SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2002
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number 0-11083
ONE LIBERTY PROPERTIES, INC.
----------------------------
(Exact name of Registrant as specified in its charter)
MARYLAND 13-3147497
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
60 Cutter Mill Road, Great Neck, New York 11021
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (516) 466-3100
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Indicate the number of shares outstanding of each of the
issuer's classes of stock, as of the latest practicable date.
As of August 7, 2002, the Registrant had 5,597,631 shares of
Common Stock and 648,058 shares of Redeemable Convertible
Preferred Stock outstanding.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Per Share Data)
June 30, December 31,
2002 2001
---- ----
(Unaudited)
Assets
Real estate investments, at cost
Land $ 25,939 $ 25,939
Buildings 100,292 101,288
--------- ---------
126,231 127,227
Less accumulated depreciation 9,768 8,663
--------- ---------
116,463 118,564
Investment in unconsolidated joint ventures 13,436 6,345
Cash and cash equivalents 29,891 2,285
Unbilled rent receivable 2,787 2,442
Rent, interest, deposits and other receivables 1,195 1,157
Note receivable - officer 166 167
Investment in BRT Realty Trust-(related party) 413 361
Deferred financing costs 1,105 1,247
Other (including available-for-sale securities of
$1,098 and $249) 1,313 371
-------- --------
Total assets $166,769 $132,939
======== ========
Liabilities and Stockholders' Equity
Liabilities:
Mortgages payable $ 74,651 $ 76,587
Accrued expenses and other liabilities 831 827
Dividends payable 2,105 1,177
-------- ---------
Total liabilities 77,587 78,591
-------- ---------
Commitments and contingencies - -
Stockholders' equity:
Redeemable convertible preferred stock, $1 par value; $1.60 cumulative
annual dividend; 2,300 shares authorized; 648 shares issued;
liquidation and
redemption values of $16.50 10,693 10,693
Common stock, $1 par value; 25,000
shares authorized; 5,593 and 3,058
shares issued and outstanding 5,593 3,058
Paid-in capital 65,268 32,192
Accumulated other comprehensive income - net
unrealized gain on available-for-sale securities 340 261
Accumulated undistributed net income 7,288 8,144
--------- --------
Total stockholders' equity 89,182 54,348
--------- --------
Total liabilities and stockholders' equity $166,769 $132,939
======== ========
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- -----------------------
2002 2001 2002 2001
---- ---- ---- ----
Revenues:
Rental income $ 3,631 $ 3,830 $ 7,283 $ 7,590
Equity in earnings of unconsolidated joint ventures 275 - 473 -
Interest and other income 183 52 201 76
-------- -------- --------- --------
4,089 3,882 7,957 7,666
-------- -------- -------- --------
Expenses:
Depreciation and amortization 699 727 1,423 1,446
Interest - mortgages payable 1,501 1,477 3,003 2,750
Interest - line of credit 19 38 28 231
Leasehold rent - 72 24 144
General and administrative 413 298 774 597
Public offering expenses 105 - 125 -
Real estate expenses 31 52 64 89
-------- -------- -------- ---------
2,768 2,664 5,441 5,257
-------- -------- -------- --------
Income before gain (loss) on sale 1,321 1,218 2,516 2,409
-------- -------- -------- --------
(Loss) on sale of real estate - (46) - (46)
Gain (loss) on sale of available-for-sale securities 6 (9) 8 (14)
--------- --------- -------- ---------
6 (55) 8 (60)
--------- --------- -------- ---------
Net income $ 1,327 $ 1,163 $ 2,524 $ 2,349
======== ======== ======== ========
Calculation of net income applicable to common stockholders:
Net income $ 1,327 $ 1,163 $ 2,524 $ 2,349
Less: dividends on preferred stock 259 259 518 518
--------- -------- -------- --------
Net income applicable to
common stockholders $ 1,068 $ 904 $ 2,006 $ 1,831
======= ======== ======= =======
Weighted average number of common shares outstanding:
Basic 4,129 3,016 3,600 3,013
===== ===== ===== =====
Diluted 4,168 3,026 3,637 3,020
===== ===== ===== =====
Net income per common share:
Basic $ .26 $ .30 $ .56 $ .61
========= ========= ========= =========
Diluted $ .26 $ .30 $ .55 $ .61
========= ========= ========= =========
Cash distributions per share:
Common Stock $ .33 $ .30 $ .66 $ .60
========= ========= ========= =========
Preferred Stock $ .40 $ .40 $ .80 $ .80
========= ========= ========= =========
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the six month period ended June 30, 2002 (unaudited)
and the year ended December 31, 2001
(Amounts in Thousands)
Accumulated
Other Accumulated
Preferred Common Paid-in Comprehensive Undistributed
Stock Stock Capital Income Net Income Total
------- ------- ------- ------- ---------- ------
Balances, January 1, 2001 $10,693 $ 3,010 $31,650 $ 76 $ 7,947 $53,376
Distributions -
common stock - - - - (3,632) (3,632)
Distributions -
preferred stock - - - - (1,037) (1,037)
Exercise of options - 33 368 - - 401
Shares issued through
dividend reinvestment plan - 15 174 - - 189
Net income - - - - 4,866 4,866
Other comprehensive income-
net unrealized gain on
available-for-sale securities - - - 185 - 185
-------
Comprehensive income - - - - - 5,051
---------- --------- --------- --------- --------- --------
Balances, December 31, 2001 10,693 3,058 32,192 261 8,144 54,348
Distributions -
common stock - - - - (2,862) (2,862)
Distributions -
preferred stock - - - - (518) (518)
Exercise of options - 25 303 - - 328
Shares issued through public offering - 2,500 32,644 - - 35,144
Shares issued through
dividend reinvestment plan - 10 129 - - 139
Net income - - - - 2,524 2,524
Other comprehensive income-
net unrealized gain on
available-for-sale securities - - - 79 - 79
--------
Comprehensive income - - - - - 2,603
-------- ------- --------- ------- --------- ----------
Balances, June 30, 2002 $10,693 $ 5,593 $65,268 $ 340 $ 7,288 $89,182
======= ======= ======= ========= ======= =======
See accompanying notes to consolidated financial statements.
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Six Months Ended
June 30,
2002 2001
---- ----
Cash flows from operating activities:
Net income $ 2,524 $ 2,349
Adjustments to reconcile net income
to net cash provided by operating activities:
Loss on sale of real estate - 46
(Gain) loss on sale of available-for-sale securities (8) 14
Increase in rental income from straight-lining of rent (345) (416)
Equity in earnings of unconsolidated joint ventures (473) -
Distributions from unconsolidated joint ventures 464 -
Payments to minority interest by subsidiary (9) (11)
Depreciation and amortization 1,423 1,446
Changes in assets and liabilities:
(Increase) decrease in rent, interest, deposits and other receivables (129) 124
Increase (decrease) in accrued expenses and other liabilities 12 (23)
---------- ----------
Net cash provided by operating activities 3,459 3,529
---------- ---------
Cash flows from investing activities:
Additions to real estate - (14)
Investment in unconsolidated joint ventures (9,412) -
Sale of portion of interest in unconsolidated joint venture 3,150 -
Net proceeds from sale of real estate - 240
Net proceeds from sale of available-for-sale securities 178 184
Purchase of available-for-sale securities - (132)
Purchase of treasury bill (992) -
---------- ----------
Net cash (used in) provided by investing activities (7,076) 278
---------- ----------
Cash flows from financing activities:
Proceeds from mortgages payable - 13,600
Repayment of mortgages payable (1,936) (538)
Payment of financing costs - (408)
(Increase) decrease in line of credit borrowings, net - (10,000)
Net proceeds from issuance of shares through public offering 35,144 -
Cash distributions - common stock (1,934) (903)
Cash distributions - preferred stock (518) (259)
Exercise of stock options 328 -
Issuance of shares through dividend reinvestment plan 139 62
--------- ---------
Net cash provided by financing activities 31,223 1,554
-------- ---------
Net increase in cash and cash equivalents 27,606 5,361
Cash and cash equivalents at beginning of period 2,285 2,069
--------- ---------
Cash and cash equivalents at end of period $ 29,891 $ 7,430
======== =======
Supplemental disclosures of cash flow information:
Cash paid during the period for interest expense $ 3,035 $ 3,008
Supplemental schedule of non-cash investing activities:
Contribution of real property to unconsolidated joint venture $ 819 $ -
See accompanying notes to consolidated financial statements.
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 - Basis of Preparation
The accompanying interim unaudited consolidated financial statements as of June
30, 2002 and for the six and three months ended June 30, 2002 and 2001 reflect
all normal, recurring adjustments which are, in the opinion of management,
necessary for a fair presentation of the results for such interim periods. The
results of operations for the six and three months ended June 30, 2002 are not
necessarily indicative of the results for the full year.
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States 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.
The consolidated financial statements include the accounts of One Liberty
Properties, Inc., its wholly-owned subsidiaries and a majority-owned limited
liability company. Material intercompany balances and transactions have been
eliminated. The Company's investments in less than majority owned joint ventures
have been accounted for using the equity method. One Liberty Properties, Inc.,
its subsidiaries and the limited liability company are hereinafter referred to
as the "Company".
Certain amounts reported in previous consolidated financial statements have been
reclassified in the accompanying consolidated financial statements to conform to
the current year's presentation.
These statements should be read in conjunction with the consolidated financial
statements and related notes which are included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2001.
Note 2 - Earnings Per Common Share
For the six and three months ended June 30, 2002 and 2001 basic earnings per
share was determined by dividing net income applicable to common stockholders
for the period by the weighted average number of shares of Common Stock
outstanding during each period.
Diluted earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue Common Stock were exercised or converted
into Common Stock or resulted in the issuance of Common Stock that then shared
in the earnings of the Company. For the six and three month periods ended June
30, 2002 and 2001 diluted earnings per share was determined by dividing net
income applicable to common stockholders for the period by the total of the
weighted average number of shares of Common Stock outstanding plus the dilutive
effect of the Company's outstanding options (36,738 and 38,197 for the six and
three months ended June 30, 2002 and 6,613 and 10,873 for the six and three
months ended June 30, 2001 respectively) using the treasury stock method. The
Preferred Stock was not considered for the purpose of computing diluted earnings
per share because their assumed conversion is antidilutive.
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 3 - Preferred and Common Stock Dividend Distributions
On June 10, 2002 the Board of Directors declared quarterly cash distributions of
$.33 and $.40 per share on the Company's common and preferred stock,
respectively, which was paid on July 3, 2002 to stockholders of record on June
22, 2002.
Note 4 - Public Offering
On May 30, 2002, the Company sold 2,500,000 shares of common stock at $15.25 per
share in a follow-on public offering. The net proceeds of approximately $35
million were used to repay the $6 million outstanding under the Company's line
of credit (that was borrowed to pay substantially all of the Company's share of
the purchase price of two megaplex stadium style movie theaters purchased by a
joint venture in which the Company is a 25% participant), and to repay $1.3
million of outstanding indebtedness on two mortgage loans that were maturing
during the year. The remainder of the net proceeds, a substantial portion of
which have been invested in cash equivalents and Treasury bills, will be used
for working capital, general corporate purposes and other property acquisitions.
Note 5 - Investment in Unconsolidated Joint Ventures - Movie Theater
Joint Venture
In November 2001, the Company entered into a joint venture with Greenwood
Properties, Corp., an affiliate of the real estate equity group of Deutsche Bank
AG, for the general purpose of acquiring, owning and financing megaplex movie
theater properties. The Company invested approximately $6.3 million for a 50%
participation in the joint venture, which acquired a megaplex stadium-style
movie theater. In April 2002, the Company sold one-half of its 50% interest in
this joint venture to MTC Investors LLC, an unrelated entity, at a price which
approximated our basis. In April and May of 2002, the joint venture acquired
three additional megaplex movie theaters for a total consideration of
approximately $36 million, of which the Company's share was 25% or approximately
$9 million. Venturers holding at least 75% of the aggregate membership interests
in this joint venture must approve all material decisions, except property
acquisitions which require unanimous approval.
The Company's investment in the movie theater joint venture, which is accounted
for on the equity method, was approximately $12,347,000 and $6,345,000 at June
30, 2002 and December 31, 2001, respectively.
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 5 - Movie Theater Unconsolidated Joint Venture (Continued)
-------------------------------------------------------
The following table presents unaudited condensed balance sheets and operating
data for the joint venture:
Condensed Balance Sheet Data June 30, 2002 December 31, 2001
- ---------------------------- ------------- -----------------
Cash and cash equivalents $ 496,240 $ 172,408
Real estate investments, net 48,204,159 12,494,935
Other assets (A) 656,169 7,676
Total assets 49,356,568 12,675,019
Other liabilities 53,862 39,195
Total equity 49,302,706 12,635,824
Three Months Ended Six Months Ended
Condensed Operating Data June 30, 2002(B) June 30, 2002 (B)
- ------------------------ ---------------- -----------------
Rental income $1,009,437 $1,419,789
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Total revenue 1,009,537 1,419,889
----------- -----------
Depreciation expense 172,356 234,987
Fees and other 7,850 13,891
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Total expenses 180,206 248,878
----------- ------------
Net income attributable to members $ 829,331 $1,171,011
=========== ==========
Company's share of net income $ 242,000 $ 413,000
=========== ===========
(A) Other assets include unbilled rent receivable of $69,502 and $7,676
at June 30, 2002 and December 31, 2001, respectively.
(B) The joint venture was formed in November 2001, therefore there is no
comparative data from June 30, 2001.
One Liberty Properties, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
Note 6 - Comprehensive Income
Statement No. 130 establishes standards for reporting comprehensive income and
its components in a full set of general-purpose financial statements and
requires that all components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. During the six and three months ended June 30, 2002, accumulated
other comprehensive income, which is solely composed of the net unrealized gain
on available-for-sale securities, increased $79,000 and $14,000 to $340,000.
During the six and three months ended June 30, 2001 comprehensive income
increased $144,000 and $183,000 to $220,000.
Note 7 - Accounting for Long-Lived Assets
The Financial Accounting Standards Board issued Statement No. 144 "Accounting
for the Impairment of Long-Lived Assets" which supersedes FASB Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of"; however it retains the fundamental provisions of that
statement related to the recognition and measurement of the impairment of
long-lived assets to be "held and used". In addition, Statement No. 144 provides
more guidance on estimating cash flows when performing a recoverability test,
requires that a long-lived asset or asset group to be disposed of other than by
sale (e.g. abandoned) be classified as "held and used" until it is disposed of,
and establishes more restrictive criteria to classify an asset or asset group as
"held for sale". The Company adopted SFAS 144 on January 1, 2002 and there was
no material effect on the earnings or the financial position of the Company.
Note 8 - New Accounting Pronouncement
The Financial Accounting Standard Board issued Statement No. 145, which
rescinded Statement No. 4, "Reporting Gains and Losses from Extinguishment of
Debt." The Company adopted SFAS 145 on May 15, 2002 and there was no material
effect on the earnings or the financial position of the Company.
Item 2. Management's Discussion And Analysis Of Financial Condition And
---------------------------------------------------------------
Results Of Operations
---------------------
Forward-Looking Statements
With the exception of historical information, this report on Form 10-Q contains
certain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933. We intend such forward-looking statements to be covered
by the safe harbor provision for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995 and include this statement for
purposes of complying with these safe harbor provisions. Forward-looking
statements, which are based on certain assumptions and describe our future
plans, strategies and expectations, are generally identifiable by use of the
words "may", "will", "believe", "expect", "intend", "anticipate", "estimate",
"project", or similar expressions or variations thereof. Forward-looking
statements should not be relied on since they involve known and unknown risks,
uncertainties and other factors which are, in some cases, beyond our control and
which could materially affect actual results, performance or achievements.
Investors are cautioned not to place undue reliance on any forward-looking
statements.
General
We are a self-administered REIT and we primarily own real estate that we net
lease to tenants. We own 33 properties and we are a member of two joint ventures
that own a total of five properties. Our 38 properties are located in 13 states.
We have elected to be taxed as a REIT under the Internal Revenue Code. To
qualify as a REIT, we must meet a number of organizational and operational
requirements, including a requirement that we currently distribute at least 90%
of ordinary taxable income to our stockholders. We intend to comply with these
requirements and to maintain our REIT status.
Our principal business strategy is to acquire improved, free standing,
commercial properties subject to long-term net leases. We acquire properties for
their value as long-term investments and for their ability to generate income
over an extended period of time. We borrow funds on a secured and unsecured
basis to finance the purchase of real estate and we intend to continue to do so
in the future.
Our rental properties are generally leased to corporate tenants under operating
leases substantially all of which are noncancellable. Substantially all of our
lease agreements are net lease arrangements that require the tenant to pay not
only rent but also substantially all the operating expenses of the leased
property, including maintenance, taxes, utilities and insurance. A majority of
our lease agreements provide for periodic rental increases; certain of our other
leases provide for increases based on the consumer price index.
In November 2001, we entered into a joint venture with an affiliate of Deutsche
Bank AG, which acquired a megaplex stadium-style movie theater. We invested
approximately $6.3 million for our 50% participation in the joint venture. In
April 2002, we sold one-half of our 50% interest in this joint venture to MTC
Investors LLC. This joint venture acquired three additional megaplex
stadium-style movie theaters during April and May 2002 for a total consideration
of approximately $36 million. During July 2002, mortgage financing of $28.9
million was completed on the four theaters owned by the joint venture. Venturers
holding at least 75% of the aggregate membership interest in this joint venture
must approve all material decisions, except for property acquisitions which
require unanimous approval. Under the joint venture operating agreement, we will
receive an acquisition fee from the joint venture equal to 0.5% of the purchase
price of each property acquired by the joint venture, other than the property
acquired in November 2001. In addition, Majestic Property Management Corp., a
company owned and controlled by our chairman of the board and certain of our
officers, but in which we have no ownership interest, will receive a management
fee equal to 1% of all rents received by the joint venture from single-tenant
properties and a management fee equal to 3% of all rents received by the joint
venture from multi-tenant properties. Majestic will receive leasing and mortgage
brokerage fees at any property acquired by the joint venture at a rate equal to
80% of the then market cost. Majestic will also receive a construction
supervision fee equal to 8% of the cost of any capital improvements or repairs
to the property and a sales commission equal to 1% of the sales price of any
properties that are sold.
In February 2002, we contributed our leasehold interest in an industrial
property in Miami, Florida to a joint venture with the owners of the fee estate
in that property in exchange for an approximately 36% interest in the joint
venture.
At June 30, 2002, we had 21 outstanding mortgages payable, aggregating $74.7
million in principal amount, all of which are secured by first liens on
individual real estate investments with an aggregate carrying value of
approximately $114 million before accumulated depreciation. The mortgages bear
interest at fixed rates ranging from 6.9% to 8.8%, and mature between 2003 and
2017.
Results of Operations
Comparison of Six and Three Months Ended June 30, 2002 and 2001
Revenues
Our revenues consist primarily of rental income from tenants in our rental
properties. In the latter part of 2001 we made a decision to expand our business
activities by acquiring and owning megaplex stadium-style movie theaters net
leased to the operator, in a joint venture (as described above). Approximately
91.5% and 88.8%, respectively, of our revenues for the six and three months
ended June 30, 2002 consists of rental income from tenants in our rental
properties and 5.9% and 6.7%, respectively, of our revenues represents equity in
the earnings of joint ventures, principally the movie theater joint venture.
There was no joint venture related revenues in the six and three months ended
June 30, 2001.
Total revenues for the six and three months ended June 30, 2002 increased by
$291,000, or 3.8%, from $7.7 million to $8 million, and by $207,000, or 5.3%, to
$4.1 million from $3.9 million for the six and three months ended June 30, 2001,
respectively. Total revenues for the six and three months ended June 30, 2002
include $413,000 and $242,000, respectively, representing our equity share of
the earnings of our movie theatre venture and $60,000 and $33,000, respectively,
representing our equity share of the earnings of a joint venture that owns an
industrial building in Miami, Florida.
The increase in our revenues, resulting primarily from our participation in the
movie theater joint venture, was offset in part by a decrease in rental income
from our rental properties. Rental income decreased by $307,000, or 4%, to $7.3
million for the six months ended June 30, 2002 from $7.6 million for the six
months ended June 30, 2001. For the three months ended June 30, 2002, rental
income decreased $199,000, or 5.2%, to $3.6 million from $3.8 million for the
three months ended June 30, 2001. The rental income decline includes $177,000
and $106,000 for the six and three months ended June 30, 2002, primarily because
rental income from an industrial property in Miami, Florida, the leasehold
interest of which was transferred by us to a joint venture in February, 2002,
was not included in rental income for the entire six and three month periods
ended June 30, 2002. Our share of net earnings from this property, now owned by
a joint venture in which we own an approximately 36% interest, is reflected in
"Equity in earnings of unconsolidated joint ventures" from February 2002. Rental
income also decreased by $144,000 and $94,000 in the six and three months ended
June 30, 2002 as a result of the sale of two small retail properties and the
vacancy of two retail properties during such periods. This decline in rental
income was partially offset by rent increases at three of our properties and an
increase in percentage rent collected.
Interest and other income increased by $125,000 and $131,000 to $201,000 and
$183,000 for the six and three months ended June 30, 2002 from $76,000 and
$52,000 for the six and three months ended June 30, 2001. This increase was
substantially due to net acquisition fees totaling $134,000 received from our
movie theater joint venture partners equal to 0.5% of the purchase price of the
three properties acquired by the joint venture during April and May 2002. This
net amount reflects a reduction based on our proportionate share of ownership in
the joint venture. To a lesser extent, this increase is also due to the
investment in cash equivalents and Treasury bills of the balance (approximately
$28 million) of the net proceeds received from the public offering which was
funded to the Company on May 30, 2002.
Expenses
Depreciation and amortization expense decreased by $23,000 and $28,000 to
$1,423,000 and $699,000 for the six and three months ended June 30, 2002 from
$1,446,000 and $727,000 for the six and three months ended June 30, 2001. The
change was relatively insignificant because our mix of properties was
substantially the same during the two comparative periods.
Interest-mortgages payable increased by $253,000 and $24,000, or 9.2% and 1.6%,
to $3 million and $1.5 million for the six and three months ended June 30, 2002
from $2.8 million and $1.5 million for the six and three months ended June 30,
2001. This increase resulted from mortgages placed on two properties during
March and April 2001.
Interest-line of credit decreased by $203,000 and $19,000, or 88% and 50%, to
$28,000 and $19,000 for the six and three months ended June 30, 2002 from
$231,000 and $38,000 for the six and three months ended June 30, 2001. This
decrease resulted from our repayment of all of the outstanding indebtedness
under our line of credit during 2001. This indebtedness was incurred to
facilitate the purchase of several properties during 2000, and was repaid using
the proceeds from mortgage financings on two properties during March and April
2001. To facilitate the purchase of two theaters through our joint venture, we
borrowed $6 million under our line of credit during May 2002, which we repaid
with a portion of the proceeds received from the public offering.
Leasehold rent expense decreased by $120,000 and $72,000, or 83% and 100% to
$24,000 and zero for the six and three months ended June 30, 2002 from $144,000
and $72,000 for the six and three months ended June 30, 2001. This rent expense
was payable on the leasehold interest position that we contributed during
February 2002 to a joint venture in which we hold an approximately 36% interest.
Therefore, effective February 2002, we no longer paid the leasehold rent.
General and administrative expenses increased $177,000 and $115,000, or 29.6%
and 38.6%, to $774,000 and $413,000 for the six and three months ended June 30,
2002 from $597,000 and $298,000 for the six and three months ended June 30,
2001. This increase was primarily due to increases in payroll and fees,
including approximately $73,000 and $61,000 for the current six and three months
of payroll and related expenses of executive and support personnel, primarily
for legal and accounting services allocated to us pursuant to a Shared Services
Agreement between us and related entities. The increase in the allocated payroll
expenses resulted from an increase in our level of business activity, primarily
property acquisition activity. The increase in payroll expenses is also due to
compensation and fees approved by our compensation committee and board of
directors and recorded during the six and three months ended June 30, 2002 (and
will continue to be recorded during future quarters): an increase of $50,000
($12,500 per quarter) in the base salary and a bonus of $50,000 ($12,500 per
quarter) to our president and chief executive officer and a fee of $50,000 per
annum ($12,500 per quarter) to the chairman of our board of directors.
On May 30, 2002, we sold 2.5 million shares of Common Stock in a follow-on
public offering. Allocated payroll and payroll related expenses, primarily for
legal and accounting services resulting from time expended by various executive
and administrative personnel in connection with the preparation and filing of a
Registration Statement on Form S-2, declared effective by the SEC on May 24,
2002 have been included in the line item "Public Offering Expenses", all of
which are nonrecurring.
Real estate expenses decreased by $25,000 and $21,000, or 28.1% and 40.4%, to
$64,000 and $31,000 for the six and three months ended June 30, 2002 from
$89,000 and $52,000 for the six and three months ended June 30, 2001. This
decrease was primarily due to the write off of a leasing commission,
non-recurring landlord repairs and certain real estate taxes not rebilled to
tenants during the six and three months ended June 30, 2001.
Liquidity and Capital Resources
We had cash and cash equivalents of $29.9 million at June 30, 2002. Our primary
sources of liquidity are cash and cash equivalents, our revolving credit
facility and cash generated from operating activities, including mortgage
financings. We maintain a $15 million revolving credit facility with Citibank
N.A. The facility is available to us to pay down existing mortgages or to fund
the acquisition of additional properties. The facility matures on March 24,
2003. Borrowings under the facility bear interest at the bank's prime rate,
currently 4.75%, and there is an unused facility fee of one-quarter of 1% per
annum. Net proceeds received from the sale or refinancing of properties are
required to be used to repay amounts outstanding under the facility if proceeds
from the facility were used to purchase or refinance the property. The facility
is guaranteed by all of our subsidiaries that own unencumbered properties and is
secured by the outstanding stock of all of our subsidiaries. At June 30, 2002 we
had no indebtedness outstanding under the facility. We are currently negotiating
for an increased credit facility.
On May 30, 2002, we sold 2.5 million shares of Common Stock at $15.25 per share
in a follow-on public offering. The net proceeds of approximately $35 million
(after underwriting commissions and expenses of the offering) were used to repay
the $6 million outstanding under the line of credit and outstanding indebtedness
under two mortgage loans related to two of our properties totaling $1.3 million
that were maturing during the year. The balance of the net proceeds will be used
for working capital, general corporate purposes and for other property
acquisitions. At June 30, 2002 a substantial portion of the net proceeds was
invested in cash equivalents and Treasury bills.
We, on our own behalf and on behalf of our megaplex theater joint venture, are
involved in various stages of negotiation, due diligence and documentation with
respect to the acquisition of additional net leased properties. The joint
venture will only acquire movie theater properties. We will use the balance of
the proceeds of the offering (presently invested in cash equivalents and
Treasury bills), cash provided from operations and our credit facility to fund
acquisitions. We and the joint venture seek and will continue to seek mortgage
financing secured by properties owned and to be acquired. In July 2002, the
joint venture closed on a first mortgage loan of $28.9 million secured by four
megaplex stadium movie theater properties previously acquired by it. We received
approximately $7.1 million from this financing, which will be used in additional
to cash available of $29.5 million to acquire additional properties.
The following sets forth our contractual cash obligations as of June 30, 2002,
all of which relate to scheduled principal and interest payments and balances
due at maturity under outstanding mortgages secured by our properties, for the
periods indicated:
Principal Balances Due
Total and Interest at Maturity
----- ------------ -----------
Due within 1 year $ 10,891,000 $ 6,673,000 $ 4,218,000
Due 1 to 3 years 27,861,000 12,146,000 15,715,000
Due 4 to 5 years 17,174,000 9,464,000 7,710,000
Due after 5 years 53,770,000 19,111,000 34,659,000
As of June 30, 2002, we had outstanding approximately $74.7 million in long-term
mortgage indebtedness, all of which is non-recourse (subject to standard
carve-outs). We expect that debt service payments of approximately $18.8 million
due in the next three years will be paid primarily from cash generated from our
operations. We anticipate that loan maturities of approximately $19.9 million
due in the next three years will be paid primarily from mortgage financings or
refinancings. If we are not successful in refinancing our existing indebtedness
or financing our unencumbered properties, our cash flow and available cash, if
any, will not be sufficient to repay all maturing debt when payments become due,
and we may be forced to sell additional equity or dispose of properties on
disadvantageous terms.
We had no outstanding contingent commitments, such as guarantees of
indebtedness, or any other contractual cash obligations at June 30, 2002.
Since completion of the public offering on May 30, 2002, we have expanded our
investment activities independently and through our movie theater joint venture.
In the ordinary course of our business we are involved in varying levels of
discussions, negotiation, due diligence and documentation with respect to the
acquisition of additional properties. After our use of the public offering
funds, continuation of our expansion program will depend on our ability to
obtain a significant amount of additional capital, either through increased debt
or additional equity or through increased reliance on joint ventures with third
parties.
Cash Distribution Policy
We have elected to be taxed as a REIT under the Internal Revenue Code since our
taxable year ended December 31, 1983. To qualify as a REIT, we must meet a
number of organizational and operational requirements, including a requirement
that we distribute currently at least 90% of our ordinary taxable income to our
stockholders. It is our current intention to comply with these requirements and
maintain our REIT status. As a REIT, we generally will not be subject to
corporate federal, state or local income taxes on taxable income we distribute
currently (in accordance with the Internal Revenue Code and applicable
regulations) to our stockholders. If we fail to qualify as a REIT in any taxable
year, we will be subject to federal, state and local income taxes at regular
corporate rates and may not be able to qualify as a REIT for four subsequent tax
years. Even if we qualify for federal taxation as a REIT, we may be subject to
certain state and local taxes on our income and to federal income and excise
taxes on our undistributed taxable income, i.e., taxable income not distributed
in the amounts and in the time frames prescribed by the Internal Revenue Code
and applicable regulations thereunder.
It is our intention to pay to our stockholders within the time periods
prescribed by the Internal Revenue Code no less that 90%, and, if possible, 100%
of our annual taxable income, including gains from the sale of real estate and
recognized gains on sale of securities. It will continue to be our policy to
make sufficient cash distributions to stockholders in order for us to maintain
our REIT status under the Internal Revenue Code.
Item 3. - Quantitative and Qualitative Disclosures About Market Risks
All of our long-term debt bears interest at fixed rates, and therefore the fair
value of these instruments is affected by changes in the market interest rates.
The following table presents scheduled principal repayments based upon maturity
dates of the debt obligations and the related weighted-average interest rates by
expected maturity dates for the fixed rate debt.
Scheduled
Principal
Year Ending Repayments Average
June 30, (In Thousands) Interest Rate
-------- ------------- -------------
2003 $ 5,395 7.85%
2004 8,647 7.92
2005 9,417 7.95
2006 6,819 7.99
2007 3,007 7.93
Thereafter 41,366 7.96
--------
Total $ 74,651 7.95
========
Fair Value $ 76,178 7.50%
========
Part II - Other Information
Item 6. - Exhibits and Reports on Form 8-K
A Form 8-K was filed on April 17, 2002 to report that OLP Theatres LLC, a wholly
owned subsidiary of the Company, sold a 25% membership interest in OLP Holdings
LLC ("Holdings") to MTC Investors LLC ("MTC") for $3,275,000.
ONE LIBERTY PROPERTIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
One Liberty Properties, Inc.
----------------------------
(Registrant)
August 14, 2002 /s/ Jeffrey Fishman
- --------------- -------------------
Date Jeffrey Fishman
President and
Chief Executive Officer
August 14, 2002 /s/ David W. Kalish
- --------------- -------------------
Date David W. Kalish
Senior Vice President and
Chief Financial Officer