SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number 0-11083
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ONE LIBERTY PROPERTIES, INC.
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(Exact name of registrant as specified in its charter)
MARYLAND 13-3147497
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
60 Cutter Mill Road, Great Neck, New York 11021
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 466-3100
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Indicate the number of shares outstanding of each of the
issuer's classes of stock, as of the latest practicable date.
As of August 10, 2000, the Registrant had 2,998,009 shares of
Common Stock and 651,658 shares of Redeemable Convertible
Preferred Stock outstanding.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was re-
required to file such reports), and (2) has been subject to such filing require-
ments for the past 90 days.
Yes X No
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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Per Share Data)
June 30, December 31,
2000 1999
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(Unaudited)
Assets
Real estate investments, at cost
Land $23,314 $16,639
Buildings 86,746 59,269
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110,060 75,908
Less accumulated depreciation 5,949 5,138
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104,111 70,770
Cash and cash equivalents 2,754 11,247
Unbilled rent receivable 2,068 1,737
Rent, interest, deposits and other receivables 1,061 733
Note receivable - officer 240 80
Investment in BRT Realty Trust-(related party) 240 240
Deferred financing costs 1,156 732
Other (including available-for-sale securities of
$312 and $352) 401 410
--- ---
Total assets $112,031 $85,949
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Liabilities and Stockholders' Equity
Liabilities:
Mortgages payable $59,381 $35,735
Line of credit (Note 4) 1,000 -
Accrued expenses and other liabilities 567 412
Dividends payable 1,159 -
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Total liabilities 62,107 36,147
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Commitments and contingencies - -
Stockholders' equity:
Redeemable convertible preferred stock,
$1 par value; $1.60 cumulative annual
dividend; 2,300 shares authorized;
655 shares issued; iquidation and
redemption values of $16.50 10,802 10,802
Common stock, $1 par value; 25,000
shares authorized; 2,989 and 2,980
shares issued and outstanding 2,989 2,980
Paid-in capital 31,425 31,338
Accumulated other comprehensive income - net
unrealized gain on available-for-sale securities 78 33
Accumulated undistributed net income 4,630 4,649
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Total stockholders' equity 49,924 49,802
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Total liabilities and stockholders' equity $112,031 $85,949
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See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
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2000 1999 2000 1999
---- ---- ---- ----
Revenues:
Rental income $3,255 $2,222 $5,704 $4,262
Interest and other income 40 911 150 1,058
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3,295 3,133 5,854 5,320
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Expenses:
Depreciation and amortization 614 416 1,068 806
Interest - mortgages payable 1,161 617 1,910 1,186
Interest - line of credit 52 - 52 -
Leasehold rent 72 72 144 144
General and administrative 280 269 571 485
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2,179 1,374 3,745 2,621
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Income before gain on sale 1,116 1,759 2,109 2,699
Gain on sale of real estate and
available-for-sale securities, net 40 39 187 50
-- -- --- --
Net income $1,156 $1,798 $2,296 $2,749
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Calculation of net income applicable to common stockholders:
Net income $1,156 $1,798 $2,296 $2,749
Less: dividends and accretion (1999)
on preferred stock 262 360 524 722
--- --- --- ---
Net income applicable to
common stockholders $ 894 $1,438 $1,772 $2,027
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Weighted average number of common shares outstanding:
Basic 2,989 2,956 2,984 2,951
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Diluted 2,990 2,958 2,985 2,952
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Net income per common share:
Basic $ .30 $ .49 $ .59 $ .69
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Diluted $ .30 $ .49 $ .59 $ .69
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Cash distributions per share:
Common Stock $ .30 $ .30 $ .60 $ .60
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Preferred Stock $ .40 $ .40 $ .80 $ .80
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See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the six month period ended June 30, 2000
and the year ended December 31, 1999
(Amounts in Thousands)
(Unaudited)
Net Unrealized
Gain (loss) on Accumulated
Preferred Common Paid-in Available-for- Undistributed
Stock Stock Capital Sale Securities Net Income Total
----- ----- ------- --------------- ---------- -----
Balances, January 1, 1999 $ - $2,940 $30,965 $100 $4,490 $38,495
Distributions -
common stock - - - - (3,552) (3,552)
Distributions -
preferred stock - - - - (1,168) (1,168)
Preferred stock 10,802 - - - - 10,802
Accretion on
preferred stock - - (79) - - (79)
Preferred shares converted
to common stock - 1 7 - - 8
Shares issued through
dividend reinvestment plan - 39 445 - - 484
Net income - - - - 4,879 4,879
Other comprehensive income-
net unrealized loss on
available-for-sale securities - - - (67) - (67)
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Comprehensive income - - - - - 4,812
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Balances, December 31, 1999 10,802 2,980 31,338 33 4,649 49,802
Distributions -
common stock - - - - (1,791) (1,791)
Distributions -
preferred stock - - - - (524) (524)
Shares issued through
dividend reinvestment plan - 9 87 - - 96
Net income - - - - 2,296 2,296
Other comprehensive income-
net unrealized gain on
available-for-sale securities - - - 45 - 45
--
Comprehensive income - - - - - 2,341
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Balances, June 30, 2000 $10,802 $2,989 $31,425 $ 78 $4,630 $49,924
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See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Six Months Ended
June 30,
2000 1999
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Cash flows from operating activities:
Net income $ 2,296 $ 2,749
Adjustments to reconcile net income
to net cash provided by operating activities:
Gain on sale of real estate and
available-for-sale securities, net (187) (50)
Increase in rental income from straight-lining of rent (331) (284)
Depreciation and amortization 1,068 806
Changes in assets and liabilities:
(Increase) decrease in rent, interest,
deposits and other receivables (360) 310
Increase in accrued expenses and other liabilities 171 288
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Net cash provided by operating activities 2,657 3,819
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Cash flows from investing activities:
Additions to real estate (25,928) (10,146)
Net proceeds from sale of real estate 837 -
Purchase of available-for-sale securities - (756)
Net proceeds from sale of available-for-sale securities 74 1,003
Collection of mortgages receivable - 10
Payments to minority interest by subsidiary (16) (7)
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Net cash used in investing activities (25,033) (9,896)
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Cash flows from financing activities:
Proceeds from mortgages payable 15,000 1,800
Repayment of mortgages payable (369) (245)
Payment of financing costs (528) (214)
Borrowings from line of credit 1,000 -
Cash distributions - common stock (894) (1,769)
Cash distributions - preferred stock (262) (643)
Note receivable - officer (160) -
Issuance of shares through dividend reinvestment plan 96 191
Repurchase of preferred stock, which was cancelled - (94)
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Net cash provided by (used in) financing activities 13,883 (974)
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Net decrease in cash and cash equivalents (8,493) (7,051)
Cash and cash equivalents at beginning of period 11,247 19,090
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Cash and cash equivalents at end of period $ 2,754 $ 12,039
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Supplemental disclosures of cash flow information:
Cash paid during the period for interest expense $ 1,918 $ 1,188
Supplemental schedule of non cash investing and financing activities:
Assumption of mortgage payable in connection
with purchase of real estate $ 9,015 $ 1,065
See accompanying notes to consolidated financial statements.
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 - Basis of Preparation
The accompanying interim unaudited consolidated financial statements as of June
30, 2000 and for the six and three months ended June 30, 2000 and 1999 reflect
all normal, recurring adjustments which are, in the opinion of management,
necessary for a fair presentation of the results for such interim periods. The
results of operations for the six and three months ended June 30, 2000 are not
necessarily indicative of the results for the full year.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements. Actual
results could differ from those estimates.
The consolidated financial statements include the accounts of One Liberty
Properties, Inc., its wholly-owned subsidiaries and a majority-owned limited
liability company. Material intercompany balances and transactions have been
eliminated. One Liberty Properties, Inc., its subsidiaries and the limited
liability company are hereinafter referred to as the "Company".
Certain amounts reported in previous consolidated financial statements have been
reclassified in the accompanying consolidated financial statements to conform to
the current year's presentation.
These statements should be read in conjunction with the consolidated financial
statements and related notes which are included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1999.
Note 2 - Earnings Per Common Share
For the six and three months ended June 30, 2000 and 1999 basic earnings per
share was determined by dividing net income applicable to common stockholders
for the period by the weighted average number of shares of Common Stock
outstanding during each period.
Diluted earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue Common Stock were exercised or converted
into Common Stock or resulted in the issuance of Common Stock that then shared
in the earnings of the Company. For the six and three month periods ended June
30, 2000 and 1999 diluted earnings per share was determined by dividing net
income applicable to common stockholders for the period by the total of the
weighted average number of
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 2 - Earnings Per Common Share (Continued)
shares of Common Stock outstanding plus the dilutive effect of the Company's
outstanding options (602 and 998 for the six and three months ended June 30,
2000 and 1,105 and 2,210 for the six and three months ended June 30, 1999,
respectively) using the treasury stock method. The Preferred Stock was not
considered for the purpose of computing diluted earnings per share because their
assumed conversion is antidilutive.
Options to purchase 128,000 shares of Common Stock at $12.375, $14.50 and $13.50
per share (which were granted during March 1999, 1998 and 1997, respectively)
were not included in the computation of diluted earnings per share because the
exercise prices of these options are greater than the average market price of
the common shares as of June 30, 2000 and, therefore, the effect would be
antidilutive.
Note 3 - Preferred and Common Stock Dividend Distributions
On June 8, 2000 the Board of Directors declared quarterly cash distributions of
$.30 and $.40 per share on the Company's common and preferred stock,
respectively, which was paid on July 5, 2000 to stockholders of record on June
20, 2000.
Note 4 - Revolving Credit Facility
On March 24, 2000, the Company consummated a $15,000,000 Revolving Credit
Facility ("Facility") with European American Bank ("EAB"). The Facility provides
that the Company pay interest at EAB's prime rate on funds borrowed under the
Facility and an unused facility fee of 1/4 of 1%. The Company paid $175,000 in
fees and closing costs which are being amortized over the term of the loan. The
Facility matures on March 24, 2002 with an option to extend the term for one
year. The Facility is guaranteed by all Company subsidiaries which own
unencumbered properties.
The Facility is being used primarily to finance the acquisition of commercial
real estate. The Company is required to comply with certain covenants. Net
proceeds received from the sale or refinance of properties are required to be
used to repay amounts outstanding under the Facility if proceeds from the
Facility were used to purchase the property.
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 5 - Property Acquisitions
During the three months ended March 31, 2000, the Company acquired three
properties for a total consideration of approximately $23,123,000. First
mortgages totaling $15,000,000 were placed on two of these properties and the
balance was paid in cash.
On April 11, 2000, an additional property was purchased for a consideration of
$11,767,000. The property was financed at closing by the Company assuming on a
non-recourse basis, the existing first mortgage with a principal balance of
$9,015,000 and the balance of the purchase price was funded from the Company's
revolving credit facility.
Note 6 - Comprehensive Income
Statement No. 130 establishes standards for reporting comprehensive income and
its components in a full set of general-purpose financial statements and
requires that all components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. During the three and six months ended June 30, 2000, accumulated
other comprehensive income, which is solely composed of the net unrealized gain
on available-for-sale securities, increased $45,000 to $78,000 from $33,000.
During the three and six months ended June 30, 1999 comprehensive income
increased $106,000 from $46,000 to $152,000 and increased $52,000 from $100,000
to $152,000, respectively.
Item 2. Management's Discussion And Analysis Of Financial Condition And Results
Of Operations
Liquidity and Capital Resources
The Company's primary sources of liquidity are cash and cash equivalents
($2,754,000 at June 30, 2000), a $15,000,000 revolving credit facility and cash
generated from operating activities. On March 24, 2000 the Company entered into
an agreement with European American Bank ("EAB") to provide a $15,000,000
revolving credit facility ("Facility"). The Facility is being used primarily to
finance the acquisition of commercial real estate. The Facility matures on March
24, 2002 with an option to extend through March 24, 2003. Borrowings under the
Facility bear interest at EAB's prime rate and there is an unused facility fee
of one-quarter of 1%. Net proceeds received from the sale or refinance of
properties are required to be used to repay amounts outstanding under the
Facility if proceeds from the Facility were used to purchase the property. The
Facility is guaranteed by all Company subsidiaries which own unencumbered
properties. At June 30, 2000 $1,000,000 was outstanding under the Facility.
In April 2000, the Company acquired a property located in Hanover, Pennsylvania
for a consideration of $11,767,000, of which $2,500,000 was funded from the
Facility, a portion of which was subsequently repaid. The Company assumed a
mortgage note with an outstanding principal balance of $9,015,000. The building
is triple net leased to a large manufacturing company.
During the three months ended March 31, 2000, the Company acquired three
properties for a total consideration of approximately $23,123,000. First
mortgages totaling $15,000,000 were placed on two of these properties and the
balance of $8,123,000 was paid in cash.
The Company is currently in discussions concerning the acquisition of additional
net leased properties. Cash provided from operations and the Company's cash
position will provide funds for cash distributions to shareholders and operating
expenses. These sources of funds as well as funds available from the Facility
will provide funds for future property acquisitions. It will continue to be the
Company's policy to make sufficient cash distributions to shareholders in order
for the Company to maintain its real estate investment trust status under the
Internal Revenue Code.
On July 6, 2000, the Company announced that its Board of Directors had
authorized the purchase of its outstanding preferred stock from time-to-time in
the open market and in private transactions. The Board of Directors of the
Company allocated $1,000,000 to this repurchase program. To date, 3,000 shares
of preferred stock have been repurchased under this program in the open market
at a total cost of $41,400.
Results of Operations
Six and Three Months Ended June 30, 2000 and 1999
Rental income increased by $1,442,000 to $5,704,000 and $1,033,000 to $3,255,000
for the six and three months ended June 30, 2000 as compared to the six and
three months ended June 30, 1999 primarily due to the acquisition of four
properties in 2000 and the inclusion of rental income on four properties
acquired in 1999 for the full 2000 periods.
Interest and other income decreased by $908,000 and $871,000 for the six and
three months ended June 30, 2000 to $150,000 and $40,000, primarily because in
the second quarter of the 1999 fiscal year $793,000 of unused escrow funds
relating to the Company's obligation to perform environmental remediation at
certain locations net leased to Total Petroleum was returned to the Company upon
completion of the Company's responsibility. Interest and other income also
decreased due to a reduction in interest earned on cash and cash equivalents
available for investment, as cash and cash equivalents were applied to fund
property acquisitions.
Increases in depreciation and amortization expense of $262,000 and $198,000 for
the six and three months ended June 30, 2000 to $1,068,000 and $614,000
primarily result from depreciation on the eight properties acquired during 2000
and 1999.
The increases in interest-mortgages payable to $1,910,000 and $1,161,000 for the
six and three months ended June 30, 2000 from $1,186,000 and $617,000 for the
six and three months ended June 30, 1999 is due to mortgages placed on seven of
the properties acquired during 2000 and 1999. Interest - line of credit amounted
to $52,000 during the six and three months ended June 30, 2000 resulting from
borrowings under the credit agreement. There were no such borrowings during the
prior year periods.
General and administrative expenses increased by $86,000 and $11,000 for the six
and three months ended June 30, 2000 to $571,000 and $280,000. These increases
were primarily due to an increase in payroll and payroll related expenses.
Gain on sale of real estate and available-for-sale securities during the six and
three months ended June 30, 2000 results substantially from a gain of $43,000 on
the sale of a property located in Kansas during the three months ended June 30,
2000 and from a gain of $156,000 on the sale of a property located in South
Carolina during the three months ended March 31, 2000.
Item 3. - Quantitative and Qualitative Disclosures About Market Risks
The Company has considered the effects of derivatives and exposures to market
risk relating to interest rate, foreign currency exchange rate, commodity price
and equity price risk. The Company 's mortgages payable bear fixed interest
rates and therefore there is no material market risk associated with these
instruments. The Company's exposure to market risk relates to its variable rate
unsecured credit facility, with the initial borrowing occurring during the
quarter ended June 30, 2000. This variable rate indebtedness had a weighted
average interest rate of 9.4% and the Company believes that a 1% change in
interest rates would not have a material effect on income.
Part II - Other Information
Item 6. - Exhibits and Reports on Form 8-K
On April 11, 2000, the Company filed a current report on Form 8-K to report the
acquisition on March 29, 2000 of a property located in El Paso, Texas for
approximately $14,066,000. In connection with the acquisition, the Company
obtained a $10,000,000 first mortgage. Audited financial statements and
unaudited pro forma financial statements relating to this acquisition were filed
on Form 8-K/A on May 11, 2000.
On May 2, 2000, the Company filed a current report on Form 8-K to report the
acquisition on April 11, 2000 of a property located in Hanover, Pennsylvania for
approximately $11,463,000. The property was financed at closing by the Company
assuming on a non-recourse basis the existing first mortgage with a principal
balance of approximately $9,000,000. Audited financial statements and unaudited
pro forma financial statements relating to this acquisition were filed on Form
8-K/A on May 11, 2000.
ONE LIBERTY PROPERTIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
One Liberty Properties, Inc.
(Registrant)
August 11, 2000 /s/ Jeffrey Fishman
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Date Jeffrey Fishman
President
August 11, 2000 /s/ David W. Kalish
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Date David W. Kalish
Vice President and
Chief Financial Officer