Company Quick10K Filing
One Liberty Properties
Price27.84 EPS1
Shares19 P/E39
MCap536 P/FCF19
Net Debt-11 EBIT29
TEV524 TEV/EBIT18
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-03-16
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-07
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-03-18
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-06
10-Q 2018-03-31 Filed 2018-05-07
10-K 2017-12-31 Filed 2018-03-14
10-Q 2017-09-30 Filed 2017-11-08
10-Q 2017-06-30 Filed 2017-08-08
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-03-10
10-Q 2016-09-30 Filed 2016-11-08
10-Q 2016-06-30 Filed 2016-08-05
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-03-15
10-Q 2015-09-30 Filed 2015-11-09
10-Q 2015-06-30 Filed 2015-08-06
10-Q 2015-03-31 Filed 2015-05-11
10-K 2014-12-31 Filed 2015-03-12
10-Q 2014-09-30 Filed 2014-11-06
10-Q 2014-06-30 Filed 2014-08-07
10-Q 2014-03-31 Filed 2014-05-08
10-K 2013-12-31 Filed 2014-03-17
10-Q 2013-09-30 Filed 2013-11-12
10-Q 2013-06-30 Filed 2013-08-08
10-Q 2013-03-31 Filed 2013-05-08
10-K 2012-12-31 Filed 2013-03-15
10-Q 2012-09-30 Filed 2012-11-09
10-Q 2012-06-30 Filed 2012-08-08
10-Q 2012-03-31 Filed 2012-05-09
10-K 2011-12-31 Filed 2012-03-14
10-Q 2011-09-30 Filed 2011-11-08
10-Q 2011-06-30 Filed 2011-08-08
10-Q 2011-03-31 Filed 2011-05-09
10-K 2010-12-31 Filed 2011-03-16
10-Q 2010-09-30 Filed 2010-11-05
10-Q 2010-06-30 Filed 2010-08-06
10-Q 2010-03-31 Filed 2010-05-07
10-K 2009-12-31 Filed 2010-03-12
8-K 2020-05-07
8-K 2020-03-13
8-K 2019-12-11
8-K 2019-11-22
8-K 2019-11-07
8-K 2019-09-11
8-K 2019-08-09
8-K 2019-08-07
8-K 2019-07-01
8-K 2019-06-13
8-K 2019-05-10
8-K 2019-05-07
8-K 2019-03-18
8-K 2018-12-04
8-K 2018-11-08
8-K 2018-09-28
8-K 2018-08-06
8-K 2018-06-13
8-K 2018-06-01
8-K 2018-05-03
8-K 2018-03-13
8-K 2017-11-07

OLP 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1 - Organization and Background
Note 2 - Summary Accounting Policies
Note 3 - Leases
Note 4 - Real Estate Acquisitions
Note 5 - Sale of Property
Note 6 - Variable Interest Entities, Contingent Liability and Consolidated Joint Ventures
Note 7 - Investment in Unconsolidated Joint Ventures
Note 8 - Debt Obligations
Note 9 - Related Party Transactions
Note 10 - Common Stock Cash Dividend
Note 11 - Shares Issued Through The At - The - Market Equity Offering Program
Note 12 - Earnings per Common Share
Note 13 - Stock Based Compensation
Note 14 - Fair Value Measurements
Note 15 - New Accounting Pronouncements
Note 16 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1A. Risk Factors
Item 6. Exhibits
EX-31.1 olp-20200331xex31d1.htm
EX-31.2 olp-20200331xex31d2.htm
EX-32.1 olp-20200331xex32d1.htm
EX-32.2 olp-20200331xex32d2.htm

One Liberty Properties Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
80064048032016002012201420172020
Assets, Equity
25201510502012201420172020
Rev, G Profit, Net Income
70362-32-66-1002012201420172020
Ops, Inv, Fin

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2020

OR

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 001-09279

ONE LIBERTY PROPERTIES, INC.

(Exact name of registrant as specified in its charter)

MARYLAND

    

13-3147497

(State or other jurisdiction of

(I.R.S. employer

incorporation or organization)

identification number)

60 Cutter Mill Road, Great Neck, New York

11021

(Address of principal executive offices)

(Zip code)

(516) 466-3100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on
which registered

Common Stock

OLP

New York Stock Exchange

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  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

    

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes  No 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of May 1, 2020, the registrant had 20,152,054 shares of common stock outstanding.

Table of Contents

One Liberty Properties, Inc. and Subsidiaries

Table of Contents

Part I — Financial Information

    

Page No.

Item 1.

Unaudited Consolidated Financial Statements

 

Consolidated Balance Sheets — March 31, 2020 and December 31, 2019

1

 

Consolidated Statements of Income — Three months ended March 31, 2020 and 2019

2

 

Consolidated Statements of Comprehensive Income — Three months ended March 31, 2020 and 2019

3

 

Consolidated Statements of Changes in Equity — Three months ended March 31, 2020 and 2019

4

 

Consolidated Statements of Cash Flows — Three months ended March 31, 2020 and 2019

5

 

Notes to Consolidated Financial Statements

7

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

 

Item 4.

Controls and Procedures

33

 

Part II — Other Information

 

Item 1A.

Risk Factor

34

Item 6.

Exhibits

34

Table of Contents

Part I — FINANCIAL INFORMATION

Item 1.    Financial Statements

ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands, Except Par Value)

March 31, 

December 31, 

    

2020

    

2019

(Unaudited)

ASSETS

Real estate investments, at cost

Land

$

196,645

$

195,320

Buildings and improvements

660,623

640,517

Total real estate investments, at cost

857,268

835,837

Less accumulated depreciation

138,607

135,302

Real estate investments, net

718,661

700,535

Investment in unconsolidated joint ventures

11,247

11,061

Cash and cash equivalents

21,360

11,034

Unbilled rent receivable

15,281

15,037

Unamortized intangible lease assets, net

28,722

26,068

Escrow, deposits and other assets and receivables

10,480

10,894

Total assets (1)

$

805,751

$

774,629

LIABILITIES AND EQUITY

Liabilities:

Mortgages payable, net of $4,420 and $4,438 of deferred financing costs, respectively

$

447,337

$

435,840

Line of credit, net of $567 and $619 of deferred financing costs, respectively

30,283

10,831

Dividends payable

9,037

8,966

Accrued expenses and other liabilities

19,363

14,587

Unamortized intangible lease liabilities, net

12,636

12,421

Total liabilities (1)

518,656

482,645

Commitments and contingencies

Equity:

One Liberty Properties, Inc. stockholders' equity:

Preferred stock, $1 par value; 12,500 shares authorized; none issued

Common stock, $1 par value; 25,000 shares authorized; 19,380 and 19,251 shares issued and outstanding

19,380

19,251

Paid-in capital

302,530

301,517

Accumulated other comprehensive loss

(6,432)

(1,623)

Distributions in excess of net income

(29,592)

(28,382)

Total One Liberty Properties, Inc. stockholders’ equity

285,886

290,763

Non-controlling interests in consolidated joint ventures (1)

1,209

1,221

Total equity

287,095

291,984

Total liabilities and equity

$

805,751

$

774,629

(1)The Company’s consolidated balance sheets include assets and liabilities of consolidated variable interest entities (“VIEs”). See Note 6. The consolidated balance sheets include the following amounts related to the Company’s consolidated VIEs: $12,158 and $12,158 of land, $23,999 and $24,223 of building and improvements, net of $4,559 and $4,334 of accumulated depreciation, $3,722 and $3,696 of other assets included in other line items, $23,993 and $24,199 of real estate debt, net, $1,323 and $1,153 of other liabilities included in other line items and $1,209 and $1,221 of non-controlling interests as of March 31, 2020 and December 31, 2019, respectively.

See accompanying notes to consolidated financial statements.

1

Table of Contents

ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in Thousands, Except Per Share Data)

(Unaudited)

Three Months Ended

March 31, 

    

2020

    

2019

Revenues:

Rental income, net

$

21,239

$

21,155

Operating expenses:

Depreciation and amortization

5,674

5,347

General and administrative (see Note 9 for related party information)

3,334

3,171

Real estate expenses (see Note 9 for related party information)

3,342

3,341

State taxes

82

79

Total operating expenses

12,432

11,938

Other operating income

Gain on sale of real estate, net

4,252

Operating income

13,059

9,217

Other income and expenses:

Equity in earnings (loss) of unconsolidated joint ventures

64

(116)

Equity in earnings from sale of unconsolidated joint venture property

121

Prepayment costs on debt

(290)

Other income

4

4

Interest:

Expense

(4,884)

(4,862)

Amortization and write-off of deferred financing costs

(243)

(232)

Net income

7,831

4,011

Net income attributable to non-controlling interests

(5)

(40)

Net income attributable to One Liberty Properties, Inc.

$

7,826

$

3,971

Weighted average number of common shares outstanding:

Basic

19,361

18,894

Diluted

19,374

18,993

Per common share attributable to common stockholders:

Basic

$

.39

$

.19

Diluted

$

.39

$

.19

See accompanying notes to consolidated financial statements.

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ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in Thousands)

(Unaudited)

Three Months Ended

March 31, 

    

2020

    

2019

Net income

$

7,831

$

4,011

Other comprehensive loss

Net unrealized loss on derivative instruments

(4,818)

(1,577)

Comprehensive income

3,013

2,434

Net income attributable to non-controlling interests

(5)

(40)

Adjustment for derivative instruments attributable to non-controlling interests

9

5

Comprehensive income attributable to One Liberty Properties, Inc.

$

3,017

$

2,399

See accompanying notes to consolidated financial statements.

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ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts in Thousands, Except Per Share Data)

(Unaudited)

Accumulated

Accumulated

Non-Controlling

    

    

    

 Other

    

 Distributions

    

 Interests in

    

Common

Paid-in

Comprehensive

 in Excess of

 Consolidated

Stock

Capital

Income (Loss)

 Net Income

  Joint Ventures

Total

Balances, December 31, 2018

$

18,736

$

287,250

$

1,890

$

(10,730)

$

1,449

$

298,595

Distributions – common stock

Cash – $.45 per share

(8,832)

(8,832)

Restricted stock vesting

 

112

 

(112)

 

 

 

 

Shares issued through equity offering program – net

 

37

 

1,002

 

 

 

 

1,039

Shares issued through dividend reinvestment plan

 

52

 

1,147

 

 

 

 

1,199

Distributions to non-controlling interests

 

 

 

 

 

(5)

 

(5)

Compensation expense – restricted stock

 

 

954

 

 

 

 

954

Net income

 

 

 

 

3,971

 

40

 

4,011

Other comprehensive loss

 

 

 

(1,572)

 

 

(5)

 

(1,577)

Balances, March 31, 2019

 

$

18,937

 

$

290,241

 

$

318

 

$

(15,591)

 

$

1,479

 

$

295,384

Balances, December 31, 2019

$

19,251

$

301,517

$

(1,623)

$

(28,382)

$

1,221

$

291,984

Distributions – common stock

Cash – $.45 per share

 

 

 

 

(9,036)

 

 

(9,036)

Restricted stock vesting

122

 

(122)

 

 

 

 

Shares issued through dividend reinvestment plan

 

7

159

 

 

 

 

166

Distributions to non-controlling interests

 

 

 

 

 

(8)

 

(8)

Compensation expense – restricted stock

 

 

976

 

 

 

 

976

Net income

 

 

 

 

7,826

 

5

 

7,831

Other comprehensive loss

 

 

 

(4,809)

 

 

(9)

 

(4,818)

Balances, March 31, 2020

$

19,380

$

302,530

$

(6,432)

$

(29,592)

$

1,209

$

287,095

See accompanying notes to consolidated financial statements.

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ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

(Unaudited)

Three Months Ended

March 31, 

    

2020

    

2019

Cash flows from operating activities:

Net income

$

7,831

$

4,011

Adjustments to reconcile net income to net cash provided by operating activities:

Gain on sale of real estate, net

(4,252)

Increase in unbilled rent receivable

(380)

(395)

Amortization and write-off of intangibles relating to leases, net

(190)

(254)

Amortization of restricted stock expense

976

954

Equity in (earnings) loss of unconsolidated joint ventures

(64)

116

Equity in earnings from sale of unconsolidated joint venture property

(121)

Depreciation and amortization

5,674

5,347

Amortization and write-off of deferred financing costs

243

232

Payment of leasing commissions

(38)

(141)

Decrease in escrow, deposits, other assets and receivables

303

495

Increase (decrease) in accrued expenses and other liabilities

69

(2,250)

Net cash provided by operating activities

10,051

8,115

Cash flows from investing activities:

Purchase of real estate

(28,504)

Improvements to real estate

(109)

(687)

Net proceeds from sale of real estate

7,093

Distributions of capital from unconsolidated joint venture

11

Net cash used in investing activities

(21,520)

(676)

Cash flows from financing activities:

Scheduled amortization payments of mortgages payable

(3,389)

(3,135)

Repayment of mortgages payable

(3,332)

Proceeds from mortgage financings

18,200

23,545

Proceeds from sale of common stock, net

1,039

Proceeds from bank line of credit

41,500

4,000

Repayment on bank line of credit

(22,100)

(28,000)

Issuance of shares through dividend reinvestment plan

166

1,199

Payment of financing costs

(165)

(378)

Distributions to non-controlling interests

(8)

(5)

Cash distributions to common stockholders

(8,965)

(8,724)

Net cash provided by (used in) financing activities

21,907

(10,459)

Net increase (decrease) in cash, cash equivalents and restricted cash

10,438

(3,020)

Cash, cash equivalents and restricted cash at beginning of year

11,968

16,733

Cash, cash equivalents and restricted cash at end of period

$

22,406

$

13,713

Supplemental disclosure of cash flow information:

Cash paid during the period for interest expense

$

4,844

$

4,939

Supplemental disclosure of non-cash investing activity:

Purchase accounting allocation - intangible lease assets

$

3,905

$

Purchase accounting allocation - intangible lease liabilities

(568)

(Continued on next page)

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ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

(Unaudited) (Continued)

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows (amounts in thousands):

March 31, 

    

2020

    

2019

Cash and cash equivalents

$

21,360

$

12,794

Restricted cash

 

 

337

Restricted cash included in escrow, deposits and other assets and receivables

1,046

582

Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows

$

22,406

$

13,713

Amounts included in restricted cash in 2019 represent the cash reserve balance received from an owner/operator at one of the Company’s ground leased properties which was sold in 2019. Restricted cash included in escrow, deposits and other assets and receivables represent amounts related to real estate tax and other reserve escrows required to be held by lenders in accordance with the Company’s mortgage agreements. The restriction on these escrow reserves will lapse when the related mortgage is repaid.

See accompanying notes to consolidated financial statements.

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One Liberty Properties, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2020

Note 1 – Organization and Background

One Liberty Properties, Inc. (“OLP”) was incorporated in 1982 in Maryland. OLP is a self-administered and self-managed real estate investment trust (“REIT”). OLP acquires, owns and manages a geographically diversified portfolio consisting primarily of industrial, retail, restaurant, health and fitness, and theater properties, many of which are subject to long-term net leases. As of March 31, 2020, OLP owns 126 properties, including four properties owned by consolidated joint ventures and three properties owned by unconsolidated joint ventures. The 126 properties are located in 31 states.

Note 2 – Summary Accounting Policies

Principles of Consolidation/Basis of Preparation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by U.S. Generally Accepted Accounting Principles (“GAAP”) for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statement disclosures. In the opinion of management, all adjustments of a normal recurring nature necessary for fair presentation have been included. The results of operations for the three months ended March 31, 2020 and 2019 are not necessarily indicative of the results for the full year. These statements should be read in conjunction with the consolidated financial statements and related notes included in OLP’s Annual Report on Form 10-K for the year ended December 31, 2019.

The preparation of the financial statements in conformity with GAAP 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 and operations of OLP, its wholly-owned subsidiaries, its joint ventures in which the Company, as defined, has a controlling interest, and variable interest entities (“VIEs”) of which the Company is the primary beneficiary. OLP and its consolidated subsidiaries are referred to herein as the “Company”. Material intercompany items and transactions have been eliminated in consolidation.

Investment in Joint Ventures and Variable Interest Entities

The Financial Accounting Standards Board, or FASB, provides guidance for determining whether an entity is a VIE. VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance and (ii) has the obligation to absorb losses, or the right to receive benefits, of the VIE that could potentially be significant to the VIE.

The Company assesses the accounting treatment for each of its investments, including a review of each venture or limited liability company or partnership agreement, to determine the rights of each party and whether those rights are protective or participating. The agreements typically contain certain protective rights, such as the requirement of partner approval to sell, finance or refinance the property and to pay capital expenditures and operating expenditures outside of the approved budget or operating plan. In situations where, among other things, the Company and its partners jointly (i) approve the annual budget, (ii) approve certain expenditures, (iii) prepare or review and approve the joint venture’s tax return before filing, or (iv) approve each lease at a property, the Company does not consolidate as the Company considers these to be substantive participation rights that result in shared, joint power over the activities that most significantly impact the performance of the joint venture or property. Additionally, the Company assesses the accounting treatment for any interests pursuant to which the Company may have a variable interest as a lessor. Leases may contain certain protective rights, such as the right of sale and the receipt of certain escrow deposits.

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Table of Contents

One Liberty Properties, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2020 (Continued)

Note 2 – Summary Accounting Policies (Continued)

The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting. All investments in unconsolidated joint ventures have sufficient equity at risk to permit the entity to finance its activities without additional subordinated financial support and, as a group, the holders of the equity at risk have power through voting rights to direct the activities of these ventures. As a result, none of these joint ventures are VIEs. In addition, the Company shares power with its co-managing members over these entities, and therefore the entities are not consolidated. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for their share of equity in earnings, cash contributions and distributions. None of the joint venture debt is recourse to the Company, subject to standard carve-outs.

The Company reviews on a quarterly basis its investments in unconsolidated joint ventures for other-than-temporary losses in investment value. Any decline that is not expected to be recovered based on the underlying assets of the investment is considered other than temporary and an impairment charge is recorded as a reduction in the carrying value of the investment. During the three months ended March 31, 2020 and 2019, there were no impairment charges related to the Company’s investments in unconsolidated joint ventures.

The Company has elected to follow the cumulative earnings approach when assessing, for the consolidated statement of cash flows, whether the distribution from the investee is a return of the investor’s investment as compared to a return on its investment. The source of the cash generated by the investee to fund the distribution is not a factor in the analysis (that is, it does not matter whether the cash was generated through investee refinancing, sale of assets or operating results). Consequently, the investor only considers the relationship between the cash received from the investee to its equity in the undistributed earnings of the investee, on a cumulative basis, in assessing whether the distribution from the investee is a return on or a return of its investment. Cash received from the unconsolidated entity is presumed to be a return on the investment to the extent that, on a cumulative basis, distributions received by the investor are less than its share of the equity in the undistributed earnings of the entity.

Note 3 – Leases

Lessor Accounting

The Company owns rental properties which are leased to tenants under operating leases with current expirations ranging from 2020 to 2055, with options to extend or terminate the lease. Revenues from such leases are reported as Rental income, net and are comprised of (i) lease components, which includes fixed and variable lease payments and (ii) non-lease components which includes reimbursements of property level operating expenses. The Company does not separate non-lease components from the related lease components, as the timing and pattern of transfer are the same, and account for the combined component in accordance with ASC 842.

Fixed lease revenues represent 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 non-cancelable term of the lease. Variable lease revenues include payments based on (i) tenant reimbursements, (ii) changes in the index or market-based indices after the inception of the lease, (iii) percentage rents or (iv) the operating performance of the property. Variable lease revenues are not recognized until the specific events that trigger the variable payments have occurred.

The components of lease revenues are as follows (amounts in thousands):

Three Months Ended

    

March 31, 

2020

2019

Fixed lease revenues

$

18,067

    

$

17,645

Variable lease revenues

2,982

3,256

Lease revenues (a)

$

21,049

$

20,901

(a)Excludes $190 and $254 of amortization related to lease intangible assets and liabilities for the three months ended March 31, 2020 and 2019, respectively.

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One Liberty Properties, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2020 (Continued)

Note 3 – Leases (Continued)

On a quarterly basis, the Company assesses the collectability of substantially all lease payments due under its leases, including unbilled rent receivable balances, by reviewing the tenant's payment history and financial condition. Changes to such collectability is recognized as a current period adjustment to rental revenue. The Company did not record any write-offs of unbilled rent receivables during the three months ended March 31, 2020 and 2019. The Company has assessed the collectability of all lease payments as probable as of March 31, 2020.

Due to the impact of the COVID-19 pandemic, rent deferrals are currently being negotiated and executed with certain of the Company’s tenants. In accordance with recent guidance issued by the FASB, the Company will elect to (i) not evaluate whether such COVID-19 pandemic related rent-relief is a lease modification under ASC 842 and (ii) treat each tenant rent deferral as if it were contemplated as part of the existing lease contract.

In many of the Company's leases, the tenant is obligated to pay the real estate taxes, insurance, and certain other expenses directly to the vendor. These obligations, which have been assumed by the tenants, are not reflected in our consolidated financial statements. To the extent any such tenant defaults on its lease or if it is deemed probable that the tenant will fail to pay for such obligations, a liability for such obligations would be recorded.

Minimum Future Rents

As of March 31, 2020, the minimum future contractual base rents to be received on non-cancellable operating leases are included in the table below (amounts in thousands). The minimum future contractual base rents do not include (i) straight-line rent or amortization of intangibles and (ii) variable lease revenues as described above.

From April 1 – December 31, 2020

$

54,108

For the year ended December 31,

2021

71,807

2022

63,372

2023

54,623

2024

46,012

2025

40,375

Thereafter

150,852

Total

$

481,149

Lessee Accounting

Ground Lease

The Company is a lessee under a ground lease in Greensboro, North Carolina, which is classified as an operating lease. The ground lease expires March 3, 2025 and provides for up to four, 5-year renewal options and one seven-month renewal option. As of March 31, 2020, the remaining lease term is 9.9 years. During each of the three months ended March 31, 2020 and 2019, the Company recognized $131,000 of lease expense related to this ground lease which is included in Real estate expenses on the consolidated statements of income.

Office Lease

The Company is a lessee under a corporate office lease in Great Neck, New York, which is classified as an operating lease. The lease expires on December 31, 2031 and provides a 5-year renewal option. As of March 31, 2020, the remaining lease term is 16.8 years. During each of the three months ended March 31, 2020 and 2019, the Company recognized $14,000 of lease expense related to this office lease which is included in General and administrative expenses on the consolidated statements of income.

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One Liberty Properties, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2020 (Continued)

Note 3 – Leases (Continued)

Minimum Future Lease Payments

As of March 31, 2020, the minimum future lease payments related to the operating ground and office leases are as follows (amounts in thousands):

From April 1 – December 31, 2020

$

382

For the year ended December 31,

2021

511

2022

506

2023

507

2024

557

2025

626

Thereafter

3,115

Total undiscounted cash flows

$

6,204

Present value discount

(1,473)

Lease liability

$

4,731

Note 4 – Real Estate Acquisitions

The following charts detail the Company’s real estate acquisitions and allocations of the purchase price during the three months ended March 31, 2020 (amounts in thousands). The Company determined that with respect to each of these acquisitions, the gross assets acquired are concentrated in a single identifiable asset. Therefore, these transactions do not meet the definition of a business and are accounted for as asset acquisitions. As such, direct transaction costs associated with these asset acquisitions have been capitalized to real estate assets and depreciated over their respective useful lives.

Contract

Capitalized

Purchase

Terms of

Transaction

Description of Property

   

Date Acquired

   

Price

   

Payment

   

Costs

Creative Office Environments industrial facility,

Ashland, Virginia

February 20, 2020

$

9,100

 

All cash (a)

$

119

Fed Ex industrial facility,

Lowell, Arkansas

February 24, 2020

19,150

All cash (a)

 

135

Totals

  

$

28,250

 

  

$

254

(a)In March 2020, the Company obtained new mortgage debt aggregating $18,200 which bears interest at rates of 3.54% and 3.63% and mature in 2035 and 2027, respectively.

Building &

Intangible Lease

Description of Property

Land

    

Improvements

Asset

Liability

    

Total

Creative Office Environments industrial facility,

 

  

 

  

 

  

Ashland, Virginia

$

391

$

7,901

$

927

$

$

9,219

Fed Ex industrial facility,

  

 

  

 

  

Lowell, Arkansas

1,687

 

15,188

2,978

(568)

 

19,285

Totals

$

2,078

$

23,089

$

3,905

$

(568)

$

28,504

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One Liberty Properties, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2020 (Continued)

Note 5 – Sale of Property

On February 11, 2020, the Company sold a retail property located in Onalaska, Wisconsin for approximately $7,093,000, net of closing costs. The sale resulted in a gain of $4,252,000 which was recorded as Gain on sale of real estate, net, in the consolidated statement of income for the three months ended March 31, 2020. In connection with the sale, the Company paid off the $3,332,000 mortgage and incurred a $290,000 debt prepayment cost which was recorded as Prepayment costs on debt in the consolidated statement of income for the three months ended March 31, 2020.

Note 6 – Variable Interest Entities, Contingent Liability and Consolidated Joint Ventures

Variable Interest Entity – Ground Lease

The Company determined it has a variable interest through its ground lease at its Beachwood, Ohio property (the Vue Apartments), and the owner/operator is a VIE because its equity investment at risk is insufficient to finance its activities without additional subordinated financial support. The Company further determined that it is not the primary beneficiary of this VIE because the Company has shared power over the activities that most significantly impact the owner/operator’s economic performance (i.e., shared rights on the sale of the property) and therefore, does not consolidate this VIE for financial statement purposes.

Accordingly, the Company accounts for this investment as land and the revenues from the ground lease as Rental income, net. Ground lease rental income amounted to $243,000 and $486,000 for the three months ended March 31, 2020 and 2019, respectively. Included in the rental income for the three months ended March 31, 2019 is $306,000 from a previously held VIE property in Wheaton, Illinois, which the Company sold in August 2019.

As of March 31, 2020, the VIE’s maximum exposure to loss was $13,901,000 which represented the carrying amount of the land. Simultaneously with the closing of the acquisition, the owner/operator obtained a mortgage for $67,444,000 from a third party which, together with the Company’s purchase of the land, provided substantially all of the funds to acquire the complex. The Company provided its land as collateral for the owner/operator’s mortgage loan; accordingly, the land position is subordinated to the mortgage. No other financial support has been provided by the Company to the owner/operator.

Variable Interest Entities – Consolidated Joint Ventures

The Company has determined that the four consolidated joint ventures in which it holds between a 90% to 95% interest are VIEs because the non-controlling interests do not hold substantive kick-out or participating rights. The Company has determined it is the primary beneficiary of these VIEs as it has the power to direct the activities that most significantly impact each joint venture’s performance including management, approval of expenditures, and the obligation to absorb the losses or rights to receive benefits. Accordingly, the Company consolidates the operations of these VIEs for financial statement purposes. The VIEs’ creditors do not have recourse to the assets of the Company other than those held by these joint ventures.

11

Table of Contents

One Liberty Properties, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2020 (Continued)

Note 6 – Variable Interest Entities, Contingent Liability and Consolidated Joint Ventures (Continued)

The following is a summary of the consolidated VIEs’ carrying amounts and classification in the Company’s consolidated balance sheets, none of which are restricted (amounts in thousands):

March 31, 

December 31, 

    

2020

    

2019

Land

$

12,158

$

12,158

Buildings and improvements, net of accumulated depreciation of $4,559 and $4,334, respectively

23,999

24,223

Cash

873

888

Unbilled rent receivable

866

859

Unamortized intangible lease assets, net

716

745

Escrow, deposits and other assets and receivables

1,267

1,204

Mortgages payable, net of unamortized deferred financing costs of $298 and $313, respectively

23,993

24,199

Accrued expenses and other liabilities

749

562

Unamortized intangible lease liabilities, net

574

591

Accumulated other comprehensive loss

(181)

(65)

Non-controlling interests in consolidated joint ventures

1,209

1,221

At March 31, 2020 and December 31, 2019, MCB Real Estate, LLC and its affiliates (‘‘MCB’’) are the Company’s joint venture partner in three consolidated joint ventures in which the Company has aggregate equity investments of approximately $7,797,000 and $7,941,000, respectively.