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, 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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
60 Cutter Mill Road, Great Neck, New York 11021
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516)466-3100
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Indicate the number of shares outstanding of each of the
issuer's classes of stock, as of the latest practicable date.
As of August 1, 1999, the Registrant had 2,956,110 shares of
Common Stock and 798,726 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,
1999 1998
---- ----
(Unaudited)
Assets
Real estate investments, at cost
Land $16,723,446 $14,466,202
Buildings 58,037,361 49,083,387
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74,760,807 63,549,589
Less accumulated depreciation 4,431,200 3,718,653
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70,329,607 59,830,936
Mortgage receivable 218,008 228,383
Cash and cash equivalents 12,038,620 19,089,625
Unbilled rent receivable 1,449,262 1,165,244
Rent, interest, deposits and
other receivables 395,867 707,959
Investment in BRT Realty Trust-(related party) 249,774 184,044
Deferred financing costs 782,406 661,185
Other (including available-for-sale securities of
$519,954 and $729,661) 602,703 810,524
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Total assets $86,066,247 $82,677,900
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Mortgages payable $32,042,664 $29,422,491
Accrued expenses and other liabilities 612,637 332,211
Dividends payable 1,207,094 1,205,571
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Total liabilities 33,862,395 30,960,273
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Commitments and contingencies - -
Minority interest in subsidiary (1,253) (2,377)
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Redeemable convertible preferred stock, $1 par value; $1.60 cumulative annual
dividend; 2,300,000 shares authorized; 800,626 and 806,376 shares issued;
liquidation and redemption values of $16.50 13,210,329 13,225,418
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Stockholders' equity:
Common stock, $1 par value;
25,000,000 shares authorized;
2,956,146 and 2,940,201
shares issued and outstanding 2,956,146 2,940,201
Paid-in capital 31,061,448 30,965,164
Accumulated other comprehensive income - net
unrealized gain on available-for-sale securities 152,118 99,512
Accumulated undistributed net income 4,825,064 4,489,709
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Total stockholders' equity 38,994,776 38,494,586
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Total liabilities and stockholders' equity $86,066,247 $82,677,900
=========== ===========
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,
----------------------- ----------------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues:
Rental income $2,221,817 $ 1,744,317 $ 4,261,993 $ 3,267,855
Interest from related parties - 204,235 - 409,855
Interest and other income 949,854 33,043 1,108,259 48,841
------- ------ --------- ------
3,171,671 1,981,595 5,370,252 3,726,551
--------- --------- --------- ---------
Expenses:
Depreciation and amortization 415,536 339,921 805,660 638,122
Interest - mortgages payable 617,144 513,641 1,185,909 938,417
Interest - bank - 147,302 - 257,913
Leasehold rent 72,209 72,209 144,417 144,417
General and administrative 264,607 177,641 476,902 330,315
------- ------- ------- -------
1,369,496 1,250,714 2,612,888 2,309,184
------- ------- ------- -------
Income before minority interest 1,802,175 730,881 2,757,364 1,417,367
Minority interest (4,109) (4,044) (8,323) (4,044)
------- ------ ------- -------
Net income $1,798,066 $ 726,837 $2,749,041 $1,413,323
========== ========== ========== ==========
Calculation of net income applicable to common stockholders:
Net income $1,798,066 $ 726,837 $2,749,041 $ 1,413,323
Less: dividends and accretion
on preferred stock 359,360 362,966 721,722 725,814
------- ------- ------- -------
Net income applicable to
common stockholders $1,438,706 $ 363,871 $2,027,319 $ 687,509
========== =========== ========== ===========
Weighted average number of common shares outstanding:
Basic 2,956,146 1,719,027 2,951,356 1,647,061
========= ========= ========= =========
Diluted 2,956,791 1,719,763 2,951,679 1,648,482
========= ========= ========= =========
Net income per common share:
Basic $ .49 $ .21 $ .69 $ .42
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Diluted $ .49 $ .21 $ .69 $ .42
============= ============= ============= =============
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, 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)
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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 - - - (1,770,886) (1,770,886)
Distributions -
preferred stock - - - (642,800) (642,800)
Accretion on
preferred stock - (78,922) - - (78,922)
Shares issued through
dividend reinvestment
plan 15,945 175,206 - - 191,151
Net income - - - 2,749,041 2,749,041
Other comprehensive income-
net unrealized gain on available-
for-sale securities - - 52,606 - 52,606
------
Comprehensive income - - - - 2,801,647
---------- ------------ ---------- ----------- -----------
Balances, June 30, 1999 $2,956,146 $31,061,448 $ 152,118 $ 4,825,064 $38,994,776
========== =========== ========== =========== ===========
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 2,749,041 $ 1,413,323
Adjustments to reconcile net income
to net cash provided by operating activities:
Increase in rental income from straight-lining of rent (284,018) (242,703)
Depreciation and amortization 805,660 638,122
Minority interest 8,323 4,044
Changes in assets and liabilities:
Decrease (increase) in rent, interest,
deposits and other receivables 310,207 (150,380)
Increase in accrued expenses and other liabilities 280,426 14,419
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Net cash provided by operating activities 3,869,639 1,676,825
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Cash flows from investing activities:
Additions to real estate (11,211,218) (12,262,210)
Purchase of available-for-sale securities (756,146) (5,286)
Sale of available-for-sale securities 952,729 -
Collection of mortgages receivable -
(including $103,436 from related party in 1998) 10,375 117,727
Payments to minority interest by subsidiary (7,200) (1,750)
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Net cash used in investing activities (11,011,460) (12,151,519)
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Cash flows from financing activities:
Proceeds from and assumption of mortgages payable 2,865,329 6,975,000
Repayment of mortgages payable (245,156) (161,985)
Repayment of bank borrowings - (4,605,029)
Payment of financing costs (214,334) (280,012)
Cash distributions - common stock (1,769,363) (940,904)
Cash distributions - preferred stock (642,800) (647,020)
Proceeds from issuance of shares through rights offering - 17,470,987
Issuance of shares through dividend reinvestment plan 191,151 353,125
Repurchase of preferred stock, which was cancelled (94,011) -
-------- ---------------
Net cash provided by financing activities 90,816 18,164,162
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Net (decrease) increase in cash
and cash equivalents (7,051,005) 7,689,468
Cash and cash equivalents at beginning of period 19,089,625 1,606,364
---------- ----------
Cash and cash equivalents at end of period $ 12,038,620 $ 9,295,832
============ ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest expense $ 1,188,462 $ 1,284,278
Cash paid during the period for income taxes 34,892 11,907
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, 1999 and for the six and three months ended June 30, 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 six and three months ended June 30, 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 balances 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 six and three months ended June 30, 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 six and three months ended June 30, 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 (323 and 645 for the six and three months
ended June 30, 1999 and 1,421 and 736 for the six and three months ended June
30, 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 80,500 shares of Common Stock at $14.50 and $13.50 per share
(which were granted during March 1998 and 1997, respectively) were not included
in the computation of diluted earnings per share because the exercise price of
these options are greater than the average market price of the common shares as
of June 30, 1999 and, therefore, the effect would be antidilutive.
Note 3 - Preferred and Common Stock Dividend Distributions
On June 9, 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 July 1, 1999 to stockholders of record on June 21,
1999.
Note 4 - Other Income
Included in other income is $792,764 which represents the return to the Company
of unused escrow funds by the escrow agent upon completion of the Company's
responsibility with respect to environmental cleanup at certain locations net
leased to Total Petroleum.
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
($12,038,620 at June 30, 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.
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. During the three months ended June 30,
1999, the Company's obligations were completed and the balance in the escrow
account of $792,764 was returned to the Company by the escrow agent.
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
Six and three months ended June 30, 1999 and 1998
Rental income increased by $994,138 to $4,261,993 and $477,500 to $2,221,817 for
the six and three months ended June 30, 1999 as compared to the six and three
months ended June 30, 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 $409,855 and
$204,235 for the six and three months ended June 30, 1998.
Interest and other income increased by $1,059,418 and $916,811 for the six and
three months ended June 30, 1999 to $1,108,259 and $949,854, of which $792,764
results from the return of unused escrow funds to the Company upon completion of
the Company's responsibility with respect to environmental cleanup at certain
locations net leased to Total Petroleum. Interest and other income also
increased 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.
Increases in depreciation and amortization expense of $167,538 and $75,615 for
the six and three months ended June 30, 1999 to $805,660 and $415,536 results
primarily from depreciation on the eight properties acquired during 1999 and
1998.
The increases in interest-mortgages payable to $1,185,909 and $617,144 for the
six and three months ended June 30, 1999 from $938,417 and $513,641 in the prior
six and three month periods is due to mortgages placed on five of the properties
acquired during 1999 and 1998.
Interest-bank amounted to $257,913 and $147,302 for the six and three months
ended June 30, 1998 resulting from borrowings under the Credit Agreement.
Borrowings were made to facilitate property acquisitions. There was no
comparable expense in the 1999 six and three month periods.
General and administrative expenses increased by $146,587 and $86,966 to
$476,902 and $264,607 for the six and three months ended June 30, 1999. These
increases were due to a combination of factors, including an increase in
professional fees and increased payroll, 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 June 30, 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)
August 12, 1999 /s/ Matthew Gould
- --------------- -----------------
Date Matthew Gould
President
August 12, 1999 /s/ David W. Kalish
- --------------- -------------------
Date David W. Kalish
Vice President and
Chief Financial Officer