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, 1998
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, 1998, the Registrant had 1,587,317 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,
1998 1997
---- ----
(Unaudited)
Assets
Real estate investments, at cost
Land $13,552,672 $12,210,147
Buildings 44,011,516 38,641,419
---------- ----------
57,564,188 50,851,566
Less accumulated depreciation 2,794,288 2,534,582
--------- ---------
54,769,900 48,316,984
Mortgages receivable-less unamortized
discount-(substantially all from
related parties) 5,866,200 5,943,450
Cash and cash equivalents 1,690,108 1,606,364
Unbilled rent receivable 788,124 665,052
Rent, interest, deposits and
other receivables 266,379 300,584
Investment in BRT Realty Trust-
(related party) 230,994 240,384
Deferred financing costs 723,118 510,123
Other 104,959 64,614
------- ------
Total assets $64,439,782 $57,647,555
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Mortgages payable $24,990,920 $20,545,247
Note payable-bank 6,985,029 4,605,029
Accrued expenses and other liabilities 290,996 394,459
Dividends payable 795,978 791,945
------- -------
Total liabilities 33,062,923 26,336,680
---------- ----------
Commitments and contingencies - -
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 13,146,308 13,106,970
---------- ----------
Stockholders' equity:
Common stock, $1 par value;
25,000,000 shares authorized;
1,574,894 and 1,561,450
shares issued and outstanding 1,574,894 1,561,450
Paid-in capital 14,548,831 14,419,609
Net unrealized gain on
available-for-sale securities 140,178 146,706
Accumulated undistributed net income 1,966,648 2,076,140
--------- ---------
Total stockholders' equity 18,230,551 18,203,905
---------- ----------
Total liabilities and stockholders' equity $64,439,782 $57,647,555
=========== ===========
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Revenues:
Rental income $1,523,538 $1,338,958
Interest from related parties 205,620 209,699
Interest and other income 15,798 17,534
------ ------
1,744,956 1,566,191
--------- ---------
Expenses:
Depreciation and amortization 298,201 250,350
Interest - mortgages payable 424,776 392,780
Interest - bank 110,611 41,984
Leasehold rent 72,208 72,208
General and administrative 152,674 163,059
------- -------
1,058,470 920,381
--------- -------
Income before minority interest 686,486 645,810
Minority interest - (6,604)
------- ------
Net income $ 686,486 $ 639,206
=========== ===========
Calculation of net income applicable
to common stockholders:
Net income $ 686,486 $ 639,206
Less: dividends and accretion
on preferred stock 362,848 362,379
------- -------
Net income applicable to
common stockholders $ 323,638 $ 276,827
=========== ============
Weighted average number of
common shares outstanding:
Basic 1,574,296 1,489,327
========= =========
Diluted 1,576,401 1,498,479
========= =========
Net income per common share (Note 2):
Basic $ .21 $ .19
=========== ============
Diluted $ .21 $ .18
=========== ============
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,
1998 and the year ended December 31, 1997
(Unaudited)
Net Unrealized
Gain (loss) on Accumulated
Common Paid-in Available-for- Undistributed
Stock Capital Sale Securities Net Income Total
----- ------- --------------- ---------- -----
Balances,
January 1, 1997 $1,473,642 $13,650,737 $ 97,673 $2,220,789 $17,442,841
Net income - - - 2,984,192 2,984,192
Distributions -
common stock - - - (1,834,799) (1,834,799)
Distributions -
preferred stock - - - (1,294,042) (1,294,042)
Accretion on
preferred stock - (156,178) - - (156,178)
Exercise of options 29,000 235,625 - - 264,625
Shares issued through
dividend reinvestment
plan 58,808 689,425 - - 748,233
Net unrealized gain
on available-for-sale
securities - - 49,033 - 49,033
------ ------- ------ ------- ------
Balances,
December 31, 1997 1,561,450 14,419,609 146,706 2,076,140 18,203,905
Net income - - - 686,486 686,486
Distributions -
common stock - - - (472,468) (472,468)
Distributions -
preferred stock - - - (323,510) (323,510)
Accretion on
preferred stock - (39,338) - - (39,338)
Shares issued through
dividend reinvestment
plan 13,444 168,560 - - 182,004
Net unrealized loss
on available-for-sale
securities - - (6,528) - (6,528)
------ ------- ------ ----- ------
Balances,
March 31, 1998 $1,574,894 $14,548,831 $ 140,178 $ 1,966,648 $18,230,551
========== =========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
---------
1998 1997
---- ----
Cash flows from operating activities:
Net income $ 686,486 $ 639,206
Adjustments to reconcile net income
to net cash provided by operating activities::
(Increase) in rental income from straight-lining of rent (123,072) (89,553)
Depreciation and amortization 298,201 250,350
Minority interest - 6,604
Changes in assets and liabilities:
(Increase) in rent, interest,
deposits and other receivables (3,278) (39,555)
Increase (decrease) in accrued expenses and other liabilities (103,463) 64,062
-------- ------
Net cash provided by operating activities 754,874 831,114
------- -------
Cash flows from investing activities:
Additions to real estate (6,712,622) -
Net proceeds from sale of real estate - 236,920
Collection of mortgages receivable -
(including $70,193 and $27,792
from related parties) 77,250 32,756
Payments to minority interest by subsidiary - (6,600)
Other - 31,000
------- ------
Net cash (used in) provided by investing activities (6,635,372) 294,076
---------- -------
Cash flows from financing activities:
Proceeds from mortgages payable 4,525,000 1,600,000
Repayment of mortgages payable (79,327) (61,027)
Proceeds from bank borrowings, net of repayments 2,380,000 (2,549,374)
Payment of financing costs (251,490) (31,641)
Cash distributions - common stock (468,435) (442,093)
Cash distributions - preferred stock (323,510) (323,510)
Issuance of shares through
dividend reinvestment plan 182,004 195,864
------- -------
Net cash provided by (used in) financing activities 5,964,242 (1,611,781)
Net increase (decrease) in cash
and cash equivalents 83,744 (486,591)
Cash and cash equivalents at beginning of period 1,606,364 2,478,580
--------- ---------
Cash and cash equivalents at end of period $1,690,108 $1,991,989
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest expense $ 578,643 $ 409,455
Cash paid during the period for income taxes 4,663 25,662
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, 1998 and for the three months ended March 31, 1998 and 1997 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, 1998 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 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, 1997.
Note 2 - Earnings Per Common Share
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings Per Share. Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to the Statement 128 requirements.
For the three months ended March 31, 1998 and 1997 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.
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 2 - Earnings Per Common Share (Continued)
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 three months ended March 31, 1998 and
1997 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 (2,105 and 9,152 for the three months ended 1998
and 1997, 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. In addition, 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 options' exercise price was greater than the average market price of
the Common Stock and, therefore, the effect would be antidilutive. See Note 4
for information regarding a Registration Statement filed February 1998 by the
Company with the Securities and Exchange Commission with respect to a rights
offering made to its stockholders.
Note 3 - Preferred and Common Stock Dividend Distributions
On March 4, 1998 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, 1998 to stockholders of record on March 18,
1998.
Note 4 - Registration Statement
On February 10, 1998, the Company filed a Registration Statement with the
Securities and Exchange Commission ("SEC") with respect to a rights offering to
its stockholders. The Registration Statement was declared effective by the SEC
on March 31, 1998. The Company issued to each common and preferred stockholder
of record as of March 24, 1998, one nontransferable right for each share owned
of record entitling the holder to purchase one share of Common Stock for a price
of $13.25 per share. In addition, each common and preferred stockholder is being
afforded the opportunity to over-subscribe to the extent of two additional
shares, but, in order for the over-subscription privilege to come into effect a
stockholder must have fully exercised the basic subscription privilege. The
offer will expire on June 15, 1998.
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 5 - Financial Accounting Standards Board Statement No. 131
In June, 1997 the Financial Accounting Standards Board issued Statement No. 131,
Disclosures About Segments of an Enterprise and Related Information, which is
effective for financial statements issued for years beginning after December 15,
1997. Statement 131 establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. Statement 131 is effective for financial statements for fiscal years
beginning after December 15, 1997, and therefore the Company will adopt the new
requirements retroactively in 1998. Management has not completed its review of
Statement 131, but does not anticipate that the adoption of this statement will
have a significant effect on the Company's reported segments.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The Company's primary sources of liquidity are cash generated from operating
activities, cash and cash equivalents, funds available under a revolving credit
facility (of which approximately $2,015,000 was available at March 31, 1998) and
funds obtainable from mortgages to be secured by real estate investments.
In March, 1996 the Company entered into a $5 million revolving credit agreement
("Credit Agreement") with Bank Leumi Trust Company of New York ("Bank Leumi").
Under the terms of the Credit Agreement the Company can 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 Commercial Bank of New York
(formerly First Bank of the Americas), increasing the total facility to
$9,000,000. Borrowings under the Credit Agreement 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 Credit
Agreement until February 29, 2000.
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 stockholders and operating
expenses. These sources of funds, as well as funds available under the Credit
Agreement, provide funds for future property acquisitions. In April, 1998 the
Company commenced a Rights Offering to its stockholders. Funds raised in the
Rights Offering will be used to pay down the existing outstanding borrowings
under the Credit Agreement and for property acquisitions. It will continue to be
the Company's policy to make sufficient cash distributions to stockholders 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 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. At March 31, 1998, there are two
locations which require additional remediation efforts. The Company believes the
$800,000 held by the escrow agent will be adequate to cover any additional
environmental costs at the Total Petroleum locations.
Results of Operations
Three months ended March 31, 1998 and 1997
Rental income increased by $184,580 to $1,523,538 for the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997 resulting
primarily from the 1997 acquisition of two properties and offset in part by the
sale of a property during 1997.
A $47,851 increase in depreciation and amortization expense to $298,201 results
primarily from depreciation on the two properties acquired during 1997, offset
in part by the sale of one property during 1997.
The increase in interest-mortgages payable from $392,780 in the 1997 three month
period to $424,776 in the 1998 three month period is due to a mortgage placed on
one of the properties acquired during 1997, offset in part by the sale of one
property during 1997.
Interest-bank note payable amounted to $110,611 and $41,984 for the three months
ended March 31, 1998 and 1997, respectively, resulting from borrowings under the
Credit Agreement. Borrowings were made to facilitate the purchase of two
properties in 1997.
Part II - Other Information
Item 6. - Exhibits and Reports on Form 8-K
On April 9, 1998, the Company filed a current report on Form 8-K with the
Securities and Exchange Commission to report the acquisition of the property
located at 300 Gold Street, Brooklyn, New York by a limited liability company,
of which the Company is a 95% member. The purchase price was $6,700,000, which
was paid in part by a new $4,525,000 mortgage from North Fork Bank and the
balance was paid by an advance under the Company's line of credit.
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 13, 1998 /s/ Matthew Gould
- ------------ -----------------
Date Matthew Gould
President
May 13, 1998 /s/ David W. Kalish
- ------------ -------------------
Date David W. Kalish
Vice President and
Chief Financial Officer