Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 01, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | ONE LIBERTY PROPERTIES INC | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 19,883,529 | |
Entity Central Index Key | 0000712770 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | |
Real estate investments, at cost | |||
Land | $ 205,660 | $ 204,162 | |
Buildings and improvements | 645,442 | 624,981 | |
Total real estate investments, at cost | 851,102 | 829,143 | |
Less accumulated depreciation | 131,589 | 123,684 | |
Real estate investments, net | 719,513 | 705,459 | |
Investment in unconsolidated joint ventures | 10,724 | 10,857 | |
Cash and cash equivalents | 17,381 | 15,204 | |
Restricted cash | 337 | 1,106 | |
Unbilled rent receivable | 14,394 | 13,722 | |
Unamortized intangible lease assets, net | 26,001 | 26,541 | |
Escrow, deposits, and other assets and receivables | 9,312 | 8,023 | |
Total assets | [1] | 797,662 | 780,912 |
Liabilities: | |||
Mortgages payable, net of $4,352 and $4,298 of deferred financing costs, respectively | 434,151 | 418,798 | |
Line of credit, net of $156 and $312 of deferred financing costs, respectively | 31,994 | 29,688 | |
Dividends payable | 8,923 | 8,724 | |
Accrued expenses and other liabilities | 15,437 | 11,094 | |
Unamortized intangible lease liabilities, net | 12,546 | 14,013 | |
Total liabilities | [1] | 503,051 | 482,317 |
Commitments and contingencies | |||
One Liberty Properties, Inc. stockholders' equity: | |||
Preferred stock, $1 par value; 12,500 shares authorized; none issued | |||
Common stock, $1 par value; 25,000 shares authorized; 19,139 and 18,736 shares issued and outstanding | 19,139 | 18,736 | |
Paid-in capital | 296,840 | 287,250 | |
Accumulated other comprehensive (loss) income | (2,196) | 1,890 | |
Distributions in excess of net income | (20,401) | (10,730) | |
Total One Liberty Properties, Inc. stockholders' equity | 293,382 | 297,146 | |
Non-controlling interests in consolidated joint ventures | [1] | 1,229 | 1,449 |
Total equity | 294,611 | 298,595 | |
Total liabilities and equity | $ 797,662 | $ 780,912 | |
[1] | The Company’s consolidated balance sheets include assets and liabilities of consolidated variable interest entities (“VIEs”). See Note 7. The consolidated balance sheets include the following amounts related to the Company’s consolidated VIEs: $12,158 and $14,722 of land, $24,602 and $27,642 of building and improvements, net of $3,886 and $4,119 of accumulated depreciation, $3,781 and $3,931 of other assets included in other line items, $24,605 and $26,850 of real estate debt, net, $1,115 and $2,455 of other liabilities included in other line items and $1,229 and $1,449 of non-controlling interests as of June 30, 2019 and December 31, 2018, respectively. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 | |
Preferred stock, shares authorized | 12,500 | 12,500 | |
Preferred stock, shares issued | 0 | 0 | |
Common stock, par value (in dollars per share) | $ 1 | $ 1 | |
Common stock, shares authorized | 25,000 | 25,000 | |
Common stock, shares issued | 19,139 | 18,736 | |
Common stock, shares outstanding | 19,139 | 18,736 | |
Land | $ 205,660 | $ 204,162 | |
Buildings and improvements | 645,442 | 624,981 | |
Accumulated depreciation | 131,589 | 123,684 | |
Non-controlling interests in consolidated joint ventures | [1] | 1,229 | 1,449 |
Consolidated VIE entities | |||
Land | 12,158 | 14,722 | |
Buildings and improvements | 24,602 | 27,642 | |
Accumulated depreciation | 3,886 | 4,119 | |
Other assets | 3,781 | 3,931 | |
Real estate debt, net | 24,605 | 26,850 | |
Other liabilities | 1,115 | 2,455 | |
Non-controlling interests in consolidated joint ventures | 1,229 | 1,449 | |
Line of Credit | |||
Deferred financing costs | 156 | 312 | |
Mortgages payable | |||
Deferred financing costs | $ 4,352 | $ 4,298 | |
[1] | The Company’s consolidated balance sheets include assets and liabilities of consolidated variable interest entities (“VIEs”). See Note 7. The consolidated balance sheets include the following amounts related to the Company’s consolidated VIEs: $12,158 and $14,722 of land, $24,602 and $27,642 of building and improvements, net of $3,886 and $4,119 of accumulated depreciation, $3,781 and $3,931 of other assets included in other line items, $24,605 and $26,850 of real estate debt, net, $1,115 and $2,455 of other liabilities included in other line items and $1,229 and $1,449 of non-controlling interests as of June 30, 2019 and December 31, 2018, respectively. |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues: | ||||
Rental income, net | $ 20,719 | $ 19,752 | $ 41,874 | $ 39,286 |
Operating expenses: | ||||
Depreciation and amortization | 5,440 | 5,250 | 10,787 | 10,432 |
General and administrative (see Note 10 for related party information) | 3,005 | 2,969 | 6,176 | 5,928 |
Real estate expenses (see Note 10 for related party information) | 3,511 | 2,592 | 6,852 | 5,336 |
State taxes | 108 | 154 | 187 | 227 |
Total operating expenses | 12,064 | 10,965 | 24,002 | 21,923 |
Other operating income | ||||
Gain on sale of real estate, net | 1,099 | 1,099 | 2,408 | |
Operating income | 9,754 | 8,787 | 18,971 | 19,771 |
Other income and expenses: | ||||
Equity in earnings (loss) of unconsolidated joint ventures | 34 | 348 | (82) | 543 |
Equity in earnings from sale of unconsolidated joint venture properties | 71 | 71 | ||
Other income | 6 | 6 | 10 | 10 |
Interest: | ||||
Expense | (4,981) | (4,445) | (9,843) | (8,747) |
Amortization and write-off of deferred financing costs | (255) | (221) | (487) | (449) |
Net income | 4,558 | 4,546 | 8,569 | 11,199 |
Net income attributable to non-controlling interests | (446) | (29) | (486) | (831) |
Net income attributable to One Liberty Properties, Inc. | $ 4,112 | $ 4,517 | $ 8,083 | $ 10,368 |
Weighted average number of common shares outstanding: | ||||
Basic (in shares) | 19,023 | 18,519 | 18,959 | 18,458 |
Diluted (in shares) | 19,129 | 18,593 | 19,060 | 18,532 |
Per common share attributable to common stockholders: | ||||
Basic (in dollars per share) | $ 0.20 | $ 0.23 | $ 0.39 | $ 0.53 |
Diluted (in dollars per share) | $ 0.20 | $ 0.23 | $ 0.39 | $ 0.53 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 4,558 | $ 4,546 | $ 8,569 | $ 11,199 |
Other comprehensive (loss) gain | ||||
Net unrealized (loss) gain on derivative instruments | (2,518) | 1,104 | (4,095) | 3,800 |
Reclassification of One Liberty Properties, Inc.'s share of joint venture net realized gain on derivative instrument included in net income | (110) | (110) | ||
One Liberty Properties, Inc.'s share of joint ventures' net unrealized gain on derivative instruments | 22 | 76 | ||
Other comprehensive (loss) gain | (2,518) | 1,016 | (4,095) | 3,766 |
Comprehensive income | 2,040 | 5,562 | 4,474 | 14,965 |
Net income attributable to non-controlling interests | (446) | (29) | (486) | (831) |
Adjustment for derivative instruments attributable to non-controlling interests | 4 | (2) | 9 | (8) |
Comprehensive income attributable to One Liberty Properties, Inc. | $ 1,598 | $ 5,531 | $ 3,997 | $ 14,126 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Common Stock | Paid-in Capital | Accumulated Other Comprehensive Income (loss) | Accumulated undistributed net income | Accumulated distributions in excess of net income | Non-Controlling Interests in Consolidated Joint Ventures | Total |
Balances at Dec. 31, 2017 | $ 18,261 | $ 275,087 | $ 155 | $ 3,257 | $ 1,742 | $ 298,502 | |
Distributions - common stock | |||||||
Distributions - common stock Cash - $.45 per share | $ (8,581) | (8,581) | |||||
Restricted stock vesting | 106 | (106) | |||||
Shares issued through dividend reinvestment plan | 50 | 1,131 | 1,181 | ||||
Distributions to non-controlling interests | (1,082) | (1,082) | |||||
Compensation expense - restricted stock | 826 | 826 | |||||
Net income | 5,851 | 802 | 6,653 | ||||
Other comprehensive income (loss) | 2,744 | 6 | 2,750 | ||||
Balances at Mar. 31, 2018 | 18,417 | 276,938 | 2,899 | 527 | 1,468 | 300,249 | |
Balances at Dec. 31, 2017 | 18,261 | 275,087 | 155 | 3,257 | 1,742 | 298,502 | |
Distributions - common stock | |||||||
Net income | 11,199 | ||||||
Other comprehensive income (loss) | 3,766 | ||||||
Balances at Jun. 30, 2018 | 18,575 | 281,396 | 3,913 | (3,608) | 1,422 | 301,698 | |
Balances at Mar. 31, 2018 | 18,417 | 276,938 | 2,899 | 527 | 1,468 | 300,249 | |
Distributions - common stock | |||||||
Distributions - common stock Cash - $.45 per share | (8,652) | (8,652) | |||||
Shares issued through equity offering program - net | 93 | 2,165 | 2,258 | ||||
Shares issued through dividend reinvestment plan | 65 | 1,437 | 1,502 | ||||
Distributions to non-controlling interests | (77) | (77) | |||||
Compensation expense - restricted stock | 856 | 856 | |||||
Net income | 4,517 | 29 | 4,546 | ||||
Other comprehensive income (loss) | 1,014 | 2 | 1,016 | ||||
Balances at Jun. 30, 2018 | 18,575 | 281,396 | 3,913 | (3,608) | 1,422 | 301,698 | |
Balances at Dec. 31, 2018 | 18,736 | 287,250 | 1,890 | (10,730) | 1,449 | 298,595 | |
Distributions - common stock | |||||||
Distributions - common stock Cash - $.45 per share | (8,832) | (8,832) | |||||
Restricted stock vesting | 112 | (112) | |||||
Shares issued through equity offering program - net | 37 | 1,002 | 1,039 | ||||
Shares issued through dividend reinvestment plan | 52 | 1,147 | 1,199 | ||||
Distributions to non-controlling interests | (5) | (5) | |||||
Compensation expense - restricted stock | 954 | 954 | |||||
Net income | 3,971 | 40 | 4,011 | ||||
Other comprehensive income (loss) | (1,572) | (5) | (1,577) | ||||
Balances at Mar. 31, 2019 | 18,937 | 290,241 | 318 | (15,591) | 1,479 | 295,384 | |
Balances at Dec. 31, 2018 | 18,736 | 287,250 | 1,890 | (10,730) | 1,449 | 298,595 | |
Distributions - common stock | |||||||
Net income | 8,569 | ||||||
Other comprehensive income (loss) | (4,095) | ||||||
Balances at Jun. 30, 2019 | 19,139 | 296,840 | (2,196) | (20,401) | 1,229 | 294,611 | |
Balances at Mar. 31, 2019 | 18,937 | 290,241 | 318 | (15,591) | 1,479 | 295,384 | |
Distributions - common stock | |||||||
Distributions - common stock Cash - $.45 per share | (8,922) | (8,922) | |||||
Shares issued through equity offering program - net | 143 | 4,132 | 4,275 | ||||
Shares issued through dividend reinvestment plan | 59 | 1,529 | 1,588 | ||||
Distributions to non-controlling interests | (692) | (692) | |||||
Compensation expense - restricted stock | 938 | 938 | |||||
Net income | $ 4,112 | 446 | 4,558 | ||||
Other comprehensive income (loss) | (2,514) | (4) | (2,518) | ||||
Balances at Jun. 30, 2019 | $ 19,139 | $ 296,840 | $ (2,196) | $ (20,401) | $ 1,229 | $ 294,611 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||
Distributions - common stock, Cash per share (in dollars per share) | $ 0.45 | $ 0.45 | $ 0.45 | $ 0.45 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 8,569 | $ 11,199 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Gain on sale of real estate, net | (1,099) | (2,408) |
Increase in unbilled rent receivable | (799) | (537) |
Amortization and write-off of intangibles relating to leases, net | (509) | (488) |
Amortization of restricted stock expense | 1,892 | 1,682 |
Equity in loss (earnings) of unconsolidated joint ventures | 82 | (543) |
Equity in earnings from sale of unconsolidated joint venture properties | (71) | |
Distributions of earnings from unconsolidated joint ventures | 41 | 88 |
Depreciation and amortization | 10,787 | 10,432 |
Amortization and write-off of deferred financing costs | 487 | 449 |
Payment of leasing commissions | (186) | (95) |
Decrease in escrow, deposits, other assets and receivables | 683 | 718 |
Decrease in accrued expenses and other liabilities | (1,637) | (1,627) |
Net cash provided by operating activities | 18,311 | 18,799 |
Cash flows from investing activities: | ||
Purchase of real estate | (26,978) | (18,452) |
Improvements to real estate | (2,335) | (5,991) |
Net proceeds from sale of real estate | 5,314 | 8,958 |
Distributions of capital from unconsolidated joint venture | 11 | |
Net cash used in investing activities | (23,988) | (15,485) |
Cash flows from financing activities: | ||
Scheduled amortization payments of mortgages payable | (6,433) | (5,313) |
Repayment of mortgages payable | (1,705) | (9,827) |
Proceeds from mortgage financings | 23,545 | 13,550 |
Proceeds from sale of common stock, net | 5,314 | 2,258 |
Proceeds from bank line of credit | 33,650 | 25,000 |
Repayment on bank line of credit | (31,500) | (14,100) |
Issuance of shares through dividend reinvestment plan | 2,787 | 2,683 |
Payment of financing costs | (382) | (262) |
Distributions to non-controlling interests | (697) | (1,159) |
Cash distributions to common stockholders | (17,555) | (17,074) |
Net cash provided by (used in) financing activities | 7,024 | (4,244) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 1,347 | (930) |
Cash, cash equivalents and restricted cash at beginning of year | 16,733 | 14,668 |
Cash, cash equivalents and restricted cash at end of period | 18,080 | 13,738 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the period for interest expense | 9,912 | $ 8,721 |
Supplemental disclosure of non-cash investing activity: | ||
Right of use asset and related lease liability | 4,381 | |
Purchase accounting allocation - intangible lease assets | 1,753 | |
Purchase accounting allocation - intangible lease liabilities | $ (305) |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 |
Reconciliation of cash, cash equivalents, and restricted cash | ||
Cash and cash equivalents | $ 17,381 | $ 12,925 |
Restricted cash | 337 | 416 |
Restricted cash included in escrow, deposits and other assets and receivables | 362 | 397 |
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows | $ 18,080 | $ 13,738 |
Organization and Background
Organization and Background | 6 Months Ended |
Jun. 30, 2019 | |
Organization and Background | |
Organization and Background | Note 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 theater properties, many of which are subject to long-term net leases. As of June 30, 2019, OLP owns 126 properties, including four properties owned by consolidated joint ventures and four properties owned by unconsolidated joint ventures. The 126 properties are located in 31 states. |
Summary Accounting Policies
Summary Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Summary Accounting Policies | |
Summary Accounting Policies | Note 2 – Summary Accounting Policies Principles of Consolidation/Basis of Preparation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by U.S. Generally Accepted Accounting Principles (“GAAP”) for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statement disclosures. In the opinion of management, all adjustments of a normal recurring nature necessary for fair presentation have been included. The results of operations for the three and six months ended June 30, 2019 and 2018 are not necessarily indicative of the results for the full year. These statements should be read in conjunction with the consolidated financial statements and related notes included in OLP’s Annual Report on Form 10-K for the year ended December 31, 2018. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements include the accounts and operations of OLP, its wholly-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. 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, and (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, none 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. None of the joint venture debt is recourse to the Company, subject to standard carve-outs. The Company periodically reviews 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 and six months ended June 30, 2019 and 2018, there were no 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. Reclassifications Certain amounts previously reported in the consolidated financial statements have been reclassified in the accompanying consolidated financial statements to conform to the current period's presentation. Such reclassifications primarily relate to the presentation on the consolidated statement of income for the three and six months ended June 30, 2018 of (i) rental income, net, due to the adoption of a new accounting pronouncement (see Note 3) and (ii) leasehold rent being included as part of Real estate expenses. In addition, the Company changed the presentation of its consolidated statement of changes in equity for the six month periods ended June 30, 2019 and 2018 as the Securities and Exchange Commission extended the annual disclosure requirement of changes in stockholders’ equity in Rule 3-04 of Regulation S-X to interim periods, which requires both the year-to-date information and subtotals for each interim period, as part of Release Nos. 33-10532, 34-83875 and IC-33203. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Leases | Note 3 – Leases As of January 1, 2019, the Company adopted ASU No. 2016-02, Leases , ASU No. 2018-11, Leases (Topic 842), Targeted Improvements , and ASU No. 2018-10, Codification Improvements to Topic 842, Leases , using the modified retrospective approach and elected the package of practical expedients that allows an entity to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. Upon adoption, there was no cumulative-effect adjustment to retained earnings as of January 1, 2019. As Lessor The Company owns rental properties which are leased to tenants under operating leases with current expirations ranging from 2019 to 2055, with options to extend or terminate the lease or purchase the property exercisable at the option of our tenants. 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 adopted the practical expedient offered in ASU No. 2018-11 which allows lessors to 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 their respective leases reported on a straight-line basis over the non-cancelable term of the lease. Variable lease revenues 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 or (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): Three Months Six Months Ended Ended June 30, 2019 Fixed lease revenues $ 17,435 $ 35,080 Variable lease revenues 3,029 6,285 Lease revenues (a) $ 20,464 $ 41,365 (a) Excludes $255 and $509 of amortization related to lease intangible assets and liabilities for the three and six months ended June 30, 2019, respectively. On a quarterly basis, the Company assesses the collectability of substantially all lease payments due under its leases, including unbilled rent receivable balances, by reviewing the tenant's payment history and financial condition. Changes to such collectability is recognized as a current period adjustment to rental revenue. The Company has assessed the collectability of all lease payments as probable as of June 30, 2019. 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 our 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. As a lessor, the adoption of ASU No. 2016-02, and the related accounting guidance, did not have a material impact on the consolidated financial statements. As a result of the adoption, the Company combined $2,034,000 and $3,978,000 from its Tenant reimbursements line item into Rental income, net, on its consolidated statements of income for the three and six months ended June 30, 2018, respectively. Minimum Future Rents As of June 30, 2019, under ASC 842, 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 intangibles and (ii) variable lease payments as described above. From July 1 – December 31, 2019 $ 34,397 For the year ended December 31, 2020 69,303 2021 67,852 2022 59,260 2023 50,456 2024 41,992 Thereafter 172,261 Total $ 495,521 As of December 31, 2018, under ASC 840, the minimum future contractual rents to be received on non-cancellable operating leases were as follows (amounts in thousands): For the year ended December 31, 2019 $ 66,959 2020 66,691 2021 65,130 2022 56,444 2023 47,644 Thereafter 208,923 Total $ 511,791 As Lessee The Company is a lessee under a ground lease in Greensboro, North Carolina, which is classified as an operating lease. The lease expires March 3, 2020 and provides for up to five, 5-year renewal options and one seven-month renewal option. On January 1, 2019, upon adoption of ASC 842, the Company recorded a $4,381,000 liability for the obligation to make payments under the lease and a $4,381,000 asset for the right to use the underlying asset during the lease term which were included in other liabilities and other assets, respectively, on the consolidated balance sheet. 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. The Company applied a discount rate of 4.75%, based on its incremental borrowing rate given the term of the lease, as the rate implicit in the lease is not known. As of June 30, 2019, the remaining lease term is 10.7 years. During the three and six months ended June 30, 2019, the Company recognized $131,000 and $262,000, respectively, of lease expense related to this ground lease which is included in Real estate expenses on the consolidated statements of income. Minimum Future Lease Payments As of June 30, 2019, under ASC 842, the minimum future lease payments related to this operating ground lease are as follows (amounts in thousands): From July 1 – December 31, 2019 $ 224 For the year ended December 31, 2020 464 2021 464 2022 464 2023 464 2024 512 Thereafter 3,086 Total undiscounted cash flows $ 5,678 Present value discount (1,398) Lease liability $ 4,280 As of December 31, 2018, under ASC 840, the minimum future lease payments related to this operating ground lease were $371,000 through July 2019 and $464,000 through March 3, 2020. |
Earnings Per Common Share
Earnings Per Common Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Common Share | |
Earnings Per Common Share | Note 4 – Earnings Per Common Share Basic earnings per share was determined by dividing net income allocable to common stockholders for each period by the weighted average number of shares of common stock outstanding during the applicable period. Net income is also allocated to the unvested restricted stock outstanding during each period, as the restricted stock is entitled to receive dividends and is therefore considered a participating security. As of June 30, 2019, the shares of common stock underlying the restricted stock units (the “RSUs”) awarded under the 2016 Incentive Plan 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 identifies the number of shares of common stock underlying the RSUs that are included in determining the diluted weighted average number of shares of common stock: Three and Six Months Ended Three and Six Months Ended June 30, 2019 (b) June 30, 2018 (c) Date of Award and Return on Stockholder Return on Stockholder Total Number of Capital Return Capital Return Underlying Shares (a) metric metric Total metric metric Total September 26, 2017 76,250 shares (d) 32,824 38,125 70,949 36,120 38,125 74,245 July 1, 2018 76,250 shares (e) 29,771 38,125 67,896 n/a n/a n/a 62,595 76,250 138,845 36,120 38,125 74,245 (a) The RSUs awarded in 2017 and 2018 vest, subject to satisfaction of the applicable market and/or performance conditions, on June 30, 2020 and 2021, respectively. (b) 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 June 30, 2019. (c) 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 June 30, 2018. (d) None of the remaining 5,301 shares and 2,005 shares are included at June 30, 2019 and 2018, respectively, as the applicable condition had not been met for these shares at the respective measurement dates. (e) None of the remaining 8,354 shares are included at June 30, 2019, as the applicable conditions had not been met for these shares at the measurement date. See Note 13 for information regarding the Company’s equity incentive plans. The following table provides a reconciliation of the numerator and denominator of earnings per share calculations (amounts in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Numerator for basic and diluted earnings per share: Net income $ 4,558 $ 4,546 $ 8,569 $ 11,199 Less net income attributable to non-controlling interests (446) (29) (486) (831) Less earnings allocated to unvested restricted stock (a) (310) (293) (620) (586) Net income available for common stockholders: basic and diluted $ 3,802 $ 4,224 $ 7,463 $ 9,782 Denominator for basic earnings per share: Weighted average number of common shares 19,023 18,519 18,959 18,458 Effect of diluted securities: RSUs 106 74 101 74 Denominator for diluted earnings per share: Weighted average number of shares 19,129 18,593 19,060 18,532 Earnings per common share, basic $ .20 $ .23 $ .39 $ .53 Earnings per common share, diluted $ .20 $ .23 $ .39 $ .53 (a) Represents an allocation of distributed earnings to unvested restricted stock that, as participating securities, are entitled to receive dividends. |
Real Estate Acquisitions
Real Estate Acquisitions | 6 Months Ended |
Jun. 30, 2019 | |
Real Estate Acquisitions | |
Real Estate Acquisitions | Note 5 – Real Estate Acquisitions The following chart details the Company’s acquisitions of real estate during the six months ended June 30, 2019 (amounts in thousands): Capitalized Third Party Contract Real Estate Purchase Terms of Acquisition Description of Property Date Acquired Price Payment Costs Zwanenberg Food Group/Metro Carpets industrial facility, Nashville, Tennessee May 30, 2019 $ 8,000 All cash (a) $ 77 Echo, Inc. industrial facility, Wauconda, Illinois May 30, 2019 3,800 All cash 26 Tinicum Mechanical Supply/Philly Motors industrial facility, Bensalem, Pennsylvania June 18, 2019 6,200 All cash 168 International Flora Technologies industrial facility, Chandler, Arizona June 26, 2019 8,650 All cash 57 Totals $ 26,650 $ 328 (a) In July 2019, the Company obtained new mortgage debt of $5,200. 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. The following chart details the allocation of the purchase price for the Company’s acquisitions of real estate during the six months ended June 30, 2019 (amounts in thousands): Building Intangible Lease Description of Property Land Building Improvements Asset Liability Total Zwanenberg Food Group/Metro Carpets industrial facility, Nashville, Tennessee $ 1,058 $ 6,280 $ 70 $ 750 $ (81) $ 8,077 Echo, Inc. industrial facility, Wauconda, Illinois 67 3,283 141 339 (4) 3,826 Tinicum Mechanical Supply/Philly Motors industrial facility, Bensalem, Pennsylvania 1,602 4,285 37 664 (220) 6,368 International Flora Technologies industrial facility, Chandler, Arizona 1,334 7,152 221 — — 8,707 Totals $ 4,061 $ 21,000 $ 469 $ 1,753 $ (305) $ 26,978 On July 24, 2019, the Company purchased an industrial property in LaGrange, Georgia for $5,200,000. |
Sale of Properties
Sale of Properties | 6 Months Ended |
Jun. 30, 2019 | |
Sale of Property | |
Sales of Property | Note 6 – Sale of Properties On June 20, 2019, the Company sold a property located in Clemmons, North Carolina and owned by a consolidated joint venture in which the Company held a 90% interest, for $5,314,000, net of closing costs, and paid off the $1,705,000 mortgage. This property accounted for less than 1% of the Company’s rental income, net, during each of the three and six months ended June 30, 2019 and 2018. The sale resulted in a gain of $1,099,000 which was recorded as Gain on sale of real estate, net, in the consolidated statements of income for the three and six months ended June 30, 2019. The non-controlling interest’s share of the gain was $422,000. On January 30, 2018, the Company sold a property located in Fort Bend, Texas and owned by a consolidated joint venture in which the Company held an 85% interest, for $8,958,000, net of closing costs. The sale resulted in a gain of $2,408,000 which was recorded as Gain on sale of real estate, net, in the consolidated statement of income for the six months ended June 30, 2018. The non-controlling interest’s share of the gain was $776,000. |
Variable Interest Entities, Con
Variable Interest Entities, Contingent Liabilities and Consolidated Joint Ventures | 6 Months Ended |
Jun. 30, 2019 | |
Variable Interest Entities, Contingent Liabilities and Consolidated Joint Ventures | |
Variable Interest Entities, Contingent Liabilities and Consolidated Joint Ventures | Note 7 – Variable Interest Entities, Contingent Liabilities and Consolidated Joint Ventures Variable Interest Entities – Ground Leases The Company determined that with respect to the properties identified in the table below, it has a variable interest through its ground leases and the two owner/operators (which are affiliated with one another) are VIEs because their equity investment at risk is insufficient to finance their activities without additional subordinated financial support. The Company further determined that it is not the primary beneficiary of these VIEs because the Company has shared power over certain activities that most significantly impact the owner/operator’s economic performance ( i.e. , shared rights on the sale of the property) and therefore, does not consolidate these VIEs for financial statement purposes. Accordingly, the Company accounts for these investments as land and the revenues from the ground leases as Rental income, net. Such rental income amounted to $486,000 and $971,000 for the three and six months ended June 30, 2019, respectively, and $941,000 and $1,947,000 for the three and six months ended June 30, 2018, respectively. Included in the amounts for the three and six months ended June 30, 2018 is rental income of $260,000 and $585,000, respectively, from a previously held VIE property in Lakemoor, Illinois, which the Company sold in September 2018. The following chart details the VIEs through the Company’s ground leases and the aggregate carrying amount and maximum exposure to loss as of June 30, 2019 (dollars in thousands): Owner/ Carrying Land Operator Amount and Contract # Units in Mortgage Maximum Purchase Apartment from Type of Exposure to Description of Property(a) Date Acquired Price Complex Third Party(b) Exposure Loss The Briarbrook Village Apartments, Wheaton, Illinois August 2, 2016 $ 10,530 342 $ 39,411 Land $ 10,536 The Vue Apartments, Beachwood, Ohio August 16, 2016 13,896 348 67,444 Land 13,901 Totals $ 24,426 690 $ 106,855 $ 24,437 (a) Simultaneously with each purchase, the Company entered into a triple net ground lease with affiliates of Strategic Properties of North America, the owner/operators of these properties. (b) Simultaneously with the closing of each acquisition, the owner/operator obtained a mortgage from a third party which, together with the Company’s purchase of the land, provided substantially all of the funds to acquire the complex. The Company provided its land as collateral for the respective owner/operator’s mortgage loans; accordingly, each land position is subordinated to the applicable mortgage. No other financial support has been provided by the Company to the owner/operator. Pursuant to the terms of the ground lease for the Wheaton, Illinois property, the owner/operator is obligated to make certain unit renovations as and when units become vacant. Cash reserves to cover such renovation work, received by the Company in conjunction with the purchase of the property, are disbursed when the unit renovations are completed. The related cash reserve balance for this property was $337,000 and $356,000 at June 30, 2019 and December 31, 2018, respectively, and is classified as Restricted cash on the consolidated balance sheets. The Restricted cash balance at December 31, 2018 also included, pursuant to a lease amendment, an escrow deposit of $750,000 from the owner/operator of the Beachwood, Ohio property and was paid in January 2019. Variable Interest Entity – Consolidated Joint Ventures The Company has determined that the four consolidated joint ventures in which it holds between a 90% to 95% 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 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 these joint ventures. 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): June 30, December 31, 2019 2018 (a) Land $ 12,158 $ 14,722 Buildings and improvements, net of accumulated depreciation of $3,886 and $4,119, respectively 24,602 27,642 Cash 1,177 1,020 Unbilled rent receivable 1,248 1,211 Unamortized intangible lease assets, net 810 890 Escrow, deposits and other assets and receivables 546 810 Mortgages payable, net of unamortized deferred financing costs of $344 and $391, respectively 24,605 26,850 Accrued expenses and other liabilities 485 761 Unamortized intangible lease liabilities, net 630 1,694 Accumulated other comprehensive (loss) income (66) 31 Non-controlling interests in consolidated joint ventures 1,229 1,449 (a) MCB Real Estate, LLC and its affiliates (‘‘MCB’’) are the Company’s joint venture partner in three and four consolidated joint ventures at June 30, 2019 and December 31, 2018, respectively, in which the Company has aggregate equity investments of approximately $7,833,000 and $9,891,000, respectively. Distributions to each joint venture partner are determined pursuant to the applicable operating agreement and may not be pro rata to the equity interest each partner has in the applicable venture. |
Investment in Unconsolidated Jo
Investment in Unconsolidated Joint Ventures | 6 Months Ended |
Jun. 30, 2019 | |
Investment in Unconsolidated Joint Ventures | |
Investment in Unconsolidated Joint Ventures | Note 8 – Investment in Unconsolidated Joint Ventures The Company participates in four unconsolidated joint ventures, each of which owns and operates one property. At June 30, 2019 and December 31, 2018, the Company’s equity investment in these ventures totaled $10,724,000 and $10,857,000, respectively. The Company recorded equity in earnings of $34,000 and equity in loss of $82,000 for the three and six months ended June 30, 2019, respectively, and, in addition to the equity in earnings from the sale of property of $71,000 in 2018, equity in earnings of $348,000 and $543,000 for the three and six months ended June 30, 2018, respectively. Included in equity in earnings from unconsolidated joint ventures for the three and six months ended June 30, 2018 is $110,000 related to the discontinuance of hedge accounting on a mortgage swap related to an unconsolidated joint venture property, located in Milwaukee, Wisconsin, that was sold in July 2018 (see Note 14). At June 30, 2019 and December 31, 2018, MCB and the Company are partners in an unconsolidated joint venture in which the Company’s equity investment is approximately $8,893,000 and $9,087,000, respectively. |
Debt Obligations
Debt Obligations | 6 Months Ended |
Jun. 30, 2019 | |
Debt Obligations | |
Debt Obligations | Note 9 – Debt Obligations Mortgages Payable The following table details the Mortgages payable, net, balances per the consolidated balance sheets (amounts in thousands): June 30, December 31, 2019 2018 Mortgages payable, gross $ 438,503 $ 423,096 Unamortized deferred financing costs (4,352) (4,298) Mortgages payable, net $ 434,151 $ 418,798 Line of Credit On July 1, 2019, the Company amended its credit facility with Manufacturers & Traders Trust Company, People’s United Bank, VNB New York, LLC, and Bank Leumi USA, which among other things, extended the facility’s maturity to December 31, 2022 from December 31, 2019. In connection with the amendment, the Company incurred a $550,000 commitment fee which will be amortized over the remaining term of the facility. The Company can borrow up to $100,000,000, subject to borrowing base requirements. The Company's interest rate is the one month LIBOR rate plus an applicable margin ranging from 175 basis points to 300 basis points depending on the ratio of the Company’s total debt to total value, as determined pursuant to the facility. At June 30, 2019 and 2018, the applicable margin was 200 and 175 basis points, respectively. An unused facility fee of .25% per annum applies to the facility. The average interest rate on the facility was approximately 4.22% and 3.54% for the six months ended June 30, 2019 and 2018, respectively. The Company was in compliance with all covenants at June 30, 2019. The following table details the Line of credit, net, balances per the consolidated balance sheets (amounts in thousands): June 30, December 31, 2019 2018 Line of credit, gross $ 32,150 $ 30,000 Unamortized deferred financing costs (156) (312) Line of credit, net $ 31,994 $ 29,688 At August 2, 2019, there was an outstanding balance of $30,350,000 (before unamortized deferred financing costs) under the facility. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions | |
Related Party Transactions | Note 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 the services of executive, administrative, legal, accounting, clerical and property management personnel, as well as property acquisition, sale and lease consulting and brokerage services, consulting services with respect to mortgage financings and construction supervisory services (collectively, the “Services”). Majestic is wholly-owned by the Company’s vice-chairman and certain of the Company’s executive officers are officers of, and are compensated by, Majestic. The amount the Company pays Majestic for the Services is approved each year by the Compensation and/or Audit Committees of the Company’s Board of Directors, and the independent directors. In consideration for the Services, the Company paid Majestic $702,000 and $1,405,000 for the three and six months ended June 30, 2019, respectively, and $689,000 and $1,367,000 for the three and six months ended June 30, 2018, respectively. Included in these fees are $322,000 and $646,000 of property management costs for the three and six months ended June 30, 2019, respectively, and $309,000 and $608,000 for the three and six months ended June 30, 2018, respectively . The amounts paid pursuant to the property management portion of the compensation and services agreement is paid 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. Majestic credits against the amounts due to it under the compensation and services agreement any management or other net payments received by it from any joint venture in which the Company is a joint venture partner. The Company also paid Majestic, pursuant to the compensation and services agreement, $54,000 and $108,000 in the three and six months ended June 30, 2019 and 2018, respectively, for the Company’s share of all direct office expenses, including rent, telephone, postage, computer services, internet usage and supplies. The Company does not pay Majestic for any services except as described in this paragraph. Executive officers and others providing services to the Company under the compensation and services agreement were awarded shares of restricted stock and RSUs under the Company’s stock incentive plans (described in Note 13). The related expense charged to the Company’s operations was $462,000 and $932,000 for the three and six months ended June 30, 2019, respectively, and $432,000 and $849,000 for the three and six months ended June 30, 2018, respectively. The amounts paid under the compensation and services agreement (except for the property management costs 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 the three and six months ended June 30, 2019 and 2018, respectively. Joint Venture Partners and Affiliates The Company paid an aggregate of $20,000 and $41,000 for the three and six months ended June 30, 2019, respectively, and $22,000 and $65,000 for the three and six months ended June 30, 2018, respectively, to its consolidated joint venture partners 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 Company’s unconsolidated joint ventures paid management fees of $30,000 and $55,000 for the three and six months ended June 30, 2019, respectively, and $45,000 and $96,000 for the three and six months ended June 30, 2018, respectively, to the other partner of the venture, which reduced Equity in earnings by $15,000 and $28,000 for the three and six months ended June 30, 2019, respectively, and $23,000 and $48,000 for the three and six months ended June 30, 2018, respectively. Other During 2019 and 2018, the Company paid quarterly fees of $72,400 and $69,000, respectively, to the Company’s chairman and $28,900 and $27,500, respectively, to the Company’s vice-chairman. These fees are included in General and administrative expenses on the consolidated statements of income. The Company obtains its property insurance in conjunction with Gould Investors L.P. (“Gould Investors”), a related party, and reimburses Gould Investors annually for the Company’s insurance cost relating to its properties. Included in Real estate expenses on the consolidated statements of income is insurance expense of $222,000 and $447,000 for the three and six months ended June 30, 2019, respectively, and $206,000 and $404,000 for the three and six months ended June 30, 2018, respectively, of amounts reimbursed to Gould Investors in prior periods. |
Common Stock Cash Dividend
Common Stock Cash Dividend | 6 Months Ended |
Jun. 30, 2019 | |
Common Stock Cash Dividend | |
Common Stock Cash Dividend | Note 11 – Common Stock Cash Dividend On June 13, 2019, the Board of Directors declared a quarterly cash dividend of $.45 per share on the Company’s common stock, totaling approximately $8,923,000. The quarterly dividend was paid on July 9, 2019 to stockholders of record on June 25, 2019. |
Shares Issued through Equity Of
Shares Issued through Equity Offering Program | 6 Months Ended |
Jun. 30, 2019 | |
Shares Issued through Equity Offering Program | |
Shares Issued through Equity Offering Program | Note 12 – Shares Issued through Equity Offering Program During the three months ended June 30, 2019, the Company sold 143,120 shares for proceeds of $4,308,000, net of commissions of $44,000, and incurred offering costs of $33,000 for professional fees. During the six months ended June 30, 2019, the Company sold 180,120 shares for proceeds of $5,392,000, net of commissions of $54,000, and incurred offering costs of $78,000 for professional fees. |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Stock Based Compensation | |
Stock Based Compensation | Note 13 – 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. An aggregate of 841,650 shares of restricted stock and restricted stock units are outstanding under the Company’s 2016 and 2012 equity incentive plans (collectively, the “Prior Plans”) and have not yet vested. No additional awards may be granted under the Prior 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 the common stock on the grant date. Unless earlier forfeited because the participant’s relationship with the Company terminated, unvested restricted stock awards vest on the fifth anniversary of the grant date, and under certain circumstances, may vest earlier. In 2017, 2018 and in July 2019, the Company granted RSUs exchangeable for up to 76,250, 76,250 and 77,776 shares, respectively, of common stock upon satisfaction, through June 30, 2020, June 30, 2021 and June 30, 2022, respectively, of specified conditions. Specifically, up to 50% of these RSUs vest upon achievement of metrics related to average annual total stockholder return (the “TSR Awards”), which metrics meet the definition of a market condition, and up to 50% vest upon achievement of metrics related to average annual return on capital (the “ROC Awards”), which metrics meet the definition of a performance condition. The holders of the RSUs are not entitled to dividends or to vote the underlying shares until such RSUs vest and shares are issued. Accordingly, the shares underlying these RSUs are not included in 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, which is recognized ratably over the service period. 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. Expense is not recognized on the RSUs which the Company does not expect to vest as a result of the Company's performance expectations. As of June 30, 2019, based on performance and market assumptions, the fair value of the RSUs granted in 2017 and 2018 is $781,000 and $853,000, respectively. Recognition of such deferred compensation expense will be charged to General and administrative expense over the respective three year performance cycle. None of these RSUs were forfeited or vested during the six months ended June 30, 2019. The following is a summary of the activity of the equity incentive plans: Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Restricted stock grants: Number of shares — — 150,050 144,750 Average per share grant price — — $ 25.70 $ 25.31 Deferred compensation to be recognized over vesting period — — $ 3,856,000 $ 3,664,000 Number of non-vested shares: Non-vested beginning of period 689,150 651,650 651,250 612,900 Grants — — 150,050 144,750 Vested during period — — (112,150) (106,000) Forfeitures — (150) — (150) Non-vested end of period 689,150 651,500 689,150 651,500 RSU grants: Number of underlying shares — — — — Average per share grant price — — — — Deferred compensation to be recognized over vesting period — — — — Number of non-vested shares: Non-vested beginning of period 152,500 76,250 152,500 76,250 Grants — — — — Vested during period — — — Forfeitures — — — — Non-vested end of period 152,500 76,250 152,500 76,250 Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Restricted stock and RSU grants: Weighted average per share value of non-vested shares (based on grant price) $ 24.60 $ 23.56 $ 24.60 $ 23.56 Value of stock vested during the period (based on grant price) $ — $ — $ 2,304,000 $ 2,289,000 Weighted average per share value of shares forfeited during the period based on grant price) $ — $ 23.93 $ — $ 23.93 The total charge to operations: Outstanding restricted stock grants $ 843,000 $ 765,000 $ 1,686,000 $ 1,500,000 Outstanding RSUs 95,000 91,000 206,000 182,000 Total charge to operations $ 938,000 $ 856,000 $ 1,892,000 $ 1,682,000 As of June 30, 2019, total compensation costs of $8,985,000 and $851,000 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 remaining vesting period is 2.6 years for the restricted stock and 1.5 years for the RSUs. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | Note 14 – 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. 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 significantly on “unobservable” market inputs. The carrying amounts of cash and cash equivalents, restricted cash, 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 June 30, 2019, the $446,700,000 estimated fair value of the Company’s mortgages payable is more than their $438,503,000 carrying value (before unamortized deferred financing costs) by approximately $8,197,000 assuming a blended market interest rate of 4.0% based on the 8.2 year weighted average remaining term to maturity of the mortgages. At December 31, 2018, the $420,396,000 estimated fair value of the Company’s mortgages payable is less than their $423,096,000 carrying value (before unamortized deferred financing costs) by approximately $2,700,000 assuming a blended market interest rate of 4.41% based on the 8.7 year weighted average remaining term to maturity of the mortgages. At June 30, 2019 and December 31, 2018, the carrying amount of the Company’s line of credit (before unamortized deferred financing costs) of $32,150,000 and $30,000,000, respectively, approximates its fair value. The fair value of the Company’s mortgages payable and line of credit are 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. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Fair Value on a Recurring Basis 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 Fair Value Financial assets: Interest rate swaps June 30, 2019 $ 126 December 31, 2018 2,399 Financial liabilities: Interest rate swaps June 30, 2019 $ 2,327 December 31, 2018 505 The Company does not own any financial instruments that are measured on a recurring basis and that are classified as Level 1 or 3. The Company’s objective in using interest rate swaps is to add stability to interest expense. The Company does not use derivatives for trading or speculative purposes. 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 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 June 30, 2019, 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. As of June 30, 2019, the Company had entered into 26 interest rate derivatives, all of which were interest rate swaps, related to 26 outstanding mortgage loans with an aggregate $113,733,000 notional amount and mature between 2019 and 2028 (weighted average remaining term to maturity of 5.4 years). Such interest rate swaps, all of which were designated as cash flow hedges, converted LIBOR based variable rate mortgages to fixed annual rate mortgages (with interest rates ranging from 3.02% to 5.38% and a weighted average interest rate of 4.12% at June 30, 2019). The fair values of the Company’s derivatives in asset and liability positions are reflected as other assets or other liabilities on the consolidated balance sheets. The following table presents the effect of the Company’s derivative financial instruments on the consolidated statements of income for the periods presented (amounts in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 One Liberty Properties, Inc. and Consolidated subsidiaries Amount of (loss) gain recognized on derivatives in other comprehensive (loss) income $ (2,477) $ 1,009 $ (3,962) $ 3,509 Amount of reclassification from Accumulated other comprehensive (loss) income into Interest expense 41 (95) 133 (291) Unconsolidated Joint Ventures (Company’s share) Amount of gain recognized on derivatives in other comprehensive (loss) income n/a $ 22 n/a $ 69 Amount of reclassification from Accumulated other comprehensive (loss) income into Equity in earnings (loss) of unconsolidated joint ventures n/a 110 n/a 103 During the three and six months ended June 30, 2019 and 2018, the Company (including one of its unconsolidated joint ventures) discontinued hedge accounting on two interest rate swaps as the forecasted hedged transactions were no longer probable of occurring. As a result, during the three and six months ended June 30, 2019 and 2018, the Company reclassified $41,000 and $110,000 of realized loss and gain, respectively, from Accumulated other comprehensive (loss) income to earnings. No gain or loss was recognized with respect to amounts excluded from effectiveness testing on the Company’s cash flow hedges for the three and six months ended June 30, 2019 and 2018. During the twelve months ending June 30, 2020, the Company estimates an additional $355,000 will be reclassified from Accumulated other comprehensive (loss) income as an increase to Interest expense. The derivative agreements in effect at June 30, 2019 provide that if the wholly-owned subsidiary of the Company which is a party to the 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 June 30, 2019 and December 31, 2018, the fair value of the derivatives in a liability position, including a net accrued interest receivable of $16,000 and an accrued interest payable of $8,000, respectively, but excluding any adjustments for non-performance risk, was approximately $2,457,000 and $554,000, 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 $2,457,000 and $554,000 as of June 30, 2019 and December 31, 2018, respectively. This termination liability value, net of adjustments for non-performance risk of $146,000 and $41,000, is included in Accrued expenses and other liabilities on the consolidated balance sheet at June 30, 2019 and December 31, 2018, respectively. |
New Accounting Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2019 | |
New Accounting Pronouncements | |
New Accounting Pronouncements | Note 15 – New Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. An entity is permitted to early adopt either the entire standard or only the provisions that eliminate or modify requirements. The Company is evaluating the new guidance to determine if, and to the extent, it will impact the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current “incurred loss” model with an “expected loss” approach. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted after December 2018. The Company is evaluating the new guidance to determine if, and to the extent, it will impact the consolidated financial statements. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events | |
Subsequent Events | Note 16 – Subsequent Events Subsequent events have been evaluated and except as disclosed herein, there were no other events relative to the consolidated financial statements that require additional disclosure. |
Summary Accounting Policies (Po
Summary Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Summary Accounting Policies | |
Principles of Consolidation/Basis of Preparation | Principles of Consolidation/Basis of Preparation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by U.S. Generally Accepted Accounting Principles (“GAAP”) for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statement disclosures. In the opinion of management, all adjustments of a normal recurring nature necessary for fair presentation have been included. The results of operations for the three and six months ended June 30, 2019 and 2018 are not necessarily indicative of the results for the full year. These statements should be read in conjunction with the consolidated financial statements and related notes included in OLP’s Annual Report on Form 10-K for the year ended December 31, 2018. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements include the accounts and operations of OLP, its wholly-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. |
Investment in Joint Ventures and Variable Interest Entities | 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, and (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, none 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. None of the joint venture debt is recourse to the Company, subject to standard carve-outs. The Company periodically reviews 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 and six months ended June 30, 2019 and 2018, there were no 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. |
Reclassifications | Reclassifications Certain amounts previously reported in the consolidated financial statements have been reclassified in the accompanying consolidated financial statements to conform to the current period's presentation. Such reclassifications primarily relate to the presentation on the consolidated statement of income for the three and six months ended June 30, 2018 of (i) rental income, net, due to the adoption of a new accounting pronouncement (see Note 3) and (ii) leasehold rent being included as part of Real estate expenses. In addition, the Company changed the presentation of its consolidated statement of changes in equity for the six month periods ended June 30, 2019 and 2018 as the Securities and Exchange Commission extended the annual disclosure requirement of changes in stockholders’ equity in Rule 3-04 of Regulation S-X to interim periods, which requires both the year-to-date information and subtotals for each interim period, as part of Release Nos. 33-10532, 34-83875 and IC-33203. |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Schedule of components of lease revenues | The components of lease revenues are as follows (amounts in thousands): Three Months Six Months Ended Ended June 30, 2019 Fixed lease revenues $ 17,435 $ 35,080 Variable lease revenues 3,029 6,285 Lease revenues (a) $ 20,464 $ 41,365 (a) Excludes $255 and $509 of amortization related to lease intangible assets and liabilities for the three and six months ended June 30, 2019, respectively. |
Schedule of minimum future contractual rents to be received under ASC 842 | As of June 30, 2019, under ASC 842, 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 intangibles and (ii) variable lease payments as described above. From July 1 – December 31, 2019 $ 34,397 For the year ended December 31, 2020 69,303 2021 67,852 2022 59,260 2023 50,456 2024 41,992 Thereafter 172,261 Total $ 495,521 |
Schedule of minimum future contractual rents to be received under ASC 840 | As of December 31, 2018, under ASC 840, the minimum future contractual rents to be received on non-cancellable operating leases were as follows (amounts in thousands): For the year ended December 31, 2019 $ 66,959 2020 66,691 2021 65,130 2022 56,444 2023 47,644 Thereafter 208,923 Total $ 511,791 |
Schedule of minimum future lease payments | As of June 30, 2019, under ASC 842, the minimum future lease payments related to this operating ground lease are as follows (amounts in thousands): From July 1 – December 31, 2019 $ 224 For the year ended December 31, 2020 464 2021 464 2022 464 2023 464 2024 512 Thereafter 3,086 Total undiscounted cash flows $ 5,678 Present value discount (1,398) Lease liability $ 4,280 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Common Share | |
Schedule of impact to the diluted weighted average number of shares of common stock related to the RSUs | Three and Six Months Ended Three and Six Months Ended June 30, 2019 (b) June 30, 2018 (c) Date of Award and Return on Stockholder Return on Stockholder Total Number of Capital Return Capital Return Underlying Shares (a) metric metric Total metric metric Total September 26, 2017 76,250 shares (d) 32,824 38,125 70,949 36,120 38,125 74,245 July 1, 2018 76,250 shares (e) 29,771 38,125 67,896 n/a n/a n/a 62,595 76,250 138,845 36,120 38,125 74,245 (a) The RSUs awarded in 2017 and 2018 vest, subject to satisfaction of the applicable market and/or performance conditions, on June 30, 2020 and 2021, respectively. (b) 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 June 30, 2019. (c) 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 June 30, 2018. (d) None of the remaining 5,301 shares and 2,005 shares are included at June 30, 2019 and 2018, respectively, as the applicable condition had not been met for these shares at the respective measurement dates. (e) None of the remaining 8,354 shares are included at June 30, 2019, as the applicable conditions had not been met for these shares at the measurement date. |
Schedule of reconciliation of the numerator and denominator of earnings per share calculations | The following table provides a reconciliation of the numerator and denominator of earnings per share calculations (amounts in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Numerator for basic and diluted earnings per share: Net income $ 4,558 $ 4,546 $ 8,569 $ 11,199 Less net income attributable to non-controlling interests (446) (29) (486) (831) Less earnings allocated to unvested restricted stock (a) (310) (293) (620) (586) Net income available for common stockholders: basic and diluted $ 3,802 $ 4,224 $ 7,463 $ 9,782 Denominator for basic earnings per share: Weighted average number of common shares 19,023 18,519 18,959 18,458 Effect of diluted securities: RSUs 106 74 101 74 Denominator for diluted earnings per share: Weighted average number of shares 19,129 18,593 19,060 18,532 Earnings per common share, basic $ .20 $ .23 $ .39 $ .53 Earnings per common share, diluted $ .20 $ .23 $ .39 $ .53 (a) Represents an allocation of distributed earnings to unvested restricted stock that, as participating securities, are entitled to receive dividends. |
Real Estate Acquisitions (Table
Real Estate Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Real Estate Acquisitions | |
Schedule of the Company's acquisitions of real estate | The following chart details the Company’s acquisitions of real estate during the six months ended June 30, 2019 (amounts in thousands): Capitalized Third Party Contract Real Estate Purchase Terms of Acquisition Description of Property Date Acquired Price Payment Costs Zwanenberg Food Group/Metro Carpets industrial facility, Nashville, Tennessee May 30, 2019 $ 8,000 All cash (a) $ 77 Echo, Inc. industrial facility, Wauconda, Illinois May 30, 2019 3,800 All cash 26 Tinicum Mechanical Supply/Philly Motors industrial facility, Bensalem, Pennsylvania June 18, 2019 6,200 All cash 168 International Flora Technologies industrial facility, Chandler, Arizona June 26, 2019 8,650 All cash 57 Totals $ 26,650 $ 328 (a) In July 2019, the Company obtained new mortgage debt of $5,200. |
Schedule of allocation of the purchase price for the company's acquisitions of real estate | The following chart details the allocation of the purchase price for the Company’s acquisitions of real estate during the six months ended June 30, 2019 (amounts in thousands): Building Intangible Lease Description of Property Land Building Improvements Asset Liability Total Zwanenberg Food Group/Metro Carpets industrial facility, Nashville, Tennessee $ 1,058 $ 6,280 $ 70 $ 750 $ (81) $ 8,077 Echo, Inc. industrial facility, Wauconda, Illinois 67 3,283 141 339 (4) 3,826 Tinicum Mechanical Supply/Philly Motors industrial facility, Bensalem, Pennsylvania 1,602 4,285 37 664 (220) 6,368 International Flora Technologies industrial facility, Chandler, Arizona 1,334 7,152 221 — — 8,707 Totals $ 4,061 $ 21,000 $ 469 $ 1,753 $ (305) $ 26,978 |
Variable Interest Entities, C_2
Variable Interest Entities, Contingent Liabilities and Consolidated Joint Ventures (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Unconsolidated Joint Ventures | |
Variable Interest Entities | |
Schedule of Variable Interest Entities through ground leases and carrying amount and maximum exposure to loss | The following chart details the VIEs through the Company’s ground leases and the aggregate carrying amount and maximum exposure to loss as of June 30, 2019 (dollars in thousands): Owner/ Carrying Land Operator Amount and Contract # Units in Mortgage Maximum Purchase Apartment from Type of Exposure to Description of Property(a) Date Acquired Price Complex Third Party(b) Exposure Loss The Briarbrook Village Apartments, Wheaton, Illinois August 2, 2016 $ 10,530 342 $ 39,411 Land $ 10,536 The Vue Apartments, Beachwood, Ohio August 16, 2016 13,896 348 67,444 Land 13,901 Totals $ 24,426 690 $ 106,855 $ 24,437 (a) Simultaneously with each purchase, the Company entered into a triple net ground lease with affiliates of Strategic Properties of North America, the owner/operators of these properties. (b) Simultaneously with the closing of each acquisition, the owner/operator obtained a mortgage from a third party which, together with the Company’s purchase of the land, provided substantially all of the funds to acquire the complex. The Company provided its land as collateral for the respective owner/operator’s mortgage loans; accordingly, each land position is subordinated to the applicable mortgage. No other financial support has been provided by the Company to the owner/operator. |
Consolidated Joint Venture-VIEs | |
Variable Interest Entities | |
Summary of Variable Interest Entities carrying amounts and classification carrying amounts and balance sheet classification | 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): June 30, December 31, 2019 2018 (a) Land $ 12,158 $ 14,722 Buildings and improvements, net of accumulated depreciation of $3,886 and $4,119, respectively 24,602 27,642 Cash 1,177 1,020 Unbilled rent receivable 1,248 1,211 Unamortized intangible lease assets, net 810 890 Escrow, deposits and other assets and receivables 546 810 Mortgages payable, net of unamortized deferred financing costs of $344 and $391, respectively 24,605 26,850 Accrued expenses and other liabilities 485 761 Unamortized intangible lease liabilities, net 630 1,694 Accumulated other comprehensive (loss) income (66) 31 Non-controlling interests in consolidated joint ventures 1,229 1,449 (a) |
Debt Obligations (Tables)
Debt Obligations (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Obligations | |
Schedule of Mortgages payable, net | The following table details the Mortgages payable, net, balances per the consolidated balance sheets (amounts in thousands): June 30, December 31, 2019 2018 Mortgages payable, gross $ 438,503 $ 423,096 Unamortized deferred financing costs (4,352) (4,298) Mortgages payable, net $ 434,151 $ 418,798 |
Schedule of Line of credit, net | The following table details the Line of credit, net, balances per the consolidated balance sheets (amounts in thousands): June 30, December 31, 2019 2018 Line of credit, gross $ 32,150 $ 30,000 Unamortized deferred financing costs (156) (312) Line of credit, net $ 31,994 $ 29,688 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Stock Based Compensation | |
Summary of the activity of the equity incentive plans | Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Restricted stock grants: Number of shares — — 150,050 144,750 Average per share grant price — — $ 25.70 $ 25.31 Deferred compensation to be recognized over vesting period — — $ 3,856,000 $ 3,664,000 Number of non-vested shares: Non-vested beginning of period 689,150 651,650 651,250 612,900 Grants — — 150,050 144,750 Vested during period — — (112,150) (106,000) Forfeitures — (150) — (150) Non-vested end of period 689,150 651,500 689,150 651,500 RSU grants: Number of underlying shares — — — — Average per share grant price — — — — Deferred compensation to be recognized over vesting period — — — — Number of non-vested shares: Non-vested beginning of period 152,500 76,250 152,500 76,250 Grants — — — — Vested during period — — — Forfeitures — — — — Non-vested end of period 152,500 76,250 152,500 76,250 Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Restricted stock and RSU grants: Weighted average per share value of non-vested shares (based on grant price) $ 24.60 $ 23.56 $ 24.60 $ 23.56 Value of stock vested during the period (based on grant price) $ — $ — $ 2,304,000 $ 2,289,000 Weighted average per share value of shares forfeited during the period based on grant price) $ — $ 23.93 $ — $ 23.93 The total charge to operations: Outstanding restricted stock grants $ 843,000 $ 765,000 $ 1,686,000 $ 1,500,000 Outstanding RSUs 95,000 91,000 206,000 182,000 Total charge to operations $ 938,000 $ 856,000 $ 1,892,000 $ 1,682,000 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Measurements | |
Schedule of derivative financial instruments measured at fair value, using Level 2 inputs | 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 Fair Value Financial assets: Interest rate swaps June 30, 2019 $ 126 December 31, 2018 2,399 Financial liabilities: Interest rate swaps June 30, 2019 $ 2,327 December 31, 2018 505 |
Schedule of effect of derivative financial instruments on statements of income | The following table presents the effect of the Company’s derivative financial instruments on the consolidated statements of income for the periods presented (amounts in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 One Liberty Properties, Inc. and Consolidated subsidiaries Amount of (loss) gain recognized on derivatives in other comprehensive (loss) income $ (2,477) $ 1,009 $ (3,962) $ 3,509 Amount of reclassification from Accumulated other comprehensive (loss) income into Interest expense 41 (95) 133 (291) Unconsolidated Joint Ventures (Company’s share) Amount of gain recognized on derivatives in other comprehensive (loss) income n/a $ 22 n/a $ 69 Amount of reclassification from Accumulated other comprehensive (loss) income into Equity in earnings (loss) of unconsolidated joint ventures n/a 110 n/a 103 |
Organization and Background (De
Organization and Background (Details) | Jun. 30, 2019stateproperty |
Organization and Background | |
Number of real estate properties | 126 |
Number of states in which properties are located | state | 31 |
Properties owned by consolidated joint ventures | |
Organization and Background | |
Number of real estate properties | 4 |
Properties owned by unconsolidated joint ventures | |
Organization and Background | |
Number of real estate properties | 4 |
Summary Accounting Policies (De
Summary Accounting Policies (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | |
Investment in Joint Ventures and Variable Interest Entities | ||||
Number of Unconsolidated Joint Venture VIEs | item | 0 | 0 | ||
Recourse debt of joint ventures | $ 0 | $ 0 | ||
Impairment charge relating to investments in unconsolidated joint ventures | $ 0 | $ 0 | $ 0 | $ 0 |
Leases - Summary (Details)
Leases - Summary (Details) $ in Thousands | Jan. 01, 2019USD ($) |
Leases | |
Election of practical expedients package | true |
ASU 2016-02 | |
Leases | |
Cumulative-effect adjustment to retained earnings | $ 0 |
Leases - As Lessor (Details)
Leases - As Lessor (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Lessor | ||||
Operating Lease, Option to extend | true | |||
Operating Lease, Option to terminate | true | |||
Components of lease revenues | ||||
Fixed lease revenues | $ 17,435,000 | $ 35,080,000 | ||
Variable lease revenues | 3,029,000 | 6,285,000 | ||
Lease revenues | 20,464,000 | 41,365,000 | ||
Amortization of intangibles relating to leases, net | 255,000 | 509,000 | $ 488,000 | |
Revenues | $ 20,719,000 | $ 19,752,000 | $ 41,874,000 | 39,286,000 |
Tenant reimbursements | ||||
Components of lease revenues | ||||
Revenues | $ 2,034,000 | $ 3,978,000 |
Leases - As Lessor - Minimum Fu
Leases - As Lessor - Minimum Future Rents (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Minimum future contractual rents to be received under ASC 842 | ||
From July 1 - December 31, 2019 | $ 34,397 | |
For the year ended December 31, 2020 | 69,303 | |
For the year ended December 31, 2021 | 67,852 | |
For the year ended December 31, 2022 | 59,260 | |
For the year ended December 31, 2023 | 50,456 | |
For the year ended December 31, 2024 | 41,992 | |
Thereafter | 172,261 | |
Total | $ 495,521 | |
Minimum future contractual rents to be received under ASC 840 | ||
For the year ended December 31, 2019 | $ 66,959 | |
For the year ended December 31, 2020 | 66,691 | |
For the year ended December 31, 2021 | 65,130 | |
For the year ended December 31, 2022 | 56,444 | |
For the year ended December 31, 2023 | 47,644 | |
Thereafter | 208,923 | |
Total | $ 511,791 |
Leases - As Lessee (Details)
Leases - As Lessee (Details) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019USD ($)item | Jun. 30, 2019USD ($)item | Jan. 01, 2019USD ($) | |
Lessee | |||
Operating lease liability | $ 4,280,000 | $ 4,280,000 | |
Real Estate in Greensboro, NC | |||
Lessee | |||
Operating lease, option to extend | true | ||
Operating lease, discount rate (as a percent) | 4.75% | 4.75% | |
Operating lease, remaining lease term | 10 years 8 months 12 days | 10 years 8 months 12 days | |
Operating lease expense | $ 131,000 | $ 262,000 | |
Real Estate in Greensboro, NC | Five-Year Lease | |||
Lessee | |||
Operating lease, renewal term | 5 years | 5 years | |
Real Estate in Greensboro, NC | Five-Year Lease | Maximum | |||
Lessee | |||
Operating lease, number of renewal options | item | 5 | 5 | |
Real Estate in Greensboro, NC | Seven-Month Lease | |||
Lessee | |||
Operating lease, number of renewal options | item | 1 | 1 | |
Operating lease, renewal term | 7 months | 7 months | |
Real Estate in Greensboro, NC | ASU 2016-02 | Adjustment | |||
Lessee | |||
Operating lease liability | $ 4,381,000 | ||
Operating lease liability, Statement of Financial Position | us-gaap:AccruedLiabilitiesCurrentAndNoncurrent | ||
Right-of-use asset | $ 4,381,000 | ||
Operating lease, right-of-use Asset, Statement of Financial Position | olp:EscrowDepositsAndOtherAssetsAndReceivables |
Leases - As Lessee - Minimum Fu
Leases - As Lessee - Minimum Future Lease Payments (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Minimum future lease payments under ASC 842 | ||
From July 1 - December 31, 2019 | $ 224,000 | |
For the year ended December 31, 2020 | 464,000 | |
For the year ended December 31, 2021 | 464,000 | |
For the year ended December 31, 2022 | 464,000 | |
For the year ended December 31, 2023 | 464,000 | |
For the year ended December 31, 2024 | 512,000 | |
Thereafter | 3,086,000 | |
Total undiscounted cash flows | 5,678,000 | |
Present value discount | (1,398,000) | |
Lease liability | $ 4,280,000 | |
Ground Leases through July 2019 | ||
Minimum future lease payments under ASC 840 | ||
Minimum future lease payments | $ 371,000 | |
Ground Leases through March 3, 2020 | ||
Minimum future lease payments under ASC 840 | ||
Minimum future lease payments | $ 464,000 |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Numerator for basic and diluted earnings per share: | ||||||
Net income | $ 4,558 | $ 4,011 | $ 4,546 | $ 6,653 | $ 8,569 | $ 11,199 |
Less net income attributable to non-controlling interests | (446) | (29) | (486) | (831) | ||
Less earnings allocated to unvested restricted stock | (310) | (293) | (620) | (586) | ||
Net income available for common stockholders: basic and diluted | $ 3,802 | $ 4,224 | $ 7,463 | $ 9,782 | ||
Denominator for basic earnings per share: | ||||||
Weighted average number of common shares | 19,023,000 | 18,519,000 | 18,959,000 | 18,458,000 | ||
Effect of diluted securities: | ||||||
RSUs | 106,000 | 74,000 | 101,000 | 74,000 | ||
Denominator for diluted earnings per share: | ||||||
Weighted average number of shares | 19,129,000 | 18,593,000 | 19,060,000 | 18,532,000 | ||
Earnings per common share, basic (in dollars per share) | $ 0.20 | $ 0.23 | $ 0.39 | $ 0.53 | ||
Earnings per common share, diluted (in dollars per share) | $ 0.20 | $ 0.23 | $ 0.39 | $ 0.53 | ||
2016 Incentive Plan | ||||||
Earnings Per Common Share | ||||||
Number of shares included in diluted weighted average number of shares pursuant to return on capital performance metric | 62,595 | 36,120 | 62,595 | 36,120 | ||
Number of shares in diluted weighted average number of shares pursuant to stockholder return metric | 76,250 | 38,125 | 76,250 | 38,125 | ||
Effect of diluted securities: | ||||||
RSUs | 138,845 | 74,245 | 138,845 | 74,245 | ||
2016 Incentive Plan | September 26, 2017 | ||||||
Earnings Per Common Share | ||||||
Number of underlying shares | 76,250 | 76,250 | 76,250 | 76,250 | ||
Number of shares included in diluted weighted average number of shares pursuant to return on capital performance metric | 32,824 | 36,120 | 32,824 | 36,120 | ||
Number of shares in diluted weighted average number of shares pursuant to stockholder return metric | 38,125 | 38,125 | 38,125 | 38,125 | ||
Number of remaining shares at the respective measurement dates | 5,301 | 2,005 | ||||
Effect of diluted securities: | ||||||
RSUs | 70,949 | 74,245 | 70,949 | 74,245 | ||
2016 Incentive Plan | July 1, 2018 | ||||||
Earnings Per Common Share | ||||||
Number of underlying shares | 76,250 | 76,250 | 76,250 | 76,250 | ||
Number of shares included in diluted weighted average number of shares pursuant to return on capital performance metric | 29,771 | 29,771 | ||||
Number of shares in diluted weighted average number of shares pursuant to stockholder return metric | 38,125 | 38,125 | ||||
Number of remaining shares at the respective measurement dates | 8,354 | |||||
Effect of diluted securities: | ||||||
RSUs | 67,896 | 67,896 |
Real Estate Acquisitions (Detai
Real Estate Acquisitions (Details) - USD ($) | Jul. 24, 2019 | Jul. 31, 2019 | Jun. 30, 2019 |
Real Estate Acquisitions | |||
Contract Purchase Price | $ 26,650,000 | ||
Capitalized Third Party Real Estate Acquisition Costs | 328,000 | ||
Allocation of purchase price for the Company's real estate acquisitions | |||
Land | 4,061,000 | ||
Building | 21,000,000 | ||
Building Improvements | 469,000 | ||
Intangible Lease Asset | 1,753,000 | ||
Intangible Lease Liability | (305,000) | ||
Total | 26,978,000 | ||
Zwanenberg Food Group/Metro Carpets industrial facility, Nashville, Tennessee | |||
Real Estate Acquisitions | |||
Contract Purchase Price | 8,000,000 | ||
Capitalized Third Party Real Estate Acquisition Costs | 77,000 | ||
New mortgage debt | $ 5,200,000 | ||
Allocation of purchase price for the Company's real estate acquisitions | |||
Land | 1,058,000 | ||
Building | 6,280,000 | ||
Building Improvements | 70,000 | ||
Intangible Lease Asset | 750,000 | ||
Intangible Lease Liability | (81,000) | ||
Total | 8,077,000 | ||
Echo, Inc. industrial facility, Wauconda, Illinois | |||
Real Estate Acquisitions | |||
Contract Purchase Price | 3,800,000 | ||
Capitalized Third Party Real Estate Acquisition Costs | 26,000 | ||
Allocation of purchase price for the Company's real estate acquisitions | |||
Land | 67,000 | ||
Building | 3,283,000 | ||
Building Improvements | 141,000 | ||
Intangible Lease Asset | 339,000 | ||
Intangible Lease Liability | (4,000) | ||
Total | 3,826,000 | ||
Tinicum Mechanical Supply/Philly Motors industrial facility, Bensalem, Pennsylvania | |||
Real Estate Acquisitions | |||
Contract Purchase Price | 6,200,000 | ||
Capitalized Third Party Real Estate Acquisition Costs | 168,000 | ||
Allocation of purchase price for the Company's real estate acquisitions | |||
Land | 1,602,000 | ||
Building | 4,285,000 | ||
Building Improvements | 37,000 | ||
Intangible Lease Asset | 664,000 | ||
Intangible Lease Liability | (220,000) | ||
Total | 6,368,000 | ||
International Flora Technologies industrial facility, Chandler, Arizona | |||
Real Estate Acquisitions | |||
Contract Purchase Price | 8,650,000 | ||
Capitalized Third Party Real Estate Acquisition Costs | 57,000 | ||
Allocation of purchase price for the Company's real estate acquisitions | |||
Land | 1,334,000 | ||
Building | 7,152,000 | ||
Building Improvements | 221,000 | ||
Total | $ 8,707,000 | ||
Industrial property in LaGrange, Georgia | |||
Real Estate Acquisitions | |||
Contract Purchase Price | $ 5,200,000 |
Sale of Properties (Details)
Sale of Properties (Details) - USD ($) | Jun. 20, 2019 | Jan. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Sale of Property | ||||||
Total sales price, net of closing costs | $ 5,314,000 | $ 8,958,000 | ||||
Mortgage loan paid off | 1,705,000 | $ 9,827,000 | ||||
Consolidated Joint Venture | Sale of real estate | Retail Property Clemmons, North Carolina | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||||
Sale of Property | ||||||
Ownership interest in consolidated joint venture of the company (as a percent) | 90.00% | |||||
Total sales price, net of closing costs | $ 5,314,000 | |||||
Mortgage loan paid off | $ 1,705,000 | |||||
Gain on sale of real estate, net | $ 1,099,000 | $ 1,099,000 | ||||
Consolidated Joint Venture | Sale of real estate | Retail Property Clemmons, North Carolina | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Maximum | ||||||
Sale of Property | ||||||
Rental revenue percentage from property | 1.00% | 1.00% | 1.00% | 1.00% | ||
Consolidated Joint Venture | Sale of real estate | Retail Property Clemmons, North Carolina | Non-Controlling Interests in Consolidated Joint Ventures | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||||
Sale of Property | ||||||
Non-controlling interest's share of the gain | $ 422,000 | $ 422,000 | ||||
Consolidated Joint Venture | Sale of real estate | Retail Property, Fort Bend, Texas | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||||
Sale of Property | ||||||
Ownership interest in consolidated joint venture of the company (as a percent) | 85.00% | |||||
Total sales price, net of closing costs | $ 8,958,000 | |||||
Gain on sale of real estate, net | $ 2,408,000 | |||||
Consolidated Joint Venture | Sale of real estate | Retail Property, Fort Bend, Texas | Non-Controlling Interests in Consolidated Joint Ventures | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||||
Sale of Property | ||||||
Non-controlling interest's share of the gain | $ 776,000 |
Variable Interest Entities, C_3
Variable Interest Entities, Contingent Liabilities and Consolidated Joint Ventures - Ground Leases (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Variable Interest Entities | |||||
Revenues | $ 20,719,000 | $ 19,752,000 | $ 41,874,000 | $ 39,286,000 | |
VIE ground leases and aggregate carrying amount and maximum exposure to loss | |||||
Restricted cash | $ 337,000 | 416,000 | $ 337,000 | 416,000 | $ 1,106,000 |
Variable Interest Entity, Not Primary Beneficiary | |||||
Variable Interest Entities | |||||
Number of affiliated owner/operators | item | 2 | 2 | |||
VIE ground leases and aggregate carrying amount and maximum exposure to loss | |||||
Land Contract Purchase Price | $ 24,426,000 | ||||
Units in Apartment Complex | item | 690 | ||||
Owner/ Operator Mortgage from Third Party | $ 106,855,000 | ||||
Carrying Amount and Maximum Exposure to Loss | $ 24,437,000 | 24,437,000 | |||
Variable Interest Entity, Not Primary Beneficiary | The Briarbrook Village Apartments, Wheaton, Illinois | |||||
VIE ground leases and aggregate carrying amount and maximum exposure to loss | |||||
Land Contract Purchase Price | $ 10,530,000 | ||||
Units in Apartment Complex | item | 342 | ||||
Owner/ Operator Mortgage from Third Party | $ 39,411,000 | ||||
Restricted cash | 337,000 | 337,000 | 356,000 | ||
Variable Interest Entity, Not Primary Beneficiary | The Briarbrook Village Apartments, Wheaton, Illinois | Land | |||||
VIE ground leases and aggregate carrying amount and maximum exposure to loss | |||||
Carrying Amount and Maximum Exposure to Loss | 10,536,000 | 10,536,000 | |||
Variable Interest Entity, Not Primary Beneficiary | The Vue Apartments, Beachwood, Ohio | |||||
VIE ground leases and aggregate carrying amount and maximum exposure to loss | |||||
Land Contract Purchase Price | $ 13,896,000 | ||||
Units in Apartment Complex | item | 348 | ||||
Owner/ Operator Mortgage from Third Party | $ 67,444,000 | ||||
Escrow deposit | $ 750,000 | ||||
Variable Interest Entity, Not Primary Beneficiary | The Vue Apartments, Beachwood, Ohio | Land | |||||
VIE ground leases and aggregate carrying amount and maximum exposure to loss | |||||
Carrying Amount and Maximum Exposure to Loss | 13,901,000 | 13,901,000 | |||
Variable Interest Entity, Not Primary Beneficiary | Rental income, net | |||||
Variable Interest Entities | |||||
Revenues | $ 486,000 | 941,000 | $ 971,000 | 1,947,000 | |
Variable Interest Entity, Not Primary Beneficiary | Rental income, net | Property in Lakemoor, Illinois | |||||
Variable Interest Entities | |||||
Revenues | $ 260,000 | $ 585,000 |
Variable Interest Entities, C_4
Variable Interest Entities, Contingent Liabilities and Consolidated Joint Ventures - Consolidated Joint Ventures (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2019USD ($)item | Dec. 31, 2018USD ($) | ||
Consolidated VIEs Carrying Amount of Assets and Liabilities | |||
Land | $ 205,660 | $ 204,162 | |
Unbilled rent receivable | 14,394 | 13,722 | |
Unamortized intangible lease assets, net | 26,001 | 26,541 | |
Escrow, deposits, and other assets and receivables | 9,312 | 8,023 | |
Mortgages payable, net of unamortized deferred financing costs of $344 and $391, respectively | 434,151 | 418,798 | |
Accrued expenses and other liabilities | 15,437 | 11,094 | |
Unamortized intangible lease liabilities, net | 12,546 | 14,013 | |
Accumulated other comprehensive (loss) income | (2,196) | 1,890 | |
Non-controlling interests in consolidated joint ventures | [1] | $ 1,229 | 1,449 |
Consolidated Joint Venture-VIEs | |||
Variable Interest Entities | |||
Number of joint ventures with controlling interest | item | 4 | ||
Consolidated VIEs Carrying Amount of Assets and Liabilities | |||
Land | $ 12,158 | 14,722 | |
Buildings and improvements, net of accumulated depreciation of $3,886 and $4,119, respectively | 24,602 | 27,642 | |
Accumulated depreciation | 3,886 | 4,119 | |
Cash | 1,177 | 1,020 | |
Unbilled rent receivable | 1,248 | 1,211 | |
Unamortized intangible lease assets, net | 810 | 890 | |
Escrow, deposits, and other assets and receivables | 546 | 810 | |
Mortgages payable, net of unamortized deferred financing costs of $344 and $391, respectively | 24,605 | 26,850 | |
Unamortized deferred financing costs | 344 | 391 | |
Accrued expenses and other liabilities | 485 | 761 | |
Unamortized intangible lease liabilities, net | 630 | 1,694 | |
Accumulated other comprehensive (loss) income | (66) | 31 | |
Non-controlling interests in consolidated joint ventures | $ 1,229 | $ 1,449 | |
Consolidated Joint Venture-VIEs | Minimum | |||
Variable Interest Entities | |||
Ownership interest in consolidated joint venture of the company (as a percent) | 90.00% | ||
Consolidated Joint Venture-VIEs | Maximum | |||
Variable Interest Entities | |||
Ownership interest in consolidated joint venture of the company (as a percent) | 95.00% | ||
Consolidated Joint Venture-VIEs | Sale of real estate | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Real Estate in Clemmons, NC | |||
Variable Interest Entities | |||
Ownership interest in consolidated joint venture of the company (as a percent) | 90.00% | ||
[1] | The Company’s consolidated balance sheets include assets and liabilities of consolidated variable interest entities (“VIEs”). See Note 7. The consolidated balance sheets include the following amounts related to the Company’s consolidated VIEs: $12,158 and $14,722 of land, $24,602 and $27,642 of building and improvements, net of $3,886 and $4,119 of accumulated depreciation, $3,781 and $3,931 of other assets included in other line items, $24,605 and $26,850 of real estate debt, net, $1,115 and $2,455 of other liabilities included in other line items and $1,229 and $1,449 of non-controlling interests as of June 30, 2019 and December 31, 2018, respectively. |
Variable Interest Entities, C_5
Variable Interest Entities, Contingent Liabilities and Consolidated Joint Ventures - MCB Real Estate, LLC (Details) - Consolidated Joint Venture-VIEs - MCB Real Estate, LLC and Affiliates | Jun. 30, 2019USD ($)item | Dec. 31, 2018USD ($)item |
Consolidated VIEs Carrying Amount of Assets and Liabilities | ||
Number of consolidated joint ventures | item | 3 | 4 |
Investment in consolidated joint ventures | $ | $ 7,833,000 | $ 9,891,000 |
Investment in Unconsolidated _2
Investment in Unconsolidated Joint Ventures (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Investment in Unconsolidated Joint Ventures | |||||
Investment in unconsolidated joint ventures | $ 10,724,000 | $ 10,724,000 | $ 10,857,000 | ||
Equity in earnings (loss) of unconsolidated joint ventures | $ 34,000 | $ 348,000 | $ (82,000) | $ 543,000 | |
Equity in earnings from sale of unconsolidated joint venture properties | 71,000 | 71,000 | |||
Unconsolidated Joint Ventures | |||||
Investment in Unconsolidated Joint Ventures | |||||
Number of unconsolidated joint ventures | 4 | 4 | |||
Number of properties owned and operated by each unconsolidated joint venture | 1 | 1 | |||
Investment in unconsolidated joint ventures | $ 10,724,000 | $ 10,724,000 | 10,857,000 | ||
Equity in earnings (loss) of unconsolidated joint ventures | 34,000 | 348,000 | (82,000) | 543,000 | |
Equity in earnings from sale of unconsolidated joint venture properties | 71,000 | ||||
Income related to the discontinuance of hedge accounting on a mortgage swap | $ 110,000 | $ 110,000 | |||
Unconsolidated Joint Ventures | MCB Real Estate, LLC and Affiliates | |||||
Investment in Unconsolidated Joint Ventures | |||||
Investment in unconsolidated joint ventures | $ 8,893,000 | $ 8,893,000 | $ 9,087,000 |
Debt Obligations- Mortgage Paya
Debt Obligations- Mortgage Payable (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Debt Obligations | ||
Mortgages payable, net | $ 434,151,000 | $ 418,798,000 |
Mortgages payable | ||
Debt Obligations | ||
Mortgages payable, gross | 438,503,000 | 423,096,000 |
Unamortized deferred financing costs | (4,352,000) | (4,298,000) |
Mortgages payable, net | $ 434,151,000 | $ 418,798,000 |
Debt Obligations - Line of Cred
Debt Obligations - Line of Credit (Details) - USD ($) | Jul. 01, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Aug. 02, 2019 | Dec. 31, 2018 |
Line of Credit | |||||
Line of credit, net | $ 31,994,000 | $ 29,688,000 | |||
Line of Credit | |||||
Line of Credit | |||||
Commitment fee which will be amortized over the remaining term of the facility | $ 550,000 | ||||
Maximum borrowing capacity | $ 100,000,000 | ||||
Unused facility fee (as a percent) | 0.25% | ||||
Interest rate during the period (as a percent) | 4.22% | 3.54% | |||
Line of credit, gross | $ 32,150,000 | $ 30,350,000 | 30,000,000 | ||
Unamortized deferred financing costs | (156,000) | (312,000) | |||
Line of credit, net | $ 31,994,000 | $ 29,688,000 | |||
Line of Credit | LIBOR | |||||
Line of Credit | |||||
Spread on variable interest rate (as a percent) | 2.00% | 1.75% | |||
Basis of interest rate | one month LIBOR | ||||
Line of Credit | LIBOR | Minimum | |||||
Line of Credit | |||||
Spread on variable interest rate (as a percent) | 1.75% | ||||
Line of Credit | LIBOR | Maximum | |||||
Line of Credit | |||||
Spread on variable interest rate (as a percent) | 3.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Related Party Transaction | ||||
Share based compensation charged to operations | $ 938,000 | $ 856,000 | $ 1,892,000 | $ 1,682,000 |
Majestic | ||||
Related Party Transaction | ||||
Fees under compensation and services agreement | 702,000 | 689,000 | 1,405,000 | 1,367,000 |
Property management costs allocated to real estate expenses | 322,000 | 309,000 | 646,000 | 608,000 |
Additional payment for the entity's share of all direct office expenses | 54,000 | 54,000 | 108,000 | 108,000 |
Executive officers and others | ||||
Related Party Transaction | ||||
Share based compensation charged to operations | 462,000 | 432,000 | 932,000 | 849,000 |
Joint Venture Partners and Affiliates | ||||
Related Party Transaction | ||||
Real estate property management costs | 20,000 | 22,000 | 41,000 | 65,000 |
Chairman | General and administrative expense | ||||
Related Party Transaction | ||||
Quarterly fees under compensation and services agreement | 72,400 | 69,000 | ||
Vice Chairman | General and administrative expense | ||||
Related Party Transaction | ||||
Quarterly fees under compensation and services agreement | 28,900 | 27,500 | ||
Gould Investors L.P. | Real estate expenses | ||||
Related Party Transaction | ||||
Insurance expense recognized of amounts reimbursed to related party | 222,000 | 206,000 | $ 447,000 | 404,000 |
Net lease tenants | Majestic | ||||
Related Party Transaction | ||||
Property management costs (as a percent) | 1.50% | |||
Operating lease tenants | Majestic | ||||
Related Party Transaction | ||||
Property management costs (as a percent) | 2.00% | |||
Unconsolidated Joint Ventures | ||||
Related Party Transaction | ||||
Aggregate management fees paid to other partners | 30,000 | 45,000 | $ 55,000 | 96,000 |
Decrease in equity earnings, joint venture transaction | $ 15,000 | $ 23,000 | $ 28,000 | $ 48,000 |
Common Stock Cash Dividend (Det
Common Stock Cash Dividend (Details) - USD ($) | Jun. 13, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 |
Common Stock Cash Dividend | |||||
Quarterly cash dividend declared (in dollars per share) | $ 0.45 | ||||
Cash dividend declared | $ 8,923,000 | $ 8,922,000 | $ 8,832,000 | $ 8,652,000 | $ 8,581,000 |
Shares Issued through Equity _2
Shares Issued through Equity Offering Program (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Shares Issued through Equity Offering Program | ||
Number of shares sold (in shares) | 143,120 | 180,120 |
Proceeds from sale of common stock, net of commissions | $ 4,308,000 | $ 5,392,000 |
Payment of commissions on sale of shares | 44,000 | 54,000 |
Payment of offering costs on sale of shares | $ 33,000 | $ 78,000 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Total charge to operations: | |||||
Share based compensation charged to operations | $ 938,000 | $ 856,000 | $ 1,892,000 | $ 1,682,000 | |
Restricted stock and RSU grants | |||||
Restricted stock and RSU grants: | |||||
Weighted average per share value of non-vested shares (based on grant price) (in dollars per share) | $ 24.60 | $ 23.56 | $ 24.60 | $ 23.56 | |
Value of stock vested during the year (based on grant price) | $ 2,304,000 | $ 2,289,000 | |||
Weighted average per share value of shares forfeited during the year (based on grant price) (in dollars per share) | $ 23.93 | $ 23.93 | |||
Restricted stock | |||||
Stock Based Compensation | |||||
Vesting period | 5 years | ||||
Summary of the activity of the incentive plans | |||||
Average per share grant price (in dollars per share) | $ 25.70 | $ 25.31 | |||
Deferred compensation to be recognized over vesting period | $ 3,856,000 | $ 3,664,000 | |||
Non-vested beginning of year (in shares) | 689,150 | 689,150 | 651,650 | 651,250 | 612,900 |
Number of non-vested shares: | |||||
Non-vested beginning of year (in shares) | 689,150 | 689,150 | 651,650 | 651,250 | 612,900 |
Number of shares awarded | 150,050 | 144,750 | |||
Vested during year (in shares) | (112,150) | (106,000) | |||
Forfeitures (in shares) | (150) | (150) | |||
Non-vested end of year (in shares) | 689,150 | 651,500 | 689,150 | 651,500 | |
Total charge to operations: | |||||
Share based compensation charged to operations | $ 843,000 | $ 765,000 | $ 1,686,000 | $ 1,500,000 | |
Compensation costs related to non-vested awards that have not yet been recognized | $ 8,985,000 | $ 8,985,000 | |||
Approximate weighted average remaining vesting period | 2 years 7 months 6 days | ||||
RSUs | |||||
Stock Based Compensation | |||||
Percentage of units to be vested on satisfaction of performance criteria of average total stockholder return | 50.00% | ||||
Percent of number of units to be vested on satisfaction of performance criteria related to average annual return on capital | 50.00% | ||||
Summary of the activity of the incentive plans | |||||
Non-vested beginning of year (in shares) | 152,500 | 152,500 | 76,250 | 152,500 | 76,250 |
Number of non-vested shares: | |||||
Non-vested beginning of year (in shares) | 152,500 | 152,500 | 76,250 | 152,500 | 76,250 |
Number of shares awarded | 77,776 | ||||
Forfeitures (in shares) | 0 | ||||
Non-vested end of year (in shares) | 152,500 | 76,250 | 152,500 | 76,250 | |
Total charge to operations: | |||||
Share based compensation charged to operations | $ 95,000 | $ 91,000 | $ 206,000 | $ 182,000 | |
Compensation costs related to non-vested awards that have not yet been recognized | $ 851,000 | $ 851,000 | |||
Approximate weighted average remaining vesting period | 1 year 6 months | ||||
2019 Incentive Plan | |||||
Stock Based Compensation | |||||
Maximum number of shares authorized for issuance | 750,000 | 750,000 | |||
2016 and 2012 Incentive Plans | Restricted stock and RSU grants | |||||
Summary of the activity of the incentive plans | |||||
Non-vested beginning of year (in shares) | 841,650 | ||||
Number of non-vested shares: | |||||
Non-vested beginning of year (in shares) | 841,650 | ||||
Non-vested end of year (in shares) | 841,650 | 841,650 | |||
Pay-for-performance program | 2017 RSU grants | General and administrative expense | |||||
Summary of the activity of the incentive plans | |||||
Deferred compensation to be recognized over vesting period | $ 781,000 | ||||
Pay-for-performance program | 2018 RSU grants | General and administrative expense | |||||
Summary of the activity of the incentive plans | |||||
Deferred compensation to be recognized over vesting period | $ 853,000 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary (Details) | Jun. 30, 2019USD ($)Yitem | Dec. 31, 2018USD ($)Y |
Recurring | Level 2 | Interest rate swap | ||
Financial assets: | ||
Derivative financial instruments | $ 126,000 | $ 2,399,000 |
Financial liabilities: | ||
Derivative financial instruments | 2,327,000 | 505,000 |
Mortgages payable | ||
FAIR VALUE MEASUREMENTS | ||
Estimated fair value of mortgages payable | 446,700,000 | 420,396,000 |
Carrying value of mortgage loans | 438,503,000 | 423,096,000 |
Excess of fair value over carrying value | $ 8,197,000 | |
Excess of carrying value over fair value | $ 2,700,000 | |
Blended market interest rate | Mortgages payable | ||
FAIR VALUE MEASUREMENTS | ||
Long-term debt, measurement input | 0.400 | 0.0441 |
Remaining term to maturity | Mortgages payable | ||
FAIR VALUE MEASUREMENTS | ||
Long-term debt, measurement input | Y | 8.2 | 8.7 |
Fair Value Measurements - Inter
Fair Value Measurements - Interest Rate Derivatives (Details) - Interest rate derivatives - Cash flow hedges | 6 Months Ended |
Jun. 30, 2019USD ($)item | |
Fair Value Measurements | |
Number of interest rate derivatives held | 26 |
Number of mortgage loans outstanding | 26 |
Notional Amount | $ | $ 113,733,000 |
Weighted average maturity | 5 years 4 months 24 days |
Weighted average annual interest rate (as a percent) | 4.12% |
Minimum | |
Fair Value Measurements | |
Fixed Interest Rate (as a percent) | 3.02% |
Maximum | |
Fair Value Measurements | |
Fixed Interest Rate (as a percent) | 5.38% |
Fair Value Measurements - Deriv
Fair Value Measurements - Derivative Instruments, Gain (Loss) (Details) - Interest rate swap - Cash flow hedges - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Fair Value Measurements | |||||
Amount of (loss) gain recognized on derivatives in other comprehensive (loss) income | $ (2,477,000) | $ 1,009,000 | $ (3,962,000) | $ 3,509,000 | |
Amount of reclassification from Accumulated other comprehensive (loss) income into Interest expense | 41,000 | (95,000) | 133,000 | (291,000) | |
Reclassification of gain (loss) | |||||
Amount of gain (loss) recognized with respect to effectiveness testing | 0 | 0 | 0 | 0 | |
Additional amount to be reclassified during the next twelve months | 355,000 | ||||
Credit risk related contingent feature | |||||
Accrued interest receivable on derivatives in a liability position | 16,000 | 16,000 | |||
Accrued interest payable on derivatives in a liability position | $ 8,000 | ||||
Fair value of derivative in a liability position, including accrued interest but excluding adjustments for non-performance risk | 2,457,000 | 2,457,000 | 554,000 | ||
Termination liability value | $ 2,457,000 | 2,457,000 | 554,000 | ||
Accrued expenses and other liabilities | |||||
Credit risk related contingent feature | |||||
Adjustments for non-performance risk | $ 146,000 | $ 41,000 | |||
Unconsolidated Joint Ventures | |||||
Fair Value Measurements | |||||
Amount of (loss) gain recognized on derivatives in other comprehensive (loss) income | 22,000 | 69,000 | |||
Amount of reclassification from Accumulated other comprehensive (loss) income into Equity in earnings (loss) of unconsolidated joint ventures | $ 110,000 | $ 103,000 |