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, 2001
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number 0-11083
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 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 7, 2001, the Registrant had 3,025,317 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,
2001 2000
---- ----
(Unaudited)
Assets
Real estate investments, at cost
Land $ 25,939 $ 26,279
Buildings 101,153 101,585
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127,092 127,864
Less accumulated depreciation 8,018 6,244
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119,074 121,620
Cash and cash equivalents 8,149 2,069
Unbilled rent receivable 2,239 1,615
Rent, interest, deposits and other receivables 960 976
Note receivable - officer 167 240
Investment in BRT Realty Trust-(related party) 303 240
Deferred financing costs 1,328 1,154
Other (including available-for-sale securities of
$216 and $228) 377 305
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Total assets $132,597 $128,219
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Liabilities and Stockholders' Equity
Liabilities:
Mortgages payable $ 76,891 $ 64,123
Line of credit - 10,000
Accrued expenses and other liabilities 763 720
Dividends payable 1,165 -
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Total liabilities 78,819 74,843
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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; 648 shares issued;
liquidation and redemption values of $16.50 10,693 10,693
Common stock, $1 par value; 25,000
shares authorized; 3,021 and 3,010
shares issued and outstanding 3,021 3,010
Paid-in capital 31,764 31,650
Accumulated other comprehensive income - net
unrealized gain on available-for-sale securities 193 76
Accumulated undistributed net income 8,107 7,947
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Total stockholders' equity 53,778 53,376
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Total liabilities and stockholders' equity $132,597 $128,219
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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,
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2001 2000 2001 2000
---- ---- ---- ----
Revenues:
Rental income $3,732 $3,321 $11,322 $9,025
Interest and other income 66 35 143 185
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3,798 3,356 11,465 9,210
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Expenses:
Depreciation and amortization 727 642 2,173 1,710
Interest - mortgages payable 1,533 1,166 4,283 3,076
Interest - line of credit 10 105 241 157
Leasehold rent 72 72 217 217
General and administrative 284 266 881 816
Real estate expenses 41 27 130 47
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2,667 2,278 7,925 6,023
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Income before gain (loss) on sale 1,131 1,078 3,540 3,187
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Gain on sale of real estate 172 - 126 199
(Loss) gain on sale of available-for-sale
securities - 3 (14) (10)
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172 3 112 189
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Net income $1,303 $1,081 $ 3,652 $3,376
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Calculation of net income applicable to common stockholders:
Net income $1,303 $1,081 $ 3,652 $3,376
Less: dividends on preferred stock 259 261 778 784
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Net income applicable to
common stockholders $1,044 $ 820 $ 2,874 $2,592
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Weighted average number of common shares outstanding:
Basic 3,020 2,998 3,016 2,989
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Diluted 3,045 2,999 3,028 2,990
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Net income per common share:
Basic $ .35 $ .27 $ .95 $ .87
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Diluted $ .34 $ .27 $ .95 $ .87
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Cash distributions per share:
Common Stock $ .30 $ .30 $ .90 $ .90
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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, 2001 (unaudited)
and the year ended December 31, 2000
(Amounts in Thousands)
Accumulated
Other Accumulated
Preferred Common Paid-in Comprehensive Undistributed
Stock Stock Capital Income Net Income Total
------- ------ ------- ------ ---------- ------
Balances, January 1, 2000 $10,802 $2,980 $31,338 $33 $4,649 $49,802
Distributions -
common stock - - - - (3,590) (3,590)
Distributions -
preferred stock - - - - (1,044) (1,044)
Preferred stock (109) - 18 - - (91)
Shares issued through
dividend reinvestment plan - 30 294 - - 324
Net income - - - - 7,932 7,932
Other comprehensive income-
net unrealized gain on
available-for-sale securities - - - 43 - 43
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Comprehensive income - - - - - 7,975
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Balances, December 31, 2000 10,693 3,010 31,650 76 7,947 53,376
Distributions -
common stock - - - - (2,714) (2,714)
Distributions -
preferred stock - - - - (778) (778)
Shares issued through
dividend reinvestment plan - 11 114 - - 125
Net income - - - - 3,652 3,652
Other comprehensive income-
net unrealized gain on
available-for-sale securities - - - 117 - 117
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Comprehensive income - - - - - 3,769
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Balances, September 30, 2001 $10,693 $3,021 $31,764 $ 193 $ 8,107 $53,778
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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)
Nine Months Ended
September 30,
2001 2000
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Cash flows from operating activities:
Net income $ 3,652 $ 3,376
Adjustments to reconcile net income
to net cash provided by operating activities:
Gain on sale of real estate (126) (199)
Loss on sale of available-for-sale securities 14 10
Increase in rental income from straight-lining of rent (624) (516)
Depreciation and amortization 2,173 1,710
Changes in assets and liabilities:
Increase in rent, interest, deposits and other receivables (67) (319)
Increase in accrued expenses and other liabilities 59 234
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Net cash provided by operating activities 5,081 4,296
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Cash flows from investing activities:
Additions to real estate (17) (33,101)
Net proceeds from sale of real estate 749 837
Net proceeds from sale of available-for-sale securities 185 150
Purchase of available-for-sale securities (132) -
Payments to minority interest by subsidiary (16) (21)
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Net cash provided by (used in) investing activities 769 (32,135)
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Cash flows from financing activities:
Proceeds from mortgages payable 13,600 15,000
Repayment of mortgages payable (832) (569)
Payment of financing costs (408) (531)
Line of credit - (paydowns) borrowings (10,000) 8,000
Cash distributions - common stock (1,808) (1,793)
Cash distributions - preferred stock (519) (523)
Issuance of shares through dividend reinvestment plan 124 195
Note receivable - officer 73 (160)
Repurchase of preferred stock, which was cancelled - (42)
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Net cash provided by financing activities 230 19,577
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Net increase (decrease) in cash and cash equivalents 6,080 (8,262)
Cash and cash equivalents at beginning of period 2,069 11,247
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Cash and cash equivalents at end of period $ 8,149 $ 2,985
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Supplemental disclosures of cash flow information:
Cash paid during the period for interest expense $ 4,551 $ 3,080
Supplemental schedule of non cash investing and financing activities:
Assumption of mortgage payable in connection
with purchase of real estate $ - $ 9,015
See accompanying notes to consolidated financial statements.
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 - Basis of Preparation
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The accompanying interim unaudited consolidated financial statements as of
September 30, 2001 and for the nine and three months ended September 20, 2001
and 2000 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, 2001 are not necessarily indicative of the results for the full year.
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States 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 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, 2000.
Note 2 - Earnings Per Common Share
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For the nine and three months ended September 30, 2001 and 2000 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, 2001 and 2000 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 of Common Stock outstanding plus
the dilutive effect of the Company's outstanding options (12,627 and 24,656 for
the nine and three months ended September 30, 2001 and 660 and 775 for the nine
and three months ended September 30, 2000, respectively) using the
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 2 - Earnings Per Common Share (Continued)
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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 40,000 shares of Common Stock at $14.50 per share (which
were granted during March 1998) were not included in the computation of diluted
earnings per share because the exercise price of these options is greater than
the average market price of the common shares as of September 30, 2001 and
therefore the effect would be antidilutive.
Note 3 - Preferred and Common Stock Dividend Distributions
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On September 5, 2001 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 1, 2001 to stockholders of record
on September 17, 2001.
Note 4 - 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 nine months ended September 30, 2001, accumulated other
comprehensive income, which is solely composed of the net unrealized gain on
available-for-sale securities, increased $117,000 to $193,000. During the nine
months ended September 30, 2000 comprehensive income increased $57,000 to
$90,000.
Note 5 - Derivative Instruments and Hedging Activities
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In June 1999, The Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 137, amending Statement of Financial
Accounting Standards No. 133. "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"), which extended the required date of adoption to fiscal
years beginning after September 15, 2000. SFAS 133 establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded on the
balance sheet as either an asset or liability measured at its fair value. SFAS
133 requires that changes in the derivative's fair value be recognized currently
in earnings unless specific hedge accounting criteria are met. The Company
adopted SFAS 133 on January 1, 2001 and the impact is immaterial due to the
Company's limited derivative activity.
Item 2. Management's Discussion And Analysis Of Financial Condition
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And Results Of Operations
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Liquidity and Capital Resources
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The Company's primary sources of liquidity are cash and cash equivalents
($8,149,000 at September 30, 2001), a $15,000,000 revolving credit facility, all
of which is available, and cash generated from operating activities. On March
24, 2000 the Company entered into an agreement with Citibank ("Citi"), formerly
European American Bank, 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
Citi'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, 2001,
there was no outstanding balance under the Facility.
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. In addition, 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. In the year 2000, 6,600
shares of preferred stock had been repurchased at a total cost of $91,000. There
have been no purchases during the nine month period ended September 30, 2001.
Results of Operations
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Nine and Three Months Ended September 30, 2001 and 2000
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Rental income increased by $2,297,000 to $11,322,000 for the nine months ended
September 30, 2001, as compared to the nine months ended September 30, 2000,
primarily due to the acquisition of eight properties during 2000. This increase
was partially offset by a decrease in revenues resulting from the sale of
thirteen Total Petroleum properties during October 2000. The $411,000 increase
in rental income to $3,732,000 for the three months ended September 30, 2001 as
compared to the three months ended September 30, 2000 results primarily from the
acquisition of four properties during the second half of 2000, offset in part by
a decrease in revenues due to the sale of the Total Petroleum properties.
Interest and other income decreased by $42,000 for the nine months ended
September 30, 2001 to $143,000 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. An increase of $31,000 to $66,000 in
interest and other income for the three months ended September 30, 2001 is due
to the completion of a $9,900,000 mortgage financing in April 2001, of which
$5,700,000 was used to pay off the outstanding credit line balance and
$4,200,000 was invested in U.S. Treasury securities.
Increases in depreciation and amortization expense of $463,000 and $85,000 for
the nine and three months ended September 30, 2001 to $2,173,000 and $727,000,
respectively, primarily results from depreciation on the eight properties
acquired during the year ended December 31, 2000. The increases were partially
offset by the decrease in depreciation resulting from the sale of the thirteen
Total Petroleum properties.
The increase in interest-mortgages payable of $1,207,000 to $4,283,000 for the
nine months ended September 30, 2001 from $3,076,000 for the nine months ended
September 30, 2000 is due to mortgages placed on seven of the properties
acquired during 2000. The $367,000 increase in interest-mortgages payable to
$1,533,000 from $1,166,000 for the three months ended September 30, 2001 is
primarily due to mortgages placed on four properties in December 2000, March
2001 and April 2001.
Interest - line of credit amounted to $241,000 and $10,000 for the nine and
three months ended September 30, 2001 and reflect a $84,000 increase and a
$95,000 decrease over the comparable periods in the preceding year. Borrowings
were made to facilitate the purchase of several properties during 2000 and were
paid off in full during 2001 with the proceeds from the mortgage financings
completed in 2001 on two properties purchased in December 2000.
Real estate expenses were $130,000 and $41,000 for the nine and three months
ended September 30, 2001 and $47,000 and $27,000 for the nine and three months
ended September 30, 2000. These increases are primarily due to the write off of
a leasing commission, non-recurring landlord repairs and certain real estate
taxes not rebilled to tenants. The nine months ended September 30, 2000 is net
of a refund of real estate taxes received by the Company during that period.
Gain on sale of real estate during the three months ended September 30, 2001
results from a gain on the sale of a property located in Utah. The gain in the
nine months ended September 30, 2001 is net of a loss on the sale of a property
located in Tennessee during the three months ended June 30, 2001. The gain in
the nine months ended September 30, 2000 includes the gain on the sale of
properties located in South Carolina and Kansas.
Item 3. - Quantitative and Qualitative Disclosures About Market Risks
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All of the Company's long-term debt bears interest at fixed rates, and therefore
the fair value of these instruments is affected by changes in the market
interest rates. The following table presents principal cash flows based upon
maturity dates of the debt obligations and the related weighted-average interest
rates by expected maturity dates for the fixed rate debt.
Principal
Year Ending Cash Flows Average
September 30, (In Thousands) Interest Rate
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2002 $ 1,844 7.86%
2003 10,649 7.87
2004 4,085 7.94
2005 9,393 7.96
2006 8,769 7.97
Thereafter 42,151 7.92
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Total $ 76,891 7.92
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Fair Value $ 78,538 7.50%
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Part II - Other Information
Item 6. - Exhibits and Reports on Form 8-K
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No Form 8-K's were filed during the quarter ended September 30, 2001.
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 9, 2001 /s/ Jeffrey Fishman
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Date Jeffrey Fishman
President
November 9, 2001 /s/ David W. Kalish
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Date David W. Kalish
Vice President and
Chief Financial Officer