SOURCE: One Liberty Properties, Inc.

August 08, 2012 08:30 ET

One Liberty Properties, Inc. Reports Second Quarter 2012 Results

Rental Income Increased 6.8% Over the Second Quarter 2011; Extends and Increases Credit Line and Reduces Interest Rate

GREAT NECK, NY--(Marketwire - Aug 8, 2012) - One Liberty Properties, Inc. (NYSE: OLP), an owner of a geographically diversified portfolio of retail, industrial, office and other properties in the United States, primarily under long term leases, today announced operating results for the quarter ended June 30, 2012.

Patrick J. Callan, Jr., President and Chief Executive Officer of One Liberty stated, "During the quarter, the Company continued to execute on its strategy of identifying and completing accretive investments in its effort to maximize value for stockholders. Our network of relationships continues to produce a steady stream of investment opportunities, and we completed approximately $14.3 million of attractive investments year-to-date. We also agreed to sell an asset that will produce a gain for financial reporting purposes of about $15 million, which together with other property sales completed during the quarter, will generate approximately $17.9 million of net proceeds. With the additional capacity on our recently expanded line of credit and available cash, we expect to increase our momentum through the balance of the year."

Operating Results:

Rental income for the second quarter of 2012 increased 6.8% to $11.71 million compared to $10.96 million for the second quarter of 2011. The increase is attributable primarily to rental income earned from the twelve properties acquired beginning March 2011.

Total operating expenses for the second quarter of 2012 were $5.18 million compared to $4.87 million for the second quarter in the prior year.

Net income for the second quarter of 2012 increased by approximately 11.9% to $5.75 million ($0.39 per diluted share), compared to $5.14 million ($0.35 per diluted share) for the second quarter in the prior year. The increase included the impact of a $2.21 million ($0.15 per diluted share) net gain on two property sales in June 2012 compared to a $932,000 ($0.06 per diluted share) gain on a property sale in the second quarter of 2011. The comparable period in 2011 also included a $1.24 million ($0.085 per diluted share) gain on settlement of debt at a discount. 

Income from continuing operations was $3.5 million, or $0.24 per diluted share, compared to $4.08 million, or $0.28 per diluted share, in the second quarter of 2011. Included in the prior period results is the gain on settlement of debt at a discount noted above. Income from discontinued operations was $2.26 million, or $0.15 per diluted share, compared to $1.06 million, or $0.07 per diluted share, in the second quarter of 2011. Income from discontinued operations included the gains on dispositions in the second quarter of each period, as noted above. 

Funds from Operations:

Funds from Operations ("FFO") was $6.3 million in the second quarter of 2012 compared to $6.7 million in the second quarter of 2011. FFO per diluted share was $0.42 in the second quarter of 2012 compared to $0.46 in the same period in 2011. The comparison of FFO per diluted share quarter versus quarter was impacted due to the inclusion, in the 2011 period, of $1.24 million ($0.085 per diluted share) gain on the settlement of debt at a discount. A reconciliation of GAAP amounts to non-GAAP amounts is presented with the financial information included later in this release.

Acquisitions and Dispositions:

During the second quarter of 2012, the Company acquired two properties for an aggregate of approximately $4.54 million and sold two properties for net proceeds of $7.05 million, and a net gain of $2.21 million.

In July 2012, the Company agreed to sell a property located in New York City for $18.25 million (including the pre-payment or assumption of the existing first mortgage in the approximate amount of $6.9 million and subject to increase upon the occurrence of specified events). We anticipate that this sale will be completed by the end of the third quarter 2012 and estimate that the sale will result in a gain for financial statement purposes of approximately $15 million.

Balance Sheet:

The Company, at June 30, 2012, had $15.4 million of cash and cash equivalents, total assets of $472 million, total debt of $236.3 million and total equity of $220 million.

Expansion and Extension of Credit Facility:

Effective as of July 31, 2012, the Company amended its revolving credit facility to, among other things, reduce the interest rate floor from 5.5% to 4.75%, increase permitted borrowings from $55 million to $75 million, subject to compliance with the borrowing base, and extend the expiration of the facility by two years to March 31, 2015.

Dividend:

On July 6, 2012 the Company paid a quarterly cash dividend of $0.33 per share to stockholders of record as of June 26, 2012.

Non-GAAP Financial Measures:

One Liberty believes that Funds from Operations ("FFO") is a widely recognized and appropriate measure of the performance of an equity REIT. One Liberty presents FFO because it considers FFO to be an important supplemental measure of One Liberty's operating performance. One Liberty believes FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude generally accepted accounting principles ("GAAP") historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. As a result, FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, interest costs and other matters without the inclusion of depreciation and amortization, providing perspective that may not necessarily be apparent from net income.

One Liberty has determined FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"). FFO is defined by NAREIT as net income (or loss) computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus real estate depreciation and amortization, plus impairment write-downs of depreciable real estate after adjustments for unconsolidated partnerships and joint ventures. FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs. FFO should not be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow as a measure of liquidity. Management believes FFO is of interest to securities analysts, investors and other interested parties and may not be comparable to similarly titled measures as reported by others.

Forward Looking Statement

Certain information contained in this press release, together with other statements and information publicly disseminated by One Liberty Properties, Inc. is forward looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. One Liberty intends 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 the purpose of complying with these safe harbor provisions. Information regarding certain important factors that could cause actual outcomes or other events to differ materially from any such forward looking statements appear in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 and in particular "Item 1A. Risk Factors" included therein. You should not rely on forward looking statements 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.

About One Liberty Properties:

One Liberty is a self-administered and self-managed real estate investment trust incorporated under the laws of Maryland in 1982. The primary business of the Company is to acquire, own and manage a geographically diversified portfolio of retail, industrial, office and other properties under long term leases. Nearly all of the Company's leases are "net leases", under which the tenant is responsible for real estate taxes, insurance and ordinary maintenance and repairs.

For additional information on the Company's operations, activities and properties, please visit One Liberty's website at www.1liberty.com.

ONE LIBERTY PROPERTIES, INC. (NYSE: OLP)  
(Amounts in Thousands, Except Per Share Data)  
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
Revenues:                                
  Rental income, net - Note 1   $ 11,707     $ 10,964     $ 23,072     $ 21,790  
                                 
Operating expenses:                                
  Depreciation and amortization     2,507       2,254       4,948       4,510  
  General and administrative     1,796       1,903       3,686       3,502  
  Real estate acquisition costs     123       18       166       45  
  Real estate expenses     679       615       1,306       1,159  
  Leasehold rent     77       77       154       154  
  Total operating expenses     5,182       4,867       10,260       9,370  
                                 
Operating income     6,525       6,097       12,812       12,420  
                                 
Other income and expenses:                                
  Equity in net earnings of unconsolidated joint ventures     384       105       453       135  
  Gain on settlement of debt     -       1,240       -       1,240  
  Other income     209       40       224       53  
  Interest:                                
    Expense     (3,430 )     (3,224 )     (6,738 )     (6,755 )
    Amortization of deferred financing costs     (192 )     (174 )     (381 )     (479 )
  Gain on sale of real estate     -       -       319       -  
                                 
Income from continuing operations     3,496       4,084       6,689       6,614  
                                 
  Income from discontinued operations     53       126       85       328  
  Net gain on sale     2,205       932       2,205       932  
Income from discontinued operations - Note 2     2,258       1,058       2,290       1,260  
                                 
                                 
Net income     5,754       5,142       8,979       7,874  
Less net income attributable to non-controlling interest     (4 )     -       (7 )     -  
                                 
Net income attributable to One Liberty Properties, Inc.   $ 5,750     $ 5,142     $ 8,972     $ 7,874  
                                 
Per common share attributable to common stockholders- diluted:                                
  Income from continuing operations   $ 0.24     $ 0.28     $ 0.44     $ 0.48  
  Income from discontinued operations     0.15       0.07       0.16       0.09  
    $ 0.39     $ 0.35     $ 0.60     $ 0.57  
                                 
Funds from operations - Note 3   $ 6,296     $ 6,651     $ 11,865     $ 11,829  
                                 
Funds from operations per common share-diluted - Note 4   $ 0.42     $ 0.46     $ 0.80     $ 0.86  
                                 
Weighted average number of common and unvested restricted shares outstanding:                                
Basic     14,787       14,426       14,749       13,775  
Diluted     14,887       14,526       14,849       13,826  
                                 
Note 1 - Rental income includes straight line rent accruals and amortization of lease intangibles of $288 and $666 for the three and six months ended June 30, 2012 and $326 and $634 for the three and six months ended June 30, 2011, respectively.  
                                 
Note 2 - Income from discontinued operations includes straight line rent accruals and amortization of lease intangibles of $1 and $1 for the three and six months ended June 30, 2012 and $(1) and $(2) for the three and six months ended June 30, 2011, respectively.  
                         
                         
ONE LIBERTY PROPERTIES, INC. (NYSE: OLP)  
(Amounts in Thousands, Except Per Share Data)  
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
Note 3                                
Funds from operations is summarized in the following table:                                
Net income attributable to One Liberty Properties, Inc.   $ 5,750     $ 5,142     $ 8,972     $ 7,874  
Add: depreciation of properties     2,535       2,326       5,026       4,675  
Add: our share of depreciation in unconsolidated joint ventures     161       97       302       176  
Add: amortization of capitalized leasing expenses     32       18       50       36  
Add: our share of amortization of capitalized leasing expenses in unconsolidated joint ventures    
22
     
-
     
38
     
-
 
Deduct: net gain on sales of real estate     (2,204 )     (932 )     (2,523 )     (932 )
Funds from operations   $ 6,296     $ 6,651     $ 11,865     $ 11,829  
                                 
Note 4                                
Funds from operations per common share is summarized in the following table:                          
Net income attributable to One Liberty Properties, Inc.   $ 0.39     $ 0.35     $ 0.60     $ 0.57  
Add: depreciation of properties     0.17       0.16       0.34       0.34  
Add: our share of depreciation in unconsolidated joint ventures     0.01       0.01       0.02       0.01  
Add: amortization of capitalized leasing expenses     -       -       0.01       -  
Add: our share of amortization of capitalized leasing expenses in unconsolidated joint ventures    
-
     
-
     
-
     
 -
 
Deduct: net gain on sales of real estate     (0.15 )     (0.06 )     (0.17 )     (0.06 )
Funds from operations per common share-diluted   $ 0.42     $ 0.46     $ 0.80     $ 0.86  
                                 
                                 
         
ONE LIBERTY PROPERTIES, INC.
CONDENSED BALANCE SHEETS
(Amounts in Thousands)
         
    June 30,   December 31,
    2012   2011
ASSETS            
Real estate investments, net   $ 402,256   $ 393,514
Property contributed to joint venture     -     11,842
Properties held for sale (including related assets of $88 and $378)     2,732     7,718
Investment in unconsolidated joint ventures     17,334     5,093
Cash and cash equivalents     15,353     12,668
Unbilled rent receivable     13,094     12,426
Unamortized intangible lease assets     14,563     11,779
Other assets     6,629     5,696
Total assets   $ 471,961   $ 460,736
             
LIABILITIES AND EQUITY            
Liabilities:            
Mortgages and loan payable   $ 209,807   $ 198,879
Mortgages payable - property held for sale     6,923     6,970
Line of credit     19,600     20,000
Unamortized intangible lease liabilities     4,955     5,166
Other liabilities     10,638     10,774
Total liabilities     251,923     241,789
             
Total One Liberty Properties, Inc. stockholders' equity     219,566     218,285
Non-controlling interests in joint ventures     472     662
Total equity     220,038     218,947
Total liabilities and equity   $ 471,961   $ 460,736

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