with respect to this propertyand if we determine thatsell the property, is impaired.we may recognize a substantial loss. See Note 6 to our consolidated financial statements.
32
Re-development of the Manahawkin PropertyLA Fitness
We continue
LA Fitness leases from us three properties pursuant to refine our efforts, which commencedthree separate leases, including a 38,000 square foot health and fitness facility in 2018, to re-developHamilton, Ohio. LA Fitness terminated the Manahawkin Property, which is owned by an unconsolidated joint venture in which we have a 50% equity interest.lease at the Hamilton, Ohio property effective as of May 1, 2024. As a result, we estimate that (i) from January 1, 2024 through the remaining lease term, we will generate $120,000 of rental income and cash flow from(ii) that through 2024, we will incur approximately $230,000, $180,000 and $170,000 of interest expense, real estate operating expense and depreciation and amortization expense, respectively.
During 2023, this property accounted for (i) $893,000 of rental income and (ii) $198,000, $188,000 and $206,000 of interest expense, real estate operating expense and depreciation and amortization expense, respectively, and during 2022, this property accounted for (iii) $915,000 of rental income and (iv) $197,000, $170,000 and $210,000 of interest expense, real estate operating expense and depreciation and amortization expense, respectively. At December 31, 2023, the variable rate mortgage debt (bearing an interest rate of daily SOFR plus 300 basis points) on this property is currently significantly less than it was several years ago$4.0 million and at December 31, 2021, the occupancy rate was 53.2%. In 2021, the property’s carrying costs (including debt service payments) exceeded the property’s operating cash flow by approximately $142,000. To date, no construction has begunis scheduled to mature in connection with the re-development and there is significant uncertainty asSeptember 2024.
It will be difficult, due to the form the re-development will take, whetherpresence of another health and when the re-developmentfitness facility located nearby, to re-lease this property to another health and fitness operator, and if we are unable to re-lease this property to such an operator, it will be completed,costly to reconfigure the costs to complete the re-development andspace for use other than as to the prospects for this property because of, among other things, the (i) decrease in rent and occupancy, (ii) possibility that co-tenancy clauses could be triggered if certain significant tenants vacate or otherwise cease operations, (iii) possibility that tenants that have informally agreed to participate in the re-development may abandon the project in light of, among other things, the extended delay in completing a re-development or challenges facing the retail environment, (iv) difficulty in obtaining financing for the project, (v) significantly greater labor and material costs than those projected at the time the re-development was initiated due, among other things, to inflation and supply chain delivery issues, and (vi) the continuing delay in completing the re-development. As of December 31, 2021, our share of the capitalized costs, (primarily soft costs) related to the re-development is $571,000. Our net income and cash flow have been negatively impacted by the re-development and our net income, cash flow and financial conditionfitness facility. We will be adversely affectedeffected if significant tenants such as Regal Cinemas do not continue paying rentwe surrender this property to the lender or if we pay off the re-developmentmortgage debt without obtaining a suitable replacement tenant at this property.
2023 and Recent Developments
In 2023, we:
● | sold 10 properties (i.e., seven restaurants and three retail properties) and an out-parcel at a multi-tenant retail property, for an aggregate net gain on sale of real estate of $17.0 million. The properties sold accounted for $2.5 million, or 2.7%, and $3.0 million, or 3.3 %, of 2023 and 2022 rental income, net, respectively. We estimate that, excluding any acquisitions, dispositions or lease amendments in 2024, rental income in 2024 will decrease by approximately $2.5 million from 2023 due to these sales. |
● | paid down our credit facility by approximately $21.8 million primarily through the use of net proceeds from property sales – as of December 31, 2023 and March 1, 2024, no amounts were outstanding on the facility. |
● | acquired a multi-tenant industrial property for an aggregate purchase price of $13.4 million. This property accounts for $806,000, or 1.1%, of our 2024 contractual rental income. |
● | through an unconsolidated joint venture in which we had a 50% equity interest, sold a multi-tenant shopping center located in Manahawkin, NJ for $36.5 million, of which our share was $18.3 million. In 2023, we recognized a $108,000 loss from the sale of this property. Our share of the net proceeds from this sale was $7.1 million. We generated, in 2023, $1.1 million (including our $850,000 share of an impairment charge) of equity in loss and in 2022 and 2021, $210,000 and $11,000, respectively, of equity in earnings from this unconsolidated joint venture. |
● | entered into, amended or extended 28 leases with respect to approximately 988,000 square feet. |
● | repurchased approximately 499,000 shares of our common stock for an aggregate purchase price of approximately $9.6 million (i.e., an average price of $19.24 per share). We anticipate that we will continue to repurchase our stock subject to, among other things, the availability of funds and attractiveness of alternative investments. |
33
Subsequent to December 31, 2023, we:
● | entered into a contract to sell a pad site at a multi-tenant retail shopping center in Lakewood, Colorado, which we own through a consolidated joint venture in which we hold a 90% interest, for $2.9 million. The buyer’s right to terminate the contract expired in February 2024 and the sale is anticipated to close during the quarter ending March 31, 2024. We anticipate recognizing a gain of approximately $1.8 million on this sale during the three months ending March 31, 2024, of which the non-controlling interest’s share will be approximately $180,000. |
Our Business Objective
Our business objective is further delayed or not completed. See “—to increase stockholder value by:
Liquidity and Capital Resources
● | identifying opportunistic and strategic property acquisitions consistent with our portfolio and our acquisition strategies; |
.”
● | monitoring and maintaining our portfolio, and as appropriate, working with tenants to facilitate the continuation or expansion of their tenancies; |
● | managing our portfolio effectively, including opportunistic and strategic property sales; |
● | obtaining mortgage indebtedness (including refinancings) on favorable terms, ensuring that the cash flow generated by a property exceeds the debt service thereon and maintaining access to capital to finance property acquisitions; and |
● | maintaining and, over time, increasing our dividend. |
34
Round Rock Guaranty Litigation
In 2019, we sued the guarantorComparison of the lease at our former property in Round Rock, Texas, which we refer to as the “Round Rock Property”, at which the tenant obtained bankruptcy protectionYears Ended December 31, 2023 and terminated its lease. (The lawsuit (the “Lawsuit”) is captioned: OLP Wyoming Springs, LLC, Plaintiff, v. Harden Healthcare, LLC, Defendant, v Benjamin Hanson, Intervenor, District Court of Williamson County, Texas, Cause No. 18-1511-C368). On February 21, 2022 we and the defendant entered into a settlement agreement with respect to the Lawsuit which provides that if we receive approximately $5.4 million (the “Settlement Amount”) by April 15, 2022, the parties to such agreement, among other things, will (i) seek to dismiss with prejudice all of the claims by and between the parties to the agreement, (ii) seek dismissal of the Lawsuit with prejudice and (iii) release each other and certain other persons from claims and liabilities with respect to matters pertaining to the Lawsuit. If the Settlement Amount is not paid by April 15, 2022, we and the defendant may continue to pursue and assert all of our respective rights, claims and defenses against each other.
2021 and Recent DevelopmentsResults of Operations -
In 2021:Revenues
The following table compares total revenues for the periods indicated:
| | | | | | | | | | | |
| | | | | | | | | | | |
| | Year Ended December 31, | | Increase | | | |||||
(Dollars in thousands) | | 2023 |
| 2022 |
| (Decrease) |
| % Change | |||
Rental income, net | | $ | 90,646 | | $ | 92,191 | | $ | (1,545) |
| (1.7) |
Lease termination fees | | | — | | | 25 | | | (25) |
| (100.0) |
Total revenues | | $ | 90,646 | | $ | 92,216 | | $ | (1,570) |
| (1.7) |
Rental income, net.
The following table details the components of rental income, net, for the periods indicated:
| | | | | | | | | | | |
| | | | | | | | ||||
| | Year Ended December 31, | | Increase | | | |||||
(Dollars in thousands) | | 2023 |
| 2022 |
| (Decrease) |
| % Change | |||
Acquisitions (1) | | $ | 5,413 | | $ | 2,472 | | $ | 2,941 | | 119.0 |
Dispositions (2) | | | 2,470 | | | 3,641 | | | (1,171) | | (32.2) |
Same store (3) | | | 82,763 | | | 86,078 | | | (3,315) | | (3.9) |
Rental income, net | | $ | 90,646 | | $ | 92,191 | | $ | (1,545) | | (1.7) |
Changes at same store properties
The decrease in same store rental income is due to the inclusion in 2022, of $4.6 million from the litigation settlement proceeds from The Vue, and decreases of:
- | $689,000 of rental income from our wholly-owned Regal Cinemas properties due to |
- | $654,000 of rental income from leases that expired in 2022 and 2023 |
- |
The decrease was offset by increases of:
- |
- |
- | $497,000 in tenant reimbursements, of |
35
Subsequent to December 31, 2021, we:
Comparison of Years Ended December 31, 2021 and 2020
Results of Operations -
Revenues
The following table compares total revenues for the periods indicated:
| | | | | | | | | | | |
| | Year Ended | | | | | | ||||
| | December 31, | | Increase | | | |||||
(Dollars in thousands) |
| 2021 |
| 2020 |
| (Decrease) |
| % Change | |||
Rental income, net | | $ | 82,180 | | $ | 81,888 | | $ | 292 |
| 0.4 |
Lease termination fees | | | 560 | | | 15 | | | 545 |
| 3,633.3 |
Total revenues | | $ | 82,740 | | $ | 81,903 | | $ | 837 |
| 1.0 |
Rental income, net.
The following table details the components of rental income, net, for the periods indicated:
| | | | | | | | | | | |
| | Year Ended | | | | | | ||||
| | December 31, | | Increase | | | |||||
(Dollars in thousands) |
| 2021 |
| 2020 |
| (Decrease) |
| % Change | |||
Acquisitions (1) | | $ | 2,761 | | $ | 1,811 | | $ | 950 | | 52.5 |
Dispositions (2) | | | 1,108 | | | 3,457 | | | (2,349) | | (67.9) |
Same store (3) | | | 78,311 | | | 76,620 | | | 1,691 | | 2.2 |
Rental income, net | | $ | 82,180 | | $ | 81,888 | | $ | 292 | | 0.4 |
36
Changes due to acquisitions and dispositions
The year ended December 31, 2021 reflects a decrease of $2.3 million due to the inclusion, in 2020, of rental income from properties sold during 2020 and 2021 (including $1.4 million from four properties sold in 2020). This decrease was offset by a $950,000 increase generated by properties acquired in 2020 and 2021 (including $313,000 from two properties acquired in 2020).
Changes at same store properties
The increase is due to:
Offsetting the increase are decreases of:
Lease termination fees.
In 2021, we recognized $560,000 in connection with the exercise by three tenants of lease termination options.
Operating Expenses
The following table compares operating expenses for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended | | | | | | | | | | | | | ||||||||
| | December 31, | | Increase | | | | Year Ended December 31, | | Increase | | | ||||||||||
(Dollars in thousands) |
| 2021 |
| 2020 |
| (Decrease) |
| % Change |
| 2023 |
| 2022 |
| (Decrease) |
| % Change | ||||||
Operating expenses: |
| |
|
| |
|
| |
|
|
|
| |
|
| |
|
| |
|
|
|
Depreciation and amortization | | $ | 22,832 | | $ | 22,964 | | $ | (132) |
| (0.6) | | $ | 24,789 | | $ | 23,781 | | $ | 1,008 |
| 4.2 |
General and administrative | |
| 14,310 | |
| 13,671 | |
| 639 |
| 4.7 | |
| 15,822 | |
| 15,258 | |
| 564 |
| 3.7 |
Real estate expenses | |
| 13,802 | |
| 13,634 | |
| 168 |
| 1.2 | |
| 16,444 | |
| 15,508 | |
| 936 |
| 6.0 |
State taxes | |
| 291 | |
| 310 | |
| (19) |
| (6.1) | |
| 284 | |
| 285 | |
| (1) |
| (0.4) |
Impairment due to casualty loss | |
| — | |
| 430 | |
| (430) |
| n/a | |||||||||||
Total operating expenses | | $ | 51,235 | | $ | 51,009 | | $ | 226 |
| 0.4 | | $ | 57,339 | | $ | 54,832 | | $ | 2,507 |
| 4.6 |
Depreciation and amortization. The increase is due primarily to:
- | $1.5 million of such expense from properties acquired in 2023 and 2022 (including $1.1 million from properties acquired in 2022), |
- | $434,000 of depreciation from improvements at several same store properties, and |
- | $186,000 of leasing commissions at several same store properties. |
The increase was offset by:
- | a decrease, in 2023, of $854,000 related to improvements and tenant origination costs at several properties that prior to December 31, 2023 were fully amortized, and |
- | the inclusion, in 2022, of $332,000 of such expense from the properties sold since January 1, 2022. |
General and administrative. The increase in 2023 is due primarily to the inclusion in 2020increases of (i) $518,000 from the properties sold since January 1, 2020 and (ii) $247,000$441,000 of improvements and tenant origination costs at several properties that prior to December 31, 2021 were fully amortized. The decrease was offset primarily from (i) $490,000 of depreciation and amortizationcompensation expense on the properties acquired in 2021 and 2020 (including
37
$344,000 from properties acquired in 2021) and (ii) $120,000 of depreciation in 2021 from improvements at several properties.
General and administrative. The increase in 2021 is primarily due to increasesadditional employees and higher levels of compensation, and (ii) $150,000 in non-cash compensation expense of (i) $542,000 due to the re-assessment of the achievability of market and performance metricsprofessional fees related to the RSUs and (ii) $205,000, of which $157,000 was due to the retirement of a non-management director in June 2021 and the related accelerated vesting of such director’s restricted stock awards. The increase was offset due to the inclusion, in 2020, of $152,000 of professional fees primarily related to changes to our charter, offering of securities and compensation determinations.various matters.
Real estate expenses.
The increase is primarily due primarily to increases at same store properties of :to:
- | $574,000 from properties acquired in 2023 and 2022 (including $407,000 from properties acquired in 2022), |
In addition, there
The increase was offset primarily by a $107,000 increase from$237,000 decrease related to properties acquiredsold in 20202022 and 2021, including $82,000 from a property acquired in 2021.2023.
Offsetting the increase are decreases of:
A substantial portion of real estate expenses are rebilled to tenants and are included in Rental income, net, on the consolidated statements of income, other than the expenses related to the Round Rock litigation.income.
Impairment due to casualty loss.36
Gain on sale of real estate, net
The following table compareslists the sold properties and related gains, net, for the periods indicated:
| | | | | | | | | | | |
| | Year Ended | | | | | | ||||
| | December 31, | | Increase | | % | |||||
(Dollars in thousands) |
| 2023 |
| 2022 | | (Decrease) |
| Change | |||
TGI Fridays restaurant property - Hauppauge, New York | | $ | 1,534 | | $ | — | | | | | |
Havertys retail property - Duluth, Georgia | | | 3,180 | | | — | | | | | |
TGI Fridays restaurant property - Greensboro, North Carolina | | | 332 | | | — | | | | | |
Land - Lakewood, Colorado (1) | | | 2,177 | | | — | | | | | |
Chuck E Cheese restaurant property - Indianapolis, Indiana | | | 226 | | | — | | | | | |
TGI Fridays restaurant property - Richmond, Virginia | | | 265 | | | — | | | | | |
Applebee's restaurants (2 properties) - Cartersville & Carrollton, Georgia | | | 2,581 | | | — | | | | | |
Applebee's restaurant property - Lawrenceville, Georgia | | | 989 | | | — | | | | | |
Havertys retail property - Virginia Beach, Virginia | | | 1,727 | | | — | | | | | |
Barnes & Noble retail property - Fort Myers, Florida | | | 3,997 | | | | | | | | |
Wendy's restaurants (4 properties) - Various cities, Pennsylvania | | | — | | | 4,649 | | | | | |
Orlando Baking industrial property - Columbus, Ohio | | | — | | | 6,925 | | | | | |
Havertys retail property - Fayetteville, Georgia | | | — | | | 1,125 | | | | | |
Vacant retail property - Columbus, Ohio | | | — | | | 4,063 | | | | | |
Total gain on sale of real estate, net | | $ | 17,008 | | $ | 16,762 | | $ | 246 |
| 1.5 |
(1) The non-controlling interest’s share of the gain on sale of real estate, net:is $218.
| | | | | | | | | | | |
| | Year Ended | | | | | | ||||
| | December 31, | | Increase | | | |||||
(Dollars in thousands) |
| 2021 |
| 2020 |
| (Decrease) |
| % Change | |||
Gain on sale of real estate, net | | $ | 25,463 | | $ | 17,280 | | $ | 8,183 |
| 47.4 |
See “–2021 and Recent Developments” and Note 5 to our consolidated financial statements for information regarding our sales of real estate.
38
Other Income and Expenses
The following table compares other income and expenses for the periods indicated:
| | | | | | | | | | | |
| | Year Ended | | | | | | ||||
| | December 31, | | Increase | | | |||||
(Dollars in thousands) | | 2021 |
| 2020 |
| (Decrease) |
| % Change | |||
Other income and expenses: | | | | | | | | | | | |
Equity in earnings of unconsolidated joint ventures | | $ | 202 | | $ | 38 | | $ | 164 |
| 431.6 |
Equity in earnings from sale of unconsolidated joint venture properties | |
| 805 | |
| 121 | |
| 684 |
| 565.3 |
Prepayment costs on debt | | | (901) | | | (1,123) | | | (222) |
| (19.8) |
Other income | |
| 869 | |
| 496 | |
| 373 |
| 75.2 |
Interest: | |
| | |
| | |
| |
| |
Expense | |
| (17,939) | |
| (19,317) | |
| (1,378) |
| (7.1) |
Amortization and write‑off of deferred financing costs | |
| (970) | |
| (976) | |
| (6) |
| (0.6) |
| | | | | | | | | | | |
| | | | | | | | ||||
| | Year Ended December 31, | | Increase | | | |||||
(Dollars in thousands) | | 2023 |
| 2022 |
| (Decrease) |
| % Change | |||
Other income and expenses: | | | | | | | | | | | |
Equity in (loss) earnings of unconsolidated joint ventures | | $ | (904) | | $ | 400 | | $ | (1,304) |
| (326.0) |
Equity in loss from sale of unconsolidated joint venture property | |
| (108) | |
| — | |
| (108) |
| n/a |
Income on settlement of litigation | | | — | | | 5,388 | | | (5,388) |
| (100.0) |
Other income | |
| 234 | |
| 1,003 | |
| (769) |
| (76.7) |
Interest: | |
| | |
| | |
| |
| |
Expense | |
| (18,780) | |
| (17,569) | |
| 1,211 |
| 6.9 |
Amortization and write-off of deferred financing costs | |
| (839) | |
| (1,115) | |
| (276) |
| (24.8) |
Equity in (loss) earnings of unconsolidated joint venturesventures. . The increasedecrease in 2021 is primarily due2023 relates to an increase atthe multi-tenant shopping center in Manahawkin, New Jersey which we sold in December 2023 and reflects (i) our Manahawkin Property resulting from (i) higher rent income from several tenants for which there were abatements and unaccrued deferrals in 2020 and50% share, or $850,000, of a $1.7 million impairment charge our joint venture recorded, (ii) a $256,000 decrease in real estate taxes, net of amounts rebilled to tenants,base rent collected primarily from Regal Cinemas, a tenant at this property, due to a lower assessment. These increases were offset by an increaselease amendment effectuated in depreciationconnection with its bankruptcy reorganization, and amortization expense primarily for improvements(iii) a $103,000 debt prepayment charge due to the property.early payoff of the mortgage on this property in connection with its sale. See Note 7 to our consolidated financial statements.
Equity in earningsloss from sale of unconsolidated joint venture property.properties. The 20212023 results represent a gainloss of $805,000$108,000 from the sale of a portion of aour joint venture’sventure property in Savannah, Georgia. The 2020 results represent a gainManahawkin, New Jersey on December 15, 2023.
37
Income on settlement of another joint venture’s property in Savannah, Georgia.
Prepayment costs on debt. litigation.The 2021 expense includes $799,000 incurred In April 2022, we received $5.4 million in connection with the salesettlement of the West Hartford, Connecticut property. The 2020 expense includes $833,000 incurred in connection with the sale of the Knoxville, Tennesseea lawsuit at our former Round Rock, Texas property and $290,000 incurred in connection with the sale of the Onalaska, Wisconsin property.(the “Round Rock Settlement”). (See Note 13 to our consolidated financial statements.)
Other income. Other incomeIncluded in 2021 and 2020 include $695,000 and $430,000, respectively, of2022 is $918,000 representing the final property insurance recoveriesrecovery related to our Lake Charles, Louisiana property damaged in an Augusta 2020 hurricane. In February 2022, we received a final payment of $918,000 of additional insurance proceeds related(See Note 13 to this property. In addition, 2021 includes a $100,000 fee obtained in connection with an assignment of a lease.our consolidated financial statements.)
Interest expense. The following table summarizescompares interest expense for the periods indicated:
| | | | | | | | | | | |
| | Year Ended | | | | | | ||||
| | December 31, | | Increase | | | |||||
(Dollars in thousands) |
| 2021 |
| 2020 |
| (Decrease) |
| % Change | |||
Interest expense: |
| |
|
| |
|
| |
|
|
|
Mortgage interest | | $ | 17,521 | | $ | 18,580 | | $ | (1,059) |
| (5.7) |
Credit line interest | | | 418 | | | 737 | | | (319) |
| (43.3) |
Total | | $ | 17,939 | | $ | 19,317 | | $ | (1,378) |
| (7.1) |
| | | | | | | | | | | |
| | | | | | | | ||||
| | Year Ended December 31, | | Increase | | | |||||
(Dollars in thousands) | | 2023 |
| 2022 |
| (Decrease) |
| % Change | |||
Interest expense: | | |
|
| |
|
| |
|
|
|
Mortgage interest | | $ | 17,514 | | $ | 16,762 | | $ | 752 |
| 4.5 |
Credit line interest | | | 1,266 | | | 807 | | | 459 |
| 56.9 |
Total | | $ | 18,780 | | $ | 17,569 | | $ | 1,211 |
| 6.9 |
Mortgage interest
The following table reflects the average interest rate on the weighted average principal amount of outstanding mortgage debt during the applicable year:
| | | | | | | | | | | |
| | Year Ended | | | | | | ||||
| | December 31, | | Increase | | | |||||
(Dollars in thousands) |
| 2021 |
| 2020 |
| (Decrease) |
| % Change | |||
Average interest rate |
| | 4.22 | % | | 4.20 | % | | 0.02 | % | 0.5 |
Average principal amount | | $ | 416,914 | | $ | 441,529 | | $ | (24,615) |
| (5.6) |
| | | | | | | | | | | |
| | | | | | | | ||||
| | Year Ended December 31, | | Increase | | | |||||
(Dollars in thousands) | | 2023 |
| 2022 |
| (Decrease) |
| % Change | |||
Weighted average interest rate | | | 4.18 | % | | 4.14 | % | | 0.04 | % | 1.0 |
Weighted average principal amount | | $ | 416,517 | | $ | 404,263 | | $ | 12,254 |
| 3.0 |
The decreaseincrease in mortgage interest in 20212023 is due primarily to the net decreaseincrease in the average principal amount of mortgage debt outstanding which resulted from scheduled amortization payments, and, primarilyfinancings effectuated in connection with property sales, the payoff of mortgages.refinancings and acquisitions.
39
Credit facility interest
The following table reflects the average interest rate on the average principal amount of outstanding credit line debt during the applicable year:
| | | | | | | | | | | |
| | Year Ended | | | | | | ||||
| | December 31, | | Increase | | % | |||||
(Dollars in thousands) | | 2021 |
| 2020 |
| (Decrease) |
| Change | |||
Average interest rate | | | 1.86 | % | | 2.53 | % | | (0.67) | % | (26.5) |
Average principal amount | | $ | 10,179 | | $ | 22,505 | | $ | (12,326) |
| (54.8) |
| | | | | | | | | | | |
| | | | | | | | ||||
| | Year Ended December 31, | | Increase | | % | |||||
(Dollars in thousands) | | 2023 |
| 2022 |
| (Decrease) |
| Change | |||
Weighted average interest rate | | | 6.69 | % | | 3.42 | % | | 3.27 | % | 95.6 |
Weighted average principal amount | | $ | 15,676 | | $ | 16,222 | | $ | (546) |
| (3.4) |
The increase in 2023 is due to the increase on the weighted average interest rate.
Amortization and write-off of deferred financing costs. The decrease in credit line interest in 20212023 is primarily due to a decreasethe $221,000 write-off of $12.3 milliondeferred costs related to the mortgages on the eleven Havertys properties that were paid off in the weighted average balance outstanding under our lineJune 2022.
38
Funds from Operations and Adjusted Funds from Operations
We compute funds from operations, or FFO, in accordance with the “White Paper on Funds From Operations” issued by the National Association of Real Estate Investment Trusts (“NAREIT”) and NAREIT’s related guidance. FFO is defined in the White Paper as net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment write-downs of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. In computing FFO, we do not add back to net income the amortization of costs in connection with our financing activities or depreciation of non-real estate assets.
We compute adjusted funds from operations, or AFFO by,by adjusting from FFO for our straight-line rent accruals and amortization of lease intangibles, deducting from income, additional rent from ground lease tenant, income on settlement of litigation, income on insurance recoveries from casualties, lease termination and certain other non-recurringassignment fees, and adding back amortization of restricted stock and restricted stock unit compensation expense, amortization of costs in connection with ourits financing activities (including ourits share of ourits unconsolidated joint ventures), income on insurance recoveries from casualties and debt prepayment costs.costs and amortization of lease incentives and mortgage intangible assets. Since the NAREIT White Paper does not provide guidelines for computing AFFO, the computation of AFFO may varyvaries from one REIT to another.
We believe that FFO and AFFO are useful and standard supplemental measures of the operating performance for equity REITs and are used frequently by securities analysts, investors and other interested parties in evaluating equity REITs, many of which present FFO and AFFO when reporting their operating results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization of real estate assets, which assumes that the value of real estate assets diminish predictabilitypredictably over time. In fact, real estate values have historically risen and fallen with market conditions. As a result, we believe that FFO and AFFO provide a performance measure that when compared year over year, should reflect the impact to operations from trends in occupancy rates, rental rates, operating costs, interest costs and other matters without the inclusion of depreciation and amortization, providing a perspective that may not be necessarily apparent from net income. We also consider FFO and AFFO to be useful to us in evaluating potential property acquisitions.
FFO and AFFO do not represent net income or cash flows from operationsoperating, investing or financing activities as defined by GAAP. FFO and AFFO and should not be considered to be an alternative to net income as a reliable measure of our operating performance; nor should FFO and AFFO be considered an alternative to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity. FFO and AFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization, capital improvements and distributions to stockholders.
Management recognizes that there are limitations in the use of FFO and AFFO. In evaluating our performance, management is careful to examine GAAP measures such as net income and cash flows from operating, investing and financing activities.
4039
The following tables provide a reconciliation of net income and net income per common share (on a diluted basis) in accordance with GAAP to FFO and AFFO for the years indicated (dollars in thousands, except per share amounts):
| | | | | | | |
|
| 2021 |
| 2020 |
| ||
GAAP net income attributable to One Liberty Properties, Inc. | | $ | 38,857 | | $ | 27,407 | |
Add: depreciation and amortization of properties | |
| 22,395 | |
| 22,558 | |
Add: our share of depreciation and amortization of unconsolidated joint ventures | |
| 571 | |
| 544 | |
Add: impairment due to casualty loss | | | 0 | | | 430 | |
Add: amortization of deferred leasing costs | |
| 437 | |
| 406 | |
Add: our share of amortization of deferred leasing costs of unconsolidated joint ventures | | | 45 | | | 20 | |
Deduct: gain on sale of real estate, net | |
| (25,463) | |
| (17,280) | |
Deduct: equity in earnings from sale of unconsolidated joint venture properties | |
| (805) | |
| (121) | |
Adjustments for non‑controlling interests | |
| 57 | |
| (88) | |
NAREIT funds from operations applicable to common stock | |
| 36,094 | |
| 33,876 | |
Deduct: straight‑line rent accruals and amortization of lease intangibles | |
| (1,019) | |
| (1,408) | |
Deduct: our share of straight‑line rent accruals and amortization of lease intangibles of unconsolidated joint ventures | |
| (10) | |
| (73) | |
Deduct: lease termination fee income | |
| (560) | |
| (15) | |
Deduct: lease assignment fee income | | | (100) | | | — | |
Add: amortization of restricted stock and RSU compensation expense | |
| 5,433 | |
| 4,686 | |
Add: prepayment costs on debt | |
| 901 | |
| 1,123 | |
Deduct: income on insurance recoveries from casualty loss | | | (695) | | | (430) | |
Add: amortization and write‑off of deferred financing costs | |
| 970 | |
| 976 | |
Add: our share of amortization and write‑off of deferred financing costs of unconsolidated joint ventures | |
| 17 | |
| 17 | |
Adjustments for non‑controlling interests | |
| 16 | |
| 3 | |
Adjusted funds from operations applicable to common stock | | $ | 41,047 | | $ | 38,755 | |
| | | | | | |
| | Year Ended | ||||
| | December 31, | ||||
|
| 2023 |
| 2022 | ||
GAAP net income attributable to One Liberty Properties, Inc. | | $ | 29,614 | | $ | 42,177 |
Add: depreciation and amortization of properties | | | 24,063 | | | 23,193 |
Add: our share of depreciation and amortization of unconsolidated joint ventures | | | 477 | | | 519 |
Add: amortization of deferred leasing costs | | | 726 | | | 588 |
Add: our share of amortization of deferred leasing costs of unconsolidated joint ventures | | | 18 | | | 21 |
Add: our share of impairment loss of unconsolidated joint venture property | | | 850 | | | — |
Add: equity in loss from sale of unconsolidated joint venture property | |
| 108 | |
| — |
Deduct: gain on sale of real estate, net | |
| (17,008) | |
| (16,762) |
Adjustments for non-controlling interests | | | 148 | | | (67) |
NAREIT funds from operations applicable to common stock | |
| 38,996 | |
| 49,669 |
Deduct: straight-line rent accruals and amortization of lease intangibles | | | (2,717) | | | (3,240) |
Deduct: our share of straight-line rent accruals and amortization of lease intangibles of unconsolidated joint ventures | | | (19) | | | (27) |
Deduct: other income and income on settlement of litigation | | | (112) | | | (5,388) |
Deduct: additional rent from ground lease tenant | | | (16) | | | (4,626) |
Deduct: income on insurance recovery from casualty loss | | | — | | | (918) |
Deduct: lease termination fee income | | | — | | | (25) |
Deduct: our share of unconsolidated joint venture lease termination fee income | | | (21) | | | (25) |
Add: amortization of restricted stock and RSU compensation | |
| 5,367 | |
| 5,507 |
Add: amortization and write-off of deferred financing costs | |
| 839 | |
| 1,115 |
Add: amortization of lease incentives | | | 121 | | | 44 |
Add: amortization of mortgage intangible assets | | | 114 | | | 12 |
Add: our share of amortization of deferred financing costs of unconsolidated joint venture | | | 42 | | | 17 |
Adjustments for non-controlling interests | | | 1 | | | 14 |
Adjusted funds from operations applicable to common stock | | $ | 42,595 | | $ | 42,129 |
| | | | | | | |
|
| 2021 |
| 2020 |
| ||
GAAP net income attributable to One Liberty Properties, Inc. | | $ | 1.85 | | $ | 1.33 | |
Add: depreciation and amortization of properties | |
| 1.06 | |
| 1.12 | |
Add: our share of depreciation and amortization of unconsolidated joint ventures | |
| 0.03 | |
| 0.03 | |
Add: impairment due to casualty loss | | | — | | | 0.02 | |
Add: amortization of deferred leasing costs | |
| 0.02 | |
| 0.02 | |
Add: our share of amortization of deferred leasing costs of unconsolidated joint ventures | | | — | | | — | |
Deduct: gain on sale of real estate, net | |
| (1.21) | |
| (0.85) | |
Deduct: equity in earnings from sale of unconsolidated joint venture properties | |
| (0.04) | |
| (0.01) | |
Adjustments for non‑controlling interests | |
| 0.01 | |
| — | |
NAREIT funds from operations per share of common stock | |
| 1.72 | |
| 1.66 | |
Deduct: straight‑line rent accruals and amortization of lease intangibles | |
| (0.06) | |
| (0.08) | |
Deduct: our share of straight‑line rent accruals and amortization of lease intangibles of unconsolidated joint ventures | |
| — | |
| — | |
Deduct: lease termination fee income | |
| (0.03) | |
| — | |
Deduct: lease assignment fee income | | | — | | | — | |
Add: amortization of restricted stock and RSU compensation expense | |
| 0.26 | |
| 0.23 | |
Add: prepayment costs on debt | |
| 0.04 | |
| 0.06 | |
Deduct: income on insurance recoveries from casualty loss | | | (0.03) | | | (0.02) | |
Add: amortization and write‑off of deferred financing costs | |
| 0.05 | |
| 0.05 | |
Add: our share of amortization and write‑off of deferred financing costs of unconsolidated joint ventures | |
| — | |
| — | |
Adjustments for non‑controlling interests | |
| — | |
| — | |
Adjusted funds from operations per share of common stock | | $ | 1.95 | | $ | 1.90 | |
| | | | | | |
| | Year Ended | ||||
| | December 31, | ||||
|
| 2023 |
| 2022 | ||
GAAP net income attributable to One Liberty Properties, Inc. | | $ | 1.38 | | $ | 1.99 |
Add: depreciation and amortization of properties | | | 1.13 | | | 1.09 |
Add: our share of depreciation and amortization of unconsolidated joint ventures | | | .02 | | | .02 |
Add: amortization of deferred leasing costs | | | .03 | | | .03 |
Add: our share of amortization of deferred leasing costs of unconsolidated joint ventures | | | — | | | — |
Add: our share of impairment loss of unconsolidated joint venture property | | | .04 | | | — |
Add: equity in loss from sale of unconsolidated joint venture property | | | .01 | | | — |
Deduct: gain on sale of real estate, net | | | (.80) | | | (.79) |
Adjustments for non-controlling interests | | | .01 | | | — |
NAREIT funds from operations per share of common stock (a) | |
| 1.82 | |
| 2.34 |
Deduct: straight-line rent accruals and amortization of lease intangibles | | | (.13) | | | (.16) |
Deduct: our share of straight-line rent accruals and amortization of lease intangibles of unconsolidated joint ventures | | | — | | | — |
Deduct: other income and income on settlement of litigation | | | (.01) | | | (.25) |
Deduct: additional rent from ground lease tenant | | | — | | | (.22) |
Deduct: income on insurance recovery from casualty loss | | | — | | | (.04) |
Deduct: lease termination fee income | | | — | | | — |
Deduct: our share of unconsolidated joint venture lease termination fee income | | | — | | | — |
Add: amortization of restricted stock and RSU compensation | | | .25 | | | .26 |
Add: amortization and write-off of deferred financing costs | | | .04 | | | .05 |
Add: amortization of lease incentives | | | .01 | | | — |
Add: amortization of mortgage intangible assets | | | .01 | | | — |
Add: our share of amortization of deferred financing costs of unconsolidated joint venture | | | — | | | — |
Adjustments for non-controlling interests | | | — | | | — |
Adjusted funds from operations per share of common stock (a) | | $ | 1.99 | | $ | 1.98 |
(a) The weighted average number of diluted common shares used to compute FFO and AFFO applicable to common stock includes unvested restricted shares that are excluded from the computation of diluted EPS.
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The $2.2$10.7 million, or 6.5%21.5%, increasedecrease in FFO is due primarily to:
● | the inclusion, in the corresponding 2022 period, of (i) $5.4 million from the Round Rock Settlement, (ii) $4.6 million from the litigation settlement proceeds from The Vue (included in rental income), and (iii) $918,000 of income on insurance recovery from casualty loss, |
● | a $1.2 million increase in interest expense, |
● | a $936,000 increase in real estate operating expenses, and |
● | a $564,000 increase in general and administrative expense. |
Offsetting the decrease is a $373,000 increase in other income, and
Offsetting
See “—Comparison of Years Ended December 31, 2023 and 2022” for further information regarding these changes.
The $466,000, or 1.1%, increase in AFFO is due to the increase is a $639,000 increase (netfactors impacting FFO as described immediately above, excluding the (i) $5.4 million from the Round Rock Settlement, (ii) $4.6 million from the litigation settlement proceeds from The Vue (included in rental income), and (iii) $918,000 of a $152,000 decrease of professional feesincome on insurance recovery from 2020) in general and administrative expense.casualty loss.
See “—Comparison of Years Ended December 31, 20212023 and 20202022” for further information regarding these changes.
The $2.3 million, or 5.9%, increase in AFFO is due to the increase in FFO as described above and:
The increase in AFFO was offset by the exclusion from AFFO of:
See “—Comparison of Years Ended December 31, 2021 and 2020” for further information regarding these changes.
Diluted per share FFO and AFFO were impacted negatively in the year ended December 31, 20212023 by an average increase from December 31, 20202022 of approximately 671,000114,000 in the weighted average number of shares of common stock outstanding as a result of stock issuances of stock in-lieu of a portion of cash dividends andpursuant to the equity incentive at-the-market equity offering and dividend reinvestment, programs.
offset by the Company’s repurchase of shares during 2023.
Comparison of Years Ended December 31, 20202022 and 20192021
As we qualify as a smaller reporting company, this comparison is omitted in accordance with Instruction 1 to Item 303(a) of Regulation S-K.
4241
Liquidity and Capital Resources
Our sources of liquidity and capital include cash flow from operations, cash and cash equivalents, borrowings under our credit facility, refinancing existing mortgage loans, obtaining mortgage loans secured by our unencumbered properties, issuance of our equity securities and property sales. In 2021,2023, we obtained approximately $31.0(i) $46.6 million of net proceeds from property sales (after giving effect to $20.4our share of $11.3 million of mortgage debt repayments $848,000and $1.8 million of debt prepayment costs and $414,000 which represents a non-controlling interest’s share on the net proceeds of a consolidated joint venture property) and $10.6seller-financing), (ii) $22.6 million of proceeds from mortgage financings.financings (after giving effect to $13.8 million of refinanced amounts) and (iii) $4.6 million from the litigation settlement proceeds from The Vue. Our available liquidity at March 4, 20221, 2024 was approximately $97.9$123.9 million, including approximately $12.6$23.9 million of cash and cash equivalents (including the credit facility’s required $3.0 million average deposit maintenance balance) and, subject to borrowing base requirements, up to $85.3$100.0 million available under our credit facility.
Liquidity and Financing
We expect to meet our short term (i.e., one year or less) and long term (i) operating cash requirements (including debt service and anticipated dividend payments) principally from cash flow from operations, our available cash and cash equivalents, proceeds from and, to the extent permitted and needed, our credit facility and (ii) investing and financing cash requirements (including an estimated aggregate of $2.2$2.7 million of capital and other expenditures for Havertys Furniture and The Vue)expenditures) from the foregoing, as well as property financings, property sales and sales of our common stock. We and our joint venture partner are also re-developing the Manahawkin Property – however, because the re-development plan is being refined, we are not providing an estimate of the re-development costs or the time frame within which the re-development will be completed.
The following table sets forth, as of December 31, 2021,2023, information with respect to our mortgage debt that is payable from January 20222024 through December 31, 2024 (excluding the mortgage debt of our unconsolidated joint venture):2026:
| | | | | | | | | | | | |
(Dollars in thousands) |
| 2022 |
| 2023 |
| 2024 |
| Total | ||||
Amortization payments | | $ | 13,253 | | $ | 12,801 | | $ | 11,940 | | $ | 37,994 |
Principal due at maturity | |
| 31,590 | |
| 12,973 | |
| 50,694 | |
| 95,257 |
Total | | $ | 44,843 | | $ | 25,774 | | $ | 62,634 | | $ | 133,251 |
At December 31, 2021, an unconsolidated joint venture had a first mortgage on its property (i.e., the Manahawkin Property) with an outstanding balance of approximately $22.1 million, bearing interest at 4.0% per annum and maturing in July 2025.
| | | | | | | | | | | | |
(Dollars in thousands) |
| 2024 |
| 2025 |
| 2026 |
| Total | ||||
Amortization payments | | $ | 11,873 | | $ | 10,627 | | $ | 10,491 | | $ | 32,991 |
Principal due at maturity | |
| 49,906 | |
| 30,850 | |
| 19,179 | |
| 99,935 |
Total | | $ | 61,779 | | $ | 41,477 | | $ | 29,670 | | $ | 132,926 |
We intend to make debt amortization payments from operating cash flow and, though no assurance can be given that we will be successful in this regard, generally intend to refinance, extend or payoff the mortgage loans which mature in 20222024 through 2024.2026. We intend to repay the amounts not refinanced or extended from our existing funds and sources of funds, including our available cash, proceeds from the sale of our common stock and our credit facility (to the extent available).
We continually seek to refinance existing mortgage loans on terms we deem acceptable to generate additional liquidity. Additionally, in the normal course of our business, we sell properties when we determine that it is in our best interests, which also generates additional liquidity. Further, since eachalthough we have done so infrequently and primarily in the context of our encumbered properties isa tenant default at a property for which we have not found a replacement tenant, if we believe we have negative equity in a property subject to a non-recourse mortgage (with standard carve-outs), if our in-house evaluation of the market value of such property is less than the principal balance outstanding on the mortgage loan, we may determine to convey in certain circumstances, such property to the mortgagee in order to terminate our mortgage obligations, including payment of interest, principal and real estate taxes, with respect to such property.
Typically, we utilize funds from our credit facility to acquire a property and, thereafter secure long-term, fixed rate mortgage debt on such property. We apply the proceeds from the mortgage loan to repay borrowings under the credit facility, thus providing us with the ability to re-borrow under the credit facility for the acquisition of additional properties.
4342
Credit Facility
Our credit facility provides that subject to borrowing base requirements, we can borrow up to $100.0 million for the acquisition of commercial real estate, repayment of mortgage debt, and renovation and operating expense purposes; provided, that if used for renovation and operating expense purposes, the amount outstanding for such purposes will not exceed the lesser of $30.0 million and 30% of the borrowing base subject to a cap of (i) $10.0 million for renovation purposes and (ii) $20.0 million for operating expense purposes. These limits will apply through June 30, 2022. On July 1, 2022, the maximum amounts we can borrow for renovation expenses and operating expenses will change to $20.0 million and $10.0 million, respectively, and to the extent that either of these maximums is exceeded as of June 30, 2022, such excess must be repaid immediately. See “—Liquidity and Capital Resources”. The facility matures December 31, 2022 and bears interest equal to the one month LIBOR rate plus the applicable margin. The applicable margin ranges from 175 basis points if our ratio of total debt to total value (as calculated pursuant to the facility) is equal to or less than 50%, increasing to a maximum of 300 basis points if such ratio is greater than 65%. The applicable margin was 175 and 200 basis points for 2021 and 2020, respectively. There is an unused facility fee of 0.25% per annum on the difference between the outstanding loan balance and $100.0 million. The credit facility requires the maintenance of $3.0 million in average deposit balances. For 2021, the weighted average interest rate on the facility was approximately 1.86% and as of February 28, 2022, the rate on the facility was 1.88%.
The terms of our credit facility include certain restrictions and covenants which limit, among other things, the incurrence of liens, and which require compliance with financial ratios relating to, among other things, the minimum amount of tangible net worth, the minimum amount of debt service coverage, the minimum amount of fixed charge coverage, the maximum amount of debt to total value, the minimum level of net income, certain investment limitations and the minimum value of unencumbered properties and the number of such properties. Net proceeds received from the sale, financing or refinancing of properties are generally required to be used to repay amounts outstanding under our credit facility.
Material Contractual Obligations
The following sets forth our material contractual obligations as of December 31, 2021:2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Payment due by period | | Payment due by period | ||||||||||||||||||||||||||
|
| Less than |
| | |
| | |
| More than |
| | |
| Less than |
| | |
| | |
| More than |
| | | ||||
(Dollars in thousands) | | 1 Year | | 1 ‑ 3 Years | | 4 ‑ 5 Years | | 5 Years | | Total | | 1 Year | | 1 ‑ 3 Years | | 4 ‑ 5 Years | | 5 Years | | Total | ||||||||||
Mortgages payable—interest and amortization | | $ | 29,605 | | $ | 51,897 | | $ | 39,224 | | $ | 74,700 | | $ | 195,426 | | $ | 28,774 | | $ | 48,305 | | $ | 39,267 | | $ | 64,299 | | $ | 180,645 |
Mortgages payable—balances due at maturity | |
| 31,590 | |
| 63,667 | |
| 51,242 | |
| 145,609 | |
| 292,108 | |
| 49,906 | |
| 50,029 | |
| 68,679 | |
| 168,560 | |
| 337,174 |
Credit facility(1) | |
| 11,700 | |
| — | |
| — | | | — | |
| 11,700 | |||||||||||||||
Purchase obligations(2) | |
| 3,864 | |
| 7,780 | |
| 6,909 | |
| 260 | |
| 18,813 | |||||||||||||||
Credit facility (1) | |
| — | |
| — | |
| — | | | — | |
| — | |||||||||||||||
Purchase obligations (2) | |
| 4,172 | |
| 7,425 | |
| 7,329 | |
| 161 | |
| 19,087 | |||||||||||||||
Total | | $ | 76,759 | | $ | 123,344 | | $ | 97,375 | | $ | 220,569 | | $ | 518,047 | | $ | 82,852 | | $ | 105,759 | | $ | 115,275 | | $ | 233,020 | | $ | 536,906 |
(1) |
(2) | Assumes that |
As of December 31, 2021,2023, we had $399.7$422.6 million of mortgage debt outstanding, (excluding mortgage debt of our unconsolidated joint venture), all of which is non-recourse (subject to standard carve-outs). We expect that mortgage interest and amortization payments (excluding repayments of principal at maturity) of approximately $81.5$77.1 million due through 20242026 will be paid primarily from cash generated from our operations. We anticipate
44
that principal balances due at maturity through 20242026 of $95.3$99.9 million will be paid primarily from cash and cash equivalents and mortgage financings and refinancings. If we are unsuccessful in refinancing our existing indebtedness or financing our unencumbered properties, our cash flow, funds available under our credit facility and available cash, if any, may not be sufficient to repay all debt obligations when payments become due, and we may need to issue additional equity, obtain long or short- term debt, or dispose of properties on unfavorable terms.
Credit Facility
Our credit facility provides that subject to borrowing base requirements, we can borrow up to $100.0 million for the acquisition of commercial real estate, repayment of mortgage debt, and renovation and operating expense purposes; provided, that if used for renovation and operating expense purposes, the amount outstanding for such purposes will not exceed the lesser of $40.0 million and 40% of the borrowing base. See “—Liquidity and Capital Resources”. The facility matures December 31, 2026 and bears interest equal to 30-day SOFR plus the applicable margin. The applicable margin ranges from 175 basis points if our ratio of total debt to total value (as calculated pursuant to the facility) is equal to or less than 50%, increasing to a maximum of 275 basis points if such ratio is greater than 60%. The applicable margin was 175 basis points for each of 2023 and 2022. There is an unused facility fee of 0.25% per annum on the difference between the outstanding loan balance and $100.0 million. The credit facility requires the maintenance of $3.0 million in average deposit balances. For 2023, the weighted average interest rate on the facility was approximately 6.69% and as of February 29, 2024, the rate on the facility was 7.08%.
The terms of our credit facility include certain restrictions and covenants which may limit, among other things, the incurrence of liens, and which require compliance with financial ratios relating to, among other things, the minimum amount of tangible net worth, the minimum amount of debt service coverage, the minimum amount of fixed charge coverage, the maximum amount of debt to value, the minimum level of net income, certain investment limitations and the minimum value of unencumbered properties and the number of such properties.
43
Net proceeds received from the sale, financing or refinancing of properties are generally required to be used to repay amounts outstanding under our credit facility.
Inflation
We are exposed to inflation risk as income from long-term leases is the primary source of our cash flows from operations. Approximately 76%69% of our leases contain provisions intended to mitigate the impact of inflation. These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures). In addition, many of our leases require the tenant to pay, or reimburse us for our payment of, all or a majority of the property'sproperty’s operating expenses, including real estate taxes, utilities, insurance and building repairs, which may also mitigate our risks associated with rising costs. However, these rent escalation provisions may not adequately offset the effects of inflation.
Inflation may also affect the overall cost of our unhedged debt (i.e., primarily debt incurred pursuant to our credit facility) and mortgage debt we may incur in the future. (The interest rate risk associated with substantially all of our current mortgage debt is either mitigated through long-term fixed interest rate loans and interest rate hedges). Increasing interest rates on acquisition mortgage debt limits the acquisition opportunities we can pursue and reduces the prices at which we sell our properties.
Cash
Distribution Policy
We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. Accordingly, to qualify as a REIT, we must, among other things, meet a number of organizational and operational requirements, including a requirement that we distribute currently at least 90% of our ordinary taxable income to our stockholders. It is our current intention to comply with these requirements and maintain our REIT status. As a REIT, we generally will not be subject to corporate federal, state or local income taxes on taxable income we distribute currently (in accordance with the Internal Revenue Code and applicable regulations) to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal, state and local income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent tax years. Even ifAlthough we qualify for federal taxation as a REIT, we may beare subject to certain state and local taxes on our income and to federal income taxes on our undistributed taxable income (i.e.(i.e., taxable income not distributed in the amounts and in the time frames prescribed by the Internal Revenue Code and applicable regulations thereunder) and are subject to Federal excise taxes on our undistributed taxable income.
It is our current intention to pay to our stockholders within the time periods prescribed by the Internal Revenue Code no less than 90%, and, if possible, 100% of our annual taxable income, including taxable gains from the sale of real estate. It will continue to be our policy to make sufficient distributions to stockholders in order for us to maintain our REIT status under the Internal Revenue Code.
Our board of directors will continue to evaluate, on a quarterly basis, the amount and nature (i.e., cash, stock or a combination of the foregoing) of dividend payments based on its assessment of, among other things, our short and long-term cash and liquidity requirements, prospects, debt maturities, projections of our REIT taxable income, net income, funds from operations, and adjusted funds from operations.
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Critical Accounting Estimates
Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"(“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we reconsider and evaluate our estimates and assumptions.
45
We base our estimates on historical experience, current trends and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could materially differ from any of our estimates under different assumptions or conditions. Our significant accounting policies are discussed in Note 2 of our consolidated financial statements in this report. We believe the accounting estimates listed below are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.
Revenue Recognition
Our main source of revenue is rental income from our tenants. Rental income primarily includes: (i) base rents that our tenants pay in accordance with the terms of their respective leases reported on a straight-line basis over the non-cancellable term of each lease and (ii) reimbursements by tenants of certain real estate operating expenses. Since many of our leases provide for rental increases at specified intervals, straight-line basis accounting requires us to record as an asset and include in revenues, unbilled rent receivables which we will only receive if the tenant makes all rent payments required through the expiration of the term of the lease. Accordingly, our management must determine, in its judgment, that the unbilled rent receivable applicable to each specific tenant is collectable. We review unbilled rent receivables on a quarterly basis and take into consideration the tenant’s payment history and the financial condition of the tenant. In the event that the collectability of an unbilled rent receivable is unlikely, we are required to write-off the receivable, which has an adverse effect on net income for the year in which the direct write-off is taken, and will decrease total assets and stockholders’ equity.
Purchase Accounting for Acquisition of Real Estate
The fair value of real estate acquired is allocated to acquired tangible assets consisting of(which includes land, building and building improvements) and identified intangible assets and liabilities consisting of(which include the value of above-marketabove, below and below-marketat-market leases and other value oforigination costs associated with in-place leases and assumed mortgages) based in each case on their fair values. The fair value of the tangible assets of an acquired property (which includes land, building and building improvements) is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land, building and building improvements based on our determination of the relative fair values of these assets. We assess the fair value of the lease intangibles and assumed mortgages based on estimated cash flow projections that utilize appropriate discount rates and available market information. The fair values associated with below-market rental renewal options are determined based on our experience and the relevant facts and circumstances that existed at the time of the acquisitions. The portion of the values of the leases associated with below-market renewal options that we deem likelyreasonably certain to be exercised by the tenant are amortized to rental income over the respective renewal periods. The allocation made by us may have a positive or negative effect on net income and may have an effect on the assets and liabilities on the balance sheet.
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Carrying Value of Real Estate Portfolio
We review our real estate portfolio on a quarterly basis to ascertain if there are any indicators of impairment to the value of any of our real estate assets, including deferred costs and intangibles, to determine if there is any need for an impairment charge. In reviewing the portfolio, we examine the type of asset, the current financial statements or other available financial information of the tenant, the economic situation in the area in which the asset is located, the economic situation in the industry in which the tenant is involved and the timeliness of the payments made by the tenant under its lease, as well as any current correspondence that may have been had with the tenant, including property inspection reports. For each real estate asset owned for which indicators of impairment exist, we perform a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the asset to its carrying amount. Management’s assumptions and estimates include projected rental rates during the holding period and property capitalization rates in order to estimate undiscounted future cash flows. If the undiscounted cash flows are less than the asset’s carrying amount, an impairment loss is recorded to the extent that the estimated fair value is less than the asset’s carrying amount. The estimated fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the property. Real estate assets that are expected to be disposed of are valued at the lower of carrying amount or fair value less costs to sell on an individual asset basis. We generally do not obtain any independent appraisals in determining value but rely on our own analysis and valuations. Any impairment charge taken with respect to any part of our real estate portfolio will reduce our net income and reduce assets and stockholders’ equity to the extent of the amount of any impairment charge, but it will not affect our cash flow or our distributions until such time as we dispose of the property.
Equity-Based Compensation
We grant shares of restricted stock and restricted stock units ("RSUs") to eligible plan participants, subject to the recipient's continued service over a specified period and, with respect to the RSUs, the satisfaction of specified conditions over a specified period. The RSUs vest based upon satisfaction of specified metrics with respect to (i) average of our annual total stockholder return (“TSR Awards”) and/or (ii) average annual return of capital (“ROC Awards”), in each case as calculated pursuant to the applicable award agreement. We account for the restricted stock awards and RSUs in accordance with ASC 718, Compensation - Stock Compensation, which requires that such compensation be recognized in the financial statements based on its estimated grant-date fair value. The value of such awards is recognized as compensation expense in general and administrative expenses in the accompanying consolidated statements of operations over the applicable service periods. Grant date fair value is determined with respect to the (i) the restricted stock awards, by the closing stock price on the date of grant, (ii) TSR Awards, by using a Monte Carlo simulation relying upon various assumptions and (iii) ROC Awards, by using the closing stock price on the grant date, subject to quarterly adjustment based upon management’s projection as to the achievability of the specified metrics related to the ROC Awards. See Note 11 to our consolidated financial statements.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Our primary market risk exposure is the effect of changes in interest rates on the interest cost of draws on our revolving variable rate credit facility and the effect of changes in the fair value of our interest rate swap agreements. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control.
We use interest rate swaps to limit interest rate risk on substantially all variable rate mortgages. These swaps are used for hedging purposes-not for speculation. We do not enter into interest rate swaps for trading purposes. At December 31, 2021, our aggregate2023, we had no liability in the event of the early termination of our swaps was $1.6 million.swaps.
At December 31, 2021,2023, we had 1913 interest rate swap agreements outstanding.outstanding with an aggregate $29.6 million notional amount. The fair market value of the interest rate swaps is dependent upon existing market interest rates and swap spreads, which change over time. As of December 31, 2021,2023, if there had been an increase of 100 basis points in forward interest rates, the fair market value of the interest rate swaps would have increased by approximately $1.3 million and the net unrealized lossgain on derivative instruments would have decreasedincreased by $1.3 million.$309,000. If there were a decrease of 100 basis points in forward interest rates, the fair market value of the interest rate swaps would have decreased by approximately $1.3 million and the net unrealized lossgain on derivative instruments would have increaseddecreased by $1.3 million.$316,000. These changes would not have any impact on our net income or cash.
Our variable mortgage debt, after giving effect to the interest rate swap agreements, bears interest at fixed rates and accordingly, the effect of changes in interest rates would not impact the amount of interest expense that we incur under these mortgages.
Our variable rate credit facility is sensitive to interest rate changes. At December 31, 2021, a 100 basis point increase of the interest rate on this facility would increase our related interest costs by approximately $117,000 per year and a 100 basis point decrease of the interest rate would decrease our related interest costs by approximately $12,000 per year.
The fair market value of our long-term debt is estimated based on discounting future cash flows at interest rates that our management believes reflect the risks associated with long-term debt of similar risk and duration.
The following table sets forth our debt obligations by scheduled principal cash flow payments and maturity date, weighted average interest rates and estimated fair market value at December 31, 2021:2023:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Year Ended December 31, |
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| | |
| | |
| Fair |
| |
| | | | | | | | | | | | | | | | | | | | | | | Market |
| |
(Dollars in thousands) | | 2022 | | 2023 | | 2024 | | 2025 | | 2026 | | Thereafter | | Total | | Value |
| ||||||||
Fixed rate: |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| |
Long‑term debt | | $ | 44,843 | | $ | 25,774 | | $ | 62,634 | | $ | 42,615 | | $ | 29,277 | | $ | 194,517 | | $ | 399,660 | | $ | 419,354 | |
Weighted average interest rate | |
| 4.02 | % |
| 4.29 | % |
| 4.39 | % |
| 4.30 | % |
| 4.01 | % |
| 4.13 | % |
| 4.18 | % |
| 3.20 | % |
Variable rate: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Long‑term debt(1) | | $ | 11,700 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 11,700 | | $ | 11,700 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Year Ended December 31, |
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| | |
| Fair |
| |
| | | | | | | | | | | | | | | | | | | | | | | Market |
| |
(Dollars in thousands) | | 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | Thereafter | | Total | | Value |
| ||||||||
Fixed rate: |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| |
Long‑term debt | | $ | 61,779 | | $ | 41,477 | | $ | 29,670 | | $ | 47,923 | | $ | 38,873 | | $ | 202,843 | | $ | 422,565 | | $ | 397,031 | |
Weighted average interest rate | |
| 4.63 | % |
| 4.30 | % |
| 4.01 | % |
| 3.77 | % |
| 4.58 | % |
| 4.33 | % |
| 4.31 | % |
| 5.93 | % |
Variable rate: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Long‑term debt(1)(2) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
(1) | As of December 31, 2023, there was no balance outstanding on our credit facility. Our credit facility matures on December 31, |
(2) | Excludes $16.0 million of variable rate mortgage debt of which $4.0 million with respect to a property tenanted by LA Fitness (Hamilton, Ohio) matures in 2024. For further information about our variable rate mortgage debt, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—General Challenges and Uncertainties.” |
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Item 8. Financial Statements and Supplementary Data.
This information appears in Item 15(a) of this Annual Report on Form 10-K and is incorporated into this Item 8 by reference thereto.
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
A review and evaluation was performed by our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our 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 (the “Exchange Act”) as of the end of the period covered by this Annual Report on Form 10-K. Based on that review and evaluation, our CEO and CFO have concluded that our disclosure controls and procedures, as designed and implemented as of December 31, 2021,2023, were effective.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:
● | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company; |
● | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of a company are being made only in accordance with authorizations of management and the board of directors of a company; and |
● | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on the financial transactions. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2021.2023. In making this assessment, our management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).
Based on its assessment, our management concluded that, as of December 31, 2021,2023, our internal control over financial reporting was effective based on those criteria.
Changes in Internal Controls over Financial Reporting
There have been no changes in our internal controls over financial reporting, as defined in in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, that occurred during the three months ended December 31, 20212023 that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
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Item 9B. Other Information.
Adoption of 2022 Incentive Plan
In March 2022, our board of directors adopted, subject to stockholder approval, the 2022 Incentive Plan. This plan permits us to grant: (i) stock options, restricted stock, restricted stock units, performance share awards and any one or more of the foregoing, up to a maximum of 750,000 shares; and (ii) cash settled dividend equivalent rights in tandem with the grant of certain awards.
Board Realignment
To more equally balance the membershipNone of our three classes ofofficers or directors Karen A. Till on March 10, 2022, resigned as a Class 2 director (with a term expiring at our 2023 annual meeting of stockholders) effective as ofhad any contract, instruction, or written plan for the 2022 annual meeting of stockholders (the “Annual Meeting”) and contingent on her nomination and election at the Annual Meeting as a Class 3 director (with a term expiring at our 2025 annual meeting of stockholders). In addition, our board, effective as of the Annual Meeting, reduced (i) the number of members on the board to nine director positions and (ii) the Class 2 director positions (with a term expiring in 2023) to three directors.
Tax Disclosure Update
The sectionpurchase or sale of our prospectus dated August 13, 2020 includedsecurities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” in our prospectus supplement dated August 13, 2020 entitled “Federal Income Tax Considerations - Impact ofeffect at any time during the Tax Cuts and Jobs Act on the Company and its Stockholders- Limitations on Interest Deductibility; Real Property Trades or Businesses Can Elect Out Subject to Longer Asset Cost Recovery Periods:” is hereby superseded, and is amended and restated in its entirety to read as follows:
“Limitations on Interest Deductibility; Real Property Trades or Businesses Can Elect Out Subject to Longer
Asset Cost Recovery Periods: The Tax Cuts and Jobs Act, which was signed into law onthree months ended December 22, 2017 (the “Tax Act” or the “Act”) limits a taxpayer’s net interest expense deduction to 30% of the sum of adjusted taxable income, business interest, and certain other amounts. Adjusted taxable income does not include items of income or expense not allocable to a trade or business, business interest or expense, the new deduction for qualified business income, NOLs, and for years prior to 2022, deductions for depreciation, amortization, or depletion. For partnerships, the interest deduction limit is applied at the partnership level, subject to certain adjustments to the partners for unused deduction limitation at the partnership level. The Act allows a real property trade or business to elect out of this interest limit so long as it uses a 40-year recovery period for nonresidential real property, a 30-year recovery period for residential rental property (40 year recovery period for residential rental property placed in service before 2018), and a 20-year recovery period for related improvements described below. The Consolidated Appropriations Act, 2021, which was signed into law on December 27, 2020, decreased the 40-year recovery period for residential rental property placed in service before 2018 to a 30-year recovery period. Disallowed interest expense is carried forward indefinitely (subject to special rules for partnerships).”31, 2023.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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PARTIII
Item 10. Directors, Executive Officers and Corporate Governance.Governance.
Apart from certain information concerning our executive officers which is set forth in Part I of this Annual Report, additional information required by this Item 10 shall be included in our proxy statement for our 20222024 annual meeting of stockholders, to be filed with the SEC not later than May 2, 2022,April 29, 2024, and is incorporated herein by reference.
Item 11. Executive Compensation.
The information required by this Item 11 will be included in our proxy statement for our 20222024 annual meeting of stockholders, to be filed with the SEC not later than May 2, 2022,April 29, 2024, and is incorporated herein by reference.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Apart from the equity compensation plan information required by Item 201(d) of Regulation S-K which is set forth below, the information required by this Item 12 will be included in our proxy statement for our 20222024 annual meeting of stockholders, to be filed with the SEC not later than May 2, 2022April 29, 2024 and is incorporated herein by reference.
Equity Compensation Plan Information
As of December 31, 2021, the only equity compensation plan under which equity compensation may be awarded is our 2019 Incentive Plan, which was approved by our stockholders in June 2019. This plan permits us to grant stock options, restricted stock, restricted stock units and performance based awards to our employees, officers, directors, consultants and other eligible participants.
The following table provides information as of December 31, 20212023 about shares of our common stock that may be issued upon the exercise of options, warrants and rights under our 2016 Incentive Plan (the “2016 Plan”), our 2019 Incentive Plan:Plan (the “2019 Plan”; and together with the 2016 Plan, the “Prior Plans”) and our 2022 Incentive Plan (the “2022 Plan”; and together with the Prior Plans, the “Incentive Plans”). No further awards may be granted under the Prior Plans.
| | | | | | | | | | | | | | |
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| |
| |
| Number of |
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| |
| |
| Number of |
|
| | | | | | securities |
| | | | | | securities |
|
| | | | | | remaining available |
| | | | | | remaining available |
|
| | Number of | | | | for future issuance |
| | Number of | | | | for future issuance |
|
| | securities | | Weighted average | | under equity |
| | securities | | Weighted average | | under equity |
|
| | to be issued | | exercise price | | compensation |
| | to be issued | | exercise price | | compensation |
|
| | upon exercise | | of outstanding | | plans (excluding |
| | upon exercise | | of outstanding | | plans (excluding |
|
| | of outstanding | | options, | | securities |
| | of outstanding | | options, | | securities |
|
| | options, warrants | | warrants | | reflected in |
| | options, warrants | | warrants | | reflected in |
|
Plan Category | | and rights(1) | | and rights | | column(a))(2) |
| | and rights(1) | | and rights | | column(a))(2) |
|
|
| (a) |
| (b) |
| (c) | |
| (a) |
| (b) |
| (c) | |
Equity compensation plans approved by security holders |
| 230,752 |
| — |
| 218,648 | |
| 248,112 | | — | | 428,675 | |
Equity compensation plans not approved by security holders |
| — |
| — |
| — | |
| — | | — | | — | |
Total |
| 230,752 |
| — |
| 218,648 | |
| 248,112 |
| — |
| 428,675 | |
(1) |
(2) | Gives effect to the |
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Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this Item 13 will be included in our proxy statement for our 20222024 annual meeting of stockholders, to be filed with the SEC not later than May 2, 2022April 29, 2024 and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
The information required by this Item 14 will be included in our proxy statement for our 20222024 annual meeting of stockholders, to be filed with the SEC not later than May 2, 2022April 29, 2024 and is incorporated herein by reference.
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PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) | Documents filed as part of this Report: |
(1) | The following financial statements of the Company are included in this Annual Report on Form 10-K: |
—Report of Independent Registered Public Accounting Firm (PCAOB ID 00042) | F-1 through F-2 |
—Statements: | |
F-3 | |
F-4 | |
F-5 | |
F-6 | |
F-7 through F-8 | |
F-9 through |
(2) | Financial Statement Schedules: |
|
All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or the notes thereto.
| ||
(b) Exhibits: | ||
| | |
1.1 |
| |
3.1 | | |
3.2 | | Amended and Restated |
4.1 | | |
4.2* | | |
4.3* | | |
| | |
4.5 | | |
10.1 | | |
10.2 | | |
10.3 | | |
10.4 | |
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10.6* | |
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10.8* |
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10.11* | | |
10.12* | | |
10.13* | | |
10.14* | | |
21.1 | | |
23.1 | | |
31.1 | | |
31.2 | | Certification of Senior Vice President and Chief Financial Officer |
32.1 | | |
32.2 | | Certification of Senior Vice President and Chief Financial Officer |
97.1 | | |
101 | | The following financial statements, notes and schedule from the One Liberty Properties, Inc. Annual Report on Form 10-K for the year ended December 31, |
104 | | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document and included in Exhibit 101). |
* | Indicates a management contract or compensatory plan or arrangement. |
The file number for all the exhibits incorporated by reference is 001- 09279 other than exhibit 4.1 whose file number is 333-86850.
Item 16. Form 10-K Summary
Not applicable.
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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 of the undersigned, thereunto duly authorized.
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March | ONE LIBERTY PROPERTIES, INC. | |
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| By: | /s/ PATRICK J. CALLAN, JR. |
| | Patrick J. Callan, Jr. |
| | President and Chief Executive Officer |
| |
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.
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Signature |
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/s/ MATTHEW J. GOULD Matthew J. Gould | | Chairman of the Board of Directors | | March |
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/s/ FREDRIC H. GOULD Fredric H. Gould | | Vice Chairman of the Board of Directors | | March |
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/s/ PATRICK J. CALLAN, JR. Patrick J. Callan, Jr. | | President, Chief Executive Officer and Director | | March |
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Charles Biederman | | Director | | March |
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/s/ EDWARD GELLERT Edward Gellert | | Director | | March |
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/s/ JEFFREY A. GOULD Jeffrey A. Gould | | Director | | March |
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/s/ J. ROBERT LOVEJOY J. Robert Lovejoy | | Director | | March |
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/s/ LEOR SIRI Leor Siri | | Director | | March |
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/s/ KAREN A. TILL Karen A. Till | | Director | | March |
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Signature |
| Title |
| Date |
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/s/ | | Senior Vice President and Chief Financial Officer | | March |
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/s/ | |
| | March |
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54
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of One Liberty Properties, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of One Liberty Properties, Inc. and subsidiaries (the Company) as of December 31, 20212023 and 2020,2022, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2021,2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 20212023 and 2020,2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021,2023, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.
| | |
| | Impairment of Real Estate Investments |
Description of the Matter | | At December 31, Auditing the Company’s impairment assessment for real estate investments was especially challenging and involved a high degree of subjectivity as a result of the assumptions and estimates inherent in the determination of estimated future cash flows expected to result from |
F-1
the property’s use and eventual disposition. In particular, management’s assumptions and estimates included projected rental rates during the holding period and property capitalization |
F-1
rates, which were sensitive to expectations about future operations, market or economic conditions, demand and competition. | ||
How We Addressed the Matter in Our Audit | | To test the Company's impairment assessment for real estate investments, we performed audit procedures that included, among others, evaluating the methodologies applied and testing the significant assumptions discussed above and the underlying data used by the Company in its impairment analyses. In certain cases, we involved our valuation specialists to assist in performing these procedures. We compared the significant assumptions used by management to historical data and observable market-specific data. We also performed sensitivity analyses of significant assumptions to evaluate the changes in estimated future cash flows that would result from changes in the assumptions. |
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1989.
New York, New York
March 11, 20226, 2024
F-2
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Par Value)
| | | | | | | | | | | | |
| | December 31, | | December 31, | ||||||||
|
| 2021 |
| 2020 |
| 2023 |
| 2022 | ||||
ASSETS | | | | | | | | | | | | |
Real estate investments, at cost | | | | | | | | | | | | |
Land | | $ | 180,183 | | $ | 190,391 | | $ | 172,309 | | $ | 181,805 |
Buildings and improvements | |
| 657,458 | |
| 648,667 | |
| 692,346 | |
| 697,791 |
Total real estate investments, at cost | |
| 837,641 | |
| 839,058 | |
| 864,655 | |
| 879,596 |
Less accumulated depreciation | |
| 160,664 | |
| 147,136 | |
| 182,705 | |
| 173,143 |
Real estate investments, net | |
| 676,977 | |
| 691,922 | |
| 681,950 | |
| 706,453 |
| | | | | | | | | | | | |
Property held-for-sale | | | 1,270 | | | — | ||||||
Investment in unconsolidated joint ventures | |
| 10,172 | |
| 10,702 | |
| 2,051 | |
| 10,400 |
Cash and cash equivalents | |
| 16,164 | |
| 12,705 | |
| 26,430 | |
| 6,718 |
Unbilled rent receivable | |
| 14,330 | |
| 15,438 | |
| 16,661 | |
| 16,079 |
Unamortized intangible lease assets, net | |
| 20,694 | |
| 24,703 | |
| 14,681 | |
| 19,841 |
Escrow, deposits and other assets and receivables | |
| 13,346 | |
| 20,667 | |
| 19,833 | |
| 23,764 |
Total assets(1) | | $ | 752,953 | | $ | 776,137 | | $ | 761,606 | | $ | 783,255 |
LIABILITIES AND EQUITY | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | |
Mortgages payable, net of $3,316 and $3,845 of deferred financing costs, respectively | | $ | 396,344 | | $ | 429,704 | ||||||
Line of credit, net of $216 and $425 of deferred financing costs, respectively | | | 11,484 | |
| 12,525 | ||||||
Mortgages payable, net (see Note 8) | | $ | 418,347 | | $ | 405,162 | ||||||
Line of credit, net (see Note 8) | | | — | |
| 21,068 | ||||||
Dividends payable | | | 9,448 | |
| 9,261 | | | 9,916 | |
| 9,693 |
Accrued expenses and other liabilities | | | 18,992 | |
| 21,498 | | | 15,502 | |
| 19,270 |
Unamortized intangible lease liabilities, net | | | 10,407 | |
| 11,189 | | | 10,096 | |
| 11,125 |
Total liabilities(1) | | | 446,675 | |
| 484,177 | | | 453,861 | |
| 466,318 |
| | | | | | | | | | | | |
Commitments and contingencies | |
| | |
| | |
| | |
| |
| | | | | | | | | | | | |
Equity: | | | | | | | | | | | | |
One Liberty Properties, Inc. stockholders’ equity: | | | | | | | | | | | | |
Preferred stock, $1 par value; 12,500 shares authorized; NaN issued | |
| — | |
| — | ||||||
Common stock, $1 par value; 50,000 shares authorized; | |
| 20,239 | |
| 19,878 | ||||||
Preferred stock, $1 par value; 12,500 shares authorized; none issued | |
| — | |
| — | ||||||
Common stock, $1 par value; 50,000 shares authorized; | |
| 20,323 | |
| 20,362 | ||||||
Paid-in capital | |
| 322,793 | |
| 313,430 | |
| 326,379 | |
| 325,895 |
Accumulated other comprehensive loss | |
| (1,513) | |
| (5,002) | ||||||
Accumulated other comprehensive income | |
| 844 | |
| 1,810 | ||||||
Distributions in excess of net income | |
| (36,187) | |
| (37,539) | |
| (40,843) | |
| (32,102) |
Total One Liberty Properties, Inc. stockholders’ equity | |
| 305,332 | |
| 290,767 | |
| 306,703 | |
| 315,965 |
Non-controlling interests in consolidated joint ventures(1) | |
| 946 | |
| 1,193 | |
| 1,042 | |
| 972 |
Total equity | |
| 306,278 | |
| 291,960 | |
| 307,745 | |
| 316,937 |
Total liabilities and equity | | $ | 752,953 | | $ | 776,137 | | $ | 761,606 | | $ | 783,255 |
(1) | The Company’s consolidated balance sheets include assets and liabilities of consolidated variable interest entities (“VIEs”). See Note 6. The consolidated balance sheets include the following amounts related to the Company’s consolidated VIEs: $ |
See accompanying notes.
F-3
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
| | | | | | | | | |
| | | | | | | | | |
| | Year Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Revenues: | | |
| | |
| | |
|
Rental income, net | | $ | 82,180 | | $ | 81,888 | | $ | 83,786 |
Lease termination fees | | | 560 | | | 15 | | | 950 |
Total revenues | | | 82,740 | | | 81,903 | | | 84,736 |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Depreciation and amortization | |
| 22,832 | |
| 22,964 | |
| 22,026 |
General and administrative (see Note 10 for related party information) | |
| 14,310 | |
| 13,671 | |
| 12,442 |
Real estate expenses (see Note 10 for related party information) | |
| 13,802 | |
| 13,634 | |
| 14,074 |
State taxes | |
| 291 | |
| 310 | |
| 348 |
Impairment due to casualty loss (see Note 13) | | | — | | | 430 | | | — |
Total operating expenses | |
| 51,235 | |
| 51,009 | |
| 48,890 |
| | | | | | | | | |
Other operating income | | | | | | | | | |
Gain on sale of real estate, net | | | 25,463 | | | 17,280 | | | 4,327 |
Operating income | |
| 56,968 | |
| 48,174 | |
| 40,173 |
| | | | | | | | | |
Other income and expenses: | | | | | | | | | |
Equity in earnings of unconsolidated joint ventures | |
| 202 | |
| 38 | |
| 16 |
Equity in earnings from sale of unconsolidated joint venture properties | | | 805 | | | 121 | | | — |
Prepayment costs on debt | | | (901) | | | (1,123) | | | (827) |
Other income (see Note 13) | | | 869 | | | 496 | | | 8 |
Interest: | | | | | | | | | |
Expense | |
| (17,939) | |
| (19,317) | |
| (19,831) |
Amortization and write-off of deferred financing costs | |
| (970) | |
| (976) | |
| (995) |
| | | | | | | | | |
Net income | |
| 39,034 | |
| 27,413 | |
| 18,544 |
Net income attributable to non-controlling interests | | | (177) | |
| (6) | |
| (533) |
Net income attributable to One Liberty Properties, Inc. | | $ | 38,857 | | $ | 27,407 | | $ | 18,011 |
| | | | | | | | | |
Weighted average number of common shares outstanding: | | | | | | | | | |
Basic | | | 20,086 | |
| 19,571 | |
| 19,090 |
Diluted | | | 20,264 | |
| 19,599 | |
| 19,119 |
| | | | | | | | | |
Per common share attributable to common stockholders: | | | | | | | | | |
Basic | | $ | 1.87 | | $ | 1.34 | | $ | 0.88 |
Diluted | | $ | 1.85 | | $ | 1.33 | | $ | 0.88 |
| | | | | | | | | |
| | Year Ended December 31, | |||||||
| | 2023 |
| 2022 |
| 2021 | |||
Revenues: | | |
| | |
| | |
|
Rental income, net | | $ | 90,646 | | $ | 92,191 | | $ | 82,180 |
Lease termination fees | | | — | | | 25 | | | 560 |
Total revenues | | | 90,646 | | | 92,216 | | | 82,740 |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Depreciation and amortization | |
| 24,789 | | | 23,781 | |
| 22,832 |
General and administrative (see Note 10 for related party information) | |
| 15,822 | | | 15,258 | |
| 14,310 |
Real estate expenses (see Note 10 for related party information) | |
| 16,444 | | | 15,508 | |
| 13,802 |
State taxes | |
| 284 | | | 285 | |
| 291 |
Total operating expenses | |
| 57,339 | |
| 54,832 | |
| 51,235 |
| | | | | | | | | |
Other operating income | | | | | | | | | |
Gain on sale of real estate, net | | | 17,008 | | | 16,762 | | | 25,463 |
Operating income | |
| 50,315 | |
| 54,146 | |
| 56,968 |
| | | | | | | | | |
Other income and expenses: | | | | | | | | | |
Equity in (loss) earnings of unconsolidated joint ventures | |
| (904) | | | 400 | |
| 202 |
Equity in (loss) earnings from sale of unconsolidated joint venture properties | | | (108) | | | — | | | 805 |
Prepayment costs on debt | | | — | | | — | | | (901) |
Income on settlement of litigation (see Note 13) | | | — | | | 5,388 | | | — |
Other income (see Note 13) | | | 234 | | | 1,003 | | | 869 |
Interest: | | | | | | | | | |
Expense | |
| (18,780) | | | (17,569) | |
| (17,939) |
Amortization and write-off of deferred financing costs | |
| (839) | | | (1,115) | |
| (970) |
| | | | | | | | | |
Net income | |
| 29,918 | |
| 42,253 | |
| 39,034 |
Net income attributable to non-controlling interests | | | (304) | | | (76) | |
| (177) |
Net income attributable to One Liberty Properties, Inc. | | $ | 29,614 | | $ | 42,177 | | $ | 38,857 |
| | | | | | | | | |
Weighted average number of common shares outstanding: | | | | | | | | | |
Basic | | | 20,499 | | | 20,360 | |
| 20,086 |
Diluted | | | 20,556 | | | 20,453 | |
| 20,264 |
| | | | | | | | | |
Per common share attributable to common stockholders: | | | | | | | | | |
Basic | | $ | 1.38 | | $ | 2.00 | | $ | 1.87 |
Diluted | | $ | 1.38 | | $ | 1.99 | | $ | 1.85 |
See accompanying notes.
F-4
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands)
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, | | Year Ended December 31, | ||||||||||||||
|
| 2021 |
| 2020 |
| 2019 |
| 2023 |
| 2022 |
| 2021 | ||||||
Net income | | $ | 39,034 | | $ | 27,413 | | $ | 18,544 | | $ | 29,918 | | $ | 42,253 | | $ | 39,034 |
| | | | | | | | | | | | | | | | | | |
Other comprehensive income | | | | | | | | | | | | | | | | | | |
Net unrealized gain (loss) on derivative instruments | | | 3,497 | |
| (3,383) | |
| (3,522) | |||||||||
Net unrealized (loss) gain on derivative instruments | | | (967) | | | 3,325 | |
| 3,497 | |||||||||
Comprehensive income | | | 42,531 | |
| 24,030 | |
| 15,022 | | | 28,951 | |
| 45,578 | |
| 42,531 |
| | | | | | | | | | | | | | | | | | |
Net income attributable to non-controlling interests | | | (177) | |
| (6) | |
| (533) | | | (304) | | | (76) | |
| (177) |
Adjustment for derivative instruments attributable to non-controlling interests | | | (8) | |
| 4 | |
| 9 | | | 1 | | | (2) | |
| (8) |
| | | | | | | | | | |||||||||
Comprehensive income attributable to One Liberty Properties, Inc. | | $ | 42,346 | | $ | 24,028 | | $ | 14,498 | | $ | 28,648 | | $ | 45,500 | | $ | 42,346 |
See accompanying notes.
F-5
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 20212023
(Amounts in Thousands, Except Per Share Data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Non-Controlling | | | | | | | | | | | | | | | Non- | | | | ||||
| | | | | | | | Accumulated | | Accumulated | | Interests in | | | | | | | | | | | | | | | | Controlling | | | | ||||
| | | | | | | | Other | | Distributions | | Consolidated | | | | | | | | | | Accumulated | | Accumulated | | Interests in | | | | ||||||
| | Common | | Paid-in | | Comprehensive | | in Excess of | | Joint | | | | | | | | | | Other | | Distributions | | Consolidated | | | | ||||||||
| | Stock | | Capital | | Income (Loss) | | Net Income | | Ventures | | Total | Common | | Paid-in | | Comprehensive | | in Excess of | | Joint | | | | |||||||||||
Balances, December 31, 2018 | | $ | 18,736 | | $ | 287,250 | | $ | 1,890 | | $ | (10,730) | | $ | 1,449 | | $ | 298,595 | |||||||||||||||||
Distributions—common stock | | | | | | | | | | | | | | | | | | | |||||||||||||||||
| Stock | | Capital | | Income (Loss) | | Net Income | | Ventures | | Total | ||||||||||||||||||||||||
Balances, December 31, 2020 | $ | 19,878 | | $ | 313,430 | | $ | (5,002) | | $ | (37,539) | | $ | 1,193 | | $ | 291,960 | ||||||||||||||||||
Distributions — common stock | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Cash — $1.80 per share | |
| — | | | — | | | — | | | (35,663) | | | — | | | (35,663) |
| — | | | — | | | — | | | (37,505) | | | — | | | (37,505) |
Shares issued through equity offering program—net | |
| 180 | | | 5,020 | | | — | | | — | | | — | | | 5,200 | |||||||||||||||||
Restricted stock vesting | |
| 115 | | | (115) | | | — | | | — | | | — | | | — | |||||||||||||||||
Shares issued through dividend reinvestment plan | |
| 220 | | | 5,492 | | | — | | | — | | | — | | | 5,712 |
| 35 | | | 942 | | | — | | | — | | | — | | | 977 |
Distributions to non-controlling interests | |
| — | | | — | | | — | | | — | | | (752) | | | (752) | |||||||||||||||||
Compensation expense—restricted stock and RSUs | | | — | | | 3,870 | | | — | | | — | | | — | | | 3,870 | |||||||||||||||||
Net income | |
| — | | | — | | | — | | | 18,011 | | | 533 | | | 18,544 | |||||||||||||||||
Other comprehensive loss | |
| — | | | — | | | (3,513) | | | — | | | (9) | | | (3,522) | |||||||||||||||||
Balances, December 31, 2019 | |
| 19,251 | | | 301,517 | | | (1,623) | | | (28,382) | | | 1,221 | | | 291,984 | |||||||||||||||||
Distributions—common stock | | | | | | | | | | | | | | | | | | | |||||||||||||||||
Cash — $1.46 per share | |
| — | | | — | | | — | | | (29,736) | | | — | | | (29,736) | |||||||||||||||||
Stock — $.34 per share | | | 404 | | | 6,424 | | | — | | | (6,828) | | | — | | | — | |||||||||||||||||
Shares issued through equity offering program, net |
| 106 | | | 3,208 | | | — | | | — | | | — | | | 3,314 | ||||||||||||||||||
Restricted stock and RSU vesting | |
| 146 | | | (146) | | | — | | | — | | | — | | | — |
| 220 | | | (220) | | | — | | | — | | | — | | | — |
Shares issued through dividend reinvestment plan | |
| 77 | | | 949 | | | — | | | — | | | — | | | 1,026 | |||||||||||||||||
Contribution from non-controlling interest | | | — | | | — | | | — | | | — | | | 10 | | | 10 | |||||||||||||||||
Distributions to non-controlling interests | |
| — | | | — | | | — | | | — | | | (40) | | | (40) | |||||||||||||||||
Compensation expense—restricted stock and RSUs | |
| — | | | 4,686 | | | — | | | — | | | — | | | 4,686 | |||||||||||||||||
Net income | |
| — | | | — | | | — | | | 27,407 | | | 6 | | | 27,413 | |||||||||||||||||
Other comprehensive loss | |
| — | | | — | | | (3,379) | | | — | | | (4) | | | (3,383) | |||||||||||||||||
Balances, December 31, 2020 | | | 19,878 | | | 313,430 | | | (5,002) | | | (37,539) | | | 1,193 | | | 291,960 | |||||||||||||||||
Distributions – common stock | | | | | | | | | | | | | | | | | | | |||||||||||||||||
Cash – $1.80 per share | | | — | | | — | | | — | | | (37,505) | | | — | | | (37,505) | |||||||||||||||||
Restricted stock and RSU vesting | |
| 220 | | | (220) | | | — | | | — | | | — | | | — | |||||||||||||||||
Shares issued through equity offering program—net | |
| 106 | | | 3,208 | | | — | | | — | | | — | | | 3,314 | |||||||||||||||||
Shares issued through dividend reinvestment plan | |
| 35 | | | 942 | | | — | | | — | | | — | | | 977 | |||||||||||||||||
Compensation expense — restricted stock and RSUs |
| — | | | 5,433 | | | — | | | — | | | — | | | 5,433 | ||||||||||||||||||
Contributions from non-controlling interest | | | — | | | — | | | — | | | — | | | 25 | | | 25 | | — | | | — | | | — | | | — | | | 25 | | | 25 |
Distributions to non-controlling interests | | | — | | | — | | | — | | | — | | | (457) | | | (457) |
| — | | | — | | | — | | | — | | | (457) | | | (457) |
Compensation expense—restricted stock and RSUs | |
| — | | | 5,433 | | | — | | | — | | | — | | | 5,433 | |||||||||||||||||
Net income | |
| — | | | — | | | — | | | 38,857 | | | 177 | | | 39,034 |
| — | | | — | | | — | | | 38,857 | | | 177 | | | 39,034 |
Other comprehensive income | |
| — | | | — | | | 3,489 | | | — | | | 8 | | | 3,497 |
| — | | | — | | | 3,489 | | | — | | | 8 | | | 3,497 |
Balances, December 31, 2021 | | $ | 20,239 | | $ | 322,793 | | $ | (1,513) | | $ | (36,187) | | $ | 946 | | $ | 306,278 | | 20,239 | | | 322,793 | | | (1,513) | | | (36,187) | | | 946 | | | 306,278 |
Distributions — common stock | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Cash — $1.80 per share |
| — | | | — | | | — | | | (38,092) | | | — | | | (38,092) | ||||||||||||||||||
Repurchases of common stock, net | | (208) | | | (5,032) | | | — | | | — | | | — | | | (5,240) | ||||||||||||||||||
Shares issued through dividend reinvestment plan |
| 102 | | | 2,293 | | | — | | | — | | | — | | | 2,395 | ||||||||||||||||||
Shares issued through equity offering program, net |
| 17 | | | 546 | | | — | | | — | | | — | | | 563 | ||||||||||||||||||
Restricted stock and RSU vesting |
| 212 | | | (212) | | | — | | | — | | | — | | | — | ||||||||||||||||||
Compensation expense — restricted stock and RSUs |
| — | | | 5,507 | | | — | | | — | | | — | | | 5,507 | ||||||||||||||||||
Distributions to non-controlling interests |
| — | | | — | | | — | | | — | | | (52) | | | (52) | ||||||||||||||||||
Net income |
| — | | | — | | | — | | | 42,177 | | | 76 | | | 42,253 | ||||||||||||||||||
Other comprehensive income |
| — | | | — | | | 3,323 | | | — | | | 2 | | | 3,325 | ||||||||||||||||||
Balances, December 31, 2022 | | 20,362 | | | 325,895 | | | 1,810 | | | (32,102) | | | 972 | | | 316,937 | ||||||||||||||||||
Distributions — common stock | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Cash — $1.80 per share | | — | | | — | | | — | | | (38,355) | | | — | | | (38,355) | ||||||||||||||||||
Repurchases of common stock, net | | (499) | | | (9,139) | | | — | | | — | | | — | | | (9,638) | ||||||||||||||||||
Shares issued through dividend reinvestment plan |
| 233 | | | 4,483 | | | — | | | — | | | — | | | 4,716 | ||||||||||||||||||
Restricted stock and RSU vesting |
| 227 | | | (227) | | | — | | | — | | | — | | | — | ||||||||||||||||||
Compensation expense — restricted stock and RSUs |
| — | | | 5,367 | | | — | | | — | | | — | | | 5,367 | ||||||||||||||||||
Distributions to non-controlling interests | | — | | | — | | | — | | | — | | | (233) | | | (233) | ||||||||||||||||||
Net income |
| — | | | — | | | — | | | 29,614 | | | 304 | | | 29,918 | ||||||||||||||||||
Other comprehensive loss |
| — | | | — | | | (966) | | | — | | | (1) | | | (967) | ||||||||||||||||||
Balances, December 31, 2023 | $ | 20,323 | | $ | 326,379 | | $ | 844 | | $ | (40,843) | | $ | 1,042 | | $ | 307,745 |
See accompanying notes.
F-6
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
| | | | | | | | | |
| | Year Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Cash flows from operating activities: | | | | | | | | | |
Net income | | $ | 39,034 | | $ | 27,413 | | $ | 18,544 |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | |
Gain on sale of real estate, net | | | (25,463) | | | (17,280) | | | (4,327) |
Impairment due to casualty loss | | | — | | | 430 | | | — |
Increase in unbilled rent receivable | |
| (234) | |
| (1,722) | |
| (1,547) |
Write-off of unbilled rent receivable | | | — | | | 1,094 | | | 585 |
Amortization and write-off of intangibles relating to leases, net | |
| (785) | |
| (780) | |
| (914) |
Amortization of restricted stock and RSU compensation expense | |
| 5,433 | |
| 4,686 | |
| 3,870 |
Equity in earnings of unconsolidated joint ventures | |
| (202) | |
| (38) | |
| (16) |
Equity in earnings from sale of unconsolidated joint venture properties | | | (805) | | | (121) | | | — |
Distributions of earnings from unconsolidated joint ventures | |
| 1,440 | |
| 208 | |
| 97 |
Depreciation and amortization | |
| 22,832 | |
| 22,964 | |
| 22,026 |
Amortization and write-off of deferred financing costs | |
| 970 | |
| 976 | |
| 995 |
Payment of leasing commissions | | | (1,430) | | | (235) | | | (523) |
Decrease (increase) in escrow, deposits, other assets and receivables | |
| 6,759 | |
| (3,146) | |
| 129 |
Increase (decrease) in accrued expenses and other liabilities | | | 1,012 | | | 677 | | | (2,687) |
Net cash provided by operating activities | |
| 48,561 | |
| 35,126 | |
| 36,232 |
| | | | | | | | | |
Cash flows from investing activities: | | | | | | | | | |
Purchase of real estate | |
| (24,534) | |
| (28,504) | |
| (49,887) |
Improvements to real estate | |
| (4,106) | |
| (1,037) | |
| (3,514) |
Investments in ground leased property | | | (1,746) | | | — | | | — |
Net proceeds from sale of real estate | |
| 52,685 | |
| 29,413 | |
| 40,761 |
Insurance recovery proceeds due to casualty loss | | | 975 | | | 150 | | | — |
Contributions of capital to unconsolidated joint venture | | | — | | | — | | | (296) |
Distributions of capital from unconsolidated joint ventures | | | 97 | | | 311 | | | 11 |
Net cash provided by (used in) investing activities | |
| 23,371 | |
| 333 | |
| (12,925) |
| | | | | | | | | |
Cash flows from financing activities: | | | | | | | | | |
Scheduled amortization payments of mortgages payable | |
| (13,957) | |
| (13,114) | |
| (13,158) |
Repayment of mortgages payable | |
| (30,532) | |
| (11,815) | |
| (19,970) |
Proceeds from mortgage financings | |
| 10,600 | |
| 18,200 | |
| 50,310 |
Proceeds from sale of common stock, net | |
| 3,314 | |
| — | |
| 5,200 |
Proceeds from bank line of credit | |
| 21,200 | |
| 41,500 | |
| 54,550 |
Repayment on bank line of credit | |
| (22,450) | |
| (40,000) | |
| (73,100) |
Issuance of shares through dividend reinvestment plan | |
| 977 | |
| 1,026 | |
| 5,712 |
Payment of financing costs | |
| (232) | |
| (189) | |
| (1,443) |
Capital contributions from non-controlling interest | |
| 25 | |
| 10 | |
| — |
Distributions to non-controlling interests | |
| (457) | |
| (40) | |
| (752) |
Cash distributions to common stockholders | |
| (37,318) | |
| (29,441) | |
| (35,421) |
Net cash used in financing activities | |
| (68,830) | |
| (33,863) | |
| (28,072) |
| | | | | | | | | |
Net increase (decrease) in cash, cash equivalents and restricted cash | |
| 3,102 | |
| 1,596 | |
| (4,765) |
Cash, cash equivalents and restricted cash at beginning of year | |
| 13,564 | |
| 11,968 | |
| 16,733 |
Cash, cash equivalents and restricted cash at end of year | | $ | 16,666 | | $ | 13,564 | | $ | 11,968 |
| | | | | | | | | |
| | | | | | | | | |
| | Year Ended December 31, | |||||||
|
| 2023 |
| 2022 |
| 2021 | |||
Cash flows from operating activities: | | | | | | | | | |
Net income | | $ | 29,918 | | $ | 42,253 | | $ | 39,034 |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | |
Gain on sale of real estate, net | | | (17,008) | | | (16,762) | | | (25,463) |
Increase in net amortization of unbilled rental income | |
| (1,898) | | | (2,409) | |
| (234) |
Write-off of unbilled rent receivable | | | 133 | | | — | | | — |
Amortization and write-off of intangibles relating to leases, net | |
| (952) | | | (831) | |
| (785) |
Amortization of restricted stock and RSU compensation expense | |
| 5,367 | | | 5,507 | |
| 5,433 |
Equity in loss (earnings) of unconsolidated joint ventures | |
| 904 | | | (400) | |
| (202) |
Equity in loss (earnings) from sale of unconsolidated joint venture properties | | | 108 | | | — | | | (805) |
Distributions of earnings from unconsolidated joint venture | |
| 194 | | | 172 | |
| 1,440 |
Depreciation and amortization | |
| 24,789 | | | 23,781 | |
| 22,832 |
Amortization and write-off of deferred financing costs | |
| 839 | | | 1,115 | |
| 970 |
Payment of leasing commissions | | | (755) | | | (2,561) | | | (1,430) |
Decrease (increase) in escrow, deposits, other assets and receivables | |
| 3,818 | | | (6,856) | |
| 6,759 |
Increase in accrued expenses and other liabilities | | | 596 | | | 1,188 | | | 1,012 |
Net cash provided by operating activities | |
| 46,053 | |
| 44,197 | |
| 48,561 |
| | | | | | | | | |
Cash flows from investing activities: | | | | | | | | | |
Purchase of real estate | |
| (9,229) | | | (51,217) | |
| (24,534) |
Improvements to real estate | |
| (4,866) | | | (4,574) | |
| (4,106) |
Investments in ground leased property | | | (932) | | | (697) | | | (1,746) |
Net proceeds from sale of real estate | |
| 40,839 | | | 30,253 | |
| 52,685 |
Insurance recovery proceeds due to casualty loss | | | — | | | 918 | | | 975 |
Distributions of capital from unconsolidated joint ventures | | | 7,143 | | | — | | | 97 |
Net cash provided by (used in) investing activities | |
| 32,955 | |
| (25,317) | |
| 23,371 |
| | | | | | | | | |
Cash flows from financing activities: | | | | | | | | | |
Scheduled amortization payments of mortgages payable | |
| (12,405) | | | (12,624) | |
| (13,957) |
Repayment of mortgages payable | |
| (14,935) | | | (54,585) | |
| (30,532) |
Proceeds from mortgage financings | |
| 36,450 | | | 70,690 | |
| 10,600 |
Proceeds from bank line of credit | |
| 40,900 | | | 53,300 | |
| 21,200 |
Repayments on bank line of credit | |
| (62,700) | | | (43,200) | |
| (22,450) |
Issuance of shares through dividend reinvestment plan | |
| 4,716 | | | 2,395 | |
| 977 |
Repurchases of common stock, net | | | (9,638) | | | (5,240) | | | — |
Proceeds from sale of common stock, net | |
| — | | | 563 | |
| 3,314 |
Payment of financing costs | |
| (716) | | | (1,669) | |
| (232) |
Capital contributions from non-controlling interest | |
| — | | | — | |
| 25 |
Distributions to non-controlling interests | |
| (233) | | | (52) | |
| (457) |
Cash distributions to common stockholders | |
| (38,132) | | | (37,847) | |
| (37,318) |
Net cash used in financing activities | |
| (56,693) | |
| (28,269) | |
| (68,830) |
| | | | | | | | | |
Net increase (decrease) in cash, cash equivalents and restricted cash | |
| 22,315 | |
| (9,389) | |
| 3,102 |
Cash, cash equivalents and restricted cash at beginning of year | |
| 7,277 | |
| 16,666 | |
| 13,564 |
Cash, cash equivalents and restricted cash at end of year | | $ | 29,592 | | $ | 7,277 | | $ | 16,666 |
(continued on next page)
F-7
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in Thousands)
The following table provides supplemental disclosure of cash flow information:
| | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, | | Year Ended December 31, | ||||||||||||||
|
| 2021 |
| 2020 |
| 2019 |
| 2023 |
| 2022 |
| 2021 | ||||||
Cash paid for interest expense and prepayment costs on debt | | $ | 18,972 | | $ | 20,213 | | $ | 19,976 | | $ | 18,798 | | $ | 17,475 | | $ | 18,972 |
| | | | | | | | | | | | | | | | | | |
Supplemental disclosure of non-cash investing activity: | | | | | | | | | | |||||||||
Supplemental disclosure of non-cash investing activities: | | | | | | | | | | |||||||||
Assumption of mortgages payable upon acquisition of properties | | $ | 4,280 | | $ | 6,034 | | $ | — | |||||||||
Lease liabilities adjustment from the reassessment of right of use assets | | | 3,366 | | | — | | | — | |||||||||
Loan receivable in connection with sale of a property | | | 1,816 | | | — | | | — | |||||||||
Purchase accounting allocation - intangible lease assets | | $ | 2,288 | | $ | 3,905 | | $ | 4,245 | | | 871 | | | 4,322 | | | 2,288 |
Purchase accounting allocation - mortgage intangible assets | | | 260 | | | 670 | | | — | |||||||||
Purchase accounting allocation - intangible lease liabilities | |
| (632) | |
| (568) | |
| (915) | |
| (237) | |
| (2,006) | |
| (632) |
Loan receivable in connection with sale of property | | | — | | | 4,613 | | | — | |||||||||
Lease liabilities arising from the recognition of right of use assets | | | — | | | 2,858 | | | 5,027 | |||||||||
| | | | | | | | | | |||||||||
Supplemental disclosure of non-cash financing activity: | | | | | | | | | | |||||||||
Common stock dividend - portion paid in shares of common stock | | $ | — | | $ | 6,828 | | $ | — |
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:
| | | | | | | | | | | | |
| | December 31, | | December 31, | ||||||||
|
| 2021 |
| 2020 |
| 2023 |
| 2022 | ||||
Cash and cash equivalents | | $ | 16,164 | | $ | 12,705 | | $ | 26,430 | | $ | 6,718 |
Restricted cash included in escrow, deposits and other assets and receivables | | | 502 | |
| 859 | | | 3,162 | |
| 559 |
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows | | $ | 16,666 | | $ | 13,564 | ||||||
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | | $ | 29,592 | | $ | 7,277 |
Restricted cash included in escrow, deposits and other assets and receivables represent amounts related to real estate tax and other reserve escrows required to be held by lenders in accordance with the Company’s mortgage agreements. The restriction on these escrow reserves will lapse when the related mortgage is repaid.repaid or when the related reserve conditions are satisfied.
See accompanying notes.
F-8
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 20212023
NOTE 1—1 — ORGANIZATION AND BACKGROUND
One Liberty Properties, Inc. (“OLP”) was incorporated in 1982 in Maryland. OLP is a self-administered and self-managed real estate investment trust (“REIT”). OLP acquires, owns and manages a geographically diversified portfolio consisting primarily of industrial retail, restaurant, health and, fitness, and theaterto a lesser extent, retail properties, many of which are subject to long-term net leases. As of December 31, 2021,2023, OLP owns 121110 properties, including 3three properties owned by consolidated joint ventures and 3two properties owned by unconsolidated joint ventures. The 121110 properties are located in 31 states.
NOTE 2—2 — SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts and operations of OLP, its wholly-ownedwholly owned subsidiaries, its joint ventures in which the Company, as defined, has a controlling interest, and variable interest entities (“VIEs”) of which the Company is the primary beneficiary. OLP and its consolidated subsidiaries are referred to herein as the “Company”. Material intercompany items and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Management believes that the estimates and assumptions that are most important to the portrayal of the Company’s consolidated financial condition and results of operations, in that they require management’s most difficult, subjective or complex judgments, form the basis of the accounting policies deemed to be most significant to the Company. These significant accounting policies relate to revenues and the value of the Company’s real estate portfolio, including investments in unconsolidated joint ventures. Management believes its estimates and assumptions related to these significant accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on the Company’s future consolidated financial condition or results of operations.
Segment Reporting
Substantially all of the Company’s real estate assets, at acquisition, are comprised of real estate owned that is leased to tenants on a long-term basis. Therefore, the Company aggregates real estate assets for reporting purposes and operates in 1one reportable segment.
Revenue Recognition
Rental income includes the base rent that each tenant is required to pay in accordance with the terms of their respective leasesits lease reported on a straight-line basis over the non-cancelable term of the lease on a straight-line basis, if collectability is probable. On a quarterly basis, management reviews the tenant’s payment history and financial condition in determining, in its judgment, whether any accrued rental income and unbilled rent receivable balances applicable to eacha specific propertytenant is collectable. Any changeschange to the collectability of lease payments or unbilled rent receivables areis recognized as a current period adjustment to rental revenue (see Note 3).
F-9
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Some leases provide for increases based on the Consumer Price Index or for additional contingent rental revenue in the form of percentage rents. The percentage rents are based upon the level of sales achieved by the lessee and are recognized once the required sales levels are reached. Some leases provide for an incentive for the lessee to sign a lease, such as a leasehold improvement allowance in which the Company reimburses the tenant for the construction of lessee assets. Such lease incentives are capitalized at lease commencement and recognized on a straight-line basis over the lease term as a reduction to rental income. A ground lease provides for rent which can be deferred and paid based on the operating performance of the property; therefore, this rent is recognized as
F-9
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES (Continued)
rental income when the operating performance is achieved and the rent is received.
In 2020, due to the impact of the COVID-19 pandemic, rent concession agreements were executed with certain of the Company’s tenants. In accordance with the FASB Staff Q&A, Topic 842 and 840 – Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic, the Company elected to (i) not evaluate whether such COVID-19 pandemic related rent-relief is a lease modification under ASC 842 and (ii) treat each tenant rent deferral or forgiveness as if it were contemplated as part of the existing lease contract. The Company applied this accounting policy to those lease agreements, based on the type of concession provided to the tenant, where the revised cash flows was substantially the same or less than the original lease agreement (see Note 3).
Many of the Company’s properties are subject to long-term net leases under which the tenant is typically responsible to pay directly to the vendor the real estate taxes, insurance, utilities and ordinary maintenance and repairs related to the property, and the Company is not the primary obligor with respect to such items. As a result, the revenue and expenses relating to these properties are recorded on a net basis. For certain properties, in addition to contractual base rent, the tenants pay their pro ratacontracted for share of real estate taxes and operating expenses to the Company. The incomerevenue and expenses associated with properties at which the Company is the primary obligor are generally recorded on a gross basis. During 2021, 20202023, 2022 and 2019,2021, the Company recorded reimbursements of expenses of $10,938,000, $10,512,000$13,636,000, $12,548,000 and $10,443,000,$10,938,000, respectively, which are included in Rental income, net in the accompanying consolidated statements of income.
Gains and losses on the sale of real estate investments are recorded when the Company no longer holds a controlling financial interest in the entity which holds the real estate investment and the relevant revenue recognition criteria under GAAP have been met.
Purchase Accounting for Acquisition of Real Estate
In acquiring real estate, the Company evaluates whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, and if that requirement is met, the asset group is accounted for as an asset acquisition and not a business combination. Transaction costs incurred with such asset acquisitions are capitalized to real estate assets and depreciated over the respectful useful lives.
The Company allocates the purchase price of real estate, including direct transaction costs applicable to an asset acquisition, among land, building, improvements and intangibles such as(e.g., the value of above, below and at-market leases, and origination costs associated with in-place leases and above or below-market mortgages assumed at the acquisition date. The Company assesses the fair value of the tangible assets of an acquired property by valuing the property as if it were vacant.date). The value, as determined, is allocated to land, building and improvementsthe gross assets acquired based on management’s determination of the relative fair values of these assets.assets and liabilities.
The Company assesses the fair value of the lease intangiblesgross assets acquired based on available market information which utilize estimated cash flow projections that utilize available market information;projections; such inputs are categorized as Level 3 inputs in the fair value hierarchy. In valuing an acquired property’s intangibles,determining fair value, factors considered by management include an evaluation of current market demand, market capitalization rates and discount rates, estimates of carrying costs (e.g., real estate taxes, insurance and other operating expenses), and lost rental revenue during the expected lease-up periods based on its evaluation of current market demand and discount rates.periods. Management also estimates costs to execute similar leases, including leasing commissions and tenant improvements.
The values of acquired above-market and below-market leases are recorded based on the present values (using discount rates which reflect the risks associated with the leases acquired) of the difference between the contractual amounts to be received and management’s estimate of market lease rates, measured over the terms of the respective leases that management deemed appropriate at the time of the acquisitions. Such valuations include a consideration of the non-cancellable terms of the respective leases, as well as any applicable renewal
F-10
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
period(s). The fair values associated with below-market rental renewal options are determined based on the Company’s experience and other relevant factors at the time of the acquisitions. The values of above-market
F-10
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES (Continued)
leases are amortized as a reduction to rental income over the terms of the respective non-cancellable lease periods. The portion of the values of below-market leases are amortized as an increase to rental income over the terms of the respective non-cancellable lease periods. The portion of the values of the leases associated with below-market renewal options that management deemed are reasonably certain to be exercised by the tenant are amortized to rental income over such renewal periods. The value of other intangible assets (i.e., origination costs) is recorded to amortization expense over the remaining terms of the respective leases. If a lease is terminated prior to its contractual expiration date or not renewed, all unamortized amounts relating to that lease would be recognized in operations at that time. The estimated useful lives of intangible assets or liabilities generally range from one to 3432 years.
The values of assumed mortgages are recorded based on the present values (using discount rates which reflect the risks associated with the mortgage assumed) of the difference between the contractual amounts to be paid at the stated interest rates and management’s estimate of market interest rates for similar debt, at the time of the acquisition, measured over the terms of the respective debt. The values of above or below-market mortgages are amortized as a decrease or increase, respectively, to interest expense over the term of the respective debt which range from six to seven years.
Accounting for Long-Lived Assets and Impairment of Real Estate Owned
The Company reviews its real estate portfolio on a quarterly basis for indicators of impairment to the value of any of its real estate assets, including deferred costs and intangibles, to determine if there is any need for an impairment charge. In reviewing the portfolio, the Company examines one or more of the following: the type of asset, the current financial statements or other available financial information of the tenant, prolonged or significant vacancies, the economic situation inenvironment of the area in which the asset is located the economic situation ofand the industry in which the tenant is involved, the timeliness of the payments made by the tenant under its lease, property inspection reports and communication with, by, or relating to, the tenant. For each real estate asset owned for which indicators of impairment exist, management performs a recoverability test by comparing (i) the sum of the estimated undiscounted future cash flows attributable to the asset, which are determined using assumptions and estimates, including projected rental rates over an appropriate holding period and property capitalization rates, to (ii) the carrying amount of the asset. If the aggregate undiscounted cash flows are less than the asset’s carrying amount, an impairment loss is recorded to the extent that the estimated fair value is less than the asset’s carrying amount. The estimated fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the property. The analysis includes an estimate of the future cash flows that are expected to result from the real estate investment’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, the effects of leasing demand, competition and other factors. During the three years ended December 31, 2023, there were no impairment charges related to the Company’s real estate portfolio.
Properties Held-for-Sale
Real estate investments are classified as properties held-for-sale when management determines that the investment meets the applicable criteria. Real estate assets that are classified as held-for-sale are: (i) valued at the lower of carrying amount or the estimated fair value less costs to sell on an individual asset basis; and (ii) not depreciated.
Depreciation and Amortization
Depreciation of buildings is computed on the straight-line method over an estimated useful life of 40 years. Depreciation of building improvements is computed on the straight-line method over the estimated useful life of the improvements. If the Company determines it is the owner of tenant improvements, the amounts funded to construct the tenant improvements are treated as a capital asset and depreciated over the lesser of the remaining lease term or the estimated useful life of the improvements on the straight-line method. Leasehold interest and the related ground lease payments are amortized over the initial lease term of the leasehold position. Depreciation expense (including amortization of a leasehold position, lease origination costs, and capitalized leasing commissions) was $22,832,000, $22,964,000 and $22,026,000, for 2021, 2020 and 2019, respectively.
Cash and Cash Equivalents
All highly liquid investments with original maturities of three months or less when purchased are considered to be cash equivalents.
F-11
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 20212023
NOTE 2—2 — SIGNIFICANT ACCOUNTING POLICIES (Continued)(CONTINUED)
Investment in Joint Ventures and Variable Interest Entities
The Financial Accounting Standards Board, or FASB, provides guidance for determining whether an entity is a VIE. VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance and (ii) has the obligation to absorb losses, or the right to receive benefits, of the VIE that could potentially be significant to the VIE.
The Company assesses the accounting treatment for each of its investments, including a review of each venture or limited liability company or partnership agreement, to determine the rights of each party and whether those rights are protective or participating. The agreements typically contain certain protective rights, such as the requirement of partner approval to sell, finance or refinance the property and to pay capital expenditures and operating expenditures outside of the approved budget or operating plan. In situations where, among other things, the Company and its partners jointly (i) approve the annual budget, (ii) approve certain expenditures, (iii) prepare or review and approve the joint venture’s tax return before filing, or (iv) approve each lease at a property, the Company does not consolidate as the Company considers these to be substantive participation rights that result in shared, joint power over the activities that most significantly impact the performance of the joint venture or property. Additionally, the Company assesses the accounting treatment for any interests pursuant to which the Company may have a variable interest as a lessor. Leases may contain certain protective rights, such as the right of sale and the receipt of certain escrow deposits.
The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting. All investments in unconsolidated joint ventures have sufficient equity at risk to permit the entity to finance its activities without additional subordinated financial support and, as a group, the holders of the equity at risk have power through voting rights to direct the activities of these ventures. As a result, NaNnone of these joint ventures are VIEs. In addition, the Company shares power with its co-managing members over these entities, and therefore the entities are not consolidated. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for their share of equity in earnings, cash contributions and distributions. NaNNone of the joint venture debt is recourse to the Company, subject to standard carve-outs.
The Company reviews on a quarterly basis its investments in unconsolidated joint ventures for other-than-temporary losses in investment value. Any decline that is not expected to be recovered based on the underlying assets of the investment is considered other than temporary and an impairment charge is recorded as a reduction in the carrying value of the investment.
During the three years ended December 31, 2021,2023, there were 0no impairment charges related to the Company’s investments in unconsolidated joint ventures.
The Company has elected to follow the cumulative earnings approach when assessing, for the consolidated statement of cash flows, whether the distribution from the investee is a return of the investor’s investment as compared to a return on its investment. The source of the cash generated by the investee to fund the distribution is not a factor in the analysis (that is, it does not matter whether the cash was generated through investee refinancing, sale of assets or operating results). Consequently, the investor only considers the relationship
between the cash received from the investee to its equity in the undistributed earnings of the investee, on a cumulative basis, in assessing whether the distribution from the investee is a return on or a return of its investment. Cash received from the unconsolidated entity is presumed to be a return on the investment to the extent that, on a cumulative basis, distributions received by the investor are less than its share of the equity in the undistributed earnings of the entity.
F-12
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 20212023
NOTE 2—2 — SIGNIFICANT ACCOUNTING POLICIES (Continued)(CONTINUED)
Fair Value Measurements
The Company measures the fair value of financial instruments based on the assumptions that market participants would use in pricing the asset or liability. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). As a basis for considering market participant assumptions in fair value measurements, a fair value hierarchy distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. In accordance with the fair value hierarchy, Level 1 assets/liabilities are valued based on quoted prices for identical instruments in active markets, Level 2 assets/liabilities are valued based on quoted prices in active markets for similar instruments, on quoted prices in less active or inactive markets, or on other “observable” market inputs and Level 3 assets/liabilities are valued based on significant “unobservable” market inputs.
Deferred Financing Costs
MortgageDerivatives and Hedging Activities
The Company uses interest rate swaps to add stability to interest expense; not for trading or speculative purposes.
The Company records all derivatives on the consolidated balance sheets at fair value using widely accepted valuation techniques including a discounted cash flow analysis on the expected cash flows of the derivatives. In addition, the Company incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. These counterparties are generally large financial institutions engaged in providing a variety of financial services. These institutions generally face similar risks regarding adverse changes in market and economic conditions including, but not limited to, fluctuations in interest rates, exchange rates, equity and commodity prices and credit line costsspreads.
The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are deferredconsidered cash flow hedges. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in accumulated other comprehensive income (outside of earnings) and subsequently reclassified to earnings in the period in which the hedged transaction becomes ineffective. For derivatives not designated as cash flow hedges, changes in the fair value of the derivative are recognized directly in earnings in the period in which the change occurs; however, the Company’s policy is to not enter into such transactions.
Stock Based Compensation
The fair value of restricted stock grants and restricted stock units (“RSUs”), determined as of the date of grant, is amortized on a straight-line basisinto general and administrative expense over the termsrespective vesting period. The deferred compensation to be recognized as expense is net of forfeitures. The Company recognizes the effect of forfeitures when they occur and previously recognized compensation expense is reversed in the period the grant or unit is forfeited. For share-based awards with a performance or market measure, the Company recognizes compensation expense over the requisite service period and the performance assumptions are re-evaluated quarterly. The requisite service period begins on the date the Compensation Committee of the respective debt obligations, which approximatesCompany’s Board of Directors authorizes the effective interest method. At Decemberaward, adopts any relevant performance measures and communicates the award to the recipient.
F-13
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 and 2020, accumulated amortization of such costs was $4,684,000 and $4,599,000, respectively. The Company presents unamortized deferred financing costs as a direct deduction from the carrying amount of the associated debt liability.2023
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Escrows
Real estate taxes and other escrows aggregating $502,000 and $859,000 at December 31, 2021 and 2020, respectively, are included in Escrow, deposits and other assets and receivables.
Income Taxes
The Company is qualified as a REIT under the applicable provisions of the Internal Revenue Code. Under these provisions, the Company will not be subject to Federal, and generally, state and local income taxes, on amounts distributed to stockholders, provided it distributes at least 90% of its ordinary taxable income and meets certain other conditions.
The Company follows a two-step approach for evaluating uncertain tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that more-likely-than-not will be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when a company subsequently determines that a tax position no longer meets the more-likely-than-notmore-likely-than-not threshold of being sustained. The use of a valuation allowance as a substitute for derecognition of tax positions is prohibited. The Company has not identified any uncertain tax positions requiring accrual.
Cash and Cash Equivalents
All highly liquid investments with original maturities of three months or less when purchased are considered to be cash equivalents.
Concentration of Credit Risk
The Company maintains cash accounts at various financial institutions. While the Company attempts to limit any financial exposure, substantially all of its deposit balances exceed federally insured limits. The Company has not experienced any losses on such accounts.
The Company’s properties are located in 31 states. Only one state, South Carolina, contributed more than 10% (i.e., 10.3%) to the Company’s total revenues in 2023. No real estate investments in any one state contributed more than 10% to the Company’s total revenues in any of the past three years.2022 and 2021.
NaN
No tenant contributed over 10% to the Company’s total revenues during 2021, 2020 and 2019.
F-13
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock Based Compensation
The fair value of restricted stock grants and restricted stock units (“RSUs”), determined asin any of the datepast three years.
Escrows
Real estate taxes and other escrows aggregating $3,162,000 and $559,000 at December 31, 2023 and 2022, respectively, are included in Escrow, deposits and other assets and receivables.
New Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting – Improvements to Reportable Segments Disclosures, which enhances disclosures of grant, is amortized into generalsignificant segment expenses regularly provided to the chief operating decision maker, extends certain annual disclosures to interim periods, and administrative expense over the respective vesting period. The deferred compensationpermits more than one measure of segment profit or loss to be recognized as expensereported under certain conditions. The amendments are effective for fiscal years beginning after December 15, 2023 and early adoption of the amendment is net of forfeitures and the performance assumptions are re-evaluated quarterly.permitted. The Company recognizeshas evaluated the effect of forfeitures when they occurguidance and previously recognized compensation expense is reversed in the period the grant or unit is forfeited. For share-based awards with a performance or market measure, the Company recognizes compensation expense over the requisite service period. The requisite service period begins on the date the Compensation Committee of the Company’s Board of Directors authorizes the award, adopts any relevant performance measures and communicates the awarddetermined it will have no material impact to the recipient.
Derivatives and Hedging Activities
The Company uses interest rate swaps to add stability to interest expense; not for trading or speculative purposes.financial statements.
The Company records all derivatives on the consolidated balance sheets at fair value using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. In addition, the Company incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. These counterparties are generally large financial institutions engaged in providing a variety of financial services. These institutions generally face similar risks regarding adverse changes in market and economic conditions including, but not limited to, fluctuations in interest rates, exchange rates, equity and commodity prices and credit spreads.
The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in accumulated other comprehensive income (outside of earnings) and subsequently reclassified to earnings in the period in which the hedged transaction becomes ineffective. For derivatives not designated as cash flow hedges, changes in the fair value of the derivative are recognized directly in earnings in the period in which the change occurs; however, the Company’s policy is to not enter into such transactions.
New Accounting Pronouncements
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which was amended in December 2022 by ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which. This Topic contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. In 2020,As of December 31, 2023, the Company electedhas converted all its LIBOR indexed debt and derivatives to applySOFR based indexes. For all derivative financial instruments designated as effective hedges, the Company utilized the elective relief in Topic 848 which allows for the continuation of hedge accounting expedients related to probability andthrough the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company may apply other elections, as applicable, as additional changes in the market occur. The Company continues to evaluate the new guidance to determine the extent to which it may impact the Company’s consolidated financial statements.transition process.
F-14
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 20212023
NOTE 3—3 — LEASES
Lessor Accounting
The Company owns rental properties which are leased to tenants under operating leases with current expirations ranging from 20222024 to 2055, with options to extend or terminate the lease. Revenues from such leases are reported as Rental income, net, and are comprised of (i) lease components, which includes fixed and variable lease payments and (ii) non-lease components which includes reimbursements of property level operating expenses. The Company does not separate non-lease components from the related lease components, as the timing and pattern of transfer are the same, and account for the combined component in accordance with ASC 842.
Fixed lease revenues represent the base rent that each tenant is required to pay in accordance with the terms of theirits respective leaseslease, and any lease incentives paid or payable to the lessee, reported on a straight-line basis over the non-cancelable term of the lease. Variable lease revenues typically include payments based on (i) tenant reimbursements, (ii) changes in the index or market-based indices after the inception of the lease, (iii) percentage rents orand (iv) the operating performance of the property. Variable lease revenues are not recognized until the specific events that trigger the variable payments have occurred.
The components of lease revenues are as follows (amounts in thousands):
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | Year Ended December 31, | |||||||||||||||
|
|
| 2021 |
| 2020 |
| 2019 |
|
| 2023 |
| 2022 |
| 2021 | ||||||
Fixed lease revenues | | | $ | 70,387 | | $ | 69,823 |
| $ | 70,788 | | | $ | 75,935 | | $ | 74,101 | | $ | 70,387 |
Variable lease revenues | | |
| 11,008 | |
| 11,285 | |
| 12,084 | | |
| 13,759 | | | 17,259 | (a) |
| 11,008 |
Lease revenues (a) | |
| $ | 81,395 | | $ | 81,108 | | $ | 82,872 | ||||||||||
Lease revenues (b) | |
| $ | 89,694 | | $ | 91,360 | | $ | 81,395 |
(a) | Includes, for 2022, $4,626 of additional rent accrued from a ground lease tenant – see Note 6. |
(b) | Excludes |
In many of the Company’s leases, the tenant is obligated to pay the real estate taxes, insurance, and certain other expenses directly to the vendor. These obligations, which have been assumed by the tenants, are not reflected in ourthe Company’s consolidated financial statements. To the extent any such tenant defaults on its lease or if it is deemed probable that the tenant will fail to pay for such obligations, a liability for such obligations would be recorded.
On a quarterly basis, the Company assesses the collectability of substantially all lease payments due by reviewing the tenant’s payment history or financial condition. Changes to collectability are recognized as a current period adjustment to rental revenue. TheAs of December 31, 2023, the Company has assessed the collectability of all recorded lease revenues as probable as of December 31, 2021.
During 2020, in response to requests for rent relief from tenants impacted by the COVID-19 pandemic and the governmental and non-governmental responses thereto, the Company (i) deferred and accrued $3,360,000 of rent payments and (ii) forgave $695,000 of rent payments, excluding amounts related to Regal Cinemas as described below. During 2020, 2021 and through February 2022, the Company collected $497,000, $2,679,000 and $28,000, respectively, of such deferred rents. The $145,000 balance of deferred rents is deemed collectible and $132,000 and $12,000 is expected to be collected during 2022 and 2023, respectively.
During 2020, the Company forgave $676,000 of rent payments from Regal Cinemas, a tenant at 2 properties, which was adversely affected by the pandemic. In February 2021, the Company executed lease amendments with this tenant pursuant to which (i) the Company agreed to defer an aggregate of $1,449,000 of rent which was originally payable from September 2020 through August 2021 (such amounts were not accrued as collections were deemed less than probable), (ii) the tenant agreed to pay an aggregate of $441,000 of rent from September 2020 through August 2021 and (iii) the parties extended the lease for 1 of these properties for two years. Through February 28, 2022, the tenant is current on all lease payments, including COVID-19 deferral repayments, in accordance with these lease amendments.probable.
F-15
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 20212023
NOTE 3—3 — LEASES (Continued)(CONTINUED)
Minimum Future Rents
As of December 31, 2021,2023, the minimum future contractual rents to be received on non-cancellable operating leases are included in the table below (amounts in thousands). The minimum future contractual rents do not include (i) straight-line rent or amortization of lease intangibles (ii) COVID-19 lease deferral repayments accrued to rental income in 2020, (iii) $1,449,000 of COVID-19 lease deferral repayments due from Regal Cinemas which were not accrued to rental incomeor incentives and (iv)(ii) variable lease payments as described above.
| | | |
For the year ended December 31, |
| | |
2022 | | $ | 68,365 |
2023 | |
| 64,478 |
2024 | | �� | 55,868 |
2025 | |
| 51,484 |
2026 | |
| 47,306 |
Thereafter | |
| 153,783 |
Total | | $ | 441,284 |
| | | |
For the year ending December 31, | | | |
2024 | | $ | 70,906 |
2025 | | | 65,473 |
2026 | | | 61,286 |
2027 | | | 51,983 |
2028 | | | 41,028 |
Thereafter | | | 127,437 |
Total | | $ | 418,113 |
Lease Termination FeesIncentives
At December 31, 2023 and 2022, the Company’s unamortized lease incentives aggregating $1,095,000 and $1,300,000, respectively, are recorded in other assets and receivables on the consolidated balance sheets. During 2021,2023 and 2022, the Company received an aggregateamortized $121,000 and $44,000, respectively, of $487,000such incentives as lease termination fees from 2 retail tenants.
a reduction to rental income. During 2020,2023, the Company received $88,000wrote-off $84,000 of a tenant’s unamortized lease incentive balance as athe related property was sold during such year, which reduced the gain on sale reported on the consolidated statement of income. The lease termination fee from an industrial tenant, of which $73,000 and 15,000 was recognized in 2021 and 2020, respectively.
During 2019, the Company received an aggregate of $950,000 as lease termination fees from 2 retail tenants and wrote-off $37,000 of unbilled rent receivableincentives will be amortized against rental income.income over the term of the leases during the next 10 years.
Unbilled Straight-Line Rent
At December 31, 20212023 and 2020,2022, the Company’s unbilled rent receivables aggregating $14,330,000$16,661,000 and $15,438,000,$16,079,000, respectively, represent rent reported on a straight-line basis in excess of rental payments required under the respective leases. The unbilled rent receivable is to be billed and received pursuant to the lease terms during the next 19 years.
15 years.
During 2021, 20202023, 2022 and 2019,2021, the Company wrote-off $1,438,000, $365,000$1,048,000, $519,000 and $182,000,$1,438,000, respectively, of unbilled straight-line rent receivable related to the properties sold during such years, which reduced the gain on sale reported on the consolidated statements of income.
At December 31, 20212023 and 2020,2022, the Company’s unbilled rent payablesunearned rental income aggregating $897,000$579,000 and $801,000,$756,000, respectively, represent rent reported on a straight-line basis less than rental payments required under the respective leases. Such amounts are recorded in other liabilities on the consolidated balance sheets. The unbilled rent payableunearned rental income is to be billed and received pursuant torecognized into revenue over the lease termsterm of the leases during the next eight years.
20 years.
During 2023, the Company wrote-off $43,000 of a tenant’s unearned rental income as the related property sold was sold during such year, which increased the gain on sale reported on the consolidated statement of income. No such amounts were written off during 2022 or 2021.
On a quarterly basis, the Company assesses the collectability of unbilled rent receivable balances by reviewing the tenant’s payment history and financial condition. The Company has assessed the collectability of all unbilled rent receivable balances as probable as of December 31, 2021.2023. During 2020,2023, the Company wrote-off, as a reduction toof rental income, $1,094,000net, $133,000 of unbilled rent receivables due from Regal Cinemas, a tenant at two locations which was adversely affected by the pandemic,Bed Bath & Beyond as the collection of such amounts was deemed less than probable. During 2019, due to uncertainty related to certain tenants with going concern ortenant filed for Chapter 11 bankruptcy issues, the Company wrote-off, as a reduction to rental income, $548,000 of unbilled rent receivables.protection and rejected its lease in April 2023.
F-16
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 20212023
NOTE 3—3 — LEASES (Continued)(CONTINUED)
Lessee Accounting
Ground Lease
The Company is a lessee under a ground lease in Greensboro, North Carolina, which is classified as an operating lease. The ground lease expires March 3, 2025 and provides for up to 4,four, 5five-year renewal options and 1one seven-month renewal option. At December 31, 20212023 and 2020,2022, the Company recorded a liability of $6,634,000$2,827,000 and $6,895,000,$6,366,000, respectively, for the obligation to make payments under the lease and an asset of $6,267,000$2,246,000 and $6,663,000,$5,864,000, respectively, for the right to use the underlying asset during the lease term which are included in other liabilities and other assets, respectively, on the consolidated balance sheet.sheets. Lease payments associated with renewal option periods that the Company determined were reasonably certain to be exercised are included in the measurement of the lease liability and right of use asset. During 2023, as a result of an amendment to the operating lease at this property, the Company determined it was no longer reasonably certain that the second ground lease extension option would be exercised. As such, the Company reassessed the right of use asset and adjusted the lease liability to reflect the shortened lease term. As of December 31, 2021,2023, the remaining lease term, including renewal options deemed exercised, is 13.26.2 years. The Company applied a discount rate of 2.956.91%%, based on its incremental borrowing rate given the term of the lease, as the rate implicit in the lease is not known. During the years ended December 31, 2021, 20202023, 2022 and 2019,2021, the Company recognized $544,000, $599,000 $533,000 and $525,000,$599,000, respectively, of lease expense related to this ground lease which is included in Real estate expenses on the consolidated statementstatements of income.
Office Lease
The Company is a lessee under a corporate office lease in Great Neck, New York, which is classified as an operating lease. The lease expires on December 31, 2031 and provides a 5-year renewal option. At December 31, 20212023 and 2020,2022, the Company recorded a liability of $578,000$536,000 and $602,000,$558,000, respectively, for the obligation to make payments under the lease and an asset of $564,000$505,000 and $593,000,$535,000, respectively, for the right to use the underlying asset during the lease term which are included in other liability and other assets, respectively, on the consolidated balance sheet.sheets. Lease payments associated with the renewal option period, which was determined to be reasonably certain to be exercised, are included in the measurement of the lease liability and right of use asset. As of December 31, 2021,2023, the remaining lease term, including the renewal optionsoption deemed exercised, is 15.013.0 years. The Company applied a discount rate of 3.81%, based on its incremental borrowing rate given the term of the lease, as the rate implicit in the lease is not known. During the years ended December 31, 2021, 20202023, 2022 and 2019,2021, the Company recognized $55,000, $57,000$56,000, $56,000 and $54,000,$55,000, respectively, of lease expense related to this office lease which is included in General and administrative expenses on the consolidated statementstatements of income.
Minimum Future Lease Payments
As of December 31, 2021,2023, the minimum future lease payments related to the operating ground and office leases are as follows (amounts in thousands):
| | | |
For the year ended December 31, |
| | |
2022 | | $ | 506 |
2023 | |
| 507 |
2024 | |
| 557 |
2025 | |
| 626 |
2026 | |
| 627 |
Thereafter | |
| 6,220 |
Total undiscounted cash flows | | $ | 9,043 |
Present value discount | |
| (1,831) |
Lease liability | | $ | 7,212 |
| | | |
For the year ending December 31, | | | |
2024 | | $ | 557 |
2025 | | | 626 |
2026 | |
| 627 |
2027 | |
| 629 |
2028 | |
| 630 |
Thereafter | |
| 1,229 |
Total undiscounted cash flows | | $ | 4,298 |
Present value discount | |
| (935) |
Lease liability | | $ | 3,363 |
F-17
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 20212023
NOTE 4—4 — REAL ESTATE INVESTMENTS
Acquisitions
The following tables detailtable details the Company’s real estate acquisitions during 2023 and allocations of the purchase price during 2021 and 20202022 (amounts in thousands). The Company determined that with respect to each of these acquisitions, the gross assets acquired are concentrated in a single identifiable asset. Therefore, these transactions do not meet the definition of a business and are accounted for as asset acquisitions. As such, direct transaction costs associated with these asset acquisitions have been capitalized to real estate assets and depreciated over their respective useful lives.
| | | | | | | | | | |
| | | | Contract | | | | Capitalized | ||
| | Date | | | Purchase | | Terms of | | | Transaction |
Description of Property |
| Acquired |
| Price |
| Payment |
| Costs | ||
Pureon, Inc. industrial facility, | | | | | | | | | | |
Monroe, North Carolina | | May 27, 2021 | | $ | 7,000 |
| Cash and $4,500 mortgage (a) | | $ | 60 |
Multi-tenant industrial facility, | | | | | | | | | | |
Lehigh Acres, Florida | | September 29, 2021 | | | 9,355 | | Cash and $6,100 mortgage (a) | | | 77 |
Home Depot USA, Inc. industrial facility, | | | | | | | | | | |
Omaha, Nebraska | | November 12, 2021 | | | 7,975 | | All cash | | | 67 |
TOTALS FOR 2021 | | | | $ | 24,330 |
|
| | $ | 204 |
| | | | | | | | | | |
Creative Office Environments industrial facility, | | | | | | | | | | |
Ashland, Virginia | | February 20, 2020 | | $ | 9,100 |
| All cash (b) | | $ | 119 |
Fed Ex industrial facility, | | | | | | | | | | |
Lowell, Arkansas | | February 24, 2020 | | | 19,150 | | All cash (b) |
| | 135 |
TOTALS FOR 2020 | |
| | $ | 28,250 |
|
| | $ | 254 |
| | | | | | | | | | |
| | | | Contract | | | | Capitalized | ||
| | Date | | | Purchase | | Terms of | | | Transaction |
Description of Industrial Property |
| Acquired |
| Price |
| Payment |
| Costs | ||
Multi-tenant | | | | | | | | | | |
Blythewood, South Carolina | | July 13, 2023 | | $ | 13,400 | | Cash and $4,280 mortgage (a) | | $ | 109 |
Totals for 2023 | | | | $ | 13,400 |
|
| | $ | 109 |
| | | | | | | | | | |
Conditioned Air Company of Naples LLC | | | | | | | | | | |
Fort Myers, Florida | | January 5, 2022 | | $ | 8,100 | | All cash (b) | | $ | 66 |
Q.E.P. Co., Inc. | | | | | | | | | | |
Dalton, Georgia | | May 12, 2022 | | | 17,000 | | All cash (b) | | | 330 |
Multi-tenant | | | | | | | | | | |
Hillside, Illinois | | May 16, 2022 | | | 5,770 | | All cash | | | 112 |
Curaleaf, Inc. | | | | | | | | | | |
Lexington, Kentucky | | June 17, 2022 | | | 8,430 | | Cash and $5,480 mortgage (c) | | | 80 |
Multi-tenant | | | | | | | | | | |
Northwood, Ohio | | November 15, 2022 | | | 8,629 | | Cash and $6,034 mortgage (d) | | | 87 |
Multi-tenant | | | | | | | | | | |
Northwood, Ohio | | November 15, 2022 | | | 8,561 | | Cash and $6,034 mortgage (d) | | | 86 |
Totals for 2022 | | | | $ | 56,490 |
|
| | $ | 761 |
(a) |
(b) | Subsequent to the acquisitions of |
| | | | | | | | | | | | | | | | | | | |
| | | | | Building & | | Intangible Lease | | | | | Market Cap |
| Discount | |||||
Description of Property |
| Land |
| Improvements |
| Asset (a) |
| Liability (b) | | Total | | Rate (c) | | Rate (c) | |||||
Pureon, Inc. industrial facility, | |
|
|
| |
| | | | | | | | |
| | | | |
Monroe, North Carolina | | $ | 897 | | $ | 5,106 | | $ | 1,057 | | $ | — | | $ | 7,060 | | 7.00% | | 6.08% |
Multi-tenant industrial facility, | | | | | | | | | | | | | | | | | | | |
Lehigh Acres, Florida | | | 1,935 | | | 7,393 | | | 701 | | | (596) | | | 9,433 | | 6.75% | | 5.60% |
Home Depot USA, Inc. industrial facility, | | | | | | | | | | | | | | | | | | | |
Omaha, Nebraska | | | 1,000 | | | 6,547 | | | 530 | | | (36) | | | 8,041 | | 6.25% | | 6.16% |
TOTALS FOR 2021 | | $ | 3,832 | | $ | 19,046 | | $ | 2,288 | | $ | (632) | | $ | 24,534 | | | | |
| | | | | | | | | | | | | | | | | | | |
Creative Office Environments industrial facility, | |
|
|
| |
| | | | | | | | |
| | | | |
Ashland, Virginia | | $ | 391 | | $ | 7,901 | | $ | 927 | | $ | — | | $ | 9,219 | | 6.50% | | n/a |
Fed Ex industrial facility, | | |
| |
|
| | | | | | | |
|
| | | | |
Lowell, Arkansas | | | 1,687 | |
| 15,188 | | | 2,978 | | | (568) | |
| 19,285 | | 6.25% | | 6.16% |
TOTALS FOR 2020 | | $ | 2,078 | | $ | 23,089 | | $ | 3,905 | | $ | (568) | | $ | 28,504 | | | | |
F-18
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 4—REAL ESTATE INVESTMENTS (Continued)
The Company assessed the fair value of the lease intangibles based on estimated cash flow projections that utilize appropriate discount rates and available market information. Such inputs are Level 3 (as defined in Note 2) in the fair value hierarchy.
At December 31, 2021 and 2020, accumulated amortization of intangible lease assets was $25,892,000 and $24,530,000, respectively, and accumulated amortization of intangible lease liabilities was $8,968,000 and $8,539,000, respectively.
During 2021, 2020 and 2019, the Company recognized net rental income of $785,000, $780,000 and $914,000, respectively, for the amortization of the above/below market leases. During 2021, 2020 and 2019, the Company recognized amortization expense of $4,700,000, $4,617,000 and $4,039,000, respectively, relating to the amortization of the origination costs associated with in-place leases, which is included in Depreciation and amortization expense.
The unamortized balance of intangible lease assets as a result of acquired above market leases at December 31, 2021 will be deducted from rental income through 2032 as follows (amounts in thousands):
| | | |
2022 |
| $ | 449 |
2023 | |
| 256 |
2024 | |
| 186 |
2025 | |
| 163 |
2026 | |
| 125 |
Thereafter | |
| 425 |
Total | | $ | 1,604 |
The unamortized balance of intangible lease liabilities as a result of acquired below market leases at December 31, 2021 will be added to rental income through 2055 as follows (amounts in thousands):
| | | |
2022 |
| $ | 1,203 |
2023 | |
| 961 |
2024 | |
| 742 |
2025 | |
| 519 |
2026 | |
| 512 |
Thereafter | |
| 6,470 |
Total | | $ | 10,407 |
The unamortized balance of origination costs associated with in-place leases at December 31, 2021 will be charged to amortization expense through 2055 as follows (amounts in thousands):
| | | |
2022 |
| $ | 4,398 |
2023 | |
| 3,756 |
2024 | |
| 2,472 |
2025 | |
| 2,011 |
2026 | |
| 1,907 |
Thereafter | |
| 4,546 |
Total | | $ | 19,090 |
Property Acquisition Subsequent to December 31, 2021
On January 5, 2022, the Company acquired an industrial property located in Fort Myers, Florida for $8,100,000. The initial term of the lease expires in 2030. Subsequent to the acquisition, the Company obtained $4,860,000 of nine-year mortgage debt with an interest rate of 3.09% and amortizing over 25 years.
F-19
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 20212023
NOTE 4 — REAL ESTATE INVESTMENTS (CONTINUED)
The following table details the allocation of the purchase price and capitalized transaction costs for the Company’s acquisition of real estate during 2023 and 2022 (amounts in thousands):
| | | | | | | | | | | | | | | | | | |
| | | | | Building & | | Intangible Lease | | Mortgage | | | | ||||||
Description of Industrial Property |
| Land |
| Improvements |
| Asset (a) |
| Liability (b) | | Intangible (c) | | Total | ||||||
Multi-tenant | | | | | | | | | | | | | | | | | | |
Blythewood, South Carolina | | $ | 311 | | $ | 12,304 | | $ | 871 | | $ | (237) | | $ | 260 | | $ | 13,509 |
Totals for 2023 | | $ | 311 | | $ | 12,304 | | $ | 871 | | $ | (237) | | $ | 260 | | $ | 13,509 |
| | | | | | | | | | | | | | | | | | |
Conditioned Air Company of Naples LLC | | | | | | | | | | | | | | | | | | |
Fort Myers, Florida | | $ | 991 | | $ | 6,876 | | $ | 568 | | $ | (269) | | $ | — | | $ | 8,166 |
Q.E.P. Co., Inc. | | | | | | | | | | | | | | | | | | |
Dalton, Georgia | | | 547 | | | 15,836 | | | 1,223 | | | (276) | | | — | | | 17,330 |
Multi-tenant | | | | | | | | | | | | | | | | | | |
Hillside, Illinois | | | 2,560 | | | 2,975 | | | 539 | | | (192) | | | — | | | 5,882 |
Curaleaf, Inc. | | | | | | | | | | | | | | | | | | |
Lexington, Kentucky | | | 1,558 | | | 6,881 | | | 486 | | | (415) | | | — | | | 8,510 |
Multi-tenant | | | | | | | | | | | | | | | | | | |
Northwood, Ohio | | | 181 | | | 8,306 | | | 747 | | | (854) | | | 336 | | | 8,716 |
Multi-tenant | | | | | | | | | | | | | | | | | | |
Northwood, Ohio | | | 171 | | | 7,383 | | | 759 | | | — | | | 334 | | | 8,647 |
Totals for 2022 | | $ | 6,008 | | $ | 48,257 | | $ | 4,322 | | $ | (2,006) | | $ | 670 | | $ | 57,251 |
(a) | With respect to the intangible lease assets, the weighted average amortization period for the 2023 and 2022 acquisitions is 1.1 years and 6.1 years, respectively. |
(b) | With respect to the intangible lease liabilities, the weighted average amortization period for the 2023 and 2022 acquisitions is 1.1 years and 8.8 years, respectively. |
(c) | With respect to the mortgage intangible assets, the weighted average amortization period for the 2023 and 2022 acquisitions is 5.4 years and 7.1 years, respectively. |
The following table details the market capitalization and discount rates associated with the assessment of the fair value of the related lease and mortgage intangibles for the Company’s acquisition of real estate:
| | | | | | | | |
| | | | | | Discount Rate (a) | ||
Year | | | | Market Cap | | Lease | | Mortgage |
Acquired | | Description of Industrial Property | | Rate (a) | | Intangible | | Intangible |
2023 | | Multi-tenant | | | | | | |
| | Blythewood, South Carolina | | 6.75% | | 6.75% | | 6.00% |
2022 | | Conditioned Air Company of Naples LLC | | | | | | |
| | Fort Myers, Florida | | 5.50% | | 5.60% | | — |
2022 | | Q.E.P. Co., Inc. | | | | | | |
| | Dalton, Georgia | | 5.00% | | 5.69% | | — |
2022 | | Multi-tenant | | | | | | |
| | Hillside, Illinois | | 6.25% | | 6.63% | (b) | — |
2022 | | Curaleaf, Inc. | | | | | | |
| | Lexington, Kentucky | | 5.25% | | 5.88% | | — |
2022 | | Multi-tenant | | | | | | |
| | Northwood, Ohio | | 6.75% | | 5.60% | | 5.75% |
2022 | | Multi-tenant | | | | | | |
| | Northwood, Ohio | | 6.75% | | 5.60% | | 5.75% |
(a) | The fair value of the tangible and intangible leases and mortgages were assessed as of the acquisition date using an income approach and estimated cash flow projections which utilize an appropriate market capitalization rate and discount rate which are categorized as Level 3 unobservable inputs in the fair value hierarchy (as defined in Note 2). |
(b) | Represents the weighted average discount rate of the warehouse lease (i.e., 5.77%) and the office lease (i.e., 9.03%). |
F-19
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 4 — REAL ESTATE INVESTMENTS (CONTINUED)
The following table details the accumulated amortization of acquired intangibles during the periods indicated (amounts in thousands):
| | | | | | | | | | | | | | | | | | |
| | | December 31, 2023 | | | December 31, 2022 | ||||||||||||
| | | Intangible | | | Intangible | ||||||||||||
| | | Lease Assets | | | Mortgage Asset (a) | | | Lease Liabilities | | | Lease Assets | | | Mortgage Asset (a) | | | Lease Liabilities |
Accumulated amortization | | $ | 19,377 | | $ | 126 | | $ | 5,191 | | $ | 23,506 | | $ | 12 | | $ | 5,061 |
(a) | In connection with the assumption of below-market mortgages in 2022 and 2023 upon the acquisition of the Northwood, Ohio and Blythewood, South Carolina properties. |
The following table details the amortization of acquired intangibles and the classification in the Company’s consolidated statements of income for the periods indicated (amounts in thousands):
| | | | | | | | | | |
| Year Ended December 31, | | | |||||||
| 2023 | | 2022 | | 2021 | | Classification | |||
Intangible lease assets/liabilities | $ | 952 | | $ | 831 | | $ | 785 | | Rental income, net |
Tenant origination costs | | 4,821 | | | 4,722 | | | 4,700 | | Depreciation and amortization |
Intangible mortgage assets | | 114 | | | 12 | | | — | | Interest expense |
As of December 31, 2023, the future amortization of the Company’s acquired intangibles are as follows (amounts in thousands):
| | | | | | | | | | | | |
For the year ending December 31, | | Intangible Lease Assets (a) | | | Tenant Origination Costs (b) | | | Intangible Mortgage Assets (c) | | | Intangible Lease Liabilities (d) | |
2024 | $ | 154 | | $ | 3,685 | | $ | 137 | | $ | 1,085 | |
2025 |
| 128 | | | 2,672 | | | 137 | | | 723 | |
2026 |
| 91 | | | 2,462 | | | 137 | | | 704 | |
2027 |
| 31 | | | 1,785 | | | 137 | | | 756 | |
2028 |
| 28 | | | 1,103 | | | 137 | | | 735 | |
Thereafter |
| 80 | | | 2,462 | | | 119 | | | 6,093 | |
Total | $ | 512 | | $ | 14,169 | | $ | 804 | | $ | 10,096 | |
(a) | The result of acquired above-market leases and will be deducted from rental income through 2032. |
(b) | The result of acquired in-place leases and will be charged to Depreciation and amortization expense through 2055. |
(c) | The result of acquired below-market mortgages and will be charged to interest expense through 2030. |
(d) | The result of acquired below-market leases and will be added to rental income through 2055. |
Depreciation and Amortization
Depreciation of buildings is computed on the straight-line method over an estimated useful life of 40 years. Depreciation of building improvements is computed on the straight-line method over the estimated useful life of the improvements. If the Company determines it is the owner of tenant improvements, the amounts funded to construct the tenant improvements are treated as a capital asset and depreciated over the lesser of the remaining lease term or the estimated useful life of the improvements on the straight-line method. Leasehold interest and the related ground lease payments are amortized over the initial lease term of the leasehold position. During 2023, 2022 and 2021, the Company recorded depreciation expense (including amortization of a leasehold position, lease origination costs, and capitalized leasing commissions) of $24,789,000, $23,781,000 and $22,832,000, respectively.
F-20
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 5—5 — SALES OF PROPERTIES AND PROPERTY HELD-FOR-SALE
The following charttable details the Company’s sales of real estate during 2021, 20202023, 2022 and 20192021 (amounts in thousands):
| | | | | | | | | | | | | | |
| | | | | | | Gain on sale | | Mortgage | | Prepayment | |||
| | | | Gross | | of Real | | Prepaid | | Costs on | ||||
Description of Property | | Date Sold | | Sales Price | | Estate, Net | | on Sale | | Debt | ||||
Whole Foods retail property & parking lot, | | | | | | | | | | | | | | |
West Hartford, Connecticut | | June 17, 2021 | | $ | 40,510 | | $ | 21,469 | | $ | 15,403 | | $ | 799 |
Vacant retail property, | | | | | | | | | | | | | | |
Philadelphia, Pennsylvania | | July 1, 2021 | | | 8,300 | | | 1,299 | (a) | | 3,574 | | | 26 |
Wendys restaurant property, | | | | | | | | | | | | | | |
Hanover, Pennsylvania | | December 27, 2021 | | | 2,815 | | | 1,331 | | | 696 | | | 11 |
Wendys restaurant property, | | | | | | | | | | | | | | |
Gettysburg, Pennsylvania | | December 27, 2021 | | | 2,885 | | | 1,364 | | | 714 | | | 12 |
TOTALS FOR 2021 | | $ | 54,510 | | $ | 25,463 | (b) | $ | 20,387 | | $ | 848 | ||
| | | | | | | | | | | | | | |
Hobby Lobby retail property, | | | | | | | | | | | | | | |
Onalaska, Wisconsin | | February 11, 2020 | | $ | 7,115 | | $ | 4,252 | | $ | 3,332 | | $ | 290 |
CarMax retail property, | | | | | | | | | | | | | | |
Knoxville, Tennessee | | July 1, 2020 | | | 18,000 | | | 10,316 | | | 8,483 | | | 833 |
PetSmart retail property | | | | | | | | | | | | | | |
Houston, Texas | | December 15, 2020 | | | 4,013 | (c) | | 1,067 | | | n/a | | | n/a |
Guitar Center retail property, | | | | | | | | | | | | | | |
Houston, Texas | | December 15, 2020 | | | 5,212 | (c) | | 1,645 | | | n/a | | | n/a |
TOTALS FOR 2020 | | $ | 34,340 | | $ | 17,280 | (d) | $ | 11,815 | | $ | 1,123 | ||
| | | | | | | | | | | | | | |
Kmart retail property, | | | | | | | | | | | | | | |
Clemmons, North Carolina | | June 20, 2019 | | $ | 5,500 | | $ | 1,099 | (e) | $ | 1,705 | | $ | 41 |
Multi-tenant retail property, | | | | | | | | | | | | | | |
Athens, Georgia | | August 23, 2019 | | | 6,050 | | | 1,045 | | | 2,645 | | | 161 |
Land - The Briarbrook Village Apartments, | | | | | | | | | | | | | | |
Wheaton, Illinois | | August 29, 2019 | | | 12,066 | | | 1,530 | | | n/a | | | n/a |
Aaron's retail property, | | | | | | | | | | | | | | |
Houston, Texas | | October 21, 2019 | | | 1,675 | | | 218 | | | n/a | | | n/a |
Assisted living facility, | | | | | | | | | | | | | | |
Round Rock, Texas | | December 10, 2019 | | | 16,600 | | | 435 | | | 13,157 | | | 625 |
TOTALS FOR 2019 | | | | $ | 41,891 | | $ | 4,327 | (f) | $ | 17,507 | | $ | 827 |
| | | | | | | | | | | |
| | | | | | Gross | | Gain on Sale of | | ||
Description of Property | | City, State | | Date Sold | | Sales Price | | Real Estate, Net | | ||
TGI Fridays restaurant property | | Hauppauge, New York | | February 28, 2023 | | $ | 4,200 | | $ | 1,534 | |
Havertys retail property | | Duluth, Georgia | | May 31, 2023 | | | 6,000 | | | 3,180 | |
TGI Fridays restaurant property | | Greensboro, North Carolina | | September 20, 2023 | | | 3,250 | | | 332 | |
Land (a) | | Lakewood, Colorado | | November 14, 2023 | | | 3,333 | (a) | | 2,177 | (a) |
Chuck E Cheese restaurant property | | Indianapolis, Indiana | | November 15, 2023 | | | 2,200 | | | 226 | |
TGI Fridays restaurant property | | Richmond, Virginia | | November 17, 2023 | | | 3,200 | | | 265 | |
Applebee's restaurants (2 properties) | | Cartersville & Carrollton, Georgia | | December 5, 2023 | | | 7,300 | | | 2,581 | |
Applebee's restaurant property | | Lawrenceville, Georgia | | December 7, 2023 | | | 2,903 | (b) | | 989 | |
Havertys retail property | | Virginia Beach, Virginia | | December 15, 2023 | | | 5,500 | | | 1,727 | |
Barnes & Noble retail property | | Fort Myers, Florida | | December 21, 2023 | | | 7,300 | | | 3,997 | |
Totals for 2023 | | $ | 45,186 | | $ | 17,008 | (c) | ||||
| | | | | | | | | | | |
Wendy's restaurants (4 properties) | | Various cities, Pennsylvania | | March 22, 2022 | | $ | 10,000 | | $ | 4,649 | |
Orlando Baking industrial property | | Columbus, Ohio | | May 2, 2022 | | | 8,500 | | | 6,925 | |
Havertys retail property | | Fayetteville, Georgia | | June 17, 2022 | | | 4,800 | (d) | | 1,125 | |
Vacant retail property | | Columbus, Ohio | | August 8, 2022 | | | 8,300 | | | 4,063 | |
Totals for 2022 | | $ | 31,600 | | $ | 16,762 | (e) | ||||
| | | | | | | | | | | |
Whole Foods retail property & parking lot | | West Hartford, Connecticut | | June 17, 2021 | | $ | 40,510 | | $ | 21,469 | |
Vacant retail property | | Philadelphia, Pennsylvania | | July 1, 2021 | | | 8,300 | | | 1,299 | (f) |
Wendy's restaurants - 2 properties | | Hanover & Gettysburg, Pennsylvania | | December 27, 2021 | | | 5,700 | | | 2,695 | |
Totals for 2021 | | $ | 54,510 | (g) | $ | 25,463 | (h) |
(a) | A consolidated joint venture, in which the Company holds a 90% interest, sold a land parcel which was part of a multi-tenant shopping center. In connection with the sale of this parcel, the joint venture paid down $1,116 of the mortgage on this property. The non-controlling interest’s share of the gain was $218. |
(b) | In connection with this sale, the Company provided seller-financing of $1,816 which is included in other receivables on the consolidated balance sheet as of December 31, 2023. The loan receivable bears interest at 8.0% and matures on July 1, 2024, with a buyer’s option to extend the maturity an additional six months. |
(c) | As a result of these sales, the Company wrote-off, as a reduction to Gain on sale of real estate, net, an aggregate of $1,005 of unbilled/unearned rent, $982 of net unamortized intangible lease assets and liabilities and $223 of other assets and receivables. |
(d) | In connection with this sale, the Company paid off the $1,563 mortgage on this property. |
(e) | As a result of these sales, the Company wrote-off, as a reduction to Gain on sale of real estate, net, an aggregate of $519 of unbilled rent receivables and $4 of net unamortized intangible lease liabilities and assets. |
(f) | This property was owned by a consolidated joint venture in which the Company held a 90% interest. The non-controlling interest’s share of the gain was $130. |
In connection with these sales, the Company paid off mortgages in an aggregate of $20,387 and incurred $848 of prepayment costs on debt. |
(h) | As a result of these sales, the Company wrote-off, as a reduction to Gain on sale of real estate, net, an aggregate of $1,438 of unbilled rent receivables and $967 of unamortized intangible lease assets. |
F-20F-21
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 20212023
NOTE 5—5 — SALES OF PROPERTIES AND PROPERTY HELD-FOR-SALE (Continued)(CONTINUED)
In September 2021,
Sale subsequent to December 31, 2023
On January 19, 2024, the Company entered into a contract to sell an industrial property locateda pad site at a multi-tenant shopping center in Columbus, OhioLakewood, Colorado, which is owned by a consolidated joint venture in which the Company holds a 90% interest, for $8,500,000$2,900,000. The buyer’s right to terminate the contract without penalty expired on December 14, 2021. At December 31, 2021,February 23, 2024 and the Company classified the $1,270,000 net book value of the property’s land, building and improvements as Property held-for-sale in the accompanying consolidated balance sheet. Itsale is anticipated that thisto close during the quarter ending March 31, 2024. The Company anticipates recognizing a gain on sale of real estate, net on its consolidated statement of income of approximately $1,800,000 during the three months ending March 31, 2024, of which the non-controlling interest’s share will be completed in April 2022 and will result in a gain which will be recognized in the three and six months ending June 30, 2022.
In January 2022, the Company entered into a contract to sell 4 restaurant properties located in Pennsylvania for $10,000,000. The buyer’s right to terminate the contract without penalty expired on February 28, 2022. It is anticipated the sale will be completed in April 2022.
approximately $180,000.
NOTE 6—6 — VARIABLE INTEREST ENTITIES, CONTINGENT LIABILITY AND CONSOLIDATED JOINT VENTURES
Variable Interest Entities—Entity—Ground Lease
The Company determined it has a variable interest through its ground lease at its Beachwood, Ohio property (The Vue Apartments) and the owner/operator is a VIE because its equity investment at risk is insufficient to finance its activities without additional subordinated financial support. The Company further determined that it is not the primary beneficiary of this VIE because the Company does not have power over the activities that most significantly impact the owner/operator’s economic performance and therefore, does not consolidate this VIE for financial statement purposes. Accordingly, the Company accounts for this investment as land and the revenues from the ground lease as Rental income, net. The ground lease provides for rent which can be deferred and paid based on the operating performance of the property; therefore, this rent is recognized as rental income when the operating performance is achieved and the rent is received. GroundNo ground lease rental income amounted to $0, $729,000 and $1,597,000 during 2021,has been collected since October 2020 and 2019, respectively. Included inother than the 2019 amounts is rentalproceeds from the settlement of the Proceedings (as defined under “Additional rent income of $814,000 from a previously held VIE property located in Wheaton, Illinois which was sold in August 2019 (see Note 5)– Ground Lease Tenant”).
As of December 31, 2021,2023, the VIE’s maximum exposure to loss was $15,756,000$17,276,000 which represented the carrying amount of the land. In purchasing the property in 2016, the owner/operator obtained a $67,444,000mortgage for $67,444,000 from a third party which, together with the Company’s purchase of the land, provided substantially all of the funds to acquire the multi-family property. The Company provided its land as collateral for the owner/operator’s mortgage loan; accordingly, the land position is subordinated to the mortgage. The mortgage balance was $66,013,000$63,569,000 as of December 31, 2021.2023.
Pursuant to the ground lease, as amended in November 2020, the Company agreed, in its discretion, to fund 78% of (i) any operating expense shortfalls at the property and (ii) any capital expenditures required at the property. The Company funded $1,746,000$932,000 and $697,000 during the yearyears ended December 31, 20212023 and an additional $271,000 from January 1 through March 1, 2022.2022, respectively. These amounts are included as part of the carrying amount of the land.
Additional rent income—Ground Lease Tenant
The Company did not fund anyCompany’s ground lease tenant was a plaintiff/claimant in various legal proceedings (the “Proceedings”) against, among others, the developer of such amounts duringapartment complex alleging, among other things, that the yearbuildings’ construction was flawed. The Proceedings were settled in the quarter ended December 31, 2020.2022 and although the Company was not a party to the Proceedings, pursuant to the lease with the tenant, the Company received $4,642,000 from the settlement. At December 31, 2022, $4,626,000 of such sum was accrued as rental income, net on the consolidated statement of income and as other receivables on the consolidated balance sheet.
F-22
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 6 — VARIABLE INTEREST ENTITIES, CONTINGENT LIABILITY AND CONSOLIDATED JOINT VENTURES (CONTINUED)
Variable Interest Entities—Consolidated Joint Ventures
The Company has determined that the 3three consolidated joint ventures in which it holds between a 90% to 9595%% interest are VIEs because the non-controlling interests do not hold substantive kick-out or participating rights. The Company has determined it is the primary beneficiary of these VIEs as it has the power to direct the activities that most significantly impact each joint venture’s performance including management, approval of expenditures, and the obligation to absorb the losses or rights to receive benefits. Accordingly, the Company
F-21
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 6—VARIABLE INTEREST ENTITIES, CONTINGENT LIABILITY AND CONSOLIDATED JOINT VENTURES (Continued)
consolidates the operations of these VIEs for financial statement purposes. The VIEs’ creditors do not have recourse to the assets of the Company other than those held by the applicable joint venture.
The following is a summary of the consolidated VIEs’ carrying amounts and classification in the Company’s consolidated balance sheets, none of which are restricted (amounts in thousands):
| | | | | | |
| | December 31, | ||||
| | 2021 |
| 2020 (a) | ||
Land | | $ | 10,365 | | $ | 12,158 |
Buildings and improvements, net of accumulated depreciation of $4,957 and $5,232, respectively | | | 18,472 | |
| 23,372 |
Cash | | | 1,134 | |
| 1,102 |
Unbilled rent receivable | | | 1,020 | | | 861 |
Unamortized intangible lease assets, net | | | 548 | | | 627 |
Escrow, deposits and other assets and receivables | | | 878 | | | 1,089 |
Mortgages payable, net of unamortized deferred financing costs of $195 and $253, respectively | | | 19,193 | | | 23,530 |
Accrued expenses and other liabilities | | | 875 | |
| 752 |
Unamortized intangible lease liabilities, net | | | 475 | | | 526 |
Accumulated other comprehensive loss | | | (33) | | | (127) |
Non-controlling interests in consolidated joint ventures | | | 946 | |
| 1,193 |
| | | | | | |
| | December 31, | ||||
| | 2023 (a) |
| 2022 | ||
Land | | $ | 9,917 | | $ | 10,365 |
Buildings and improvements, net of accumulated depreciation of $6,380 and $5,670, respectively | | | 17,475 | |
| 17,870 |
Cash | | | 1,059 | |
| 1,163 |
Unbilled rent receivable | | | 938 | | | 1,111 |
Unamortized intangible lease assets, net | | | 412 | | | 472 |
Escrow, deposits and other assets and receivables | | | 749 | | | 772 |
Mortgages payable, net of unamortized deferred financing costs of $109 and $152, respectively | | | 16,660 | | | 18,500 |
Accrued expenses and other liabilities | | | 745 | |
| 711 |
Unamortized intangible lease liabilities, net | | | 385 | | | 424 |
Accumulated other comprehensive income | | | 2 | | | 22 |
Non-controlling interests in consolidated joint ventures | | | 1,042 | |
| 972 |
(a) |
As of December 31, 2023 and 2022, MCB Real Estate, LLC and its affiliates (‘‘MCB’’) are the Company’s joint venture partner in 2 and 3two consolidated joint ventures at December 31, 2021 and 2020, respectively, in which the Company has aggregate equity investments of approximately $4,691,000$4,448,000 and $7,495,000,$4,563,000, respectively.
Distributions to each joint venture partner are determined pursuant to the applicable operating agreement and, in the event of a sale of, or refinancing of the mortgage encumbering, the property owned by such venture, the distributions to the Company may be less than that implied by the Company’s equity ownership interest in the venture.
F-23
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 7—7 — INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
As of December 31, 2021 and 2020,
In September 2023, an unconsolidated joint venture in which the Company participatedhad a 50% interest entered into a contract to sell this multi-tenant shopping center in 3Manahawkin, New Jersey for $36,500,000. As a result, the joint venture recorded an impairment charge of $1,699,000, of which the Company’s 50% share was $850,000 and was recorded in Equity in loss from unconsolidated joint ventures eachon the consolidated statement of which owns and operates 1 property;income for the Company’s equity investment in these ventures totaled $10,172,000 and $10,702,000year ended December 31, 2023. On December 15, 2023, this property was sold for $35,070,000, respectively.net of closing costs. The Company recorded equityCompany’s 50% share of the loss from this sale was $108,000, which is included in earningsEquity in loss from sale of $202,000, $38,000 and $16,000 during 2021, 2020 and 2019, respectively.unconsolidated joint venture properties on the consolidated statement of income for the year ended December 31, 2023.
In July 2021, an unconsolidated joint venture in which the Company had a 50% interest sold a portion of its land located in Savannah, Georgia for $2,559,000,, net of closing costs. The Company’s 50% share of the gain from this sale was $805,000, which is included in Equity in earnings from sale of unconsolidated joint venture properties on the consolidated statement of income for the year ended December 31, 2021. The unconsolidated joint venture retained approximately 2.2 acres of land at this property.
The Company’s remaining two unconsolidated joint ventures each own and operate one property. As of December 31, 2023 and 2022, the Company’s equity investment in unconsolidated joint ventures totaled $2,051,000 and $10,400,000, respectively. The Company recorded equity in loss of $904,000 during 2023 and equity in earnings of $400,000 and $202,000 during 2022 and 2021, respectively.
In March 2020, an unconsolidated joint venture sold another of its properties located in Savannah, Georgia for $819,000, net of closing costs. The Company’s 50% share of the gain from this sale was $121,000, which is included in Equity in earnings from sale of unconsolidated joint venture properties on the consolidated statement of income for the year ended December 31, 2020.
At December 31, 2021 and 2020, MCB and the Company are partners in an unconsolidated joint venture in which the Company’s equity investment is approximately $8,773,000 and $8,761,000, respectively.
F-22
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 8—8 — DEBT OBLIGATIONS
Mortgages Payable
The following table details the Mortgages payable, net, balances per the consolidated balance sheets (amounts in thousands):
| | | | | | | | | | | | | |
| | | December 31, | | December 31, | ||||||||
|
| | 2021 |
| 2020 | | 2023 |
| 2022 | ||||
Mortgages payable, gross | | | $ | 399,660 | | $ | 433,549 | | $ | 422,565 | | $ | 409,175 |
Unamortized deferred financing costs | | | | (3,316) | |
| (3,845) | | | (3,414) | |
| (3,355) |
Unamortized mortgage intangible assets (a) | | | (804) | | | (658) | |||||||
Mortgages payable, net | | | $ | 396,344 | | $ | 429,704 | | $ | 418,347 | | $ | 405,162 |
(a) | In connection with the assumption of two below-market mortgages upon the acquisition of the Northwood, Ohio and Blythewood, South Carolina properties (see Note 4). |
At December 31, 2021,2023, there were 6968 outstanding mortgages payable, all of which are secured by first liens on individual real estate investments with an aggregate gross carrying value of $670,462,000$670,157,000 before accumulated depreciation of $120,055,000.$127,325,000. After giving effect to interest rate swap agreements (see Note 9), the mortgage payments bear interest at fixed rates ranging from 3.02%3.05% to 5.50%,8.40% and mature between 20222024 and 2042.2047. The weighted average interest rate on all mortgage debt was 4.18%4.31% and 4.19%4.10% at December 31, 2021 and 2020, respectively.
During 2020, due to the COVID-19 pandemic, the Company and its mortgage lenders agreed to defer the payment of $1,670,000 of debt service due in 2020 and 2021. Of the total deferred, approximately $215,000 and $174,000 was repaid in 2021 and 2020, respectively, $210,000 was deferred until 2022 through 2023 and the balance was deferred until the maturity of such debt.2022, respectively.
Scheduled principal repayments during the periodsyears indicated are as follows (amounts in thousands):
| | | |
Year Ending December 31, |
| | |
2022 | | $ | 44,843 |
2023 | | | 25,774 |
2024 | | | 62,634 |
2025 | | | 42,615 |
2026 | | | 29,277 |
Thereafter | | | 194,517 |
Total | | $ | 399,660 |
| | | | | | | | | | | | | | | | | | | | | |
Year Ending December 31, |
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| 2028 |
| Thereafter |
| Total | |||||||
Amortization payments | | $ | 11,873 | | $ | 10,627 | | $ | 10,491 | | $ | 9,399 | | $ | 8,718 | | $ | 34,283 | | $ | 85,391 |
Principal due at maturity | |
| 49,906 | |
| 30,850 | |
| 19,179 | |
| 38,524 | |
| 30,155 | |
| 168,560 | |
| 337,174 |
Total | | $ | 61,779 | | $ | 41,477 | | $ | 29,670 | | $ | 47,923 | | $ | 38,873 | | $ | 202,843 | | $ | 422,565 |
F-24
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 8 — DEBT OBLIGATIONS (CONTINUED)
Line of Credit
The Company has aCompany’s credit facility with Manufacturers &and Traders Trust Company People’s United Bank,and VNB New York, LLC, and Bank Leumi USA, pursuant to whichprovides that it may borrow up to $100,000,000,, subject to borrowing base requirements. The facility is available for the acquisition of commercial real estate, repayment of mortgage debt, and renovation and operating expense purposes; provided, that if used for renovation and operating expense purposes, the amount outstanding for such purposes will not exceed the lesser of $30,000,000$40,000,000 and 30%40% of the borrowing base, subject to a cap of (i) $10,000,000 for renovation purposes and (ii) $20,000,000 for operating expense purposes. These limits will apply through June 30, 2022. On July 1, 2022, the maximum amounts the Company can borrow for renovation expenses and operating expenses will change to $20,000,000 and $10,000,000, respectively, and, to the extent that either of these maximums is exceeded as of June 30, 2022, such excess must be repaid immediately.base. Net proceeds received from the sale, financing or refinancing of properties are generally required to be used to repay amounts outstanding under the credit facility. The facility is guaranteed by subsidiaries of the Company that own unencumbered properties and the Company is required to pledge to the lenders the equity interests in such subsidiaries.
F-23
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 8—DEBT OBLIGATIONS (Continued)
The facility, which matures December 31, 2022,2026, provides for an interest rate equal to the one month LIBOR rate30-day SOFR plus an applicable margin ranging from 175 basis points to 300275 basis points depending on the ratio of the Company’s total debt to total value, as determined pursuant to the facility. The applicable margin was 175 and 200 basis points at December 31, 20212023 and 2020, respectively.2022. An unused facility fee of .25.25%% per annum applies to the facility. The weighted average interest rate on the facility was approximately 1.86%6.69%, 2.53%3.42% and 4.03%1.86% during 2023, 2022 and 2021, 2020 and 2019, respectively.
The credit facility includes certain restrictions and covenants which may limit, among other things, the incurrence of liens, and which require compliance with financial ratios relating to, among other things, the minimum amount of tangible net worth, the minimum amount of debt service coverage, the minimum amount of fixed charge coverage, the maximum amount of debt to value, the minimum level of net income, certain investment limitations and the minimum value of unencumbered properties and the number of such properties. The Company was in compliance with all covenants at December 31, 2021.2023.
The following table details the Line of credit, net, balances per the consolidated balance sheets (amounts in thousands):
| | | | | | | | | | | | | |
| | December 31, | | December 31, | |||||||||
| | 2021 |
| 2020 | | 2023 |
|
| 2022 | ||||
Line of credit, gross | | $ | 11,700 | | $ | 12,950 | | $ | — | | | $ | 21,800 |
Unamortized deferred financing costs | | | (216) | | | (425) | | | — | (a) | | | (732) |
Line of credit, net | | $ | 11,484 | | $ | 12,525 | | $ | — | | | $ | 21,068 |
(a) | In accordance with ASU 2015-15, the Company reclassified the $549 balance of unamortized deferred financing costs to other assets and receivables on the consolidated balance sheet at December 31, 2023, as there was no balance outstanding on the Line of credit. |
At each of December 31, 2023 and March 1, 2024, $100,000,000 was available to be borrowed under the facility, including an aggregate of up to $40,000,000 available for renovation and operating expense purposes.
Deferred Financing Costs
Mortgage and credit line costs are deferred and amortized on a straight-line basis over the terms of the respective debt obligations, which approximates the effective interest method. At December 31, 2023 and 2022, thereaccumulated amortization of such costs was an outstanding balance of $14,700,000 (before$5,298,000 and $4,791,000, respectively. The Company generally presents unamortized deferred financing costs), and $20,000,000 was available for operating expense purposes undercosts as a direct deduction from the facility.carrying amount of the associated debt liability.
F-25
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 9—FAIR VALUE MEASUREMENTS
The carrying amounts of cash and cash equivalents, escrow, deposits and other assets and receivables (excluding interest rate swaps), dividends payable, and accrued expenses and other liabilities, (excluding interest rate swaps), are not measured at fair value on a recurring basis but are considered to be recorded at amounts that approximate fair value.
At December 31, 2021, the $419,354,000 estimated
The fair value and carrying amounts of the Company’s mortgages payable is greater than their $399,660,000 carrying value (before unamortized deferred financing costs) by approximately $19,694,000, assuming a blended market interest rate of 3.20% based on the 6.4 year weighted average remaining term to maturity of the mortgages.
At December 31, 2020, the $461,965,000 estimated fair value of the Company’s mortgages payable is greater than their $433,549,000 carrying value (before unamortized deferred financing costs) by approximately $28,416,000, assuming a blended market interest rate of 3.00% based on the 7.1 year weighted average remaining term to maturity of the mortgages.
At December 31, 2021 and 2020, the carrying amount of the Company’s line of credit (before unamortized deferred financing costs) of $11,700,000 and $12,950,000, respectively, approximates its fair value.
The fair value of the Company’s mortgages payable and line of credit are estimatedas follows (dollars in thousands):
| | | | | | | | |
| | December 31, | | |||||
|
| 2023 |
| | 2022 |
| ||
Fair value of mortgages payable (a) | | $ | 397,031 | | | $ | 378,943 | |
Carrying value of mortgages payable, gross | | $ | 422,565 | | | $ | 409,175 | |
Fair value less than the carrying value | | $ | (25,534) | | | $ | (30,232) | |
Blended market interest rate (a) | | | 5.93 | % | | | 5.87 | % |
Weighted average interest rate | | | 4.31 | % | | | 4.10 | % |
Weighted average remaining term to maturity (years) | | | 5.9 | | | | 6.5 | |
(a) | Estimated using unobservable inputs such as available market information and discounted cash flow analysis based on borrowing rates the Company believes it could obtain with similar terms and maturities. These fair value measurements fall within Level 3 of the fair value hierarchy. |
At December 31, 2023 and 2022, the carrying amount of the Company’s line of credit (before unamortized deferred financing costs) of $0 and $21,800,000, respectively, approximates its fair value.
Considerable judgment is necessary to interpret market data and develop the estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
F-24
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 9—FAIR VALUE MEASUREMENTS (Continued)
Fair Value on a Recurring Basis
As of December 31, 2021,2023, the Company had in effect 1913 interest rate derivatives, all of which were interest rate swaps, related to 1913 outstanding mortgage loans with an aggregate $56,884,000$29,650,000 notional amount maturing between 20222024 and 2026 (weighted average remaining term to maturity of 2.51.2 years). These interest rate swaps, all of which were designated as cash flow hedges, converted LIBORSOFR based variable rate mortgages to fixed annual rate mortgages (withmortgages. The interest rates rangingrange from 3.02%3.22% to 5.16% and4.55% with a weighted average interest rate of 4.05%3.88% at December 31, 2021).2023.
The fair value of the Company’s derivative financial instruments, using Level 2 inputs, was determined to be the following (amounts in thousands):
| | | | | | | |
| | As of | | Carrying and | | Balance Sheet | |
|
| December 31, |
| Fair Value |
| Classification | |
Financial liabilities: | | | | | | | |
Interest rate swaps |
| 2021 | | $ | 1,514 | | Other liabilities |
|
| 2020 | |
| 5,012 | | |
Fair values are approximated using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.
Although the Company has determined the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the associated credit valuation adjustments associated with it use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparty. As of December 31, 2021,2023, the Company has assessed and determined the impact of the credit valuation adjustments on the overall valuation of its derivative positions is not significant. As a result, the Company determined its derivative valuation is classified in Level 2 of the fair value hierarchy. The Company does not currently own any financial instruments that are measured on a recurring basis and that are classified as Level 1 or 3.
F-26
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 9 — FAIR VALUE MEASUREMENTS (CONTINUED)
The fair value of the Company’s derivative financial instruments was determined to be the following (amounts in thousands):
| | | | | | | |
| | As of | | Carrying and | | Balance Sheet | |
|
| December 31, |
| Fair Value |
| Classification | |
Financial assets: Interest rate swaps | | 2023 | | $ | 824 | | Other assets |
|
| 2022 | |
| 1,811 | | Other assets |
As of December 31, 2023 and 2022, there were no derivatives in a liability position.
The following table presents the effect of the Company’s derivative financial instruments on the consolidated statements of income for the periodsyears presented (amounts in thousands):
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | Year Ended December 31, | ||||||||||||
|
| | 2021 |
| 2020 |
| 2019 | | 2023 |
| 2022 |
| 2021 | ||||
One Liberty Properties Inc. and Consolidated Subsidiaries | | | | | | | | | | ||||||||
Amount of gain (loss) recognized on derivatives in other comprehensive loss | | $ | 1,179 | | $ | (5,481) | | $ | (4,224) | ||||||||
Amount of reclassification from Accumulated other comprehensive loss into Interest expense | |
| (2,318) | |
| (2,098) | |
| (702) | ||||||||
Amount of gain (loss) recognized on derivatives in other comprehensive income (loss) | $ | 328 | | $ | 3,028 | | $ | 1,179 | |||||||||
Amount of reclassification from Accumulated other comprehensive income (loss) into Interest expense |
| 1,295 | |
| (297) | |
| (2,318) |
During 2021, 2020 and 2019, in connection with the sale of severaltwo properties and the early payoff of the related mortgages, the Company discontinued hedge accounting on the related interest rate swaps as the hedged forecasted transactions were no longer probable to occur. As such, the Company accelerated the reclassification of amounts$867,000 from accumulatedAccumulated other comprehensive loss to interest expense which is recordedincluded as part of Prepayment costs on debt in the consolidated statementsstatement of income. Such reclassifications amounted to $867,000, $776,000 and $816,000 during 2021, 2020 and 2019, respectively.income for the year ended December 31, 2021.
During the twelve months ending December 31, 2022,2024, the Company estimates an additional $930,000$714,000 will be reclassified from Accumulated other comprehensive income as an increasea decrease to Interest expense.
F-25
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 9—FAIR VALUE MEASUREMENTS (Continued)
The derivative agreements in effect at December 31, 20212023 provide that if the wholly-ownedwholly owned subsidiary of the Company which is a party to such agreement defaults or is capable of being declared in default on any of its indebtedness, then a default can be declared on such subsidiary’s derivative obligation. In addition, the Company is a party to the derivative agreements and if there is a default by the subsidiary on the loan subject to the derivative agreement to which the Company is a party and if there are swap breakage losses on account of the derivative being terminated early, the Company could be held liable for such swap breakage losses.
As of December 31, 2021 and 2020, the fair value of the derivatives in a liability position, including accrued interest of $84,000 and $120,000, respectively, but excluding any adjustments for non-performance risk, was approximately $1,632,000 and $5,314,000, respectively. In the event the Company had breaches of any of the contractual provisions of the derivative contracts, it would be required to settle its obligations thereunder at their termination liability value of $1,632,000 and $5,314,000 as of December 31, 2021 and 2020, respectively. This termination liability value, net of adjustments for non-performance risk of $34,000 and $182,000, is included in Accrued expenses and other liabilities on the consolidated balance sheets at December 31, 2021 and 2020, respectively.
NOTE 10—10 — RELATED PARTY TRANSACTIONS
Compensation and Services Agreement
Pursuant to the compensation and services agreement with Majestic Property Management Corp. (“Majestic”), Majestic provides the Company with certain (i) executive, administrative, legal, accounting, clerical, property management, property acquisition, consulting (i.e., sale, leasing, brokerage, and mortgage financing), and construction supervisory services (collectively, the “Services”) and (ii) facilities and other resources. Majestic is wholly-ownedwholly owned by the Company’s vice chairman and it provides compensation to several of the Company’s executive officers.
In
F-27
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 10 — RELATED PARTY TRANSACTIONS (CONTINUED)
During 2023, 2022, and 2021, in consideration for the Services, the Company paid Majestic $3,317,000, $3,067,000 and $3,111,000, in 2021, $3,011,000 in 2020 and $2,826,000 in 2019.respectively. Included in these fees are $1,510,000 in 2023, $1,346,000 in 2022 and $1,365,000 in 2021 $1,265,000 in 2020 and $1,307,000 in 2019, of property management services. The amounts paid for property management services isare based on 1.5% and 2.0% of the rental payments (including tenant reimbursements) actually received by the
Company from net lease tenants and operating lease tenants, respectively. The Company does not pay Majestic with respect to properties managed by third parties. TheDuring 2023, 2022 and 2021, the Company also paid Majestic, pursuant to the compensation and services agreement, $317,000, $317,000 and $295,000, in 2021, $275,000 in 2020 and $216,000 in 2019respectively, for the Company’s share of all direct office expenses, including rent, telephone, postage, computer services, internet usage and supplies.
Executive officers and all others providing services to the Company under the compensation and services agreement were awarded shares of restricted stock and RSUsrestricted stock units (“RSUs”) under the Company’s stock incentive plans (described in Note 12). Theplans. During 2023, 2022 and 2021, the related expense charged to the Company’s operations was $2,499,000, $2,572,000 and $2,590,000, $2,349,000 and $1,973,000 in 2021, 2020 and 2019, respectively.
The amounts paid under the compensation and services agreement (except for the property management services which are included in Real estate expenses) and the costs of the stock incentive plans are included in General and administrative expense on the consolidated statements of income for 2021, 2020 and 2019.
F-26
Table of Contentsincome.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 10—RELATED PARTY TRANSACTIONS (Continued)
Joint Venture Partners and Affiliates
During 2021, 20202023, 2022 and 2019,2021, the Company paid an aggregate of $83,000, $76,000$90,000, $84,000 and $82,000$83,000, respectively, to its consolidated joint venture partner or their affiliates (none of whom are officers, directors, or employees of the Company) for property management services, which are included in Real estate expenses on the consolidated statements of income.
The
During 2023, 2022 and 2021, the Company’s unconsolidated joint ventures paid management fees of $115,000, $131,000 and $118,000, $93,000 and $117,000respectively, to the other partner of the ventures, which increased Equity in loss on the consolidated statement of income by $57,000 during 2023 and reduced Equity in earnings on the consolidated statements of income by $59,000, $47,000$66,000 and $59,000 during 2022 and 2021, 2020 and 2019, respectively. In addition, in 2020, an unconsolidated joint venture of the Company paid a leasing commission and development fee totaling $75,000 to the other partner of the venture, which was in Investment in unconsolidated joint ventures on the consolidated balance sheet as of December 31, 2020.
Other
During 2021, 20202023, 2022 and 2019,2021, the Company paid fees of (i) $298,000, $298,000$313,000, $313,000 and $289,000,$298,000, respectively, to the Company’s chairman and (ii) $119,000, $119,000$125,000, $125,000 and $116,000,$119,000, respectively, to the Company’s vice chairman. These fees are included in General and administrative expense on the consolidated statements of income.
At December 31, 20212023 and 2020,2022, Gould Investors L.P. (“Gould Investors”), a related party, owned 1,921,7122,180,931 and 1,894,8831,998,535 shares of the outstanding common stock of the Company, respectively, or approximately 9.2%10.4% and 9.2%9.5%, respectively.
The Company obtains its property insurance in conjunction with Gould Investors and reimburses Gould Investors annually for the Company’s insurance cost relating to its properties. Amounts reimbursed to Gould Investors were $1,402,000, $1,168,000$1,093,000, $586,000 and $1,025,000$1,402,000 during 2021, 20202023, 2022 and 2019,2021, respectively. Included in Real estate expenses on the consolidated statements of income is insurance expense of $893,000, $944,000 and $1,267,000 $1,091,000during 2023, 2022 and $927,000 during 2021, 2020 and 2019, respectively. The balance of the amounts reimbursed to Gould Investors represents prepaid insurance and is included in Otherother assets on the consolidated balance sheets.
F-27
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 11—EARNINGS PER COMMON SHARE
Basic earnings per share was determined by dividing net income allocable to common stockholders for each year by the weighted average number of shares of common stock outstanding during the applicable year. Net income is also allocated to the unvested restricted stock outstanding during each year, as the restricted stock is entitled to receive dividends and is therefore considered a participating security. As of December 31, 2021, the shares of common stock underlying the RSUs awarded in 2019 through 2021 under the 2019 Incentive Plan (see Note 12) are excluded from the basic earnings per share calculation, as these units are not participating securities.
Diluted earnings per share reflects the potential dilution that could occur if securities or other rights exercisable for, or convertible into, common stock were exercised or converted or otherwise resulted in the issuance of common stock that shared in the earnings of the Company.
The following table provides a reconciliation of the numerator and denominator of earnings per share calculations (amounts in thousands, except per share amounts):
| | | | | | | | | |
| | Year Ended December 31, | |||||||
| | 2021 |
| 2020 |
| 2019 | |||
Numerator for basic and diluted earnings per share: | | | | | | | | | |
Net income | | $ | 39,034 | | $ | 27,413 | | $ | 18,544 |
Deduct net income attributable to non-controlling interests | | | (177) | |
| (6) | |
| (533) |
Deduct earnings allocated to unvested restricted stock (a) | | | (1,326) | |
| (1,263) | |
| (1,227) |
Net income available for common stockholders: basic and diluted | | $ | 37,531 | | $ | 26,144 | | $ | 16,784 |
Denominator for basic earnings per share: | | | | | | | | | |
Weighted average number of common shares outstanding | | | 20,086 | |
| 19,571 | |
| 19,090 |
Effect of dilutive securities: RSUs | | | 178 | |
| 28 | |
| 29 |
Denominator for diluted earnings per share: | | | | | | | | | |
Weighted average number of shares | | | 20,264 | |
| 19,599 | |
| 19,119 |
| | | | | | | | | |
Earnings per common share, basic | | $ | 1.87 | | $ | 1.34 | | $ | 0.88 |
Earnings per common share, diluted | | $ | 1.85 | | $ | 1.33 | | $ | 0.88 |
F-28
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 20212023
NOTE 11—EARNINGS PER COMMON SHARE (Continued)
The following table identifies the number of shares of common stock underlying the RSUs that are included in the calculation, on a diluted basis, of the weighted average number of shares of common stock for such years:
| | | | | | | | | | |
Year Ended December 31, 2021: | ||||||||||
|
| Total Number of |
| Shares Included Based on (a) |
| | ||||
| | Underlying | | Return on | | Stockholder | | | | Shares |
Date of Award | | Shares (b)(c) | | Capital Metric | | Return Metric | | Total | | Excluded (d) |
August 3, 2021 | | 80,700 | | 40,350 | | 40,350 | | 80,700 | | — |
August 3, 2020 |
| 75,026 | | 37,513 | | 37,513 | | 75,026 | | — |
July 1, 2019 |
| 75,026 | | 37,513 | | 37,513 | | 75,026 | | — |
Totals |
| 230,752 | | 115,376 |
| 115,376 |
| 230,752 |
| — |
| | | | | | | | | | |
Year Ended December 31, 2020: | ||||||||||
|
| Total Number of |
| Shares Included Based on (a) |
| | ||||
| | Underlying | | Return on | | Stockholder | | | | Shares |
Date of Award | | Shares (b)(c) | | Capital Metric | | Return Metric | | Total | | Excluded (d) |
August 3, 2020 | | 75,026 | | 37,513 | | 37,513 | | 75,026 | | — |
July 1, 2019 | | 75,026 | | 23,233 | | — | | 23,233 | | 51,793 |
July 1, 2018 (e) | | 73,750 | | 24,823 | | — | | 24,823 | | 48,927 |
Totals |
| 223,802 | | 85,569 |
| 37,513 |
| 123,082 |
| 100,720 |
| | | | | | | | | | |
Year Ended December 31, 2019: | ||||||||||
|
| Total Number of |
| Shares Included Based on (a) |
| | ||||
| | Underlying | | Return on | | Stockholder | | | | Shares |
Date of Award | | Shares (b)(c) | | Capital Metric | | Return Metric | | Total | | Excluded (d) |
July 1, 2019 | | 75,026 | | 728 | | — | | 728 | | 74,298 |
July 1, 2018 (e) | | 73,750 | | 14,755 | | 3,273 | | 18,028 | | 55,722 |
September 26, 2017 (f) | | 76,250 | | 22,129 | | 31,498 | | 53,627 | | 22,623 |
Totals |
| 225,026 | | 37,612 |
| 34,771 |
| 72,383 |
| 152,643 |
There were 0 options outstanding to purchase shares of common stock or other rights exercisable for, or convertible into, common stock in 2021, 2020 and 2019.
F-29
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 12—11 — STOCKHOLDERS’ EQUITY
Stock Based Compensation
The Company’s 2019 Incentive Plan (“Plan”), approved by the Company’s stockholders in June 2019, permits the Company to grant, among other things, stock options, restricted stock, RSUs, performance share awards and dividend equivalent rights and any one or more of the foregoing to its employees, officers, directors and consultants. A maximum of 750,000 shares of the Company’s common stock is authorized for issuance pursuant to this Plan. As of December 31, 2021, an aggregate of 524,952 shares subject to awards in the form of restricted stock (294,200 shares) and RSUs (230,752 shares) are outstanding under the Plan. On January 12, 2022, 153,575 restricted shares were issued pursuant to this Plan, having an aggregate value of approximately $5,183,000 and are scheduled to vest in January 2027.
Under the Company’s 2016 equity incentive plan (the “Prior Plan”), as of December 31, 2021, (i) an aggregate of 412,250 shares in the form of restricted stock are outstanding and have not yet vested, and (ii) with respect to 76,250 shares of common stock underlying RSUs that had been granted in each of 2018 and 2017, 73,750 and 24,343 shares were deemed to have vested in 2021 and 2020, respectively, and such shares were issued after the Compensation Committee determined that the metrics with respect to such shares had been satisfied. RSUs with respect to the 2,500 and 51,907 share balances under the 2018 and 2017 RSU grants were forfeited in 2019 and 2020, respectively. NaN additional awards may be granted under the Prior Plan.
For accounting purposes, the restricted stock is not included in the shares shown as outstanding on the balance sheet until they vest; however, dividends are paid on the unvested shares. The restricted stock grants are charged to General and administrative expense over the respective vesting periods based on the market value of the common stock on the grant date. Unless earlier forfeited because the participant’s relationship with the Company terminated, unvested restricted stock awards vest five years from the grant date, and under certain circumstances may vest earlier.Common Stock Dividend
In 2021, 2020 and 2019, the Company granted RSUs exchangeable for up to 80,700, 75,026 and 77,776 shares, respectively, of common stock upon satisfaction, through June 30, 2024, June 30, 2023 and June 30, 2022, respectively, of metrics related to average annual total stockholder return (the “TSR Metric”) and average annual return on capital (the “ROC Metric”; together with the TSR Metric, the “Metrics”). Up to 50% of the RSUs vest upon satisfaction of the TSR Metric (the “TSR Awards”) and up to 50% of the RSUs vest upon satisfaction of the ROC Metric (the “ROC Awards”). The RSUs vest only if the recipient maintains a relationship with the Company during the applicable three-year performance cycle. RSUs are not entitled to voting or dividends rights; however, upon vesting, the holders of the RSUs granted in 2021 are entitled to receive an amount equal to the dividends that would have been paid on the underlying shares had such shares been outstanding during the three-year performance cycle. The Company accrued $27,000 for such dividend equivalent rights based on the number of shares underlying the 2021 RSUs that would be issued based on performance and market assumptions determined as of December 31, 2021.
The TSR Metrics and ROC Metrics meet the definition of a market condition and performance condition, respectively. The shares underlying the RSUs are excluded from the shares shown as outstanding on the balance sheet. For the TSR Awards, a third party appraiser prepared a Monte Carlo simulation pricing model to determine the fair value of such awards, which is recognized ratably over the service period. The Monte Carlo valuation consisted of computing the grant date fair value of the awards using the Company’s simulated stock price. For these TSR awards, the per unit or share fair value was estimated using the following assumptions:
| | | | | | | | | |
TSR Award Year |
| Expected Life (yrs) |
| Dividend Rate |
| Risk-Free Interest Rate |
| Expected Price Volatility (a) |
|
2021 |
| 3 |
| 5.91% | | 0.03% - 0.35% | | 26.74% - 41.53% | |
2020 |
| 3 |
| 10.40% | | 0.10% - 0.18% | | 51.24% - 77.92% | |
2019 |
| 3 |
| 6.22% | | 1.79% - 2.07% | | 21.37% - 23.04% | |
F-30
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 12—STOCKHOLDERS’ EQUITY (Continued)
For the ROC Awards, the fair value is based on the market value on the date of grant and the performance assumptions are re-evaluated quarterly. The Company does not recognize expense on ROC Awards which it does not expect the performance and/or market conditions to be met.
As of December 31, 2021, based on performance and market assumptions, the fair value of the RSUs granted in 2021, 2020 and 2019 is $1,808,000, $962,000 and $1,446,000, respectively. Recognition of such deferred compensation will be charged to General and administrative expense over the respective three-year performance cycle. NaN of these RSUs were forfeited or vested during the year ended December 31, 2021.
The following is a summary of the activity of the equity incentive plans:
| | | | | | | | | |
| | | | | | | | | |
| | Year Ended December 31, | |||||||
| | 2021 |
| 2020 |
| 2019 | |||
Restricted stock grants: | | | | | | | | | |
Number of shares | | | 151,500 | | | 149,550 | | | 150,050 |
Average per share grant price | | $ | 20.34 | | $ | 28.10 | | $ | 25.70 |
Deferred compensation to be recognized over vesting period | | $ | 3,082,000 | | $ | 4,202,000 | | $ | 3,856,000 |
| | | | | | | | | |
Number of non-vested shares: | | | | | | | | | |
Non-vested beginning of year | | | 701,675 | | | 674,250 | | | 651,250 |
Grants | |
| 151,500 | |
| 149,550 | |
| 150,050 |
Vested during year | |
| (145,725) | |
| (122,125) | |
| (114,650) |
Forfeitures | |
| (1,000) | |
| — | |
| (12,400) |
Non-vested end of year | |
| 706,450 | |
| 701,675 | |
| 674,250 |
| | | | | | | | | |
RSU grants: | | | | | | | | | |
Number of underlying shares | | | 80,700 | | | 75,026 | | | 77,776 |
Average per share grant price | | $ | 30.46 | | $ | 17.31 | | $ | 28.96 |
Deferred compensation to be recognized over vesting period | | $ | 1,808,000 | | $ | 850,000 | | $ | 865,000 |
| | | | | | | | | |
Number of non-vested shares: | | | | | | | | | |
Non-vested beginning of year | | | 223,802 | | | 225,026 | | | 152,500 |
Grants | | | 80,700 | | | 75,026 | | | 77,776 |
Vested during year | | | (73,750) | | | (24,343) | | | — |
Forfeitures | | | — | | | (51,907) | | | (5,250) |
Non-vested end of year | | | 230,752 | | | 223,802 | | | 225,026 |
| | | | | | | | | |
Restricted stock and RSU grants (based on grant price): | | | | | | | | | |
Weighted average per share value of non-vested shares | | $ | 25.04 | | $ | 24.98 | | $ | 24.96 |
Value of stock vested during the year | | $ | 5,165,000 | | $ | 3,589,000 | | $ | 2,365,000 |
Weighted average per share value of shares forfeited during the year | | $ | 24.62 | | $ | 24.03 | | $ | 25.40 |
| | | | | | | | | |
Total charge to operations: | | | | | | | | | |
Outstanding restricted stock grants | | $ | 3,734,000 | | $ | 3,529,000 | | $ | 3,229,000 |
Outstanding RSUs | | | 1,699,000 | | | 1,157,000 | | | 641,000 |
Total charge to operations | | $ | 5,433,000 | | $ | 4,686,000 | | $ | 3,870,000 |
F-31
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2021
NOTE 12—STOCKHOLDERS’ EQUITY (Continued)
As of December 31, 2021, total compensation costs of $7,137,000 and $2,292,000 related to non-vested restricted stock awards and RSUs, respectively, have not yet been recognized. These compensation costs will be charged to General and administrative expense over the remaining respective vesting periods. The weighted average vesting period is 2.1 years for the restricted stock and 1.5 years for the RSUs.
Common Stock Dividend Distributions
In each of 20212023, 2022 and 2019,2021, the Board of Directors declared an aggregate $1.80 per share in cash distributions. The following table details the Company’s dividend activity for the year ended December 31, 2020 (amounts in thousands, except per share data):
| | | | | | | | | | | | | | | |
|
| | Total |
| Dividend Paid |
| | Cash |
| Stock | | | Value | ||
Declaration Date (a) |
| | Dividend |
| Cash % |
| Stock % |
| | Distributed |
| Issued | | | per Share |
March 13, 2020 | | $ | 9,037 | | 100.0 | | — | | $ | 9,037 | | — | | | — |
June 10, 2020 (b) | | $ | 9,068 | | 50.0 | | 50.0 | | $ | 4,537 | | 263 | | $ | 17.22 |
September 9, 2020 (b) | | $ | 9,198 | | 75.0 | | 25.0 | | $ | 6,901 | | 141 | | $ | 16.27 |
December 2, 2020 | | $ | 9,261 | | 100.0 | | — | | $ | 9,261 | | — | | | — |
|
On March 10, 2022,4, 2024, the Board of Directors declared a quarterly cash dividend of $0.45$0.45 per share on the Company’s common stock, totaling approximately $9,504,000$9,500,000. The quarterly dividend is payable on April 7, 20224, 2024 to stockholders of record on March 24, 2022.27, 2024.
Change in Authorized Capital
In 2020,Stock Repurchase Program
During 2022 and 2023, the Board of Directors authorized and/or amended repurchase programs pursuant to which the Company filed an amendedcould repurchase shares of its common stock in open-market, through privately negotiated transactions or otherwise. During 2023 and restated charter with2022, the Maryland State Department of AssessmentsCompany repurchased approximately 499,000 and Taxation, which, among other things, increased the number of208,000 shares of common stock, for total consideration of $9,638,000 and $5,214,000, net of commissions of $30,000 and $12,000, respectively. As of December 31, 2023, the Company is authorized to issue from 25,000,000repurchase approximately $8,082,000 of shares to 50,000,000 shares.of common stock.
No shares were repurchased by the Company during 2021.
Shares Issued through the At-the-Market Equity Offering Program
The Company did not sell any shares during 2023.
During 2022, the Company sold approximately 17,000 shares for proceeds of $604,000, net of commissions of $12,000, and incurred offering costs of $41,000 for professional fees. During 2021, the Company sold 106,290 shares for proceeds of $3,379,000, net of commissions of $69,000, and incurred offering costs of $65,000 for professional fees.
Dividend Reinvestment Plan
The Company’s Dividend Reinvestment Plan (the “DRP”), among other things, provides stockholders with the opportunity to reinvest all or a portion of their cash dividends paid on the Company’s common stock in additional shares of its common stock, at a discount, determined in the Company’s sole discretion, of up to 5%5% from the market price (as such price is calculated pursuant to the DRP). In June 2020, the Company suspended, and in June 2021, the Company reinstated, the dividend reinvestment feature of its DRP. The discount from the market price is determined in the Company’s sole discretion; prior to the suspension, the shares werecurrently being offered at a 5% discount and after the reinstatement shares were offered at a 3% discount.. Under the DRP, the Company issued 35,000, 77,000approximately 233,000, 102,000 and 220,00035,000 shares of common stock during 2023, 2022 and 2021, 2020 and 2019, respectively.
Shares Issued throughStock Based Compensation
The Company’s 2022, 2019 and 2016 Incentive Plans (collectively, the At-the-Market Equity Offering Program
During 2021,“Plans”) permit the Company sold 106,290to grant, among other things, stock options, restricted stock, RSUs, performance share awards and dividend equivalent rights and any one or more of the foregoing to its employees, officers, directors and consultants. A maximum of 750,000 shares of the Company’s common stock was authorizedfor proceedsissuance pursuant to each plan at such plan’s inception.
F-29
Table of $3,379,000, netContents
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 11 — STOCKHOLDERS’ EQUITY (CONTINUED)
The following details the shares subject to awards that are outstanding under the Plans as of commissionsDecember 31, 2023:
| | | | | | |
| | 2022 | | 2019 | | 2016 |
|
| Incentive Plan (a) |
| Incentive Plan (b) |
| Incentive Plan (b) |
Restricted stock | | 149,335 | | 426,625 | | 136,600 |
RSUs | | 168,490 | | 79,622 | | — |
Totals | | 317,825 | | 506,247 | | 136,600 |
(a) | On January 12, 2024, 151,180 restricted shares were issued pursuant to this plan, having an aggregate value of approximately $3,265,000 and are scheduled to vest in January 2029. |
(b) | No additional awards may be granted under such plans. |
For accounting purposes, the restricted stock is not included in the shares shown as outstanding on the balance sheet until they vest; however, dividends are paid on the unvested shares. The restricted stock grants are charged to General and administrative expense over the respective vesting periods based on the market value of $69,000, and incurred offering costs of $65,000 for professional fees. During 2019,the common stock on the grant date. Unless earlier forfeited because the participant’s relationship with the Company sold 180,120 shares for proceeds of $5,392,000, net of commissions of $54,000,terminated, unvested restricted stock awards vest five years from the grant date, and incurred offering costs of $192,000 for professional fees. under certain circumstances may vest earlier.
The Company did not sell any sharesfollowing table reflects the activities involving RSUs that were outstanding during the year ended December 31, 2020. Subsequent2023:
| | | | | | | | | | | |
|
| 2023 | | 2022 | | 2021 | | 2020 | | 2019 | |
RSUs granted (a) | | 85,250 | | 85,350 | | 80,700 | | 75,026 | | 77,776 | |
RSUs vested | | — | | — | | — | | 74,988 | (b) | 64,488 | (c) |
RSUs forfeited | | — | | 2,110 | (d) | 1,078 | (d) | 38 | (d) | 13,288 | (e) |
RSUs outstanding | | 85,250 | | 83,240 | | 79,622 | | — | | — | |
Vesting Date (f) (g) | | 6/30/2026 | | 6/30/2025 | | 6/30/2024 | | 6/30/2023 | | 6/30/2022 | |
(a) | The shares underlying the RSUs are excluded from the shares shown as outstanding on the balance sheet until they have vested and been issued. |
(b) | Such shares were issued in August 2023. |
(c) | Such shares were issued in August 2022. |
(d) | Such shares were forfeited due to the retirement of a recipient before the completion of the applicable three-year performance cycle. |
(e) | Of the shares forfeited from the 2019 grant, 10,538 shares were not earned in 2022 because the applicable market condition was only partially satisfied and the remaining 2,750 shares were forfeited in 2019. |
(f) | Generally, the recipient must maintain a relationship with the Company during the applicable three-year performance cycle. |
(g) | RSUs vest upon satisfaction of metrics related to average annual total stockholder return (“TSR Metric”) and average annual return on capital (“ROC Metric”; together with the TSR Metric, the “Metrics”) and are issued to the extent the Compensation Committee determines that the Metrics with respect to the vesting of such shares have been satisfied. |
F-30
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 11 — STOCKHOLDERS’ EQUITY (CONTINUED)
The specific metrics and other material terms and conditions of the RSUs are as follows:
| | | | | | | | |
| | | | | | Performance Criteria (a) | ||
Year RSU Granted | | Metric | | Weight | | Minimum | | Maximum |
2019 - 2020 (b) | | ROC Metric (c) | | 50% | | Average annual of at least 7.0% | | Average annual of at least 9.75% |
| | TSR Metric (d) | | 50% | | Average annual of at least 7.0% | | Average annual of at least 12.0% |
2021 - 2023 (e) (f) | | ROC Metric (c) | | 50% | | Average annual of at least 6.0% | | Average annual of at least 8.75% |
| | TSR Metric (d) | | 50% | | Average annual of at least 6.0% | | Average annual of at least 11.0% |
(a) If the average annual ROC or TSR falls between the applicable minimum and maximum performance criteria, a pro-rata portion of such units, as applicable, vest.
(b) Such RSUs were not entitled to voting or dividend rights.
(c) The ROC Metrics meet the definition of a performance condition. Fair value is based on the market value on the date of grant. For ROC Awards, the Company does not recognize expense when performance conditions are not expected to be met; such performance assumptions are re-evaluated quarterly.
(d) The TSR Metrics meet the definition of a market condition. A third-party appraiser prepares a Monte Carlo simulation pricing model to determine the fair value of such awards, which is recognized ratably over the three-year service period. For these TSR awards, the per unit or share fair value was estimated using the following assumptions:
| | | | | | | | | |
TSR Award Year |
| Expected |
| Dividend |
| Risk-Free |
| Expected Price |
|
2023 |
| 3 |
| 8.72% | | 4.42% - 5.28% | | 28.69% - 30.05% | |
2022 |
| 3 |
| 7.10% | | 1.58% - 3.33% | | 29.37% - 39.87% | |
2021 |
| 3 |
| 5.91% | | 0.03% - 0.35% | | 26.74% - 41.53% | |
(1) | Calculated based on the historical and implied volatility. |
(e) Such RSUs are (i) not entitled to voting rights and (ii) upon vesting, the holders receive an amount equal to the dividends that would have been paid on the underlying shares had such shares been outstanding during the three-year performance cycle.
(f) As of December 31, 20212023 and through March 1, 2022, the Company sold 17,259accrued an aggregate of $450,000 and $210,000 of dividend equivalents, respectively, for the 2023, 2022 and 2021 RSUs based on the number of shares that would have been issued, underlying such RSUs, using performance and market assumptions determined as of such dates.
As of December 31, 2023, based on performance and market assumptions, the fair value of the RSUs granted in 2023, 2022 and 2021 is $958,000, $1,371,000 and $1,822,000, respectively. Recognition of such deferred compensation will be charged to General and administrative expense over the respective three-year performance cycle.
F-31
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 11 — STOCKHOLDERS’ EQUITY (CONTINUED)
The following is a summary of the activity of the equity incentive plans:
| | | | | | | | | |
| | Year Ended December 31, | |||||||
| | 2023 |
| 2022 |
| 2021 | |||
Restricted stock grants: | | | | | | | | | |
Number of shares | | | 152,955 | | | 153,575 | | | 151,500 |
Average per share grant price | | $ | 22.09 | | $ | 33.75 | | $ | 20.34 |
Deferred compensation to be recognized over vesting period | | $ | 3,379,000 | | $ | 5,183,000 | | $ | 3,082,000 |
| | | | | | | | | |
Number of non-vested shares: | | | | | | | | | |
Non-vested beginning of the year | | | 712,375 | | | 706,450 | | | 701,675 |
Grants | |
| 152,955 | | | 153,575 | |
| 151,500 |
Vested during the year | |
| (152,300) | | | (146,900) | |
| (145,725) |
Forfeitures | |
| (470) | | | (750) | |
| (1,000) |
Non-vested end of the year | |
| 712,560 | |
| 712,375 | |
| 706,450 |
| | | | | | | | | |
RSU grants: | | | | | | | | | |
Number of underlying shares | | | 85,250 | | | 85,350 | | | 80,700 |
Average per share grant price | | $ | 20.32 | | $ | 26.44 | | $ | 30.46 |
Deferred compensation to be recognized over vesting period | | $ | 958,000 | | $ | 1,420,000 | | $ | 1,808,000 |
| | | | | | | | | |
Number of non-vested shares: | | | | | | | | | |
Non-vested beginning of the year | | | 241,076 | | | 230,752 | | | 223,802 |
Grants | | | 85,250 | | | 85,350 | | | 80,700 |
Vested during the year | | | (74,988) | | | (64,488) | | | (73,750) |
Forfeitures | | | (3,226) | | | (10,538) | | | — |
Non-vested end of the year | | | 248,112 | | | 241,076 | | | 230,752 |
| | | | | | | | | |
Restricted stock and RSU grants (based on grant price): | | | | | | | | | |
Weighted average per share value of non-vested shares | | $ | 25.90 | | $ | 26.26 | | $ | 25.04 |
Value of stock vested during the year | | $ | 5,165,000 | | $ | 5,535,000 | | $ | 5,165,000 |
Weighted average per share value of shares forfeited during the year | | $ | 27.52 | | $ | 29.12 | | $ | 24.62 |
| | | | | | | | | |
Total charge to operations: | | | | | | | | | |
Outstanding restricted stock grants | | $ | 3,979,000 | | $ | 4,057,000 | | $ | 3,734,000 |
Outstanding RSUs | | | 1,388,000 | | | 1,450,000 | | | 1,699,000 |
Total charge to operations | | $ | 5,367,000 | | $ | 5,507,000 | | $ | 5,433,000 |
As of December 31, 2023, total compensation costs of $7,627,000 and $1,797,000 related to non-vested restricted stock awards and RSUs, respectively, have not yet been recognized. These compensation costs will be charged to General and administrative expense over the remaining respective vesting periods. The weighted average vesting period is 2.1 years for proceeds of $604,000, net of commissions of $12,000the restricted stock and .1.5 years for the RSUs.
F-32
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2023
NOTE 12 — EARNINGS PER COMMON SHARE
Basic earnings per share was determined by dividing net income allocable to common stockholders for each year by the weighted average number of shares of common stock outstanding during the applicable year. Net income is also allocated to the unvested restricted stock outstanding during each year, as the restricted stock is entitled to receive dividends and is therefore considered a participating security. As of December 31, 2023, the shares of common stock underlying the RSUs (see Note 11) are excluded from the basic earnings per share calculation, as these units are not participating securities until they vest and are issued.
Diluted earnings per share reflects the potential dilution that could occur if securities or other rights exercisable for, or convertible into, common stock were exercised or converted or otherwise resulted in the issuance of common stock that shared in the earnings of the Company.
The following table provides a reconciliation of the numerator and denominator of earnings per share calculations (amounts in thousands, except per share amounts):
| | | | | | | | | |
| | Year Ended December 31, | |||||||
| | 2023 |
| 2022 |
| 2021 | |||
Numerator for basic and diluted earnings per share: | | | | | | | | | |
Net income | | $ | 29,918 | | $ | 42,253 | | $ | 39,034 |
Deduct net income attributable to non-controlling interests | | | (304) | | | (76) | |
| (177) |
Deduct earnings allocated to unvested restricted stock (a) | | | (1,291) | | | (1,434) | |
| (1,326) |
Net income available for common stockholders: basic and diluted | | $ | 28,323 | | $ | 40,743 | | $ | 37,531 |
Denominator for basic earnings per share: | | | | | | | | | |
Weighted average number of common shares outstanding | | | 20,499 | | | 20,360 | |
| 20,086 |
Effect of dilutive securities: RSUs | | | 57 | | | 93 | |
| 178 |
Denominator for diluted earnings per share: | | | | | | | | | |
Weighted average number of shares | | | 20,556 | |
| 20,453 | |
| 20,264 |
| | | | | | | | | |
Earnings per common share, basic | | $ | 1.38 | | $ | 2.00 | | $ | 1.87 |
Earnings per common share, diluted | | $ | 1.38 | | $ | 1.99 | | $ | 1.85 |
(a) | Represents an allocation of distributed earnings to unvested restricted stock that, as participating securities, are entitled to receive dividends. |
F-33
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 12 — EARNINGS PER COMMON SHARE (CONTINUED)
The following table identifies the number of shares of common stock underlying the RSUs that are included in the calculation, on a diluted basis, of the weighted average number of shares of common stock for such years:
| | | | | | | | | | |
Year Ended December 31, 2023: | ||||||||||
|
| Total Number |
| Shares Included Based on (a) |
| | ||||
| | of Underlying | | Return on | | Stockholder | | | | Shares |
Date of Award |
| Shares |
| Capital Metric |
| Return Metric |
| Total |
| Excluded (b) |
July 1, 2023 (c) | | 85,250 | | 23,237 | | 42,625 | | 65,862 | | 19,388 |
July 1, 2022 (c)(d) | | 83,240 | | 35,050 | | — | | 35,050 | | 48,190 |
August 3, 2021 (c)(d) | | 79,622 | | 39,811 | | — | | 39,811 | | 39,811 |
Totals | | 248,112 | | 98,098 |
| 42,625 |
| 140,723 |
| 107,389 |
| | | | | | | | | | |
Year Ended December 31, 2022: | ||||||||||
|
| Total Number |
| Shares Included Based on (a) |
| | ||||
| | of Underlying | | Return on | | Stockholder | | | | Shares |
Date of Award |
| Shares |
| Capital Metric |
| Return Metric |
| Total |
| Excluded (b) |
July 1, 2022 (c) | | 85,350 | | 40,222 | | — | | 40,222 | | 45,128 |
August 3, 2021 (c) |
| 80,700 | | 40,350 | | — | | 40,350 | | 40,350 |
August 3, 2020 (e) |
| 75,026 | | 37,513 | | 37,513 | | 75,026 | | — |
Totals |
| 241,076 |
| 118,085 |
| 37,513 |
| 155,598 |
| 85,478 |
| | | | | | | | | | |
Year Ended December 31, 2021: | ||||||||||
|
| Total Number |
| Shares Included Based on (a) |
| | ||||
| | of Underlying | | Return on | | Stockholder | | | | Shares |
Date of Award | | Shares |
| Capital Metric |
| Return Metric |
| Total | | Excluded (b) |
August 3, 2021 (c) | | 80,700 | | 40,350 | | 40,350 | | 80,700 | | — |
August 3, 2020 (e) |
| 75,026 | | 37,513 | | 37,513 | | 75,026 | | — |
July 1, 2019 (f) |
| 75,026 | | 37,513 | | 37,513 | | 75,026 | | — |
Totals |
| 230,752 | | 115,376 |
| 115,376 |
| 230,752 |
| — |
(a) | Reflects the number of shares underlying RSUs that would be issued assuming the measurement date used to determine whether the applicable conditions are satisfied is December 31 of the applicable year. |
(b) | Excluded as the applicable conditions had not been met for these shares at the applicable measurement dates. |
(c) | The RSUs awarded in 2023, 2022 and 2021 vest, subject to satisfaction of the applicable market and/or performance conditions, as of June 30, 2026, 2025 and 2024, respectively (see Note 11). |
(d) | As of December 31, 2023, 1,078 shares of the 2021 award and 2,110 shares of the 2022 award were forfeited due to the retirement of a recipient before the completion of the applicable three-year performance cycle. |
(e) | With respect to the RSUs awarded August 3, 2020, 74,988 shares were deemed to have vested and the balance of 38 shares were forfeited in June 2023. The vested shares were issued in August 2023 (see Note 11). |
(f) | With respect to the RSUs awarded July 1, 2019, 64,488 shares were deemed to have vested and the balance of 10,538 shares were forfeited in June 2022. The vested shares were issued in August 2022 (see Note 11). |
There were no options outstanding to purchase shares of common stock or other rights exercisable for, or convertible into, common stock in 2023, 2022 and 2021.
F-34
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 13—OTHER INCOME
Settlement of Litigation
During 2022, the Company received $5,388,000 in connection with the settlement of a lawsuit which was recognized as Income on settlement of litigation on the consolidated statement of income for such year.
Insurance Recoveries on Hurricane Casualty
In 2020, a portion of a multi-tenanted building atDuring 2022 and 2021, the Company’s Lake Charles, Louisiana property was damaged due to Hurricane Laura and as such, the Company recognized an impairment loss of $430,000 representing the carrying value of the damaged portion of the building based on its replacement cost (and net of accumulated depreciation of $352,000).
The Company submitted a claim to its insurance carrier to cover, less the $263,000 deductible, the (i) approximate $2,306,000 cost to rebuild the damaged portion of the building (of which $150,000, $975,000 and $918,000 were received in 2020, 2021, and February 2022, respectively), and (ii) $259,000 of losses in rental income (of which $216,000 and $43,000 were received in 2021 and February 2022, respectively). The $961,000 received in February 2022 will be recognized in the consolidated statement of income for the three months ending March 31, 2022. The Company recognized a gain on insurance recoveries of $695,000$918,000 and $430,000 during the years ended December 31, 2021 and 2020,$695,000, respectively, which is included in Other income on the consolidated statements of income.income for such years, related to hurricane damage to one of its properties in 2020. No such gain was recognized during 2023.
Lease Assignment Fee Income
InDuring 2021, the Company received a one-time fee of $100,000 from a tenant in connection with consenting to a lease assignment related to 6six of its properties; such amount is included in Other income on the consolidated statement of income for the year ended December 31, 2021.
Interest Income on Loan Receivable
In December 2020, in connection with a sale of 2 properties in Houston, Texas (see Note 5), the Company provided the buyer a $4,612,500 one-year loan representing 50% of the purchase price whichsuch year. No such income was included in other receivables on the consolidated balance sheet at December 31, 2020. The Company received $59,000 of interest income on this loan which is recorded in Other income on the consolidated statement of income for the year ended December 31, 2021. The loan was repaid in full in April 2021.recognized during 2023 and 2022.
NOTE 14—14 — COMMITMENTS AND CONTINGENCIES
The Company maintains a non-contributory defined contribution pension plan covering eligible employees. Contributions by the Company are made through a money purchase plan, based upon a percent of the qualified employees’ total salary (subject to the maximum amount allowed by law). Pension expense approximated $436,000, $349,000 and $301,000 $307,000for 2023, 2022 and $304,000 for 2021, 2020 and 2019, respectively, and is included in General and administrative expense inon the consolidated statements of income.
The Company is party to (i) leases obligating it to provide tenant improvement allowances and (ii) various legal proceedings. Management believes these allowances and proceedings are routine, and incidental to the operation of the Company’s business and that such allowance payments or proceedings will not have a material adverse effect upon the Company’s consolidated financial statements taken as a whole.
F-33F-35
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 20212023
NOTE 15—15 — INCOME TAXES
The Company elected to be taxed as a REIT under the Internal Revenue Code, commencing with its taxable year ended December 31, 1983. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its ordinary taxable income to its stockholders. As a REIT, the Company generally will not be subject to corporate level federal, state and local income tax on taxable income it distributes currently to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal, state and local income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. It is management’s current intention to adhere to these requirements and maintain the Company’s REIT status.
Even though the Company qualifies for taxation as a REIT, the Company is subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. As of December 31, 2021,2023, tax returns for the calendar years 20182020 through 20212022 remain subject to examination by the Internal Revenue Service and various state and local tax jurisdictions.
During 2021, 20202023, 2022 and 2019,2021, the Company did not incur any federal income tax expense. The Company does not have any deferred tax assets or liabilities at December 31, 20212023 and 2020.2022.
The approximate allocation of the distributions made to stockholders is as follows for the years indicated:
| | | | | | | | | |
| | Year Ended December 31, | | ||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Ordinary income (a) | | 43 | % | | 45 | % | | 73 | % |
Capital gains | | 57 | | | 47 | | | — | |
Return of capital | | — | | | 8 | | | 27 | |
| | 100 | % | | 100 | % | | 100 | % |
| | | | | | | | | |
| | Year Ended December 31, | | ||||||
|
| 2023 |
| 2022 |
| 2021 | |||
Ordinary income (a) | | 53 | % | | 54 | % | | 43 | % |
Capital gains | | 47 | | | 46 | | | 57 | |
| | 100 | % | | 100 | % | | 100 | % |
(a) | In |
The Company treats depreciation expense, straight-line rent adjustments and certain other items differently for tax purposes than for financial reporting purposes. Therefore, its taxable income and dividends paid deduction differs from its financial statement income.
The following table reconciles dividends declared with the dividends paid deduction for the years indicated (amounts in thousands):
| | | | | | | | | |
|
| 2021 |
| 2020 |
| 2019 | |||
| | Estimate | | Actual | | Actual | |||
Dividends declared | | $ | 37,478 | | $ | 36,564 | | $ | 35,663 |
Dividend reinvestment plan (a) | |
| 35 | |
| 47 | |
| 247 |
| |
| 37,513 | |
| 36,611 | |
| 35,910 |
Less: Spillover dividends designated to previous year | |
| — | |
| — | |
| — |
Less: Spillover dividends designated to following year (b) | | | (2,150) | | | (9,261) | | | (8,976) |
Less: Return of capital | | | — | | | (3,265) | | | (9,842) |
Plus: Dividends designated from prior year | | | 9,261 | | | 8,976 | | | 549 |
Plus: Dividends designated from following year | |
| — | |
| — | |
| — |
Dividends paid deduction | | $ | 44,624 | | $ | 33,061 | | $ | 17,641 |
| | | | | | | | | |
|
| 2023 |
| 2022 |
| 2021 | |||
| | Estimate | | Actual | | Actual | |||
Dividends declared | | $ | 38,116 | | $ | 37,915 | | $ | 37,478 |
Dividend reinvestment plan (a) | |
| 157 | |
| 102 | |
| 35 |
| |
| 38,273 | |
| 38,017 | |
| 37,513 |
Less: Spillover dividends designated to previous year | |
| (4,240) | |
| — | |
| — |
Less: Spillover dividends designated to following year | | | — | | | — | | | (2,085) |
Plus: Dividends designated from prior year | | | — | | | 2,085 | | | 9,261 |
Plus: Dividends designated from following year | |
| 737 | |
| 4,240 | |
| — |
Dividends paid deduction | | $ | 34,770 | | $ | 44,342 | | $ | 44,689 |
(a) | Reflects the discount on common stock purchased through the dividend reinvestment plan of |
F-34F-36
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 20212023
NOTE 16—16 — SUBSEQUENT EVENTS
Subsequent events have been evaluated and, except as noted below and previously disclosed, there were no other events relative to the consolidated financial statements that require additional disclosure.
Round Rock Guaranty Litigation
In 2019, the Company sued the guarantor of the lease at its former property in Round Rock, Texas, at which the tenant obtained bankruptcy protection and terminated its lease. (The lawsuit (the “Lawsuit”) is captioned: OLP Wyoming Springs, LLC, Plaintiff, v. Harden Healthcare, LLC, Defendant, v Benjamin Hanson, Intervenor, District Court of Williamson County, Texas, Cause No. 18-1511-C368). On February 21, 2022, the Company and the defendant entered into a settlement agreement with respect to the Lawsuit which provides that if the Company receives approximately $5,400,000 (the “Settlement Amount”) by April 15, 2022, the parties to such agreement, among other things, will (i) seek to dismiss with prejudice all of the claims by and between the parties to the agreement, (ii) seek dismissal of the Lawsuit with prejudice and (iii) release each other and certain other persons from claims and liabilities with respect to matters pertaining to the Lawsuit. If the Settlement Amount is not paid by April 15, 2022, the Company and the defendant may continue to pursue and assert all of its respective rights, claims and defenses against each other.
NOTE 17—17 — QUARTERLY FINANCIAL DATA (Unaudited):
(In Thousands, Except Per Share Data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarter Ended | | Total | | | Quarter Ended | | Total | | ||||||||||||||||||||||
2021 |
| March 31 |
| June 30 |
| Sept. 30 |
| Dec. 31 |
| For Year | | |||||||||||||||||||||
2023 |
| March 31 |
| June 30 |
| Sept. 30 |
| Dec. 31 |
| For Year | | |||||||||||||||||||||
Total revenues | | $ | 20,816 | | $ | 20,422 | | $ | 20,436 | | $ | 21,066 | | $ | 82,740 | | | $ | 22,952 | | $ | 22,407 | | $ | 22,546 | | $ | 22,741 | | $ | 90,646 | |
Gain on sale of real estate, net | | $ | — | | $ | 21,491 | | $ | 1,277 | | $ | 2,695 | | $ | 25,463 | | | $ | 1,534 | | $ | 3,180 | | $ | 332 | | $ | 11,962 | | $ | 17,008 | |
Net income | | $ | 2,957 | | $ | 23,332 | | $ | 6,212 | | $ | 6,533 | | $ | 39,034 | | | $ | 5,408 | | $ | 6,539 | | $ | 2,769 | | $ | 15,202 | | $ | 29,918 | |
Net income attributable to One Liberty Properties, Inc. | | $ | 2,962 | | $ | 23,329 | | $ | 6,059 | | $ | 6,507 | | $ | 38,857 | | | $ | 5,386 | | $ | 6,519 | | $ | 2,747 | | $ | 14,962 | | $ | 29,614 | |
Weighted average number of common shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | |
| 20,003 | |
| 20,013 | |
| 20,115 | | | 20,210 | | | 20,086 | | |
| 20,514 | |
| 20,571 | |
| 20,567 | |
| 20,342 | | | 20,499 | |
Diluted | |
| 20,061 | |
| 20,187 | |
| 20,273 | | | 20,369 | | | 20,264 | | |
| 20,579 | |
| 20,642 | |
| 20,596 | |
| 20,383 | | | 20,556 | |
Net income per common share attributable to common stockholders: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | .13 | | $ | 1.13 | | $ | .29 | | $ | .31 | | $ | 1.87 | (a) | ||||||||||||||||
Diluted | | $ | .13 | | $ | 1.12 | | $ | .28 | | $ | .30 | | $ | 1.85 | (a) | ||||||||||||||||
Basic and Diluted | | $ | .25 | | $ | .30 | | $ | .12 | | $ | .71 | | $ | 1.38 | (a) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | Total |
| | Quarter Ended | | Total |
| ||||||||||||||||||||||
2020 | |
| March 31 |
| June 30 |
| Sept. 30 |
| Dec. 31 |
| For Year |
| |||||||||||||||||||||
2022 |
| March 31 |
| June 30 |
| Sept. 30 |
| Dec. 31 |
| For Year |
| ||||||||||||||||||||||
Total revenues | | | $ | 21,239 | | $ | 20,861 | | $ | 21,071 | | $ | 18,732 | | $ | 81,903 | | | $ | 21,556 | | $ | 21,472 | | $ | 21,473 | | $ | 27,715 | | $ | 92,216 | |
Gain on sale of real estate, net | | | $ | 4,252 | | $ | — | | $ | 10,316 | | $ | 2,712 | | $ | 17,280 | | | $ | 4,649 | | $ | 8,050 | | $ | 4,063 | | $ | — | | $ | 16,762 | |
Net income | | | $ | 7,831 | | $ | 2,285 | | $ | 13,726 | | $ | 3,571 | | $ | 27,413 | | | $ | 9,340 | | $ | 16,785 | | $ | 7,221 | | $ | 8,907 | | $ | 42,253 | |
Net income attributable to One Liberty Properties, Inc. | | | $ | 7,826 | | $ | 2,284 | | $ | 13,725 | | $ | 3,572 | | $ | 27,407 | | | $ | 9,323 | | $ | 16,767 | | $ | 7,204 | | $ | 8,883 | | $ | 42,177 | |
Weighted average number of common shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | |
| 19,361 | |
| 19,445 | |
| 19,640 | | | 19,835 | | | 19,571 | | |
| 20,379 | |
| 20,364 | |
| 20,340 | |
| 20,358 | | | 20,360 | |
Diluted | | |
| 19,374 | |
| 19,505 | |
| 19,686 | | | 19,871 | | | 19,599 | | |
| 20,541 | |
| 20,480 | |
| 20,416 | |
| 20,406 | | | 20,453 | |
Net income per common share attributable to common stockholders: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | $ | .39 | | $ | .10 | | $ | .67 | | $ | .16 | | $ | 1.34 | (a) | | $ | .44 | | $ | .80 | | $ | .34 | | $ | .42 | | $ | 2.00 | (a) |
Diluted | | | $ | .39 | | $ | .10 | | $ | .67 | | $ | .16 | | $ | 1.33 | (a) | | $ | .44 | | $ | .79 | | $ | .34 | | $ | .42 | | $ | 1.99 | (a) |
(a) | Calculated on weighted average shares outstanding for the year. |
(b) | Includes $4,626 of additional rent from a ground lease tenant recognized in the quarter ended December 31, 2022 – see Note 6. |
(c) | Includes $5,388 of income from the settlement of a lawsuit received in the quarter ended June 30, 2022 – see Note 13. |
F-35F-37
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Schedule III—Consolidated Real Estate and Accumulated Depreciation
December 31, 2023
(Amounts in Thousands)
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Schedule III—Consolidated Real Estate and Accumulated Depreciation
December 31, 2021
(Amounts in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Capitalized | | Gross Amount at Which Carried | | | | | | | | ||||||||
| | | | | | | Initial Cost to Company | | Subsequent to | | at December 31, 2021 | | | | | | | | ||||||||||||
| | | | | | | | | | Building and | | Acquisition | | | | | Building & | | | | | Accumulated | | Date of | | Date | ||||
Type |
| Location |
| Encumbrances |
| Land |
| Improvements |
| Improvements |
| Land |
| Improvements |
| Total |
| Depreciation (1) |
| Construction |
| Acquired | ||||||||
Health & Fitness |
| Tucker, GA | | $ | — | | $ | 807 | | $ | 3,027 | | $ | 3,420 | | $ | 807 | | $ | 6,447 | | $ | 7,254 | | $ | 3,058 |
| 1988 |
| 2002 |
Health & Fitness |
| Hamilton, OH | |
| 4,282 | |
| 1,483 | |
| 5,953 | |
| — | |
| 1,483 | | | 5,953 | | | 7,436 | |
| 1,784 |
| 2008 |
| 2011 |
Health & Fitness |
| Secaucus, NJ | |
| 7,722 | |
| 5,449 | |
| 9,873 | |
| — | |
| 5,449 | | | 9,873 | | | 15,322 | |
| 2,249 |
| 1986 |
| 2012 |
Industrial |
| West Palm Beach, FL | |
| — | |
| 181 | |
| 724 | |
| 235 | |
| 181 | | | 959 | | | 1,140 | |
| 472 |
| 1973 |
| 1998 |
Industrial |
| New Hyde Park, NY | |
| 2,267 | |
| 182 | |
| 728 | |
| 281 | |
| 182 | | | 1,009 | | | 1,191 | |
| 510 |
| 1960 |
| 1999 |
Industrial |
| Ronkonkoma, NY | |
| 5,305 | |
| 1,042 | |
| 4,171 | |
| 2,920 | |
| 1,042 | | | 7,091 | | | 8,133 | |
| 3,129 |
| 1986 |
| 2000 |
Industrial |
| Hauppauge, NY | |
| 24,006 | |
| 1,951 | |
| 10,954 | |
| 9,600 | |
| 1,951 | | | 20,554 | | | 22,505 | |
| 8,103 |
| 1982 |
| 2000 |
Industrial |
| Melville, NY | |
| 2,396 | |
| 774 | |
| 3,029 | |
| 1,170 | |
| 774 | | | 4,199 | | | 4,973 | |
| 1,793 |
| 1982 |
| 2003 |
Industrial |
| Saco, ME | |
| 5,165 | |
| 1,027 | |
| 3,623 | |
| 2,050 | |
| 1,027 | | | 5,673 | | | 6,700 | |
| 1,630 |
| 2001 |
| 2006 |
Industrial |
| Baltimore, MD (2) | |
| 18,261 | |
| 6,474 | |
| 25,282 | |
| — | |
| 6,474 | | | 25,282 | | | 31,756 | |
| 9,507 |
| 1960 |
| 2006 |
Industrial |
| Durham, NC | |
| 2,444 | |
| 1,043 | |
| 2,404 | |
| 44 | |
| 1,043 | | | 2,448 | | | 3,491 | |
| 758 |
| 1991 |
| 2011 |
Industrial |
| Pinellas Park, FL | |
| 2,111 | |
| 1,231 | |
| 1,669 | |
| — | |
| 1,231 | | | 1,669 | | | 2,900 | |
| 432 |
| 1995 |
| 2012 |
Industrial |
| Miamisburg, OH | |
| — | |
| 165 | |
| 1,348 | |
| 83 | |
| 165 | | | 1,431 | | | 1,596 | |
| 379 |
| 1987 |
| 2012 |
Industrial |
| Fort Mill, SC | |
| 7,195 | |
| 1,840 | |
| 12,687 | |
| 55 | |
| 1,840 | | | 12,742 | | | 14,582 | |
| 2,967 |
| 1992 |
| 2013 |
Industrial |
| Indianapolis, IN | |
| 5,208 | |
| 1,224 | |
| 6,935 | |
| — | |
| 1,224 | | | 6,935 | | | 8,159 | |
| 1,833 |
| 1997 |
| 2013 |
Industrial |
| Fort Mill, SC | |
| 21,982 | |
| 1,804 | |
| 33,650 | |
| — | |
| 1,804 | | | 33,650 | | | 35,454 | |
| 8,572 |
| 1997 |
| 2013 |
Industrial |
| New Hope, MN | |
| 3,864 | |
| 881 | |
| 6,064 | |
| 154 | |
| 881 | | | 6,218 | | | 7,099 | |
| 1,129 |
| 1967 |
| 2014 |
Industrial |
| Louisville, KY | |
| — | |
| 578 | |
| 3,727 | |
| 34 | |
| 578 | | | 3,761 | | | 4,339 | |
| 672 |
| 1974 |
| 2015 |
Industrial |
| Louisville, KY | |
| — | |
| 51 | |
| 230 | |
| — | |
| 51 | | | 230 | | | 281 | |
| 41 |
| 1974 |
| 2015 |
Industrial |
| McCalla, AL | |
| 9,124 | |
| 1,588 | |
| 14,682 | |
| — | |
| 1,588 | | | 14,682 | | | 16,270 | |
| 2,418 |
| 2003 |
| 2015 |
Industrial |
| St. Louis, MO | |
| 10,344 | |
| 3,728 | |
| 13,006 | |
| 739 | |
| 3,728 | | | 13,745 | | | 17,473 | |
| 2,363 |
| 1969 |
| 2015 |
Industrial |
| Greenville, SC | |
| 4,523 | |
| 693 | |
| 6,893 | |
| 307 | |
| 693 | | | 7,200 | | | 7,893 | |
| 1,105 |
| 1997 |
| 2016 |
Industrial |
| Greenville, SC | |
| 5,026 | |
| 528 | |
| 8,074 | |
| 127 | |
| 528 | | | 8,201 | | | 8,729 | |
| 1,254 |
| 2000 |
| 2016 |
Industrial |
| El Paso, TX | |
| 12,798 | |
| 3,691 | |
| 17,904 | |
| 350 | |
| 3,691 | | | 18,254 | | | 21,945 | |
| 2,662 |
| 1997 |
| 2016 |
Industrial |
| Lebanon, TN | |
| 20,378 | |
| 2,094 | |
| 30,039 | |
| 44 | |
| 2,094 | | | 30,083 | | | 32,177 | |
| 4,117 |
| 1996 |
| 2016 |
Industrial |
| Huntersville, NC | |
| 4,561 | |
| 1,046 | |
| 6,674 | |
| — | |
| 1,046 | | | 6,674 | | | 7,720 | |
| 815 |
| 2014 |
| 2017 |
Industrial |
| Pittston, PA | |
| 6,387 | |
| 999 | |
| 9,922 | |
| 250 | |
| 999 | | | 10,172 | | | 11,171 | |
| 1,229 |
| 1990 |
| 2017 |
Industrial |
| Ankeny, IA | |
| 7,779 | |
| 1,351 | |
| 11,607 | |
| — | |
| 1,351 | | | 11,607 | | | 12,958 | |
| 1,353 |
| 2016 |
| 2017 |
Industrial |
| Memphis, TN | |
| 4,734 | |
| 140 | |
| 7,952 | |
| — | |
| 140 | | | 7,952 | | | 8,092 | |
| 872 |
| 1979 |
| 2017 |
Industrial |
| Pennsburg, PA | |
| 7,609 | |
| 1,776 | |
| 11,126 | |
| — | |
| 1,776 | | | 11,126 | | | 12,902 | |
| 1,170 |
| 1986 |
| 2018 |
Industrial |
| Plymouth, MN | |
| 3,079 | |
| 1,121 | |
| 4,429 | |
| — | |
| 1,121 | | | 4,429 | | | 5,550 | |
| 410 |
| 1978 |
| 2018 |
Industrial |
| Englewood, CO | |
| 7,820 | |
| 1,562 | |
| 11,300 | |
| — | |
| 1,562 | | | 11,300 | | | 12,862 | |
| 943 |
| 2013 |
| 2018 |
Industrial |
| Moorestown, NJ | |
| 3,715 | |
| 1,822 | |
| 5,056 | |
| — | |
| 1,822 | | | 5,056 | | | 6,878 | |
| 415 |
| 1990 |
| 2018 |
Industrial | | Moorestown, NJ | | | 8,278 | | | 1,443 | | | 10,898 | | | 52 | | | 1,443 | | | 10,950 | | | 12,393 | | | 882 | | 1972 | | 2018 |
Industrial | | Bakersfield, CA | | | — | | | 1,988 | | | 9,998 | | | — | | | 1,988 | | | 9,998 | | | 11,986 | | | 798 | | 1980 | | 2018 |
Industrial | | Green Park, MO | | | 5,994 | | | 1,421 | | | 7,835 | | | — | | | 1,421 | | | 7,835 | | | 9,256 | | | 613 | | 2008 | | 2018 |
Industrial | | Greenville, SC | | | — | | | 186 | | | 6,419 | | | — | | | 186 | | | 6,419 | | | 6,605 | | | 497 | | 2008 | | 2018 |
Industrial | | Nashville, TN | | | 4,891 | | | 1,058 | | | 6,350 | | | — | | | 1,058 | | | 6,350 | | | 7,408 | | | 424 | | 1974 | | 2019 |
Industrial | | Wauconda, IL | | | — | | | 67 | | | 3,423 | | | 41 | | | 67 | | | 3,464 | | | 3,531 | | | 248 | | 1998 | | 2019 |
Industrial | | Bensalem, PA | | | 3,859 | | | 1,602 | | | 4,323 | | | 50 | | | 1,602 | | | 4,373 | | | 5,975 | | | 279 | | 1975 | | 2019 |
Industrial | | Chandler, AZ | | | 4,920 | | | 1,335 | | | 7,379 | | | 22 | | | 1,335 | | | 7,401 | | | 8,736 | | | 493 | | 2004 | | 2019 |
Industrial | | LaGrange, GA | | | 3,031 | | | 297 | | | 4,500 | | | — | | | 297 | | | 4,500 | | | 4,797 | | | 287 | | 2013 | | 2019 |
Industrial | | Shakopee, MN | | | 4,742 | | | 1,877 | | | 5,462 | | | 10 | | | 1,877 | | | 5,472 | | | 7,349 | | | 333 | | 1998 | | 2019 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Capitalized | | Gross Amount at Which Carried | | | | | | | | ||||||||
| | | | | | | Initial Cost to Company | | Subsequent to | | at December 31, 2023 | | | | | | | | ||||||||||||
| | | | | | | | | | Building and | | Acquisition | | | | | Building & | | | | | Accumulated | | Date of | | Date | ||||
Type |
| Location |
| Encumbrances |
| Land |
| Improvements |
| Improvements |
| Land |
| Improvements |
| Total |
| Depreciation (1) |
| Construction |
| Acquired | ||||||||
Health & Fitness |
| Tucker, GA | | $ | — | | $ | 807 | | $ | 3,027 | | $ | 3,420 | | $ | 807 | | $ | 6,447 | | $ | 7,254 | | $ | 3,461 |
| 1988 |
| 2002 |
Health & Fitness |
| Hamilton, OH | |
| 3,969 | |
| 1,483 | |
| 5,953 | |
| 10 | |
| 1,483 | | | 5,963 | | | 7,446 | |
| 2,128 |
| 2008 |
| 2011 |
Health & Fitness |
| Secaucus, NJ | |
| 7,058 | |
| 5,449 | |
| 9,873 | |
| — | |
| 5,449 | | | 9,873 | | | 15,322 | |
| 2,744 |
| 1986 |
| 2012 |
Industrial |
| West Palm Beach, FL | |
| — | |
| 181 | |
| 724 | |
| 235 | |
| 181 | | | 959 | | | 1,140 | |
| 551 |
| 1973 |
| 1998 |
Industrial |
| New Hyde Park, NY | |
| 2,103 | |
| 182 | |
| 728 | |
| 281 | |
| 182 | | | 1,009 | | | 1,191 | |
| 574 |
| 1960 |
| 1999 |
Industrial |
| Ronkonkoma, NY | |
| 5,004 | |
| 1,042 | |
| 4,171 | |
| 2,943 | |
| 1,042 | | | 7,114 | | | 8,156 | |
| 3,625 |
| 1986 |
| 2000 |
Industrial |
| Hauppauge, NY | |
| 21,984 | |
| 1,951 | |
| 10,954 | |
| 9,600 | |
| 1,951 | | | 20,554 | | | 22,505 | |
| 9,279 |
| 1982 |
| 2000 |
Industrial |
| Melville, NY | |
| 2,195 | |
| 774 | |
| 3,029 | |
| 1,170 | |
| 774 | | | 4,199 | | | 4,973 | |
| 2,037 |
| 1982 |
| 2003 |
Industrial |
| Saco, ME | |
| 4,865 | |
| 1,027 | |
| 3,623 | |
| 2,050 | |
| 1,027 | | | 5,673 | | | 6,700 | |
| 1,914 |
| 2001 |
| 2006 |
Industrial |
| Baltimore, MD | |
| 16,995 | |
| 6,474 | |
| 25,282 | |
| — | |
| 6,474 | | | 25,282 | | | 31,756 | |
| 10,772 |
| 1960 |
| 2006 |
Industrial |
| Durham, NC | |
| 4,250 | |
| 1,043 | |
| 2,404 | |
| 44 | |
| 1,043 | | | 2,448 | | | 3,491 | |
| 877 |
| 1991 |
| 2011 |
Industrial |
| Pinellas Park, FL | |
| 1,957 | |
| 1,231 | |
| 1,669 | |
| 614 | |
| 1,231 | | | 2,283 | | | 3,514 | |
| 555 |
| 1995 |
| 2012 |
Industrial |
| Miamisburg, OH | |
| — | |
| 165 | |
| 1,348 | |
| 90 | |
| 165 | | | 1,438 | | | 1,603 | |
| 489 |
| 1987 |
| 2012 |
Industrial |
| Fort Mill, SC | |
| 18,548 | |
| 1,840 | |
| 12,687 | |
| 557 | |
| 1,840 | | | 13,244 | | | 15,084 | |
| 3,593 |
| 1992 |
| 2013 |
Industrial |
| Indianapolis, IN | |
| 8,741 | |
| 1,224 | |
| 6,935 | |
| — | |
| 1,224 | | | 6,935 | | | 8,159 | |
| 2,155 |
| 1997 |
| 2013 |
Industrial |
| Fort Mill, SC | |
| 20,197 | |
| 1,804 | |
| 33,650 | |
| — | |
| 1,804 | | | 33,650 | | | 35,454 | |
| 10,154 |
| 1997 |
| 2013 |
Industrial |
| New Hope, MN | |
| 3,658 | |
| 881 | |
| 6,064 | |
| 234 | |
| 881 | | | 6,298 | | | 7,179 | |
| 1,480 |
| 1967 |
| 2014 |
Industrial |
| Louisville, KY | |
| — | |
| 578 | |
| 3,727 | |
| 570 | |
| 578 | | | 4,297 | | | 4,875 | |
| 877 |
| 1974 |
| 2015 |
Industrial |
| Louisville, KY | |
| — | |
| 51 | |
| 230 | |
| — | |
| 51 | | | 230 | | | 281 | |
| 53 |
| 1974 |
| 2015 |
Industrial |
| McCalla, AL | |
| 12,665 | |
| 1,588 | |
| 14,682 | |
| — | |
| 1,588 | | | 14,682 | | | 16,270 | |
| 3,167 |
| 2003 |
| 2015 |
Industrial |
| St. Louis, MO | |
| 9,580 | |
| 3,728 | |
| 13,006 | |
| 779 | |
| 3,728 | | | 13,785 | | | 17,513 | |
| 3,140 |
| 1969 |
| 2015 |
Industrial |
| Greenville, SC | |
| 4,206 | |
| 693 | |
| 6,893 | |
| 1,101 | |
| 693 | | | 7,994 | | | 8,687 | |
| 1,558 |
| 1997 |
| 2016 |
Industrial |
| Greenville, SC | |
| 4,674 | |
| 528 | |
| 8,074 | |
| 938 | |
| 528 | | | 9,012 | | | 9,540 | |
| 1,732 |
| 2000 |
| 2016 |
Industrial |
| El Paso, TX | |
| 23,000 | |
| 3,691 | |
| 17,904 | |
| 2,429 | |
| 3,691 | | | 20,333 | | | 24,024 | |
| 3,871 |
| 1997 |
| 2016 |
Industrial |
| Lebanon, TN | |
| 19,504 | |
| 2,094 | |
| 30,039 | |
| 214 | |
| 2,094 | | | 30,253 | | | 32,347 | |
| 5,676 |
| 1996 |
| 2016 |
Industrial |
| Huntersville, NC | |
| 4,251 | |
| 1,046 | |
| 6,674 | |
| — | |
| 1,046 | | | 6,674 | | | 7,720 | |
| 1,167 |
| 2014 |
| 2017 |
Industrial |
| Pittston, PA | |
| 14,350 | |
| 999 | |
| 9,922 | |
| 1,609 | |
| 999 | | | 11,531 | | | 12,530 | |
| 1,891 |
| 1990 |
| 2017 |
Industrial |
| Ankeny, IA | |
| 7,251 | |
| 1,351 | |
| 11,607 | |
| — | |
| 1,351 | | | 11,607 | | | 12,958 | |
| 1,949 |
| 2016 |
| 2017 |
Industrial |
| Memphis, TN | |
| 4,457 | |
| 140 | |
| 7,952 | |
| — | |
| 140 | | | 7,952 | | | 8,092 | |
| 1,286 |
| 1979 |
| 2017 |
Industrial |
| Pennsburg, PA | |
| 7,182 | |
| 1,776 | |
| 11,126 | |
| — | |
| 1,776 | | | 11,126 | | | 12,902 | |
| 1,786 |
| 1986 |
| 2018 |
Industrial |
| Plymouth, MN | |
| 2,904 | |
| 1,121 | |
| 4,429 | |
| — | |
| 1,121 | | | 4,429 | | | 5,550 | |
| 642 |
| 1978 |
| 2018 |
Industrial |
| Englewood, CO | |
| 7,412 | |
| 1,562 | |
| 11,300 | |
| — | |
| 1,562 | | | 11,300 | | | 12,862 | |
| 1,531 |
| 2013 |
| 2018 |
Industrial |
| Moorestown, NJ | |
| 3,507 | |
| 1,822 | |
| 5,056 | |
| — | |
| 1,822 | | | 5,056 | | | 6,878 | |
| 681 |
| 1990 |
| 2018 |
Industrial | | Moorestown, NJ | | | 7,844 | | | 1,443 | | | 10,898 | | | 52 | | | 1,443 | | | 10,950 | | | 12,393 | | | 1,497 | | 1972 | | 2018 |
Industrial | | Bakersfield, CA | | | — | | | 1,988 | | | 9,998 | | | — | | | 1,988 | | | 9,998 | | | 11,986 | | | 1,323 | | 1980 | | 2018 |
Industrial | | Green Park, MO | | | 5,666 | | | 1,421 | | | 7,835 | | | — | | | 1,421 | | | 7,835 | | | 9,256 | | | 1,016 | | 2008 | | 2018 |
Industrial | | Greenville, SC | | | 4,800 | | | 186 | | | 6,419 | | | 210 | | | 186 | | | 6,629 | | | 6,815 | | | 889 | | 2008 | | 2018 |
Industrial | | Nashville, TN | | | 4,611 | | | 1,058 | | | 6,350 | | | 255 | | | 1,058 | | | 6,605 | | | 7,663 | | | 767 | | 1974 | | 2019 |
Industrial | | Wauconda, IL | | | — | | | 67 | | | 3,423 | | | 41 | | | 67 | | | 3,464 | | | 3,531 | | | 439 | | 1998 | | 2019 |
Industrial | | Bensalem, PA | | | 3,649 | | | 1,602 | | | 4,323 | | | 150 | | | 1,602 | | | 4,473 | | | 6,075 | | | 516 | | 1975 | | 2019 |
Industrial | | Chandler, AZ | | | 4,648 | | | 1,335 | | | 7,379 | | | 102 | | | 1,335 | | | 7,481 | | | 8,816 | | | 897 | | 2004 | | 2019 |
Industrial | | LaGrange, GA | | | 2,862 | | | 297 | | | 4,500 | | | — | | | 297 | | | 4,500 | | | 4,797 | | | 521 | | 2013 | | 2019 |
Industrial | | Shakopee, MN | | | 4,469 | | | 1,877 | | | 5,462 | | | 10 | | | 1,877 | | | 5,472 | | | 7,349 | | | 624 | | 1998 | | 2019 |
F-36F-38
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Capitalized | | Gross Amount at Which Carried | | | | | | | | ||||||||
| | | | | | | Initial Cost to Company | | Subsequent to | | at December 31, 2021 | | | | | | | | ||||||||||||
| | | | | | | | | | Building and | | Acquisition | | | | | Building & | | | | | Accumulated | | Date of | | Date | ||||
Type |
| Location |
| Encumbrances |
| Land |
| Improvements |
| Improvements |
| Land |
| Improvements |
| Total |
| Depreciation (1) |
| Construction |
| Acquired | ||||||||
Industrial | | Rincon, GA | | | 3,896 | |
| 61 | | | 5,968 | | | — | | | 61 | | | 5,968 | | | 6,029 | | | 335 | | 1998 | | 2019 |
Industrial |
| Chandler, AZ | |
| — | |
| 1,164 | | | 1,691 | | | 4 | | | 1,164 | | | 1,695 | | | 2,859 | | | 100 | | 2007 | | 2019 |
Industrial | | Ashland, VA | | | 5,444 | | | 391 | | | 7,901 | | | — | | | 391 | | | 7,901 | | | 8,292 | | | 387 | | 2007 | | 2020 |
Industrial | | Lowell, AR | | | 11,945 | | | 1,687 | | | 15,188 | | | — | | | 1,687 | | | 15,188 | | | 16,875 | | | 780 | | 2017 | | 2020 |
Industrial | | Monroe, NC | | | 4,431 | | | 897 | | | 5,106 | | | — | | | 897 | | | 5,106 | | | 6,003 | | | 84 | | 2000 | | 2021 |
Industrial | | Lehigh Acres, FL | | | 6,060 | | | 1,935 | | | 7,393 | | | — | | | 1,935 | | | 7,393 | | | 9,328 | | | 56 | | 2002 | | 2021 |
Industrial | | Omaha, NE | | | — | | | 1,000 | | | 6,548 | | | — | | | 1,000 | | | 6,548 | | | 7,548 | | | 21 | | 1988 | | 2021 |
Industrial |
| Joppa, MD | |
| 8,482 | |
| 3,815 | | | 8,142 | | | 1,473 | | | 3,815 | | | 9,615 | | | 13,430 | | | 2,051 | | 1994 | | 2014 |
Office |
| Brooklyn, NY | |
| — | |
| 1,381 | | | 5,447 | | | 3,013 | | | 1,381 | | | 8,460 | | | 9,841 | | | 4,555 | | 1973 | | 1998 |
Other |
| Newark, DE | |
| 1,364 | |
| 935 | | | 3,643 | | | 278 | | | 935 | | | 3,921 | | | 4,856 | | | 1,738 | | 1996 | | 2003 |
Other | | Beachwood, OH | | | — | | | 13,901 | | | — | | | 1,855 | | | 15,756 | | | — | | | 15,756 | | | — | | N/A | | 2016 |
Restaurant | | Hauppauge, NY | | | — | | | 725 | | | 2,963 | | | — | | | 725 | | | 2,963 | | | 3,688 | | | 1,194 | | 1992 | | 2005 |
Restaurant | | Palmyra, PA | | | — | | | 650 | | | 650 | | | — | | | 650 | | | 650 | | | 1,300 | | | 186 | | 1981 | | 2010 |
Restaurant | | Reading, PA | | | — | | | 655 | | | 625 | | | — | | | 655 | | | 625 | | | 1,280 | | ��� | 179 | | 1981 | | 2010 |
Restaurant | | Reading, PA | | | — | | | 618 | | | 643 | | | — | | | 618 | | | 643 | | | 1,261 | | | 185 | | 1983 | | 2010 |
Restaurant | | Trexlertown, PA | | | — | | | 800 | | | 439 | | | — | | | 800 | | | 439 | | | 1,239 | | | 125 | | 1994 | | 2010 |
Restaurant | | Carrollton, GA | | | 1,374 | | | 796 | | | 1,458 | | | — | | | 796 | | | 1,458 | | | 2,254 | | | 423 | | 1996 | | 2012 |
Restaurant | | Cartersville, GA | | | 1,299 | | | 786 | | | 1,346 | | | — | | | 786 | | | 1,346 | | | 2,132 | | | 415 | | 1995 | | 2012 |
Restaurant | | Kennesaw, GA | | | 1,065 | | | 702 | | | 916 | | | — | | | 702 | | | 916 | | | 1,618 | | | 249 | | 1989 | | 2012 |
Restaurant | | Lawrenceville, GA | | | 1,022 | | | 866 | | | 899 | | | — | | | 866 | | | 899 | | | 1,765 | | | 285 | | 1988 | | 2012 |
Restaurant | | Concord, NC | | | 1,345 | | | 999 | | | 1,076 | | | — | | | 999 | | | 1,076 | | | 2,075 | | | 273 | | 2000 | | 2013 |
Restaurant | | Myrtle Beach, SC | | | 1,345 | | | 1,102 | | | 1,161 | | | — | | | 1,102 | | | 1,161 | | | 2,263 | | | 297 | | 1978 | | 2013 |
Restaurant | | Greensboro, NC | | | — | | | 1,770 | | | 1,237 | | | — | | | 1,770 | | | 1,237 | | | 3,007 | | | 378 | | 1983 | | 2013 |
Restaurant | | Richmond, VA | | | — | | | 1,680 | | | 1,341 | | | — | | | 1,680 | | | 1,341 | | | 3,021 | | | 254 | | 1983 | | 2013 |
Restaurant | | Indianapolis, IN | | | — | | | 853 | | | 1,465 | | | — | | | 853 | | | 1,465 | | | 2,318 | | | 339 | | 1982 | | 2014 |
Retail | | Seattle, WA | | | — | | | 201 | | | 189 | | | 35 | | | 201 | | | 224 | | | 425 | | | 169 | | 1986 | | 1987 |
Retail | | Rosenberg, TX | | | — | | | 216 | | | 863 | | | 66 | | | 216 | | | 929 | | | 1,145 | | | 604 | | 1994 | | 1995 |
Retail | | Ft. Myers, FL | | | — | | | 1,013 | | | 4,054 | | | — | | | 1,013 | | | 4,054 | | | 5,067 | | | 2,546 | | 1995 | | 1996 |
Retail | | Selden, NY | | | 2,460 | | | 572 | | | 2,287 | | | 150 | | | 572 | | | 2,437 | | | 3,009 | | | 1,375 | | 1997 | | 1999 |
Retail | | Batavia, NY | | | — | | | 515 | | | 2,061 | | | — | | | 515 | | | 2,061 | | | 2,576 | | | 1,178 | | 1998 | | 1999 |
Retail | | Champaign, IL | | | — | | | 791 | | | 3,165 | | | 530 | | | 791 | | | 3,695 | | | 4,486 | | | 1,966 | | 1985 | | 1999 |
Retail | | El Paso, TX | | | 9,852 | | | 2,821 | | | 11,123 | | | 2,587 | | | 2,821 | | | 13,710 | | | 16,531 | | | 7,641 | | 1974 | | 2000 |
Retail | | Somerville, MA | | | — | | | 510 | | | 1,993 | | | 24 | | | 510 | | | 2,017 | | | 2,527 | | | 951 | | 1993 | | 2003 |
Retail | | Hyannis, MA | | | — | | | 802 | | | 2,324 | | | — | | | 802 | | | 2,324 | | | 3,126 | | | 811 | | 1998 | | 2008 |
Retail | | Marston Mills, MA | | | — | | | 461 | | | 2,313 | | | — | | | 461 | | | 2,313 | | | 2,774 | | | 802 | | 1998 | | 2008 |
Retail | | Everett, MA | | | — | | | 1,935 | | | — | | | — | | | 1,935 | | | — | | | 1,935 | | | — | | N/A | | 2008 |
Retail | | Kennesaw, GA | | | 4,801 | | | 1,501 | | | 4,349 | | | 1,138 | | | 1,501 | | | 5,487 | | | 6,988 | | | 1,985 | | 1995 | | 2008 |
Retail | | Royersford, PA | | | 18,876 | | | 19,538 | | | 3,150 | | | 524 | | | 19,538 | | | 3,674 | | | 23,212 | | | 1,118 | | 2001 | | 2010 |
Retail | | Monroeville, PA | | | — | | | 450 | | | 863 | | | — | | | 450 | | | 863 | | | 1,313 | | | 251 | | 1994 | | 2010 |
Retail | | Bolingbrook, IL | | | — | | | 834 | | | 1,887 | | | 101 | | | 834 | | | 1,988 | | | 2,822 | | | 612 | | 2001 | | 2011 |
Retail | | Crystal Lake, IL | | | — | | | 615 | | | 1,899 | | | — | | | 615 | | | 1,899 | | | 2,514 | | | 595 | | 1997 | | 2011 |
Retail | | Lawrence, KS | | | — | | | 134 | | | 938 | | | 207 | | | 134 | | | 1,145 | | | 1,279 | | | 255 | | 1915 | | 2012 |
Retail | | Greensboro, NC | | | 1,207 | | | 1,046 | | | 1,552 | | | 29 | | | 1,046 | | | 1,581 | | | 2,627 | | | 365 | | 2002 | | 2014 |
Retail |
| Highlands Ranch, CO |
|
| — | | | 2,361 | | | 2,924 | | | 296 | | | 2,361 | | | 3,220 | | | 5,581 | | | 720 | | 1995 | | 2014 |
Retail |
| Woodbury, MN |
|
| 2,606 | | | 1,190 | | | 4,003 | | | — | | | 1,190 | | | 4,003 | | | 5,193 | | | 870 | | 2006 | | 2014 |
Retail |
| Cuyahoga Falls, OH |
|
| 982 | | | 71 | | | 1,371 | | | — | | | 71 | | | 1,371 | | | 1,442 | | | 199 | | 2004 | | 2016 |
Retail |
| Hilliard, OH |
|
| 869 | | | 300 | | | 1,077 | | | — | | | 300 | | | 1,077 | | | 1,377 | | | 160 | | 2007 | | 2016 |
Retail |
| Port Clinton, OH |
|
| 841 | | | 52 | | | 1,187 | | | — | | | 52 | | | 1,187 | | | 1,239 | | | 177 | | 2005 | | 2016 |
Retail |
| South Euclid, OH |
|
| 954 | | | 230 | | | 1,566 | | | 53 | | | 230 | | | 1,619 | | | 1,849 | | | 242 | | 1975 | | 2016 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Capitalized | | Gross Amount at Which Carried | | | | | | | | ||||||||
| | | | | | | Initial Cost to Company | | Subsequent to | | at December 31, 2023 | | | | | | | | ||||||||||||
| | | | | | | | | | Building and | | Acquisition | | | | | Building & | | | | | Accumulated | | Date of | | Date | ||||
Type |
| Location |
| Encumbrances |
| Land |
| Improvements |
| Improvements |
| Land |
| Improvements |
| Total |
| Depreciation (1) |
| Construction |
| Acquired | ||||||||
Industrial | | Rincon, GA | | $ | 3,675 | | $ | 61 | | $ | 5,968 | | $ | — | | $ | 61 | | $ | 5,968 | | $ | 6,029 | | $ | 638 | | 1998 | | 2019 |
Industrial |
| Chandler, AZ | |
| — | | | 1,164 | | | 1,691 | | | 4 | | | 1,164 | | | 1,695 | | | 2,859 | | | 192 | | 2007 | | 2019 |
Industrial | | Ashland, VA | | | 5,131 | | | 391 | | | 7,901 | | | — | | | 391 | | | 7,901 | | | 8,292 | | | 799 | | 2007 | | 2020 |
Industrial | | Lowell, AR | | | 11,265 | | | 1,687 | | | 15,188 | | | — | | | 1,687 | | | 15,188 | | | 16,875 | | | 1,613 | | 2017 | | 2020 |
Industrial | | Monroe, NC | | | 4,185 | | | 897 | | | 5,106 | | | — | | | 897 | | | 5,106 | | | 6,003 | | | 351 | | 2000 | | 2021 |
Industrial | | Lehigh Acres, FL | | | 5,727 | | | 1,934 | | | 7,393 | | | — | | | 1,934 | | | 7,393 | | | 9,327 | | | 437 | | 2002 | | 2021 |
Industrial | | Omaha, NE | | | — | | | 1,001 | | | 6,547 | | | 6 | | | 1,001 | | | 6,553 | | | 7,554 | | | 360 | | 1988 | | 2021 |
Industrial | | Fort Myers, FL | | | 4,617 | | | 991 | | | 6,876 | | | — | | | 991 | | | 6,876 | | | 7,867 | | | 358 | | 2020 | | 2022 |
Industrial | | Dalton, GA | | | 9,710 | | | 547 | | | 15,836 | | | — | | | 547 | | | 15,836 | | | 16,383 | | | 646 | | 1996 | | 2022 |
Industrial | | Hillside, IL | | | — | | | 2,560 | | | 2,975 | | | — | | | 2,560 | | | 2,975 | | | 5,535 | | | 131 | | 2002 | | 2022 |
Industrial | | Lexington, KY | | | 5,279 | | | 1,558 | | | 6,881 | | | — | | | 1,558 | | | 6,881 | | | 8,439 | | | 276 | | 2001 | | 2022 |
Industrial | | Northwood, OH | | | 5,823 | | | 181 | | | 8,306 | | | — | | | 181 | | | 8,306 | | | 8,487 | | | 242 | | 1999 | | 2022 |
Industrial | | Northwood, OH | | | — | | | 171 | | | 7,383 | | | — | | | 171 | | | 7,383 | | | 7,554 | | | 218 | | 2001 | | 2022 |
Industrial | | Blythewood, SC | | | 4,236 | | | 311 | | | 12,304 | | | — | | | 311 | | | 12,304 | | | 12,615 | | | 147 | | 2004 | | 2023 |
Industrial | | Joppa, MD | |
| 7,859 | | | 3,815 | | | 8,142 | | | 1,406 | | | 3,815 | | | 9,548 | | | 13,363 | | | 2,618 | | 1994 | | 2014 |
Office | | Brooklyn, NY | |
| — | | | 1,381 | | | 5,447 | | | 3,161 | | | 1,381 | | | 8,608 | | | 9,989 | | | 5,039 | | 1973 | | 1998 |
Other |
| Newark, DE | |
| 1,157 | | | 935 | | | 3,643 | | | 278 | | | 935 | | | 3,921 | | | 4,856 | | | 1,978 | | 1996 | | 2003 |
Other | | Beachwood, OH | | | — | | | 13,901 | | | — | | | 3,375 | | | 17,276 | | | — | | | 17,276 | | | — | | N/A | | 2016 |
Restaurant | | Kennesaw, GA | | | — | | | 702 | | | 916 | | | — | | | 702 | | | 916 | | | 1,618 | | | 293 | | 1989 | | 2012 |
Restaurant | | Concord, NC | | | 1,240 | | | 999 | | | 1,076 | | | — | | | 999 | | | 1,076 | | | 2,075 | | | 338 | | 2000 | | 2013 |
Restaurant | | Myrtle Beach, SC | | | 1,240 | | | 1,102 | | | 1,161 | | | — | | | 1,102 | | | 1,161 | | | 2,263 | | | 352 | | 1978 | | 2013 |
Retail | | Seattle, WA | | | — | | | 201 | | | 189 | | | 35 | | | 201 | | | 224 | | | 425 | | | 182 | | 1986 | | 1987 |
Retail | | Rosenberg, TX | | | — | | | 216 | | | 863 | | | 66 | | | 216 | | | 929 | | | 1,145 | | | 656 | | 1994 | | 1995 |
Retail | | Selden, NY | | | 2,314 | | | 572 | | | 2,287 | | | 150 | | | 572 | | | 2,437 | | | 3,009 | | | 1,497 | | 1997 | | 1999 |
Retail | | Batavia, NY | | | — | | | 515 | | | 2,061 | | | — | | | 515 | | | 2,061 | | | 2,576 | | | 1,282 | | 1998 | | 1999 |
Retail | | Champaign, IL | | | — | | | 791 | | | 3,165 | | | 530 | | | 791 | | | 3,695 | | | 4,486 | | | 2,184 | | 1985 | | 1999 |
Retail | | El Paso, TX | | | 9,157 | | | 2,821 | | | 11,123 | | | 2,813 | | | 2,821 | | | 13,936 | | | 16,757 | | | 8,694 | | 1974 | | 2000 |
Retail | | Somerville, MA | | | — | | | 510 | | | 1,993 | | | 24 | | | 510 | | | 2,017 | | | 2,527 | | | 1,051 | | 1993 | | 2003 |
Retail | | Hyannis, MA | | | — | | | 802 | | | 2,324 | | | — | | | 802 | | | 2,324 | | | 3,126 | | | 927 | | 1998 | | 2008 |
Retail | | Marston Mills, MA | | | — | | | 461 | | | 2,313 | | | — | | | 461 | | | 2,313 | | | 2,774 | | | 918 | | 1998 | | 2008 |
Retail | | Everett, MA | | | — | | | 1,935 | | | — | | | — | | | 1,935 | | | — | | | 1,935 | | | — | | N/A | | 2008 |
Retail | | Kennesaw, GA | | | 4,467 | | | 1,501 | | | 4,349 | | | 1,138 | | | 1,501 | | | 5,487 | | | 6,988 | | | 2,403 | | 1995 | | 2008 |
Retail | | Royersford, PA | | | 18,165 | | | 19,538 | | | 3,150 | | | 524 | | | 19,538 | | | 3,674 | | | 23,212 | | | 1,337 | | 2001 | | 2010 |
Retail | | Monroeville, PA | | | — | | | 450 | | | 863 | | | 57 | | | 450 | | | 920 | | | 1,370 | | | 297 | | 1994 | | 2010 |
Retail | | Bolingbrook, IL | | | — | | | 834 | | | 1,887 | | | 101 | | | 834 | | | 1,988 | | | 2,822 | | | 713 | | 2001 | | 2011 |
Retail | | Crystal Lake, IL | | | — | | | 615 | | | 1,899 | | | 535 | | | 615 | | | 2,434 | | | 3,049 | | | 759 | | 1997 | | 2011 |
Retail | | Lawrence, KS | | | — | | | 134 | | | 938 | | | 207 | | | 134 | | | 1,145 | | | 1,279 | | | 327 | | 1915 | | 2012 |
Retail | | Greensboro, NC | | | — | | | 1,046 | | | 1,552 | | | 29 | | | 1,046 | | | 1,581 | | | 2,627 | | | 450 | | 2002 | | 2014 |
Retail |
| Highlands Ranch, CO |
|
| — | | | 2,361 | | | 2,924 | | | 296 | | | 2,361 | | | 3,220 | | | 5,581 | | | 935 | | 1995 | | 2014 |
Retail |
| Woodbury, MN |
|
| 2,405 | | | 1,190 | | | 4,003 | | | — | | | 1,190 | | | 4,003 | | | 5,193 | | | 1,098 | | 2006 | | 2014 |
Retail |
| Cuyahoga Falls, OH |
| | 908 | | | 71 | | | 1,371 | | | — | | | 71 | | | 1,371 | | | 1,442 | | | 271 | | 2004 | | 2016 |
Retail |
| Hilliard, OH |
| | 805 | | | 300 | | | 1,077 | | | — | | | 300 | | | 1,077 | | | 1,377 | | | 218 | | 2007 | | 2016 |
Retail |
| Port Clinton, OH |
|
| 779 | | | 52 | | | 1,187 | | | — | | | 52 | | | 1,187 | | | 1,239 | | | 241 | | 2005 | | 2016 |
Retail |
| South Euclid, OH |
|
| 882 | | | 230 | | | 1,566 | | | 53 | | | 230 | | | 1,619 | | | 1,849 | | | 343 | | 1975 | | 2016 |
Retail |
| St Louis Park, MN |
| | — | | | 3,388 | | | 13,088 | | | 152 | | | 3,388 | | | 13,240 | | | 16,628 | | | 2,621 | | 1962 | | 2016 |
Retail |
| Deptford, NJ |
|
| 2,277 | | | 572 | | | 1,779 | | | 705 | | | 572 | | | 2,484 | | | 3,056 | | | 1,139 | | 1981 | | 2012 |
Retail |
| Cape Girardeau, MO |
|
| 862 | | | 545 | | | 1,547 | | | — | | | 545 | | | 1,547 | | | 2,092 | | | 484 | | 1994 | | 2012 |
Retail |
| Littleton, CO |
|
| 8,048 | | | 6,005 | | | 11,272 | | | 1,037 | | | 5,557 | | | 12,757 | | | 18,314 | | | 3,278 | | 1985 | | 2015 |
F-37F-39
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Capitalized | | Gross Amount at Which Carried | | | | | | | | ||||||||
| | | | | | | Initial Cost to Company | | Subsequent to | | at December 31, 2021 | | | | | | | | ||||||||||||
| | | | | | | | | | Building and | | Acquisition | | | | | Building & | | | | | Accumulated | | Date of | | Date | ||||
Type |
| Location |
| Encumbrances |
| Land |
| Improvements |
| Improvements |
| Land |
| Improvements |
| Total |
| Depreciation (1) |
| Construction |
| Acquired | ||||||||
Retail |
| St Louis Park, MN |
|
| — | | | 3,388 | | | 13,088 | | | 152 | | | 3,388 | | | 13,240 | | | 16,628 | | | 1,907 | | 1962 | | 2016 |
Retail |
| Deptford, NJ |
|
| 2,449 | | | 572 | | | 1,779 | | | 705 | | | 572 | | | 2,484 | | | 3,056 | | | 960 | | 1981 | | 2012 |
Retail |
| Cape Girardeau, MO |
|
| 985 | | | 545 | | | 1,547 | | | — | | | 545 | | | 1,547 | | | 2,092 | | | 404 | | 1994 | | 2012 |
Retail |
| Littleton, CO |
|
| 9,921 | | | 6,005 | | | 11,272 | | | 994 | | | 6,005 | | | 12,266 | | | 18,271 | | | 2,502 | | 1985 | | 2015 |
Retail-Furniture |
| Columbus, OH |
|
| — | | | 1,445 | | | 5,431 | | | 460 | | | 1,445 | | | 5,891 | | | 7,336 | | | 3,509 | | 1996 | | 1997 |
Retail-Furniture |
| Duluth, GA (3) |
|
| 1,284 | | | 778 | | | 3,436 | | | 30 | | | 778 | | | 3,466 | | | 4,244 | | | 1,349 | | 1987 | | 2006 |
Retail-Furniture |
| Fayetteville, GA (3) |
|
| 1,608 | | | 976 | | | 4,308 | | | — | | | 976 | | | 4,308 | | | 5,284 | | | 1,692 | | 1987 | | 2006 |
Retail-Furniture |
| Wichita, KS (3) |
|
| 1,954 | | | 1,189 | | | 5,248 | | | 178 | | | 1,189 | | | 5,426 | | | 6,615 | | | 2,061 | | 1996 | | 2006 |
Retail-Furniture |
| Lexington, KY (3) |
|
| 1,332 | | | 800 | | | 3,532 | | | 145 | | | 800 | | | 3,677 | | | 4,477 | | | 1,387 | | 1999 | | 2006 |
Retail-Furniture |
| Bluffton, SC (3) |
|
| 973 | | | 589 | | | 2,600 | | | 163 | | | 589 | | | 2,763 | | | 3,352 | | | 1,021 | | 1994 | | 2006 |
Retail-Furniture |
| Amarillo, TX (3) |
|
| 1,414 | | | 860 | | | 3,810 | | | 129 | | | 860 | | | 3,939 | | | 4,799 | | | 1,496 | | 1996 | | 2006 |
Retail-Furniture |
| Austin, TX (3) |
|
| 2,636 | | | 1,587 | | | 7,010 | | | 162 | | | 1,587 | | | 7,172 | | | 8,759 | | | 2,753 | | 2001 | | 2006 |
Retail-Furniture |
| Tyler, TX (3) |
|
| 1,698 | | | 1,031 | | | 4,554 | | | 187 | | | 1,031 | | | 4,741 | | | 5,772 | | | 1,789 | | 2001 | | 2006 |
Retail-Furniture |
| Newport News, VA (3) |
|
| 1,239 | | | 751 | | | 3,316 | | | 89 | | | 751 | | | 3,405 | | | 4,156 | | | 1,302 | | 1995 | | 2006 |
Retail-Furniture |
| Richmond, VA (3) |
|
| 1,440 | | | 867 | | | 3,829 | | | 211 | | | 867 | | | 4,040 | | | 4,907 | | | 1,504 | | 1979 | | 2006 |
Retail-Furniture |
| Virginia Beach, VA (3) |
|
| 1,406 | | | 854 | | | 3,770 | | | 236 | | | 854 | | | 4,006 | | | 4,860 | | | 1,481 | | 1995 | | 2006 |
Retail-Furniture |
| Gurnee, IL |
|
| — | | | 834 | | | 3,635 | | | — | | | 834 | | | 3,635 | | | 4,469 | | | 1,390 | | 1994 | | 2006 |
Retail-Furniture |
| Naples, FL |
|
| 1,820 | | | 3,070 | | | 2,846 | | | 195 | | | 3,070 | | | 3,041 | | | 6,111 | | | 1,036 | | 1992 | | 2008 |
Retail-Office Supply |
| Lake Charles, LA (4)(5) |
|
| 4,503 | | | 1,167 | | | 3,887 | | | 2,905 | | | 1,167 | | | 6,792 | | | 7,959 | | | 2,385 | | 1998 | | 2002 |
Retail-Office Supply |
| Chicago, IL (5) |
|
| 3,316 | | | 3,877 | | | 2,256 | | | — | | | 3,877 | | | 2,256 | | | 6,133 | | | 750 | | 1994 | | 2008 |
Retail-Office Supply |
| Cary, NC (5) |
|
| 2,798 | | | 1,129 | | | 3,736 | | | — | | | 1,129 | | | 3,736 | | | 4,865 | | | 1,241 | | 1995 | | 2008 |
Retail-Office Supply |
| Eugene, OR (5) |
|
| 2,491 | | | 1,952 | | | 2,096 | | | — | | | 1,952 | | | 2,096 | | | 4,048 | | | 696 | | 1994 | | 2008 |
Retail-Office Supply |
| El Paso, TX (5) |
|
| 2,176 | | | 1,035 | | | 2,700 | | | — | | | 1,035 | | | 2,700 | | | 3,735 | | | 897 | | 1993 | | 2008 |
Theater |
| Greensboro, NC |
|
| — | | | — | | | 8,328 | | | 3,000 | | | — | | | 11,328 | | | 11,328 | | | 8,661 | | 1999 | | 2004 |
Theater |
| Indianapolis, IN |
|
| 3,897 | | | 3,099 | | | 5,225 | | | 19 | | | 3,099 | | | 5,244 | | | 8,343 | | | 1,013 | | 1997 | | 2014 |
| | | | $ | 399,660 | | $ | 178,328 | | $ | 614,952 | | $ | 44,361 | | $ | 180,183 | | $ | 657,458 | | $ | 837,641 | | $ | 160,664 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Capitalized | | Gross Amount at Which Carried | | | | | | | | ||||||||
| | | | | | | Initial Cost to Company | | Subsequent to | | at December 31, 2023 | | | | | | | | ||||||||||||
| | | | | | | | | | Building and | | Acquisition | | | | | Building & | | | | | Accumulated | | Date of | | Date | ||||
Type |
| Location |
| Encumbrances |
| Land |
| Improvements |
| Improvements |
| Land |
| Improvements |
| Total |
| Depreciation (1) |
| Construction |
| Acquired | ||||||||
Retail-Furniture |
| Wichita, KS |
|
| — | | | 1,189 | | | 5,248 | | | 126 | | | 1,189 | | | 5,374 | | | 6,563 | | | 2,325 | | 1996 | | 2006 |
Retail-Furniture |
| Lexington, KY |
|
| — | | | 800 | | | 3,532 | | | 266 | | | 800 | | | 3,798 | | | 4,598 | | | 1,587 | | 1999 | | 2006 |
Retail-Furniture |
| Bluffton, SC |
|
| — | | | 589 | | | 2,600 | | | 170 | | | 589 | | | 2,770 | | | 3,359 | | | 1,158 | | 1994 | | 2006 |
Retail-Furniture |
| Amarillo, TX |
|
| — | | | 860 | | | 3,810 | | | 2 | | | 860 | | | 3,812 | | | 4,672 | | | 1,687 | | 1996 | | 2006 |
Retail-Furniture |
| Austin, TX |
|
| — | | | 1,587 | | | 7,010 | | | 192 | | | 1,587 | | | 7,202 | | | 8,789 | | | 3,138 | | 2001 | | 2006 |
Retail-Furniture |
| Tyler, TX |
|
| — | | | 1,031 | | | 4,554 | | | 168 | | | 1,031 | | | 4,722 | | | 5,753 | | | 2,029 | | 2001 | | 2006 |
Retail-Furniture |
| Newport News, VA |
|
| — | | | 751 | | | 3,316 | | | 229 | | | 751 | | | 3,545 | | | 4,296 | | | 1,471 | | 1995 | | 2006 |
Retail-Furniture |
| Richmond, VA |
|
| — | | | 867 | | | 3,829 | | | 164 | | | 867 | | | 3,993 | | | 4,860 | | | 1,698 | | 1979 | | 2006 |
Retail-Furniture |
| Gurnee, IL |
|
| — | | | 834 | | | 3,635 | | | — | | | 834 | | | 3,635 | | | 4,469 | | | 1,571 | | 1994 | | 2006 |
Retail-Furniture |
| Naples, FL |
|
| 1,684 | | | 3,070 | | | 2,846 | | | 195 | | | 3,070 | | | 3,041 | | | 6,111 | | | 1,204 | | 1992 | | 2008 |
Retail-Office Supply |
| Lake Charles, LA (2) |
|
| — | | | 1,167 | | | 3,887 | | | 2,905 | | | 1,167 | | | 6,792 | | | 7,959 | | | 3,063 | | 1998 | | 2002 |
Retail-Office Supply |
| Chicago, IL (2) |
|
| 3,076 | | | 3,877 | | | 2,256 | | | — | | | 3,877 | | | 2,256 | | | 6,133 | | | 862 | | 1994 | | 2008 |
Retail-Office Supply |
| Cary, NC (2) |
|
| 2,595 | | | 1,129 | | | 3,736 | | | — | | | 1,129 | | | 3,736 | | | 4,865 | | | 1,428 | | 1995 | | 2008 |
Retail-Office Supply |
| Eugene, OR (2) |
|
| 2,312 | | | 1,952 | | | 2,096 | | | — | | | 1,952 | | | 2,096 | | | 4,048 | | | 801 | | 1994 | | 2008 |
Retail-Office Supply |
| El Paso, TX (2) |
|
| 2,021 | | | 1,035 | | | 2,700 | | | — | | | 1,035 | | | 2,700 | | | 3,735 | | | 1,032 | | 1993 | | 2008 |
Theater |
| Greensboro, NC |
|
| — | | | — | | | 8,328 | | | 3,000 | | | — | | | 11,328 | | | 11,328 | | | 9,142 | | 1999 | | 2004 |
Theater |
| Indianapolis, IN |
|
| 3,648 | | | 3,099 | | | 5,225 | | | 19 | | | 3,099 | | | 5,244 | | | 8,343 | | | 1,294 | | 1997 | | 2014 |
| | | | $ | 422,565 | | $ | 169,382 | | $ | 641,447 | | $ | 53,826 | | $ | 172,309 | | $ | 692,346 | | $ | 864,655 | | $ | 182,705 | | | | |
Note 1—Depreciation is provided over the estimated useful lives of the buildings and improvements, which range from 2 to 40 years.
Note 2—Upon purchase of the property in December 2006, a $416 rental income reserve was posted by the seller for the Company’s benefit, since the property was not producing sufficient rent at the time of acquisition. The Company recorded the receipt of this rental reserve as a reduction to land and building.
Note 3—These 11 properties are retail furniture stores covered by one loan that is secured by cross-collateralized mortgages.
Note 4—Amounts for this property’s building and improvements and accumulated depreciation are shown net of $782 and $352, respectively, resulting from a 2020 impairment write-off due to casualty loss.
Note 5—These 5five properties are retail office supply stores net leased to the same tenant, pursuant to separate leases. NaNFour of these leases contain cross default provisions.
F-38F-40
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Schedule III
Consolidated Real Estate and Accumulated Depreciation
(a) Reconciliation of “Real Estate and Accumulated Depreciation”
(Amounts in Thousands)
| | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, | | Year Ended December 31, | ||||||||||||||
|
| 2021 |
| 2020 |
| 2019 |
| 2023 |
| 2022 |
| 2021 | ||||||
Investment in real estate: | | | | | | | | | | | | | | | | | | |
Balance, beginning of year | | $ | 839,058 | | $ | 835,837 | | $ | 829,143 | | $ | 879,596 | | $ | 837,641 | | $ | 839,058 |
Addition: Land, buildings and improvements | |
| 28,837 | |
| 26,444 | |
| 49,669 | |
| 18,176 | |
| 59,654 | |
| 28,837 |
Deduction: Properties sold | | | (28,064) | | | (22,441) | | | (42,975) | | | (33,117) | | | (17,699) | | | (28,064) |
Deduction: Property held-for-sale | | | (2,190) | | | — | | | — | | | — | | | — | | | (2,190) |
Deduction: Impairment due to casualty loss | |
| — | |
| (782) | |
| — | |||||||||
Balance, end of year | | $ | 837,641 | | $ | 839,058 | | $ | 835,837 | | $ | 864,655 | | $ | 879,596 | | $ | 837,641 |
| | | (b) | | | | | | | | | (b) | | | | | | |
Accumulated depreciation: | | | | | | | | | | | | | | | | | | |
Balance, beginning of year | | $ | 147,136 | | $ | 135,302 | | $ | 123,684 | | $ | 173,143 | | $ | 160,664 | | $ | 147,136 |
Addition: Depreciation | |
| 17,694 | |
| 17,941 | |
| 17,534 | |
| 19,242 | |
| 18,471 | |
| 17,694 |
Deduction: Accumulated depreciation related to properties sold | |
| (3,246) | |
| (5,755) | |
| (5,916) | |
| (9,680) | |
| (5,992) | |
| (3,246) |
Deduction: Accumulated depreciation related to property held-for-sale | | | (920) | | | — | | | — | | | — | | | — | | | (920) |
Deduction: Impairment due to casualty loss | | | — | | | (352) | | | — | |||||||||
Balance, end of year | | $ | 160,664 | | $ | 147,136 | | $ | 135,302 | | $ | 182,705 | | $ | 173,143 | | $ | 160,664 |
(b) | At December 31, |
F-39F-41