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 September 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.
(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 office) (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 November 6, 2000, the Registrant had 3,003,905 shares of
Common Stock and 648,058 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
required to file such reports), and (2) has been subject to such filing
requirements 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)
September 30, December 31,
2000 1999
---- ----
(Unaudited)
Assets
Real estate investments, at cost
Land $24,738 $16,639
Buildings 92,495 59,269
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117,233 75,908
Less accumulated depreciation 6,522 5,138
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110,711 70,770
Cash and cash equivalents 2,985 11,247
Unbilled rent receivable 2,253 1,737
Rent, interest, deposits and other receivables 1,038 733
Note receivable - officer 240 80
Investment in BRT Realty Trust-(related party) 254 240
Deferred financing costs 1,090 732
Other (including available-for-sale
securities of $236 and $352) 308 410
--- ---
Total assets $118,879 $85,949
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Liabilities and Stockholders' Equity
Liabilities:
Mortgages payable $59,181 $35,735
Line of credit (Note 4) 8,000 -
Accrued expenses and other liabilities 624 412
Dividends payable 1,160 -
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Total liabilities 68,965 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; 652
and 655 shares issued; liquidation and
redemption values of $16.50 10,752 10,802
Common stock, $1 par value; 25,000
shares authorized; 2,998 and 2,980
shares issued and outstanding 2,998 2,980
Paid-in capital 31,523 31,338
Accumulated other comprehensive income - net
unrealized gain on available-for-sale securities 90 33
Accumulated undistributed net income 4,551 4,649
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Total stockholders' equity 49,914 49,802
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Total liabilities and stockholders' equity $118,879 $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 Nine Months Ended
September 30, September 30,
------------- -------------
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
Rental income $3,321 $2,277 $9,025 $6,539
Interest and other income (Note 7) 35 149 185 1,258
-- --- --- -----
3,356 2,426 9,210 7,797
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Expenses:
Depreciation and amortization 642 417 1,710 1,223
Interest - mortgages payable 1,166 667 3,076 1,853
Interest - line of credit 105 - 157 -
Leasehold rent 72 72 217 217
General and administrative 293 207 863 692
--- --- --- ---
2,278 1,363 6,023 3,985
----- ----- ----- -----
Income before gain on sale 1,078 1,063 3,187 3,812
Gain on sale of real estate and
available-for-sale securities, net 3 62 189 62
- -- --- --
Net income $1,081 $1,125 $3,376 $3,874
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Calculation of net income applicable to
common stockholders:
Net income $1,081 $1,125 $3,376 $3,874
Less: dividends and accretion (1999)
on preferred stock 261 263 784 985
--- --- --- ---
Net income applicable to
common stockholders $ 820 $ 862 $2,592 $2,889
======= ======= ====== ======
Weighted average number of common
shares outstanding:
Basic 2,998 2,963 2,989 2,955
===== ===== ===== =====
Diluted 2,999 2,971 2,990 2,959
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Net income per common share:
Basic $ .27 $ .29 $ .87 $ .98
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Diluted $ .27 $ .29 $ .87 $ .98
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Cash distributions per share:
Common Stock $ .30 $ .30 $ .90 $ .90
======= ======= ====== ======
Preferred Stock $ .40 $ .40 $ 1.20 $ 1.20
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See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the nine month period ended September 30, 2000 (unaudited)
and the year ended December 31, 1999
(Amounts in Thousands)
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)
----
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 - - - - (2,690) (2,690)
Distributions -
preferred stock - - - - (784) (784)
Shares issued through
dividend reinvestment plan - 18 177 - - 195
Repurchase of preferred stock,
which was cancelled (50) - 8 - - (42)
Net income - - - - 3,376 3,376
Other comprehensive income-
net unrealized gain on
available-for-sale securities - - - 57 - 57
--
Comprehensive income - - - - - 3,433
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Balances, September 30, 2000 $10,752 $2,998 $31,523 $ 90 $ 4,551 $49,914
======= ====== ======= ======= ======== =======
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Nine Months Ended
September 30,
2000 1999
---- ----
Cash flows from operating activities:
Net income $ 3,376 $ 3,874
Adjustments to reconcile net income
to net cash provided by operating activities:
Gain on sale of real estate and
available-for-sale securities, net (189) (62)
Increase in rental income from straight-lining of rent (516) (428)
Depreciation and amortization 1,710 1,223
Changes in assets and liabilities:
(Increase) in rent, interest, deposits and other receivables (319) (40)
Increase in accrued expenses and other liabilities 234 54
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Net cash provided by operating activities 4,296 4,621
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Cash flows from investing activities:
Additions to real estate (33,101) (11,499)
Net proceeds from sale of real estate 837 210
Purchase of available-for-sale securities - (838)
Net proceeds from sale of available-for-sale securities 150 1,023
Collection of mortgages receivable - 228
Payments to minority interest by subsidiary (21) (13)
---- ----
Net cash used in investing activities (32,135) (10,889)
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Cash flows from financing activities:
Proceeds from mortgages payable 15,000 5,775
Repayment of mortgages payable (569) (380)
Payment of financing costs (531) (284)
Borrowings from line of credit 8,000 -
Cash distributions - common stock (1,793) (2,713)
Cash distributions - preferred stock (523) (906)
Note receivable - officer (160) -
Issuance of shares through dividend reinvestment plan 195 280
Repurchase of preferred stock, which was cancelled (42) (2,446)
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Net cash provided by (used in) financing activities 19,577 (674)
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Net decrease in cash and cash equivalents (8,262) (6,942)
Cash and cash equivalents at beginning of period 11,247 19,090
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Cash and cash equivalents at end of period $ 2,985 $ 12,148
======= ========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest expens $ 3,080 $ 1,855
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
September 30, 2000 and for the nine and three months ended September 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 nine and three months ended September
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 nine and three months ended September 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 nine and three month periods ended
September 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 shares
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 2 - Earnings Per Common Share (Continued)
------------------------------------
of Common Stock outstanding plus the dilutive effect of the Company's
outstanding options (660 and 775 for the nine and three months ended September
30, 2000 and 3,271 and 7,557 for the nine and three months ended September 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 September 30, 2000 and therefore the effect would be
antidilutive.
Note 3 - Preferred and Common Stock Dividend Distributions
-------------------------------------------------
On September 7, 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 October 2, 2000 to stockholders of record
on September 18, 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.
Note 5 - Property Acquisitions
---------------------
On August 23, 2000, two additional properties were purchased for a total
consideration of approximately $7,100,000. In connection with the purchase, the
Company drew down $7,000,000 under the Facility.
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 5 - Property Acquisitions - (Continued)
-----------------------------------
On April 11, 2000, a 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, an existing first mortgage with a principal balance of $9,015,000. The
balance of the purchase price was funded from the Facility.
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.
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 nine months ended September 30, 2000,
accumulated other comprehensive income, which is solely composed of the net
unrealized gain on available-for-sale securities, increased $12,000 to $90,000
from $78,000 and increased $57,000 to $90,000 from $33,000, respectively. During
the three and nine months ended September 30, 1999 comprehensive income
decreased $44,000 to $108,000 from $152,000 and increased $8,000 from $100,000
to $108,000, respectively.
Note 7 - Other Income
------------
Included in other income for the nine months ended September 30, 1999 is
$792,764 which represents the return to the Company of unused escrow funds upon
completion of the Company's responsibility with respect to environmental cleanup
at certain locations net leased to Total Petroleum.
Note 8 - Subsequent Event
----------------
On October 20, 2000, the Company sold the thirteen locations it owned in
Michigan that were net leased to Total Petroleum. The gross sales price was
$12,000,000 and will result in a gain of approximately $3,500,000 for financial
statement purposes. The Company's present intention is to use the sales proceeds
to acquire one or more additional net leased properties on a tax-deferred basis;
accordingly, the Company is not expected to realize a gain for federal income
tax purposes on the sale.
Item 2. Management's Discussion And Analysis Of Financial Condition And Results
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Of Operations
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Liquidity and Capital Resources
- -------------------------------
The Company's primary sources of liquidity are cash and cash equivalents
($2,985,000 at September 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 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 September 30, 2000, $8,000,000 was outstanding under the
Facility.
On October 20, 2000, the Company sold thirteen locations it owned in Michigan
that were net leased to Total Petroleum for a gross sales price of $12,000,000.
The sale will result in a gain of approximately $3,500,000 for financial
statement purposes. The Company's present intention is to use the sales proceeds
to acquire one or more additional net leased properties on a tax-deferred basis;
accordingly, the Company is not expected to realize a gain on the sale for
federal income tax purposes.
In August 2000, the Company acquired two properties located in Grand Rapids,
Michigan for a consideration of $7,100,000, of which $7,000,000 was funded from
the Facility. The properties and all of the improvements are triple net leased
to a large health management company and are being operated as health clubs.
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. In connection with this
acquisition, the Company assumed a first mortgage 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 $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
and cash available from the sale of the Total Petroleum properties 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. Through October, 2000,
6,600 shares of preferred stock have been repurchased at a total cost of
$91,000.
Results of Operations
- ---------------------
Nine and Three Months Ended September 30, 2000 and 1999
- -------------------------------------------------------
Rental income increased by $2,486,000 to $9,025,000 and by $1,044,000 to
$3,321,000 for the nine and three months ended September 30, 2000, respectively,
as compared to the nine and three months ended September 30, 1999, primarily due
to the acquisition of six properties during the nine months ended September 30,
2000.
Interest and other income decreased by $1,073,000 for the nine months ended
September 30, 2000 to $185,000, 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 in the nine and three
months ended September 30, 2000 due to a reduction in interest earned on cash
and cash equivalents available for investment, as cash and cash equivalents were
used to fund property acquisitions.
Increases in depreciation and amortization expense of $487,000 and $225,000 for
the nine and three months ended September 30, 2000 to $1,710,000 and $642,000
primarily result from depreciation on the six properties acquired during the
nine months ended September 30, 2000.
The increases in interest-mortgages payable to $3,076,000 and $1,166,000 for the
nine and three months ended September 30, 2000 from $1,853,000 and $667,000 for
the nine and three months ended September 30, 1999 is due to mortgages placed on
seven properties acquired during 2000 and 1999. Interest - line of credit
amounted to $157,000 and $105,000 during the nine and three months ended
September 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 $171,000 and $86,000 for the
nine and three months ended September 30, 2000 to $863,000 and $293,000. 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 nine
and three months ended September 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 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
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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 9.9% for the period ended September 30, 2000 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 August 28, 2000, the Company filed a current report on Form 8-K to report the
acquisition on August 23, 2000 of two properties located in Grand Rapids,
Michigan for approximately $7,100,000. In connection with the purchase, the
Company drew down $7,000,000 under its Revolving Credit Facility. Audited
financial statements and unaudited pro forma financial statements relating to
this acquisition were filed on Form 8-K/A on October 11, 2000.
On October 25, 2000, the Company filed a current report on Form 8-K to report
the sale on October 20, 2000 of thirteen gas, service station and convenience
store properties, all located in Michigan. The gross sales price was $12,000,000
and will result in a gain of approximately $3,500,000 for financial statement
purposes. The Company's present intention is to use the sales proceeds to
acquire one or more additional net leased properties on a tax-deferred basis;
accordingly, the Company is not expected to realize a gain for federal income
tax purposes on the sale.
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.
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(Registrant)
November 10, 2000 /s/ Jeffrey Fishman
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Date Jeffrey Fishman
President
November 10, 2000 /s/ David W. Kalish
- ----------------- -------------------
Date David W. Kalish
Vice President and
Chief Financial Officer