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, 1996
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.
(Exact name of registrant as specified in its charter)
MARYLAND 13-3147497
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
60 Cutter Mill Road, Great Neck, New York 11021
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(516) 466-3100
Indicate the number of shares outstanding of each of the issuer's
classes of stock, as of the latest practicable date.
As of October 15, 1996, the Registrant had 1,472,642 shares
of Common Stock and 808,776 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
___
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1996 1995
(Unaudited)
Assets
Real estate investments, at cost
Land $ 9,585,616 $ 7,299,417
Buildings 27,311,033 18,154,919
___________ __________
36,896,649 25,454,336
Less accumulated depreciation 1,640,177 1,200,571
Less valuation allowance -
(Note 7) 459,000 -
34,797,472 24,253,765
Mortgages receivable-less unamortized
discount-(substantially all from
related parties) 6,082,076 7,036,141
Senior secured note receivable-
less unamortized discount-
(related party) - 528,575
Cash and cash equivalents 2,369,150 3,844,409
Unbilled rent receivable 240,321 86,767
Rent, interest, deposits and
other receivables 607,069 696,790
Investment in U.S. Government
obligations and securities 705,123 1,274,747
Investment in BRT Realty Trust-
(related party) 180,288 127,704
Deferred financing costs and
other assets 396,505 191,348
___________ _________
Total assets $45,378,004 $38,040,246
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Mortgages payable $13,638,199 $ 6,590,154
Accrued expenses and
other liabilities 370,208 193,767
Dividends payable 760,753 748,346
___________ ___________
Total liabilities 14,769,160 7,532,267
___________ __________
Commitments and contingencies -
(Note 5) - -
Minority interest in subsidiary 142,471 -
Redeemable convertible preferred
stock, $1 par value; $1.60
cumulative annual dividend;
2,300,000 shares authorized;
808,776 shares issued; liquidation
and redemption values of $16.50 12,912,039 12,796,475
___________ __________
Stockholders' equity:
Common stock, $1 par value;
25,000,000 shares authorized;
1,457,478 and 1,416,119
shares issued and outstanding 1,457,478 1,416,119
Paid-in capital 13,505,658 13,218,757
Net unrealized gain (loss) on
available-for-sale securities 43,061 ( 6,758)
Accumulated undistributed net
income 2,548,137 3,083,386
__________ __________
Total stockholders' equity 17,554,334 17,711,504
__________ __________
Total liabilities and
stockholders' equity $45,378,004 $38,040,246
=========== ===========
<FN>
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ __________________
1996 1995 1996 1995
Revenues:
Rental income $1,247,777 $ 707,236 $2,841,346 $1,938,256
Interest from
related parties 301,591 598,152 921,462 1,511,927
Dividends from
related party -- -- -- 13,940
Interest and other
income 44,522 57,733 214,023 282,779
________ ________ _________ ________
1,593,890 1,363,121 3,976,831 3,746,902
_________ ________ _________ _________
Expenses:
Depreciation 170,531 117,349 439,606 324,092
Interest -
mortgages payable 216,331 102,248 557,880 338,812
Interest -
bank note payable 15,418 -- 15,418 --
Leasehold rent 72,208 72,208 216,625 212,185
General and
administrative 178,178 164,476 547,356 483,225
Provision for valua-
tion adjustment of
real estate (Note 7) 145,000 -- 459,000 --
797,666 456,281 2,235,885 1,358,314
________ ________ ________ ________
Operating income before
minority interest
in earnings of
subsidiary 796,224 906,840 1,740,946 2,388,588
Minority interest in
earnings of subsidiary (5,249) -- (5,249) --
Net income $790,975 $906,840 $1,735,697 $2,388,588
======== ======== ========== ==========
Calculation of net
income applicable to
common stockholders:
Net income $ 790,975 $906,840 $1,735,697 $2,388,588
Less: dividends
and accretion on
preferred stock 362,147 361,687 1,086,094 1,084,717
_________ _______ ________ _________
Net income
applicable
to common
stockholders $ 428,828 $545,153 $ 649,603 $1,303,871
========= ======== ========= ==========
Weighted average
number of
common shares
outstanding 1,457,273 1,416,119 1,439,051 1,407,097
========= ========= ========= =========
Net income per
common share
(Note 2): $ .29 $ .39 $ .45 $ .93
======== ======== ======== ========
Cash distributions
per share:
Common Stock $ .30 $ .30 $ .90 $ .725
======== ======== ======== ========
Preferred Stock $ .40 $ .40 $ 1.20 $ 1.20
======== ======== ======== ========
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the nine month period ended September 30, 1996
and the year ended December 31, 1995
(Unaudited)
Net
Unrealized Gain
(Loss) on Accumulated
Common Paid-in Available-for- Undistributed
Stock Capital Sale Securities Net Income Total
Balances,
January 1,
1995 $1,399,119 $13,233,109 $(34,913)$2,730,523 $17,327,838
Net income - - - 3,096,302 3,096,302
Distributions
-common
stock - - - (1,449,397)(1,449,397)
Distributions
-preferred
stock - - - (1,294,042)(1,294,042)
Accretion on
preferred
stock - (152,477) - - (152,477)
Exercise of
options 17,000 138,125 - - 155,125
Net unrealized
gain on avail-
able-for-sale-
securities - - 28,155 - 28,155
________ ___________ ________ _________ ________
Balances,
December
31,
1995 1,416,119 13,218,757 ( 6,758) 3,083,386 17,711,504
Net income - - - 1,735,697 1,735,697
Distributions
-common
stock - - - (1,300,415)(1,300,415)
Distributions
-preferred
stock - - - (970,531) (970,531)
Accretion on
preferred
stock - (115,563) - - (115,563)
Exercise of
options 22,500 182,812 - - 205,312
Shares pur-
chased through
dividend re-
investment
plan 18,859 219,652 - - 238,511
Net unrealized
gain on
available
-for- sale-
securities - - 49,819 - 49,819
Balances,
September
30,1996 $1,457,478 $13,505,658 $ 43,061 $2,548,137 $17,554,334
========== =========== ======== ========== ===========
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
1996 1995
_______ _________
Cash flows from operating
activities:
Net income $1,735,697 $2,388,588
Adjustments to reconcile
net income to net
cash provided by
operating activities:
Provision for valuation
adjustment of real estate 459,000 -
Depreciation and
amortization 483,575 350,692
Minority interest in earnings
of subsidiary 5,249 -
Changes in assets and
liabilities:
(Increase) decrease in rent,
interest, deposits
and other receivables (109,182) 3,290
Increase (decrease) in accrued
expenses and other
liabilities 176,441 (12,940)
_________ __________
Net cash provided by
operating
activities 2,750,780 2,729,630
_________ _________
Cash flows from investing
activities:
Additions to real estate (11,442,313) (2,746,937)
Costs of acquisition of
real estate and mortgage
receivable from Gould
Investors L.P.-related party -- (90,514)
Collection of mortgages
receivable-
(including $934,984 and
$110,042 from related
parties) 954,066 125,518
Collection of senior secured
note receivable-BRT Realty
Trust-related party 528,575 1,340,891
Sale of U.S. Government
obligations and securities,
net 569,598 2,747,197
Net investment by minority
interest in subsidiary 137,223 --
Other (2,248) (14,987)
___________ ________
Net cash (used in)
provided by investing
activities (9,255,099) 1,361,168
Cash flows from financing
activities:
Proceeds from mortgages
payable 7,125,000 731,250
Satisfaction of mortgage
payable -- (2,753,700)
Repayment of mortgages
payable (76,955) (37,981)
Payment of financing costs (204,269) --
Exercise of stock options 205,312 155,125
Cash distributions-common
stock (1,288,008) (774,616)
Cash distributions-preferred
stock (970,531) (970,531)
Issuance of shares through
dividend reinvestment plan 238,511 --
Net cash provided by
(used in)financing
activities 5,029,060 (3,650,453)
_________ _________
Net (decrease) increase
in cash and cash
equivalents (1,475,259) 440,345
Cash and cash equivalents at
beginning of period 3,844,409 2,701,456
_________ _________
Cash and cash equivalents at
end of period $2,369,150 $3,141,801
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (continued)
Nine Months Ended September 30,
1996 1995
____ ____
Supplemental disclosures of
cash flow information:
Cash paid during the period for
interest expense $549,524 $357,066
Cash paid during the period for
income taxes 59,444 43,769
Supplemental schedule of noncash
investing and financing
activities:
Accretion on preferred stock 115,563 114,186
Acquisition of real estate and
mortgage receivable from
Gould Investors L.P.-
related party -- (9,861,729)
Consideration for acquisition
from Gould Investors L.P.:
Extinguishment of mortgage
receivable -- 6,850,000
Transfer of BRT preferred
stock -- 2,455,355
Transfer of BRT common
stock -- 556,374
<FN>
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, 1996 and for the nine and three
months ended September 30, 1996 and 1995 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, 1996 are not necessarily indicative of the
results for the full year.
The consolidated financial statements include the accounts of One
Liberty Properties, Inc., its wholly-owned subsidiaries and its
majority-owned real estate investment. Material intercompany items
and transactions have been eliminated. One Liberty Properties,
Inc., its subsidiaries and its majority-owned real estate
investment 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, 1995.
Note 2 - Per Share Data
Primary earnings per common share data is based upon the weighted
average number of common shares and assumed equivalent shares
outstanding during the period, after giving effect to dividends
and accretion relating to the Company's preferred stock. The
preferred stock is not considered a common stock equivalent for
the purposes of computing earnings per share because their
assumed conversion is anti-dilutive. The assumed exercise of
outstanding stock options, using the treasury stock method, is
not materially dilutive for the primary earnings per common share
computation for the nine and three month periods ended September
30, 1996 and 1995.
Fully diluted earnings per common share are based on an increase
in the number of common shares that would be outstanding assuming
the exercise of common share options. Since fully diluted
earnings per share amounts are not materially dilutive, such
amounts are not presented.
Note 3 - Distribution Reinvestment Plan
In May, 1996, the Company implemented a Distribution Reinvestment
Plan (the "Plan"). The Plan provides owners of record of 100
shares or more of its common and/or preferred stock the opportunity
to reinvest cash distributions in newly-issued common stock of the
Company, at a five percent discount from the market price. Shares
are purchased from the Company; no open market purchases are made
under the Plan. On July 2, 1996 and October 2, 1996 the Company
issued 18,859 and 15,164 common shares, respectively, under the
Plan.
Note 4 - Preferred and Common Stock Dividend Distributions
On September 11, 1996 the Board of Directors declared quarterly
cash distributions of $.30 and $.40 per share on the Company's
common and preferred stock, respectively, payable on October 2,
1996 to stockholders of record on September 23, 1996.
Note 5 - Credit Agreement
On March 1, 1996 the Company entered into a $5,000,000 revolving
credit agreement ("Credit Agreement") with Bank Leumi Trust
Company of New York ("Bank Leumi"). Borrowings under the Credit
Agreement will be used to provide the Company with funds to acquire
properties. The Credit Agreement matures February 28, 1999 with a
right for the Company to extend the Credit Agreement until February
29, 2000. As collateral for any advances made under the Credit
Agreement, the Company has pledged the stock of its subsidiaries
and certain mortgages receivable.
In connection with the acquisition of a property on August 14,
1996, the Company borrowed approximately $1,510,000 under the
Credit Agreement. This amount plus interest of $15,418 was repaid
on September 26, 1996 with funds received by the Company from a
mortgage financing of a different property that had been acquired
in July 1996.
Note 6 - Stock Options
Options to purchase a total of 22,500 shares of the Company's
common stock at $9.125 per share were exercised in March 1996.
The options had been granted under the 1989 Stock Option Plan.
Note 7 - Provision for Valuation Adjustment
During July 1996 and August 1996, the Company entered into
contracts for sale of two of its "Payless" properties at sales
prices which are lower than the carrying amounts. The Company has
recorded a provision for valuation adjustment for the differences.
The sales are expected to close during December, 1996. The Company
has also taken a provision on another "Payless" property where the
tenant is not renewing its lease, which expires on December 31,
1996, and although the tenant is still paying its rent, it has
vacated the premises which is located in a declining neighborhood.
The Company has determined the estimated value of this property to
be lower than the carrying amount and thus a provision was taken
for the difference.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At September 30, 1996, the Company's primary sources of liquidity
were approximately $2,369,000 in cash, $705,000 in investments in
U.S. Government obligations and securities and a $5 million
availability under a revolving credit agreement (discussed below).
Long term debt at September 30, 1996 consisted of $13,638,199 of
mortgages payable which are secured by certain real estate
investments.
In March, 1996 the Company entered into a $5 million revolving
credit agreement with Bank Leumi Trust Company of New York ("Bank
Leumi"). Borrowings under the credit agreement will provide the
Company with funds, when needed, to acquire additional properties.
The credit agreement matures February 28, 1999 with a right for the
Company to extend the agreement until February 29, 2000. Under the
terms of this agreement the Company has the ability to add
additional lenders to provide a maximum total facility of
$15,000,000. The Company is currently negotiating with several
banks to increase the facility to the maximum. At September 30,
1996, there were no outstanding borrowings under the credit
agreement.
In July, 1996 the Company invested in a limited liability company
("LLC") which acquired a property for a consideration, including
closing costs of approximately $3,360,000. The Company provided 95%
of the required funds. In September, 1996 the LLC obtained
mortgage financing on this property and the Company received
$1,902,850 from the financing. The building is an industrial/flex
office facility and is net leased to a single tenant.
During October, 1996 and November, 1996 the Company purchased two
additional properties at a total cost of approximately $8,500,000.
In order to close on these two acquisitions the Company borrowed $5
million under the credit agreement plus an additional $2 million in
the form of a short term loan from Bank Leumi. The short term loan
and a portion of the credit agreement will be repaid from the
proceeds of anticipated mortgage financings on these two
properties.
The Company is currently in discussions concerning the acquisition
of additional net leased properties. In management's judgement,
the Company's cash position, cash provided from operations, cash
provided from anticipated mortgage financings and cash available
from the anticipated inclusion of other banks to the credit
agreement will provide adequate funds for cash distributions to
shareholders, operating expenses and future investment
opportunities. 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.
In connection with the lease agreements with Total Petroleum,
Inc. ("Total Petroleum") consummated in 1991, the Company agreed
to expend certain funds to remediate environmental problems at
certain locations net leased to Total Petroleum. It was agreed
that the net cost to the Company would not exceed $350,000 per
location, with any excess cost being the responsibility of Total
Petroleum. At that time the Company deposited $2,000,000 with an
independent escrow agent to insure compliance by the Company with
its obligations with respect to the environmental clean up. The
escrow agent held approximately $1,316,000 as of September 30,
1996, which the Company deems adequate to cover any additional
environmental costs.
Results of Operations
Nine and three months ended September 30, 1996 and 1995
Rental income increased to $2,841,346 and $1,247,777 for the nine
and three months ended September 30, 1996 from $1,938,256 and
$707,236 for the nine and three months ended September 30, 1995.
Increases of approximately $684,451 and $321,902, respectively, are
due primarily to rents earned on twenty-two net leased properties
acquired during 1995 and 1996. The straight-lining of rents during
the nine months ended September 30, 1996 resulted in increases of
$218,639 in the 1996 periods.
The decrease in interest income from related parties of $590,465
from $1,511,927 in the nine months ended September 30, 1995 to
$921,462 in the current nine month period and the decrease of
$296,561 from $598,152 in the three months ended September 30, 1995
to $301,591 in the current three month period is substantially due
to accelerated principal collections during 1995 on a senior note
receivable which resulted in unusually large amortization of the
discount on such note during the prior year periods and
additionally, resulted in a substantial decrease in interest earned
on such note during the current year periods. This note was
collected in full during August, 1996.
In the 1995 nine month period dividends from related party amounted
to $13,940, resulting from an investment that the Company no longer
owns.
Interest and other income decreased to $214,023 in the current nine
month period from $282,779 in the prior nine month period and to
$44,522 in the current three month period from $57,733 in the prior
three month period due to a combination of factors including a
decrease of interest earned on U.S. Government securities resulting
from the sale of some of such investments, the proceeds of which
were used to purchase properties.
The increase in depreciation from $324,092 and $117,349 for the
nine and three months ended September 30, 1995 to $439,606 and
$170,531 for the nine and three month periods ended September 30,
1996 results from depreciation on properties acquired during 1995
and 1996. The increase in interest-mortgages payable to $557,880
and $216,331 in the current nine and three month periods from
$338,812 and $102,248 in the prior nine and three month periods is
due to interest paid on mortgages placed in connection with
property acquisitions during 1995 and 1996. The increase in
interest-mortgages payable for the current nine month period was
offset to a small extent by the elimination of interest on a
mortgage loan that was fully repaid in March, 1995.
Interest - bank note payable amounted to $15,418 during the current
three month period, resulting from a borrowing under the revolving
credit agreement during August, 1996. The Company repaid this
borrowing during September 1996.
General and administrative costs increased during the nine and
three months ended September 30, 1996 to $547,356 and $178,178 from
$483,225 and $164,476 during the nine and three months ended
September 30, 1995 due to a combination of factors, including an
increase in income tax provisions and various costs incurred with
the implementation of the Company's distribution reinvestment plan
during the current 1996 periods. Also contributing to the increase
in general and administrative costs was the amortization of
capitalized costs incurred in connection with the Company obtaining
a bank credit facility and placing mortgages on its properties.
During July 1996 and August 1996, the Company entered into two
contracts for sale of two of its "Payless" properties at sales
prices which are lower than the carrying amounts. The Company
recorded a provision for valuation adjustment for the differences
in the June 30, 1996 quarter. The sales are expected to close
during December, 1996. The Company has also taken a provision on
another "Payless" property where the tenant is not renewing its
lease, which expires on December 31, 1996, and although the tenant
is still paying its rent, it has vacated the premises which is
located in a declining neighborhood. The Company has determined
the estimated value of this property to be lower than the carrying
amount and thus a provision was taken for the difference in the
September 30, 1996 quarter. There was no comparable provision in
the prior year periods.
Part II - Other Information
Item 6. - Exhibits and Reports on Form 8-K
No Form 8-Ks were filed during the quarter ended September 30,
1996.
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)
November 13, 1996 /s/ Matthew Gould
_______________ _________________
Date Matthew Gould
President
November 13, 1996 /s/ David W. Kalish
_______________ ___________________
Date David W. Kalish
Vice President and
Chief Financial Officer