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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
[ X] Annual Report Pursuant to Section l3 or l5(d)
of the Securities Exchange Act of l934
For the fiscal year ended December 31, 1999
[ ] 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.
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(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: (5l6)466-3l00
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Securities registered pursuant to Section
l2(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, par value $1.00 American Stock Exchange
$16.50 Cumulative Convertible
Preferred Stock, par value $1.00 American Stock Exchange
Securities registered pursuant to Section l2(g) of the Act:
NONE
Indicate by check mark whether the Registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].
As of March 2, 2000 the aggregate market value of all voting stock (Common Stock
and Preferred Stock) held by non-affiliates of the Registrant was approximately
$24,014,000.
As of March 2, 2000, the Registrant had 2,979,687 shares of Common Stock and
654,658 shares of $16.50 Cumulative Convertible Preferred Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The proxy statement for the Registrant's Annual Meeting of Stockholders,
scheduled for June 8, 2000, will be filed with the Securities and Exchange
Commission within 120 days after the end of the Registrant's fiscal year covered
by this Form 10-K. The information required by Part III (Item 10-Directors and
Executive Officers of the Registrant, Item 11 -Executive Compensation, Item 12 -
Security Ownership of Certain Beneficial Owners and Management, and Item 13 -
Certain Relationships and Related Transactions) will be incorporated by
reference from the definitive proxy statement to be filed by the Registrant
pursuant to Regulation 14A under the Securities Exchange Act of 1934.
PART I
Item 1. Business
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General
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One Liberty Properties, Inc. (the "Company") is a self administered and self
managed real estate investment trust ("REIT") incorporated under the laws of
Maryland on December 20, 1982. The primary business of the Company is to
acquire, own and manage improved, free standing, commercial real estate operated
by the lessee under a long-term net lease. Its focus has been the acquisition,
ownership and management of improved real property leased to retail businesses
under long-term commercial net leases. The Company intends to continue to
acquire, own and manage improved real property leased to retail businesses under
net leases, but it also intends to expand its activities in the acquisition and
ownership of improved commercial real estate (office buildings and industrial
buildings) net leased to a corporation or government agency. The Company has
acquired in the past, and will continue to acquire properties improved with
multi-family apartment buildings which are leased under a long-term ground lease
to an operator, but such acquisitions will be made only as opportunities arise
and it will not be a focus of the Company's business. Under the typical net
lease and long-term ground lease, rental and other payments to be made by the
lessee are payable without diminution. The lessee, in addition to its rent
obligation, is generally responsible for payment of all charges attributable to
the property, such as real estate taxes, assessments, water and sewer rents and
charges, governmental charges and all utility and other charges incurred in the
operation of the property. The lessee is also generally responsible for
maintaining the property, including ordinary maintenance and repair and
restoration following a casualty or partial condemnation, but it is not unusual
for the lessor to be responsible for structural items, foundation and slab, and
roof repair and/or replacement. Tenant is also generally responsible for
casualty, rent loss and liability insurance. The rental provisions in a net
lease transaction may include, but may not be limited to, rent payable on a
stepped basis (rentals increase at specified intervals), an indexed basis
(rentals increase pursuant to a formula such as the consumer price index), a
percentage basis (minimum rental payments plus additional rentals in the form of
participation in the sales derived from the business conducted at the property),
or a combination of the foregoing.
At December 31, 1999, the Company owned fee title to 42 properties and a
"sandwich" lease position with respect to one property. The 43 properties are
located in 14 states. Since December 31, 1999 and through March 1, 2000, the
Company has acquired fee title to two additional properties and sold one
property. Twenty-four of the 44 properties are net-leased to various retail
operators. Thirteen of the 44 properties are operated as service stations
containing gasoline pumping islands, a service area and a convenience store. All
thirteen "service station" properties are net-leased to a subsidiary of an oil
company. Three of the properties are improved with industrial buildings, two of
which are operated as frozen food warehouses. Three properties currently owned
by the Company are a residential apartment building net leased to an operator,
an industrial/office/training site leased to a local government agency on a net
basis and an office/service/storage site net leased to a telecommunications
company. One property owned by the Company is currently vacant.
Investment Policy
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The Company's business strategy has been focused on acquiring improved,
commercial property subject to a long-term net lease which has scheduled rent
increases. The primary emphasis has been on properties improved with a free
standing building and net-leased on a long term basis to a retail operation. The
Company will continue to acquire free standing commercial property net leased to
retailers. The Company will expand its investment activities by acquiring
commercial properties net leased to corporations or government agencies. In the
acquisition of commercial properties the Company may acquire properties subject
to net leases which have a shorter remaining term than is usual in the typical
retail net lease. The Company's investment policies, as stated in its by-laws,
as amended, are as follows:
Types of Investments - The Company is permitted to invest in any type of real
property, mortgage loans (and in both cases in interests therein) and other
investments of any nature, without limitation, provided such investment does not
adversely affect the Company's ability to qualify as a REIT under the Internal
Revenue Code. No limitation is set on the number of properties or mortgage loans
in which the Company may invest, the amount or percentage of the Company's
assets which may be invested in any specific property or on the concentration of
investments in any geographic area in the United States. The Company may
consider investments in any type of real property and in mortgage loans secured
by real property; however as stated above, the investment policy of the Company
is to invest in improved, commercial real estate under net lease. In prior
years, the Company acquired mortgages receivable for investment. In 1998 the
Company received a payoff in full of a mortgage receivable previously acquired
at a discount. The payoff resulted in the receipt by the Company of $7,582,163,
including amortization of discount of $2,080,918 and $5,501,402 of principal.
The Company has no present plans to invest in mortgage loans secured by real
estate. The Company does not intend to make construction loans or loans secured
by mortgages on undeveloped land. Although it has not done so in the past, the
Company may issue securities in exchange for properties which fit its investment
criteria. The Company pursues a national operating strategy, and does not intend
to purchase properties located outside of the United States and Puerto Rico.
After termination of any lease relating to any of the Company's properties
(either at lease expiration or early termination), the Company will seek to
relet or sell such property in a manner which will maximize the return to the
Company, considering the income and residual potential of such property.
Although the Company acquires properties for long-term investment and does not
engage in the turnover of investments, the Company may consider the sale or
other disposition of any of the properties prior to termination of the relevant
leases if such sale or other disposition appears advantageous. The Company may
take a purchase money mortgage as part payment in lieu of cash in connection
with any sale and may take into account local custom and prevailing market
conditions in negotiating the terms of repayment. It will be the Company's
policy to use any cash realized from the sale or other disposition of
properties, net of required distributions to shareholders to maintain its REIT
status, to pay down amounts due under loan agreements (excluding real estate
mortgage loans), if any, and in the acquisition of additional properties.
Incurrence of Debt - The directors of the Company, in the exercise of their
business judgment, are permitted to determine the level of debt and the terms
and conditions of any financing or refinancing. There is no limitation on the
level of debt which the Company may incur. The Company has in the past and
intends in the future to borrow money, on a secured and unsecured basis. The
proceeds of any borrowings are used for property acquisitions and for working
capital purposes.
The investment objectives of the Company are (i) to protect the Company's
capital, (ii) to provide current income; and (iii) to provide the opportunity
for increases in income and capital appreciation. In evaluating potential net
lease investments, the Company considers, among other factors (i) the intrinsic
value of the property, given its location and use, (ii) local demographics
(population, occupancy levels, rental trends), (iii) the lessee's adequacy from
a financial point of view to meet operational needs and lease obligations, (iv)
the return on equity to the Company, and (v) potential for income and capital
appreciation. The intrinsic value of the property, essentially its location and
local demographics, are given greater weight in the acquisition process than the
tenant's credit worthiness, although the tenant's financial condition is a
factor given consideration in the acquisition process.
From time to time, the Company invests in publicly traded shares of other
REIT's. The Company may invest, on a limited basis, in the shares of an entity
not involved in real estate investments, provided that any such investment does
not adversely affect the Company's ability to qualify as a REIT under the
Internal Revenue Code. Investments by the Company in shares of another entity
are made in such a way so that the Company will not be treated as an investment
company under the Investment Company Act of 1940. The Company has not in the
past invested in the securities of another entity for the purpose of exercising
control, and it has no present plans to invest in the securities of another
entity for such purpose. However, subject to Board of Director approval, the
Company, in the future, may acquire shares of another entity with a view to
gaining control. The Company does not intend to underwrite the securities of
other issuers.
Executive Officers of the Company
The following sets forth information with respect to the executive officers of
the Company:
NAME AGE POSITION WITH THE COMPANY
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Fredric H. Gould 64 Chairman of the Board and Chief
Executive Officer
Jeffrey Fishman 41 President and Chief Operating Officer
Jeffrey Gould 34 Senior Vice President
Matthew Gould 40 Senior Vice President
Israel Rosenzweig 52 Senior Vice President
Simeon Brinberg 66 Vice President
David W. Kalish 53 Vice President and Chief Financial
Officer
Mark H. Lundy 38 Secretary
Seth D. Kobay 45 Vice President and Treasurer
Karen Dunleavy 41 Vice President, Financial
Lawrence G. Ricketts 23 Vice President, Acquisitions
Each of the above listed executive officers will hold office until the next
annual meeting of the Board of Directors, scheduled for June 8, 2000, or until
their respective successors are elected and shall qualify. The information below
sets forth the business experience of the officers of the Company for at least
the past five years.
Fredric H. Gould. Mr. Gould has been Chairman of the Board of the Company since
1989 and became Chief Executive Officer in December, 1999. Mr. Gould has served
as Chairman of the Board of Trustees of BRT Realty Trust, a real estate
investment trust, since 1984 and Chief Executive Officer of BRT Realty Trust
since 1996. Since 1985 Mr. Gould has been an executive officer (currently
Chairman of the Board) of the managing general partner of Gould Investors L.P.,
a limited partnership engaged in the ownership and operation of real properties
and he also serves as a general partner of Gould Investors L.P. He is President
of the advisor to BRT Realty Trust and a director of East Group Properties, Inc.
Jeffrey Fishman. Mr. Fishman has been President and Chief Operating Officer of
the Company since December, 1999. From 1996 to December 1999 Mr. Fishman was the
Senior Managing Director of Cogswell Properties, LLC, a real estate property
owner and manager. For more than five years prior to 1996, he was President of
Britannia Management Services, Inc., a real estate property owner and manager.
Jeffrey Gould. Mr. Gould has been a Vice President of the Company since 1989 and
a Senior Vice President and Director of the Company since December, 1999. Mr.
Gould was Executive Vice President and Chief Operating Officer of BRT from March
1993 to March 1996, and President and Chief Operating Officer since March 1996.
Mr. Gould has served as a Trustee of BRT Realty Trust since March 1997. He is
also a Senior Vice President of the managing general partner of Gould Investors
L.P. since 1996.
Matthew Gould. Mr. Gould served as President and Chief Executive Officer of the
Company from 1989 to December, 1999 and became a Senior Vice President and
Director of the Company in December 1999. He has been a Vice President of BRT
Realty Trust since 1986, a Vice President of the managing general partner of
Gould Investors L.P. from 1986 to 1996 and President since 1996. He also serves
as a Vice President of the advisor to BRT Realty Trust.
Israel Rosenzweig. Mr. Rosenzweig has served as Senior Vice President of the
Company since June, 1997. He has been a Senior Vice President of BRT Realty
Trust since March 1998. From November 1994 to April 1997 he was a Senior Vice
President and Chief Lending Officer of Bankers Federal Savings and Loan
Association. For more than five years prior to March 1995, he served as
President of BRT Realty Trust. He also serves as a Vice President of the
managing general partner of Gould Investors L.P. Mr. Rosenzweig is a director of
Nautica Enterprises, Inc.
Simeon Brinberg. Mr. Brinberg has served as Vice President of the Company since
1989. He has been Secretary of BRT Realty Trust since 1983, a Senior Vice
President of BRT Realty Trust since 1988 and a Vice President of the managing
general partner of Gould Investors L.P. since 1988. He is a director of CK Witco
Corporation.
David W. Kalish. Mr. Kalish has served as Vice President and Chief Financial
Officer of the Company since June 1990. Mr. Kalish is also Senior Vice
President, Finance of BRT Realty Trust and Vice President and Chief Financial
Officer of the managing general partner of Gould Investors L.P. For more than
five years prior to June 1990, Mr. Kalish, a certified public accountant, was a
partner of Buchbinder Tunick & Company, certified public accountants.
Mark H. Lundy. In addition to being Secretary of the Company since June 1993,
Mr. Lundy has been a Vice President of BRT since April 1993 and a Vice President
of the managing general partner of Gould Investors L.P. since July 1990. Prior
to July 1990 he was associated with the law firm of Dickstein, Shapiro and
Moran, Washington, D.C.
Seth D. Kobay. Mr. Kobay has been Vice President and Treasurer of the Company
since August 1994. He has been Vice President and Treasurer of BRT Realty Trust
since March 1994 and Vice President of Operations of the managing general
partner of Gould Investors L.P. since 1986.
Karen Dunleavy. Ms. Dunleavy has been Vice President, Financial of the Company
since August 1994. She has served as Treasurer of the managing general partner
of Gould Investors L.P. since 1986.
Lawrence G. Ricketts. Mr. Ricketts has been Vice President, Acquisitions of the
Company since December 1999 and has been employed by the Company since January
1999. From May 1998 to January, 1999 he was employed as an analyst by BRT
Funding Corp. He graduated from Fairfield University in May 1998.
Matthew Gould and Jeffrey Gould are Fredric H. Gould's sons.
Item 2. Properties
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General
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The Company, at December 31, 1999, owned fee title to 42 properties and a
"sandwich" lease position with respect to one property. Since December 31, 1999,
through March 1, 2000, the Company has acquired fee title to two additional
properties and sold one property to its lessee. The 44 properties are located in
14 states. The 44 properties referred to are herein collectively called the
"Properties" and individually a "Property".
Twenty-four of the forty-four Properties owned by the Company are net-leased to
various retail operators under long term leases. Each location has adequate
parking for the building constructed on the site. Most of the retail tenants
operate on a national basis and include, among others, The Kroger Company,
Barnes & Noble Superstores, Inc., Hollywood Entertainment, Inc., Payless Shoe
Source, Inc., Ames Department Stores, Office Max, Inc. and Petco Animal
Supplies, Inc. Thirteen of the forty-four properties are service stations leased
to Total Petroleum Inc. Each service station contains gasoline pumping islands,
a service area and a convenience store. Three of the properties are industrial
buildings, two of which are used as frozen food warehouses. One of the
properties is a residential apartment building containing 126 rental units and
six retail stores, and one property is an industrial/office/training building
net leased to a local government agency. Another property is an
office/service/storage site net leased to a telecommunications company. One
building was vacated by the tenant at the expiration of its lease (1996) and is
currently vacant. Occupancy rate for the properties has been in excess of 95%
for fiscal years 1999, 1998, 1997, 1996 and 1995. The current occupancy rate is
over 99%.
It is the policy of the Company to obtain mortgages on substantially all of its
properties. In most instances, the mortgage financing is consummated at the time
of acquisition of a property or committed for prior to or soon after
acquisition. By obtaining mortgage commitments at or about the time a property
is acquired, the Company can determine at or about the time of acquisition the
return which will be realized by the Company from ownership of the property
during the term (or a significant portion of the term) of the lease. On
occasion, the Company acquires a property subject to a mortgage or elects not to
obtain mortgage financing on a specific property.
At December 31, 1999, the Company had placed mortgages on sixteen of the 43
properties it owned as of that date (none of the service stations leased to
Total Petroleum Inc. is subject to a mortgage). At December 31, 1999, the
Company had $35,734,742 principal amount of mortgages outstanding, bearing
interest at rates ranging from 6.9% to 9.1%. Substantially all mortgages contain
prepayment penalties. The following table sets forth scheduled principal
mortgage payments due for the properties owned as of December 31, 1999 (assuming
no payment is made on principal on any outstanding mortgage in advance of its
due date):
PRINCIPAL PAYMENTS DUE
YEAR IN YEAR INDICATED
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2000 $ 1,463,633
2001 646,573
2002 1,984,502
2003 9,366,412
2004 3,405,003
2005 and thereafter 18,868,619
Significant Properties
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As of December 31, 1999, none of the Properties owned by the Company either had
a book value equal to or greater than 10% of the total assets of the Company or
revenues which accounted for more than 10% of the Company's aggregate gross
revenues. If the Properties leased by Total Petroleum, Inc. (thirteen separate
properties) are considered as one property then Total Petroleum accounted for
more than 10% of the Company's aggregate revenues in 1999. The following sets
forth the information concerning the Total Petroleum leases.
Description of Total Petroleum Properties
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The Total Petroleum Properties are all service stations and include gasoline
pumping islands, a service area and a retail building used as a convenience
store.
Description of Total Petroleum Leases
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Lease Term The Total Petroleum Properties have 13 separate but identical leases
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dated as of May 15, 1991 (Total Petroleum Leases). The primary lease term for
the Total Petroleum Properties is 20 years ending on May 31, 2011. Total
Petroleum has the right to extend the leases for two 10 year renewal terms, but
the renewal options can only be exercised on an all or none basis. The Total
Petroleum Leases contain cross default provisions which provide that on a
monetary default resulting in the termination of a lease, the Landlord has a
right to terminate any or all of the other leases.
Amounts Payable under the Total Petroleum Leases The combined annual rent for
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all 13 properties is $968,022 through May 14, 2000, increasing by 3% each May
15th throughout the term of the lease. The leases are net leases, which requires
Total Petroleum to pay all real estate taxes, assessments, and all utility
charges.
Maintenance and Modifications Total Petroleum is required, at its expense, to
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maintain the Total Petroleum Properties in good repair and is responsible to
keep each property in reasonably clean condition. The Tenant at its sole expense
may make any non-structural alterations, additions, replacements or improvements
to the property without the Landlord's consent. The Tenant is required to obtain
the Landlord's prior written consent for structural alterations, additions,
replacements or improvements which consent will not be unreasonably withheld.
Insurance Total Petroleum is required to maintain insurance at its expense
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providing for fire with standard extended risk coverage to the extent of the
full replacement cost. So long as the Tenant's net worth exceeds $100,000,000
the deductible may be that which is provided in Total Petroleum's master
corporate insurance policy, and if its net worth falls below $100,000,000 then
the deductible shall not exceed $250,000 without Landlord's consent. In
Management's opinion the Total Petroleum Properties are adequately covered by
insurance.
Damage to or Condemnation of Property If any of the Total Petroleum Properties
- --------------------------------------
is damaged or destroyed by fire or other casualty there is to be no rent
abatement and Total Petroleum is required to repair and restore the premises in
a reasonable diligent manner. If, however, the premises are rendered
untenantable, Total Petroleum may terminate the lease in which event it shall
pay to the Company an amount sufficient to restore the premises to the condition
existing as of the date the lease was executed, reasonable wear and tear
excepted.
If all or any part of any of the properties is taken by condemnation so as to
render the remaining portion of the property unsuitable for Tenant's business,
then the rent due under the lease shall be equitably adjusted until such time as
the Tenant provides Landlord with written notice that it elects to terminate the
lease. If however, the Tenant does not vacate the property within ninety days of
such taking then it is conclusively presumed that such taking is not extensive
enough to render the premises unsuitable for Total Petroleum's business. In the
event of a taking, damages awarded are payable as follows: (i) Total Petroleum
is entitled to a portion of the award attributable to the value of its leasehold
and (ii) Landlord is entitled to the value of its reversion. In allocating
between the value of the leasehold and the reversion, the value of improvements
and betterments made by the Tenant is to be equitably divided between leasehold
and reversion. Each party is entitled to file a claim in any condemnation
proceeding.
Option to Purchase Total Petroleum has been granted an option to purchase each
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location at fair market value, excluding the value of the improvements made by
it. This option may be exercised during the last six months of the term of the
lease. Fair market value is to be determined by an appraisal process.
Right of First Refusal Total Petroleum has been granted a right of first refusal
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to purchase a Total Petroleum Property from the Company for the same purchase
price and on the same terms and conditions as a bona fide offer to purchase
received by the Company from an unrelated party which is engaged in, or plans to
engage in, the business of selling petroleum products, which offer the Company
intends to accept.
Right of First Offer Total Petroleum has been granted a right of first offer to
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purchase each location, which may be exercised if, at any time during the term
of the lease, the Company (or its successor) desires to sell the Property to an
unrelated party other than an unrelated party which is engaged in, or plans to
engage in, the business of selling petroleum products. Such purchase would be on
the same term and conditions as those offered by the Company.
Mortgage The Total Petroleum Properties are owned free and clear of mortgages.
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Leases
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The Company's policy has been to enter into long-term leases with its tenants,
and the leases generally afford the tenant one or more renewal options. All
leases are net leases, under which the lessee, in addition to its rental
obligation, is responsible for all charges attributable to the property, such as
real estate taxes, assessments, water and sewer rents and charges. The lessee is
also generally responsible for maintaining the property, including maintenance
and repair and for restoration following a casualty or partial condemnation. It
is not unusual for the Company to be responsible for structural repairs,
including foundation and slab, and for roof repair or replacement.
The following table sets forth scheduled lease expirations for all leases for
the Properties as of December 31, 1999.
Current
Net Rentable Annual % of Rents
Square Feet Rents Under Represented
Year of Lease Number of Leases Subject to Expiring By Expiring
Expiration (1) Expiring Expiring Leases Leases (2) Leases
-------------- -------- --------------- ---------- --------
2000 0 0 $ 0 0%
2001 5 15,416 225,009 2.62%
2002 2 69,072 869,200 10.13%
2003 1 3,062 61,240 0.72%
2004 1 55,370 243,000 2.83%
2005 1 38,448 149,947 1.75%
2006 1 72,897 359,640 4.19%
2007 2 26,550 485,462 5.66%
2008 1 10,361 88,320 1.03%
2009 2 89,000 237,000 2.76%
2010 and thereafter 26 999,052 5,859,731 68.31%
-- ------- --------- ------
42 (3) 1,379,228 $8,578,549 100%
== ========= ========== ====
(1) Lease expirations assume tenants do not exercise existing renewal options.
(2) Reflects monthly base rent provided for under terms of each expiring lease
as in effect on December 31, 1999 multiplied by 12 and does not take into
account any contractual rent escalations.
(3) The above table does not include the Company's one vacant property and one
property that was sold in February 2000.
Competition
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The Company faces competition for the acquisition of net leased properties from
other REITs, investment companies, insurance companies, pension funds and
private individuals, some of whom have greater resources than the Company. The
Company also faces indirect competition from institutions that provide or
arrange for other types of commercial financing, such as traditional mortgage
financing and traditional bank financing. The Company believes that its
management's experience in real estate, mortgage lending, credit underwriting
and transaction structuring allows it to compete effectively for properties.
Environmental Matters
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Under various federal, state and local environmental laws, regulations and
ordinances, current or former owners of real estate, may be required to
investigate and clean up hazardous or toxic chemicals, substances or waste or
petroleum products or waste (collectively, "Hazardous Materials") released on,
under, in or from such property, and may be held liable to governmental entities
or to third parties for certain damage and for investigation and clean-up costs
incurred by such parties in connection with the release or threatened release of
Hazardous Materials. Such laws typically impose responsibility and liability
without regard to whether the owner knew of or was responsible for the presence
of Hazardous Materials, and the liability under such laws has been interpreted
to be joint and several under such circumstances. The Company's leases generally
provide that the tenant is responsible for all environmental liability and for
compliance with environmental regulations relating to the tenant's operations.
Such a contractual arrangement does not eliminate the Company's statutory
liability or preclude claims against the Company by governmental authorities or
persons who are not a party to such an arrangement. Contractual arrangements in
the Company's leases may provide a basis for the Company to recover from the
tenant damages or costs for which the Company has been found liable.
The cost of investigation and clean-up of Hazardous Materials on, under, in or
from property can be substantial, and the fact that the property has had a
release of Hazardous Materials, even if remediated, may adversely affect the
value of the property and the owner's ability to sell or lease the property or
to borrow using the property as collateral. In addition, some environmental laws
create a lien on a property in favor of the government for damages and costs it
incurs in connection with the release or threatened release of Hazardous
Materials, and certain state environmental laws provide that such a lien has
priority over all other encumbrances on the property or that a lien can be
imposed on other property owned by the responsible party. Finally, the presence
of Hazardous Materials on a property could result in a claim by a private party
for personal injury or a claim by a neighboring property owner for property
damage.
Other federal, state and local laws and regulations govern the removal or
encapsulation of asbestos-containing material when such material is in poor
condition or in the event of building remodeling, renovation or demolition.
Still other federal, state and local statutes, regulations and ordinances may
require the removal or upgrading of underground storage tanks that are out of
service or out of compliance. In addition, federal, state and local laws,
regulations and ordinances may impose prohibitions, limitations and operational
standards on, or require permits, approvals and notifications in connection with
the discharge of wastewater and other water pollutants, the emission of air
pollutants and operation of air polluting equipment, the generation and
management of Hazardous Materials, and workplace health and safety.
Non-compliance with environmental or health and safety requirements may also
result in the need to cease or alter operations at a property, which could
affect the financial health of a tenant and its ability to make lease payments.
Furthermore, if there is a violation of such requirement in connection with a
tenant's operations, it is possible that the Company, as the owner of the
property, could be held accountable by governmental authorities for such
violation and could be required to correct the violation.
The Company typically undertakes an investigation of potential environmental
risks when evaluating an acquisition. Where warranted, Phase I and/or Phase II
assessments are performed by independent environmental consulting and
engineering firms. Phase I assessments do not involve subsurface testing,
whereas Phase II assessments involve some degree of soil and/or groundwater
testing. The Company may acquire a property which is known to have had a release
of Hazardous Materials in the past, subject to a determination of the level of
risk and potential cost of remediation. The Company normally requires property
sellers to indemnify it against any environmental problem existing as of the
date of purchase. Additionally, the Company normally structures its leases to
require the tenant to assume all responsibility for environmental compliance or
environmental remediation relating to the tenants operations at the Property.
Except for the environmental remediation undertaken by the Company at the Total
Petroleum Properties, (fully satisfied in 1999) the Company has not been
notified by any governmental authority of or become aware of non-compliance,
liability or other claim in connection with any of the Properties.
In 1991, when the Company entered into lease agreements relating to 13 Total
Petroleum Properties, the Company deposited $2,000,000 with an independent
escrow agent, to cover remediation costs relating to environmental problems
discovered at certain of the Total Petroleum Properties. The agreement between
the Company and Total Petroleum limited the Company's maximum cost to $350,000
per location, with any excess cost being the responsibility of Total Petroleum.
The Company's obligation with respect to the remediation efforts was satisfied
in 1999 and $793,000 held by the escrow agent was returned to the Company in
June, 1999.
Regulations and Insurance
- -------------------------
Americans With Disabilities Act and Similar Laws. Under the Americans with
- ----------------------------------------------------
Disabilities Act of 1990 (the "ADA"), all places of public accommodation are
required to meet certain Federal requirements related to access and use by
disabled persons. These requirements became effective in 1992. Although
management of the Company believes that the Properties are substantially in
compliance with present requirements of the ADA, the Company has not conducted
and does not presently intend to conduct an audit or investigation to determine
its compliance. There can be no assurance that the Company will not incur
additional costs in complying with the ADA.
Additional legislation may place further burdens or restrictions on owners with
respect to access by disabled persons. The ultimate amount of the cost of
compliance with the ADA or such legislation is not currently ascertainable, but
are not expected to have a material effect on the Company.
Insurance. Under substantially all leases, the Company's tenants are responsible
- ---------
for maintaining and paying for adequate insurance on the Properties leased by
them, including all risk insurance for the full replacement cost and liability
insurance. The Company monitors compliance by its tenants with the obligation to
insure the Properties. The Company believes the Properties are covered by
adequate fire, flood, property, and liability insurance.
Item 3. Legal Proceedings
-----------------
Neither the Company nor the Properties are presently subject to any material
litigation nor, to the Company's knowledge, is any material litigation
threatened against the Company or the Properties, other than routine litigation
arising in the ordinary course of business, which collectively are not expected
to have a material adverse effect on the business, financial condition or
results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
There were no matters submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Form 10-K.
Part II
Item 5. Market for the Registrant's Common Equity and Related
-----------------------------------------------------
Stockholder Matters
-------------------
The following table sets forth the high and low prices for the Common Stock and
the Convertible Preferred Stock of the Company as reported by the American Stock
Exchange and the per share cash distributions paid by the Company on the Common
Stock and Preferred Stock during each quarter of the years ended December 31,
1999 and 1998.
COMMON STOCK PREFERRED STOCK
DISTRIBUTIONS DISTRIBUTIONS
1999 HIGH LOW PER SHARE HIGH LOW PER SHARE
- ---- ---- --- --------- ---- --- ----------
First Quarter 12 3/4 12 1/16 $.30 17 3/8 15 15/16 $.40
Second Quarter 13 1/2 12 1/4 $.30 17 1/8 16 3/16 $.40
Third Quarter 15 1/4 13 3/8 $.30 16 13/16 15 3/4 $.40
Fourth Quarter 14 1/2 12 3/4 $.30 16 7/8 15 7/16 $.40
1998
First Quarter 14 3/4 13 5/8 $.30 17 3/4 16 5/8 $.40
Second Quarter 14 5/8 12 3/4 $.30 17 3/4 16 7/16 $.40
Third Quarter 14 11 7/8 $.30 17 1/8 16 5/16 $.40
Fourth Quarter 13 1/8 12 1/4 $.30* 17 16 3/8 $.40*
*A cash distribution of $.30 and $.40 was paid on the Common Stock and Preferred
Stock, respectively, on January 5, 1999. These distributions are reported as
being paid in the fourth quarter of the prior year.
The Common Stock and Convertible Preferred Stock of the Company trade on the
American Stock Exchange, under the symbols OLP and OLP Pr, respectively. As of
February 28, 2000 there were 402 common and 159 preferred stockholders of record
and the Company estimates that at such date there were approximately 1,950 and
1,200 beneficial owners of the Company's Common and Preferred Stock,
respectively.
Item 6. Selected Financial Data
-----------------------
The following are highlights of the Company's operations which are derived from
the audited financial statements of the Company for the years ended December 31,
1999, 1998, 1997, 1996 and 1995.
YEAR ENDED DECEMBER 31,
INCOME STATEMENT DATA 1999 1998 1997 1996 1995
- --------------------- ---- ---- ---- ---- ----
(Amounts in Thousands, Except Per Share Data)
Revenues $10,180 $10,133 $6,285 $5,512 $4,891
Gain on Sale of Real Estate and Securities 126 1,132 599 - -
Provision for Valuation Adjustment - (157) - (659) -
Net Income 4,879 6,418 2,984 2,174 3,096
Calculation of Net Income
Applicable to Common Stockholders:
Net Income 4,879 6,418 2,984 2,174 3,096
Less: Dividends and Accretion on
Preferred Stock 1,247 1,452 1,450 1,448 1,446
Net Income Applicable to Common Stockholders $ 3,632 $4,966 $1,534 $726 $1,650
Weighted Average Number of Common
Shares Outstanding
Basic 2,960 2,297 1,523 1,447 1,409
Diluted 2,963 2,298 1,529 1,459 1,423
Net Income Per Common Share:
Basic $1.23 $2.16 $1.01 $.50 $1.17
Diluted $1.23 $2.16 $1.00 $.50 $1.16
Cash Distributions Per Share of:
Common Stock $1.20 $1.20 $1.20 $1.20 $1.03
Preferred Stock $1.60 $1.60 $1.60 $1.60 $1.60
BALANCE SHEET DATA
- ------------------
Total Real Estate Investments, Net $70,770 $59,831 $48,317 $42,889 $24,254
Investments in US Government
Obligations and Securities - - - - 1,275
Mortgages and Note Receivables - 228 5,943 6,049 7,565
Total Assets 85,949 82,678 57,648 52,523 38,040
Mortgages Payable 35,735 29,422 20,545 16,847 6,590
Total Liabilities 36,145 30,960 26,337 21,988 7,532
Redeemable Convertible Preferred Stock (Note a) - 13,225 13,107 12,951 12,796
Total Stockholders' Equity 49,802 38,495 18,204 17,443 17,712
Note a: Each preferred shareholder of the Company had a one-time right which
expired in September, 1999 to "put" the Preferred Stock to the Company at $16.50
per share. Accordingly, effective September 30, 1999, the preferred stock is
included in "Stockholders' Equity".
Item 7. 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
($11,247,000 at December 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. On March 24, 2000 the Company entered into an agreement with European
American Bank ("EAB") to provide a $15,000,000 revolving credit facility. The
facility will be used primarily to finance the acquisition of commercial real
estate. Borrowings under the facility will bear interest at EAB's prime rate and
there will be an unused facility fee of one-quarter of 1%. The Company will be
required to comply with financial affirmative and negative covenants and the
Company will be required to reduce down the outstanding amount under the
facility upon the sale or refinance of a property for which proceeds drawn down
under the facility were used. The facility is guaranteed by all Company
subsidiaries which own unencumbered properties.
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 shareholders and operating
expenses. These sources of funds, as well as funds obtainable from mortgage
financing and funds available from the credit facility 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.
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 at a cost to the
Company of $2,264,922. The cash used to make the payment came from the Company's
working capital and the 137,268 shares of Preferred Stock were cancelled and
returned.
Results of Operations
- ---------------------
Comparison of Years Ended December 31, 1999 and 1998
- ----------------------------------------------------
Rental income increased by $1,744,000 to $8,831,000 for the year ended December
31, 1999 as compared to the year ended December 31, 1998 primarily due to the
acquisition of four properties in 1999 and the inclusion of rental income on
four properties acquired in 1998 for a full year.
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 year ended December 31, 1998 is
$2,081,000, which represents the unamortized balance of the discount. There is
no comparable income item in the year ended December 31, 1999.
Interest and other income increased by $963,000 to $1,349,000 for the year ended
December 31, 1999 of which $793,000 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 current year due to interest earned on the increase
in cash and cash equivalents available for investment. The increase in cash and
cash equivalents resulted 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.
The increase in depreciation and amortization expense of $267,000 for the year
ended December 31, 1999 to $1,645,000 results primarily from depreciation on the
eight properties acquired during 1999 and 1998.
The increase in interest-mortgages payable to $2,543,000 for the year ended
December 31, 1999 from $2,075,000 for the year ended December 31, 1998 is due to
mortgages placed on seven of the properties acquired during 1999 and 1998.
Interest-bank amounted to $258,000 for the year ended December 31, 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 year ended December 31, 1999.
General and administrative expenses increased by $255,000 to $933,000 for the
year ended December 31, 1999. This increase was due to a combination of factors,
including increases in professional fees, payroll and miscellaneous expenses
related to properties.
During the year ended December 31, 1998 the Company had determined that the
estimated fair value of certain 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 $157,000 in the year
ended December 31, 1998. There was no comparable provision in the year ended
December 31, 1999.
Gain on sale of real estate during the year ended December 31, 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
$62,000 based on the adjusted basis. The 1998 gain on sale of real estate
results from the sale of a property located in the State of Washington. The
Company realized a gain of $1,102,000.
Comparison of Years Ended December 31, 1998 and 1997
- ----------------------------------------------------
Rental income increased by $1,746,000 to $7,087,000 for the year ended December
31, 1998 as compared to the year ended December 31, 1997, resulting primarily
from the acquisition of four properties in 1998 and two properties in 1997,
offset in part by the sale of a property during 1997.
On September 16, 1998, the Company received a payoff in full of a mortgage
receivable, which had previously been acquired at a discount. Included in
interest from related party for the year ended December 31, 1998 is $2,081,000,
which represents the unamortized balance on the discount.
Interest and other income increased by $275,000 to $386,000, due to an increase
in cash and cash equivalents available for investment. Such investments were
made primarily from the investment of 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.
An increase in depreciation and amortization expense of $355,000 to $1,378,000
results primarily from depreciation on six properties acquired during 1998 and
1997, offset in part by the sale of one property during 1997.
The increase in interest-mortgages payable to $2,075,000 in 1998 from $1,517,000
in 1997 is due to mortgages placed on four of the properties acquired during
1998 and 1997, offset in part by the sale of one property during 1997.
Interest-bank note payable amounted to $258,000 for the year ended December 31,
1998, as compared to $210,000 for the year ended December 31, 1997, resulting
from borrowings under the Credit Agreement. Borrowings were made to facilitate
property acquisitions. The $6,985,000 outstanding note balance was repaid June
22, 1998 with a portion of the proceeds realized by the Company from the sale of
common shares through the rights offering.
General and administrative expenses increased by $48,000 to $678,000 for the
year ended December 31, 1998. These increases were due to a combination of
factors as the Company's level of activities increased.
At December 31, 1998 the Company owns 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 these stores have been relet and one remains
vacant. The Company has determined that the estimated fair value of these
properties are lower than their carrying amounts and thus, the Company has taken
a provision for the differences. The total provision taken on these three
properties amounts to $157,000. There was no comparable provision in the year
ended December 31, 1997.
The 1998 gain on sale of real estate results from the sale on October 30, 1998
of a property located in the State of Washington. The Company realized a gain of
$1,102,000.
On August 5, 1997, the property owned by a limited liability company in which
the Company was a majority member was sold and a gain of $599,000 was realized
on the sale. The Company's share of the gain is $384,000 (after deducting the
minority interest share of the gain of $215,000).
Year 2000 Computer Issues
- -------------------------
The Company completed all year 2000 readiness work and experienced no problems.
Item 7a. Qualitative and Quantitative Disclosures About Market Risk
----------------------------------------------------------
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's mortgages payable bear fixed interest rates
and therefore there is no material market risk associated with these
instruments.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
The financial statements and supplementary data listed in Items 14(a)(1) and
14(a)(2) hereof are included herein.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
None
PART III
Information required by Part III (Item 10 - "Directors and Executive Officers of
the Registrant", Item 11 - "Executive Compensation", Item 12 -"Security
Ownership of Certain Beneficial Owners and Management" and Item 13 -"Certain
Relationships and Related Transactions") will be contained in the definitive
proxy statement to be filed within 120 days of the end of the Company's fiscal
year.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
----------------------------------------------------------------
(a) Documents filed as part of this Report:
1. The following financial statements of the Company are included in this
Report on Form 10-K:
Page
----
- Report of Independent Auditors F-1
- Statements:
Consolidated Balance Sheets F-2
Consolidated Statements of Income F-3
Consolidated Statements of Stockholders' Equity F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6 through F-17
2. Financial Statement Schedules:
- Schedule III-Real Estate
and Accumulated Depreciation F-18 through F-19
All other schedules are omitted because they are not applicable or the required
information is shown in the consolidated financial statements or the notes
thereto.
3. Exhibits
--------
3.1 Articles of Incorporation, as amended, of the Company, filed as Exhibit
3.1 to the Company's Form 10-Q for the quarter ended September 30,
1985, which Exhibit is incorporated herein by reference.
3.2 Amendment to Articles of Incorporation, filed as Exhibit to the
Company's Form 10-Q for the quarter ended June 30, 1989, which Exhibit
is incorporated herein by reference.
3.3 Amendment to Articles of Incorporation, filed as an Exhibit to the
Company's Form 10-Q for the quarter ended June 30, 1990, which Exhibit
is incorporated herein by reference.
3.4 By-Laws of the Company, as amended, filed as an Exhibit to the
Company's Form 10-Q for the quarter ended June 30, 1989, which Exhibit
is incorporated herein by reference.
3.5 Amendment to By-Laws filed as an Exhibit to the Company's Form 10-Q
for the quarter ended June 30, 1990, which Exhibit is incorporated
herein by reference.
21.1 Subsidiaries of Registrant (filed herewith)
(b) No reports on Form 8-K were filed by the Registrant during the last
quarter of the period covered by this report.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf of the undersigned, thereunto duly authorized.
ONE LIBERTY PROPERTIES, INC.
Dated: March 28, 2000 By:s/ Jeffrey Fishman
---------------------
Jeffrey Fishman, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant in the capacities indicated on the dates indicated.
Signature Title Date
--------- ----- ----
s/ Fredric H. Gould
- -------------------
Fredric H. Gould Chairman of the March 28, 2000
Board of Directors and
Chief Executive Officer
s/ Jeffrey Fishman
- ------------------
Jeffrey Fishman President and
Chief Operating Officer March 28, 2000
s/ Marshall Rose
- ----------------
Marshall Rose Director March 28, 2000
- ---------------
Joseph A. Amato Director March 28, 2000
s/ Charles Biederman
- --------------------
Charles Biederman Director March 28, 2000
s/ Jeffrey Gould
- ----------------
Jeffrey Gould Director March 28, 2000
s/ Matthew Gould
- ----------------
Matthew Gould Director March 28, 2000
s/ Arthur Hurand
- ----------------
Arthur Hurand Director March 28, 2000
s/ David W. Kalish
- ------------------
David W. Kalish Vice President and
Chief Financial Officer March 28, 2000
Exhibit 21.1
SUBSIDIARIES OF THE COMPANY
Company State of Incorporation
------- ----------------------
OLP Action, Inc. Michigan
OLP Arby's II South Carolina
OLP Iowa, Inc. Delaware
OLP Texas, Inc. Texas
OLP-TSA Georgia, Inc. Georgia
OLP Dixie Drive Houston, Inc. Texas
OLP Greenwood Village, Colorado, Inc. Colorado
OLP Ft. Myers, Inc. Florida
OLP Rabro Drive Corp. New York
OLP Chattanooga, Inc. Tennessee
OLP Columbus, Inc. Ohio
OLP Mesquite, Inc. Texas
OLP South Highway Houston, Inc. Texas
OLP Selden, Inc. New York
OLP Palm Beach, Inc. Florida
OLP New Hyde Park, Inc. New York
OLP Champaign, Inc. Illinois
OLP Batavia, Inc. New York
ONE LIBERTY PROPERTIES, INC.
and SUBSIDIARIES
Consolidated Financial Statements
December 31, 1999
REPORT OF INDEPENDENT AUDITORS
------------------------------
To the Board of Directors and Stockholders of
One Liberty Properties, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of One Liberty
Properties, Inc. and Subsidiaries (the "Company") as of December 31, 1999 and
1998, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1999. Our audits also included the financial statement schedule listed in the
Index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of One
Liberty Properties, Inc. and Subsidiaries at December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
Ernst & Young LLP
New York, New York February 25, 2000, except
for Note 6 (Note Payable - Bank), as to which
the date is March 24, 2000
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Amounts in Thousands, Except Per Share Data)
ASSETS
December 31,
---------------------------
1999 1998
---- ----
Real estate investments, at cost (Notes 3, 4, and 6)
Land $ 16,639 $ 14,466
Buildings 59,269 49,084
--------- ---------
75,908 63,550
Less accumulated depreciation 5,138 3,719
---------- ----------
70,770 59,831
Mortgages receivable - 228
Cash and cash equivalents 11,247 19,090
Unbilled rent receivable 1,737 1,165
Rent, interest, deposits and other receivables 813 708
Investment in BRT Realty Trust - (related party) (Note 2) 240 184
Deferred financing costs 732 661
Other (including available-for-sale securities
of $352 and $730) (Note 2) 410 811
--------- ---------
$ 85,949 $ 82,678
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgages payable (Note 6) $ 35,735 $ 29,422
Accrued expenses and other liabilities 410 332
Dividends payable - 1,206
---------- ---------
Total liabilities 36,145 30,960
---------- ---------
Commitments and contingencies - -
Minority interest in subsidiary (Note 8) 2 (2)
---------- ---------
Redeemable Convertible Preferred Stock,
$1 par value; $1.60 cumulative annual
dividend; 2,300 shares authorized; 806 shares issued;
liquidation and redemption values of $16.50 (Note 7) - 13,225
---------- ---------
Stockholders' equity (Notes 7,9,10 and 11):
Redeemable Convertible Preferred Stock,
$1 par value; $1.60 cumulative annual dividend;
2,300 shares authorized; 655 shares issued;
liquidation and redemption values of $16.50 10,802 -
Common Stock, $1 par value; 25,000 shares authorized;
2,980 and 2,940 shares issued and outstanding 2,980 2,940
Paid-in capital 31,338 30,965
Accumulated other comprehensive income - net unrealized
gain on available-for-sale securities (Note 2) 33 100
Accumulated undistributed net income 4,649 4,490
--------- ---------
Total stockholders' equity 49,802 38,495
--------- ---------
$ 85,949 $ 82,678
========= =========
See accompanying notes.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Amounts in Thousands, Except Per Share Data)
Year Ended December 31,
---------------------------------------
1999 1998 1997
---- ---- ----
Revenues:
Rental income (Note 3) $ 8,831 $ 7,087 $ 5,341
Interest from related party (Note 5) - 2,660 833
Interest and other income 1,349 386 111
-------- -------- --------
10,180 10,133 6,285
------- ------- --------
Expenses:
Depreciation and amortization 1,645 1,378 1,023
Interest - mortgages payable 2,543 2,075 1,517
Interest - bank - 258 210
Leasehold rent 289 289 289
General and administrative (Note 8) 933 678 630
Provision for valuation adjustment of
real estate (Note 4) - 157 -
--------- --------- ---------
5,410 4,835 3,669
--------- --------- ---------
Income before gain on sale and minority interest 4,770 5,298 2,616
-------- -------- --------
Gain on sale of real estate including minority
interest share of $215 in 1997 (Note 3) 62 1,102 599
-
Gain on sale of available-for-sale securities 64 30 -
--------- --------- --------
126 1,132 599
-------- -------- --------
Income before minority interest 4,896 6,430 3,215
Minority interest (17) (12) (231)
---------- ---------- ---------
Net income $ 4,879 $ 6,418 $ 2,984
========== ========= =========
Calculation of net income applicable to common stockholders:
Net income $ 4,879 $ 6,418 $ 2,984
Less dividends and accretion on preferred stock 1,247 1,452 1,450
--------- --------- ---------
Net income applicable to common stockholders $ 3,632 $ 4,966 $ 1,534
======== ======== ========
Weighted average number of common shares outstanding:
Basic 2,960 2,297 1,523
===== ===== =====
Diluted 2,963 2,298 1,529
===== ===== =====
Net income per common share (Notes 2, 9 and 11):
Basic $ 1.23 $ 2.16 $ 1.01
======== ========= =========
Diluted $ 1.23 $ 2.16 $ 1.00
======== ========= =========
Cash distributions per share:
Common Stock $ 1.20 $ 1.20 $ 1.20
========= ========= =========
Preferred Stock $ 1.60 $ 1.60 $ 1.60
========= ========= =========
See accompanying notes.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
For the three years ended December 31, 1999
(Amounts in Thousands, Except Per Share Data)
Accumulated
Other Accumulated
Preferred Common Paid-in Comprehensive Undistributed
Stock Stock Capital Income Net Income Total
----- ----- ------- ------ ---------- -----
Balances, December 31, 1996 $ - $1,473 $13,651 $ 98 $2,221 $17,443
Distributions - Common Stock
($1.20 per share) - - - - (1,835) (1,835)
Distributions - Preferred Stock
($1.60 per share) - - - - (1,294) (1,294)
Accretion on Preferred Stock - - (156) - - (156)
Exercise of options - 29 236 - - 265
Shares issued through dividend
reinvestment plan - 59 689 - - 748
Net income - - - - 2,984 2,984
Other comprehensive income -
net unrealized gain on available-
for-sale securities (Note 2) - - - 49 - 49
---------
Comprehensive income - - - - - 3,033
--------- --------- --------- -------- -------- ---------
Balances, December 31, 1997 - 1,561 14,420 147 2,076 18,204
Distributions - Common Stock
($1.20 per share) - - - - (2,710) (2,710)
Distributions - Preferred Stock
($1.60 per share) - - - - (1,294) (1,294)
Accretion on Preferred Stock - - (158) - - (158)
Shares issued through rights offering - 1,332 16,139 - - 17,471
Shares issued through dividend
reinvestment plan - 47 564 - - 611
Net income - - - - 6,418 6,418
Other comprehensive income -
net unrealized loss on available-
for-sale securities (Note 2) - - - (47) - (47)
---------
Comprehensive income - - - - - 6,371
------------ ------------ ------------- ------------ ---------- -------
Balances, December 31, 1998 - 2,940 30,965 100 4,490 38,495
Distributions - Common Stock
($1.20 per share) - - - - (3,552) (3,552)
Distributions - Preferred Stock
($1.60 per share) - - - - (1,168) (1,168)
Preferred Stock (Note 7) 10,802 - - - - 10,802
Accretion on Preferred Stock - - (79) - - (79)
Preferred shares converted to
Common Stock - 1 7 - - 8
Shares issued through dividend
reinvestment plan - 39 445 - - 484
Net income - - - - 4,879 4,879
Other comprehensive income -
net unrealized loss on available-
for-sale securities (Note 2) - - - (67) - (67)
--------
Comprehensive income - - - - - 4,812
------- -------- ------- --------- --------- --------
Balances, December 31, 1999 $10,802 $ 2,980 $31,338 $ 33 $ 4,649 $49,802
======= ======== ======= ========== ======== =======
See accompanying notes.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Amounts in Thousands)
Year Ended December 31,
-------------------------------------------
1999 1998 1997
---- ---- ----
Cash flows from operating activities:
Net income $ 4,879 $ 6,418 $ 2,984
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of real estate (62) (1,102) (599)
Gain on sale of available-for-sale securities (64) (30) -
Increase in rental income from straight-lining of rent (572) (500) (360)
Provision for valuation adjustment - 157 -
Depreciation and amortization 1,645 1,378 1,023
Minority interest in earnings of subsidiary 17 12 231
Changes in assets and liabilities:
Decrease in rent, interest, deposits and
other receivables (82) (461) (221)
Increase (decrease) in accrued expenses
and other liabilities 78 (62) (81)
---------- --------- -----------
Net cash provided by operating activities 5,839 5,810 2,977
--------- ------- ---------
Cash flows from investing activities:
Additions to real estate (11,499) (13,172) (10,058)
Net proceeds from sale of real estate 210 1,419 4,347
Net proceeds from sale of available-for-sale securities 1,203 282 -
Collection of mortgages receivable - (including $5,653
and $79 from related parties in 1998 and 1997) 228 5,715 106
Purchase of available-for-sale securities (885) (935) -
Payments to minority interest by subsidiary (13) (14) (396)
Other - - 42
----------- ------------ --------
Net cash used in investing activities (10,756) (6,705) (5,959)
----------- ------------ --------
Cash flows from financing activities:
(Repayments) proceeds from bank borrowings - (4,605) 705
Proceeds from mortgages payable 5,775 9,236 5,925
Payment of financing costs (238) (345) (203)
Repayment of mortgages payable (528) (359) (2,227)
Exercise of stock options - - 265
Cash distributions - Common Stock (4,434) (2,297) (1,809)
Cash distributions - Preferred Stock (1,491) (1,294) (1,294)
Proceeds from issuance of shares through rights offering - 17,471 -
Repurchase of preferred stock, which was cancelled (2,494) (40) -
Issuance of shares through dividend reinvestment plan 484 611 748
-------- --------- ---------
Net cash (used in) provided by financing activities (2,926) 18,378 2,110
-------- --------- -------
Net (decrease) increase in cash and cash equivalents (7,843) 17,483 (872)
Cash and cash equivalents at beginning of year 19,090 1,607 2,479
-------- ------- --------
Cash and cash equivalents at end of year $11,247 $19,090 $ 1,607
======= ======= ========
Supplemental disclosures of cash flow information:
Cash paid during the year for interest expense $2,546 $2,438 $1,728
Supplemental schedule of non cash investing and financing activities:
Assumption of mortgage payable in connection
with purchase of real estate $1,065 - -
See accompanying notes.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
(Amounts in Thousands, Except Per Share Data)
NOTE 1 - ORGANIZATION AND BACKGROUND
One Liberty Properties, Inc. (the "Company") was incorporated in
1982 in the state of Maryland. The Company is a self-managed Real
Estate Investment Trust ("REIT") which currently participates in
net leasing transactions and has engaged in other real property
transactions and invested in real property mortgages.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
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.
Use of Estimates
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 and accompanying notes. Actual results
could differ from those estimates.
Income Recognition
Rental income includes the base rent that each tenant is required
to pay in accordance with the terms of their respective leases
reported on a straight-line basis over the initial term of the
lease. Mortgage receivable discount was amortized over the
remaining life, utilizing the interest method, based on the
Company's evaluation of the collectibility of the carrying amount
of the mortgage.
Depreciation
Depreciation of buildings is computed on the straight-line method
over an estimated useful life of 40 years for commercial
properties and 27 and one half years for residential properties.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Deferred Financing Costs
Mortgage and credit line costs are deferred and amortized on a
straight-line basis over the terms of the respective debt
obligations.
Federal Income Taxes
The Company has qualified as a real estate investment trust under
the applicable provisions of the Internal Revenue Code. Under
these provisions, the Company will not be subject to federal
income taxes on amounts distributed to stockholders providing it
distributes substantially all of its taxable income and meets
certain other conditions.
Total distributions made during 1999 and 1998 included
approximately 21% and 74%, respectively, attributable to capital
gains, with the balance to ordinary income.
Investments in Debt and Equity Securities
The Company determines the appropriate classification of
securities at the time of purchase and reassesses the
appropriateness of the classification at each report date. At
December 31, 1999, all marketable securities have been classified
as available-for-sale and, as a result, are stated at fair value.
Unrealized gains and losses on available-for-sale securities are
recorded as a separate component of stockholders' equity.
The Company's investment in 30 common shares of BRT Realty Trust
("BRT"), a related party of the Company, (accounting for less than
1% of the total voting power of BRT), purchased at a cost of $97
has a fair market value at December 31, 1999 of $240. The net
unrealized holding gain of $143 is excluded from earnings. In
addition, the Company has invested $462 in various other equity
securities which have a fair market value of $352 at December 31,
1999. The aggregate net unrealized holding loss of $110 on these
investments is also excluded from earnings. At December 31, 1999,
the cumulative unrealized gain of $33 on these investments is
reported as a separate component of stockholders' equity.
Realized gains and losses are determined using the average cost
method. During 1999 and 1998, sales proceeds and gross realized
gains and losses on securities classified as available-for-sale
were:
1999 1998
---- ----
Sales proceeds $1,203 $ 282
====== =======
Gross realized losses $ (4) $ -
====== =======
Gross realized gains $ 68 $ 30
====== =======
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the
fair value of each class of financial instruments:
Mortgages receivable: At December 31, 1998 the Company had one
mortgage loan outstanding with a balance of $228 carrying an
interest rate which approximated market and thus the outstanding
balance approximated its fair value. The mortgage was paid off in
full in July, 1999.
Cash and cash equivalents: The carrying amounts reported in the
balance sheet for these instruments approximate their fair values.
Investment in BRT Realty Trust: Since this investment is
considered "available-for-sale", it is reported in the balance
sheet based upon quoted market prices.
Mortgages payable: The Company determined the estimated fair value
of its debt by discounting future cash payments at their effective
rates of interest, which approximate current market rates of
interest for similar loans. Accordingly, there is no material
difference between their carrying amount and fair value.
Accretion on Preferred Stock
The Company has Preferred Stock outstanding which is both
redeemable and convertible. The stock was initially recorded in
the financial statements at its fair value based upon the initial
average trades on the American Stock Exchange. The amount by which
the redemption value exceeded the carrying value was accreted
using the interest method through July 1, 1999. (See Note 7.)
Earnings Per Common Share
Basic earnings per share was determined by dividing net income
applicable to common stockholders for each year by the weighted
average number of shares of Common Stock outstanding during each
year.
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. Diluted earnings per share was determined by dividing net
income applicable to common stockholders for each year by the
total of the weighted average number of shares of Common Stock
outstanding plus the dilutive effect of the Company's outstanding
options (3, 1 and 6 shares for the years ended 1999, 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.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Options to purchase 40 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 and, therefore, the effect would be
antidilutive. Options to purchase 41 shares of Common Stock at
$13.50 per share, which were granted during March 1997, were also
not included in the computation of diluted earnings per share,
except for the three months ended September 1999, June 1998 and
March 1998 when the exercise price of the options were lower than
the average market price of the common shares.
Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with
maturities of three months or less when purchased.
Valuation Allowance on Real Estate Owned
The Company reviews each real estate asset owned for which
indicators of impairment are present to determine whether the
carrying amount of the asset will be recovered. Recognition of
impairment is required if the undiscounted cash flows estimated to
be generated by those assets are less than the assets' carrying
amount. Measurement is based upon the fair market value of the
asset. Real estate assets that are expected to be disposed of are
valued at the lower of carrying amount or fair value less costs to
sell on an individual asset basis.
Comprehensive Income
Effective January 1, 1998, the Company adopted the Financial
Accounting Standard Board's Statement No. 130, Reporting
Comprehensive Income. Statement No. 130 establishes standards for
the reporting and display of comprehensive income and its
components. Statement 130 requires unrealized gains or losses on
the Company's available-for-sale securities to be included in
other comprehensive income. Prior year financial statements have
been reclassified to conform to the requirements of Statement 130.
At December 31, 1999, accumulated other comprehensive income,
which is solely comprised of the net unrealized gain on
available-for-sale securities was $33.
Segment Reporting
Effective January 1, 1998, the Company adopted the Financial
Accounting Standards Board's Statement No. 131, Disclosure About
Segments of an Enterprise and Related Information. Statement No.
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. As the Company operates predominantly in one industry
segment, Statement No. 131 did not have a material impact on the
Company's financial statements.
NOTE 3 - REAL ESTATE INVESTMENTS AND MINIMUM FUTURE RENTALS
The rental properties owned at December 31, 1999 are leased under
noncancellable operating leases to corporate tenants with current
expirations ranging from 2001 to 2038, with certain tenant renewal
rights. The majority of lease agreements are net lease
arrangements which require the tenant to pay not only rent but all
the expenses of the leased property including maintenance, taxes,
utilities and insurance. Certain lease agreements provide for
periodic rental increases and others provide for increases based
on the consumer price index.
The minimum future rentals to be received over the next five years
on the operating leases in effect at December 31, 1999 are as
follows:
Year Ending
December 31,
------------
2000 $8,635
2001 8,746
2002 8,463
2003 7,886
2004 7,847
Included in the minimum future rentals are rentals from a property
owned in fee by an unrelated third party. The Company pays annual
fixed leasehold rent of $289 through April 2010 and has a right to
extend the lease for up to three 15 year and one 14 year renewal
options.
At December 31, 1999, the Company has recorded an unbilled rent
receivable aggregating $1,737, representing rent reported on a
straight-line basis in excess of rental payments required under
the initial term of the respective leases. This amount is to be
billed and received pursuant to the lease terms over the next
eighteen years. The minimum future rentals presented above include
amounts applicable to the repayment of these unbilled rent
receivables.
For the year ended December 31, 1999, the following assets
generated revenues for the Company in an amount exceeding 10% of
the Company's total revenues:
For the Year Ended December 31, 1999
------------------------------------
Description Revenue % of Total Revenues
----------- ------- -------------------
Total Petroleum properties (a) $1,093 10.7%
(a) Total Petroleum, an operator of combination gas station
and retail convenience stores, is a tenant in thirteen of
the Company's properties, all located in the State of
Michigan.
NOTE 3 - REAL ESTATE INVESTMENTS AND MINIMUM FUTURE RENTALS (Continued)
In connection with the Total Petroleum lease agreement (entered
into in 1991), the Company deposited $2,000 with an independent
escrow agent, which represented the estimated maximum amount to
remediate environmental problems discovered at certain locations.
The Company completed its responsibility with respect to the
environmental cleanup during the year ended December 31, 1999.
Included in other income for the year ended December 31, 1999 is
$793 which represents the return to the Company of unused escrow
funds by the escrow agent.
Sale of Real Estate
On July 22, 1999, the Company sold a property for a sales price
of $225 and recognized a gain of $62.
On October 30, 1998, the Company sold a property located in the
State of Washington for a sales price of $1,500 and recognized a
gain of $1,102. In addition, a second mortgage receivable the
Company held on the property was paid off as part of the sale.
The outstanding balance of this mortgage receivable was $36 at
the time of the sale.
On August 5, 1997, the property owned by a limited liability
company in which the Company was a majority member was sold. A
gain of $599 was realized on the sale. The Company's share of the
gain was $384 after deducting the minority interest portion.
NOTE 4 - PROVISION FOR VALUATION ADJUSTMENT
During the year ended December 31, 1998, the Company determined
that the estimated fair value of certain properties were lower
than their carrying amounts and thus, the Company recorded a
provision for the differences. The total provision taken on these
three properties during the year ended December 31, 1998, which
amounted to $157, had been presented as a reduction to real estate
investments on the balance sheet.
NOTE 5 - INTEREST FROM RELATED PARTY
On July 30, 1993, as a result of a public auction, the Federal
Deposit Insurance Corporation sold to an entity related to the
Company, for a consideration of $19,000, a $23,000 first mortgage,
providing for an interest rate of 8% per annum, secured by a
single tenant office building located in Manhattan, New York. The
office building which secured this mortgage is owned by a
partnership in which Gould Investors L.P. ("Gould"), a related
party, is General Partner and in which Gould owns substantially
all of the partnership interests. Simultaneously with the
purchase, $13,181 was advanced by an unrelated party, $6,080
(which includes closing costs) was advanced by the Company, and
the mortgage was severed into a first mortgage of $13,181 paying
interest at 9 1/2% per annum held by the unrelated party and a
subordinate wrap mortgage of $9,819 held by the Company. Both the
first mortgage and the wrap mortgage were to mature in 2005.
NOTE 5 -INTEREST FROM RELATED PARTY (Continued)
On September 16, 1998, the Company received a payoff in full of
this mortgage in the amount of $7,582. The original discount of
$3,738 was being amortized by the Company over the life of the
mortgage and at September 16, 1998, the unamortized balance of the
discount (which the Company realized as interest income) was
$2,081. Interest income, including amortization of the discount of
$2,321 and $334 amounted to $2,660 and $833 for the years ended
1998 and 1997, respectively. At December 31, 1999 and 1998, Gould
owned 749 and 960 shares of the common stock of the Company or
25.1% and 32.6% of the equity interest and 22.7% and 28.7% of the
voting rights, respectively.
See Note 8 for other related party transaction information.
NOTE 6 - DEBT OBLIGATIONS
Mortgages Payable
At December 31, 1999, there are sixteen outstanding mortgages
payable, all of which are secured by individual real estate
investments with an aggregate carrying value of $56,717 before
accumulated depreciation. The mortgages bear interest at rates
ranging from 6.9% to 9.1%, and mature between 2000 and 2024.
Scheduled principal repayments during the next five years and
thereafter are as follows:
Year Ending
December 31,
2000 $ 1,464
2001 647
2002 1,984
2003 9,366
2004 3,405
2005 and thereafter 18,869
--------
Total $ 35,735
========
Note Payable - Bank
On March 24, 2000 the Company entered into an agreement with
European American Bank ("EAB") to provide for a two year $15,000
credit facility. The facility will be used primarily to finance
the acquisition of commercial real estate. The facility provides
that the Company will pay interest at EAB's prime rate on funds
borrowed and an unused facility fee of 1/4%. The Company has the
option to extend the term for one year. The facility is guaranteed
by all of the Company's subsidiaries which own unencumbered
properties.
The $9,000 revolving credit agreement ("Credit Agreement") with
Bank Leumi Trust Company of New York ("Bank Leumi") and Commercial
Bank of New York (formerly First Bank of the Americas) matured on
February 28, 1999. Borrowings under the Credit Agreement were used
to provide the Company with funds, when needed, to acquire
additional properties. The Company paid interest under the Credit
Agreement at the rate of prime plus 1/2% on funds borrowed on an
interest only basis, plus a 1/4% servicing fee on the outstanding
balance to Bank Leumi.
NOTE 7 - REDEEMABLE CONVERTIBLE PREFERRED STOCK
The Preferred Stock has the following rights, qualifications and
conditions: (i) a cumulative dividend preference of $1.60 per
share per annum; (ii) a liquidation preference of $16.50 per
share; (iii) a right to convert each share of Preferred Stock at
any time into .825 of a share of Common Stock; (iv) redeemable by
the Company at $16.50 per share and (v) one-half vote per share.
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 preferred
shares to the Company for a total payment by the Company of
$2,265. The preferred shareholders no longer have any rights to
"put" their shares to the Company.
During the year ended December 31, 1999 the Company repurchased 14
shares of Preferred Stock for an aggregate consideration of $228.
NOTE 8 - OTHER RELATED PARTY TRANSACTIONS
Gould charged the Company $248, $202 and $179 during the years
ended December 31, 1999, 1998 and 1997, respectively, for
allocated general and administrative expenses and payroll based on
time incurred by various employees.
The Company paid a company controlled by the Chairman of the Board
of Directors and certain officers of the Company brokerage fees
totaling $102 during the year ended December 31, 1999 relating to
mortgages placed on five of the Company's properties. These fees
were deferred and are being amortized over the lives of the
respective loans. During the year ended December 31, 1998, this
company was paid a brokerage fee of $45 relating to the sale of
real estate.
During December 1999, the Company made an $80 loan to its new
president providing for an interest rate equal to the prime rate
and maturing in December, 2004. This loan is secured by shares of
the Company purchased with the proceeds and personally guaranteed
by this individual and his wife. An additional $80 loan was made
at similar terms in January, 2000.
During October 1998, Gould made a $350 loan to the same individual
and his wife bearing interest at 9% and maturing in October, 2001.
The loan is secured by interests in several real estate
partnerships in which Gould and the Company are the majority
partners, and the wife of the Company's president is the minority
partner. The loan is also personally guaranteed. The outstanding
balance at December 31, 1999 is $225. Gould made an additional $20
loan to him during December, 1999 bearing interest equal to the
prime and maturing in December, 2004.
See Note 5 for other related party transaction information.
NOTE 9 - STOCK OPTIONS
On November 17, 1989, the directors of the Company adopted the
1989 Stock Option Plan. Stock options under the 1989 Stock Option
Plan are granted at per share amounts at least equal to their fair
market value at the date of grant. A maximum of 225 common shares
were reserved for issuance under the 1989 Stock Option Plan, of
which none are available for grant at December 31, 1999.
On December 6, 1996, the directors of the Company adopted the 1996
Stock Option Plan (Incentive/Nonstatutory Stock Option Plan).
Incentive stock options are granted at per share amounts at least
equal to their fair market value at the date of grant, whereas for
nonstatutory stock options the exercise price may be any amount
determined by the Board of Directors. Options granted under the
Plan will expire no later than ten years after the date on which
the option is granted. A maximum of 125 shares of common stock of
the Company are reserved for issuance to employees, officers,
directors, consultants and advisors to the Company, of which 92
are available for grant at December 31, 1999.
On March 25, 1999, the Directors of the Company granted, under the
1996 and 1989 Stock Option Plans, options to purchase a total of
47 shares of common stock at $12.375 per share to a number of the
Company's officers and employees. The options are cumulatively
exercisable at a rate of 25% per annum, commencing six months
after the date of grant, and expire five years after the date of
grant. At December 31, 1999, options to purchase 12 shares are
exercisable, none of which have been exercised.
On March 23, 1998, the Directors of the Company granted, under the
1989 Stock Option Plan, options to purchase a total of 40 shares
of common stock at $14.50 per share to a number of the Company's
officers and employees. The options are cumulatively exercisable
at a rate of 25% per annum, commencing six months after the date
of grant, and expire five years after the date of grant. At
December 31, 1999, options to purchase 20 shares are exercisable,
none of which have been exercised.
On March 21, 1997, the Directors of the Company granted, under the
1989 Stock Option Plan, options to purchase a total of 41 shares
of common stock at $13.50 per share to a number of the Company's
officers and employees. The options are cumulatively exercisable
at a rate of 25% per annum, commencing six months after the date
of grant, and expire five years after the date of grant. At
December 31, 1999, options to purchase 30 shares are exercisable,
none of which have been exercised.
The Company adopted Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees ("APB 25"), and related
interpretations in accounting for its employee stock options.
Under APB 25, no compensation expense is recognized because the
exercise price of the Company's employee stock options equals the
market price of the underlying stock on the date of grant. The
alternative fair value accounting provided for under FASB No. 123,
Accounting for Stock-Based Compensation, is not applicable because
it requires use of option valuation models that were not developed
for use in valuing employee stock options.
NOTE 9 - STOCK OPTIONS (Continued)
Pro forma information regarding net income and earnings per share
is required by FASB No. 123, and has been determined as if the
Company had accounted for its employee stock options under the
fair value method. The fair value for these options was estimated
at the date of the grant using a Black-Scholes option pricing
model with the following weighted-average assumptions for 1999 and
1998, respectively: risk free interest rate of 6.41% and 5.64%,
dividend yield of 9.7% and 8.95%, volatility factor of the
expected market price of the Company's Common Stock based on
historical results of .116 and .123; and expected lives of 5
years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective
assumptions including expected stock price volatility. Because the
Company's employee stock options have characteristics
significantly different from those of traded options, and changes
in the subjective input assumptions can materially affect the fair
value estimate, management believes the existing models do not
necessarily provide a reliable single measure of the fair value of
its employee stock options. Had the fair value method of
accounting been applied to the Company's stock plan, which
requires recognition of compensation cost ratably over the vesting
period, proforma net income applicable to common stockholders
would have been $3,610 which would result in proforma earnings of
$1.22 per share in 1999. The Company had elected not to present
pro forma information for 1998 and 1997 because the impact on the
reported net income and earnings per share is immaterial.
Changes in the number of common shares under all option
arrangements are summarized as follows:
Year Ended December 31,
-------------------------------------
1999 1998 1997
---- ---- ----
Outstanding at beginning of period 81 41 29
Granted 47 40 41
Option prices $12.375-$14.50 $13.50-$14.50 $13.50-$9.125
Exercisable at end of period 62 30 10
Exercised - - 29
Expired - - -
Outstanding at end of period 128 81 41
Option price per share outstanding $12.375-$14.50 $13.50-$14.50 $13.50
As of December 31, 1999, the outstanding options had a weighted
average remaining contractual life of approximately 3.28 years and
a weighted average exercise price of $13.40.
NOTE 10 - DISTRIBUTION REINVESTMENT PLAN
In May, 1996, the Company implemented a Distribution Reinvestment
Plan (the "Plan"). The Plan provides owners of record of 100
shares or more of its common and/or preferred stock the
opportunity to reinvest cash distributions in newly-issued common
stock of the Company at a five percent discount from the market
price. No open market purchases are made under the Plan. During
the years ended December 31, 1999 and 1998, the Company issued 39
and 47 common shares, respectively, under the Plan.
NOTE 11 - RIGHTS OFFERING
On June 22, 1998, the Company sold 1,332 shares of Common Stock at
$13.25 per share in a rights offering to its stockholders. The
Company had issued one nontransferable right for each common
and/or preferred share owned of record as of March 24, 1998
entitling the holder to purchase one share of Common Stock for a
price of $13.25 per share and certain over-subscription
privileges. Gould purchased 769 shares or 57.7% of the total
shares issued. The offer expired on June 15, 1998.
NOTE 12 - SUBSEQUENT EVENTS
On January 13, 2000 and February 10, 2000, the Company acquired
two additional real properties. One property, leased to a single
retail tenant, was acquired for a total cash consideration of
approximately $1,341 with the net lease expiring in 2010. The
other property, net leased to two retail tenants, was acquired for
a total consideration of $7,650 with $2,650 paid in cash. The
basic term of the net leases expires in 2013 and 2014 and provide
lease renewal options through 2028 and 2029.
On February 25, 2000, the Company sold a real property for a
consideration of $735, realizing a gain of approximately $150.
NOTE 13 - QUARTERLY FINANCIAL DATA (UNAUDITED):
Quarter Ended
-------------
Total
March 31 June 30 September 30 December 31 For Year
-------- ------- ------------ ----------- --------
1999
Revenues $2,198 $3,172(a) $2,426 $2,384 $10,180
Net income 951 1,798(a) 1,125 1,005 4,879
Net income applicable to
common stockholders 589 1,438(a) 862 743 3,632
Net income per common share:
Basic .20 .49 .29 .25 1.23(b)
Diluted .20 .49 .29 .25 1.23(b)
(a) Includes $793 representing the return to the Company of unused escrow funds. See Note 3.
(b) Calculated on weighted average shares outstanding for the year.
Quarter Ended
-------------
Total
March 31 June 30 September 30 December 31 For Year
-------- ------- ------------ ----------- --------
1998
Revenues $1,745 $1,982 $4,277(d) $2,129 $10,133
Net income 686 727 2,947 (c)(d) 2,058 6,418
Net income applicable to
common stockholders 324 364 2,583 (c)(d) 1,695 4,966
Net income per common share:
Basic .21 .21 .88 .58 2.16(e)
Diluted
.21 .21 .82 .57 2.16(e)
(c) Net income reflects a provision for valuation adjustment of real estate
amounting to $157 for the quarter ending September 30, 1998.
(d) Includes $2,081, (or $.71 and $.58 per common share, basic and diluted,
respectively) from the early payoff in September 1998 of a mortgage
receivable acquired by the Company at a discount, representing the
unamortized balance of the discount. See Note 5.
(e) Calculated on weighted average shares outstanding for the year.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Schedule III - Consolidated Real Estate and Accumulated Depreciation
December 31, 1999
(Amounts in Thousands)
Initial Cost Gross Amount at Which Carried At Life on Which
to Company December 31, 1999 Depreciation in
Latest Income
Date Of Statement Is
Accumulated Construc- Date Computed
Encumbrances Land Buildings Land Buildings Total Depreciation tion Acquired (Years)
------------ ---- --------- ---- --------- ----- ------------ ---- -------- --------
Free Standing
Retail Locations:
- ----------------
Columbus, OH $ 4,249 $ 1,445 $ 5,781 $ 1,445 $ 5,781 $ 7,226 $ 307 1996 November 19, 1997 40
Ft. Myers, FL 3,119 1,013 4,054 1,013 4,054 5,067 317 1996 November 7, 1996 40
Miscellaneous 18,040 10,843 35,317 10,731 35,106 45,837 3,206 Various Various 40
Office Building:
- ----------------
New York, NY 4,426 1,344 5,300 1,344 5,300 6,644 238 1973 March 31, 1998 40
Miscellaneous - 181 724 181 724 905 22 1978 October 2, 1998 40
Apartment Building:
- -------------------
New York, NY 4,888 1,110 4,439 1,110 4,439 5,549 895 1910 June 14, 1994 27.5
Industrial:
- -----------
Miscellaneous 1,013 815 3,865 815 3,865 4,680 153 Various Various 40
------ ----- ----- ------ ----- ----- -----
$35,735 $16,751 $59,480 $16,639 $59,269 $75,908 $5,138
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ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes To Schedule III
Consolidated Real Estate And Accumulated Depreciation
(a) Reconciliation of "Real Estate and Accumulated Depreciation"
Year Ended December 31,
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1999 1998
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Investment in real estate:
Balance, beginning of year $ 63,550 $ 50,852
Addition: Land and buildings 12,564 13,172
Deductions:
Cost of properties sold (206) (317)
Valuation allowance (c) - (157)
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Balance, end of year $ 75,908 $ 63,550
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Accumulated depreciation:
Balance, beginning of year $ 3,719 $ 2,535
Addition: depreciation 1,477 1,184
Deduction: accumulated
depreciation related to
properties sold (58) -
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Balance, end of year $ 5,138 $ 3,719
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(b) The aggregate cost of the properties is approximately $323 greater for
federal income tax purposes.
(c) During the year ended December 31, 1998, the Company took a provision
for valuation adjustment of real estate totaling $157. See Note 4 to
the consolidated financial statements for other information.