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, 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.
Asof August 1, 1997, the Registrant had 1,533,811 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
June 30, December 31,
1997 1996
(Unaudited)
Assets
Real estate investments, at cost
Land $10,703,651 $11,040,590
Buildings 33,461,018 33,695,317
---------- -----------
44,164,669 44,735,907
Less accumulated depreciation 2,158,806 1,846,694
--------- -----------
42,005,863 42,889,213
Mortgages receivable-less unamortized
discount-(substantially all from
related parties) 5,980,973 6,049,033
Cash and cash equivalents 2,085,475 2,478,580
Unbilled rent receivable 480,501 304,828
Rent, interest, deposits and
other receivables 120,461 66,908
Investment in BRT Realty Trust-
(related party) 223,482 199,068
Deferred financing costs 512,042 480,640
Other 76,733 54,718
------ --------------
Total assets $51,485,530 $52,522,988
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Mortgages payable $ 18,317,688 $16,846,921
Note payable-bank 1,050,626 3,900,000
Accrued expenses and other liabilities 508,513 475,109
Dividends payable 779,729 765,603
------- -------------
Total liabilities 20,656,556 21,987,633
---------- ------------
Commitments and contingencies - -
Minority interest in subsidiary 141,829 141,722
------------ ------------
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 13,028,647 12,950,792
----------- -----------
Stockholders' equity:
Common stock, $1 par value;
25,000,000 shares authorized;
1,520,729 and 1,473,642
shares issued and outstanding 1,520,729 1,473,642
Paid-in capital 14,064,727 13,650,737
Net unrealized gain on
available-for-sale securities 122,087 97,673
Accumulated undistributed net income 1,950,955 2,220,789
Total stockholders' equity 17,658,498 17,442,841
------------ -----------
Total liabilities and stockholders' equity $51,485,530 $52,522,988
=========== ===========
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- --------------
1997 1996 1997 1996
---- ---- ---- ----
Revenues:
Rental income $1,343,554 $ 850,006 $ 2,682,512 $1,593,569
Interest from related parties 208,701 326,901 418,400 619,871
Interest and other income 14,913 111,564 32,447 169,501
------------ ------------ ------------- -------
1,567,168 1,288,471 3,133,359 2,382,941
----------- ----------- ----------- ---------
Expenses:
Depreciation and amortization 251,754 159,320 502,104 295,876
Interest - mortgages payable 395,459 198,005 788,239 341,549
Interest - bank 29,152 - 71,136 -
Leasehold rent 72,209 72,209 144,417 144,417
General and administrative 170,841 176,679 333,900 342,377
Provision for valuation adjustment
of real estate - 314,000 - 314,000
--------------- ------- ------------- -----------
919,415 920,213 1,839,796 1,438,219
----------- ----------- --------- ---------
Operating income before minority
interest in earnings of subsidiary 647,753 368,258 1,293,563 944,722
Minority interest in earnings of subsidiary (6,703) - (13,307) -
------------ --------------- ------------ ---------------
Net income $ 641,050 $ 368,258 $1,280,256 $ 944,722
=========== ============ ========== ==========
Calculation of net income applicable
to common stockholders:
Net income $ 641,050 $ 368,258 $1,280,256 $ 944,722
Less: dividends and accretion
on preferred stock 362,496 362,031 724,875 723,947
------------ ------------- ---------- ----------
Net income applicable to
common stockholders $ 278,554 $ 6,227 $ 555,381 $ 220,775
=========== ============ ========== ==========
Weighted average number of
common shares outstanding 1,507,542 1,438,619 1,498,484 1,429,842
============ ============ ========== =========
Net income per common share (Note 2) $ .18 $ - $ .37 $ .15
============ ============ ========== ==========
Cash distributions per share:
Common Stock $ .30 $ .30 $ .60 $ .60
============ ============ =========== ==========
Preferred Stock $ .40 $ .40 $ .80 $ .80
============ ============ =========== ==========
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, 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 - - - 1,280,256 1,280,256
Distributions -
common stock - - - (903,070) (903,070)
Distributions -
preferred stock - - - (647,020) (647,020)
Accretion on
preferred stock - (77,855) - - (77,855)
Exercise of options 15,000 121,875 - - 136,875
Shares issued through
dividend reinvestment
plan 32,087 369,970 - - 402,057
Net unrealized gain
on available-for-sale
securities - - 24,414 - 24,414
--------------- ---------------- ----------- --------------- --------------
Balances,
June 30, 1997 $1,520,729 $14,064,727 $ 122,087 $ 1,950,955 $17,658,498
============== =========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
1997 1996
Cash flows from operating activities:
Net income $ 1,280,256 $ 944,722
Adjustments to reconcile net income
to net cash provided by operating
activities:
(Increase)in rental income from straight-lining of rent (175,673) -
Provision for valuation adjustment of real estate - 314,000
Depreciation and amortization 502,104 295,876
Minority interest in earnings of subsidiary 13,307 -
Changes in assets and liabilities:
(Increase) decrease in rent, interest,
deposits and other receivables (75,568) 265,828
Increase in accrued expenses and other liabilities 33,404 45,853
----------- -----------
Net cash provided by operating activities 1,577,830 1,866,279
----------- -----------
Cash flows from investing activities:
Additions to real estate - (4,059,478)
Sale of real estate 384,598 -
Collection of mortgages receivable -
(including $56,577 and $873,353
from related parties) 68,060 885,019
Collection of senior secured note
receivable - BRT Realty Trust - related party - 327,546
Sale of U.S. Government
obligations and securities, net - 60,356
Other 41,134 -
----------- --------------
Net cash provided by (used in) investing activities 493,792 (2,786,557)
---------- -------------
Cash flows from financing activities:
Proceeds from mortgages payable 1,600,000 2,725,000
Repayment of mortgages payable (129,233) (45,985)
Repayments on note payable-bank (2,849,374) -
Payment of financing costs (89,088) (88,108)
Exercise of stock options 136,875 205,312
Cash distributions - common stock (888,944) (856,422)
Cash distributions - preferred stock (647,020) (647,020)
Issuance of shares through
dividend reinvestment plan 402,057 -
---------- --------------
Net cash provided by (used in) financing activities (2,464,727) 1,292,777
----------- -----------
Net (decrease) increase in cash
and cash equivalents (393,105) 372,499
Cash and cash equivalents at beginning of period 2,478,580 3,844,409
---------- ----------
Cash and cash equivalents at end of period $2,085,475 $4,216,908
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest expense $ 858,777 $ 315,382
Cash paid during the period for income taxes 16,011 55,999
Supplemental schedule of noncash
investing and financing activities:
Accretion on preferred stock 77,855 76,927
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, 1997 and for the six and three months ended June 30, 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 six and three months ended June 30, 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 six and three
month periods ended June 30, 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.
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 2 - Per Share Data (Continued)
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, 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 June 6, 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 July 1, 1997 to stockholders of record on June 20,
1997.
Note 4 - Stock Options
Options to purchase a total of 15,000 shares of the Company's common stock at
$9.125 per share were exercised in June 1997. The options had been granted under
the 1989 Stock Option Plan.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At June 30, 1997, the Company's primary sources of liquidity were cash generated
from operating activities, approximately $2,085,475 in cash and cash equivalents
and a $9,000,000 revolving credit agreement (discussed below), of which
$7,949,374 was available at June 30, 1997. Long-term debt at June 30, 1997
consisted of $18,317,688 of mortgages payable, which is secured by certain real
estate investments.
On August 5, 1997, a property owned by a limited liability company in which the
Company is a significant member was sold. The Company realized a gain of
approximately $500,000 on the sale. A portion of the net cash proceeds was used
to pay off the entire $1,050,626 outstanding balance 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"). 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. In June, 1997, the Company closed on a
$4,000,000 participation interest with First Bank of the Americas, increasing
the total facility to $9,000,000. 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.
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 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 $1,058,000 as of June 30, 1997, which the Company deems adequate
to cover any additional environmental costs.
Results of Operations
Six and three months ended June 30, 1997 and 1996
As a result of the Company's acquisition of five properties in 1996, rental
income increased by $1,088,943 and $493,548 to $2,682,512 and $1,343,554 for the
six and three months ended June 30, 1997 from $1,593,569 and $850,006 for the
six and three months ended June 30, 1996. The straight lining of rents during
the six and three months ended June 30, 1997 contributed $175,673 and $86,121 to
the increase in rental income.
The decrease in interest income from related parties of $201,471 from $619,871
in the six months ended June 30, 1996 to $418,400 in the current six month
period and the decrease of $118,200 from $326,901 in the three months ended June
30, 1996 to $208,701 in the current three month period 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 $32,447 in the current six month period
from $169,501 in the prior six month period and to $14,913 in the current three
month period from $111,564 in the prior three month period due to a combination
of factors including 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.
Increases in depreciation and amortization expense of $206,228 and $92,434 for
the six and three months ended June 30, 1997 to $502,104 and $251,754 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 to $788,239 and $395,459 in the
current six and three month periods from $341,549 and $198,005 in the prior six
and three month periods is due to interest paid on mortgages placed in
connection with property acquisitions during 1996. Interest - bank note payable
amounted to $71,136 and $29,152 during the six and three months ended June 30,
1997 resulting from borrowings under the revolving credit agreement.
At June 30, 1996 the Company had determined that the estimated fair value of two
of its properties were lower than the carrying amount and thus recorded a
provision for valuation adjustment for the difference. These properties were
sold during the six months ended June 30, 1997. There was no comparable
provision taken in 1997.
Part II - Other Information
Item 6. - Exhibits and Reports on Form 8-K
No Form 8-Ks were filed during the quarter ended June 30, 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)
August 14, 1997 /s/ Matthew Gould
Date Matthew Gould
President
August 14, 1997 /s/ David W. Kalish
Date David W. Kalish
Vice President and
Chief Financial Officer