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 September 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.
As of November 1, 1997, the Registrant had 1,557,950 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
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Assets
Real estate investments, at cost
Land $10,598,515 $11,040,590
Buildings 33,029,157 33,695,317
---------- ----------
43,627,672 44,735,907
Less accumulated depreciation 2,301,689 1,846,694
--------- ---------
41,325,983 42,889,213
Mortgages receivable-less unamortized
discount-(substantially all from
related parties) 5,942,138 6,049,033
Cash and cash equivalents 1,843,879 2,478,580
Unbilled rent receivable 563,403 304,828
Rent, interest, deposits and
other receivables 318,283 66,908
Investment in BRT Realty Trust-
(related party) 274,188 199,068
Deferred financing costs 431,697 480,640
Other 62,866 54,718
------ ------
Total assets $50,762,437 $52,522,988
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Mortgages payable $ 16,283,523 $16,846,921
Note payable-bank 2,000,000 3,900,000
Accrued expenses and other liabilities 469,353 475,109
Dividends payable 786,805 765,603
------- -------
Total liabilities 19,539,681 21,987,633
---------- ----------
Commitments and contingencies - -
Minority interest in subsidiary - 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 13,067,750 12,950,792
---------- ----------
Stockholders' equity:
Common stock, $1 par value;
25,000,000 shares authorized;
1,544,314 and 1,473,642
shares issued and outstanding 1,544,314 1,473,642
Paid-in capital 14,268,741 13,650,737
Net unrealized gain on
available-for-sale securities 172,793 97,673
Accumulated undistributed net income 2,169,158 2,220,789
--------- ---------
Total stockholders' equity 18,155,006 17,442,841
---------- ----------
Total liabilities and stockholders'equity $50,762,437 $52,522,988
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rental income $1,267,217 $1,247,777 $3,949,729 $2,841,346
Interest from related parties 207,596 301,591 625,996 921,462
Interest and other income 17,703 44,522 50,150 214,023
------ ------ ------ -------
1,492,516 1,593,890 4,625,875 3,976,831
--------- --------- --------- ---------
Expenses:
Depreciation and amortization 252,476 187,699 754,580 483,575
Interest - mortgages payable 368,788 216,331 1,157,027 557,880
Interest - bank 25,635 15,418 96,771 15,418
Leasehold rent 72,208 72,208 216,625 216,625
General and administrative 150,119 161,010 484,019 503,387
Provision for valuation adjustment
of real estate - 145,000 - 459,000
------- ------- -------- -------
869,226 797,666 2,709,022 2,235,885
------- ------- --------- ---------
Income before gain on sale of real
estate and minority interest 623,290 796,224 1,916,853 1,740,946
Gain on sale of real estate 599,251 - 599,251 -
------- ------- ------- -------
Income before minority interest 1,222,541 796,224 2,516,104 1,740,946
Minority interest (217,532) (5,249) (230,839) (5,249)
-------- ------ -------- ------
Net income $1,005,009 $ 790,975 $2,285,265 $1,735,697
========== =========== ========== ==========
Calculation of net income applicable
to common stockholders:
Net income $1,005,009 $ 790,975 $2,285,265 $1,735,697
Less: dividends and accretion
on preferred stock 362,613 362,147 1,087,488 1,086,094
------- ------- --------- ---------
Net income applicable to
common stockholders $ 642,396 $ 428,828 $1,197,777 $ 649,603
=========== ============ ========== ==========
Weighted average number of
common shares outstanding 1,535,982 1,457,273 1,511,042 1,439,051
========= ========= ========= =========
Net income per common share (Note 2) $ .42 $ .29 $ .79 $ .45
========== ============= =========== ===========
Cash distributions per share:
Common Stock $ .30 $ .30 $ .90 $ .90
=========== ============= =========== ===========
Preferred Stock $ .40 $ .40 $ 1.20 $ 1.20
=========== ============= =========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
For the nine month period ended September 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
--------- -------- --------------- ------------ -------
<S> <C> <C> <C> <C>
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 - - - 2,285,265 2,285,265
Distributions -
common stock - - - (1,366,365) (1,366,365)
Distributions -
preferred stock - - - (970,531) (970,531)
Accretion on
preferred stock - (116,958) - - (116,958)
Exercise of options 25,500 207,188 - - 232,688
Shares issued through
dividend reinvestment
plan 45,172 527,774 - - 572,946
Net unrealized gain
on available-for-sale
securities - - 75,120 - 75,120
---------- ---------- ---------- --------- ----------
Balances,
September 30, 1997 $1,544,314 $14,268,741 $ 172,793 $ 2,169,158 $18,155,006
========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,285,265 $ 1,735,697
Adjustments to reconcile net income
to net cash provided by operating activities:
Gain on sale of real estate (599,251) -
(Increase) in rental income from straight-lining of rent (258,575) -
Provision for valuation adjustment of real estate - 459,000
Depreciation and amortization 754,580 483,575
Minority interest 230,839 5,249
Changes in assets and liabilities:
(Increase) in rent, interest,
deposits and other receivables (259,523) (109,182)
Increase (decrease) in accrued expenses and other liabilities (5,756) 176,441
------ -------
Net cash provided by operating activities 2,147,579 2,750,780
--------- ---------
Cash flows from investing activities:
Additions to real estate (2,832,231) (11,442,313)
Net proceeds from sale of real estate 4,347,603 -
Collection of mortgages receivable -
(including $86,466 and $934,984
from related parties) 106,895 954,066
Collection of senior secured note
receivable - BRT Realty Trust - related party - 528,575
Sale of U.S. Government
obligations and securities, net - 569,598
Investment by minority interest in subsidiary - 167,980
Payments to minority interest by subsidiary (396,333) (30,757)
Other 54,332 (2,248)
Net cash provided by (used in) investing activities 1,280,266 (9,255,099)
--------- ----------
Cash flows from financing activities:
Proceeds from mortgages payable 1,600,000 7,125,000
Repayment of mortgages payable (2,163,398) (76,955)
Repayments on note payable-bank (1,900,000) -
Payment of financing costs (89,088) (204,269)
Exercise of stock options 232,688 205,312
Cash distributions - common stock (1,345,163) (1,288,008)
Cash distributions - preferred stock (970,531) (970,531)
Issuance of shares through
dividend reinvestment plan 572,946 238,511
------- -------
Net cash provided by (used in) financing activities (4,062,546) 5,029,060
---------- ---------
Net (decrease) increase in cash
and cash equivalents (634,701) (1,475,259)
Cash and cash equivalents at beginning of period 2,478,580 3,844,409
--------- ---------
Cash and cash equivalents at end of period $1,843,879 $2,369,150
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest expense $ 1,272,646 $ 549,524
Cash paid during the period for income taxes 17,035 59,444
Supplemental schedule of noncash
investing and financing activities:
Accretion on preferred stock 116,958 115,563
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
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
September 30, 1997 and for the nine and three months ended September 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 nine and three months ended September
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 (see Note 5). 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, 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 for the primary
earnings per common share computation for the nine and three month periods ended
September 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.
<PAGE>
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 August 25, 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 October 1, 1997 to stockholders of record on
September 17, 1997.
Note 4 - Stock Options
Options to purchase a total of 25,500 shares of the Company's common stock
at $9.125 per share were exercised in September and June 1997. The options had
been granted under the 1989 Stock Option Plan.
Note 5 - Sale of Real Estate
On August 5, 1997, the property owned by a limited liability company in
which the Company is a significant member was sold and the limited liability
company was liquidated. A gain of approximately $599,000 was realized on the
sale. The Company's share of the gain is approximately $384,000.
Note 6 - Financial Accounting Standards Board Statement No. 131
In June, 1997 the Financial Accounting Standards Board issued Statement No.
131,"Disclosure about segments of an enterprise and Related Information" which
is effective for financial statements issued for periods beginning after
December 15, 1997. Statement No. 131 requires disclosures about segments of
an enterprise and related information regarding the different types of business
activities in which an enterprise engages and the different economic
environments in which it operates. The Company does not believe that the
implementation of Statement No. 131 will have a material impact on its financial
statements.
<PAGE>
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 $7,000,000 was available at September 30,
1997) and funds obtainable from mortgages to be secured by real estate
investments.
On August 5, 1997, the property owned by a limited liability company in
which the Company is a significant member was sold and the limited liability
company was liquidated. A gain of approximately $599,000 was realized on the
sale. The Company's share of the gain was approximately $384,000. A portion of
the net cash proceeds distributed to the Company by the limited liability
company was used to pay off $1,050,626 under the Credit Agreement, (defined
below), the outstanding balance at that time.
In September 1997, the Company purchased an additional property for a
consideration of approximately $2,830,000. The Company borrowed $2,700,000 under
the Credit Agreement ($700,000 has since been repaid with cash provided by
operations) to consumate the purchase.
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 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 Credit
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 and the Company's cash position will provide adequate funds for cash
distributions to shareholders and operating expenses. These sources of funds, as
well as funds available under the Credit Agreement, will provide funds for
future property acquisitions. 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 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. The escrow agent held approximately
$881,000 as of September 30, 1997, which the Company deems adequate to cover any
additional environmental costs.
<PAGE>
Results of Operations
Nine and three months ended September 30, 1997 and 1996
As a result of the acquisition of five properties in 1996 and one property
in 1997 rental income increased by $1,108,383 to $3,949,729 for the nine months
ended September 30, 1997 as compared to the nine months ended September 30,
1996. The properties acquired in 1996 were acquired at various times between
April and November 1996; accordingly, two of such properties (purchased in the
last quarter of 1996), and the property acquired in 1997, did not contribute to
rental income in the 1996 nine month period, and three of such properties
contributed to rental income for only a portion of the 1996 nine month period.
Rental income for the 1997 nine month period was negatively affected by the sale
of three properties, one in January 1997, one in May 1997 and the third, and
most material, in August 1997. The property acquisitions and dispositions
referred to above, also affected rental income for the quarter ended September
30, 1997 as compared to the quarter ended September 30, 1996. Rental income for
the 1997 quarter was $19,440 greater than the 1996 quarter. The primary reasons
for rental income in the third quarter of 1997 not reflecting a greater increase
as compared to the third quarter of 1996 are the property sale in early August
1997, the disposition of two other properties in January 1997 and May 1997 and
the greater impact of straight-lining of rents during the September 30, 1996
quarter.
The decrease in interest income from related parties of $295,466 from
$921,462 in the nine months ended September 30, 1996 to $625,996 in the 1997
nine month period and the decrease of $93,995 from $301,591 in the three months
ended September 30, 1996 to $207,596 in the current three month period is
substantially due to the payoff in full of a senior note receivable during
August 1996.
Interest and other income decreased to $50,150 in the current nine month
period from $214,023 in the prior nine month period and to $17,703 in the
current three month period from $44,522 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 securities, the proceeds
of which were used to purchase properties.
Increases in depreciation and amortization expense of $271,005 and $64,777
for the nine and three months ended September 30, 1997 to $754,580 and $252,476
results primarily from depreciation on properties acquired during 1996. Also
contributing to the increase was the amortization of capitalized costs incurred
in connection with the Company's credit facility and placing mortgages on its
properties.
The increase in interest-mortgages payable to $1,157,027 and $368,788 in
the current nine and three month periods from $557,880 and $216,331 in the prior
nine and three month periods is due to interest paid on mortgages placed on
properties acquired during 1996. Interest - bank note payable amounted to
$96,771 and $25,635 during the nine and three months ended September 30, 1997
resulting from borrowings under the Credit Agreement. Such interest amounted to
$15,418 during both of the 1996 comparable periods. Borrowings under the Credit
Agreement were made to facilitate property acquisitions.
During the nine and three months ended September 30, 1996 the Company
determined that the estimated fair value of certain of its properties were lower
than the carrying amount and thus recorded a provision for valuation adjustment
for the difference. The valuation adjustment was $459,000 for the nine months
ended September 30, 1996, covering three properties and $145,000 for the three
months ended September 30, 1996 covering one property. Two of these properties
were sold during the nine months ended September 30, 1997 and one property is
vacant. There were no comparable provisions taken in 1997.
On August 5, 1997, the property owned by a limited liability company in
which the Company is a significant member was sold and a gain of $599,251 was
realized on the sale. The Company's share of the gain is $383,915 (after the
minority interest share of the gain of $215,336).
<PAGE>
Part II - Other Information
Item 6. - Exhibits and Reports on Form 8-K
No Form 8-Ks were filed during the quarter ended September 30, 1997.
<PAGE>
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)
November 13, 1997 /s/ Matthew Gould
Date Matthew Gould
President
November 13, 1997 /s/ David W. Kalish
Date David W. Kalish
Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000712770
<NAME> ONE LIBERTY PROPERTIES, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,844
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 50,762
<CURRENT-LIABILITIES> 0
<BONDS> 16,284
13,068
0
<COMMON> 1,544
<OTHER-SE> 16,611
<TOTAL-LIABILITY-AND-EQUITY> 50,762
<SALES> 0
<TOTAL-REVENUES> 4,626
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,709
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,285
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,285
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,285
<EPS-PRIMARY> .79
<EPS-DILUTED> .79
</TABLE>
