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 March 31, 1997
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 May 1, 1997, the Registrant had 1,505,729 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
March 31, December 31,
1997 1996
---- ----
(Unaudited)
Assets
Real estate investments, at cost
Land $10,799,932 $11,040,590
Buildings 33,590,512 33,695,317
---------- ----------
44,390,444 44,735,907
Less accumulated depreciation 1,991,712 1,846,694
--------- ---------
42,398,732 42,889,213
Mortgages receivable-less unamortized
discount-(substantially all from
related parties) 6,016,277 6,049,033
Cash and cash equivalents 1,991,989 2,478,580
Unbilled rent receivable 394,381 304,828
Rent, interest, deposits and
other receivables 85,582 66,908
Investment in BRT Realty Trust-
(related party) 206,580 199,068
Deferred financing costs 484,492 480,640
Other 75,599 54,718
------ ------
Total assets $51,653,632 $52,522,988
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Mortgages payable $18,385,894 $16,846,921
Note payable-bank 1,350,626 3,900,000
Accrued expenses and other liabilities 539,171 475,109
Dividends payable 770,360 765,603
------- -------
Total liabilities 21,046,051 21,987,633
---------- ----------
Commitments and contingencies - -
Minority interest in subsidiary 141,726 141,722
------- -------
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 12,989,661 12,950,792
---------- ----------
Stockholders' equity:
Common stock, $1 par value;
25,000,000 shares authorized;
1,489,501 and 1,473,642
shares issued and outstanding 1,489,501 1,473,642
Paid-in capital 13,791,873 13,650,737
Net unrealized gain on
available-for-sale securities 105,185 97,673
Accumulated undistributed net income 2,089,635 2,220,789
--------- ---------
Total stockholders' equity 17,476,194 17,442,841
---------- ----------
Total liabilities and stockholders'equity $51,653,632 $52,522,988
=========== ===========
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Revenues:
Rental income $1,338,958 $ 743,563
Interest from related parties 209,699 292,970
Interest and other income 17,534 57,937
------ ------
1,566,191 1,094,470
--------- ---------
Expenses:
Depreciation and amortization 250,350 126,082
Interest - mortgages payable 392,780 143,544
Interest - bank 41,984 -
Leasehold rent 72,208 72,208
General and administrative 163,059 176,172
------- -------
920,381 518,006
------- -------
Operating income before minority interest
in earnings of subsidiary 645,810 576,464
Minority interest in earnings of subsidiary (6,604) -
------ -------
Net income $ 639,206 $ 576,464
========== ==========
Calculation of net income applicable
to common stockholders:
Net income $ 639,206 $ 576,464
Less: dividends and accretion
on preferred stock 362,379 361,916
------- -------
Net income applicable to
common stockholders $ 276,827 $ 214,548
========== ==========
Weighted average number of
common shares outstanding 1,489,327 1,421,064
========= =========
Net income per common share (Note 2) $ .19 $ .15
========== ==========
Cash distributions per share:
Common Stock $ .30 $ .30
========== ==========
Preferred Stock $ .40 $ .40
========== ==========
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the three month period ended March 31, 1997
and the year ended December 31, 1996
(Unaudited)
Net Unrealized
Gain (loss) on Accumulated
Common Paid-in Available-for- Undistributed
Stock Capital Sale Securities Net Income Total
----- ------- --------------- ---------- -----
Balances,
January 1, 1996 $1,416,119 $13,218,757 $ ( 6,758) $3,083,386 $17,711,504
Net income - - - 2,173,952 2,173,952
Distributions -
common stock - - - (1,742,507) (1,742,507)
Distributions -
preferred stock - - - (1,294,042) (1,294,042)
Accretion on
preferred stock - (154,317) - - (154,317)
Exercise of options 23,500 190,937 - - 214,437
Shares issued through
dividend reinvestment
plan 34,023 395,360 - - 429,383
Net unrealized gain
on available-for-sale
securities - - 104,431 - 104,431
------ ------- ------- --------- -------
Balances,
December 31, 1996 1,473,642 13,650,737 97,673 2,220,789 17,442,841
Net income - - - 639,206 639,206
Distributions -
common stock - - - (446,850) (446,850)
Distributions -
preferred stock - - - (323,510) (323,510)
Accretion on
preferred stock - (38,869) - - (38,869)
Shares issued through
dividend reinvestment
plan 15,859 180,005 - - 195,864
Net unrealized gain
on available-for-sale
securities - - 7,512 - 7,512
------ ------ ----- ------- -----
Balances,
March 31, 1997 $ 1,489,501 $13,791,873 $ 105,185 $ 2,089,635 $17,476,194
=========== =========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
1997 1996
---- ----
Cash flows from operating activities:
Net income $ 639,206 $ 576,464
Adjustments to reconcile net income
to net cash provided by operating activities:
(Increase) in rental income from straight-lining of rent (89,553) -
Depreciation and amortization 250,350 136,556
Minority interest in earnings of subsidiary 6,604 -
Changes in assets and liabilities:
(Increase) decrease in rent, interest,
deposits and other receivables (39,555) 106,887
Increase in accrued expenses
and other liabilities 64,062 11,646
------ ------
Net cash provided by operating activities 831,114 831,553
------- -------
Cash flows from investing activities:
Sale of real estate 236,920 -
Collection of mortgages receivable -
(including $27,792 and $884,099
from related parties) 32,756 891,157
Collection of senior secured note
receivable - BRT Realty Trust - related party - 93,008
Sale of U.S. Government
obligations and securities, net - (27,731)
Other 24,400 -
------ -------
Net cash provided by investing activities 294,076 956,434
------- -------
Cash flows from financing activities:
Proceeds from mortgages payable 1,600,000 -
Repayment of mortgages payable (61,027) (20,693)
Repayments on note payable-bank (2,549,374) -
Payment of financing costs (31,641) (79,972)
Exercise of stock options - 205,312
Cash distributions - common stock (442,093) (424,836)
Cash distributions - preferred stock (323,510) (323,510)
Issuance of shares through
dividend reinvestment plan 195,864 -
------- --------
Net cash (used in) financing activities (1,611,781) (643,699)
---------- --------
Net (decrease) increase in cash
and cash equivalents (486,591) 1,144,288
Cash and cash equivalents at beginning of period 2,478,580 3,844,409
--------- ---------
Cash and cash equivalents at end of period $1,991,989 $4,988,697
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest expense $ 409,455 $ 136,951
Cash paid during the period for income taxes 25,662 58,597
Supplemental schedule of noncash
investing and financing activities:
Accretion on preferred stock 38,869 38,406
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
March 31, 1997 and for the three months ended March 31,1997 and 1996 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 three months ended March 31, 1997 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 a majority-owned limited
liability company. Material intercompany items and transactions have been
eliminated. One Liberty Properties, Inc., its subsidiaries and its 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, 1996.
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 or is anti-dilutive
for the primary earnings per common share computation for the three month
periods ended March 31, 1997 and 1996.
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.
In February, 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per share,
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
the dilutive effect of stock options will be excluded. The impact of
Statement 128 on the calculation of primary and fully diluted earnings per share
is not expected to be material.
Note 3 - Preferred and Common Stock Dividend Distributions
-------------------------------------------------
On March 4, 1997 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 April 1, 1997 to stockholders of record on March
17, 1997.
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Liquidity and Capital Resources
- -------------------------------
At March 31, 1997, the Company's primary sources of liquidity were cash
generated from operating activities, approximately $1,992,000 in cash and cash
equivalents and a $5,000,000 revolving credit agreement (discussed below), of
which $3,649,374 was available at March 31, 1997. Long term debt at March 31,
1997 consisted of $18,385,894 of mortgages payable which is secured by certain
real estate investments. At May 12, 1997 $1,050,626 was outstanding under the
credit agreement.
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 March 31, 1997, one institution has expressed an interest in
participating to the extent of $4,000,000.
The Company is currently in discussions concerning the acquisition of
additional net leased properties. In management's judgement, cash provided from
operations, the Company's cash position and cash available under the credit
agreement and from the anticipated inclusion of other banks in the credit
agreement will provide adequate funds for cash distributions to shareholders,
operating expenses and future investments. 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 discovered at certain locations that were 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 $1,244,000 as of March 31, 1997 which the Company deems adequate
to cover any additional environmental costs.
Results of Operations
Three months ended March 31, 1997 and 1996
- ------------------------------------------
As a result of the Company's acquisition of five properties in 1996, rental
income increased by $595,395 to $1,338,958 for the three months ended March 31,
1997 from $743,563 for the three months ended March 31, 1996. The
straight-lining of rents during the three months ended March 31, 1997
contributed $89,553 to the increase in rental income.
The decrease in interest income from related parties of $83,271 for the
three months ended March 31, 1997 from $292,970 for the three months ended March
31, 1996 to $209,699 for the three months ended March 31, 1997 is substantially
due to the payoff in full during August 1996 of a senior note receivable and to
a lesser extent, the payoff in full during March 1996 of an $845,000 mortgage
receivable.
Interest and other income decreased to $17,534 for the three months ended
March 31, 1997 from $57,937 for the three months ended in March 31, 1996
primarily due to a decrease in interest earned on U.S. Government securities
resulting from the sale of such investments, the proceeds of which were used to
purchase properties.
A $124,268 increase in depreciation and amortization expense to $250,350
results from depreciation on properties acquired during 1996. Also contributing
to the increase was the amortization of capitalized costs incurred in connection
with the Company obtaining a bank credit facility and placing mortgages on its
properties.
The increase in interest-mortgages payable from $143,544 in the three
months ended March 31, 1996 to $392,780 in the three months ended March 31, 1997
is due to interest paid on mortgages placed in connection with property
acquisitions during 1996. Interest - bank note payable amounted to $41,984
during the three months ended March 31, 1997 resulting from borrowings under the
revolving credit agreement.
General and administrative costs of $163,059 reflect a decrease of $13,113
from the prior period expense of $176,172 and results substantially from a
decrease in income tax provisions.
Part II - Other Information
Item 6. - Exhibits and Reports on Form 8-K
No Form 8-Ks were filed during the quarter ended March 31, 1997.
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)
May 14, 1997 /s/ Matthew Gould
- ------------ -----------------
Date Matthew Gould
President
May 14, 1997 /s/ David W. Kalish
- ------------ -------------------
Date David W. Kalish
Vice President and
Chief Financial Officer