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, 1999
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, 1999, the Registrant had 2,956,146 shares of
Common Stock and 800,626 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,
1999 1998
---- ----
(Unaudited)
Assets
Real estate investments, at cost
Land $16,735,758 $14,466,202
Buildings 58,086,611 49,083,387
---------- ----------
74,822,369 63,549,589
Less accumulated depreciation 4,056,098 3,718,653
--------- -----------
70,766,271 59,830,936
Mortgage receivable 223,258 228,383
Cash and cash equivalents 8,541,701 19,089,625
Unbilled rent receivable 1,302,854 1,165,244
Rent, interest, deposits and
other receivables 761,403 707,959
Investment in BRT Realty Trust-(related party) 210,336 184,044
Deferred financing costs 629,505 661,185
Other (including available-for-sale securities of
$1,067,167 and $729,661) 1,146,537 810,524
--------- ---------
Total assets $83,581,865 $82,677,900
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Mortgages payable $30,371,175 $29,422,491
Accrued expenses and other liabilities 555,915 332,211
Dividends payable 1,206,592 1,205,571
--------- ---------
Total liabilities 32,133,682 30,960,273
---------- ----------
Commitments and contingencies - -
Minority interest in subsidiary (3,563) (2,377)
------- -------
Redeemable convertible preferred stock, $1 par value;
$1.60 cumulative annual dividend; 2,300,000 shares
authorized; 803,926 and 806,376 shares issued;
liquidation and redemption values of $16.50 13,225,546 13,225,418
---------- -----------
Stockholders' equity:
Common stock, $1 par value;
25,000,000 shares authorized;
2,946,806 and 2,940,201
shares issued and outstanding 2,946,806 2,940,201
Paid-in capital 30,999,541 30,965,164
Accumulated other comprehensive income - net
unrealized gain on available-for-sale securities 45,761 99,512
Accumulated undistributed net income 4,234,092 4,489,709
----------- ----------
Total stockholders' equity 38,226,200 38,494,586
------------ -----------
Total liabilities and stockholders' equity $83,581,865 $82,677,900
=========== ===========
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
------------------
1999 1998
---- ----
Revenues:
Rental income $2,040,176 $1,523,538
Interest from related party - 205,620
Interest and other income 158,405 15,798
---------- --------
2,198,581 1,744,956
--------- ---------
Expenses:
Depreciation and amortization 390,124 298,201
Interest - mortgages payable 568,765 424,776
Interest - bank - 110,611
Leasehold rent 72,208 72,208
General and administrative 212,295 152,674
------- -------
1,243,392 1,058,470
--------- ---------
Income before minority interest 955,189 686,486
Minority interest (4,214) -
------- ----------
Net income $ 950,975 $ 686,486
========== ==========
Calculation of net income applicable to common stockholders:
Net income $ 950,975 $ 686,486
Less: dividends and accretion
on preferred stock 362,362 362,848
-------- ---------
Net income applicable to
common stockholders $ 588,613 $ 323,638
=========== ==========
Weighted average number of common shares outstanding:
Basic 2,946,512 1,574,296
Diluted 2,946,512 1,576,401
Net income per common share (Note 2):
Basic $ .20 $ .21
=========== ==========
Diluted $ .20 $ .21
=========== ==========
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, 1999
and the year ended December 31, 1998
(Unaudited)
Net Unrealized
Gain (loss) on Accumulated
Common Paid-in Available-for- Undistributed
Stock Capital Sale Securities Net Income Total
----- ------- --------------- ---------- -----
Balances, January 1, 1998 $1,561,450 $14,419,609 $146,706 $2,076,140 $18,203,905
Distributions -
common stock - - - (2,710,787) (2,710,787)
Distributions -
preferred stock - - - (1,294,042) (1,294,042)
Accretion on
preferred stock - (158,061) - - (158,061)
Shares issued through
rights offering 1,331,733 16,139,254 - - 17,470,987
Shares issued through
dividend reinvestment
plan 47,018 564,362 - - 611,380
Net income - - - 6,418,398 6,418,398
Other comprehensive income-
net unrealized loss on available-
for-sale securities - - (47,194) - (47,194)
--------
Comprehensive income - - - - 6,371,204
-------------- -------------- ------------ ------------ ---------
Balances, December 31, 1998 2,940,201 30,965,164 99,512 4,489,709 38,494,586
Distributions -
common stock - - - (884,042) (884,042)
Distributions -
preferred stock - - - (322,550) (322,550)
Accretion on
preferred stock - (39,812) - - (39,812)
Shares issued through
dividend reinvestment
plan 6,605 74,189 - - 80,794
Net income - - - 950,975 950,975
Other comprehensive income-
net unrealized loss on available-
for-sale securities - - (53,751) - (53,751)
--------
Comprehensive income - - - - 897,224
-------------- ------------ ------------- ----------- -------
Balances, March 31, 1999 $2,946,806 $30,999,541 $ 45,761 $ 4,234,092 $38,226,200
============= ============ =========== =========== ===========
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
------------------
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 950,975 $ 686,486
Adjustments to reconcile net income
to net cash provided by operating activities:
(Increase) in rental income from straight-lining of rent (137,610) (123,072)
Depreciation and amortization 390,124 298,201
Minority interest 4,214 -
Changes in assets and liabilities:
(Increase) in rent, interest,
deposits and other receivables (51,951) (3,278)
Increase (decrease) in accrued expenses and other liabilities 223,704 (103,463)
------- -------------
Net cash provided by operating activities 1,379,456 754,874
--------- -------------
Cash flows from investing activities:
Additions to real estate (11,272,780) (6,712,622)
Purchase of available-for-sale securities (662,011) -
Sale of available-for-sale securities 244,463 -
Collection of mortgages receivable -
(including $70,193 from related party in 1998) 5,125 77,250
Payments to minority interest by subsidiary (5,400) -
------- ---------
Net cash (used in) investing activities (11,690,603) (6,635,372)
------------ -------------
Cash flows from financing activities:
Proceeds from and assumption of mortgages payable 1,065,329 4,525,000
Repayment of mortgages payable (116,645) (79,327)
Proceeds from bank borrowings, net of repayments - 2,380,000
Payment of financing costs (21,000) (251,490)
Cash distributions - common stock (883,021) (468,435)
Cash distributions - preferred stock (322,550) (323,510)
Issuance of shares through
dividend reinvestment plan 80,794 182,004
Repurchase of preferred stock, which was cancelled (39,684) -
-------- ---------
Net cash (used in) provided by financing activities (236,777) 5,964,242
--------- ---------
Net (decrease) increase in cash
and cash equivalents (10,547,924) 83,744
Cash and cash equivalents at beginning of period 19,089,625 1,606,364
---------- ----------
Cash and cash equivalents at end of period $ 8,541,701 $ 1,690,108
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest expense $ 569,769 $ 578,643
Cash paid during the period for income taxes 15,800 4,663
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, 1999 and for the three months ended March 31, 1999 and 1998 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, 1999 are not necessarily
indicative of the results for the full year.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements. 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 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, 1998.
Note 2 - Earnings Per Common Share
For the three months ended March 31, 1999 and 1998 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 three months ended March 31, 1999 and
1998 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 (-0- and 2,105 for the three months ended 1999 and
1998, 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.
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 2 - Earnings Per Common Share (Continued)
Options to purchase 128,000 shares of Common Stock at $12.375, $14.50 and $13.50
per share (which were granted during March 1999, 1998 and 1997, respectively)
were not included in the computation of diluted earnings per share because the
exercise price of these options are equal to or greater than the average market
price of the common shares and, therefore, the effect would be antidilutive.
Note 3 - Preferred and Common Stock Dividend Distributions
On March 2, 1999 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, 1999 to stockholders of record on March 18,
1999.
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 and cash equivalents
($8,541,701 at March 31, 1999), cash generated from operating activities, and
funds obtainable from mortgages to be secured by real estate investments. In
February 1999, a revolving credit facility entered into by the Company, which
provided for a facility of $9,000,000, matured and was not renewed by the
Company. The Company is currently engaged in negotiations for a new credit
facility but there can be no assurance that a new facility will be obtained or
if obtained that the amount of availability or the terms will be favorable.
The terms of the Preferred Stock of the Company affords each preferred holder
the right to "put" the Preferred Stock to the Company at $16.50 per share for
the period commencing July 1, 1999 and ending on September 28, 1999. The Company
will fund any cash required in connection with the exercise of the put option
from funds from operations, cash generated from mortgage financing and cash on
hand; and if necessary, the Company will borrow funds on a secured or unsecured
basis for such purpose. Although no commitments for financing has been obtained,
management believes that such financing will be available on competitive terms;
if required, including the likelihood that a new credit facility will be
completed by that date.
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 obtainable from mortgage
financing, will provide funds for future 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, 1999, there are two
locations which require additional remediation efforts. These two locations have
a total of approximately $20,000 remaining to be expended towards the $350,000
maximum. Accordingly, the approximate $795,000 still held by the escrow agent is
adequate to cover the additional environmental costs and a significant portion
is expected to be returned to the Company.
Management believes there will be no effect on the Company's liquidity relating
to the year 2000 issue because during 1997 the Company acquired computer
hardware and software to handle the Company's accounting and real estate
management. The computer software is capable of handling all issues relating to
the year 2000. In addition, the Company's business will not be adversely
affected in any material way if its suppliers or lessees encounter year 2000
problems.
Results of Operations
Three months ended March 31, 1999 and 1998
Rental income increased by $516,638 to $2,040,176 for the three months ended
March 31, 1999 as compared to the three months ended March 31, 1998 resulting
primarily from the acquisition of four properties in 1999 and four properties in
1998.
On September 6, 1998, the Company received a payoff in full of a related party
mortgage receivable. Interest income from this mortgage amounted to $205,620 for
the three months ended March 31, 1998.
Interest and other income increased by $142,607 to $158,405, due to an increase
in cash and cash equivalents available for investment. Such investments were
made using the net proceeds realized by the Company from the sale of common
shares through a rights offering (which was consummated in June, 1998) and from
the approximate $7,600,000 the Company received from the payoff of a mortgage
receivable in September 1998.
A $91,923 increase in depreciation and amortization expense to $390,124 results
primarily from depreciation on the eight properties acquired during 1999 and
1998.
The increase in interest-mortgages payable from $424,776 in the 1998 three month
period to $568,765 in the 1999 three month period is due to mortgages placed on
three of the properties acquired during 1998.
Interest-bank amounted to $110,611 for the three months ended March 31, 1998
resulting from borrowings under the Credit Agreement. Borrowings were made to
facilitate property acquisitions.
General and administrative expenses increased by $59,621 to $212,295 for the
three months ended March 31, 1999. These increases were due to a combination of
factors, including a new employee, as the Company's level of activity increased.
Item 3. - Quantitative and Qualitative Disclosures About Market Risks
The Company has considered the effects of derivatives and exposures to market
risk relating to interest rate, foreign currency exchange rate, commodity price
and equity price risk. The Company has assessed the market risk for its variable
rate debt and variable rate mortgage receivables and believes that a one-percent
change in interest rates would not have a material effect on net income.
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, 1999.
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, 1999 /s/ Matthew Gould
- ------------ -----------------
Date Matthew Gould
President
May 13, 1999 /s/ David W. Kalish
- ------------ -------------------
Date David W. Kalish
Vice President and
Chief Financial Officer