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, 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 November 1, 1999, the Registrant had 2,971,592 shares of
Common Stock and 654,758 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,
1999 1998
---- ----
(Unaudited)
<S> <C> <C>
Assets
Real estate investments, at cost
Land $16,638,765 $14,466,202
Buildings 59,269,299 49,083,387
---------- ----------
75,908,064 63,549,589
Less accumulated depreciation 4,754,789 3,718,653
--------- ---------
71,153,275 59,830,936
Mortgage receivable - 228,383
Cash and cash equivalents 12,147,827 19,089,625
Unbilled rent receivable 1,593,109 1,165,244
Rent, interest, deposits and other receivables 760,419 707,959
Investment in BRT Realty Trust-(related party) 268,554 184,044
Deferred financing costs 816,416 661,185
Other (including available-for-sale securities of
$468,115 and $729,661) 536,393 810,524
------- -------
Total assets $87,275,993 $82,677,900
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Mortgages payable $35,882,850 $29,422,491
Accrued expenses and other liabilities 373,366 332,211
Dividends payable 1,152,080 1,205,571
----------- -----------
Total liabilities 37,408,296 30,960,273
---------- ----------
Commitments and contingencies - -
Minority interest in subsidiary (2,432) (2,377)
---------- ----------
Redeemable convertible preferred stock, $1 par value;
$1.60 cumulative annual dividend; 2,300,000
shares authorized; 806,376 shares issued;
liquidation and redemption values of $16.50 (Note 3) - 13,225,418
---------- ----------
Stockholders' equity:
Redeemable convertible preferred stock,
$1 par value; $1.60 cumulative annual
dividend; 2,300,000 shares authorized;
657,558 shares issued; liquidation and
redemption values of $16.50 (Note 3) 10,849,707 -
Common stock, $1 par value; 25,000,000
shares authorized; 2,963,523 and 2,940,201
shares issued and outstanding 2,963,523 2,940,201
Paid-in capital 31,150,806 30,965,164
Accumulated other comprehensive income - net
unrealized gain on available-for-sale securities 107,932 99,512
Accumulated undistributed net income 4,798,161 4,489,709
----------- ----------
Total stockholders' equity 49,870,129 38,494,586
---------- ----------
Total liabilities and stockholders' equity $87,275,993 $82,677,900
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 2,277,203 $ 1,897,958 $ 6,539,196 $ 5,165,813
Interest from related parties - 2,250,459 - 2,660,314
Interest and other income 149,184 129,069 1,257,443 177,910
----------- ----------- ----------- -----------
2,426,387 4,277,486 7,796,639 8,004,037
----------- ----------- ----------- -----------
Expenses:
Depreciation and amortization 417,233 368,827 1,222,893 1,006,949
Interest - mortgages payable 666,943 560,703 1,852,852 1,499,120
Interest - bank - - - 257,913
Leasehold rent 72,208 72,208 216,625 216,625
General and administrative 202,255 168,300 679,157 498,615
Provision for valuation
adjustment of real estate - 156,832 - 156,832
----------- ----------- ----------- ----------
1,358,639 1,326,870 3,971,527 3,636,054
----------- ----------- ----------- ----------
Income before gain on sale of real
estate and minority interest 1,067,748 2,950,616 3,825,112 4,367,983
Gain on sale of real estate 61,652 - 61,652 -
----------- ----------- ----------- ----------
Income before minority interest 1,129,400 2,950,616 3,886,764 4,367,983
Minority interest (4,222) (4,032) (12,545) (8,076)
----------- ----------- ----------- ----------
Net income $1,125,178 $2,946,584 $3,874,219 $4,359,907
=========== =========== =========== ==========
Calculation of net income applicable
to common stockholders:
Net income $1,125,178 $2,946,584 $3,874,219 $4,359,907
Less: dividends and accretion
on preferred stock 263,023 363,085 984,745 1,088,899
----------- ---------- ---------- ----------
Net income applicable to
common stockholders $ 862,155 $2,583,499 $2,889,474 $3,271,008
========== ========== ========== ==========
Weighted average number of common shares outstanding:
Basic 2,963,339 2,933,544 2,955,394 2,080,601
========= ========= ========= =========
Diluted 2,969,279 3,600,784 2,957,819 2,081,548
========= ========= ========= =========
Net income per common share:
Basic $ .29 $ .88 $ .98 $ 1.57
========= ========= ========= =========
Diluted $ .29 $ .82 $ .98 $ 1.57
========= ========= ========= =========
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>
<CAPTION>
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the nine month period ended
September 30, 1999 and the year
ended December 31, 1998
(Unaudited)
Net Unrealized
Gain (loss)on Accumulated
Preferred Common Paid-in Available-for- Undistributed
Stock Stock Capital Sale Securities Net Income Total
----- ----- ------- --------------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
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 - - - - (2,659,943) (2,659,943)
Distributions -
preferred stock - - - - (905,824) (905,824)
Preferred stock - (Note 3) 10,849,707 - - - - 10,849,707
Accretion on
preferred stock - - (78,922) - - (78,922)
Shares issued through
dividend reinvestment plan - 22,910 256,726 - - 279,636
Preferred shares converted
to common stock - 412 7,838 - - 8,250
Net income - - - - 3,874,219 3,874,219
Other comprehensive income-
net unrealized gain on
available-for-sale securities - - - 8,420 - 8,420
---------
Comprehensive income - - - - - 3,882,639
----------- ------------ ----------- -------- ---------- ---------
Balances,
September 30,1999 $10,849,707 $2,963,523 $31,150,806 $ 107,932 $4,798,161 $49,870,129
=========== ============ =========== ========= ========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
--------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,874,219 $ 4,359,907
Adjustments to reconcile net income
to net cash provided by operating activities:
Gain on sale of real estate (61,652) -
Increase in rental income from straight-lining of rent (427,865) (369,581)
Provision for valuation adjustment - 156,832
Depreciation and amortization 1,222,893 1,006,949
Minority interest in earnings of subsidiary 12,545 8,076
Changes in assets and liabilities:
Increase in rent, interest,
deposits and other receivables (39,875) (495,286)
Increase in accrued expenses and other liabilities 41,155 24,853
------ ------
Net cash provided by operating activities 4,621,420 4,691,750
--------- ---------
Cash flows from investing activities:
Additions to real estate (11,499,199) (12,266,772)
Net proceeds from sale of real estate 209,623 -
Purchase of available-for-sale securities (837,726) (628,223)
Net proceeds from sale of available-for-sale securities 1,023,182 281,620
Collection of mortgages receivable -
(including $5,653,413 from related party in 1998) 228,383 5,675,118
Payments to minority interest by subsidiary (12,600) (5,400)
-------- -------
Net cash used in investing activities (10,888,337) (6,943,657)
------------ -----------
Cash flows from financing activities:
Proceeds from mortgages payable 5,775,000 9,236,178
Repayment of mortgages payable (379,970) (254,329)
Repayment of bank borrowings - (4,605,029)
Payment of financing costs (283,906) (359,565)
Cash distributions - common stock (2,713,434) (1,417,099)
Cash distributions - preferred stock (905,824) (970,531)
Proceeds from issuance of shares through rights offering - 17,470,987
Issuance of shares through dividend reinvestment plan 279,636 534,704
Repurchase of preferred stock, which was cancelled (2,446,383) -
----------- -----------
Net cash (used in) provided by financing activities (674,881) 19,635,316
--------- ----------
Net (decrease) increase in cash and cash equivalents (6,941,798) 17,383,409
Cash and cash equivalents at beginning of period 19,089,625 1,606,364
---------- ----------
Cash and cash equivalents at end of period $ 12,147,827 $ 18,989,773
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for interest expense $ 1,855,399 $ 1,855,971
Cash paid during the period for income taxes 38,984 20,429
Supplemental schedule of non cash investing and financing activities:
Assumption of mortgage payable in connection
with purchase of real estate $ 1,065,329 -
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, 1999 and for the nine and three months ended September 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 nine and three months ended September
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 nine and three months ended September 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 nine month periods ended September 30,
1999 and 1998 and the three month period ended September 30, 1999, 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
<PAGE>
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 2 - Earnings Per Common Share (Continued)
-------------------------------------
plus the dilutive effect of the Company's outstanding options (2,425 and 5,940
for the nine and three months ended September 30, 1999 and 947 for the nine
months ended September 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.
However, for the three months ended September 30, 1998, the assumed conversion
of the Preferred Stock is dilutive. Thus, for the three months ended September
30, 1998, diluted earnings per share was determined by dividing net income for
the period by the total of the weighted average number of Common Stock
outstanding plus the dilutive effect of the Company's Preferred Stock using the
if-converted method.
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 exercise price of these options is greater than
the average market price of the common shares as of September 30, 1999 and,
therefore, the effect would be antidilutive.
Note 3 - Preferred Stock
---------------
Pursuant to the Company's certificate of incorporation, as amended, each
preferred shareholder of the Company had a one-time right to "put" the Preferred
Stock to the Company at $16.50 per share for a period of ninety (90) days
commencing July 1, 1999. During this period, preferred shareholders "put"
137,268 preferred shares to the Company for a total payment by the Company of
$2,264,922.
During the nine months ended September 30, 1999 the Company repurchased 11,050
shares of Preferred Stock for an aggregate consideration of $181,461. During
October 1999, an additional 2,800 shares of Preferred Stock was purchased by the
Company.
Pursuant to the Company's certificate of incorporation, as amended, the Company
has the option to redeem the Preferred Stock at $16.50 per share. The preferred
shareholders no longer have any rights to "put" their shares to the Company.
<PAGE>
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 4 - Preferred and Common Stock Dividend Distributions
-------------------------------------------------
On September 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 October 6, 1999 to stockholders of record on
September 30, 1999.
Note 5 - Other Income
------------
Included in other income for the nine months ended September 30, 1999 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, Inc.
<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 and cash equivalents
($12,147,827 at September 30, 1999), cash generated from operating activities,
and funds obtainable from mortgages 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 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.
Pursuant to the Company's certificate of incorporation, as amended, the
preferred shareholders had a right to "put" the preferred stock to the Company
at $16.50 per share for a period of ninety (90) days commencing July 1, 1999.
Preferred shareholders "put" 137,268 shares to the Company and the Company paid
such preferred shareholders a total of $2,264,922. The cash used to make the
payment came from the Company's working capital.
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 hardware and 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.
<PAGE>
Results of Operations
- ---------------------
Nine and three months ended September, 1999 and 1998
- ----------------------------------------------------
Rental income increased by $1,373,383 to $6,539,196 and $379,245 to $2,277,203
for the nine and three months ended September 30, 1999 as compared to the nine
and three months ended September 30, 1998 primarily due to the acquisition of
four properties in 1999 and four properties in 1998.
On September 6, 1998, the Company received a payoff in full of the related party
mortgage receivable, which had previously been acquired at a discount. Included
in interest from related party for the 1998 periods is $2,080,918, which
represents the unamortized balance of the discount. There is no comparable
income item in the 1999 nine and three month periods.
Interest and other income increased by $1,079,533 to $1,257,443 for the nine
month period ended September 30, 1999 of which $792,764 is due to the return of
unused escrow funds 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 in the nine and three month periods due
to interest earned on the increase in cash and cash equivalents (available for
investment). The increase in cash and cash equivalents results from the sale of
common shares by the Company through a rights offering (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 $215,944 and $48,406 for
the nine and three months ended September 30, 1999 to $1,222,893 and $417,233,
respectively, results primarily from depreciation on the eight properties
acquired during 1999 and 1998.
The increases in interest-mortgages payable to $1,852,852 and $666,943 for the
nine and three months ended September 30, 1999 from $1,499,120 and $560,703 in
the prior nine and three month periods is due to mortgages placed on seven of
the properties acquired during 1999 and 1998.
Interest-bank amounted to $257,913 for the nine months ended September 30, 1998
resulting from borrowings under the Credit Agreement. Borrowings under the
Credit Agreement were made to facilitate property acquisitions. There was no
comparable expense in the 1999 nine month period.
<PAGE>
General and administrative expenses increased by $180,542 and $33,955 to
$679,157 and $202,255 for the nine and three months ended September 30, 1999.
These increases were due to a combination of factors, including an increase in
professional fees and increased payroll.
At September 30, 1998 the Company owned three properties which had been leased
to a retail chain of stores. Since the expiration of the initial term of these
leases on December 31, 1996, two of theses stores have been relet (one was sold
in July 1999) and one remains vacant. At September 30, 1998 the Company had
determined that the estimated fair value of these properties were lower than
their carrying amounts and thus, the Company had taken a provision for the
differences. The total provision taken on these three properties amounted to
$156,832 in the nine months ended September 30, 1998. There was no comparable
provision in the nine months ended September 30, 1999.
Gain on sale of real estate during the three months ended September 30, 1999
results from the sale of one of the three properties the Company had taken a
provision on during 1998. The Company sold the property to the lessee and
realized a gain of $61,652 based on the adjusted basis.
<PAGE>
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 September 30, 1999.
<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 10, 1999 /s/ Matthew Gould
- ----------------- -----------------
Date Matthew Gould
President
November 10, 1999 /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-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 12,148
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 87,276
<CURRENT-LIABILITIES> 0
<BONDS> 35,883
10,850
0
<COMMON> 2,964
<OTHER-SE> 36,057
<TOTAL-LIABILITY-AND-EQUITY> 87,276
<SALES> 0
<TOTAL-REVENUES> 7,797
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,972
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,874
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,874
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,874
<EPS-BASIC> .98
<EPS-DILUTED> .98
</TABLE>
