2020 ANNUAL REPORT
ABOUT US
One Liberty Properties, Inc. is a self-administered and self-managed real estate investment trust
incorporated under the laws of Maryland in December 1982. The Company acquires, owns and man-
ages a geographically diversified portfolio consisting primarily of industrial and retail properties,
many of which are subject to long-term leases. Many of our leases are “net leases,” under which the
tenant is typically responsible for real estate taxes, insurance and ordinary maintenance and repairs.
We acquired our portfolio of properties by balancing fundamental real estate analysis with tenant
credit evaluation. Our analysis focuses on the value of a property, determined primarily by its loca-
tion, use, and local demographics. We also evaluate a tenant’s financial ability to meet operational
needs and lease obligations. We believe that our emphasis on property value enables us to achieve
better returns on our acquired properties and also enhances our ability to re-rent or dispose of a
property on favorable terms upon the expiration or early termination of a lease. Consequently, we
believe that the weighting of these factors in our analysis enables us to achieve attractive current
returns with potential growth through contractual rent increases and property appreciation.
1.80
1.75
1.70
1.65
1.60
1.55
1.50
50
40
30
20
10
0
DEAR STOCKHOLDERS,
With over three decades of operating experi-
DIVIDEND PER SHARE OF COMMON STOCK
making the allocation of capital to this asset
ence at One Liberty, 2020 will stand apart as a
year we would like to forget, but one that will
not soon be forgotten. Although the fall-out of
the global impact of the COVID-19 pandemic
continues as we begin 2021, there are indica-
tions suggesting we should be more optimistic
about the future.
We were fortunate to have the foresight to have
transformed the portfolio over the past 15 years.
As a result, we entered the pandemic with a
portfolio in which approximately 50% of our
rent was generated from industrial properties.
This fact, coupled with the balance of our port-
folio which is a well-rounded and diverse mix of
quality, service-retail assets, targeted-retail and
class most effective and reliable. This can read-
$1.801
ily be demonstrated by the 2020 results of our
$1.80
industrial assets on which, despite the pan-
$1.80
$1.80
demic, we collected 100% of the industrial prop-
$1.75
erty rents during the year.
$1.74
$1.70
In February 2020, prior to the pandemic, our
$1.66
focus on acquiring industrial properties resulted
$1.65
in our adding two such properties for approxi-
mately $28 million at attractive yields. These
$1.60
assets are net-leased and contributed $1.8 mil-
6.6%
Dividend
Yield2
lion of rental income in 2020. These assets inte-
$1.55
9.0%
grate well with the overall portfolio which is
Dividend
Yield2
highlighted by stable tenants with long dura-
$1.50
tion leases. Our transformation to an industrial
2020
portfolio has resulted in us adding 21 high qual-
6.6%
Dividend
Yield2
6.7%
Dividend
Yield2
7.4%
Dividend
Yield2
2018
2016
2019
2017
other assets, contributed to our ability to navi-
ity industrial assets over the past few years.
gate many of this year’s challenges. Looking
ahead, we expect to continue transforming the
portfolio over the long-term to ensure it is posi-
tioned to generate sustained cashflow and
value for our stockholders.
TOTAL REVENUES OF INDUSTRIAL PROPERTIES
(Dollars in Millions)
During 2020, other than in January and
February, we effectively paused acquisition
activities as we focused on addressing the chal-
lenges presented by the pandemic. As we now
$50
$40
have successfully addressed many of those
$30
challenges, we are re-focusing our efforts on
opportunistically adding primarily industrial
assets. Industrial properties provide consistent
annual rent growth, stable tenancies, and
assets that are less capital-intensive relative to
other asset classes. This asset class has proven
$20
$10
to offer sustained cash-flow opportunities
$0
$45.4
$40.8
$31.6
$26.6
$22.3
2016
2017
2018
2019
2020
ONE LIBERTY PROPERTIES, INC.
1
PERCENT OF RENTAL INCOME NET BY PROPERTY TYPE
Industrial
Retail
All Other1
51.8%
31.6%
43.7%
35.1%
41.9%
40.1%
55.4%
48.7%
35.2%
32.9%
16.6%
21.2%
18.0%
16.1%
11.7%
60%
50%
40%
30%
20%
10%
0%
2016
2017
2018
2019
2020
1All Other consists of the following property types: Restaurant, Health & Fitness, Theater, Apartments, Office and Other.
In pursuing opportunities to acquire industrial
joint ventures that owned three properties and
assets, we will continue to be disciplined. We
at such date, our investment in these unconsol-
will continue to assess acquisition opportuni-
idated joint ventures is $10.7 million.
ties by weighing various factors, including the
value of the underlying property, the character-
istics of the specific local markets (including
demographics, historic growth, growth poten-
tial, access to transportation networks and bar-
riers to entry), use and potential re-use of the
property, and the tenant’s credit quality. These
criteria allow us to make informed and rational
choices in adding to our portfolio.
We continue to maximize value by pruning
assets that we perceive as having attained
maximum value or as not providing long-term,
sustainable returns. As a result, in 2020 we sold
several retail properties to reduce our exposure
to this sector. Specifically, we sold four retail
properties for gross proceeds of $34.3 million
and recognized a net gain of $17.3 million. With
the proceeds, we reduced debt and provided
As of December 31, 2020, we owned 120 proper-
additional financial capacity for future growth
ties with a net book value of $691.9 million. Our
opportunities. We believe that as we move
occupancy rate, based on square footage, was
ahead, reallocating capital generated from
98.4%, in 2020 compared to 98.1% at the end of
asset sales to industrial properties will result in
2019. Also, at year-end 2020, we participated in
stable, long-term growth.
123
10.7
PROPERTIES
MILLION SQ FT
31
STATES
Our strong and flexible balance sheet served us
portfolio through accretive acquisition oppor-
well in 2020 as we navigated the pandemic.
tunities and strategic dispositions of nonessen-
While our results for the year were impacted
tial and challenged assets. As we move through
compared to 2019, we still produced rental
2021, we anticipate adding industrial properties
income over $81 million. Not surprisingly, given
in a disciplined manner while disposing of
the backdrop of 2020, funds from operations1
assets that we do not believe will contribute to
and adjusted funds from operations were also
our long-term success.
impacted causing a year-over-year reduction
relative to 2019. However, despite the chal-
lenges of 2020, we continued to pay quarterly
dividends and the dividend we declared in
March represents our 113th consecutive quar-
terly dividend payment.
We remain confident in our strategy and com-
mitted to creating long-term value for all
stockholders. And because management
owns almost 22% of the Company, manage-
ment and stockholder interests are aligned.
Your success will be our success, and our suc-
With positive news regarding the pandemic
cess will be your success.
emerging and assuming a stable, economic
recovery, we are hopeful that 2021 will afford
greater opportunities for growth. As we move
ahead, we will build on the following:
We would like to thank our Board of Directors
and our employees for their ongoing insights
and contributions. We also thank our stock-
holders for their continued support.
→ 2021 contractual rental income of approxi-
mately $68.7 million;
Sincerely yours,
→ year-end occupancy rate of 98.4% with a
weighted average remaining lease term of 5.6
years; and
→ a weighted average remaining term of mort-
gage debt of 7.1 years with a weighted aver-
age interest rate thereon of 4.19%.
Over 30 years, we have shown an ability to suc-
cessfully overcome a multitude of challenges,
including the changing retail landscape and
the challenges presented by the pandemic. We
believe that a key ingredient to our past and
future success has been, and will continue to
be, our ability to proactively transform our
Matthew J. Gould
Chairman of the Board
Patrick J. Callan, Jr.
President and Chief Executive Officer
March 25, 2021
1 A description and reconciliation of non-GAAP financial measures (i.e., funds from operations and adjusted funds from opera-
tions) to GAAP financial measures is presented at pages 42 – 44 of the Annual Report on Form 10-K that accompanies this
letter. Contractual rental income is described at page 7 of such report.
ONE LIBERTY PROPERTIES, INC.
3
CREATIVE OFFICE ENVIRONMENTS
Ashland, VA (Richmond MSA) • Industrial
PROPERTY
LISTINGS
INDUSTRIAL
Total Properties: 46
Total States: 24
Total Square Footage: 7,500,842
RETAIL—SUPERMARKET
Total Properties: 3
Total States: 2
Total Square Footage: 104,827
RETAIL— GENERAL
Total Properties: 30
Total States: 15
Total Square Footage: 1,370,728
THEATER
Total Properties: 2
Total States: 2
Total Square Footage: 118,901
RESTAURANT
Total Properties: 17
Total States: 7
Total Square Footage: 83,801
APARTMENTS
Total Properties: 1
Total States: 1
Total Square Footage: 349,999
RETAIL—FURNITURE
Total Properties: 14
Total States: 9
Total Square Footage: 747,534
OFFICE
Total Properties: 1
Total States: 1
Total Square Footage: 66,000
RETAIL— OFFICE SUPPLY
Total Properties: 5
Total States: 5
Total Square Footage: 161,636
OTHER
Total Properties: 1
Total States: 1
Total Square Footage: 23,547
HEALTH & FITNESS
Total Properties: 3
Total States: 3
Total Square Footage: 141,663
POWER DISTRIBUTORS AND
KEYSTONE AUTOMOTIVE
Ankeny, IA (Des Moines MSA) • Industrial
YANFENG
McCalla, AL (Birmingham MSA) • Industrial
CALERES/FAMOUS FOOTWEAR
Lebanon, TN (Nashville MSA) • Industrial
CREATIVE OFFICE ENVIRONMENTS
Ashland, VA (Richmond MSA) • Industrial
FEDEX GROUND
Lowell, AR (Northwest Arkansas MSA) • Industrial
U. S. LUMBER
Joppa, MD (Baltimore MSA) • Industrial
SHUT TERFLY
Fort Mill, SC (Charlotte MSA) • Industrial
CALERES/FAMOUS FOOTWEAR
Lebanon, TN (Nashville MSA) • Industrial
ONE LIBERTY PROPERTIES, INC.
5
FINANCIAL HIGHLIGHTS
(Amounts in Thousands, Except Per Share Data)
Total revenues
Depreciation and amortization
Real estate expenses
Other expenses
Impairment due to casualty loss
Total operating expenses
Gain on sale of real estate, net
Operating income
Net income
Less net income attributable to non-controlling interests
Net income attributable to One Liberty Properties, Inc.
Net income per common share—diluted
Weighted average number of common shares—diluted
Real estate investments, net
Investment in unconsolidated joint ventures
Cash and cash equivalents
Total assets
Mortgages payable, net of deferred financing costs
Line of credit—outstanding, net of deferred financing costs
Total liabilities
Total equity
DIVIDEND PER SHARE OF COMMON STOCK
Year Ended December 31,
2020
2019
$ 81,903
$ 84,736
22,964
13,634
13,981
430
51,009
17,280
22,026
14,074
12,790
—
48,890
4,327
$ 48,174
$ 40,173
$ 27,413
(6)
$ 27,407
$
1.33
$ 18,544
(533)
$ 18,011
$
0.88
19,599
19,119
December 31,
2020
2019
$ 691,922
$ 700,535
10,702
12,705
776,137
429,704
12,525
484,177
291,960
11,061
11,034
774,629
435,840
10,831
482,645
291,984
$1.80
$1.80
$1.801
$1.74
$1.66
6.6%
Dividend
Yield2
6.7%
Dividend
Yield2
7.4%
Dividend
Yield2
6.6%
Dividend
Yield2
9.0%
Dividend
Yield2
$1.80
$1.75
$1.70
$1.65
$1.60
$1.55
$1.50
2016
2017
2018
2019
2020
1During 2020, approximately 18.75% of the dividend was paid in shares of our common stock.
2Calculated based on the closing stock price at December 31.
1.80
1.75
1.70
1.65
1.60
1.55
1.50
2020 FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 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
(State or other jurisdiction of
Incorporation or Organization)
60 Cutter Mill Road, Great Neck, New York
(Address of principal executive offices)
13-3147497
(I.R.S. employer
Identification No.)
11021
(Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
Registrant’s telephone number, including area code: (516) 466-3100
Title of each class
Common Stock, par value $1.00 per share
Trading Symbol
OLP
Name of exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No
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, a small reporting
company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “small 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 standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether registrant is a shell company (defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of June 30, 2020 (the last business day of the registrant’s most recently completed second quarter), the aggregate market value of all
common equity held by non-affiliates of the registrant, computed by reference to the price at which common equity was last sold on said date,
was approximately $278 million.
As of March 1, 2021, the registrant had 20,732,353 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the 2021 annual meeting of stockholders of One Liberty Properties, Inc., to be filed pursuant to
Regulation 14A not later than April 30, 2021, are incorporated by reference into Part III of this Annual Report on Form 10-K.
TABLE OF CONTENTS
Form 10-K
Item No.
Explanatory Note
Cautionary Note Regarding Forward-Looking Statements
PART I
1.
1A.
1B.
2.
3.
4.
PART II
5.
6.
7.
7A.
8.
9.
9A.
9B.
PART III
10.
11.
12.
13.
14.
PART IV
15.
16.
Signatures
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
Page(s)
1
1
3
12
25
25
30
30
31
31
32
49
50
50
50
51
51
51
52
52
52
53
54
55
Explanatory Note
In the narrative portion of this Annual Report on Form 10-K, except as otherwise indicated:
• the information with respect to our consolidated joint ventures is generally described as if such ventures
are our wholly owned subsidiaries and information with respect to unconsolidated joint ventures is
generally separately described.
• (i) all references to joint ventures refer to unconsolidated joint ventures, (ii) all interest rates with respect
to debt give effect to the related interest rate derivative, if any, (iii) amounts reflected as debt reflect the
gross debt owed, without deducting deferred financing costs and (iv) references to industrial properties
include properties (a) a portion of which may be used for office purposes and (b) that are used for
distribution, warehouse and flex purposes.
• 2021 contractual rental income derived from multiple properties leased pursuant to a master lease is
allocated among such properties based on management’s estimate of the appropriate allocations.
• references to the impact of the COVID-19 pandemic include the impact of the governmental and non-
governmental responses thereto and the economic and financial consequences thereof.
• the term “standard carve-outs,” when used in describing mortgages or mortgage financings, refers to
recourse items to an otherwise non-recourse mortgage. While carve-outs vary from lender to lender and
transaction to transaction, the carve-outs may include, among other things, voluntary bankruptcy filings,
environmental liabilities, the sale, financing or encumbrance of the property in violation of loan
documents, damage to property as a result of intentional misconduct or gross negligence, failure to pay
valid taxes and other claims which could create liens on the property and the conversion of security
deposits, insurance proceeds or condemnation awards. The interest rate on most of our variable
rate mortgage debt has been fixed through the use of interest rate swap agreements. In addition to our
being liable for “standard carve-outs”, we may also be liable, at the parent company level, for swap
breakage losses on otherwise non-recourse mortgage debt that is subject to an interest rate swap
agreement, if such agreement is terminated prior to its stated expiration. See Note 9 to our consolidated
financial statements.
• we present information regarding our 2021 contractual rental income (which we also refer to as
“contractual rental income”) – contractual rental income represents the base rent tenants are required to
pay us in 2021 and does not reflect, among other things, variable rent (including amounts tenants are
required to reimburse us) or the adjustments required by US Generally Accepted Accounting Principles
(“GAAP”) to present rental income. We view contractual rental income as an operating – not a financial –
metric, and present it because we believe investors are interested in knowing the amount of cash rent we
are entitled to collect. Contractual rental income is not a substitute for rental income, as determined in
accordance with GAAP, and may not be comparable from year–to–year or to similar metrics presented by
other REITs. See “Item 1. Business–Our Tenants”.
• our use of the term e-commerce includes the provision by the restaurant, health and fitness and theater
sectors of their goods and services through distribution channels other than traditional brick and mortar
distribution channels.
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K, together with other statements and information publicly disseminated by
us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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,” “could,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar
expressions or variations thereof and include, without limitation, statements regarding our future estimated
contractual rental income, funds from operations, adjusted funds from operations and our dividend. You should
not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other
1
factors which are, in some cases, beyond our control and which could materially affect actual results,
performance or achievements.
Currently, the most significant risk and uncertainty we face is the adverse effect of the COVID-19 pandemic,
the various governmental and non-governmental responses thereto, and the related economic consequences of the
foregoing on (i) our and our tenants’ financial condition, results of operations, cash flows and performance, and
(ii) the real estate market, global economy and financial markets. The extent to which COVID-19 impacts us,
our tenants and the economy generally will depend on future developments, which are highly uncertain and
cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions
taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic
and containment measures, among others. Moreover, you should interpret many of the risks and challenges
identified in this report, as well as the risks and challenges set forth in the other reports we file with the Securities
and Exchange Commission (the “SEC”), as being heightened as a result of the numerous adverse impacts of the
COVID-19 pandemic, which risks and challenges are magnified due to the ongoing nature of the
pandemic. Additional uncertainties, risks and factors which may cause actual results to differ materially from
current expectations include, but are not limited to:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
the financial failure of, or other default in payment by, tenants under their leases and the potential
resulting vacancies;
the ability or willingness of mortgage lenders to make accommodations with respect to our debt service
obligations at properties for which we provide rent relief to our tenants or which are otherwise
challenged;
adverse changes and disruption in the retail sector, which could impact our tenants’ ability to pay rent
and expense reimbursement;
loss or bankruptcy of one or more of our tenants, and bankruptcy laws that may limit our remedies if a
tenant becomes bankrupt and rejects its lease;
our ability to renew or re-lease space as leases expire;
our ability to pay dividends;
changes in governmental laws and regulations relating to real estate and related investments;
limitations on our ability to exercise legal remedies due to court closures and/or moratoriums on the
exercise of certain types of remedies or activities;
the level and volatility of interest rates;
general economic and business conditions, including those currently affecting our nation’s economy and
real estate markets;
general and local real estate conditions, including any changes in the value of our real estate;
compliance with credit facility and mortgage debt covenants;
the availability of, and costs associated with, sources of capital and liquidity;
competition in our industry; and
the other risks, uncertainties and factors described in the reports and documents we file with the SEC
including the risks, uncertainties and factors described under “Item 1A. Risk Factors” and “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this
Annual Report on Form 10-K, and in the Quarterly Reports on Form 10-Q and the other reports we file
with the SEC.
In light of the factors referred to above, the future events discussed or incorporated by reference in this
report and other documents we file with the SEC may not occur, and actual results, performance or achievements
2
could differ materially from those anticipated or implied in the forward-looking statements. Given these
uncertainties, you should not rely on any forward-looking statements.
Any or all of our forward-looking statements in this report and in any other public statements we make may
turn out to be incorrect. Actual results may differ from our forward-looking statements because of inaccurate
assumptions we might make or because of the occurrence of known or unknown risks and uncertainties. Many
factors mentioned in the discussion below and elsewhere in this report will be important in determining future
results. Consequently, no forward-looking statement can be guaranteed and you are cautioned not to place undue
reliance on these forward- looking statements. Actual future results may vary materially.
Except as may be required under the United States federal securities laws, we undertake no obligation to
publicly update our forward-looking statements, whether as a result of new information, future events or
otherwise. You are advised, however, to consult any further disclosures we make in our reports that are filed with
or furnished to the SEC.
Item 1. Business.
General
PART I
We are a self-administered and self-managed real estate investment trust, also known as a REIT. We acquire,
own and manage a geographically diversified portfolio consisting primarily of industrial, retail, restaurant, health
and fitness and theater properties, many of which are subject to long-term leases. Most of our leases are “net
leases” under which the tenant, directly or indirectly, is responsible for paying the real estate taxes, insurance and
ordinary maintenance and repairs of the property. As of December 31, 2020, we own 120 properties and
participate in joint ventures that own three properties. These 123 properties are located in 31 states and have an
aggregate of approximately 10.7 million square feet (including an aggregate of approximately 365,000 square
feet at properties owned by our joint ventures).
As of December 31, 2020:
• our 2021 contractual rental income (as described in “–Our Tenants”) is $68.7 million;
• the occupancy rate of our properties is 98.4% based on square footage;
• the weighted average remaining term of our mortgage debt is 7.1 years and the weighted average interest
rate thereon is 4.19%; and
• the weighted average remaining term of the leases generating our 2021 contractual rental income is 5.6
years.
We maintain a website at www.1liberty.com. The reports and other documents that we electronically file
with, or furnish to, the SEC pursuant to Section 13 or 15(d) of the Exchange Act can be accessed through this
site, free of charge, as soon as reasonably practicable after we electronically file or furnish such reports. These
filings are also available on the SEC’s website at www.sec.gov. The information on our website is not part of this
report.
The Impact of the COVID-19 Pandemic; 2020 and Recent Developments
In 2020, we focused primarily on responding to the challenges presented by the COVID-19 pandemic:
working with our challenged tenants to implement, as appropriate, abatements or deferrals of their rent
obligations; working with our mortgage lenders to ensure that debt service obligations on properties subject to
abatements or deferrals did not exceed the cash flow from such properties; ensuring the health and safety of our
employees; and taking other actions, such as amending our credit facility and paying a portion of our dividend in
stock, to conserve cash and ensure that we have the liquidity and capital resources necessary to address the
economic consequences of the pandemic. We summarize below certain information regarding our 2020
activities, the impact of the pandemic on our business and our efforts to respond to such impact.
3
In 2020:
• our rental income, net, decreased by $1.9 million, or 2.3%, from 2019; the net decrease is due to the
pandemic and the direct and indirect economic consequences thereof which resulted in, among other
things, the write-off of unbilled rent receivables, the abatement of rent and the inability to collect certain
rent.
• we acquired two industrial properties for an aggregate purchase price of $28.3 million. These properties,
which were acquired in February 2020, account for $1.9 million, or 2.7%, of our 2021 contractual rental
income.
• we sold four retail properties, for an aggregate net gain on sale of real estate of $17.3 million, without
giving effect to $1.1 million of mortgage prepayment costs. The properties sold accounted for 1.7% and
3.2% of 2020 and 2019 rental income, net, respectively.
• we collected $66.5 million, or 91.7%, of the base rent due for 2020, before giving effect to rent deferrals
and abatements;
• we collected $67.0 million, or 98.4%, of the base rent due for 2020 (including $497,000 of deferral
repayments), after giving effect to deferrals and abatements;
• as a result of the challenges faced by Regal Cinemas, a tenant at two properties, our cash flow from
operations was reduced by $1.6 million and our net income was reduced by approximately $2.3 million;
• we abated $1.4 million of base rent from 12 tenants, including $676,000 from Regal Cinemas and
$500,000 from LA Fitness. For seven tenants, we linked a rent abatement to a lease extension (and for
another tenant, reduced the lease term and the base rent payable) at a property – as a result, the aggregate
base rent payable beginning January 1, 2021 by these eight tenants over the modified lease term increased
by $16.3 million over the amount payable prior to such abatement/lease modification and, because of the
effect of straight-line rent, the net reduction in rental income during 2020 was $465,000 due to the
abatements and lease modifications;
• we deferred the payment of $3.5 million of base rent from 37 tenants, of which:
- $497,000 was paid through December 31, 2020 and $529,000 was paid in the first quarter of 2021
(through February 28, 2021), and
- $1.6 million, or 47.0%, is owed by four tenants.
• we enhanced our financial flexibility by entering into amendments (including an amendment entered into
in March 2021) to our credit facility which increased, until June 30, 2022, the amount we can borrow for
operating expense purposes from $10.0 million to $20.0 million; as of March 4, 2021, $66.4 million is
available under the facility, of which $20.0 million is available for operating expense purposes.
• we conserved $6.8 million of cash by paying a portion of our dividends in stock - specifically, we paid
approximately 50%, or $4.5 million, of the $9.1 million dividend declared in June 2020 through the
issuance of 263,229 shares of common stock and $2.3 million or 25% of the $9.2 million dividend
declared in September 2020 through the issuance of 141,227 shares of common stock.
See “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations” for further information regarding the pandemic’s impact on us.
4
Our Business Objective
Our business objective is to increase stockholder value by:
• identifying opportunistic and strategic property acquisitions consistent with our portfolio and our
acquisition strategies;
• monitoring and maintaining our portfolio, and as appropriate, working with tenants to facilitate the
continuation or expansion of their tenancies;
• managing our portfolio effectively, including opportunistic and strategic property sales; and
• obtaining mortgage indebtedness (including refinancings) on favorable terms, ensuring that the cash flow
generated by a property exceeds the debt service thereon and maintaining access to capital to finance
property acquisitions.
Acquisition Strategies
We seek to acquire properties throughout the United States that have locations, demographics and other
investment attributes that we believe to be attractive. We believe that long-term leases provide a predictable
income stream over the term of the lease, making fluctuations in market rental rates and in real estate values less
significant to achieving our overall investment objectives. Our primary goal is to acquire single-tenant properties
that are subject to long-term net leases that include periodic contractual rental increases or rent increases based
on increases in the consumer price index. Periodic contractual rental increases provide reliable increases in future
rent payments and rent increases based on the consumer price index provide protection against inflation.
Historically, long-term leases have made it easier for us to obtain longer-term, fixed-rate mortgage financing
with principal amortization, thereby moderating the interest rate risk associated with financing or refinancing our
property portfolio and reducing the outstanding principal balance over time. We may, however, acquire a
property that is subject to a short-term lease when we believe the property represents a favorable opportunity for
generating additional income from its re-lease or has significant residual value. Although the acquisition of
single-tenant properties subject to net leases is the focus of our investment strategy, we also consider investments
in, among other things, (i) properties that can be re-positioned or re-developed, (ii) community shopping centers
anchored by national or regional tenants and (iii) properties ground leased to operators of multi-family properties.
We pay substantially all the operating expenses at community shopping centers, a significant portion of which is
reimbursed by tenants pursuant to their leases.
Generally, we hold the properties we acquire for an extended period of time. Our investment criteria are
intended to identify properties from which increased asset value and overall return can be realized from an
extended period of ownership. Although our investment criteria favor an extended period of ownership, we will
dispose of a property if we regard the disposition of the property as an opportunity to realize the overall value of
the property sooner or to avoid future risks by achieving a determinable return from the property.
Historically, a significant portion of our portfolio generated rental income from retail properties. We are
sensitive to the risks facing the retail industry and over the past several years have been addressing our exposure
thereto by focusing on acquiring industrial properties and properties that capitalize on e-commerce activities –
since September 2016, we have not acquired any retail properties, and have sold 13 retail properties. As a result
of the focus on industrial properties and the sale of retail properties, retail properties generated 32.9%, 35.2%,
41.9%, and 43.7%, of rental income, net, in 2020, 2019, 2018 and 2017, respectively, and industrial properties
generated 55.4%, 48.7%, 40.1% and 35.1%, of rental income, net, in 2020, 2019, 2018 and 2017, respectively.
We identify properties through the network of contacts of our senior management and our affiliates, which
contacts include real estate brokers, private equity firms, banks and law firms. In addition, we attend industry
conferences and engage in direct solicitations.
Our charter documents do not limit the number of properties in which we may invest, the amount or
percentage of our assets that may be invested in any specific property or property type, or the concentration of
investments in any region in the United States. We do not intend to acquire properties located outside of the
United States. We will continue to form entities to acquire interests in real properties, either alone or with other
investors, and we may acquire interests in joint ventures or other entities that own real property.
5
It is our policy, and the policy of our affiliated entities (as described below), that any investment opportunity
presented to us or to any of our affiliated entities that involves the acquisition of a net leased property, a ground
lease (other than a ground lease of a multi-family property) or a community shopping center, will first be offered
to us and may not be pursued by any of our affiliated entities unless we decline the opportunity. Further, to the
extent our affiliates are unable or unwilling to pursue an acquisition of a multi-family property (including a
ground lease of a multi-family property), we may pursue such transaction if it meets our investment objectives.
Our affiliated entities include Gould Investors L.P., a master limited partnership involved primarily in the
ownership and operation of a diversified portfolio of real estate assets, and BRT Apartments Corp., a NYSE
listed multi-family REIT.
Investment Evaluation
In evaluating potential investments, we consider, among other criteria, the following:
• the current and projected cash flow of the property;
• the estimated return on equity to us;
• an evaluation of the property and improvements, given its location and use;
• alternate uses or tenants for the property;
• local demographics (population and rental trends);
• the terms of tenant leases, including co-tenancy provisions and the relationship between current rents and
market rents;
• the potential to finance or refinance the property;
• an evaluation of the credit quality of the tenant;
• the projected residual value of the property;
• the ability of a tenant, if a net leased property, or major tenants, if a multi-tenant property, to meet
operational needs and lease obligations;
• potential for income and capital appreciation;
• occupancy of and demand for similar properties in the market area; and
• the ability of a tenant and the related property to weather the challenges presented by the pandemic, other
similar events and any related economic dislocations.
Typical Property Attributes
As of December 31, 2020, the properties in our portfolio have the following attributes:
• Net leases. Most of our leases are net leases under which the tenant is typically responsible for real estate
taxes, insurance and ordinary maintenance and repairs. We believe that investments in net leased
properties offer reasonably predictable returns.
• Long-term leases. Many of our leases are long-term leases. The weighted average remaining term of our
leases is 5.6 years, 6.6 years and 7.7 years at December 31, 2020, 2019 and 2018, respectively. Leases
representing approximately 50.1%, 28.7% and 21.2% of our 2021 contractual rental income expire
between 2021 and 2025, 2026 and 2029, and 2030 and thereafter, respectively.
• Scheduled rent increases. Leases representing approximately 63.8% of our 2021 contractual rental
income provide for either periodic contractual rent increases or a rent increase based on the consumer
price index.
6
Our Tenants
The following table sets forth information about the diversification of our tenants by industry sector as of
December 31, 2020:
Type of Property
Industrial
Retail—General
Retail—Furniture(2)
Restaurant
Health & Fitness
Retail—Supermarket
Retail—Office Supply(3)
Other
Theater
Number of Number of
2021 Contractual 2021 Contractual
Percentage of
Tenants
50
51
3
9
1
2
1
3
1
121
Properties Rental Income(1)
46 $ 38,132,377
11,283,717
28
6,159,219
14
3,454,315
16
3,238,489
3
2,721,142
3
2,085,528
5
1,669,922
3
—
2
120 $ 68,744,709
Rental Income
55.5
16.4
9.0
5.0
4.7
4.0
3.0
2.4
—
100.0
(1) Our 2021 contractual rental income represents, after giving effect to any abatements, concessions, deferrals
or adjustments, the base rent payable to us in 2021 under leases in effect at December 31, 2020, including
approximately $1.0 million from two tenants with seven properties that at December 31, 2020 were debtors
in bankruptcy proceedings. Excluded from 2021 contractual rental income is an aggregate of $8.1 million
comprised of: (i) $2.8 million of COVID-19 rent deferral repayments accrued to rental income in 2020, of
which $529,000 was paid by February 28, 2021, (ii) $2.4 million from Regal Cinemas, a tenant at two
properties which, among other things, had not paid rent for several months and has closed our theaters for an
unspecified period, (iii) $1.4 million representing our share of the base rent payable in 2021 to our joint
ventures, (iv) $1.2 million of estimated variable lease payments from The Vue, a multi-family complex
which ground leases the underlying land from us and which we do not anticipate will be paying rent for
several months, if not longer, (v) approximately $755,000 of amortization of intangibles and (vi) the reversal
of approximately $477,000 of straight-line rent.
(2) Eleven properties are net leased to Haverty Furniture Companies, Inc., which we refer to as Haverty
Furniture, pursuant to a master lease covering all such properties.
(3) Includes five properties which are net leased to Office Depot pursuant to five separate leases. Four of the
Office Depot leases contain cross-default provisions.
Many of our tenants (including franchisees of national chains) operate on a national basis including, among
others, Advanced Auto, Applebees, Burlington Coat Factory, CVS, Famous Footwear, FedEx, Ferguson
Enterprises, LA Fitness, L-3 Harris Technologies, Marshalls, Northern Tool, Office Depot, PetSmart, Regal
Cinemas, Ross Stores, Shutterfly, TGI Friday’s, The Toro Company, Walgreens, Wendy’s and Whole Foods, and
some of our tenants operate on a regional basis, including Haverty Furniture and Giant Food Stores.
Our Leases
Most of our leases are net leases under which the tenant, in addition to its rental obligation, typically is
responsible, directly or indirectly for expenses attributable to the operation of the property, such as real estate
taxes and assessments, insurance and ordinary maintenance and repairs. The tenant is also generally responsible
for maintaining the property and for restoration following a casualty or partial condemnation. The tenant is
typically obligated to indemnify us for claims arising from the property and is responsible for maintaining
insurance coverage for the property it leases and naming us an additional insured. Under some net leases, we are
responsible for structural repairs, including foundation and slab, roof repair or replacement and restoration
following a casualty event, and at several properties we are responsible for certain expenses related to the
operation and maintenance of the property.
Many of our leases provide for contractual rent increases periodically throughout the term of the lease or for
rent increases pursuant to a formula based on the consumer price index. Some leases provide for minimum rents
supplemented by additional payments based on sales derived from the property subject to the lease (i.e.,
percentage rent). Percentage rent contributed less than $45,000 of rental income in each of 2020 and 2019.
7
Generally, our strategy is to acquire properties that are subject to existing long-term leases or to enter into
long-term leases with our tenants. Our leases generally provide the tenant with one or more renewal options.
The following table sets forth scheduled expirations of leases at our properties as of December 31, 2020:
Year of Lease Expiration(1)
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030 and thereafter
Number of
Expiring
Leases
Percentage of
Approximate
Square
Footage
Subject to
Expiring
Leases(2)
252,932 $
2021 Contractual 2021 Contractual
Rental Income Rental Income
Under Expiring Represented by
Expiring Leases
1.6
21.0
12.6
8.3
6.6
8.5
9.4
4.1
6.7
21.2
100.0
Leases
1,129,321
14,461,130
8,667,919
5,696,587
4,534,960
5,847,164
6,464,456
2,791,102
4,594,092
14,557,978
155 10,138,292 $ 68,744,709
2,107,833
1,257,165
961,442
397,703
606,352
1,106,041
557,653
908,121
1,983,050
9
25
24
21
13
11
9
9
6
28
(1) Lease expirations assume tenants do not exercise existing renewal options.
(2) Excludes an aggregate of 165,779 square feet of vacant space.
Financing, Re-Renting and Disposition of Our Properties
Our credit facility provides us with a source of funds that may be used to acquire properties, payoff existing
mortgages, and to a more limited extent, invest in joint ventures, improve properties and for working capital
purposes. Net proceeds received from the sale, financing or refinancing of properties are required to be used to
repay amounts outstanding under our facility. See “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital Resources—Credit Facility”.
We mortgage specific properties on a non-recourse basis, subject to standard carve-outs to enhance the
return on our investment in a specific property. The proceeds of mortgage loans are applied to reduce
indebtedness on our credit facility and for other general purposes, including property acquisitions, investments in
joint ventures or other entities that own real property, and working capital.
With respect to properties we acquire on a free and clear basis, we usually seek to obtain long-term
fixed-rate mortgage financing, when available at acceptable terms, shortly after the acquisition of such property
to avoid the risk of movement of interest rates and fluctuating supply and demand in the mortgage markets. We
also will acquire a property that is subject to (and will assume) a fixed-rate mortgage. Substantially all of our
mortgages provide for amortization of part of the principal balance during the term, thereby reducing the
refinancing risk at maturity. Some of our properties may be financed on a cross-defaulted or cross-collateralized
basis, and we may collateralize a single financing with more than one property.
After termination or expiration of any lease relating to any of our properties, we will seek to re-rent or sell
such property in a manner that will maximize the return to us, considering, among other factors, the income
potential and market value of such property. We acquire properties for long-term investment for income purposes
and do not typically engage in the turnover of investments. We will consider the sale of a property if a sale
appears advantageous in view of our investment objectives. If there is a substantial tax gain, we may seek to
enter into a tax deferred transaction and reinvest the proceeds in another property. Cash realized from the sale of
properties, net of required payoffs of the related mortgage debt, if any, required paydowns of our credit facility,
and distributions to stockholders, is available for general working capital purposes and the acquisition of
additional properties.
8
Our Joint Ventures
As of December 31, 2020, we own a 50% equity interest in three joint ventures that own properties with
approximately 365,000 square feet of space. At December 31, 2020, our investment in these joint ventures was
approximately $10.7 million and the occupancy rate at these properties, based on square footage, was 59.1%. See
“Item 2. Properties-Properties Owned by Joint Ventures” for information about, among other things, the
occupancy rate at our joint venture properties.
Based on the leases in effect at December 31, 2020, we anticipate that our share of the base rent payable in
2021 to our joint ventures is approximately $1.4 million (excluding our $237,000 share of the base rent payable
by Regal Cinemas, which has closed for an unspecified period, at our multi-tenant community shopping center in
Manahawkin, New Jersey). Our property in Manahawkin, New Jersey is expected to contribute 78.4% of the
aggregate base rent payable by all of our joint ventures in 2021. Of the aggregate base rent payable to all of our
joint ventures in 2021, leases with respect to 22.3%, 37.7% and 40.0% is payable pursuant to leases expiring
from 2021 to 2022, from 2023 to 2024, and thereafter, respectively. See “Item 1A, Risk Factors” and “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information
regarding our Manahawkin, New Jersey joint venture.
Competition
The U.S. commercial real estate investment market is highly competitive. We compete with many entities
engaged in the acquisition, development and operation of commercial properties. As such, we compete with other
investors for a limited supply of properties and financing for these properties. Investors include traded and non-
traded public REITs, private equity firms, institutional investment funds, insurance companies and private
individuals, many of which have greater financial resources than we do and the ability or willingness to accept
more risk than we believe we can prudently manage. There can be no assurance that we will be able to compete
successfully with such entities in our acquisition, development and leasing activities in the future.
Regulation
Environmental
Investments in real property create the potential for environmental liability on the part of the owner or
operator of such real property. If hazardous substances are discovered on or emanating from a property, the
owner or operator of the property may be held strictly liable for all costs and liabilities relating to such hazardous
substances. We have obtained a Phase I environmental study (which involves inspection without soil sampling or
ground water analysis) conducted by independent environmental consultants on each of our properties and, in
certain instances, have conducted additional investigations.
We do not believe that there are hazardous substances existing on our properties that would have a material
adverse effect on our business, financial position or results of operations. We do not carry insurance coverage for
the types of environmental risks described above.
We believe that we are in compliance, in all material respects, with all federal, state and local ordinances and
regulations regarding hazardous or toxic substances. Furthermore, we have not been notified by any
governmental authority of any noncompliance, liability or other claim in connection with any of our properties,
that we believe would have a material adverse effect on our business, financial position or results of operations.
Americans with Disabilities Act of 1990
Our properties are required to comply with the Americans with Disabilities Act of 1990 and similar state and
local laws and regulations (collectively, the “ADA”). The primary responsibility for complying with the ADA,
(i.e., either us or our tenant) generally depends on the applicable lease, but we may incur costs if the tenant is
responsible and does not comply. As of December 31, 2020, we have not been notified by any governmental
authority, nor are we otherwise aware, of any non-compliance with the ADA that we believe would have a
material adverse effect on our business, financial position or results of operations.
9
Other Regulations
State and local governmental authorities regulate the use of our properties. While many of our leases
mandate that the tenant is primary responsibility for complying with such regulations, the tenant’s failure to
comply could result in the imposition of fines or awards of damages on us, as the property owner, or restrictions
on the ability to conduct business on such properties.
Human Capital Resources
As of December 31, 2020, we had nine full-time employees (including five executive officers), who devote
substantially all of their business time to our activities. In addition, certain (i) executive, administrative, legal,
accounting, clerical, property management, property acquisition, consulting (i.e., sale, leasing, brokerage, and
mortgage financing), and construction supervisory services, which we refer to collectively as the “Services”, and
(ii) facilities and other resources, are provided pursuant to a compensation and services agreement between us
and Majestic Property Management Corp. Majestic Property is wholly owned by our vice chairman of the board
and it provides compensation to certain of our executive officers.
In 2020, pursuant to the compensation and services agreement, we paid Majestic Property approximately
$3.0 million for the Services plus $275,000 for our share of all direct office expenses, including rent, telephone,
postage, computer services, supplies and internet usage. Included in the $3.0 million is $1.3 million for property
management services—the amount for the property management services is based on 1.5% and 2.0% of the
rental payments (including tenant reimbursements) actually received by us from net lease tenants and operating
lease tenants, respectively. We do not pay Majestic Property with respect to properties managed by third parties.
Based on our portfolio of properties at December 31, 2020, we estimate that the property management fee in
2021 will be approximately $1.4 million. See Notes 10 and 12 to our consolidated financial statements for
information about the amounts paid to Majestic Property for the Services and equity awards to individuals
performing Services.
We provide a competitive benefits program to help meet the needs of our employees. In addition to salaries,
the program includes annual cash bonuses, stock awards, contributions to a pension plan, healthcare and
insurance benefits, health savings accounts, paid time off, family leave and an education benefit. Employees are
offered great flexibility to meet personal and family needs and regular opportunities to participate in professional
development programs. Most of our employees have a long tenure with us, which we believe is indicative of our
employees’ satisfaction with the work environment we provide.
We maintain a work environment that is free from discrimination or harassment on the basis of color, race,
sex, national origin, ethnicity, religion, age, disability, sexual orientation, gender identification or expression or
any other status protected by applicable law, and our employees are compensated without regard to any of the
foregoing.
In response to the pandemic and as part of our commitment to ensure the safety and well-being of our
employees, many of our employees have worked from home since mid-March 2020 and we have staggered the
dates in which employees work from our executive offices. We have also taken additional safety measures,
including monitoring occupancy levels, limiting business travel, temperature screenings and providing and
requiring the use of personal protective equipment, to ensure the safety of our employees.
The compensation benefits and workplace protections described above are also provided to the individuals
providing services to us pursuant to the compensation and services agreement.
10
Information About Our Executive Officers
Set forth below is a list of our executive officers whose terms expire at our 2021 annual board of directors’
meeting. The business history of our executive officers, who are also directors, will be provided in our proxy
statement to be filed pursuant to Regulation 14A not later than April 30, 2021.
NAME
Matthew J. Gould*
Fredric H. Gould*
Patrick J. Callan, Jr.
Lawrence G. Ricketts, Jr.
Jeffrey A. Gould*
David W. Kalish**
Mark H. Lundy
Israel Rosenzweig
Karen Dunleavy
Alysa Block
Richard M. Figueroa
Isaac Kalish**
Justin Clair
AGE
61
85
58
44
55
73
58
73
62
60
53
45
38
POSITION WITH THE COMPANY
Chairman of the Board
Vice Chairman of the Board
President, Chief Executive Officer and Director
Executive Vice President and Chief Operating Officer
Senior Vice President and Director
Senior Vice President and Chief Financial Officer
Senior Vice President
Senior Vice President
Senior Vice President, Financial
Treasurer
Senior Vice President and Assistant Secretary
Vice President and Assistant Treasurer
Senior Vice President — Acquisitions
* Matthew J. Gould and Jeffrey A. Gould are Fredric H. Gould’s sons.
** Isaac Kalish is David W. Kalish’s son.
Lawrence G. Ricketts, Jr. Mr. Ricketts has been our Chief Operating Officer since 2008, Vice President
from 1999 through 2006 and Executive Vice President since 2006.
David W. Kalish. Mr. Kalish has served as our Senior Vice President and Chief Financial Officer since
1990 and as Senior Vice President, Finance of BRT Apartments Corp. since 1998. Since 1990, he has served as
Vice President and Chief Financial Officer of the managing general partner of Gould Investors L.P. Mr. Kalish is
a certified public accountant.
Mark H. Lundy. Mr. Lundy has served as our Vice President since 2000 and as our Senior Vice President
since 2006. Mr. Lundy has been a Vice President of BRT Apartments Corp. from 1993 to 2006, its Senior Vice
President since 2006, a Vice President of the managing general partner of Gould Investors from 1990 through
2012 and its President and Chief Operating Officer since 2013. He is an attorney admitted to practice in New
York and the District of Columbia.
Israel Rosenzweig. Mr. Rosenzweig has served as our Senior Vice President since 1997, as Chairman of
the Board of Directors of BRT Apartments Corp. since 2013, as Vice Chairman of its Board of Directors from
2012 through 2013, and as its Senior Vice President from 1998 through 2012. He has been a Vice President of
the managing general partner of Gould Investors since 1997.
Karen Dunleavy. Ms. Dunleavy has served our Senior Vice President, Financial since 2019, as our Vice
President, Financial from 1994 through 2019, and as Treasurer of the managing general partner of Gould
Investors from 1986 through 2013. Ms. Dunleavy is a certified public accountant.
Alysa Block. Ms. Block has been our Treasurer since 2007, and served as Assistant Treasurer from 1997 to
2007. Ms. Block has also served as the Treasurer of BRT Apartments Corp. from 2008 through 2013, and served
as its Assistant Treasurer from 1997 to 2008.
Richard M. Figueroa. Mr. Figueroa has served as our Senior Vice President since 2019, as Vice President
from 2001 through 2019, as Vice President of BRT Apartments Corp. from 2002 through 2019 and as Vice
President of the managing general partner of Gould Investors since 1999. Mr. Figueroa is an attorney admitted to
practice in New York.
Isaac Kalish. Mr. Kalish has served as our Vice President since 2013, Assistant Treasurer since 2007, as
Assistant Treasurer of the managing general partner of Gould Investors from 2012 through 2013, as Treasurer
from 2013, as Vice President and Treasurer of BRT Apartments Corp. since 2013, and as its Assistant Treasurer
from 2009 through 2013. Mr. Kalish is a certified public accountant.
11
Justin Clair. Mr. Clair has been employed by us since 2006, served as Assistant Vice President from 2010
through 2014, as Vice President from 2014 through 2019, and as Senior Vice President - Acquisitions, since
2019.
Item 1A. Risk Factors.
Set forth below is a discussion of certain risks affecting our business. The categorization of risks set forth
below is meant to help you better understand the risks facing our business and is not intended to limit your
consideration of the possible effects of these risks to the listed categories. Any impacts from the realization of any
of the risks discussed, including our financial condition and results of operations, may, and likely will, adversely
affect many aspects of our business. In addition to the other information contained or incorporated by reference
in this Form 10-K, readers should carefully consider the following risk factors:
Risks Related to the COVID-19 Pandemic
The COVID-19 pandemic and the governmental and non-governmental responses thereto have adversely
impacted, and may in the future, adversely impact our business, income, cash flow, results of operations,
financial condition, liquidity, prospects, ability to service our debt obligations, or our ability to pay cash
dividends to our stockholders.
Our ability to lease our properties and collect rental revenues and expense reimbursements, and the ability of
our tenants to fulfill their obligations to us, is dependent in part upon national, regional and local economic
conditions. The pandemic and the measures taken to combat it caused a significant economic slowdown and high
levels of unemployment. The slowdown and the other disruptions resulting directly and indirectly from the
pandemic adversely impacted our and many of our tenants’ financial condition and results of operations. In
particular, tenants in the retail, restaurant, theater and health and fitness sectors, experienced severe financial
distress and obtained rent relief from us. During 2020, we (i) wrote-off $1.1 million of unbilled rent receivables
with respect to Regal Cinemas, a tenant that operates theaters at two of our properties, as collections of such
receivables were deemed less than probable, (ii) abated $1.4 million of base rent with respect to 12 tenants at 13
properties, including $676,000 and $500,000 of base rent owed by Regal Cinemas and LA Fitness, respectively,
(iii) did not collect and did not accrue $928,000 of rent from Regal Cinemas and (iv) deferred $3.5 million of
base rent payments. As a result of, among other things, these write-offs and abatements, our rental income, net,
decreased by 2.3% to $81.9 million, from $83.8 million in 2019, and our cash flow from operations decreased by
3.0% to $35.1 million from $36.2 million in 2019.
At December 31, 2020, $3.0 million of deferred rent is owed by 34 tenants at 43 properties. Approximately
92.7%, 6.9% and 0.4% of such deferred rent is due in 2021, 2022 and 2023, respectively. Four tenants account
for $1.6 million, or 52.4%, of the $3.0 million of deferred rent (i.e., Haverty Furniture, Famous Footwear, LA
Fitness, and Barnes and Noble, owe 26.3%, 10.3%, 9.6% and 6.2% of the deferred rent, respectively). The failure
to pay deferred rent will adversely impact our cash flow, net income, liquidity and ability to pay dividends.
The pandemic and the current economic, financial, and capital markets environments present material risks
and uncertainties. We are unable to predict the ultimate impact that the pandemic and the continuing economic
slowdown will have on our business, financial condition, results of operation and cash flows, which will depend
largely on future developments relating, among other things, to the duration and scope of the pandemic, efforts to
boost the economy, the timing and strength of an economic recovery, if any, and other factors outside of our
control. If the pandemic and economic slowdown continue for an extended period, among other things, (i)
tenants, and in particular, tenants in the retail, restaurant, theater and health and fitness sectors, may be unable to
satisfy their obligations to us (including obligations under deferral arrangements or extended leases) and will
seek additional rent relief, may choose not to renew their leases or only renew on terms less favorable to us, (ii) it
is more likely that tenants that to date have only been minimally impacted will be significantly and adversely
effected, (iii) the amounts tenants at challenged properties pay us may be insufficient, without an accommodation
from the mortgage lender, to pay our debt service obligations with respect to such properties, (iv) the mortgage
lenders for challenged properties may be unwilling or unable to allow for accommodations or further
accommodations with respect to our debt service obligations at such properties, (v) the trend toward e-commerce
at the expense of the “bricks and mortar” commerce in which we are engaged will continue to grow at an
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accelerating rate, (vi) it will be more difficult to obtain equity and debt financing, and (vii) it will be more
difficult to acquire properties to grow our business and dispose of underperforming assets. Our business,
income, cash flow, results of operations, financial condition, liquidity, prospects, ability to service our debt, and
ability to pay cash dividends to our stockholders, will be adversely effected upon the occurrence of any one or
more of the foregoing. The risks, uncertainties and challenges presented by the pandemic and the economic
slowdown may also have the effect of heightening many of the other risks, challenges and uncertainties described
in this report.
We have, and may pay, all or a portion of dividends in our own stock, in which case stockholders may be
required to pay tax in excess of the cash they receive.
To improve our liquidity and capital resource position in light of the economic dislocations caused by the
pandemic, we paid approximately $6.8 million, or 18.7%, of the dividends we declared in 2020 in stock. These
stock dividends were taxable to our stockholders in the same manner cash dividends were taxed. If the economic
dislocations resulting from the pandemic continue, we may, to the extent we are required to pay dividends to
maintain our REIT status, distribute taxable dividends that are payable all or in part in our stock. Taxable
stockholders receiving such dividends will be required to include the full amount of the dividend as income to the
extent of our current and accumulated earnings and profits for federal income tax purposes. As a result, a U.S.
stockholder may be required to pay tax with respect to such dividends in excess of the cash dividend received. If
a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less
than the amount included in income with respect to the dividend, depending on the market price of our stock at
the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax
with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In
addition, the issuance of stock in lieu of cash dividend may be dilutive and may result in a reduction in earnings
per share and other per share metrics used to evaluate us. Finally, the trading price of our stock would experience
downward pressure if a significant number of our stockholders sell shares of our stock in order to pay taxes owed
on dividends.
Risks Related to Our Business
If we are unable to re-rent properties upon the expiration of our leases or if our tenants default or seek
bankruptcy protection, our rental income will be reduced and we would incur additional costs.
Substantially all of our rental income is derived from rent paid by our tenants. From 2021 through 2023,
leases with respect to 58 tenants that account for 35.2% of our 2021 contractual rental income, expire, including
leases with two tenants (i.e., Haverty Furniture and the City of New York) at 12 properties that account for 7.0%
and 1.8% of 2021 contractual rental income, respectively. From 2024 through 2025, leases with respect to 34
tenants that account for 14.9% of our 2021 contractual rental income, expire. If our tenants, and in particular, our
significant tenants, (i) do not renew their leases upon the expiration of same, (ii) default on their obligations or
(iii) seek rent relief, lease renegotiation or other accommodations, our revenues could decline and, in certain
cases, co-tenancy provisions (i.e., a tenant’s right to reduce their rent or terminate their lease if certain key
tenants vacate a property) may be triggered possibly allowing other tenants at the same property to reduce their
rental payments or terminate their leases. At the same time, we would remain responsible for the payment of the
mortgage obligations with respect to the related properties and would become responsible for the operating
expenses related to these properties, including, among other things, real estate taxes, maintenance and insurance.
In addition, we may incur expenses in enforcing our rights as landlord. Even if we find replacement tenants or
renegotiate leases with current tenants, the terms of the new or renegotiated leases, including the cost of required
renovations or concessions to tenants, or the expense of the reconfiguration of a tenant’s space, may be less
favorable than current lease terms and could reduce the amount of cash available to meet expenses and pay
dividends. If tenants facing financial difficulties default on their obligation to pay rent or do not renew their
leases at lease expiration, our results of operations, cash flow and financial condition may be adversely affected.
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Traditional retail tenants account for 32.4% of our 2021 contractual rental income and the competition that
such tenants face from e-commerce retail sales could adversely affect our business.
Approximately 32.4% of our 2021 contractual rental income is derived from retail tenants, including 9.0%
from tenants engaged in selling furniture (i.e., Haverty Furniture accounts for 7.0% of 2021 contractual rental
income) and 3.0% from tenants engaged in selling office supplies (i.e., Office Depot, a tenant at five properties,
of which one property is currently closed but for which the tenant continues to pay rent, accounts for 3.0% of
2021 contractual rental income). Because e-commerce retailers may be able to provide customers with better
pricing and the ease, comfort and safety of shopping from their home or office, our retail tenants face increasing
competition from e-commerce retailers, which competition may continue to accelerate as a result of the
pandemic. The accelerating growth of e-commerce sales decreases the need for traditional retail outlets and
reduce retailers’ space and property requirements. This would adversely impact our ability to rent space at our
retail properties and increase competition for retail tenants thereby reducing the rent we would receive at these
properties and adversely affect our results of operations, cash flow and financial condition.
Approximately 25.2% of our 2021 contractual rental income is derived from five tenants. The default,
financial distress or failure of any of these tenants, or such tenant’s determination not to renew or extend
their lease, could significantly reduce our revenues.
Haverty Furniture, FedEx, LA Fitness, Northern Tool and L-3 Harris Technologies account for
approximately 7.0%, 5.2%, 4.7%, 4.3% and 4.0%, respectively, of our 2021 contractual rental income. The
default, financial distress (including that experienced by Haverty Furniture and LA Fitness) or bankruptcy of any
of these or other significant tenants or such tenant’s determination not to renew or extend their lease (including a
possible determination by Haverty Furniture not to renew their lease which expires in 2022), could significantly
reduce our revenues, would cause interruptions in the receipt of, or the loss of, a significant amount of rental
income and would require us to pay operating expenses (including real estate taxes) currently paid by the tenant.
This could also result in the vacancy of the property or properties occupied by the defaulting or non-renewing
tenant, which would significantly reduce our rental revenues and net income until the re-rental of the property or
properties and could decrease the ultimate sale value of the property.
Write-offs of unbilled rent receivables and intangible lease assets will reduce our net income, total assets and
stockholders’ equity and may result in breaches of financial covenants under our credit facility.
At December 31, 2020, the aggregate of our unbilled rent receivable and intangible lease assets is $40.1
million; three tenants (i.e., FedEx, Northern Tools and Famous Footwear) account for 24% of such sum. We are
required to assess the collectability of our unbilled rent receivables and the remaining useful lives of our
intangible lease assets. Such assessments take into consideration, among other things, a tenant’s payment history,
financial condition, and the likelihood of collectability of future rent. If we determine, based on our assessment,
that the collectability of a tenant’s unbilled rent receivable is not probable or that the useful life of a tenant’s
intangible lease asset has changed, write-offs would be required. Such write-offs, such as our write-off of the
$1.1 million unbilled rent receivable from Regal Cinemas, result in a reduction of our net income, total assets and
stockholders’ equity and in certain circumstances may result in the breach of our financial covenants under the
credit facility.
The concentration of our properties in certain states may make our revenues and the value of our portfolio
vulnerable to adverse changes in local economic conditions.
Some of the properties we own are located in the same or a limited number of geographic regions.
Approximately 50.4% of our 2021 contractual rental income is derived from properties located in seven states—
New York (9.3%), South Carolina (9.2%), Pennsylvania (8.1%), Texas (7.6%), Georgia (6.1%), New Jersey
(5.1%) and Maryland (5.0%). As a result, a decline in the economic conditions in these states or in regions
where our properties may be concentrated in the future, may have an adverse effect on the rental and occupancy
rates for, and the property values of, these properties, which could lead to a reduction of our rental income and/or
impairment charges.
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Our portfolio of properties is concentrated in the industrial and retail real estate sectors, and our business
would be adversely affected by an economic downturn in either of such sectors.
Approximately 55.5% and 32.4% of our 2021 contractual rental income is derived from industrial and retail
tenants, respectively, and we are vulnerable to economic declines that negatively impact these sectors of the
economy, which could have an adverse effect on our results of operations, liquidity and financial condition.
Declines in the value of our properties could result in impairment charges.
If we are presented with indications of impairment in the value of a particular property or group of
properties, we will be required to evaluate any such property or properties. If we determine that any of our
properties at which indicators of impairment exist have undiscounted cash flows below the net book value of
such property, we will be required to recognize an impairment charge for the difference between the fair value
and the book value during the quarter in which we make such determination.
Our ability to fully control the maintenance of our net-leased properties may be limited.
The tenants of our net-leased properties are responsible for maintenance and other day-to-day management
of the properties. If a property is not adequately maintained in accordance with the terms of the applicable lease,
we may incur expenses for deferred maintenance or other liabilities once the property is no longer leased. While
we visit our properties on an intermittent basis, these visits are not comprehensive inspections and deferred
maintenance items may go unnoticed. While our leases generally provide for recourse against the tenant in these
instances, a bankrupt or financially-troubled tenant may be more likely to defer maintenance, and it may be more
difficult to enforce remedies against such a tenant.
A significant portion of our leases are long-term and do not have fair market rental rate adjustments, which
could negatively impact our income and reduce the amount of funds available to make distributions to
stockholders.
A significant portion of our rental income comes from long-term net leases. There is an increased risk with
long-term leases that the contractual rental increases in future years will fail to result in fair market rental rates
during those years. If we do not accurately judge the potential for increases in market rental rates when
negotiating these long-term leases or if we are unable to obtain any increases in rental rates over the terms of our
leases, significant increases in future property operating costs, to the extent not covered under the net leases,
could result in us receiving less than fair value from these leases. As a result, our income and distributions to our
stockholders could be lower than they would otherwise be if we did not engage in long-term net leases. In
addition, increases in interest rates may also negatively impact the value of our properties that are subject to
long-term leases. While a significant number of our net leases provide for annual escalations in the rental rate,
the increase in interest rates may outpace the annual escalations.
The re-development of a multi-tenant community shopping center located in Manahawkin, New Jersey owned
by a joint venture may be unsuccessful or fail to meet our expectations.
A joint venture in which we are a 50% partner is re-developing a multi-tenant community shopping center
located in Manahawkin, New Jersey, which we refer to as the “Manahawkin Property.” As a result of this re-
development activity and the related decrease in occupancy, and more recently, the failure of Regal Cinemas, a
significant tenant at this property, to pay rent, the income and cash flow from this property decreased
significantly over the past several years.
This re-development project may be unsuccessful or fail to meet our expectations due to a variety of risks
and uncertainties including:
• whether and when anchor or significant tenants, such as Regal Cinemas which has been experiencing
financial difficulty, will reopen and begin paying rent,
• co-tenancy clauses that permit certain significant tenants to terminate their lease or otherwise reduce their
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rent obligations could be triggered if certain significant tenants vacate, cease paying rent or otherwise
cease operations,
• current tenants that have informally agreed to participate in the re-development may determine not to
participate,
• the joint venture’s inability to obtain, on acceptable terms, the financing needed to implement the re-
development,
• the joint venture’s inability to obtain all necessary zoning and other required governmental permits and
authorizations on a timely basis,
• occupancy rates and rents at the re-developed property may not meet the expected levels and could be
insufficient to make the property profitable,
• the inability to complete the project on schedule, or at all, as a result of factors, many of which are beyond
the joint venture’s control, including the pandemic, weather, labor conditions and material shortages,
• development and construction costs of the project may exceed the joint venture’s estimates,
• we or our joint venture partner may not have sufficient resources to fund the project, and
• fluctuations in local and regional economic conditions due to the time lag between commencement and
completion of the project.
We may be adversely affected if this re-development is further delayed or is unsuccessful. See “Item 2.
Properties” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” for further information about the Manahawkin Property.
Risks Related to Our Financing Activities, Indebtedness and Capital Resources
If we are unable to refinance our mortgage loans at maturity, we may be forced to sell properties at
disadvantageous terms, which would result in the loss of revenues and in a decline in the value of our
portfolio.
We had, as of December 31, 2020, $433.5 million in mortgage debt outstanding (all of which is non-recourse
subject to standard carve-outs) and our ratio of debt to total market capital was 51.9%. The risks associated with
our mortgage debt, include the risks that cash flow from properties securing the indebtedness and our available
cash and cash equivalents will be insufficient to meet required payments of principal and interest.
Generally, only a portion of the principal of our mortgage indebtedness will be repaid prior to or at maturity
and we do not plan to retain sufficient cash to repay such indebtedness at maturity. Accordingly, to meet these
obligations if they cannot be refinanced at maturity, we will have to use funds available under our credit facility,
if any, and our available cash and cash equivalents to pay our mortgage debt or seek to raise funds through the
financing of unencumbered properties, sale of properties or the issuance of additional equity. From 2021 through
2025, approximately $205.0 million of our mortgage debt matures—specifically, $22.6 million in 2021, $46.1
million in 2022, $30.3 million in 2023, $63.0 million in 2024 and $43.0 million in 2025. If we are unsuccessful
in refinancing or extending existing mortgage indebtedness or financing unencumbered properties, selling
properties on favorable terms or raising additional equity, our cash flow will be insufficient to repay all maturing
mortgage debt when payments become due, and we may be forced to dispose of properties on disadvantageous
terms or convey properties secured by mortgages to the mortgagees, which would lower our revenues and the
value of our portfolio.
We may find that the value of a property could be less than the mortgage secured by such property. We may
also have to decide whether we should refinance or pay off a mortgage on a property at which the mortgage
matures prior to lease expiration and the tenant may not renew the lease. In these types of situations, after
evaluating various factors, including among other things, the tenant’s competitive position in the applicable sub-
market, our and our tenant’s estimates of its prospects, consideration of alternative uses and opportunities to
re-purpose or re-let the property, we may seek to renegotiate the terms of the mortgage, or to the extent that the
loan is non-recourse and the terms of the mortgage cannot be satisfactorily renegotiated, forfeit the property by
conveying it to the mortgagee and writing off our investment.
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If interest rates increase or credit markets tighten, it may be more difficult for us to secure financing, which
may limit our ability to finance or refinance our real estate properties, reduce the number of properties we can
acquire, sell certain properties, and decrease our stock price.
Increases in interest rates or reduced access to credit markets may make it difficult for us to obtain financing,
refinance mortgage debt, limit the mortgage debt available on properties we wish to acquire and limit the
properties we can acquire. Even in the event that we are able to secure mortgage debt on, or otherwise finance
our real estate properties, due to increased costs associated with securing financing and other factors beyond our
control, we may be unable to refinance the entire outstanding loan balance or be subject to unfavorable terms
(such as higher loan fees, interest rates and periodic payments). In addition, an increase in interest rates could
decrease the amount third parties are willing to pay for our assets, thereby limiting our ability to reposition our
portfolio promptly in response to changes in economic or other conditions.
While interest rates have been at historically low levels the past several years, they could become
increasingly volatile. During the three years ended December 31, 2020, the interest rate on the 10-year treasury
note ranged from 0.51% to 3.24%. If we are required to refinance mortgage debt that matures over the next
several years at higher interest rates than such mortgage debt currently bears, the funds available for dividends
may be reduced. The following table sets forth, as of December 31, 2020, the principal balance of the mortgage
payments due at maturity on our properties and the weighted average interest rate thereon (dollars in thousands):
Year
2021
2022
2023
2024
2025
2026 and thereafter
Principal
Balances
Due at
Maturity
8,542
$
31,584
16,709
50,636
32,086
168,143
Weighted Average
Interest Rate
Percentage
4.13
3.92
4.39
4.42
4.32
4.05
We manage a substantial portion of our exposure to interest rate risk by accessing debt with staggered
maturities, obtaining fixed rate mortgage debt and by fixing the interest rate on variable rate debt through the use
of interest rate swap agreements. However, no amount of hedging activity can fully insulate us from the risks
associated with changes in interest rates. Swap agreements involve risk, including that counterparties may fail to
honor their obligations under these arrangements, and these arrangements have caused us to pay higher interest
rates on our debt obligations than would otherwise be the case. Failure to hedge effectively against interest rate
risk could adversely affect our results of operations and financial condition.
Because REIT stocks are often perceived as high-yield investments, investors may perceive less relative
benefit to owning REIT stocks as interest rates and the yield on government treasuries and other bonds increase.
Accordingly, an increase in interest rates could reduce the amount investors are willing to pay for our common
stock.
If our borrowings increase, the risk of default on our repayment obligations and our debt service requirements
will also increase.
At December 31, 2020, we had $446.5 million of debt outstanding, including $433.5 million of mortgage
debt and $13.0 million of debt incurred pursuant to our credit facility. Increased leverage, whether pursuant to
our credit facility or mortgage debt, could result in increased risk of default on our payment obligations related to
borrowings and in an increase in debt service requirements, which could reduce our net income and the amount
of cash available to meet expenses and to pay dividends.
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A breach of our credit facility could occur if a significant number of our tenants default or fail to renew
expiring leases, or we take impairment charges against our properties.
Our credit facility includes covenants that require us to maintain certain financial ratios and comply with
other requirements. If our tenants default under their leases or fail to renew expiring leases, generally accepted
accounting principles may require us to recognize impairment charges against our properties, and our financial
position could be adversely affected causing us to be in breach of the financial covenants contained in our credit
facility.
Failure to meet interest and other payment obligations under our revolving credit facility or a breach by us of
the covenants to maintain the financial ratios would place us in default under our credit facility, and, if the banks
called a default and required us to repay the full amount outstanding under the credit facility, we might be
required to rapidly dispose of our properties, which could have an adverse impact on the amounts we receive on
such disposition. If we are unable to dispose of our properties in a timely fashion to the satisfaction of the banks,
the banks could foreclose on that portion of our collateral pledged to the banks, which could result in the
disposition of our properties at below market values. The disposition of our properties at below our carrying
value would adversely affect our net income, reduce our stockholders’ equity and adversely affect our ability to
pay dividends.
The phasing out of LIBOR may adversely affect our cash flow and financial results.
At December 31, 2020, our variable rate debt that bears interest at the one month LIBOR rate plus a
negotiated spread is in principal amount of $97.7 million (i.e., $84.7 million of mortgage debt and $13.0 million
of credit facility debt). We hedged our exposure to the fluctuating interest payments on this mortgage debt by
entering into interest rate swaps with the counterparties (or their affiliates) to such debt – these swaps effectively
fix our interest payments under the related debt. At December 31, 2020, we have 23 swaps with 6 separate
counterparties and an aggregate notional amount of $84.7 million. The fluctuating interest payments on the credit
facility debt are not hedged. The authority regulating LIBOR announced it intends to stop compelling banks to
submit rates for the calculation of LIBOR after June 2023 and it is possible that LIBOR will become unavailable
at an earlier date. Approximately $68.7 million of this mortgage debt and the related notional amount of interest
rate swaps mature after June 2023. Accordingly, there is uncertainty as to how the interest rate on this mortgage
debt, the related swaps and the credit facility debt will be determined when LIBOR is unavailable. Though these
agreements, and instruments provide for alternative methods of calculating the interest rate if LIBOR is
unavailable, such alternative rates may be unavailable (or the alternative rate provided for in the variable rate
mortgage debt may be inconsistent with the alternative rate provided for by the related swap), in which case we
may have to negotiate an alternative rate with the counterparties to such debt, the related swaps and the credit
facility debt - we can provide no assurance that we and our counterparties will be able to agree to alternative
rates. Even if alternative rates are available, the swaps may not effectively hedge our interest payment obligation
on this variable rate mortgage debt and may result in fluctuating interest payments with respect to such debt. Our
cash flow and financial results may be adversely affected if we are unable to arrange a mutually satisfactory
alternative rate to LIBOR for our variable rate mortgage debt and the credit facility debt. Further, the absence of
LIBOR or a generally acceptable alternative thereto may make it difficult to hedge our interest rate exposure on
variable rate mortgage debt that we incur in the future which in turn may make it more difficult to acquire
properties.
Certain of our net leases and our ground leases require us to pay property related expenses that are not the
obligations of our tenants.
Under the terms of substantially all of our net leases, in addition to satisfying their rent obligations, our
tenants are responsible for the payment of real estate taxes, insurance and ordinary maintenance and repairs.
However, under the provisions of certain net and ground leases, we are required to pay some expenses, such as
the costs of environmental liabilities, roof and structural repairs, insurance premiums, certain non-structural
repairs and maintenance. If our properties incur significant expenses that must be paid by us under the terms of
our leases, our business, financial condition and results of operations will be adversely affected and the amount
of cash available to meet expenses and pay dividends may be reduced.
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Risks Related to Real Estate Investments
Our revenues and the value of our portfolio are affected by a number of factors that affect investments in
leased real estate generally.
We are subject to the general risks of investing in leased real estate. These include the non-performance of
lease obligations by tenants, leasehold improvements that will be costly or difficult to remove should it become
necessary to re-rent the leased space for other uses, covenants in certain retail leases that limit the types of
tenants to which available space can be rented (which may limit demand or reduce the rents realized on
re-renting), rights to terminate leases due to co-tenancy provisions, events of casualty or condemnation affecting
the leased space or the property or due to interruption of the tenant’s quiet enjoyment of the leased premises,
obligations of a landlord to restore the leased premises or the property following events of casualty or
condemnation, adverse changes in economic conditions and local conditions (e.g., changing demographics,
retailing trends and traffic patterns), declines in rental rates, changes in the supply and price of quality properties
and the market supply and demand of competing properties, the impact of environmental laws, security concerns,
prepayment penalties applicable under mortgage financings, changes in tax, zoning, building code, fire safety and
other laws and regulations, the type of insurance coverage available, and changes in the type, capacity and
sophistication of building systems. The occurrence of any of these events could adversely impact our results of
operations, liquidity and financial condition.
Real estate investments are relatively illiquid and their values may decline.
Real estate investments are relatively illiquid. Therefore, we will be limited in our ability to reconfigure our
real estate portfolio in response to economic changes. We may encounter difficulty in disposing of properties
when tenants vacate either at the expiration of the applicable lease or otherwise. If we decide to sell any of our
properties, our ability to sell these properties and the prices we receive on their sale may be affected by many
factors, including the number of potential buyers, the number of competing properties on the market and other
market conditions, as well as whether the property is leased and if it is leased, the terms of the lease. As a result,
we may be unable to sell our properties for an extended period of time without incurring a loss, which would
adversely affect our results of operations, liquidity and financial condition.
Uninsured and underinsured losses may affect the revenues generated by, the value of, and the return from a
property affected by a casualty or other claim.
Most of our tenants obtain, for our benefit, comprehensive insurance covering our properties in amounts that
are intended to be sufficient to provide for the replacement of the improvements at each property. However, the
amount of insurance coverage maintained for any property may be insufficient (i) to pay the full replacement cost
of the improvements at the property following a casualty event or (ii) if coverage is provided pursuant to a
blanket policy and the tenant’s other properties are subject to insurance claims. In addition, the rent loss coverage
under the policy may not extend for the full period of time that a tenant may be entitled to a rent abatement as a
result of, or that may be required to complete restoration following, a casualty event. In addition, there are certain
types of losses, such as those arising from earthquakes, floods, hurricanes and terrorist attacks, that may be
uninsurable or that may not be economically insurable. Changes in zoning, building codes and ordinances,
environmental considerations and other factors also may make it impossible or impracticable for us to use
insurance proceeds to replace damaged or destroyed improvements at a property. If restoration is not or cannot be
completed to the extent, or within the period of time, specified in certain of our leases, the tenant may have the
right to terminate the lease. If any of these or similar events occur, it may reduce our revenues, the value of, or
our return from, an affected property.
We have been, and in the future will be, subject to significant competition and we may not be able to compete
successfully for investments.
We have been, and in the future will be, subject to significant competition for attractive investment
opportunities from other real estate investors, many of which have greater financial resources and the ability to
take greater risks than us, including publicly-traded REITs, non-traded REITs, insurance companies, commercial
and investment banking firms, private institutional funds, hedge funds, private equity funds and other investors.
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We may not be able to compete successfully for investments. If we pay higher prices for investments, our returns
may be lower and the value of our assets may not increase or may decrease significantly below the amount we
paid for such assets. If such events occur, we may experience lower returns on our investments.
Our current and future investments in joint ventures could be adversely affected by the lack of sole decision
making authority, reliance on joint venture partners’ financial condition or insurance coverage, disputes that
may arise between our joint venture partners and us and our reliance on one significant joint venture partner.
Seven properties in which we have an interest are owned through consolidated joint ventures (four
properties) and unconsolidated joint ventures (three properties). We may continue to acquire properties through
joint ventures and/or contribute some of our properties to joint ventures. Investments in joint ventures may, under
certain circumstances, involve risks not present when a third party is not involved, including the possibility that
joint venture partners might file for bankruptcy protection, fail to fund their share of required capital
contributions or obtain insurance coverage pursuant to a blanket policy as a result of which claims with respect to
other properties covered by such policy and in which we have no interest could reduce or eliminate the coverage
available with respect to the joint venture properties. Further, joint venture partners may have conflicting
business interests or goals, and as a result there is the potential risk of impasses on decisions, such as a sale and
the timing thereof. Any disputes that may arise between joint venture partners and us may result in litigation or
arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time
and effort on our business. Consequently, actions by or disputes with joint venture partners might result in
subjecting properties owned by the joint venture to additional risk. With respect to our (i) consolidated joint
ventures, we own, with two joint venture partners and their respective affiliates, properties that account for 3.8%
of 2021 contractual rental income, and (ii) unconsolidated joint ventures, we own, with two joint venture partners
and their affiliates, properties which account for our $1.4 million share of 2021 base rent payable. We may be
adversely affected if we are unable to maintain a satisfactory working relationship with these joint venture
partners or if any of these partners becomes financially distressed.
Regulatory and Tax Risks
Compliance with environmental regulations and associated costs could adversely affect our results of
operations and liquidity.
Under various federal, state and local laws, ordinances and regulations, an owner or operator of real property
may be required to investigate and clean up hazardous or toxic substances or petroleum product releases at the
property and may be held liable to a governmental entity or to third parties for property damage and for
investigation and cleanup costs incurred in connection with contamination. The cost of investigation, remediation
or removal of hazardous or toxic substances may be substantial, and the presence of such substances, or the
failure to properly remediate a property, may adversely affect our ability to sell or rent the property or to borrow
money using the property as collateral. In connection with our ownership, operation and management of real
properties, we may be considered an owner or operator of the properties and, therefore, potentially liable for
removal or remediation costs, as well as certain other related costs, including governmental fines and liability for
injuries to persons and property, not only with respect to properties we own now or may acquire, but also with
respect to properties we have owned in the past.
We cannot provide any assurance that existing environmental studies with respect to any of our properties
reveal all potential environmental liabilities, that any prior owner of a property did not create any material
environmental condition not known to us, or that a material environmental condition does not otherwise exist, or
may not exist in the future, as to any one or more of our properties. If a material environmental condition does in
fact exist, or exists in the future, the remediation costs could have a material adverse impact upon our results of
operations, liquidity and financial condition.
Compliance with the Americans with Disabilities Act could be costly.
Under the Americans with Disabilities Act of 1990, all public accommodations must meet Federal
requirements for access and use by disabled persons. A determination that our properties do not comply with the
Americans with Disabilities Act could result in liability for both governmental fines and damages. If we are
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required to make unanticipated major modifications to any of our properties to comply with the Americans with
Disabilities Act, which are determined not to be the responsibility of our tenants, we could incur unanticipated
expenses that could have an adverse impact upon our results of operations, liquidity and financial condition.
Legislative or regulatory tax changes could have an adverse effect on us.
There are a number of issues associated with an investment in a REIT that are related to the Federal income
tax laws, including, but not limited to, the consequences of our failing to continue to qualify as a REIT. At any
time, the Federal income tax laws governing REITs or the administrative interpretations of those laws may be
amended or modified. Any new laws or interpretations may take effect retroactively and could adversely affect
us or our stockholders.
Risks Related to OLP’s Organization, Structure and Ownership of Stock
Our transactions with affiliated entities involve conflicts of interest.
From time to time we have entered into transactions with persons and entities affiliated with us and with
certain of our officers and directors. Such transactions involve a potential conflict of interest, and entail a risk
that we could have obtained more favorable terms if we had entered into such transaction with an unaffiliated
third party. We are a party to a compensation and services agreement with Majestic Property effective as of
January 1, 2007, as amended. Majestic Property is wholly-owned by the vice chairman of our board of directors
and it provides compensation to certain of our part-time senior executive officers and other individuals
performing services on our behalf. Pursuant to the compensation and services agreement, we pay an annual fee to
Majestic Property which provides us with the Services. See “Item 1. Business – Human Capital Resources”. In
2020 we paid, and in 2021 we anticipate paying, Majestic Property, (i) a fee of $3.0 million and $3.1 million,
respectively, and (ii) $275,000 and $295,000, respectively, for our share of all direct office expenses, including
rent, telephone, postage, computer services, supplies, and internet usage. We also obtain our property insurance
in conjunction with Gould Investors L.P., our affiliate, and in 2020, reimbursed Gould Investors $1.2 million for
our share of the insurance premiums paid by Gould Investors. At December 31, 2020, Gould Investors
beneficially owns approximately 9.2% of our outstanding common stock and certain of our senior executive
officers are also executive officers of the managing general partner of Gould Investors. See Note 10 of our
consolidated financial statements for information regarding equity awards to individuals performing services on
our behalf pursuant to the compensation and services agreement.
Our senior management and other key personnel, including those performing services on a part-time basis,
are critical to our business and our future success depends on our ability to retain them.
We depend on the services of Matthew J. Gould, chairman of our board of directors, Fredric H. Gould, vice
chairman of our board of directors, Patrick J. Callan, Jr., our president and chief executive officer, Lawrence G.
Ricketts, Jr., our executive vice president and chief operating officer, and David W. Kalish, our senior vice
president and chief financial officer, and other members of senior management to carry out our business and
investment strategies. Of the foregoing executive officers, only Messrs. Callan and Ricketts, devote all of their
business time to us. Other members of senior management provide services to us either on a full-time or part-
time, as-needed basis. The loss of the services of any of our senior management or other key personnel, the
inability or failure of the members of senior management providing services to us on a part-time basis to devote
sufficient time or attention to our activities or our inability to recruit and retain qualified personnel in the future,
could impair our ability to carry out our business and investment strategies.
Certain provisions of our charter, our Bylaws, as amended, and Maryland law may inhibit a change in control
that stockholders consider favorable and could also limit the market price of our common stock.
Certain provisions of our charter (the “Charter”), our Bylaws and Maryland law may impede, or prevent, a
third party from acquiring control of us without the approval of our board of directors. These provisions:
21
• provide for a staggered board of directors consisting of three classes, with one class of directors being
elected each year and each class being elected for three-year terms and until their successors are duly
elected and qualify;
• impose restrictions on ownership and transfer of our stock (such provisions being intended to, among
other purposes, facilitate our compliance with certain requirements under the Code, relating to our
qualification as a REIT under the Code); and
• provide that directors may be removed only for cause and only by the vote of at least a majority of all
outstanding shares entitled to vote.
Certain provisions of the Maryland General Corporation Law (the “MGCL”) may impede a third party from
making a proposal to acquire us or inhibit a change of control under circumstances that otherwise could be in the
best interest of holders of shares of our common stock, including:
• “control share” provisions that provide that, subject to certain exceptions, holders of “control shares” of
our company (defined as voting shares which, when aggregated with other shares controlled by the
stockholder, entitle the holder to exercise voting power in the election of directors within one of three
increasing ranges) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of
ownership or control of issued and outstanding “control shares,” subject to certain exceptions) have no
voting rights with respect to the control shares except to the extent approved by our stockholders by the
affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all
interested shares; and
• additionally, Title 3, Subtitle 8 of the MGCL permits our board of directors, without stockholder approval
and regardless of what is currently provided in the Charter or the Bylaws, to implement certain corporate
governance provisions.
Ownership of less than 9.9% of our outstanding stock could violate the restrictions on ownership and transfer
in our Charter, which would result in the shares owned or acquired in violation of such restrictions being
designated as “excess shares” and transferred to a trust for the benefit of a charitable beneficiary and loss of
the right to receive dividends and other distributions on, and the economic benefit of any appreciation of, such
shares, and you may not have sufficient information to determine at any particular time whether an
acquisition of our shares will result in a loss of the economic benefit of such shares.
In order for us to qualify as a real estate investment trust under the Code, no more than 50% of the value of
the outstanding shares of our stock may be owned, directly or indirectly or through application of certain
attribution rules, by five or fewer “individuals” (as defined in the Code) at any time during the last half of a
taxable year. To facilitate our qualification as a REIT under the Code, among other purposes, the Charter
generally prohibits any person other than Fredric H. Gould, currently vice chairman of our board of directors,
from actually or constructively owning more than 9.9% of the outstanding shares of all classes and series of our
stock, which we refer to as the “ownership limit.” In addition, the Charter prohibits any person from beneficially
or constructively owning shares of our stock that would result in more than 50% of the value of the outstanding
shares of our stock to be beneficially owned by five or fewer individuals, regardless of whether such ownership
is during the last half of any taxable year, which we refer to as the “Five or Fewer Limit.” Shares transferred in
violation of either of these restrictions will be designated automatically as “excess shares” and transferred to a
trust for the benefit of a charitable beneficiary selected by us. The person that attempted to acquire the shares of
our stock in violation of the restrictions in the Charter will not be entitled to any dividends or distributions paid
after the date of the transfer to the trust and, upon a sale of such shares by the trust, will generally be entitled to
receive only the lesser of the market value on the date of the event that resulted in the transfer to the trust or the
net proceeds of the sale by the trust to a person who could own the shares without violating the ownership limits.
Pursuant to the attribution rules under the Code, Fredric H. Gould, is our only stockholder that beneficially
owned in excess of 9.9% of our capital stock on June 14, 2005, when the ownership limit became effective, and
is the only person permitted to own and acquire shares of our capital stock, directly or indirectly, in excess of the
ownership limit. Based on information supplied to us, as of March 4, 2021, Mr. Gould beneficially owns
approximately 11.667% of the outstanding shares of our stock. As a result of Mr. Gould’s beneficial ownership
of our stock, compliance with the 9.9% ownership limit will not ensure that your ownership of shares of our
22
stock will not violate the Five or Fewer Limit or prevent shares of stock that you intended to acquire from being
designated as “excess shares” and transferred to a charitable trust.
Currently, if three other individuals unrelated to Mr. Gould were to beneficially own exactly 9.9% of our
outstanding stock, no other individual may beneficially own 8.633% or more of our outstanding stock without
violating the Five or Fewer Limit and causing the newly-acquired shares to be designated as “excess shares” and
transferred to the charitable trust. However, there is no limitation on Mr. Gould acquiring additional shares of our
stock or otherwise increasing his percentage of ownership of our stock, meaning that the amount of our stock that
other persons or entities may acquire without potentially violating the Five or Fewer Limit could be reduced in
the future and without notice. Our Board has exempted from the 9.9% ownership limit the ownership by Mr.
Gould’s direct and indirect heirs of shares of our stock that they inherit from him, subject to the same conditions
and limitations as apply to Mr. Gould.
Fredric H. Gould and his heirs will be required by the Exchange Act and regulations promulgated thereunder
to report, with certain exceptions, their acquisition of additional shares of our stock within two days of such
acquisitions, and all holders of our stock will be required to file reports of their acquisition of beneficial
ownership (as defined in the Exchange Act) of more than 5% of our outstanding stock. However, beneficial
ownership for purposes of the reporting requirements under the Exchange Act is calculated differently than
beneficial ownership for purposes of determining compliance with the Five or Fewer Limit. As a result, you may
not have enough information currently available to you at any time to determine the percentage of ownership of
our stock that you can acquire without violating the Five or Fewer Limit and losing the economic benefit of the
ownership of such newly-acquired shares.
Failure to qualify as a REIT could result in material adverse tax consequences and could significantly reduce
cash available for distributions.
We operate so as to qualify as a REIT under the Code. Qualification as a REIT involves the application of
technical and complex legal provisions for which there are limited judicial and administrative interpretations.
The determination of various factual matters and circumstances not entirely within our control may affect our
ability to qualify as a REIT. In addition, no assurance can be given that legislation, new regulations,
administrative interpretations or court decisions will not significantly change the tax laws with respect to
qualification as a REIT or the federal income tax consequences of such qualification. If we fail to quality as a
REIT, we will be subject to federal, certain additional state and local income tax (including any applicable
alternative minimum tax) on our taxable income at regular corporate rates and would not be allowed a deduction
in computing our taxable income for amounts distributed to stockholders. In addition, unless entitled to relief
under certain statutory provisions, we would be disqualified from treatment as a REIT for the four taxable years
following the year during which qualification is lost. The additional tax would reduce significantly our net
income and the cash available to pay dividends.
We are subject to certain distribution requirements that may result in our having to borrow funds at
unfavorable rates.
To obtain the favorable tax treatment associated with being a REIT, we generally are required, among other
things, to distribute to our stockholders at least 90% of our ordinary taxable income (subject to certain
adjustments) each year. To the extent that we satisfy these distribution requirements, but distribute less than
100% of our taxable income we will be subject to Federal and state corporate tax on our undistributed taxable
income.
As a result of differences in timing between the receipt of income and the payment of expenses, and the
inclusion of such income and the deduction of such expenses in arriving at taxable income, and the effect of
nondeductible capital expenditures and the timing of required debt service (including amortization) payments, we
may need to borrow funds in order to make the distributions necessary to retain the tax benefits associated with
qualifying as a REIT, even if we believe that then prevailing market conditions are not generally favorable for
such borrowings. Such borrowings could reduce our net income and the cash available to pay dividends.
23
Compliance with REIT requirements may hinder our ability to maximize profits.
In order to qualify as a REIT for Federal income tax purposes, we must continually satisfy tests concerning,
among other things, our sources of income, the amounts we distribute to our stockholders and the ownership of
our stock. We may also be required to make distributions to stockholders at disadvantageous times or when we
do not have funds readily available for distribution. Accordingly, compliance with REIT requirements may
hinder our ability to operate solely on the basis of maximizing profits.
In order to qualify as a REIT, we must also ensure that at the end of each calendar quarter, at least 75% of
the value of our assets consists of cash, cash items, government securities and real estate assets. Any investment
in securities cannot include more than 10% of the outstanding voting securities of any one issuer or more than
10% of the total value of the outstanding securities of any one issuer. In addition, no more than 5% of the value
of our assets can consist of the securities of any one issuer, other than a qualified REIT security. If we fail to
comply with these requirements, we must dispose of such portion of these securities in excess of these
percentages within 30 days after the end of the calendar quarter in order to avoid losing our REIT status and
suffering adverse tax consequences. This requirement could cause us to dispose of assets for consideration that is
less than their true value and could lead to an adverse impact on our results of operations and financial condition.
If we reduce or do not increase our dividend, the market value of our common stock may decline.
The level of our dividend is established by our board of directors from time to time based on a variety of
factors, including our cash available for distribution, funds from operations, adjusted funds from operations and
maintenance of our REIT status. Various factors could cause our board of directors to decrease or not increase
our dividend, including tenant defaults or bankruptcies resulting in a material reduction in our funds from
operations, a material loss resulting from an adverse change in the value of one or more of our properties, or
insufficient income to cover our dividends. In 2020, our dividends exceed our “earnings and profits” as
determined pursuant to the Code (approximately 8.1% of our dividends exceeded our earnings and profits and
therefor constituted a return of capital); accordingly, we were not required to pay dividends that exceeded such
earnings and profits to maintain our REIT status. We anticipate that at least a portion of the dividends we will
pay in 2021 will constitute a return of capital and we would not be required to pay dividends that qualify as
return of capital to maintain our REIT status. If our board of directors determines to reduce or not increase our
dividend for the foregoing or any other reason, the market value of our common stock could be adversely
affected.
General Business Risks
Breaches of information technology systems could materially harm our business and reputation
We collect and retain on information technology systems, certain financial, personal and other sensitive
information provided by third parties, including tenants, vendors and employees. We also rely on information
technology systems for the collection and distribution of funds. We have been, and continue to be, subject to
cybersecurity attacks though we have not incurred any significant loss therefrom. There can be no assurance that
we will be able to prevent unauthorized access to sensitive information or the unauthorized distribution of funds.
Any loss of this information or unauthorized distribution of funds as a result of a cybersecurity attack may result
in loss of funds to which we are entitled, legal liability and costs (including damages and penalties), as well as
damage to our reputation, that could materially and adversely affect our business.
Actual or threatened epidemics, pandemics, outbreaks, or other public health crises may adversely affect our
tenants’ financial condition and the profitability of our properties.
Our business and the businesses of our tenants could be materially and adversely affected by the risks, or the
public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as
the COVID-19 pandemic. The risk, or public perception of the risk, of a pandemic or media coverage of
infectious diseases could cause customers to avoid retail properties, and with respect to our properties generally,
could cause temporary or long-term disruptions in our tenants’ supply chains and/or delays in the delivery of our
tenants’ inventory. Moreover, an epidemic, pandemic, outbreak or other public health crisis, such as COVID-19,
could cause the on-site employees of our tenants to avoid our tenants’ properties, which could adversely affect
24
our tenants’ ability to adequately manage their businesses. Risks related to an epidemic, pandemic or other health
crisis, such as COVID-19, could also lead to the complete or partial closure of one or more of our tenants’ stores
or facilities. Such events could adversely impact our tenants’ sales and/or cause the temporary closure of our
tenants’ businesses, which could severely disrupt their operations and the rental revenue we generate from our
leases with them. The ultimate extent of the impact of any epidemic, pandemic or other health crisis on our
business, financial condition and results of operations will depend on future developments, which are highly
uncertain and cannot be predicted, including new information that may emerge concerning the severity of such
epidemic, pandemic or other health crisis and actions taken to contain or prevent their further spread, among
others. These and other potential impacts of an epidemic, pandemic or other health crisis, such as COVID-19,
could therefore materially and adversely affect our business, financial condition and results of operations.
The failure of any bank in which we deposit our funds could have an adverse impact on our financial
condition.
We have diversified our cash and cash equivalents between several banking institutions in an attempt to
minimize exposure to any one of these entities. However, the Federal Deposit Insurance Corporation only insures
accounts in amounts up to $250,000 per depositor per insured bank. We currently have cash and cash equivalents
deposited in certain financial institutions significantly in excess of federally insured levels. If any of the banking
institutions in which we have deposited funds ultimately fails, we may lose our deposits over $250,000. The loss
of our deposits may have an adverse effect on our financial condition.
We are dependent on third party software for our billing and financial reporting processes.
We are dependent on third party software, and in particular Yardi’s property management software, for
generating tenant invoices and financial reports. If the software fails (including a failure resulting from such
parties unwillingness or inability to maintain or upgrade the functionality of the software), our ability to bill
tenants and prepare financial reports could be impaired which would adversely affect our business.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
As of December 31, 2020, we own 120 properties with an aggregate net book value of $691.9 million. Our
occupancy rate, based on square footage, was 98.4%, 98.1% and 99.2% as of December 31, 2020, 2019 and
2018, respectively.
At December 31, 2020, we participated in joint ventures that owned three properties and at such date, our
investment in these unconsolidated joint ventures is $10.7 million. The occupancy rate of our joint venture
properties, based on square footage, was 59.1%, 59.3% and 59.3% as of December 31, 2020, 2019 and 2018,
respectively. For further information about the Manahawkin Property, including information about the related
mortgage debt and re-development activities, see “—Properties Owned by Joint Ventures”, “—Mortgage Debt”
and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Our executive office is located at 60 Cutter Mill Road, Suite 303, Great Neck, New York. We believe that
this facility is satisfactory for our current and projected needs.
25
Our Properties
The following table details, as of December 31, 2020, certain information about our properties (except as
otherwise indicated, each property is tenanted by a single tenant):
Location
Fort Mill, SC
Hauppauge, NY
Baltimore, MD
Royersford, PA(1)
Lebanon, TN
El Paso, TX
West Hartford, CT
Secaucus, NJ
Delport, MO(2)
El Paso, TX(3)
McCalla, AL
St. Louis Park, MN(2)
Littleton, CO(4)
Brooklyn, NY
Lowell, AR
Fort Mill, SC
Joppa, MD
Ankeny, IA(2)
Moorestown, NJ(2)
Pittston, PA
Englewood, CO
Tucker, GA
Pennsburg, PA(2)
Hamilton, OH
Greenville, SC(5)
Bakersfield, CA
Green Park, MO
Columbus, OH
Saco, ME
Ronkonkoma, NY(2)
Wichita, KS
Indianapolis, IN
Lake Charles, LA(6)
Huntersville, NC
Ashland, VA
Columbus, OH
Memphis, TN
Ft. Myers, FL
Chandler, AZ
Kennesaw, GA
Chicago, IL
Amarillo, TX
Cedar Park, TX
Moorestown, NJ
Nashville, TN(2)
Melville, NY
Fayetteville, GA
Shakopee, MN
Cary, NC
Greenville, SC
Virginia Beach, VA
Louisville, KY
Champaign, IL(2)
New Hyde Park, NY
Bensalem, PA(5)
Greenville, SC(7)
Rincon, GA
Plymouth, MN
Type of Property
Industrial
Industrial
Industrial
Retail
Industrial
Industrial
Retail—Supermarket
Health & Fitness
Industrial
Retail
Industrial
Retail
Retail
Office
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Health & Fitness
Industrial
Health & Fitness
Industrial
Industrial
Industrial
Retail—Furniture
Industrial
Industrial
Retail—Furniture
Industrial
Retail—Office Supply
Industrial
Industrial
Industrial
Industrial
Retail
Industrial
Retail
Retail—Office Supply
Retail—Furniture
Retail—Furniture
Industrial
Industrial
Industrial
Retail—Furniture
Industrial
Retail—Office Supply
Industrial
Retail—Furniture
Industrial
Retail
Industrial
Industrial
Industrial
Industrial
Industrial
Percentage of
2021 Contractual
Rental Income
Approximate
Square Footage
of Building
2021 Contractual
Rental Income
per Square Foot
4.3
4.0
3.4
3.2
3.0
2.8
2.6
2.2
2.1
1.9
1.9
1.9
1.9
1.8
1.8
1.7
1.6
1.6
1.5
1.5
1.4
1.4
1.3
1.1
1.1
1.1
1.0
1.0
1.0
1.0
1.0
1.0
1.0
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.7
0.7
0.7
0.7
0.7
0.7
0.6
0.6
0.6
0.6
$
701,595
201,614
367,000
194,600
540,200
419,821
47,174
44,863
339,094
110,179
294,000
131,710
101,617
66,000
248,370
303,188
258,710
208,234
219,881
249,600
63,882
58,800
291,203
38,000
142,200
218,116
119,680
96,924
131,400
90,599
88,108
125,622
54,229
78,319
88,003
105,191
224,749
29,993
62,121
32,138
23,939
72,027
72,000
64,000
99,500
51,351
65,951
114,000
33,490
88,800
58,937
125,370
50,530
38,000
85,663
128,000
95,000
82,565
4.20
13.57
6.39
11.47
3.83
4.60
37.92
33.43
8.69
12.36
4.43
21.78
16.65
19.24
4.95
3.92
4.33
10.28
9.80
4.02
15.30
16.16
6.34
20.75
16.20
3.36
6.02
7.40
5.33
14.95
7.91
5.45
38.12
8.07
7.04
5.83
2.72
20.17
9.64
18.57
24.37
7.91
7.91
8.80
11.16
10.68
7.91
4.55
14.62
5.41
7.91
3.70
19.02
12.01
20.38
5.54
4.60
5.15
26
Location
Eugene, OR
Deptford, NJ
Highland Ranch, CO(2)
Tyler, TX
Newark, DE
Duluth, GA
Newport, VA
El Paso, TX
Woodbury, MN
LaGrange, GA
Durham, NC
Richmond, VA
Greensboro, NC
Gurnee, IL
Naples, FL
Wauconda, IL
Selden, NY
Somerville, MA
Bluffton, SC
Carrollton, GA
Pinellas Park, FL
Cartersville, GA
Hauppauge, NY
West Hartford, CT(8)
Richmond, VA
Greensboro, NC
Hyannis, MA
Lexington, KY
New Hope, MN
Chandler, AZ
Myrtle Beach, SC
Everett, MA
Kennesaw, GA
Lawrenceville, GA
Bolingbrook, IL
Concord, NC
Cape Girardeau, MO
Miamisburg, OH
Marston, MA
Indianapolis, IN
Monroeville, PA
Gettysburg, PA
Hanover, PA
West Palm Beach, FL
Batavia, NY
Palmyra, PA
Reading, PA
Reading, PA
Trexlertown, PA
Cuyahoga Falls, OH
South Euclid, OH
Hilliard, OH
Port Clinton, OH
Lawrence, KS
Seattle, WA
Rosenberg, TX
Louisville, KY
Crystal Lake, IL(9)
Greensboro, NC(10)
Indianapolis, IN(10)
Philadelphia, PA(11)
Beachwood, OH(12)
Type of Property
Retail—Office Supply
Retail
Retail
Retail—Furniture
Other
Retail—Furniture
Retail—Furniture
Retail—Office Supply
Retail
Industrial
Industrial
Retail—Furniture
Retail
Retail—Furniture
Retail—Furniture
Industrial
Retail
Retail
Retail—Furniture
Restaurant
Industrial
Restaurant
Restaurant
Retail—Supermarket
Restaurant
Restaurant
Retail
Retail—Furniture
Industrial
Industrial
Restaurant
Retail
Restaurant
Restaurant
Retail
Restaurant
Retail
Industrial
Retail
Restaurant
Retail
Restaurant
Restaurant
Industrial
Retail
Restaurant
Restaurant
Restaurant
Restaurant
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Industrial
Retail
Theater
Theater
Retail—Supermarket
Land
27
2021 Contractual
of Building
Percentage of
Approximate
2021 Contractual Square Footage Rental Income
per Square Foot
Rental Income
16.37
15.90
19.50
7.91
17.00
7.91
7.91
15.20
7.25
4.06
6.95
7.91
23.58
13.23
18.70
5.48
20.00
23.23
7.91
45.53
5.03
45.84
36.65
—
26.02
36.46
24.85
7.91
1.80
8.59
31.68
11.43
52.35
50.49
6.10
42.04
14.71
5.48
21.00
14.14
27.83
51.63
54.90
14.26
6.00
48.48
48.66
51.72
43.03
17.21
9.94
15.55
15.19
10.17
26.06
8.79
4.45
—
—
—
—
—
24,978 $
25,358
42,920
50,810
23,547
50,260
49,865
25,000
49,406
80,000
46,181
38,788
12,950
22,768
15,912
53,750
14,555
12,054
35,011
6,012
53,064
5,635
7,000
—
9,367
6,655
9,750
30,173
122,461
25,035
6,734
18,572
4,051
4,025
33,111
4,749
13,502
35,707
8,775
12,820
6,051
2,944
2,702
10,361
23,483
2,798
2,754
2,551
3,004
6,796
11,672
6,751
6,749
8,600
3,053
8,000
9,642
57,653
61,213
57,688
32,446
349,999
10,304,071
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.5
0.5
0.5
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.1
0.1
0.1
0.1
0.1
—
—
—
—
—
100.0
(1) This property, a community shopping center, is leased to 12 tenants. Contractual rental income per square
foot excludes 1,650 vacant square feet. Approximately 27.9% of the square footage is leased to a
supermarket.
(2) This property has two tenants.
(3) This property has four tenants. Contractual rental income per square foot excludes 2,395 vacant square feet.
(4) This property, a community shopping center, is leased to 21 tenants. Contractual rental income per square
foot excludes 23,635 vacant square feet.
(5) This property has three tenants.
(6) This property has three tenants. Approximately 43.4% of the square footage is leased to a retail office supply
operator.
(7) This property has two tenants. Contractual rental income excludes 48,000 vacant square feet.
(8) This property provides additional parking for the W. Hartford, CT, retail supermarket.
(9) This property has been vacant since 2017.
(10) These properties are tenanted by Regal Cinemas which has closed the theaters at our properties for an
unspecified period.
(11) This property has been vacant since 2019.
(12) This property is ground leased to a multi-unit apartment complex owner/operator. Contractual rental income
excludes $1.2 million of variable rent as it is unlikely we will receive rent for several months, if not longer.
See Note 6 of our consolidated financial statements and “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations — Challenges and Uncertainties Facing Certain Tenants and
Properties.”
Properties Owned by Joint Ventures
The following table sets forth, as of December 31, 2020, information about the properties owned by joint
ventures in which we are a venture partner:
Percentage of
Base Rent Payable
in 2021
Location
Manahawkin, NJ(2)
Savannah, GA
Savannah, GA(3)
Type of
Property
Retail
Retail
Restaurant
Contributed by
the Applicable
Approximate
Square Footage
Joint Venture(1) of Building
78.4
14.5
7.1
100.0
319,349 $
46,058
—
365,407
2021
Base Rent
per Square Foot
7.96
4.42
—
(1) Represents our share of the base rent payable in 2021 with respect to such joint venture property,
expressed as a percentage of the aggregate base rent payable in 2021 with respect to all of our
joint venture properties. Base rent payable in 2021 excludes $237,000 from, Regal Cinemas, a
tenant at our Manahawkin, New Jersey property, which has closed for an unspecified period.
(2) The Manahawkin Property, a community shopping center, is leased to 22 tenants and is
undergoing re-development. Base rent per square foot excludes (i) 149,447 vacant square feet
and (ii) 31,619 square feet leased to Regal Cinemas. See “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations.”
(3) Portions of this property are used as a parking lot and ground leased to a restaurant.
28
Geographic Concentration
As of December 31, 2020, the 120 properties owned by us are located in 31 states. The following table sets
forth information, presented by state, related to our properties as of December 31, 2020:
State
New York
South Carolina
Pennsylvania
Texas
Georgia
New Jersey
Maryland
Tennessee
Minnesota
Ohio
Colorado
Missouri
North Carolina
Connecticut
Virginia
Illinois
Florida
Alabama
Arkansas
Iowa
Massachusetts
Indiana
Arizona
Kansas
Kentucky
California
Maine
Other
2021
Contractual
Number of
Properties
Rental
Income
Percentage of
2021
Contractual
Rental
Income
8 $ 6,398,224
6,306,335
7
5,581,672
12
5,256,941
7
4,175,318
10
3,527,027
4
3,467,424
2
3,237,837
3
2,821,941
5
2,756,277
9
2,678,349
3
2,392,938
3
2,190,481
7
2,041,992
2
2,031,460
5
1,840,560
6
1,317,004
4
1,303,539
1
1,230,498
1
1,082,337
1
918,849
4
865,973
3
814,142
2
784,787
2
745,406
3
733,260
1
700,693
1
1,543,445
4
120 $ 68,744,709
Approximate
Building
Square Feet
492,602
1,405,528
901,523
757,837
401,872
354,102
625,710
864,449
500,142
657,789
208,419
472,276
243,557
47,174
244,960
216,544
109,330
294,000
248,370
208,234
49,151
196,130
87,156
96,708
165,185
218,116
131,400
105,807
100.0 10,304,071
9.3
9.2
8.1
7.6
6.1
5.1
5.0
4.7
4.1
4.0
3.9
3.5
3.2
3.0
3.0
2.7
1.9
1.9
1.8
1.6
1.3
1.3
1.2
1.1
1.1
1.1
1.0
2.2
The following table sets forth information, presented by state, related to the properties owned by our joint
ventures as of December 31, 2020:
Our Share
of the
Number of
Base Rent
Payable in 2021
to these
Properties Joint Ventures Square Feet
319,349
$ 1,101,421
46,058
303,379
365,407
$ 1,404,800
Approximate
Building
1
2
3
State
New Jersey
Georgia
29
Mortgage Debt
At December 31, 2020, we had:
• 74 first mortgages secured by 91 of our 120 properties; and
• $433.5 million of mortgage debt outstanding with a weighted average interest rate of 4.19% and a
weighted average remaining term to maturity of approximately 7.1 years. Substantially all of such
mortgage debt bears fixed interest at rates ranging from 3.02% to 5.87% and contains prepayment
penalties.
The following table sets forth scheduled principal mortgage payments due on our properties as of December
31, 2020 (dollars in thousands):
YEAR
2021
2022
2023
2024
2025
Thereafter
Total
$
PRINCIPAL
PAYMENTS DUE
22,575
46,126
30,278
63,016
43,048
228,506
433,549
$
At December 31, 2020, the first mortgage on the Manahawkin Property, the only joint venture property with
mortgage debt, had an outstanding principal balance of $22.9 million, carries an annual interest rate of 4% and
matures in July 2025. This mortgage contains a prepayment penalty. The following table sets forth the scheduled
principal mortgage payments due for this property as of December 31, 2020 (dollars in thousands):
YEAR
2021
2022
2023
2024
2025
Total
PRINCIPAL
PAYMENTS DUE
770
$
802
834
868
19,584
22,858
$
The mortgages on our properties (including properties owned by joint ventures) are generally non-recourse,
subject to standard carve-outs.
Item 3. Legal Proceedings.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
30
Part II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities.
Our common stock is listed on the New York Stock Exchange under the symbol “OLP.” As of March 5,
2021, there were approximately 270 holders of record of our common stock.
We qualify as a REIT for Federal income tax purposes. In order to maintain that status, we are required to
distribute to our stockholders at least 90% of our annual ordinary taxable income. The amount and timing of
future distributions will be at the discretion of our board of directors and will depend upon our financial
condition, earnings, business plan, cash flow and other factors. We intend to make distributions in an amount at
least equal to that necessary for us to maintain our status as a real estate investment trust for Federal income tax
purposes.
Issuer Purchases of Equity Securities
We did not repurchase any shares of our outstanding common stock in 2020. We are authorized to
repurchase up to $7.5 million in shares of our common stock.
Item 6. Selected Financial Data.
Not applicable as we qualify as a smaller reporting company.
31
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We are a self-administered and self-managed REIT focused on acquiring, owning and managing a
geographically diversified portfolio of industrial, retail (including furniture stores and supermarkets), restaurant,
health and fitness and theater properties, many of which are subject to long-term leases. Most of our leases are
“net leases” under which the tenant, directly or indirectly, is responsible for paying the real estate taxes,
insurance and ordinary maintenance and repairs of the property. As of December 31, 2020, we own, in 31 states,
123 properties, including four properties owned by consolidated joint ventures and three properties owned
through unconsolidated joint ventures.
Challenges and Uncertainties Related to the COVID-19 Pandemic
The most significant challenge we faced in 2020, and the significant uncertainties we face in the near term,
are the direct and indirect economic and other impacts of the COVID-19 pandemic and the responses thereto.
The pandemic had, and continues to have, a significant impact on the global economy, the U.S. economy, and the
economies of the local markets in which our properties are located. The preventative measures taken to address
the pandemic, and the economic consequences resulting therefrom, have affected, and will continue to affect, our
tenants to varying degrees depending on, among other things, the location of the subject property and the nature
of the tenant and use of the property (i.e., industrial or non-industrial), with retail (both general and specialized),
theater, health and fitness, and restaurant properties having been and continuing to be significantly adversely
affected.
The pandemic and the current economic, financial, and capital markets environments present material risks
and uncertainties. We are unable to predict the ultimate impact that the pandemic and the continuing economic
slowdown will have on our business, financial condition, results of operation and cash flows, which will depend
largely on future developments relating, among other things, to the duration and scope of the pandemic, efforts to
boost the economy, the timing and strength of an economic recovery, if any, and other factors outside of our
control. If the pandemic and economic slowdown continue for an extended period, among other things,
•
•
•
•
•
•
•
tenants, and in particular, tenants in the retail, restaurant, theater and health and fitness sectors, may
be unable to satisfy their obligations to us (including obligations under deferral arrangements or
extended leases) and may seek additional rent relief, may choose not to renew their leases, or if they
renew, may do so on terms less favorable to us,
it is more likely that tenants that to date have only been minimally impacted will be significantly
and adversely effected,
the amounts tenants at challenged properties pay us may be insufficient, without an accommodation
from the mortgage lender at such properties, to pay our debt service obligations with respect to such
properties,
the mortgage lenders for challenged properties may be unwilling or unable to allow for
accommodations or further accommodations with respect to our debt service obligations at such
properties,
the transformation of the retail, restaurant, health and fitness and theater sectors toward the provision
by these sectors of goods and services through e-commerce distribution channels at the expense of
the bricks and mortar distribution channels, may continue to grow at an accelerating rate,
it may be more difficult to obtain equity and debt financing, and
it may be more difficult to acquire properties to grow our business and dispose of underperforming
assets.
Our business, income, cash flow, results of operations, financial condition, liquidity, prospects, ability to
service our debt, and ability to pay cash dividends to our stockholders, may be adversely affected upon the
occurrence of any one or more of the foregoing. The risks, uncertainties and challenges presented by the
pandemic and the economic slowdown may also have the effect of heightening many of the other risks,
challenges and uncertainties described in this report.
32
Deferrals and Abatements; Addressing Liquidity and Capital Resource Requirements
We summarize below certain information, as of December 31, 2020 (unless otherwise indicated), regarding
the impact of the pandemic on our business and our responses thereto. See Note 2 to our consolidated financial
statements for information regarding the accounting treatment afforded to abatements and deferrals of rental
payments.
We deferred the payment of an aggregate of approximately $3.5 million, or 4.8%, of the annual base rent
otherwise payable during 2020. Of such sum, $1.6 million, or 47.0%, is payable by four tenants at 16 properties.
Of the total $3.5 million deferral, approximately 14.2% was repaid in 2020 and 79.6%, 5.9% and 0.3% are to be
paid in 2021, 2022 and 2023, respectively. These deferrals do not (i) modify or defer tenant obligations to
reimburse us for property level operating expenses and (ii) affect our net income, funds from operations or
adjusted funds from operations; however, they reduced cash available for acquisitions, operations and
dividends. We may grant, as circumstances require, rent deferrals in addition to those described in this report.
The abatements we agreed to reduced for 2020 (before giving effect to the impact of lease extensions on
straight-line rent as described below) rental income by $1.4 million. For seven tenants, we linked a rent
abatement to a lease extension (and for another tenant, reduced the lease term and the base rent payable) at a
property. As a result of the abatements coupled with the modified lease term,
•
the aggregate base rent payable beginning January 1, 2021 by these eight tenants over the modified lease
term increased by $16.3 million over the amount payable prior to such abatement/lease modification, and
• because of the effect of straight-line rent, the net reduction in rental income during 2020 was $465,000.
We may grant, as circumstances require, rent abatements in addition to those described in this report.
The table below provides information regarding the base rent due and collected for the periods indicated,
before and after giving effect to deferrals and abatements (dollars in thousands):
Year Ended
December 31, 2020
Three Months Ended
December 31, 2020
Two Months Ended
February 28, 2021
Before D&A (1)
Industrial
Retail (2)
Restaurant
Health & Fitness
Other
Theater
Base Rent Base Rent
Due
$ 37,607
23,722
3,082
3,218
2,537
2,339
$ 72,505
Collected Collected
97.9
91.0
85.5
75.5
90.4
31.4
91.7
Percentage Base Rent Base Rent
Due
$ 9,521
5,751
775
810
661
587
$ 18,105
Collected Collected
100.0
98.2
100.0
100.0
63.1
—
94.8
Percentage Base Rent Base Rent
Due
$ 6,398
3,734
519
540
440
393
$ 12,024
Percentage
Collected Collected
100.0
99.7
100.0
100.0
63.2
23.9
96.1
$ 6,398
3,724
519
540
278
94
$ 11,553
$ 9,521
5,646
775
810
417
—
$ 17,169
$ 36,806
21,583
2,636
2,428
2,294
734
$ 66,481
Year Ended
December 31, 2020
Three Months Ended
December 31, 2020
Two Months Ended
February 28, 2021
After D&A (3)
Industrial
Retail (2)
Restaurant
Health & Fitness
Other
Theater
Base Rent Base Rent
Due
$ 36,948
21,887
2,716
2,428
2,537
1,518
$ 68,034
Collected (4) Collected
100.0
99.9
100.0
100.0
90.4
48.4
98.4
Percentage Base Rent Base Rent
Due
$ 9,579
5,875
840
810
661
587
$ 18,352
Collected (5) Collected
100.0
99.8
100.0
100.0
63.1
—
95.4
Percentage Base Rent Base Rent
Due
$ 6,514
4,073
584
552
440
409
$ 12,572
Percentage
Collected (6) Collected
100.0
99.8
100.0
97.8
63.2
23.0
96.0
$ 6,514
4,064
584
540
278
94
$ 12,074
$ 9,579
5,861
840
810
417
—
$ 17,507
$ 36,948
21,858
2,716
2,428
2,294
734
$ 66,978
_______________
(1) Before D&A represents the base rents due or collected, as the case may be, for the applicable period, before giving effect
to rent deferral and abatement agreements.
(2) Retail, reflected above, includes our Retail–Furniture, Retail–Supermarket and Retail–Office Supply sectors.
(3) After D&A represents the base rents due or collected, as the case may be, for the applicable period, after giving effect to
rent deferral and abatement agreements.
(4) Includes $497,000 of deferral repayments (i.e., $142,000 by industrial tenants, $275,000 by retail tenants and $80,000 by
restaurant tenants).
33
(5) Includes repayments of $338,000 (i.e., $58,000 by industrial tenants, $215,000 by retail tenants and $65,000 by
restaurant tenants) related to deferrals taken in prior periods.
(6) Includes repayments of $529,000 (i.e., $116,000 by industrial tenants, $348,000 by retail tenants and $65,000 by
restaurant tenants) related to deferrals taken in prior periods.
To conserve cash and enhance our financial flexibility:
•
•
•
•
we paid a portion of our dividends in stock - specifically, we paid approximately 50%, or $4.5
million, of the $9.1 million dividend declared in June 2020 through the issuance of 263,229
shares of common stock and $2.3 million or 25% of the $9.2 million dividend declared in
September 2020 through the issuance of 141,227 shares of common stock; the weighted
average price at which such stock was issued was $16.88 per share.
our credit facility was amended to increase from $10.0 million to $20.0 million the amount we
can use for working capital and operating expense through June 30, 2022;
we have and continue to manage and monitor our mortgage maturities. In 2021, 2022 and
2023, debt service of $32.4 million, $31.4 million and $28.4 million is payable, respectively.
Generally, we and our mortgage lenders have modified our debt service obligations so that
such obligations at a particular property do not exceed the amounts we are contractually
entitled to receive from the tenant at such property, after giving effect to rent abatements or
deferrals. During 2020, mortgage lenders deferred payment of $1.8 million of debt service due
in 2020 (including our $218,000 share of the debt service at a joint venture property);
approximately 9.9% of such deferred debt was paid in 2020, 12.6% of such debt is deferred
from 2021 through 2023, and 77.4% is deferred until the maturity of such debt, and
we have and continue to monitor carefully compliance with the terms and conditions of our
credit facility and are in continual contact with our lenders. While we currently believe we will
continue to be in compliance with the facility’s financial covenants, if, among other things,
tenants contributing certain levels of base rent terminate their leases, seek bankruptcy
protection or obtain rent concessions, we may not continue to comply with the terms
thereof. See “ – Liquidity and Capital Resources – Credit Facility.”
General Challenges and Uncertainties
In addition to the challenges and uncertainties presented by the pandemic, and as also described under
“Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors”, we, among other
things, face additional challenges and uncertainties, which are heightened by the pandemic, including the
possibility we will not be able to: acquire or dispose of properties on acceptable terms, lease our properties on
terms favorable to us or at all, collect amounts owed to us by our tenants, renew or re-let, on acceptable terms,
leases that are expiring or otherwise terminating.
We seek to manage the risk of our real property portfolio and the related financing arrangements by (i)
diversifying among types of properties, industries, locations, tenants, scheduled lease expirations, mortgage
maturities and lenders, and (ii) minimizing our exposure to interest rate fluctuations. As a result, as of
December 31, 2020:
• our 2021 contractual rental income is derived from the following property types: 55.5% from industrial,
32.4% from retail, 5.0% from restaurant, 4.7% from health and fitness and 2.4% from other properties,
• there are seven states with properties that account for five percent or more of 2021 contractual rental
income, and no state accounts for more than 9.3% of 2021 contractual rental income,
• there are two tenants (i.e., Haverty Furniture and FedEx) that account for more than five percent of 2021
contractual rental income and those tenants account for 12.2% of contractual rental income.
34
• through 2029, there are two years in which the percentage of our 2021 contractual rental income
represented by expiring leases exceeds 10% (i.e., 21.0% in 2022 and 12.6% in 2023)—approximately
21.2% of our 2021 contractual rental income is represented by leases expiring in 2030 and thereafter,
• after giving effect to interest rate swap agreements, substantially all of our mortgage debt bears interest at
fixed rates,
• in 2021, 2022 and 2023, 5.2%, 10.6% and 7.0% of our total scheduled principal mortgage payments (i.e.,
amortization and balances due at maturity) is due, respectively, and
• there are six different counterparties to our portfolio of interest rate swaps: four counterparties, rated A- or
better by a national rating agency, account for 90.7%, or $76.9 million, of the notional value of our swaps;
and two counterparties, rated A− by other ratings providers, account for 9.3%, or $7.8 million, of the
notional value of such swaps.
We monitor the risk of tenant non-payments through a variety of approaches tailored to the applicable
situation. Generally, based on our assessment of the credit risk posed by our tenants, we monitor a tenant’s
financial condition through one or more of the following actions: reviewing tenant financial statements or other
financial information, obtaining other tenant related information, regular contact with tenant’s representatives,
tenant credit checks and regular management reviews of our tenants. We may sell a property if the tenant’s
financial condition is unsatisfactory.
We monitor, on an ongoing basis, our expiring leases and generally approach tenants with expiring leases
(including those subject to renewal options) at least a year prior to lease expiration to determine their interest in
renewing their leases. In 2021 and 2022, 31 tenants with 34 leases for 28 properties representing $15.6 million,
or 22.6%, of 2021 contractual rental income expire. The following table provides information, as of December
31, 2020, regarding the leases that expire in 2021 and 2022 (with respect to the multi-tenant shopping centers in
Royersford, Pennsylvania and Lakewood, Colorado, which have both retail and restaurant tenants, we have
allocated the property count and associated mortgage debt to the retail (and not restaurant) categories because
these are mixed-use properties):
Number of
Properties
Number of
Tenants
Type of Property
Industrial
Retail (2)(3)
Restaurant
Health & Fitness
Other
Theater
7
20
1
n/a
n/a
n/a
28
Weighted Average
Remaining
Lease Term to
Maturity (months)
16
17
20
n/a
n/a
n/a
7
20
4
n/a
n/a
n/a
31
Percentage of
2021 Contractual
Rental Income
Percentage of
2020 Rental
Income (1)
Percentage of
2019 Rental
Income (1)
9.4
12.7
0.5
n/a
n/a
n/a
22.6
8.9
12.1
0.5
n/a
n/a
n/a
21.5
8.4
11.9
0.5
n/a
n/a
n/a
20.8
Mortgage
Debt
Outstanding
$ 49,384
54,861
n/a
n/a
n/a
n/a
$ 104,245
______________
(1) In 2020 and 2019, the rental income reflected above of $71.4 million and $73.4 million, respectively,
excludes tenant reimbursement income of $10.5 million and $10.4 million, respectively.
(2) Retail, reflected above, includes our Retail–Furniture, Retail–Supermarket and Retail–Office Supply sectors.
(3) Haverty Furniture leases eleven of these properties.
We are negotiating lease extensions with respect to several properties that account for at least 7.0% of 2021
contractual rental income and at which the lease(s) expire in 2022. We anticipate that if such arrangements are
finalized, as to which no assurance can be given, (i) we will extend the leases for several properties for periods
ranging from four years to nine years, (ii) a lease for at least one of these properties will not be renewed, and (iii)
we will expend an aggregate of approximately $3.3 million from 2021 through 2023 for capital improvements
and transaction costs at several of these properties. As a result of the foregoing and other accommodations that
may be provided in connection with renewing the leases at these properties, we anticipate that the base rent and
cash flow from operations generated by the properties that are re-leased will decrease beginning in late 2022
from that currently generated by all of such properties. If other significant tenants with leases expiring in 2021
and 2022 choose not to renew their leases or negotiate for renewals on terms less favorable to us than currently in
effect, we may be adversely affected due to the reduction in base rents received and the expenses associated with
maintaining vacant properties.
35
In acquiring properties, we balance an evaluation of the terms of the leases and the credit of the existing
tenants with a fundamental analysis of the real estate to be acquired, which analysis takes into account, among
other things, the estimated value of the property, local demographics and the ability to re-rent or dispose of the
property on favorable terms upon lease expiration or early termination.
We are sensitive to the risks facing the retail industry as a result of the growth of e-commerce. Over the past
several years, we have been addressing our exposure to the retail industry by focusing on acquiring industrial
properties (including warehouse and distribution facilities) and properties that we believe capitalize on
e-commerce activities - since September 2016, we have not acquired any retail properties and have sold 13 retail
properties. As a result of the focus on industrial properties and the sale of retail properties, retail properties
generated 32.9%, 35.2%, 41.9% and 43.7%, of rental income, net, in 2020, 2019, 2018 and 2017, respectively,
and industrial properties generated 55.4%, 48.7%, 40.1% and 35.1%, of rental income, net, in 2020, 2019, 2018
and 2017, respectively.
At December 31, 2020, we have variable rate debt in the principal amount of $97.7 million (i.e., $84.7
million of mortgage debt and $13.0 million of credit facility debt) that bear interest at the one month LIBOR rate
plus a negotiated spread. This mortgage debt is hedged through interest rate swaps and the credit facility debt is
not hedged. The authority regulating LIBOR announced it intends to stop compelling banks to submit rates for
the circulation of LIBOR after June 2023 and it is possible that LIBOR will become unavailable at an earlier
date. As approximately $68.7 million of this mortgage debt and the related notional amount of the interest rate
swaps mature after June 2023, there is uncertainty as to how the interest rate on this variable rate debt and the
related swaps will be determined when LIBOR is unavailable.
Challenges and Uncertainties Facing Certain Tenants and Properties
Set forth below is a description of the challenges and uncertainties facing certain tenants or properties:
Regal Cinemas
• Regal Cinemas is a tenant at three properties, including a property owned by an unconsolidated
joint venture. Regal Cinemas closed substantially all of its theaters in October 2020 and has not
indicated when the theaters at our properties will re-open. We summarize below certain information
about our Regal Cinemas properties:
-
the two consolidated properties accounted for $165,000 and $2.5 million of rental income,
during 2020 and 2019, respectively. In 2020, we, among other things, (i) wrote-off, as reduction
to rental income, $1.1 million of the tenant’s unbilled rent receivable, (ii) did not collect and did
not accrue $928,000 of the rent due principally for September through December 2020, and (iii)
abated rent of $676,000. At December 31, 2020, our Indianapolis, Indiana property had
mortgage debt, intangible lease liabilities and intangible lease assets of approximately $4.0
million, $654,000 and $832,000, respectively. There is no mortgage debt, intangible lease
liabilities or intangible lease assets at our Greensboro, North Carolina property at which we
lease the underlying fee and in turn lease the property to Regal Cinemas. We estimate that the
carrying costs for these properties for the twelve months ending December 31, 2021 are
approximately $725,000, including real estate taxes of approximately $337,000 and debt service
of $184,000. Regal Cinemas is the primary obligor with respect to $541,000 of such costs and
we are only responsible with respect to such amount if it is not paid by Regal Cinemas.
- a Regal Cinemas theater is a tenant at a multi-tenant property located in Manahawkin, New
Jersey and which is owned by an unconsolidated joint venture. Our 50% share of the base rent
paid by Regal Cinemas at this property was $69,000, $237,000, and $237,000 representing
5.2%, 16.5% and 13.0% of our share of the total base rent payable by all tenants at such
property in 2020, 2019 and 2018, respectively. Regal Cinemas has not paid our share (i.e.,
$89,000) of the base rent due for the four months ended December 31, 2020. At December 31,
2020, our share of the mortgage debt at this property was approximately $11.4 million.
36
•
In February 2021, we entered into lease amendments with Regal Cinemas pursuant to which:
- with respect to the Indianapolis, Indiana and Greensboro, North Carolina properties, we agreed
to defer an aggregate of $1.4 million of rent otherwise payable from September 2020 through
August 2021, the tenant agreed to pay an aggregate of $441,000 of rent during such period and
the parties extended the lease for the Indianapolis, Indiana property for two years, and
- with respect to the Manahawkin, New Jersey property, we agreed to defer our 50% share of an
aggregate of $182,000 of rent otherwise payable from September 2020 through August 2021,
and the parties extended the lease for one year, and
• The deferred amounts are to be repaid in equal installments from January 2022 through June 2023.
LA Fitness
• LA Fitness, an owner/operator of health and fitness facilities, is a tenant at three properties. During
2020, we deferred $290,000 and abated $500,000 of the base rent this tenant was required to pay.
In connection with these accommodations, the tenant agreed to extend the lease at one property for
five years which, due to the effect of straight-line rent, we estimate will contribute an additional
$24,000 annually to rental income. This tenant paid base rent of $2.4 million and $3.1 million in
2020 and 2019, respectively, and we anticipate that they will pay base rent of $3.4 million in 2021
(including $133,000 of deferral repayments). At December 31, 2020, the mortgage debt, unbilled
rent receivable, intangible lease assets and intangible lease liabilities with respect to these properties
was $12.5 million, $1.4 million, $523,000 and $36,000, respectively.
The Vue - Beachwood, Ohio
• A multi-family complex, which we refer to as The Vue, ground leases from us the underlying land
located in Beachwood, Ohio. During 2020, 2019 and 2018, the owner/operator of the property paid
us $729,000, $783,000 and $1.4 million, respectively, of rental income, all of which was variable
rent. For the past several years, the property has faced, and we anticipate that for at least the next
several months, if not longer, the property will continue to face, occupancy, financial and litigation
challenges. For the past several months, the property, after giving effect to mortgage payments, has
operated on a negative cash flow basis, and we anticipate that it will continue to operate on a
negative cash flow basis for at least the next several months, if not longer. The tenant has not paid
the aggregate $486,000 of rent owed from October 2020 through March 2021 and we do not
anticipate that the tenant will resume making rental payments for the next several months, if not
longer. In November 2020, the ground lease was amended to require, among other things, that the
owner/operator deposit $1.2 million to pay certain past due operating expenses and a portion of
anticipated future operating cash flow shortfalls at the property as well as $170,000 to pay a portion
of the capital expenditures required at the property (all of which sums have been deposited). We
agreed, subject to our discretion, to fund 78% of (i) any further operating expense shortfalls at the
property after the $1.2 million operating expense deposit has been fully utilized, and (ii) capital
expenditures required at the property. (We estimate that the property currently requires capital
expenditures of $700,000 to $1.2 million). During the first quarter of 2021 (through March 4,
2021), we provided The Vue with $409,000 to cover, among other things, (i) the anticipated
operating cash flow shortfalls for February and March 2021 and (ii) capital expenditures for
November 2020 through January 2021. At December 31, 2020, (i) there are no unbilled rent
receivables, intangibles or tenant origination costs associated with this property and (ii) the net
book value of our land subject to this ground lease is $13.9 million and is subordinate to $67.2
million of mortgage debt incurred by the owner/operator. If the tenant does not resume making
monthly rental payments, ceases paying its mortgage obligations, or, if pursuant to the ground lease
amendment, we fund additional capital expenditures or operating expense shortfalls at the property,
our cash flow will be adversely impacted. See "- Off Balance Sheet Arrangements" and Note 6 to
our consolidated financial statements.
37
Update as to Status of Tenants that filed for Bankruptcy in 2020
In our Quarterly Report on Form 10-Q for the period ended September 30, 2020, we reported that four
tenants leasing ten properties had filed for bankruptcy protection from May through August 2020. As of
February 28, 2021, these tenants or their respective affiliates, NPC International, a Wendy’s franchisee that,
among other things, operates more than 385 Wendy’s restaurants, CEC Entertainment, Inc., the operator of
Chuck E Cheese restaurants, Tuesday Morning Corporation, a Nasdaq listed retailer specializing in home
products, and Tailored Brands, the parent of Men’s Wearhouse, had exited bankruptcy. With respect to these
four tenants, we estimate that after giving effect to lease amendments entered into in connection with the
bankruptcy proceedings, total base rent and rental income will (i) decrease by approximately $177,000 and
$292,000, respectively, for the year ending December 31, 2021 and (ii) increase by approximately $897,000 and
$128,000, respectively, from January 1, 2021 through the expiration (without giving effect to any extension
options) of the applicable leases.
Re-development of the Manahawkin Property
We are re-developing the Manahawkin Property, which is owned by an unconsolidated joint venture in
which we have a 50% equity interest. As a result of this re-development activity and the related decrease in
occupancy, and more recently, the failure of Regal Cinemas, a significant tenant at this property, to pay rent, the
income and cash flow from this property decreased significantly over the past several years and the property’s
carrying costs (including debt service payments) exceed the operating cash flow generated therefrom. Because
of, among other things, the (i) decrease in rent, (ii) possibility that co-tenancy clauses could be triggered if
certain significant tenants vacate or otherwise cease operations, (iii) possibility that tenants that have informally
agreed to participate in the re-development, in light of, among other things, the challenges facing the retail
environment, may determine not to participate and (iv) anticipated difficulty in obtaining financing for the
project and the anticipated delay in completing the re-development, there is uncertainty as to if and when the re-
development will be completed. If Regal Cinemas does not continue paying rent as agreed to in February 2021
(see “—Regal Cinemas” above) or the re-development is not completed on a timely basis, our net income, cash
flow and financial condition may be adversely affected. See “—Liquidity and Capital Resources.”
Round Rock Guaranty Litigation
In 2019, we sued the guarantor of the lease at our former property in Round Rock, Texas, which we refer to
as the “Round Rock Property”, at which the tenant obtained bankruptcy protection and terminated its lease. (The
lawsuit is captioned: OLP Wyoming Springs, LLC, Plaintiff, v. Harden Healthcare, LLC, Defendant, v Benjamin
Hanson, Intervenor, District Court of Williamson County, Texas, Cause No. 18-1511-C368). The trial court
granted our motion for summary judgment determining that the lease guarantor is liable under its guaranty. Our
damage assessment asserts mitigated damages in excess of $14 million and the lease guarantor asserts that it is
not liable for any damages, and that if the court determines it is liable for damages, the damages would range
from $1.0 million to $5.6 million. We anticipate that we will continue to incur significant expense in connection
with this lawsuit and cannot provide any assurance that we will realize any recovery therefrom.
2020 and Recent Developments
In 2020:
• our rental income, net, decreased by $1.9 million, or 2.3%, from 2019; the net decrease is due to the
pandemic and the direct and indirect economic consequences thereof which resulted in, among other
things, the abatement of rent, the write-off of unbilled rent receivables and the inability to collect certain
rent.
• we acquired two industrial properties for an aggregate purchase price of $28.3 million. These properties,
which were acquired in February 2020, account for $1.9 million, or 2.7%, of our 2021 contractual rental
income.
• we sold four retail properties, for an aggregate net gain on sale of real estate of $17.3 million, without
giving effect to $1.1 million of mortgage prepayment costs. The properties sold accounted for 1.7% and
3.2% of 2020 and 2019 rental income, net, respectively.
38
In January 2021, a retail tenant that accounts for $718,000, or 1.0%, of 2021 contractual rental income
exercised its option to terminate its lease in January 2022 and in connection therewith, paid a lease termination
fee of $350,000 which we will recognize ratably over the year ending December 31, 2021.
Comparison of Years Ended December 31, 2020 and 2019
Revenues
The following table compares total revenues for the periods indicated:
Year Ended
December 31,
Increase
(Dollars in thousands)
Rental income, net
Lease termination fees
Total revenues
Rental income, net.
2020
2019
$ 81,888 $ 83,786 $ (1,898)
(935)
$ 81,903 $ 84,736 $ (2,833)
(Decrease) % Change
(2.3)
(98.4)
(3.3)
950
15
The following table details the components of rental income, net, for the periods indicated:
Year Ended
December 31,
Increase
(Dollars in thousands)
Acquisitions (1)
Dispositions (2)
Same store (3)
Rental income, net
2020
2019
$ 6,391 $ 1,971 $ 4,420
(3,862)
5,263
(2,456)
76,552
$ 81,888 $ 83,786 $ (1,898)
(Decrease) % Change
224.3
(73.4)
(3.2)
(2.3)
1,401
74,096
(1) The 2020 column represents rental income from properties acquired since January 1, 2019; the
2019 column represents rental income from properties acquired during the year ended December
31, 2019.
(2) The 2020 column represents rental income from properties sold during the year ended December
31, 2020; the 2019 column represents rental income from properties sold since January 1, 2019.
(3) Represents rental income from 110 properties that were owned for the entirety of the periods
presented.
Changes due to acquisitions and dispositions
Properties acquired in 2019 and 2020 generated a $4.4 million increase (including $1.8 million from two
properties acquired in 2020), offset by a decrease of $3.9 million representing the 2019 rental income from
properties sold during 2019 and 2020.
Changes at same store properties
The decrease is due to:
• $1.3 million of Covid-19 rent abatements, including $676,000 related to our two Regal Cinemas
properties, located in Greensboro, North Carolina and Indianapolis, Indiana, and $500,000 at our LA
Fitness property in Secaucus, New Jersey,
• a $1.1 million non-cash write-off against rental income in 2020 of the entire unbilled rent receivable
balance related to the two Regal Cinemas properties, and
• $928,000 of rent from the two Regal Cinemas properties principally due for September 2020 through
December 2020 that we did not collect and did not accrue as collections were deemed less than probable
at December 31, 2020.
39
Offsetting the decrease are increases of:
• $882,000 due to increased straight-line rental income resulting from lease extensions at several properties
at which tenants were provided rent abatements, including $474,000 at our LA Fitness property and
$399,000 for the two Regal Cinemas properties, and
• $237,000 primarily due to tenant reimbursements which generally relate to real estate taxes and operating
expenses incurred in the same period.
Lease termination fees.
In 2019, we received $950,000 of lease termination fees in connection with the buyout of leases at our
Philadelphia, Pennsylvania, and Newark, Delaware retail properties.
Operating Expenses
The following table compares operating expenses for the periods indicated:
(Dollars in thousands)
Operating expenses:
Depreciation and amortization
General and administrative
Real estate expenses
State taxes
Impairment due to casualty loss
Total operating expenses
Year Ended
December 31,
Increase
2020
2019
(Decrease) % Change
$ 22,964 $ 22,026 $
13,671
13,634
310
430
12,442
14,074
348
—
$ 51,009 $ 48,890 $
938
1,229
(440)
(38)
430
2,119
4.3
9.9
(3.1)
(10.9)
n/a
4.3
Depreciation and amortization. The increase is due primarily to $1.9 million of depreciation and
amortization expense on the properties acquired in 2020 and 2019 (including $941,000 from properties acquired
in 2020). This increase was offset primarily by the inclusion in 2019 of (i) $761,000 from the properties sold
since January 1, 2019 and (ii) amortization of $201,000 of tenant origination costs at several properties that prior
to December 31, 2020, were fully amortized in connection with lease expirations.
General and administrative. The increase is due primarily to increases of:
• $515,000 in non-cash compensation expense related to the restricted stock units awarded in 2020, 2019
and 2018 (approximately $356,000 due to updated projections of the achievability of performance metrics
and $159,000 due to the inclusion of three years (as opposed to 2.5 years) of such units),
• $392,000, representing a $287,000 increase in the amount paid pursuant to our compensation and services
agreement and a $105,000 increase due to higher compensation levels, and
• $301,000 in non-cash compensation expense related to restricted stock of which $175,000 is principally
related to the increase in the number, and higher fair value, of the shares granted in 2020 in comparison to
the awards granted in 2015 and $126,000 is due to the inclusion, in 2019, of the reversal of such expense
for the cancellation of restricted stock resulting from a director’s resignation.
The increase was offset by a $187,000 decrease due primarily to the elimination of the professional fees
related to the attestation regarding internal controls over financial reporting.
We anticipate that for the quarter ending June 30, 2021, we will recognize compensation expense of
$176,000 resulting from the accelerated vesting of restricted stock awards due to a director’s retirement from the
board at the 2021 annual meeting of stockholders.
Real estate expenses.
The decrease is due primarily to decreases of : (i) $482,000 related to properties, other than the Round Rock
Property, sold during 2020 and 2019 (including $279,000 from properties sold in 2020), (ii) $280,000 of real
estate tax expense and $248,000 of legal expenses for our Round Rock Property which was sold in December
40
2019. We incurred $860,000 and $612,000 of litigation expenses in connection with the Round Rock Property in
2019 and 2020, respectively, and we may expend significant amounts in such litigation expenses in 2021. The
decrease was offset by a $591,000 increase from properties acquired in 2020 and 2019 (including $150,000 from
properties acquired in 2020).
A substantial portion of real estate expenses are rebilled to tenants and are included in Rental income, net, on
the consolidated statements of income, other than the expenses related to the Round Rock Property.
Impairment due to casualty loss.
In August 2020, a building at our Lake Charles, Louisiana property was damaged due to a hurricane and we
wrote-off $430,000, representing the carrying value of the damaged portion of the building. See “- Other
income” for information about the insurance recoveries received and to be received with respect to this
impairment.
Gain on sale of real estate, net
The following table compares gain on sale of real estate, net:
Year Ended
December 31,
Increase
(Dollars in thousands)
Gain on sale of real estate, net
2020
2019
$ 17,280 $ 4,327 $ 12,953
(Decrease) % Change
299.4
See Note 5 to our consolidated financial statements for information regarding our sales of real estate.
Other Income and Expenses
The following table compares other income and expenses for the periods indicated:
(Dollars in thousands)
Other income and expenses:
Equity in earnings of unconsolidated joint ventures
Equity in earnings from sale of unconsolidated joint venture
property
Prepayment costs on debt
Other income (including $430 of insurance recoveries in
2020)
Interest:
Year Ended
December 31,
Increase
2020
2019
(Decrease) % Change
$
38 $
16 $
22
137.5
121
(1,123)
—
(827)
121
296
n/a
35.8
496
8
488 6,100.0
Expense
Amortization and write‑off of deferred financing costs
(19,317)
(976)
(19,831)
(995)
(514)
(19)
(2.6)
(1.9)
Equity in earnings from sale of unconsolidated joint venture property. The results for 2020 represent a
$121,000 gain from the sale of the Savannah, Georgia property.
Prepayment costs on debt. These costs were incurred in (i) 2020 in connection with the sale of two
properties (Knoxville, Tennessee, $833,000 and Onalaska, Wisconsin, $290,000) and (ii) 2019 in connection
with the sale of three properties, including $625,000 incurred in connection with the sale of the Round Rock
Property.
Other income. Other income in 2020 includes $430,000 of property insurance recoveries related to our Lake
Charles, Louisiana property that was damaged by a hurricane in August 2020. We anticipate that we may
recognize an additional $600,000 as other income from insurance recoveries over the next several months.
41
Interest expense. The following table summarizes interest expense for the periods indicated:
(Dollars in thousands)
Interest expense:
Credit line interest
Mortgage interest
Total
Credit facility interest
Year Ended
December 31,
Increase
2020
2019
(Decrease) % Change
$
737 $ 1,016 $
18,580
18,815
$ 19,317 $ 19,831 $
(279)
(235)
(514)
(27.5)
(1.2)
(2.6)
The following table reflects the average interest rate on the average principal amount of outstanding
credit line debt during the applicable year:
(Dollars in thousands)
Average interest rate on credit line debt
Average principal amount of credit line debt
Year Ended
December 31,
2020
2019
2.53 %
4.03 %
$
22,505
$
20,067
$
Increase
(Decrease)
%
Change
(1.50) %
2,438
(37.2)
12.1
The decrease in 2020 is substantially due to a decrease of 150 basis points (i.e., from $4.03% to 2.53%), in
the weighted average interest rate due to a decrease in the one month LIBOR rate. The decrease was offset by a
$2.4 million increase in the weighted average balance outstanding under the facility.
Mortgage interest
The following table reflects the average interest rate on the average principal amount of outstanding
mortgage debt during the applicable year:
(Dollars in thousands)
Average interest rate on mortgage debt
Average principal amount of mortgage debt $
Year Ended
December 31,
2020
2019
Increase
(Decrease) % Change
4.20 %
4.29 %
441,529
$
438,014
$
(0.09) %
3,515
(2.1)
0.8
Funds from Operations and Adjusted Funds from Operations
We compute funds from operations, or FFO, in accordance with the “White Paper on Funds From
Operations” issued by the National Association of Real Estate Investment Trusts (“NAREIT”) and NAREIT’s
related guidance. FFO is defined in the White Paper as net income (calculated in accordance with GAAP),
excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate
assets, gains and losses from change in control, impairment write-downs of certain real estate assets and
investments in entities where the impairment is directly attributable to decreases in the value of depreciable real
estate held by the entity. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect
FFO on the same basis. In computing FFO, we do not add back to net income the amortization of costs in
connection with our financing activities or depreciation of non-real estate assets.
We compute adjusted funds from operations, or AFFO, by adjusting from FFO for our straight-line rent
accruals and amortization of lease intangibles, deducting lease termination fees and adding back amortization of
restricted stock and restricted stock unit compensation expense, amortization of costs in connection with our
financing activities (including our share of our unconsolidated joint ventures), income on insurance recoveries
from casualties and debt prepayment costs. Since the NAREIT White Paper does not provide guidelines for
computing AFFO, the computation of AFFO may vary from one REIT to another.
We believe that FFO and AFFO are useful and standard supplemental measures of the operating
performance for equity REITs and are used frequently by securities analysts, investors and other interested
parties in evaluating equity REITs, many of which present FFO and AFFO when reporting their operating results.
FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization of real estate assets,
which assumes that the value of real estate assets diminish predictability over time. In fact, real estate values
42
have historically risen and fallen with market conditions. As a result, we believe that FFO and AFFO provide a
performance measure that when compared year over year, should reflect the impact to operations from trends in
occupancy rates, rental rates, operating costs, interest costs and other matters without the inclusion of
depreciation and amortization, providing a perspective that may not be necessarily apparent from net income. We
also consider FFO and AFFO to be useful to us in evaluating potential property acquisitions.
FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. FFO and
AFFO and should not be considered to be an alternative to net income as a reliable measure of our operating
performance; nor should FFO and AFFO be considered an alternative to cash flows from operating, investing or
financing activities (as defined by GAAP) as measures of liquidity. FFO and AFFO do not measure whether cash
flow is sufficient to fund all of our cash needs, including principal amortization, capital improvements and
distributions to stockholders.
Management recognizes that there are limitations in the use of FFO and AFFO. In evaluating our
performance, management is careful to examine GAAP measures such as net income and cash flows from
operating, investing and financing activities.
The table below provides a reconciliation of net income in accordance with GAAP to FFO and AFFO for the
years indicated:
GAAP net income attributable to One Liberty Properties, Inc.
Add: depreciation and amortization of properties
Add: our share of depreciation and amortization of unconsolidated joint ventures
Add: impairment due to casualty loss
Add: amortization of deferred leasing costs
Add: our share of amortization of deferred leasing costs of unconsolidated joint ventures
Deduct: gain on sale of real estate, net
Deduct: equity in earnings from sale of unconsolidated joint venture properties
Adjustments for non‑controlling interests
NAREIT funds from operations applicable to common stock
Deduct: straight‑line rent accruals and amortization of lease intangibles
Deduct: our share of straight‑line rent accruals and amortization of lease intangibles of
unconsolidated joint ventures
Deduct: lease termination fee income
Add: amortization of restricted stock compensation
Add: prepayment costs on debt
Deduct: income on insurance recoveries from casualty loss
Add: amortization and write‑off of deferred financing costs
Add: our share of amortization and write‑off of deferred financing costs of unconsolidated
joint ventures
Adjustments for non‑controlling interests
Adjusted funds from operations applicable to common stock
2020
2019
$ 27,407 $ 18,011
21,574
527
—
452
18
(4,327)
—
324
36,579
(1,876)
22,558
544
430
406
20
(17,280)
(121)
(88)
33,876
(1,408)
(73)
(15)
4,686
1,123
(430)
976
(62)
(950)
3,870
827
—
995
17
17
(23)
3
$ 38,755 $ 39,377
43
The table below provides a reconciliation of net income per common share (on a diluted basis) in accordance
with GAAP to FFO and AFFO for the years indicated:
GAAP net income attributable to One Liberty Properties, Inc.
Add: depreciation and amortization of properties
Add: our share of depreciation and amortization of unconsolidated joint ventures
Add: impairment due to casualty loss
Add: amortization of deferred leasing costs
Add: our share of amortization of deferred leasing costs of unconsolidated joint ventures
Deduct: gain on sale of real estate, net
Deduct: equity in earnings from sale of unconsolidated joint venture properties
Adjustments for non‑controlling interests
NAREIT funds from operations per share of common stock
Deduct: straight‑line rent accruals and amortization of lease intangibles
Deduct: our share of straight‑line rent accruals and amortization of lease intangibles of
unconsolidated joint ventures
Deduct: lease termination fee income
Add: amortization of restricted stock compensation
Add: prepayment costs on debt
Deduct: income on insurance recoveries from casualty loss
Add: amortization and write‑off of deferred financing costs
Add: our share of amortization and write‑off of deferred financing costs of unconsolidated
joint ventures
Adjustments for non‑controlling interests
Adjusted funds from operations per share of common stock
$
2020
2019
1.33 $
1.12
0.03
0.02
0.02
—
(0.85)
(0.01)
—
1.66
(0.08)
—
—
0.23
0.06
(0.02)
0.05
0.88
1.11
0.03
—
0.02
—
(0.22)
—
0.02
1.84
(0.10)
—
(0.05)
0.20
0.04
—
0.05
—
—
1.90 $
—
—
1.98
$
The $2.7 million, or 7.4%, decrease in FFO is primarily due to:
• a $1.9 million decrease in rental income,
• a $935,000 decrease in lease termination fee income,
• a $1.2 million increase in general and administrative expense, and
• a $296,000 increase in prepayment costs on debt.
Offsetting the decrease is:
• a $514,000 decrease in interest expense,
• a $478,000 decrease in real estate operating expense, and
• a $488,000 increase in other income.
These changes are described in “—Comparison of Years Ended December 31, 2020 and 2019”.
The $622,000, or 1.6%, decrease in AFFO is due to the decrease in FFO as described above excluding:
• $468,000 of the decrease in rental income related to straight-line rent accruals and amortization of lease
intangibles,
• the $935,000 decrease in lease termination fee income,
• $816,000 of the increase in general and administrative expense related to amortization of restricted stock
compensation,
• the $296,000 increase in prepayment costs on debt, and
• $430,000 of the increase in other income related to income from insurance recoveries from casualty loss.
These changes are described in “—Comparison of Years Ended December 31, 2020 and 2019”.
44
Comparison of Years Ended December 31, 2019 and 2018
As we qualify as a smaller reporting company, this comparison is omitted in accordance with Instruction 1 to
Item 303(a) of Regulation S-K.
Liquidity and Capital Resources
Our sources of liquidity and capital include cash flow from operations, cash and cash equivalents,
borrowings under our credit facility, refinancing existing mortgage loans, obtaining mortgage loans secured by
our unencumbered properties, issuance of our equity securities and property sales. In 2020, we obtained $18.2
million of proceeds from mortgage financings, approximately $16.5 million of net proceeds from property sales
(after giving effect to repayment of mortgage debt and debt prepayment costs and excluding the $4.6 million
purchase money mortgage received on the sale of the Houston, Texas properties) and paid $6.8 million of
dividends through the issuance of our stock. Our available liquidity at March 4, 2021 was approximately $75.1
million, including approximately $8.7 million of cash and cash equivalents (including the credit facility’s
required $3.0 million average deposit maintenance balance) and, subject to borrowing base requirements, up to
$66.4 million available under our credit facility.
Liquidity and Financing
We expect to meet our (i) operating cash requirements (including debt service and anticipated dividend
payments) principally from cash flow from operations, our available cash and cash equivalents, proceeds from
and, to the extent permitted and needed, our credit facility and (ii) investing and financing cash requirements
(including an estimated $3.3 million of capital expenditures and transaction fees that may be required over the
next two years in connection with anticipated lease extensions) from the foregoing, as well as property
financings, property sales and sale of our common stock. We and our joint venture partner are also re-developing
the Manahawkin Property - we estimate that our share of the capital expenditures required in connection with
such re-development will range from $12.0 million to $15.0 million. We are evaluating various sources of
funding for such expenditures including borrowings from our credit facility.
The following table sets forth, as of December 31, 2020, information with respect to our mortgage debt that
is payable from January 2021 through December 31, 2023 (excluding the mortgage debt of our unconsolidated
joint venture):
(Dollars in thousands)
Amortization payments
Principal due at maturity
Total
2021
2022
2023
Total
$ 14,033 $ 14,542 $ 13,569 $ 42,144
56,835
$ 22,575 $ 46,126 $ 30,278 $ 98,979
31,584
16,709
8,542
At December 31, 2020, an unconsolidated joint venture had a first mortgage on its property (i.e., the
Manahawkin Property) with an outstanding balance of approximately $22.9 million, bearing interest at 4.0% per
annum and maturing in July 2025.
We intend to make debt amortization payments from operating cash flow and, though no assurance can be
given that we will be successful in this regard, generally intend to refinance, extend or payoff the mortgage loans
which mature in 2021 through 2023. We intend to repay the amounts not refinanced or extended from our
existing funds and sources of funds, including our available cash, proceeds from the sale of our common stock
and our credit facility (to the extent available).
We continually seek to refinance existing mortgage loans on terms we deem acceptable to generate
additional liquidity. Additionally, in the normal course of our business, we sell properties when we determine
that it is in our best interests, which also generates additional liquidity. Further, since each of our encumbered
properties is subject to a non-recourse mortgage (with standard carve-outs), if our in-house evaluation of the
market value of such property is less than the principal balance outstanding on the mortgage loan, we may
determine to convey, in certain circumstances, such property to the mortgagee in order to terminate our mortgage
obligations, including payment of interest, principal and real estate taxes, with respect to such property.
Typically, we utilize funds from our credit facility to acquire a property and, thereafter secure long-term,
fixed rate mortgage debt on such property. We apply the proceeds from the mortgage loan to repay borrowings
45
under the credit facility, thus providing us with the ability to re-borrow under the credit facility for the
acquisition of additional properties.
Credit Facility
Our credit facility provides that subject to borrowing base requirements, we can borrow up to $100.0 million
for the acquisition of commercial real estate, repayment of mortgage debt, and renovation and operating expense
purposes; provided, that if used for renovation and operating expense purposes, the amount outstanding for such
purposes will not exceed the lesser of $30.0 million and 30% of the borrowing base subject to a cap of (i) $10.0
million for renovation expenses and (ii) $20.0 million for operating expense purposes. On June 30, 2022, the
amount we can borrow for renovation expenses and operating expenses changes to $20.0 million and $10.0
million, respectively. To the extent that as of July 1, 2022 more than $10.0 million is outstanding for operating
expense purposes, such excess must be repaid immediately. See “—Liquidity and Capital Resources”. The
facility matures December 31, 2022 and bears interest equal to the one month LIBOR rate plus the applicable
margin. The applicable margin ranges from 175 basis points if our ratio of total debt to total value (as calculated
pursuant to the facility) is equal to or less than 50%, increasing to a maximum of 300 basis points if such ratio is
greater than 65%. The applicable margin was 200 basis points for 2020 and 2019. There is an unused facility
fee of 0.25% per annum on the difference between the outstanding loan balance and $100.0 million. The credit
facility requires the maintenance of $3.0 million in average deposit balances. For 2020, the weighted average
interest rate on the facility was approximately 2.53% and as of February 28, 2021, the rate on the facility was
1.87%.
The terms of our credit facility include certain restrictions and covenants which limit, among other things,
the incurrence of liens, and which require compliance with financial ratios relating to, among other things, the
minimum amount of tangible net worth, the minimum amount of debt service coverage, the minimum amount of
fixed charge coverage, the maximum amount of debt to total value, the minimum level of net income, certain
investment limitations and the minimum value of unencumbered properties and the number of such properties.
Net proceeds received from the sale, financing or refinancing of properties are generally required to be used to
repay amounts outstanding under our credit facility.
Contractual Obligations
The following sets forth our contractual obligations as of December 31, 2020:
(Dollars in thousands)
Contractual Obligations
Mortgages payable—interest and amortization
Mortgages payable—balances due at maturity
Credit facility(1)
Purchase obligations(2)
Total
Less than
1 Year
1 ‑ 3 Years
4 ‑ 5 Years
More than
5 Years
Total
Payment due by period
$ 32,350 $ 59,880 $ 46,031 $ 94,467 $ 232,728
307,700
12,950
19,492
$ 44,794 $ 128,919 $ 136,240 $ 262,917 $ 572,870
168,143
—
307
82,722
—
7,487
48,293
12,950
7,796
8,542
—
3,902
(1) Represents the amount outstanding at December 31, 2020. We may borrow up to $100.0 million pursuant to
such facility, subject to compliance with borrowing base requirements. At December 31, 2020, after giving
effect to such borrowing base requirements, $62.4 million was available to be borrowed. The facility expires
December 31, 2022. See “—Credit Facility”.
(2) Assumes that $3.4 million will be payable annually during the next five years pursuant to the compensation
and services agreement. Excludes (i) an estimated $12.0 million to $15.0 million anticipated to be expended
in connection with the re-development of the Manahawkin Property, which we expect will be completed in
stages through 2022, (ii) an estimated $3.3 million of capital expenditures and transaction fees that may be
required in connection with anticipated lease extensions and (iii) our funding of capital expenditures and
operating cash flow shortfalls at The Vue, of which $409,000 was funded in February 2021. We have not
provided an estimate of the amounts we will fund for The Vue. See “—General Challenges and
Uncertainties” and “—Challenges and Uncertainties Facing Certain Tenants and Properties – The Vue”,
and “—Re-development of the Manahawkin Property”.
46
As of December 31, 2020, we had $433.5 million of mortgage debt outstanding (excluding mortgage debt of
our unconsolidated joint venture), all of which is non-recourse (subject to standard carve-outs). We expect that
mortgage interest and amortization payments (excluding repayments of principal at maturity) of approximately
$92.2 million due through 2023 will be paid primarily from cash generated from our operations. We anticipate
that principal balances due at maturity through 2023 of $56.8 million will be paid primarily from cash and cash
equivalents and mortgage financings and refinancings. If we are unsuccessful in refinancing our existing
indebtedness or financing our unencumbered properties, our cash flow, funds available under our credit facility
and available cash, if any, may not be sufficient to repay all debt obligations when payments become due, and we
may need to issue additional equity, obtain long or short- term debt, or dispose of properties on unfavorable
terms.
Cash Distribution Policy
We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. Accordingly,
to qualify as a REIT, we must, among other things, 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 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) and are subject to Federal excise taxes on our undistributed taxable income.
It is our intention to pay to our stockholders within the time periods prescribed by the Internal Revenue Code
no less than 90%, and, if possible, 100% of our annual taxable income, including taxable gains from the sale of
real estate. It will continue to be our policy to make sufficient distributions to stockholders in order for us to
maintain our REIT status under the Internal Revenue Code.
Of the aggregate $36.6 million of dividends declared in 2020, $6.8 million or 18.7% was paid in the form of
stock (excluding $1.0 million paid in stock pursuant to our dividend reinvestment plan). We paid dividends in
stock to conserve cash in response to the economic dislocations resulting from the pandemic. Our board of
directors will continue to evaluate, on a quarterly basis, the amount and nature (i.e., cash or stock) of dividend
payments based on its assessment of, among other things, our short and long-term cash and liquidity
requirements, prospects, debt maturities, projections of our REIT taxable income, net income, funds from
operations, and adjusted funds from operations.
Off-Balance Sheet Arrangements
We are not a party to any off-balance sheet arrangements other than with respect to a land parcel owned by
us and located in Beachwood, Ohio. This parcel is improved by a multi-family complex and we ground leased
the parcel to the owner/operator of such complex. The ground lease generated $729,000, $783,000 and $1.4
million of rental income, net, during 2020, 2019 and 2018, respectively.
At December 31, 2020, the carrying value of the land on our balance sheet was $13.9 million; our leasehold
position is subordinate to $67.2 million of mortgage debt incurred by our tenant, the owner/operator of the multi-
family complex. In addition, as described in “– Challenges and Uncertainties Facing Certain Tenants and
Properties – The Vue,” we have agreed to fund certain capital expenditures and operating cash flow shortfalls at
this property. We do not believe that this type of off-balance sheet arrangement has been or will be material to
our liquidity and capital resource positions, except to the extent we determine to continue to fund the capital
expenditures required by, and the operating cash flow shortfalls at this property. See Note 6 to our consolidated
financial statements for additional information regarding this arrangement.
47
Critical Accounting Estimates
Our discussion and analysis of financial condition and results of operations are based upon our consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in
the United States ("GAAP"). The preparation of these financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we
reconsider and evaluate our estimates and assumptions.
We base our estimates on historical experience, current trends and various other assumptions that we believe
to be reasonable under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could
materially differ from any of our estimates under different assumptions or conditions. Our significant accounting
policies are discussed in Note 2 of our consolidated financial statements in this report. We believe the
accounting estimates listed below are the most critical to aid in fully understanding and evaluating our reported
financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to
make estimates about the effect of matters that are inherently uncertain.
Rental Income
Rental income includes: (i) base rents that our tenants pay in accordance with the terms of their respective
leases reported on a straight-line basis over the non-cancellable term of each lease and (ii) reimbursements by
tenants of certain real estate operating expenses. Since many of our leases provide for rental increases at
specified intervals, straight-line basis accounting requires us to record as an asset and include in revenues,
unbilled rent receivables which we will only receive if the tenant makes all rent payments required through the
expiration of the term of the lease. Accordingly, our management must determine, in its judgment, that the
unbilled rent receivable applicable to each specific tenant is collectable. We review unbilled rent receivables on a
quarterly basis and take into consideration the tenant’s payment history and the financial condition of the tenant.
In the event that the collectability of an unbilled rent receivable is unlikely, we are required to write-off the
receivable, which has an adverse effect on net income for the year in which the direct write-off is taken, and will
decrease total assets and stockholders’ equity.
Purchase Accounting for Acquisition of Real Estate
The fair value of real estate acquired is allocated to acquired tangible assets, consisting of land and building,
and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases
and other value of in-place leases based in each case on their fair values. The fair value of the tangible assets of
an acquired property (which includes land, building and building improvements) is determined by valuing the
property as if it were vacant, and the “as-if-vacant” value is then allocated to land, building and building
improvements based on our determination of relative fair values of these assets. We assess fair value of the lease
intangibles based on estimated cash flow projections that utilize appropriate discount rates and available market
information. The fair values associated with below-market rental renewal options are determined based on our
experience and the relevant facts and circumstances that existed at the time of the acquisitions. The portion of the
values of the leases associated with below-market renewal options that we deem likely to be exercised are
amortized to rental income over the respective renewal periods. The allocation made by us may have a positive
or negative effect on net income and may have an effect on the assets and liabilities on the balance sheet.
Carrying Value of Real Estate Portfolio
We review our real estate portfolio on a quarterly basis to ascertain if there are any indicators of impairment
to the value of any of our real estate assets, including deferred costs and intangibles, to determine if there is any
need for an impairment charge. In reviewing the portfolio, we examine the type of asset, the current financial
statements or other available financial information of the tenant, the economic situation in the area in which the
asset is located, the economic situation in the industry in which the tenant is involved and the timeliness of the
payments made by the tenant under its lease, as well as any current correspondence that may have been had with
the tenant, including property inspection reports. For each real estate asset owned for which indicators of
impairment exist, we perform a recoverability test by comparing the sum of the estimated undiscounted future
48
cash flows attributable to the asset to its carrying amount. Management’s assumptions and estimates include
projected rental rates during the holding period and property capitalization rates in order to estimate
undiscounted future cash flows. If the undiscounted cash flows are less than the asset’s carrying amount, an
impairment loss is recorded to the extent that the estimated fair value is less than the asset’s carrying amount.
The estimated fair value is determined using a discounted cash flow model of the expected future cash flows
through the useful life of the property. Real estate assets that are expected to be disposed of are valued at the
lower of carrying amount or fair value less costs to sell on an individual asset basis. We generally do not obtain
any independent appraisals in determining value but rely on our own analysis and valuations. Any impairment
charge taken with respect to any part of our real estate portfolio will reduce our net income and reduce assets and
stockholders’ equity to the extent of the amount of any impairment charge, but it will not affect our cash flow or
our distributions until such time as we dispose of the property.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Our primary market risk exposure is the effect of changes in interest rates on the interest cost of draws on
our revolving variable rate credit facility and the effect of changes in the fair value of our interest rate swap
agreements. Interest rates are highly sensitive to many factors, including governmental monetary and tax
policies, domestic and international economic and political considerations and other factors beyond our control.
We use interest rate swaps to limit interest rate risk on variable rate mortgages. These swaps are used for
hedging purposes-not for speculation. We do not enter into interest rate swaps for trading purposes. At December
31, 2020, our aggregate liability in the event of the early termination of our swaps was $5.3 million.
At December 31, 2020, we had 23 interest rate swap agreements outstanding. The fair market value of the
interest rate swaps is dependent upon existing market interest rates and swap spreads, which change over time.
As of December 31, 2020, if there had been an increase of 100 basis points in forward interest rates, the fair
market value of the interest rate swaps would have increased by approximately $2.9 million and the net
unrealized loss on derivative instruments would have decreased by $2.9 million. If there were a decrease of 100
basis points in forward interest rates, the fair market value of the interest rate swaps would have decreased by
approximately $3.1 million and the net unrealized loss on derivative instruments would have increased by $3.1
million. These changes would not have any impact on our net income or cash.
Our variable mortgage debt, after giving effect to the interest rate swap agreements, bears interest at fixed
rates and accordingly, the effect of changes in interest rates would not impact the amount of interest expense that
we incur under these mortgages.
Our variable rate credit facility is sensitive to interest rate changes. At December 31, 2020, a 100 basis point
increase of the interest rate on this facility would increase our related interest costs by approximately $130,000
per year and a 100 basis point decrease of the interest rate would decrease our related interest costs by
approximately $19,000 per year.
The fair market value of our long-term debt is estimated based on discounting future cash flows at interest
rates that our management believes reflect the risks associated with long-term debt of similar risk and duration.
The following table sets forth our debt obligations by scheduled principal cash flow payments and maturity
date, weighted average interest rates and estimated fair market value at December 31, 2020:
(Dollars in thousands)
Fixed rate:
Long‑term debt
Weighted average interest rate
Variable rate:
Long‑term debt(1)
For the Year Ended December 31,
Fair
Market
2021
2022
2023
2024
2025
Thereafter
Total
Value
$ 22,575
$ 46,126
$ 30,278
$ 63,016
$ 43,048
$ 228,506
$ 433,549
$ 461,965
4.23 %
4.05 %
4.35 %
4.38 %
4.30 %
4.12 %
4.19 %
3.00 %
—
$ 12,950
$
$
—
$
—
$
—
$ 12,950
$
—
$
(1) Our credit facility matures on December 31, 2022 and bears interest at the 30 day LIBOR rate plus the
applicable margin. The applicable margin varies based on the ratio of total debt to total value. See “Item 7.
Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Liquidity and
Capital Resources—Credit Facility.”
49
Item 8. Financial Statements and Supplementary Data.
This information appears in Item 15(a) of this Annual Report on Form 10-K, and is incorporated into this
Item 8 by reference thereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
A review and evaluation was performed by our management, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) as of the end of the period covered by this Annual Report on Form 10-K.
Based on that review and evaluation, our CEO and CFO have concluded that our disclosure controls and
procedures, as designed and implemented as of December 31, 2020, were effective.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under
the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and
principal financial officers and effected by a company’s board, management and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP and includes those policies and procedures that:
• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of a company;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that receipts and expenditures of a company are being made
only in accordance with authorizations of management and the board of directors of a company; and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of a company’s assets that could have a material effect on the financial transactions.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that
controls may become inadequate because of changes in conditions or that the degree of compliance with the
policies or procedures may deteriorate.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed
the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this
assessment, our management used criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control—Integrated Framework (2013).
Based on its assessment, our management concluded that, as of December 31, 2020, our internal control over
financial reporting was effective based on those criteria.
Changes in Internal Controls over Financial Reporting
There have been no changes in our internal controls over financial reporting, as defined in in Rules 13a-15(f)
and 15d-15(f) promulgated under the Exchange Act, that occurred during the three months ended December 31,
2020 that materially affected, or is reasonably likely to materially affect, our internal controls over financial
reporting.
50
Item 9B. Other Information.
Tax Disclosure Update
The section of our prospectus dated August 13, 2020 included in our prospectus supplement dated August
13, 2020 entitled “Federal Income Tax Considerations - Impact of the Tax Cuts and Jobs Act on the Company
and its Stockholders- Limitations on Interest Deductibility; Real Property Trades or Businesses Can Elect Out
Subject to Longer Asset Cost Recovery Periods:” is hereby superseded, and is amended and restated in its
entirety to read as follows:
Limitations on Interest Deductibility; Real Property Trades or Businesses Can Elect Out Subject to Longer
Asset Cost Recovery Periods: The Tax Cuts and Jobs Act, which was signed into law on December 22, 2017 (the
“Tax Act” or the “Act”) limits a taxpayer’s net interest expense deduction to 30% of the sum of adjusted taxable
income, business interest, and certain other amounts. Adjusted taxable income does not include items of income
or expense not allocable to a trade or business, business interest or expense, the new deduction for qualified
business income, NOLs, and for years prior to 2022, deductions for depreciation, amortization, or depletion. For
partnerships, the interest deduction limit is applied at the partnership level, subject to certain adjustments to the
partners for unused deduction limitation at the partnership level. The Act allows a real property trade or business
to elect out of this interest limit so long as it uses a 40-year recovery period for nonresidential real property, a 30-
year recovery period for residential rental property (40 year recovery period for residential rental property placed
in service before 2018), and a 20-year recovery period for related improvements described below. The
Consolidated Appropriations Act, 2021, which was signed into law on December 27, 2020, decreased the 40-year
recovery period for residential rental property placed in service before 2018 to a 30-year recovery period.
Disallowed interest expense is carried forward indefinitely (subject to special rules for partnerships).
Credit Facility Amendment
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations –
Liquidity and Capital Resources- Credit Facility” for information regarding the amendment to the facility
entered into in March 2021, which extended, until June 30, 2022, our ability to use up to $20.0 million for
operating expenses.
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
Apart from certain information concerning our executive officers which is set forth in Part I of this Annual
Report, additional information required by this Item 10 shall be included in our proxy statement for our 2021
annual meeting of stockholders, to be filed with the SEC not later than April 30, 2021, and is incorporated herein
by reference.
Item 11. Executive Compensation.
The information required by this Item 11 will be included in our proxy statement for our 2021 annual
meeting of stockholders, to be filed with the SEC not later than April 30, 2021, and is incorporated herein by
reference.
51
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
Apart from the equity compensation plan information required by Item 201(d) of Regulation S-K which is
set forth below, the information required by this Item 12 will be included in our proxy statement for our 2021
annual meeting of stockholders, to be filed with the SEC not later than April 30, 2021 and is incorporated herein
by reference.
Equity Compensation Plan Information
As of December 31, 2020, the only equity compensation plan under which equity compensation may be
awarded is our 2019 Incentive Plan, which was approved by our stockholders in June 2019. This plan permits us
to grant stock options, restricted stock, restricted stock units and performance based awards to our employees,
officers, directors, consultants and other eligible participants. The following table provides information as of
December 31, 2020 about shares of our common stock that may be issued upon the exercise of options, warrants
and rights under our 2019 Incentive Plan:
Weighted‑average
exercise price
of outstanding
options,
warrants
and rights
(b)
Number of
securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities
reflected in
column(a))(2)
(c)
450,398
—
450,398
—
—
—
Number of
securities
to be issued
upon exercise
of outstanding
options, warrants
and rights(1)
(a)
150,052
—
150,052
Plan Category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
(1) Represents 150,052 shares of common stock issuable pursuant to restricted stock units (“RSUs”). On June
30, 2022 and 2023, the shares of common stock underlying these units vest, if and to the extent specified
performance (i.e., average annual return on capital) and/or market (i.e., average annual total stockholder
return) conditions are satisfied by such dates. Excludes 73,750 shares of common stock underlying RSUs
issued pursuant to our 2016 Incentive Plan that vest in 2021 subject to satisfaction of such performance and
market conditions.
(2) Does not give effect to 151,500 shares of restricted stock granted January 6, 2021 pursuant to our 2019
Incentive Plan.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this Item 13 will be included in our proxy statement for our 2021 annual
meeting of stockholders, to be filed with the SEC not later than April 30, 2021 and is incorporated herein by
reference.
Item 14. Principal Accountant Fees and Services.
The information required by this Item 14 will be included in our proxy statement for our 2021 annual
meeting of stockholders, to be filed with the SEC not later than April 30, 2021 and is incorporated herein by
reference.
52
Item 15. Exhibits and Financial Statement Schedules.
(a) Documents filed as part of this Report:
PART IV
(1) The following financial statements of the Company are included in this Annual Report on Form 10-K:
—Report of Independent Registered Public Accounting Firm
—Statements:
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules:
F-1 through F-2
F-3
F-4
F-5
F-6
F-7 through F-8
F-9 through F-37
—Schedule III—Real Estate and Accumulated Depreciation
F-38 through F-41
All other schedules are omitted because they are not applicable or the required information is shown in the
consolidated financial statements or the notes thereto.
(b) Exhibits:
1.1 Equity Offering Sales Agreement, dated August 19, 2020 by and between One Liberty Properties,
Inc., D.A. Davidson & Co. and B. Riley FBR, Inc. (incorporated by reference to Exhibit 1.1 to our
Current Report on Form 8-K filed on August 19, 2020).
3.1 Articles of Amendment and Restatement of One Liberty Properties, Inc.
3.2 Amended and Restated By-Laws of One Liberty Properties, Inc. (incorporated by reference to
Exhibit 3.2 to our Current Report on Form 8-K filed on July 9, 2020).
4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to our Registration
Statement on Form S-2, Registration No. 333-86850, filed on April 24, 2002 and declared effective
on May 24, 2002).
4.2* One Liberty Properties, Inc. 2012 Incentive Plan (incorporated by reference to Exhibit 4.1 to our
Current Report on Form 8-K filed on June 12, 2012).
4.3* One Liberty Properties, Inc. 2016 Incentive Plan (incorporated by reference to Exhibit 10.1 to our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2016).
4.4* One Liberty Properties, Inc. 2019 Incentive Plan (incorporated by reference to Exhibit 4.1 to our
Current Report on Form 8-K filed June 13, 2019).
4.5 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange
Act of 1934.
10.1 Third Amended and Restated Loan Agreement dated as of November 9, 2016, between VNB New
York, LLC, People’s United Bank, Bank Leumi USA and Manufacturers and Traders Trust
Company, as lenders, and One Liberty Properties, Inc. (the “Loan Agreement”) (incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K filed November 10, 2016).
10.2 First Amendment to Loan Agreement dated July 1, 2019 (incorporated by reference to Exhibit 10.1
to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019).
10.3 Second Amendment to Loan Agreement dated as of July 8, 2020 (incorporated by reference to
Exhibit 10.1 to our Current Report on Form 8-K filed July 14, 2020).
10.4 Third Amendment to Loan Agreement dated as of March 3, 2021.
10.5* Compensation and Services Agreement effective as of January 1, 2007 between One Liberty
Properties, Inc. and Majestic Property Management Corp. (incorporated by reference to Exhibit 10.1
to our Current Report on Form 8-K filed on March 14, 2007).
53
10.6* First Amendment to Compensation and Services Agreement effective as of April 1, 2012 between
One Liberty Properties, Inc. and Majestic Property Management Corp. (incorporated by reference to
Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).
10.7* Form of Restricted Stock Award Agreement for the 2012 Incentive Plan (incorporated by reference
to Exhibit 10.9 to our Annual Report on Form 10-K for the year ended December 31, 2013).
10.8* Form of Restricted Stock Award Agreement for awards granted in 2017 pursuant to the 2016
Incentive Plan (incorporated by reference to Exhibit 10.12 to our Annual Report on Form 10-K for
the year ended December 31, 2016).
10.9* Form of Performance Award Agreement for grants in 2017 pursuant to the 2016 Incentive Plan
(incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2017).
10.10* Form of Restricted Stock Award Agreement for awards granted in 2018 and 2019 pursuant to the
2016 Incentive Plan (incorporated by reference to Exhibit 10.7 of our Annual Report on Form 10-K
for the year ended December 31, 2017).
10.11* Form of Performance Award Agreement for grants in 2018 pursuant to the 2016 Incentive Plan
(incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2018).
10.12* Form of Performance Award Agreement for grants in 2019 pursuant to the 2019 Incentive Plan
(incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2019).
10.13* Form of Restricted Stock Award Agreement for awards granted in 2020 pursuant to the 2019
Incentive Plan (incorporated by reference to Exhibit 10.11 to our Annual Report on Form 10-K for
the year ended December 31, 2019).
21.1 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP
31.1 Certification of President and Chief Executive Officer
31.2 Certification of Senior Vice President and Chief Financial Officer
32.1 Certification of President and Chief Executive Officer
32.2 Certification of Senior Vice President and Chief Financial Officer
101 The following financial statements, notes and schedule from the One Liberty Properties, Inc. Annual
Report on Form 10-K for the year ended December 31, 2020 filed on March 12, 2021, formatted in
Inline XBRL: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii)
Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Changes in
Equity; (v) Consolidated Statements of Cash Flows; (vi) Notes to the Consolidated Financial
Statements; and (vii) Schedule III – Consolidated Real Estate and Accumulated Depreciation.
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL
document and included in Exhibit 101).
*
Indicates a management contract or compensatory plan or arrangement.
The file number for all the exhibits incorporated by reference is 001- 09279 other than exhibit 4.1 whose file
number is 333-86850.
Item 16. Form 10-K Summary
Not applicable.
54
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange, the Registrant has duly caused this
report to be signed on its behalf of the undersigned, thereunto duly authorized.
March 12, 2021
ONE LIBERTY PROPERTIES, INC.
By:
/s/ PATRICK J. CALLAN, JR.
Patrick J. Callan, Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Exchange Act, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ MATTHEW J. GOULD
Matthew J. Gould
/s/ FREDRIC H. GOULD
Fredric H. Gould
Chairman of the Board of Directors
March 12, 2021
Vice Chairman of the Board of Directors
March 12, 2021
/s/ PATRICK J. CALLAN, JR.
Patrick J. Callan, Jr.
President, Chief Executive Officer and Director
(Principal Executive Officer)
March 12, 2021
/s/ CHARLES BIEDERMAN
Charles Biederman
Director
Joseph A. DeLuca
Director
/s/ EDWARD GELLERT
Edward Gellert
Director
/s/ JEFFREY A. GOULD
Jeffrey A. Gould
Director
/s/ J. ROBERT LOVEJOY
J. Robert Lovejoy
Director
/s/ LEOR SIRI
Leor Siri
Director
/s/ KAREN A. TILL
Karen A. Till
Director
55
March 12, 2021
March __, 2021
March 12, 2021
March 12, 2021
March 12, 2021
March 12, 2021
March 12, 2021
Signature
Title
Date
/s/ EUGENE I. ZURIFF
Eugene I. Zuriff
Director
March 12, 2021
/s/ DAVID W. KALISH
David W. Kalish
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
March 12, 2021
/s/ KAREN DUNLEAVY
Karen Dunleavy
Senior Vice President, Financial
(Principal Accounting Officer)
March 12, 2021
56
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of One Liberty Properties, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of One Liberty Properties, Inc. and
subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of income,
comprehensive income, changes in equity and cash flows for each of the three years in the period ended
December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2)
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2020
and 2019, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2020, in conformity with U.S. generally accepted accounting principles.
Adoption of ASU No. 2016-02
As discussed in Note 3 to the consolidated financial statements, the Company changed its method of
accounting for leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842), and the related
amendments.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain
an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on
the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such
opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the
financial statements that was communicated or required to be communicated to the audit committee and that: (1)
relates to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in
any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
account or disclosures to which it relates.
F-1
Description of the Matter
How We Addressed the Matter in Our Audit
Impairment of Real Estate Investments
At December 31, 2020, the Company’s real estate
investments totaled approximately $691.9 million. As
described in Note 2 to the consolidated financial
statements, investments in real estate are reviewed for
impairment when circumstances indicate that the carrying
value of a property may not be recoverable.
Auditing the Company’s impairment assessment for real
estate investments was especially challenging and involved
a high degree of subjectivity as a result of the assumptions
and estimates inherent in the determination of estimated
future cash flows expected to result from the property’s use
and eventual disposition. In particular, management’s
assumptions and estimates included projected rental rates
during the holding period, and property capitalization rates,
which were sensitive to expectations about future
operations, market or economic conditions, demand and
competition.
To test the Company's impairment assessment for real
estate investments, we performed audit procedures that
included, among others, evaluating the methodologies
applied and testing the significant assumptions discussed
above and the underlying data used by the Company in its
impairment analyses. In certain cases, we involved our
valuation specialists to assist in performing these
procedures. We compared the significant assumptions
used by management to historical data and observable
market-specific data. We also performed sensitivity
analyses of significant assumptions to evaluate the changes
in estimated future cash flows that would result from
changes in the assumptions.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1989.
New York, New York
March 12, 2021
F-2
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Amounts in Thousands, Except Par Value)
ASSETS
Real estate investments, at cost
Land
Buildings and improvements
Total real estate investments, at cost
Less accumulated depreciation
Real estate investments, net
Investment in unconsolidated joint ventures
Cash and cash equivalents
Unbilled rent receivable
Unamortized intangible lease assets, net
Escrow, deposits and other assets and receivables
Total assets(1)
Liabilities:
LIABILITIES AND EQUITY
December 31,
2020
2019
$ 190,391 $ 195,320
640,517
835,837
135,302
700,535
648,667
839,058
147,136
691,922
10,702
12,705
15,438
24,703
20,667
11,061
11,034
15,037
26,068
10,894
$ 776,137 $ 774,629
Mortgages payable, net of $3,845 and $4,438 of deferred financing costs, respectively $ 429,704 $ 435,840
10,831
Line of credit, net of $425 and $619 of deferred financing costs, respectively
8,966
Dividends payable
14,587
Accrued expenses and other liabilities
12,421
Unamortized intangible lease liabilities, net
482,645
12,525
9,261
21,498
11,189
484,177
Total liabilities(1)
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; 50,000 and 25,000 shares authorized;
19,878 and 19,251 shares issued and outstanding
Paid-in capital
Accumulated other comprehensive loss
Distributions in excess of net income
Total One Liberty Properties, Inc. stockholders’ equity
Non-controlling interests in consolidated joint ventures(1)
Total equity
Total liabilities and equity
—
—
19,878
313,430
(5,002)
(37,539)
290,767
1,193
291,960
19,251
301,517
(1,623)
(28,382)
290,763
1,221
291,984
$ 776,137 $ 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, $23,372 and $24,223 of building and
improvements, net of $5,232 and $4,334 of accumulated depreciation, $3,679 and $3,696 of other assets
included in other line items, $23,530 and $24,199 of real estate debt, net, $1,278 and $1,153 of other
liabilities included in other line items, and $1,193 and $1,221 of non-controlling interests as of December
31, 2020 and 2019, respectively.
See accompanying notes.
F-3
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Amounts in Thousands, Except Per Share Data)
Year Ended December 31,
2020
2019
2018
$ 81,888 $ 83,786 $ 78,754
372
79,126
15
81,903
950
84,736
Revenues:
Rental income, net
Lease termination fees
Total revenues
Operating expenses:
Depreciation and amortization
General and administrative (see Note 10 for related party information)
Real estate expenses (see Note 10 for related party information)
State taxes
Impairment due to casualty loss
Total operating expenses
Other operating income
Gain on sale of real estate, net
Operating income
Other income and expenses:
22,964
13,671
13,634
310
430
51,009
22,026
12,442
14,074
348
—
48,890
24,155
11,937
11,596
370
—
48,058
17,280
48,174
4,327
40,173
5,262
36,330
Equity in earnings of unconsolidated joint ventures
Equity in earnings from sale of unconsolidated joint venture properties
Prepayment costs on debt
Other income (including $430 of insurance recoveries in 2020, see Note 4)
Interest:
38
121
(1,123)
496
16
—
(827)
8
1,304
2,057
—
720
Expense
Amortization and write-off of deferred financing costs
(19,317)
(976)
(19,831)
(995)
(17,862)
(985)
27,413
(6)
21,564
(899)
$ 27,407 $ 18,011 $ 20,665
18,544
(533)
19,571
19,599
19,090
19,119
18,575
18,588
$
$
1.34 $
1.33 $
0.88 $
0.88 $
1.05
1.05
Net income
Net income attributable to non-controlling interests
Net income attributable to One Liberty Properties, Inc.
Weighted average number of common shares outstanding:
Basic
Diluted
Per common share attributable to common stockholders:
Basic
Diluted
See accompanying notes.
F-4
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Amounts in Thousands)
Net income
$
Year Ended December 31,
2019
2020
27,413 $ 18,544 $
2018
21,564
Other comprehensive (loss) income
Net unrealized (loss) gain on derivative instruments
Reclassification of net realized gain on derivative instrument included
in net income
Reclassification of One Liberty Properties, Inc.’s share of joint venture
net realized gain on derivative instrument included in net income
One Liberty Properties, Inc.’s share of joint ventures’ net unrealized
gain on derivative instruments
Other comprehensive (loss) gain
(3,383)
(3,522)
2,170
—
—
—
—
—
(3,383)
—
(3,522)
(398)
(110)
76
1,738
Comprehensive income
24,030
15,022
23,302
Net income attributable to non-controlling interests
Adjustment for derivative instruments attributable to non-controlling
interests
(6)
4
(533)
(899)
9
(3)
Comprehensive income attributable to One Liberty Properties, Inc.
$
24,028 $
14,498 $
22,400
See accompanying notes.
F-5
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the Three Years Ended December 31, 2020
(Amounts in Thousands, Except Per Share Data)
Common Paid-in
Stock
Capital
$ 18,261 $ 275,087 $
Accumulated
Other
Comprehensive
Income (Loss)
Balances, December 31, 2017
Distributions—common stock
Cash — $1.80 per share
Shares issued through equity offering program—net
Restricted stock vesting
Shares issued through dividend reinvestment plan
Distributions to non-controlling interests
Compensation expense—restricted stock
Net income
Other comprehensive income
Balances, December 31, 2018
Distributions—common stock
Cash — $1.80 per share
Shares issued through equity offering program—net
Restricted stock vesting
Shares issued through dividend reinvestment plan
Distributions to non-controlling interests
Compensation expense—restricted stock
Net income
Other comprehensive loss
Balances, December 31, 2019
Distributions—common stock
Cash — $1.46 per share
Stock — $.34 per share
Restricted stock vesting
Shares issued through dividend reinvestment plan
Contribution from non-controlling interest
Distributions to non-controlling interests
Compensation expense—restricted stock
Net income
Other comprehensive loss
Balances, December 31, 2020
—
126
106
243
—
—
—
—
18,736
—
180
115
220
—
—
—
—
19,251
—
3,012
(106)
5,747
—
3,510
—
—
287,250
—
5,020
(115)
5,492
—
3,870
—
—
301,517
—
404
146
77
—
—
—
—
—
—
6,424
(146)
949
—
—
4,686
—
—
$ 19,878 $ 313,430 $
Non‑
Accumulated
Undistributed Controlling
Interests in
Net Income
(Distributions Consolidated
in Excess of
Net Income)
Joint
Ventures
Total
155 $
3,257 $
1,742 $ 298,502
—
—
—
—
—
—
—
1,735
1,890
—
—
—
—
—
—
—
(3,513)
(1,623)
(34,652)
—
—
—
—
—
20,665
—
(10,730)
(35,663)
—
—
—
—
—
18,011
—
(28,382)
—
—
—
—
—
—
—
—
(3,379)
(5,002) $
(29,736)
(6,828)
—
—
—
—
—
27,407
—
(37,539) $
—
—
—
—
(1,195)
—
899
3
1,449
—
—
—
—
(752)
—
533
(9)
1,221
(34,652)
3,138
—
5,990
(1,195)
3,510
21,564
1,738
298,595
(35,663)
5,200
—
5,712
(752)
3,870
18,544
(3,522)
291,984
—
—
—
—
10
(40)
—
6
(4)
(29,736)
—
—
1,026
10
(40)
4,686
27,413
(3,383)
1,193 $ 291,960
See accompanying notes.
F-6
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Amounts in Thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of real estate, net
Impairment due to casualty loss
Increase in unbilled rent receivable
Write-off of unbilled rent receivable
Bad debt expense
Amortization and write-off of intangibles relating to leases, net
Amortization of restricted stock expense
Equity in earnings of unconsolidated joint ventures
Equity in earnings from sale of unconsolidated joint venture property
Distributions of earnings from unconsolidated joint ventures
Depreciation and amortization
Amortization and write-off of deferred financing costs
Payment of leasing commissions
(Increase) decrease in escrow, deposits, other assets and receivables
Increase (decrease) in accrued expenses and other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of real estate
Improvements to real estate
Net proceeds from sale of real estate
Insurance recovery proceeds due to casualty loss
Contributions of capital to unconsolidated joint venture
Distributions of capital from unconsolidated joint venture
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Scheduled amortization payments of mortgages payable
Repayment of mortgages payable
Proceeds from mortgage financings
Proceeds from sale of common stock, net
Proceeds from bank line of credit
Repayment on bank line of credit
Issuance of shares through dividend reinvestment plan
Payment of financing costs
Capital contribution from non-controlling interest
Distributions to non-controlling interests
Cash distributions to common stockholders
Net cash (used in) provided by financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year
Supplemental disclosure of cash flow information:
Cash paid during the period for interest expense and prepayment costs on debt
Supplemental disclosure of non-cash investing activity:
Lease liabilities arising from the recognition of right of use assets
Loan receivable in connection with sale of property
Purchase accounting allocation - intangible lease assets
Purchase accounting allocation - intangible lease liabilities
Supplemental disclosure of non-cash financing activity:
$
$
$
Year Ended December 31,
2019
2020
2018
$
27,413 $
18,544
$
21,564
(17,280)
430
(1,722)
1,094
—
(780)
4,686
(38)
(121)
208
22,964
976
(235)
(3,146)
677
35,126
(28,504)
(1,037)
29,413
150
—
311
333
(13,114)
(11,815)
18,200
—
41,500
(40,000)
1,026
(189)
10
(40)
(29,441)
(33,863)
1,596
11,968
13,564 $
(4,327)
—
(1,547)
585
—
(914)
3,870
(16)
—
97
22,026
995
(523)
129
(2,687)
36,232
(49,887)
(3,514)
40,761
—
(296)
11
(12,925)
(13,158)
(19,970)
50,310
5,200
54,550
(73,100)
5,712
(1,443)
—
(752)
(35,421)
(28,072)
(4,765)
16,733
11,968
20,213 $
19,976
2,858 $
4,613
3,905
(568)
5,027
—
4,245
(915)
$
$
$
(5,262)
—
(1,156)
1,514
684
(1,849)
3,510
(1,304)
(2,057)
2,341
24,155
985
(442)
(1,183)
1,146
42,646
(80,290)
(7,311)
27,088
—
—
852
(59,661)
(11,081)
(24,502)
61,733
3,138
74,500
(53,900)
5,990
(1,182)
—
(1,195)
(34,421)
19,080
2,065
14,668
16,733
17,783
—
—
4,435
(2,508)
Common stock dividend - portion paid in shares of common stock
$
6,828 $
—
$
—
(Continued on next page)
F-7
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
(Amounts in Thousands)
The following table provides a reconciliation of cash and 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):
Cash and cash equivalents
Restricted cash included in escrow, deposits and other assets and receivables
Total cash, cash equivalents and restricted cash shown in the consolidated statement
of cash flows
December 31,
2020
12,705 $
859
2019
11,034
934
$
$
13,564 $
11,968
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.
F-8
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 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 December 31, 2020, OLP owns 123 properties,
including four properties owned by consolidated joint ventures and three properties owned by unconsolidated
joint ventures. The 123 properties are located in 31 states.
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
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.
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.
F-9
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 years ended December 31, 2020, 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.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. generally accepted
accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ
from those estimates.
Management believes that the estimates and assumptions that are most important to the portrayal of the
Company’s consolidated financial condition and results of operations, in that they require management’s most
difficult, subjective or complex judgments, form the basis of the accounting policies deemed to be most
significant to the Company. These significant accounting policies relate to revenues and the value of the
Company’s real estate portfolio, including investments in unconsolidated joint ventures. Management believes
its estimates and assumptions related to these significant accounting policies are appropriate under the
circumstances; however, should future events or occurrences result in unanticipated consequences, there could be
a material impact on the Company’s future consolidated financial condition or results of operations.
Revenue Recognition
Rental income includes the base rent that each tenant is required to pay in accordance with the terms of their
respective leases reported on a straight-line basis over the non-cancelable term of the lease. On a quarterly basis,
management reviews the tenant’s payment history and financial condition in determining, in its judgment,
whether any accrued rental income and unbilled rent receivable balances applicable to each specific property is
collectable. Some leases provide for increases based on the Consumer Price Index or for additional contingent
rental revenue in the form of percentage rents. The percentage rents are based upon the level of sales achieved
by the lessee and are recognized once the required sales levels are reached. A ground lease provides for rent
which can be deferred and paid based on the operating performance of the property; therefore, this rent is
recognized as rental income when the operating performance is achieved and the rent is received.
Due to the impact of the COVID-19 pandemic, rent concession agreements have been executed and are
being negotiated with certain of the Company’s tenants. In accordance with the FASB Staff Q&A, Topic 842 and
840 – Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic, a lessor may make
an accounting policy election 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 or forgiveness as if it were contemplated as
part of the existing lease contract. The Company has elected to apply this accounting policy to those lease
F-10
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES (Continued)
agreements, based on the type of concession provided to the tenant, where the revised cash flows are
substantially the same or less than the original lease agreement (see Note 3).
Many of the Company’s properties are subject to long-term net leases under which the tenant is typically
responsible to pay directly to the vendor the real estate taxes, insurance, utilities and ordinary maintenance and
repairs related to the property, and the Company is not the primary obligor with respect to such items. As a
result, the revenue and expenses relating to these properties are recorded on a net basis. For certain properties, in
addition to contractual base rent, the tenants pay their pro rata share of real estate taxes and operating expenses
to the Company. The income and expenses associated with properties at which the Company is the primary
obligor are generally recorded on a gross basis. During 2020, 2019 and 2018, the Company recorded
reimbursements of expenses of $10,512,000, $10,443,000 and $8,456,000, respectively, which are reported as
part of Rental income, net in the accompanying consolidated statements of income.
Gains and losses on the sale of real estate investments are recorded when the Company no longer holds a
controlling financial interest in the entity which holds the real estate investment and the relevant revenue
recognition criteria under GAAP have been met.
Fair Value Measurements
The Company measures the fair value of financial instruments based on the assumptions that market
participants would use in pricing the asset or liability. Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date (exit price). As a basis for considering market participant assumptions in fair value
measurements, a fair value hierarchy distinguishes between market participant assumptions based on market data
obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about
market participant assumptions. In accordance with the fair value hierarchy, Level 1 assets/liabilities are valued
based on quoted prices for identical instruments in active markets, Level 2 assets/liabilities are valued based on
quoted prices in active markets for similar instruments, on quoted prices in less active or inactive markets, or on
other “observable” market inputs and Level 3 assets/liabilities are valued based on significant “unobservable”
market inputs.
Purchase Accounting for Acquisition of Real Estate
In acquiring real estate, the Company evaluates whether substantially all of the fair value of the gross assets
acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, and if that
requirement is met, the asset group is accounted for as an asset acquisition and not a business combination.
Transaction costs incurred with such asset acquisitions are capitalized to real estate assets and depreciated over
the respectful useful lives.
The Company allocates the purchase price of real estate, including direct transaction costs applicable to an
asset acquisition, among land, building, improvements and intangibles, such as the value of above, below and at-
market leases, and origination costs associated with in-place leases at the acquisition date. The Company assesses
the fair value of the tangible assets of an acquired property by valuing the property as if it were vacant. The
value, as determined, is allocated to land, building and improvements based on management’s determination of
the relative fair values of these assets.
The Company assesses the fair value of the lease intangibles based on estimated cash flow projections that
utilize appropriate discount rates and available market information. Such inputs are Level 3 in the fair value
hierarchy. In valuing an acquired property’s intangibles, factors considered by management include estimates of
carrying costs (e.g., real estate taxes, insurance, other operating expenses) and lost rental revenue during the
expected lease-up periods based on its evaluation of current market demand. Management also estimates costs to
execute similar leases, including leasing commissions and tenant improvements.
F-11
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES (Continued)
The values of acquired above-market and below-market leases are recorded based on the present values
(using discount rates which reflect the risks associated with the leases acquired) of the difference between the
contractual amounts to be received and management’s estimate of market lease rates, measured over the terms of
the respective leases that management deemed appropriate at the time of the acquisitions. Such valuations
include a consideration of the non-cancellable terms of the respective leases, as well as any applicable renewal
period(s). The fair values associated with below-market rental renewal options are determined based on the
Company’s experience and the relevant facts and circumstances at the time of the acquisitions. The values of
above-market leases are amortized as a reduction to rental income over the terms of the respective non-
cancellable lease periods. The portion of the values of below-market leases are amortized as an increase to rental
income over the terms of the respective non-cancellable lease periods. The portion of the values of the leases
associated with below-market renewal options that management deemed are reasonably certain to be exercised
by the tenant are amortized to rental income over such renewal periods. The value of other intangible assets (i.e.,
origination costs) is recorded to amortization expense over the remaining terms of the respective leases. If a lease
is terminated prior to its contractual expiration date or not renewed, all unamortized amounts relating to that lease
would be recognized in operations at that time. The estimated useful lives of intangible assets or liabilities
generally range from one to 35 years.
Accounting for Long-Lived Assets and Impairment of Real Estate Owned
The Company reviews its real estate portfolio on a quarterly basis to ascertain if there are any indicators of
impairment to the value of any of its real estate assets, including deferred costs and intangibles, to determine if
there is any need for an impairment charge. In reviewing the portfolio, the Company examines one or more of
the following: the type of asset, the current financial statements or other available financial information of the
tenant, the economic situation in the area in which the asset is located, the economic situation of the industry in
which the tenant is involved, the timeliness of the payments made by the tenant under its lease, property
inspection reports and any communication with, or by, the tenant. For each real estate asset owned for which
indicators of impairment exist, management performs a recoverability test by comparing (i) the sum of the
estimated undiscounted future cash flows attributable to the asset, over an appropriate hold period, to (ii) the
carrying amount of the asset. If the aggregate undiscounted cash flows are less than the asset’s carrying amount,
an impairment loss is recorded to the extent that the estimated fair value is less than the asset’s carrying amount.
The estimated fair value is determined using a discounted cash flow model of the expected future cash flows
through the useful life of the property. The analysis includes an estimate of the future cash flows that are
expected to result from the real estate investment’s use and eventual disposition. These cash flows consider
factors such as expected future operating income, trends and prospects, the effects of leasing demand,
competition and other factors.
Properties Held-for-Sale
Real estate investments are classified as properties held-for-sale when management determines that the
investment meets the applicable criteria. Real estate assets that are classified as held-for-sale are: (i) valued at
the lower of carrying amount or the estimated fair value less costs to sell on an individual asset basis; and (ii) not
depreciated.
Cash and Cash Equivalents
All highly liquid investments with original maturities of three months or less when purchased are considered
to be cash equivalents.
Escrows
Real estate taxes and other escrows aggregating $859,000 and $934,000 at December 31, 2020 and 2019,
respectively, are included in Escrow, deposits and other assets and receivables.
F-12
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES (Continued)
Depreciation and Amortization
Depreciation of buildings is computed on the straight-line method over an estimated useful life of 40 years.
Depreciation of building improvements is computed on the straight-line method over the estimated useful life of
the improvements. If the Company determines it is the owner of tenant improvements, the amounts funded to
construct the tenant improvements are treated as a capital asset and depreciated over the lesser of the remaining
lease term or the estimated useful life of the improvements on the straight-line method. Leasehold interest and
the related ground lease payments are amortized over the initial lease term of the leasehold position.
Depreciation expense (including amortization of a leasehold position, lease origination costs, and capitalized
leasing commissions) was $22,964,000, $22,026,000 and $24,155,000, for 2020, 2019 and 2018, respectively.
Deferred Financing Costs
Mortgage and credit line costs are deferred and amortized on a straight-line basis over the terms of the
respective debt obligations, which approximates the effective interest method. At December 31, 2020 and 2019,
accumulated amortization of such costs was $4,599,000 and $3,799,000, respectively. The Company presents
unamortized deferred financing costs as a direct deduction from the carrying amount of the associated debt
liability.
Income Taxes
The Company is qualified as a REIT under the applicable provisions of the Internal Revenue Code. Under
these provisions, the Company will not be subject to Federal, and generally, state and local income taxes, on
amounts distributed to stockholders, provided it distributes at least 90% of its ordinary taxable income and meets
certain other conditions.
The Company follows a two-step approach for evaluating uncertain tax positions. Recognition (step one)
occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more-likely-than-
not to be sustained upon examination. Measurement (step two) determines the amount of benefit that more-
likely-than-not will be realized upon settlement. Derecognition of a tax position that was previously recognized
would occur when a company subsequently determines that a tax position no longer meets the more-likely-than-
not threshold of being sustained. The use of a valuation allowance as a substitute for derecognition of tax
positions is prohibited. The Company has not identified any uncertain tax positions requiring accrual.
Concentration of Credit Risk
The Company maintains cash accounts at various financial institutions. While the Company attempts to limit
any financial exposure, substantially all of its deposit balances exceed federally insured limits. The Company has
not experienced any losses on such accounts.
The Company’s properties are located in 31 states. No real estate investments in any one state contributed
more than 10% to the Company’s total revenues in any of the past three years.
No tenant contributed over 10% to the Company’s total revenues during 2020, 2019 and 2018.
Segment Reporting
Substantially all of the Company’s real estate assets, at acquisition, are comprised of real estate owned that is
leased to tenants on a long-term basis. Therefore, the Company aggregates real estate assets for reporting
purposes and operates in one reportable segment.
F-13
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock Based Compensation
The fair value of restricted stock grants and restricted stock units (“RSUs”), determined as of the date of
grant, is amortized into general and administrative expense over the respective vesting period. The deferred
compensation to be recognized as expense is net of forfeitures and the performance assumptions are re-evaluated
quarterly. The Company recognizes the effect of forfeitures when they occur and previously recognized
compensation expense is reversed in the period the grant or unit is forfeited. For share-based awards with a
performance or market measure, the Company recognizes compensation expense over the requisite service
period. The requisite service period begins on the date the Compensation Committee of the Company’s Board of
Directors authorizes the award, adopts any relevant performance measures and communicates the award to the
recipient.
Derivatives and Hedging Activities
The Company uses interest rate swaps to add stability to interest expense; not for trading or speculative
purposes.
The Company records all derivatives on the consolidated balance sheets at fair value using widely accepted
valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. In
addition, the Company incorporates credit valuation adjustments to appropriately reflect both its own non-
performance risk and the respective counterparty’s non-performance risk in the fair value measurements. These
counterparties are generally large financial institutions engaged in providing a variety of financial services.
These institutions generally face similar risks regarding adverse changes in market and economic conditions
including, but not limited to, fluctuations in interest rates, exchange rates, equity and commodity prices and
credit spreads.
The accounting for changes in the fair value of derivatives depends on the intended use of the derivative,
whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting
and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives
designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered
cash flow hedges. For derivatives designated as cash flow hedges, the effective portion of changes in the fair
value of the derivative is initially reported in accumulated other comprehensive income (outside of earnings) and
subsequently reclassified to earnings in the period in which the hedged transaction becomes ineffective. For
derivatives not designated as cash flow hedges, changes in the fair value of the derivative are recognized directly
in earnings in the period in which the change occurs; however, the Company’s policy is to not enter into such
transactions.
Collectability of Lease Payments
Prior to the adoption of ASC 842 in January 2019, the Company’s policy was to maintain an allowance for
doubtful accounts for estimated losses resulting from the inability of a tenant to make required lease payments. If
the financial condition of a tenant were to deteriorate, adversely impacting its ability to make payments, an
allowance would have been required. The Company recorded bad debt expense as a reduction of rental income.
During 2018, the Company recorded bad debt expense of $684,000 related to lease payments from tenants that
filed Chapter 11 bankruptcy protection. Subsequent to the adoption of ASC 842, any changes to the collectability
of lease payments is recognized as a current period adjustment to rental revenue (see Note 3).
F-14
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES (Continued)
New Accounting Pronouncements
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which contains
practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other
contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform
activities occur. During the year ended December 31, 2020, the Company has elected to apply the hedge
accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash
flows to assume that the index upon which future hedged transactions will be based matches the index on the
corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent
with past presentation. The Company may apply other elections, as applicable, as additional changes in the
market occur. The Company continues to evaluate the new guidance, to determine if, and to the extent, it will
impact the Company’s consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure
Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and
modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project.
The Company adopted this guidance on January 1, 2020 and its adoption did not have any impact on the
Company’s previously reported consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments, which changed how entities measure credit losses for
most financial assets and certain other instruments that are not measured at fair value through net income. The
guidance replaces the current “incurred loss” model with an “expected loss” approach. The Company adopted
this guidance on January 1, 2020 and its adoption did not have any impact on the Company’s previously reported
income from operations, net income or accumulated undistributed net income for the periods presented. In
December 2020, in connection with a sale of two properties in Houston, Texas, the Company provided a
$4,612,500 one-year loan representing 50% of the purchase price as seller-financing to the buyer (see Note 5).
The Company reviewed the need for an allowance under ASU No. 2016-13 for this loan receivable. The
Company evaluated the extent and impact of any credit deterioration that could affect the performance and the
value of the secured properties, as well as the financial and operating capability of the borrower. The properties’
operating results and existing cash balances are considered and used to assess whether cash flows from
operations are sufficient to cover the current and future operating and debt service requirements. The Company
also evaluates the borrower’s competency in managing and operating the secured properties and considers the
overall economic environment, real estate sector and geographic sub-market in which the secured properties are
located. The Company applies normal loan review and underwriting procedures (as may be implemented or
modified from time to time) in making that judgment. The Company has evaluated the credit loss using the loss-
rate method and determined the expected credit loss on this loan is immaterial.
F-15
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 3—LEASES
Lessor Accounting
The Company owns rental properties which are leased to tenants under operating leases with current
expirations ranging from 2021 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):
Year Ended December 31,
2019
2020
2018
Fixed lease revenues
Variable lease revenues
Lease revenues (a)
$ 69,823 $ 70,788 $ 65,042
11,863
$ 81,108 $ 82,872 $ 76,905
11,285
12,084
(a) Excludes $780, $914 and $1,849 of amortization related to lease intangible assets and liabilities
for 2020, 2019 and 2018, respectively.
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.
During the year ended December 31, 2020, in response to requests for rent relief from tenants impacted by
the COVID-19 pandemic and the governmental and non-governmental responses thereto, the Company deferred
and accrued $3,505,000 and forgave $184,000 of rent payments. For lease concessions that have been accounted
for as lease modifications in accordance with ASC 842, the Company forgave $1,187,000 of rent payments
during the year ended December 31, 2020. As of December 31, 2020 and through February 28, 2021, tenants
repaid $497,000 and $529,000, respectively, of COVID-19 related deferred rent.
On a quarterly basis, the Company assesses the collectability of substantially all payments due under its
leases by reviewing the tenant’s payment history and financial condition. Changes to collectability are
recognized as a current period adjustment to rental revenue. As a result of this assessment, during the fourth
quarter of 2020 the Company did not record approximately $928,000 of rent as collections were deemed less than
probable. Such sum was due from Regal Cinemas, a tenant at two locations, which was adversely affected by the
pandemic. The Company has assessed the collectability of all other lease payments as probable as of December
31, 2020.
F-16
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 3—LEASES (Continued)
Minimum Future Rents
As of December 31, 2020, the minimum future contractual rents to be received on non-cancellable operating
leases are included in the table below (amounts in thousands). The minimum future contractual rents do not
include (i) straight-line rent or amortization of intangibles, (ii) COVID-19 lease deferral repayments accrued to
rental income in 2020 and (iii) variable lease payments as described above.
For the year ended December 31,
2021
2022
2023
2024
2025
Thereafter
Total
Lease Termination Fees
$ 70,637
62,167
53,248
44,469
40,243
163,148
$ 433,912
During 2020, the Company received $88,000 as a lease termination fee from an industrial tenant in
connection with the exercise of an early lease termination option, of which $15,000 was recognized in the year
ended December 31, 2020 and the remainder will be amortized to revenues over the remaining lease term
expiring May 31, 2021.
During 2019, the Company received an aggregate of $950,000 as lease termination fees from two retail
tenants in lease buy-out transactions. In connection with one of these transactions, the Company wrote-off
$37,000 of unbilled rent receivable against rental income.
During 2018, the Company received $372,000 as a lease termination fee from a retail tenant in a lease buy-
out transaction. In connection with this transaction, the Company recorded $804,000 as rental income,
representing the write-off of the $878,000 balance of the unamortized intangible lease liability, offset in part by
the write-off of the $74,000 balance of the unbilled rent receivable.
Unbilled Straight-Line Rent
At December 31, 2020 and 2019, the Company’s unbilled rent receivables aggregating $15,438,000 and
$15,037,000, respectively, represent rent reported on a straight-line basis in excess of rental payments required
under the respective leases. The unbilled rent receivable is to be billed and received pursuant to the lease terms
during the next 15 years.
During 2020, 2019 and 2018, the Company wrote-off $365,000, $182,000 and $45,000, respectively, of
unbilled straight-line rent receivable related to the properties sold during such years, which reduced the gain on
sale reported on the consolidated statements of income.
At December 31, 2020 and 2019, the Company’s unbilled rent payables aggregating $801,000 and $662,000,
respectively, represent rent reported on a straight-line basis less than rental payments required under the
respective leases. The unbilled rent payable is to be billed and received pursuant to the lease terms during the
next 21 years.
On a quarterly basis, the Company assesses the collectability of unbilled rent receivable balances by
reviewing the tenant’s payment history and financial condition. During 2020, the Company wrote-off, as a
reduction to rental income, $1,094,000 of unbilled rent receivables as collections of such amounts were deemed
less than probable. Such sum was due from Regal Cinemas, a tenant at two locations, which was adversely
affected by the pandemic. During 2019 and 2018, due to uncertainty related to certain tenants with going
concern or bankruptcy issues, the Company wrote-off, as a reduction to rental income, $548,000 and $1,440,000,
respectively, of unbilled rent receivables. The Company has assessed the collectability of all other unbilled rent
receivable balances as probable as of December 31, 2020.
F-17
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 3—LEASES (Continued)
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 December 31, 2020, the Company recorded a $6,895,000 liability for the
obligation to make payments under the lease and a $6,663,000 asset for the right to use the underlying asset
during the lease term which are included in other liabilities and other assets, respectively, on the consolidated
balance sheet. Lease payments associated with renewal option periods that the Company determined were
reasonably certain to be exercised are included in the measurement of the lease liability and right of use asset. As
of December 31, 2020, the remaining lease term, including renewal options deemed exercised, is 14.2 years. The
Company applied a discount rate of 2.95%, based on its incremental borrowing rate given the term of the lease,
as the rate implicit in the lease is not known. During the years ended December 31, 2020 and 2019, the
Company recognized $533,000 and $525,000, respectively, of lease expense related to this ground lease which is
included in Real estate expenses on the consolidated statement 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 December
31, 2020, the Company has recorded a $602,000 liability for the obligation to make payments under the lease and
a $593,000 asset for the right to use the underlying asset during the lease term which are included in other
liability and other assets, respectively, on the consolidated balance sheet. Lease payments associated with the
renewal option period, which was determined to be reasonably certain to be exercised, are included in the
measurement of the lease liability and right of use asset. As of December 31, 2020, the remaining lease term,
including renewal options deemed exercised, is 16.0 years. The Company applied a discount rate of 3.81%, based
on its incremental borrowing rate given the term of the lease, as the rate implicit in the lease is not known.
During the years ended December 31, 2020 and 2019, the Company recognized $57,000 and $54,000,
respectively, of lease expense related to this office lease which is included in General and administrative
expenses on the consolidated statement of income.
Minimum Future Lease Payments
As of December 31, 2020, the minimum future lease payments related to the operating ground and office
leases are as follows (amounts in thousands):
For the year ended December 31,
2021
2022
2023
2024
2025
Thereafter
Total undiscounted cash flows
Present value discount
Lease liability
$
$
$
511
506
507
557
626
6,847
9,554
(2,057)
7,497
F-18
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 4—REAL ESTATE INVESTMENTS
Acquisitions
The following table details the Company’s real estate acquisitions during 2020 and 2019. 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.
Description of Property (amounts in thousands)
Creative Office Environments industrial facility,
Ashland, Virginia
Fed Ex industrial facility,
Lowell, Arkansas
Totals for 2020
Date
Acquired
Contract
Capitalized
Purchase Terms of
Transaction
Price
Payment Costs
February 20, 2020 $
9,100 All cash (a) $
February 24, 2020
19,150 All cash (a)
$ 28,250
$
May 30, 2019
$
8,000 All cash (b) $
Zwanenberg Food Group/Metro Carpets industrial facility,
Nashville, Tennessee
Echo, Inc. industrial facility,
Wauconda, Illinois
Betz Mechanical Supply/Steve Davis Sales industrial facility,
Bensalem, Pennsylvania
International Flora Technologies industrial facility,
Chandler, Arizona
Nissan North America industrial facility,
LaGrange, Georgia
Continental Hydraulics industrial facility,
Shakopee, Minnesota
Cosentino industrial facility,
Rincon, Georgia
The Door Mill industrial facility,
Chandler, Arizona
Totals for 2019
May 30, 2019
June 18, 2019
June 26, 2019
July 24, 2019
September 13, 2019
October 3, 2019
October 23, 2019
3,800 All cash
6,200 All cash (b)
8,650 All cash (b)
5,200 All cash (b)
8,000 All cash (b)
6,400 All cash (b)
3,000 All cash
$ 49,250
$
119
135
254
77
26
168
64
72
62
121
47
637
(a) In 2020, the Company obtained new mortgage debt aggregating $18,200 bearing interest rates from 3.54% to
3.63% and maturing from 2027 through 2035.
(b) In 2019, the Company obtained new mortgage debt aggregating $50,310 bearing interest rates from 3.68% to
4.90% and maturing from 2024 through 2033.
F-19
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 4—REAL ESTATE INVESTMENTS (Continued)
The following table details the allocation of the purchase price for the Company’s acquisitions of real estate
during 2020 and 2019 (amounts in thousands):
Description of Property
Creative Office Environments industrial facility,
Ashland, Virginia
Fed Ex industrial facility,
Lowell, Arkansas
Totals for 2020
Zwanenberg Food Group/Metro Carpets industrial facility,
Nashville, Tennessee
Echo, Inc. industrial facility,
Wauconda, Illinois
Betz Mechanical Supply/Steve Davis Sales industrial facility,
Bensalem, Pennsylvania
International Flora Technologies industrial facility,
Chandler, Arizona
Nissan North America industrial facility,
LaGrange, Georgia
Continental Hydraulics industrial facility,
Shakopee, Minnesota
Cosentino industrial facility,
Rincon, Georgia
The Door Mill industrial facility,
Chandler, Arizona
Totals for 2019
Building &
Intangible Lease
Land
Improvements Asset Liability Total
$
391 $
7,901 $
927 $
— $ 9,219
1,687
$ 2,078 $
15,188
23,089 $ 3,905 $
2,978
(568)
19,285
(568) $ 28,504
$ 1,058 $
6,350 $
750 $
(81) $ 8,077
67
3,424
339
(4)
3,826
1,602
1,335
4,322
664
(220)
6,368
7,379
—
—
8,714
297
4,499
627
(151)
5,272
1,877
5,462
944
(221)
8,062
61
5,969
667
(176)
6,521
1,164
$ 7,461 $
1,691
39,096 $ 4,245 $
254
(62)
3,047
(915) $ 49,887
As of December 31, 2020, the weighted average amortization period for the 2020 acquisitions is 8.3 years
and 13.7 years for the intangible lease assets and intangible lease liabilities, respectively. As of December 31,
2019, the weighted average amortization period for the 2019 acquisitions is 7.6 years and 9.8 years for the
intangible lease assets and intangible lease liabilities, respectively. The Company assessed the fair value of the
lease intangibles based on estimated cash flow projections that utilize appropriate discount rates and available
market information. Such inputs are Level 3 (as defined in Note 2) in the fair value hierarchy.
At December 31, 2020 and 2019, accumulated amortization of intangible lease assets was $24,530,000 and
$19,904,000, respectively, and accumulated amortization of intangible lease liabilities was $8,539,000 and
$7,502,000, respectively.
During 2020, 2019 and 2018, the Company recognized net rental income of $780,000, $914,000 and
$1,849,000, respectively, for the amortization of the above/below market leases. During 2020, 2019 and 2018,
the Company recognized amortization expense of $4,617,000, $4,039,000 and $7,175,000, respectively, relating
to the amortization of the origination costs associated with in-place leases, which is included in Depreciation and
amortization expense. Included in Depreciation and amortization expense for 2018 is a $2,743,000 write-off of
origination costs related to a property at which the tenant filed Chapter 11 bankruptcy.
F-20
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 4—REAL ESTATE INVESTMENTS (Continued)
The unamortized balance of intangible lease assets as a result of acquired above market leases at December
31, 2020 will be deducted from rental income through 2032 as follows (amounts in thousands):
2021
2022
2023
2024
2025
Thereafter
Total
$
$
647
481
288
218
195
546
2,375
The unamortized balance of intangible lease liabilities as a result of acquired below market leases at
December 31, 2020 will be added to rental income through 2055 as follows (amounts in thousands):
2021
2022
2023
2024
2025
Thereafter
Total
$
1,402
1,160
922
694
488
6,523
$ 11,189
The unamortized balance of origination costs associated with in-place leases at December 31, 2020 will be
charged to amortization expense through 2055 as follows (amounts in thousands):
2021
2022
2023
2024
2025
Thereafter
Total
$
4,609
3,961
3,319
2,303
1,944
6,192
$ 22,328
Impairment due to Casualty Loss
In August 2020, a portion of a multi-tenanted building at the Company’s Lake Charles, Louisiana
property was damaged due to Hurricane Laura. During the year ended December 31, 2020, the Company
recognized an impairment loss of $430,000 representing the carrying value of the damaged portion of the
building based on its replacement cost (and net of accumulated depreciation of $352,000).
The Company submitted a claim to its insurance carrier to cover, subject to a $250,000 deductible, the (i)
estimated $1,294,000 cost to rebuild the damaged portion of the building and (ii) $65,000 of losses in rental
income. As a result, the Company recognized a $430,000 receivable for insurance recoveries which is recorded
as Other income in the consolidated statements of income for the year ended December 31, 2020. The Company
received a $150,000 advance from the insurance carrier for this claim during the year ended December 31, 2020.
In January 2021, the Company received an additional $300,000 advance from the insurance carrier.
F-21
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 5—SALES OF PROPERTIES
The following chart details the Company’s sales of real estate during 2020, 2019 and 2018 (amounts in
thousands):
Description of Property
Hobby Lobby retail property,
Onalaska, Wisconsin
CarMax retail property,
Knoxville, Tennessee
PetSmart retail property
Houston, Texas
Guitar Center retail property,
Houston, Texas
Totals for 2020
Kmart retail property,
Gross
Sales Price Real Estate, Net
Gain (Loss)
on sale of
Mortgage Prepayment
Prepaid Costs on
on Sale
Debt
Date Sold
February 11, 2020 $
7,115 $
4,252 $
3,332 $
290
July 1, 2020
18,000
10,316
8,483
833
December 15, 2020
4,013 (a)
1,067
n/a
n/a
December 15, 2020
$
5,212 (a)
34,340 $
1,645
17,280 $ 11,815 $
n/a
n/a
1,123
Clemmons, North Carolina (b)
June 20, 2019
$
5,500 $
1,099 $
1,705 $
41
Multi-tenant retail property,
Athens, Georgia
August 23, 2019
6,050
1,045
2,645
161
Land - The Briarbrook Village Apartments,
Wheaton, Illinois
Aaron's retail property,
Houston, Texas
Assisted living facility,
Round Rock, Texas
Totals for 2019
Multi-tenant retail property,
Fort Bend, Texas (c)
Land - The Meadows Apartments,
Lakemoor, Illinois
Shopko retail property,
Lincoln, Nebraska
Totals for 2018
August 29, 2019
12,066
October 21, 2019
1,675
1,530
218
n/a
n/a
December 10, 2019
$
16,600
41,891 $
435
13,157
4,327 $ 17,507 $
January 30, 2018
$
9,200 $
2,408 $
4,423
September 14, 2018
8,459
4,585 (d)
n/a
December 13, 2018
$
10,000
27,659 $
(1,731)
5,262 $
n/a
4,423
n/a
n/a
625
827
n/a
n/a
n/a
n/a
(a) These two properties were sold simultaneously for $9,225. The Company provided seller-financing of
$4,613 which is included in other receivables on the consolidated balance sheet at December 31, 2020. The
loan receivable matures on December 15, 2021 and bears interest at 4.0% with monthly interest-only
payments until maturity.
(b) This property was owned by a consolidated joint venture in which the Company held a 90% interest. The
non-controlling interest’s share of the gain was $422.
(c) This property was owned by a consolidated joint venture in which the Company held an 85% interest. The
non-controlling interest’s share of the gain was $776.
(d) Includes $5,717, representing the unamortized balance of a $5,906 fixed rent payment which was received
and recorded as deferred income in 2017 and was to be included in rental income over the term of the lease.
F-22
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 6—VARIABLE INTEREST ENTITIES, CONTINGENT LIABILITY AND CONSOLIDATED
JOINT VENTURES
Variable Interest Entities—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 does not have power over the activities that most
significantly impact the owner/operator’s economic performance 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 $729,000, $1,597,000, and $3,357,000 during 2020,
2019 and 2018, respectively. Included in these amounts is rental income of $814,000 and $1,964,000 during
2019 and 2018, respectively, from previously held VIE properties located in Wheaton and Lakemoor, Illinois,
which were sold in August 2019 and September 2018, respectively (see Note 5).
As of December 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. The mortgage
balance was $67,162,000 as of December 31, 2020. No other financial support has been provided by the
Company to the owner/operator as of December 31, 2020. In November 2020, the ground lease was amended to
require, among other things, that the owner/operator deposit $1,200,000 to pay certain past due operating
expenses and a portion of anticipated future operating cash flow shortfalls at the property as well as $170,300 to
pay a portion of the cost of near-term capital expenditures required at the property (all of which sums have been
deposited). The Company has agreed, in its discretion, to fund 78% of (i) any further operating expense shortfalls
at the property after the initial operating expense deposit has been fully utilized, and (ii) any capital expenditures
required at the property. The Company did not fund any such amounts as of December 31, 2020. Through March
4, 2021, the Company funded $409,000.
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 the applicable joint venture.
F-23
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
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):
December 31,
Land
Buildings and improvements, net of accumulated depreciation of $5,232 and $4,334, respectively
Cash
Unbilled rent receivable
Unamortized intangible lease assets, net
Escrow, deposits and other assets and receivables
Mortgages payable, net of unamortized deferred financing costs of $253 and $313, respectively
Accrued expenses and other liabilities
Unamortized intangible lease liabilities, net
Accumulated other comprehensive loss
Non-controlling interests in consolidated joint ventures
2020
$ 12,158 $
23,372
1,102
861
627
1,089
23,530
752
526
(127)
1,193
2019
12,158
24,223
888
859
745
1,204
24,199
562
591
(65)
1,221
As of December 31, 2020 and 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 $7,495,000 and $7,941,000, respectively.
Distributions to each joint venture partner are determined pursuant to the applicable operating agreement and
may not be pro rata to the equity interest each partner has in the applicable venture.
NOTE 7—INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
As of December 31, 2020 and 2019, the Company participated in three and four unconsolidated joint
ventures, respectively, each of which owns and operates one property; the Company’s equity investment in these
ventures totaled $10,702,000 and $11,061,000, respectively. The Company recorded equity in earnings of
$38,000, $16,000 and $1,304,000 during 2020, 2019 and 2018, respectively. Included in equity in earnings from
unconsolidated joint ventures during 2018 is income of (i) $550,000 due to the write-off of an intangible lease
liability in connection with the expiration of the Kmart lease at the Manahawkin, New Jersey property and (ii)
$110,000 related to the discontinuance of hedge accounting on a mortgage swap related to a property sold in July
2018 (see Note 9).
In March 2020, an unconsolidated joint venture sold its property located in Savannah, Georgia for $819,000,
net of closing costs. The Company’s 50% share of the gain from this sale was $121,000, which is included in
Equity in earnings from sale of unconsolidated joint venture properties on the consolidated statement of income
for the year ended December 31, 2020. In 2018, the Company recorded equity in earnings from the sale of
unconsolidated joint venture properties of $2,057,000.
At December 31, 2020 and 2019, MCB and the Company are partners in an unconsolidated joint venture in
which the Company’s equity investment is approximately $8,761,000 and $8,834,000, respectively.
F-24
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 8—DEBT OBLIGATIONS
Mortgages Payable
The following table details the Mortgages payable, net, balances per the consolidated balance sheets
(amounts in thousands):
Mortgages payable, gross
Unamortized deferred financing costs
Mortgages payable, net
December 31,
2020
2019
$ 433,549 $ 440,278
(4,438)
$ 429,704 $ 435,840
(3,845)
At December 31, 2020, there were 74 outstanding mortgages payable, all of which are secured by first liens
on individual real estate investments with an aggregate gross carrying value of $708,913,000 before accumulated
depreciation of $116,579,000. After giving effect to interest rate swap agreements (see Note 9), the mortgage
payments bear interest at fixed rates ranging from 3.02% to 5.87%, and mature between 2021 and 2042. The
weighted average interest rate on all mortgage debt was 4.19% and 4.21% at December 31, 2020 and 2019,
respectively.
During 2020, due to the COVID-19 pandemic, the Company and its mortgage lenders agreed to defer the
payment of $1,670,000 of debt service due in 2020 and 2021. Of the total deferred debt, approximately $174,000
was repaid in 2020, $303,000 was deferred until 2021 through 2023 and the balance was deferred until the
maturity of such debt.
Scheduled principal repayments during the next five years and thereafter are as follows (amounts in
thousands):
Year Ending December 31,
2021
2022
2023
2024
2025
Thereafter
Total
Line of Credit
$ 22,575
46,126
30,278
63,016
43,048
228,506
$ 433,549
The Company has a credit facility with Manufacturers & Traders Trust Company, People’s United Bank,
VNB New York, LLC, and Bank Leumi USA, pursuant to which it may borrow up to $100,000,000, subject to
borrowing base requirements. The facility is available for the acquisition of commercial real estate, repayment of
mortgage debt, and renovation and operating expense purposes; provided, that if used for renovation and
operating expense purposes, the amount outstanding for such purposes will not exceed the lesser of $30,000,000
and 30% of the borrowing base subject to a cap of (i) $20,000,000 for operating expense purposes and (ii)
$10,000,000 for renovation expenses. Pursuant to the amendment to the facility entered into in March 2021, on
June 30, 2022, the amount the Company can borrow for renovation expenses and operating expenses changes to
$20,000,000 and $10,000,000, respectively. To the extent that as of July 1, 2022 more than $10,000,000 is
outstanding for operating expense purposes, such excess must be repaid immediately. Net proceeds received
from the sale, financing or refinancing of properties are generally required to be used to repay amounts
outstanding under the credit facility. The facility is guaranteed by subsidiaries of the Company that own
unencumbered properties and the Company pledged to the lenders the equity interests in the Company’s
subsidiaries.
F-25
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 8—DEBT OBLIGATIONS (Continued)
The facility, which matures December 31, 2022, provides for an interest rate equal to the one month LIBOR
rate plus an applicable margin ranging from 175 basis points to 300 basis points depending on the ratio of the
Company’s total debt to total value, as determined pursuant to the facility. The applicable margin was 200 basis
points at December 31, 2020 and 2019. An unused facility fee of .25% per annum applies to the facility. The
average interest rate on the facility was approximately 2.53%, 4.03% and 3.73% during 2020, 2019 and 2018,
respectively.
The credit facility includes certain restrictions and covenants which may limit, among other things, the
incurrence of liens, and which require compliance with financial ratios relating to, among other things, the
minimum amount of tangible net worth, the minimum amount of debt service coverage, the minimum amount of
fixed charge coverage, the maximum amount of debt to value, the minimum level of net income, certain
investment limitations and the minimum value of unencumbered properties and the number of such properties.
The Company was in compliance with all covenants at December 31, 2020.
The following table details the Line of credit, net, balances per the consolidated balance sheets (amounts in
thousands):
Line of credit, gross
Unamortized deferred financing costs
Line of credit, net
December 31,
2020
2019
$ 12,950 $ 11,450
(619)
$ 12,525 $ 10,831
(425)
At March 4, 2021, there was an outstanding balance of $15,450,000, (before unamortized deferred financing
costs) under the facility.
NOTE 9—FAIR VALUE MEASUREMENTS
The carrying amounts of cash and cash equivalents, escrow, deposits and other assets and receivables
(excluding interest rate swaps), dividends payable, and accrued expenses and other liabilities (excluding interest
rate swaps), are not measured at fair value on a recurring basis, but are considered to be recorded at amounts that
approximate fair value.
At December 31, 2020, the $461,965,000 estimated fair value of the Company’s mortgages payable is
greater than their $433,549,000 carrying value (before unamortized deferred financing costs) by approximately
$28,416,000, assuming a blended market interest rate of 3.00% based on the 7.1 year weighted average
remaining term to maturity of the mortgages.
At December 31, 2019, the $454,039,000 estimated fair value of the Company’s mortgages payable is
greater than their $440,278,000 carrying value (before unamortized deferred financing costs) by approximately
$13,761,000, assuming a blended market interest rate of 3.72% based on the 8.1 year weighted average
remaining term to maturity of the mortgages.
At December 31, 2020 and 2019, the carrying amount of the Company’s line of credit (before unamortized
deferred financing costs) of $12,950,000 and $11,450,000, respectively, approximates its fair value.
The fair value of the Company’s mortgages payable and line of credit are estimated using unobservable
inputs such as available market information and discounted cash flow analysis based on borrowing rates the
Company believes it could obtain with similar terms and maturities. These fair value measurements fall within
Level 3 of the fair value hierarchy.
Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of
different market assumptions and/or estimation methodologies may have a material effect on the estimated fair
value amounts.
F-26
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 9—FAIR VALUE MEASUREMENTS (Continued)
Fair Value on a Recurring Basis
As of December 31, 2020, the Company had entered into 23 interest rate derivatives, all of which were
interest rate swaps, related to 23 outstanding mortgage loans with an aggregate $84,671,000 notional amount and
mature between 2021 and 2028 (weighted average remaining term to maturity of 3.9 years). These interest rate
swaps, all of which were designated as cash flow hedges, converted LIBOR based variable rate mortgages to
fixed annual rate mortgages (with interest rates ranging from 3.02% to 5.16% and a weighted average interest
rate of 3.95% at December 31, 2020).
The fair value of the Company’s derivative financial instruments, using Level 2 inputs, was determined to be
the following (amounts in thousands):
As of
Carrying and
December 31, Fair Value
Balance Sheet
Classification
Financial assets:
Interest rate swaps
Financial liabilities:
Interest rate swaps
2020
2019
2020
2019
$
$
— Other assets
87
5,012 Other liabilities
1,715
Fair values are approximated using widely accepted valuation techniques including discounted cash flow
analysis on the expected cash flows of the derivatives. This analysis reflects the contractual terms of the
derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate
curves and implied volatilities.
Although the Company has determined the majority of the inputs used to value its derivatives fall within
Level 2 of the fair value hierarchy, the credit valuation adjustments associated with it use Level 3 inputs, such as
estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparty. As
of December 31, 2020, the Company has assessed and determined the impact of the credit valuation adjustments
on the overall valuation of its derivative positions is not significant. As a result, the Company determined its
derivative valuation is classified in Level 2 of the fair value hierarchy. The Company does not currently own any
financial instruments that are measured on a recurring basis and that are classified as Level 1 or 3.
The following table presents the effect of the Company’s derivative financial instruments on the
consolidated statements of income for the periods presented (amounts in thousands):
Year Ended December 31,
2019
2018
2020
One Liberty Properties Inc. and Consolidated Subsidiaries
Amount of (loss) gain recognized on derivatives in other
comprehensive (loss) income
Amount of reclassification from Accumulated other comprehensive
(loss) income into Interest expense
Unconsolidated Joint Ventures (Company's share)
Amount of gain recognized on derivatives in other comprehensive
income
Amount of reclassification from Accumulated other comprehensive
income into Equity in earnings of unconsolidated joint ventures
$
(5,481) $
(4,224) $
1,870
(2,098)
(702)
98
n/a
n/a
n/a $
69
n/a
103
F-27
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 9—FAIR VALUE MEASUREMENTS (Continued)
During 2020, 2019 and 2018, the Company (including one of its unconsolidated joint ventures in 2018)
discontinued hedge accounting on several interest rate swaps as the forecasted hedged transactions were no
longer probable of occurring. As a result, during 2020, 2019 and 2018, the Company reclassified $776,000 and
$816,000 of realized loss and $505,000 of realized gain, respectively, from Accumulated other comprehensive
income to earnings.
During the twelve months ending December 31, 2021, the Company estimates an additional $1,589,000 will
be reclassified from Accumulated other comprehensive income as an increase to Interest expense.
The derivative agreements in effect at December 31, 2020 provide that if the wholly-owned subsidiary of the
Company which is a party to such agreement defaults or is capable of being declared in default on any of its
indebtedness, then a default can be declared on such subsidiary’s derivative obligation. In addition, the Company
is a party to the derivative agreements and if there is a default by the subsidiary on the loan subject to the
derivative agreement to which the Company is a party and if there are swap breakage losses on account of the
derivative being terminated early, the Company could be held liable for such swap breakage losses.
As of December 31, 2020 and 2019, the fair value of the derivatives in a liability position, including accrued
interest of $120,000 and $27,000, respectively, but excluding any adjustments for non-performance risk, was
approximately $5,314,000 and $1,832,000, respectively. In the event the Company had breaches of any of the
contractual provisions of the derivative contracts, it would be required to settle its obligations thereunder at their
termination liability value of $5,314,000 and $1,832,000 as of December 31, 2020 and 2019, respectively. This
termination liability value, net of adjustments for non-performance risk of $182,000 and $90,000, is included in
Accrued expenses and other liabilities on the consolidated balance sheets at December 31, 2020 and 2019,
respectively.
NOTE 10—RELATED PARTY TRANSACTIONS
Compensation and Services Agreement
Pursuant to the compensation and services agreement with Majestic Property Management Corp.
(“Majestic”), Majestic provides the Company with the services of executive, administrative, legal, accounting,
clerical and property management personnel, as well as property acquisition, sale and lease consulting and
brokerage services, consulting services with respect to mortgage financings and construction supervisory services
(collectively, the “Services”). Majestic is wholly-owned by the Company’s vice-chairman and certain of the
Company’s executive officers are officers of, and are compensated by, Majestic.
In consideration for the Services, the Company paid Majestic $3,011,000 in 2020, $2,826,000 in 2019 and
$2,745,000 in 2018. Included in these fees are $1,265,000 in 2020, $1,307,000 in 2019 and $1,226,000 in 2018,
of property management costs. The amounts paid for property management services is based on 1.5% and 2.0%
of the rental payments (including tenant reimbursements) actually received by the Company from net lease
tenants and operating lease tenants, respectively. The Company does not pay Majestic with respect to properties
managed by third parties. The Company also paid Majestic, pursuant to the compensation and services agreement
$275,000 in 2020 and $216,000 in each of 2019 and 2018 for the Company’s share of all direct office expenses,
including rent, telephone, postage, computer services, internet usage and supplies. The Company does not pay
Majestic for such services except as described in this paragraph.
F-28
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 10—RELATED PARTY TRANSACTIONS (Continued)
Executive officers and others providing services to the Company under the compensation and services
agreement were awarded shares of restricted stock and RSUs under the Company’s stock incentive plans
(described in Note 12). The related expense charged to the Company’s operations was $2,349,000, $1,973,000
and $1,765,000 in 2020, 2019 and 2018, respectively.
The amounts paid under the compensation and services agreement (except for the property management
costs which are included in Real estate expenses) and the costs of the stock incentive plans are included in
General and administrative expense on the consolidated statements of income for 2020, 2019 and 2018.
Joint Venture Partners and Affiliates
During 2020, 2019 and 2018, the Company paid an aggregate of $76,000, $82,000 and $107,000,
respectively, to its consolidated joint venture partners or their affiliates (none of whom are officers, directors, or
employees of the Company) for property management services, which are included in Real estate expenses on
the consolidated statements of income.
The Company’s unconsolidated joint ventures paid management fees of $93,000, $117,000 and $169,000 to
the other partner of the ventures, which reduced Equity in earnings on the consolidated statements of income by
$47,000, $59,000 and $85,000 during 2020, 2019 and 2018, respectively. In addition, (i) in 2020, an
unconsolidated joint venture of the Company paid a leasing commission and development fee totalling $75,000
to the other partner of the venture, which is in Investment in unconsolidated joint ventures on the consolidated
balance sheet as of December 31, 2020 and (ii) in 2019, in connection with a purchase of a property, the
Company paid an unconsolidated joint venture partner a $64,000 brokerage commission which is capitalized to
the real estate assets acquired.
Other
During 2020, 2019 and 2018, the Company paid fees of (i) $298,000, $289,000 and $276,000, respectively,
to the Company’s chairman and (ii) $119,000, $116,000 and $110,000, respectively, to the Company’s vice-
chairman. These fees are included in General and administrative expense on the consolidated statements of
income.
At December 31, 2020 and 2019, Gould Investors L.P. (“Gould Investors”), a related party, owned
1,894,883 shares of the outstanding common stock of the Company, or approximately 9.2% and 9.0%,
respectively.
The Company obtains its property insurance in conjunction with Gould Investors and reimburses Gould
Investors annually for the Company’s insurance cost relating to its properties. Amounts reimbursed to Gould
Investors were $1,168,000, $1,025,000 and $912,000 during 2020, 2019 and 2018, respectively. Included in
Real estate expenses on the consolidated statements of income is insurance expense of $1,091,000, $927,000 and
$877,000 during 2020, 2019 and 2018, respectively. The balance of the amounts reimbursed to Gould Investors
represents prepaid insurance and is included in Other assets on the consolidated balance sheets.
F-29
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 11—EARNINGS PER COMMON SHARE
Basic earnings per share was determined by dividing net income allocable to common stockholders for each
year by the weighted average number of shares of common stock outstanding during the applicable year. Net
income is also allocated to the unvested restricted stock outstanding during each year, as the restricted stock is
entitled to receive dividends and is therefore considered a participating security. As of December 31, 2020, the
shares of common stock underlying the RSUs awarded between 2018 and 2020 under the 2019 and 2016
Incentive Plans (See Note 12) are excluded from the basic earnings per share calculation, as these units are not
participating securities.
Diluted earnings per share reflects the potential dilution that could occur if securities or other rights
exercisable for, or convertible into, common stock were exercised or converted or otherwise resulted in the
issuance of common stock that shared in the earnings of the Company.
The following table provides a reconciliation of the numerator and denominator of earnings per share
calculations (amounts in thousands, except per share amounts):
Year Ended December 31,
2019
2018
2020
Numerator for basic and diluted earnings per share:
Net income
Less net income attributable to non-controlling interests
Less earnings allocated to unvested restricted stock (a)
Net income available for common stockholders: basic and diluted $
$
27,413
(6)
(1,263)
26,144
$
$
18,544
(533)
(1,227)
16,784
$
$
21,564
(899)
(1,173)
19,492
Denominator for basic earnings per share:
Weighted average number of common shares outstanding
19,571
19,090
18,575
Effect of dilutive securities:
RSUs
Denominator for diluted earnings per share:
Weighted average number of shares
28
29
13
19,599
19,119
18,588
Earnings per common share, basic
Earnings per common share, diluted
$
$
1.34
1.33
$
$
0.88
0.88
$
$
1.05
1.05
(a) Represents an allocation of distributed earnings to unvested restricted stock that, as participating securities,
are entitled to receive dividends.
F-30
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 11—EARNINGS PER COMMON SHARE (Continued)
The following table identifies the number of shares of common stock underlying the RSUs that are included
in the calculation, on a diluted basis, of the weighted average number of shares of common stock for such years:
Year Ended December 31, 2020 (a):
Total Number of
Shares Included Based on
Date of Award
July 1, 2018
July 1, 2019
August 3, 2020
Totals
Underlying
Shares (b)(c)
Return on
Stockholder
Capital Metric Return Metric
—
—
37,513
37,513
24,823
23,233
37,513
85,569
Shares
Total
24,823
23,233
75,026
123,082
Excluded (d)
48,927
51,793
—
100,720
73,750
75,026
75,026
223,802
Year Ended December 31, 2019 (e):
Total Number of
Shares Included Based on
Date of Award
September 26, 2017 (f)
July 1, 2018
July 1, 2019
Totals
Underlying
Shares (b)(c)
Return on
Stockholder
Capital Metric Return Metric
31,498
3,273
—
34,771
22,129
14,755
728
37,612
76,250
73,750
75,026
225,026
Year Ended December 31, 2018 (g):
Total Number of
Shares Included Based on
Date of Award
September 26, 2017 (f)
July 1, 2018
Totals
Underlying
Shares (b)
Return on
Stockholder
Capital Metric Return Metric
4,462
—
4,462
34,633
33,388
68,021
76,250
76,250
152,500
Shares
Total
53,627
18,028
728
72,383
Excluded (d)
22,623
55,722
74,298
152,643
Shares
Total
39,095
33,388
72,483
Excluded (d)
37,155
42,862
80,017
(a) Reflects the number of shares underlying RSUs that would be issued assuming the measurement date used to
determine whether the applicable conditions are satisfied is December 31, 2020.
(b) The RSUs awarded in 2018, 2019 and 2020 vest, subject to satisfaction of the applicable market and/or
performance conditions, on June 30, 2021, 2022 and 2023, respectively (see Note 12).
(c) During 2019, 2,500 shares of the 2018 award and 2,750 shares of the 2019 award were forfeited.
(d) Excluded as the applicable conditions had not been met for these shares at the respective measurement dates.
(e) Reflects the number of shares underlying RSUs that would be issued assuming the measurement date used to
determine whether the applicable conditions are satisfied is December 31, 2019.
(f) With respect to the RSUs awarded September 26, 2017, 24,343 shares vested and 51,907 shares were forfeited in
June 2020; such shares were issued in August 2020 (see Note 12).
(g) Reflects the number of shares underlying RSUs that would be issued assuming the measurement date used to
determine whether the applicable conditions are satisfied is December 31, 2018.
There were no options outstanding to purchase shares of common stock or other rights exercisable for, or
convertible into, common stock in 2020, 2019 and 2018.
F-31
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 12—STOCKHOLDERS’ EQUITY
Stock Based Compensation
The Company’s 2019 Incentive Plan (“Plan”), approved by the Company’s stockholders in June 2019,
permits the Company to grant, among other things, stock options, restricted stock, RSUs, performance share
awards and dividend equivalent rights and any one or more of the foregoing to its employees, officers, directors
and consultants. A maximum of 750,000 shares of the Company’s common stock is authorized for issuance
pursuant to this Plan. As of December 31, 2020, an aggregate of 299,602 shares subject to awards in the form of
restricted stock (149,550 shares) and RSUs (150,052 shares) are outstanding under the Plan. On January 6, 2021,
151,500 restricted shares were issued pursuant to this Plan, having an aggregate value of approximately
$3,082,000 and are scheduled to vest in January 2026.
Under the Company’s 2016 and 2012 equity incentive plans (collectively, the “Prior Plans”), as of December
31, 2020, (i) an aggregate of 625,875 shares in the form of restricted stock (552,125 shares) and RSUs (73,750
shares) are outstanding and have not yet vested, and (ii) with respect to 76,250 shares of common stock
underlying RSUs that had been granted in 2017, 24,343 shares were deemed to have vested as of June 30, 2020,
and in August 2020 such shares were issued after the Compensation Committee determined that the metrics with
respect to such shares had been satisfied. RSUs with respect to the 51,907 share balance were forfeited. No
additional awards may be granted under the Prior Plans.
For accounting purposes, the restricted stock is not included in the shares shown as outstanding on the
balance sheet until they vest; however, dividends are paid on the unvested shares. The restricted stock grants are
charged to General and administrative expense over the respective vesting periods based on the market value of
the common stock on the grant date. Unless earlier forfeited because the participant’s relationship with the
Company terminated, unvested restricted stock awards vest five years from the grant date, and under certain
circumstances may vest earlier.
In 2020, 2019 and 2018, the Company granted RSUs exchangeable for up to 75,026, 77,776 and 76,250
shares, respectively, of common stock upon satisfaction, through June 30, 2023, June 30, 2022 and June 30,
2021, respectively, of specified conditions. Specifically, up to 50% of these RSUs vest upon achievement of
metrics related to average annual total stockholder return (the “TSR Awards”), which metrics meet the definition
of a market condition, and up to 50% vest upon achievement of metrics related to average annual return on
capital (the “ROC Awards”), which metrics meet the definition of a performance condition. The holders of the
RSUs are not entitled to dividends or to vote the underlying shares until such RSUs vest and shares are issued.
Accordingly, the shares underlying these RSUs are not included in the shares shown as outstanding on the
balance sheet. For the TSR awards, a third party appraiser prepared a Monte Carlo simulation pricing model to
determine the fair value, which is recognized ratably over the service period. The Monte Carlo valuation
consisted of computing the grant date fair value of the awards using the Company’s simulated stock price. For
these TSR awards, the per unit or share fair value was estimated using the following assumptions:
TSR Award Year
2020
2019
2018
Expected Life (yrs) Dividend Rate Risk-Free Interest Rate Expected Price Volatility (a)
3
3
3
10.40%
6.22%
6.82%
0.10% - 0.18%
1.79% - 2.07%
2.18% - 2.70%
51.24% - 77.92%
21.37% - 23.04%
22.29% - 25.99%
(a) Calculated based on the historical and implied volatility.
For the ROC Awards, the fair value is based on the market value on the date of grant and the performance
assumptions are re-evaluated quarterly. The Company does not recognize expense on ROC Awards which it does
not expect to vest. During 2019, RSUs exchangeable in 2021 and 2022 for an aggregate of 5,250 shares were
forfeited.
F-32
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 12—STOCKHOLDERS’ EQUITY (Continued)
As of December 31, 2020, based on performance and market assumptions, the fair value of the RSUs
granted in 2020, 2019 and 2018 is $850,000, $1,085,000 and $1,051,000, respectively. Recognition of such
deferred compensation will be charged to General and administrative expense over the respective three year
performance cycle. None of these RSUs were forfeited or vested during the year ended December 31, 2020.
The following is a summary of the activity of the equity incentive plans:
Year Ended December 31,
2019
2018
2020
Restricted stock grants:
Number of shares
Average per share grant price
Deferred compensation to be recognized over vesting period
Number of non-vested shares:
Non-vested beginning of year
Grants
Vested during year
Forfeitures
Non-vested end of year
150,050
144,750
149,550
$
25.31
$ 4,202,000 $ 3,856,000 $ 3,664,000
25.70 $
28.10 $
674,250
149,550
(122,125)
—
701,675
651,250
150,050
(114,650)
(12,400)
674,250
612,900
144,750
(106,000)
(400)
651,250
RSU grants:
Number of underlying shares
Average per share grant price
Deferred compensation to be recognized over vesting period
75,026
77,776
17.31 $
$
28.96 $
$ 850,000 $ 865,000 $
76,250
26.41
952,000
Number of non-vested shares:
Non-vested beginning of year
Grants
Vested during year
Forfeitures
Non-vested end of year
225,026
75,026
(24,343)
(51,907)
223,802
152,500
77,776
—
(5,250)
225,026
76,250
76,250
—
—
152,500
Restricted stock and RSU grants:
Weighted average per share value of non-vested shares
(based on grant price)
Value of stock vested during the period (based on grant price)
Weighted average per share value of shares forfeited during the
period (based on grant price)
The total charge to operations:
Outstanding restricted stock grants
Outstanding RSUs
Total charge to operations
24.98 $
$
23.83
$ 3,589,000 $ 2,365,000 $ 2,289,000
24.96 $
$
24.03 $
25.40 $
23.59
$ 3,529,000 $ 3,229,000 $ 3,028,000
482,000
1,157,000
$ 4,686,000 $ 3,870,000 $ 3,510,000
641,000
As of December 31, 2020, total compensation costs of $7,814,000 and $1,449,000 related to non-vested
restricted stock awards and RSUs, respectively, have not yet been recognized. These compensation costs will be
charged to General and administrative expense over the remaining respective vesting periods. The weighted
average vesting period is 2.1 years for the restricted stock and 1.5 years for the RSUs.
F-33
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 12—STOCKHOLDERS’ EQUITY (Continued)
Common Stock Dividend Distributions
In each of 2019 and 2018, the Board of Directors declared an aggregate $1.80 per share in cash distributions.
The following table details the Company’s dividend activity for the year ended December 31, 2020 (amounts in
thousands, except per share data).
Total
Declaration Date (a)
Dividend Payable Date
9,037 April 7, 2020
$
March 13, 2020
9,068
June 10, 2020 (b)(c)
July 31, 2020
$
9,198 October 29, 2020 September 21, 2020
September 9, 2020 (b)(d) $
January 7, 2021 December 17, 2020
9,261
$
December 2, 2020
March 24, 2020
June 22, 2020
Record Date
Dividend Paid
Cash % Stock %
$
—
50.0 $
25.0 $
$
—
100.0
50.0
75.0
100.0
Cash
Issued
Stock
Issued
—
263
141
—
9,037
4,537
6,901
9,261
(a) A dividend of $0.45 per share was declared in each period indicated.
(b) Stockholders were entitled to elect whether the dividend payable to them would be paid in cash or shares of
the Company’s common stock at the percentages indicated, subject to certain limitations.
(c) The shares of common stock issued were valued at approximately $17.22 per share.
(d) The shares of common stock issued were valued at approximately $16.27 per share.
On March 12, 2021, the Board of Directors declared a quarterly cash dividend of $0.45 per share on the
Company’s common stock, totaling approximately $9,330,000. The quarterly dividend is payable on April 7,
2021 to stockholders of record on March 24, 2021.
Change in Authorized Capital
On July 8, 2020, the Company filed an amended and restated charter with the Maryland State Department of
Assessments and Taxation, which, among other things, increased the number of shares of common stock the
Company is authorized to issue from 25,000,000 shares to 50,000,000 shares.
Dividend Reinvestment Plan
On June 10, 2020, the Company temporarily suspended the dividend reinvestment feature of its Dividend
Reinvestment Plan (the “DRP”). The DRP, among other things, provided stockholders with the opportunity to
reinvest all, or a portion of, their cash dividends paid on the Company’s common stock in additional shares of its
common stock, at a discount of up to 5% from the market price (as such price is calculated pursuant to the DRP).
The discount was determined in the Company’s sole discretion and had been offered at a 5% discount from
market. Under the DRP, the Company issued 77,000, 220,000 and 243,000 shares of common stock during 2020,
2019 and 2018, respectively.
Shares Issued Through the At-the-Market Equity Offering Program
The Company did not sell any shares during the year ended December 31, 2020. During 2019, the Company
sold 180,120 shares for proceeds of $5,392,000, net of commissions of $54,000, and incurred offering costs of
$192,000 for professional fees. During 2018, the Company sold 126,300 shares for proceeds of $3,245,000, net
of commissions of $33,000, and incurred offering costs of $107,000 for professional fees.
F-34
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 13—COMMITMENTS AND CONTINGENCIES
The Company maintains a non-contributory defined contribution pension plan covering eligible employees.
Contributions by the Company are made through a money purchase plan, based upon a percent of the qualified
employees’ total salary (subject to the maximum amount allowed by law). Pension expense approximated
$307,000, $304,000 and $295,000 for 2020, 2019 and 2018, respectively, and is included in General and
administrative expense in the consolidated statements of income.
The Company pays, with respect to one of its real estate properties, annual fixed leasehold rent of $463,867
through July 31, 2024. The Company has the right to extend the lease for up to four 5-year renewal options and
one seven-month renewal option.
As discussed in Note 6, the Company (i) provided its land in Beachwood, Ohio as collateral for the
owner/operator’s mortgage loan and accordingly, the land position is subordinate to the mortgage, and (ii) has
agreed, in its discretion, to fund 78% of (a) any further operating expense shortfalls at the property and (b) any
capital expenditures required at the property.
In the ordinary course of business, the Company is party to various legal actions which management believes
are routine in nature and incidental to the operation of the Company’s business. Management believes that the
outcome of the proceedings will not have a material adverse effect upon the Company’s consolidated financial
statements taken as a whole.
NOTE 14—INCOME TAXES
The Company elected to be taxed as a REIT under the Internal Revenue Code, commencing with its taxable
year ended December 31, 1983. To qualify as a REIT, the Company must meet a number of organizational and
operational requirements, including a requirement that it currently distribute at least 90% of its ordinary taxable
income to its stockholders. As a REIT, the Company generally will not be subject to corporate level federal, state
and local income tax on taxable income it distributes currently to its stockholders. If the Company fails to
qualify as a REIT in any taxable year, it will be subject to federal, state and local income taxes at regular
corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for
four subsequent taxable years. It is management’s current intention to adhere to these requirements and maintain
the Company’s REIT status.
Even though the Company qualifies for taxation as a REIT, the Company is subject to certain state and local
taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. As
of December 31, 2020, tax returns for the calendar years 2017 through 2020 remain subject to examination by the
Internal Revenue Service and various state and local tax jurisdictions.
During 2020, 2019 and 2018, the Company did not incur any federal income tax expense. The Company
does not have any deferred tax assets or liabilities at December 31, 2020 and 2019.
Approximately 47% and 8% of the distributions made during 2020 represent capital gains and return of
capital to stockholders, respectively, with the balance representing ordinary income. Approximately 27% of the
distributions made during 2019 represent return of capital to stockholders and approximately 12% of the
distributions made during 2018 represent capital gains to stockholders. The balance of the distributions represent
ordinary income. In 2020, 2019 and 2018, the ordinary income portion of the distributions are considered
qualified REIT dividends and will be taxed at a rate reduced by up to 20% pursuant to Internal Revenue Code
Section 199A.
The Company treats depreciation expense, straight-line rent adjustments and certain other items differently
for tax purposes than for financial reporting purposes. Therefore, its taxable income and dividends paid
deduction differs from its financial statement income.
F-35
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 14—INCOME TAXES (Continued)
The following table reconciles dividends declared with the dividends paid deduction for the years indicated
(amounts in thousands):
Dividends declared
Dividend reinvestment plan (a)
Less: Spillover dividends designated to previous year
Less: Spillover dividends designated to following year (b)
Less: Return of capital
Plus: Dividends designated from prior year
Plus: Dividends designated from following year
Dividends paid deduction
2018
Actual
2019
2020
Estimate Actual
$ 36,564 $ 35,663 $ 34,652
313
34,965
(10,263)
(549)
—
—
—
$ 33,053 $ 17,641 $ 24,153
47
36,611
—
(9,261)
(3,273)
8,976
—
247
35,910
—
(8,976)
(9,842)
549
—
(a) Reflects the up to 5% discount on common stock purchased through the dividend reinvestment
plan.
(b) The entire dividend paid in January 2021 and 2020 and a portion of the dividend paid in January
2019 are considered 2021, 2020 and 2019 dividends, respectively, as such dividends were in
excess of the Company’s earnings and profits during 2020, 2019 and 2018, respectively.
NOTE 15—SUBSEQUENT EVENTS
Subsequent events have been evaluated and, except as previously disclosed, there were no other events
relative to the consolidated financial statements that require additional disclosure.
F-36
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2020
NOTE 16—QUARTERLY FINANCIAL DATA (Unaudited):
(In Thousands, Except Per Share Data)
2020
Total revenues
Gain on sale of real estate, net
Net income
Net income attributable to One Liberty Properties, Inc.
Weighted average number of common shares outstanding:
March 31 June 30 Sept. 30 Dec. 31 For Year
$ 21,239 $ 20,861 $ 21,071 $ 18,732 $ 81,903
$ 4,252 $
— $ 10,316 $ 2,712 $ 17,280
$ 7,831 $ 2,285 $ 13,726 $ 3,571 $ 27,413
$ 7,826 $ 2,284 $ 13,725 $ 3,572 $ 27,407
Quarter Ended
Total
Basic
Diluted
19,361
19,374
19,445
19,505
19,640
19,686
19,835
19,871
19,571
19,599
Net income per common share attributable to common
stockholders:
Basic
Diluted
$
$
.39 $
.39 $
.10 $
.10 $
.67 $
.67 $
.16 $
.16 $
1.34 (a)
1.33 (a)
2019
Total revenues
Gain on sale of real estate, net
Net income
Net income attributable to One Liberty Properties, Inc.
Weighted average number of common shares outstanding:
Basic
Diluted
Net income per common share attributable to common
stockholders:
Basic
Diluted
Quarter Ended
Total
March 31 June 30 Sept. 30 Dec. 31 For Year
$ 21,155 $ 20,719 $ 20,414 $ 22,448 $ 84,736
684 $ 4,327
$
$ 4,011 $ 4,558 $ 5,097 $ 4,878 $ 18,544
$ 3,971 $ 4,112 $ 5,118 $ 4,810 $ 18,011
— $ 1,099 $ 2,544 $
18,894
18,993
19,023
19,129
19,191
19,239
19,245
19,266
19,090
19,119
$
$
.19 $
.19 $
.20 $
.20 $
.25 $
.25 $
.23 $
.23 $
.88 (a)
.88 (a)
(a) Calculated on weighted average shares outstanding for the year.
F-37
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Schedule III—Consolidated Real Estate and Accumulated Depreciation
December 31, 2020
(Amounts in Thousands)
Initial Cost to Company
Cost
Capitalized
Subsequent to
Acquisition
Building and
Improvements Improvements
Gross Amount at Which Carried
at December 31, 2020
Building &
Improvements
Total
Land
Accumulated
Date of
Date
Depreciation (1) Construction Acquired
Encumbrances
$
— $
Land
Type
Health & Fitness
Health & Fitness
Health & Fitness
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Location
Tucker, GA
Hamilton, OH
Secaucus, NJ
Columbus, OH
West Palm Beach, FL
New Hyde Park, NY
Ronkonkoma, NY
Hauppauge, NY
Melville, NY
Saco, ME
Baltimore, MD (2)
Durham, NC
Pinellas Park, FL
Miamisburg, OH
Fort Mill, SC
Indianapolis, IN
Fort Mill, SC
New Hope, MN
Louisville, KY
Louisville, KY
McCalla, AL
St. Louis, MO
Greenville, SC
Greenville, SC
El Paso, TX
Lebanon, TN
Huntersville, NC
Pittston, PA
Ankeny, IA
Memphis, TN
Pennsburg, PA
Plymouth, MN
Englewood, CO
Moorestown, NJ
Moorestown, NJ
Bakersfield, CA
Green Park, MO
Greenville, SC
Nashville, TN
Wauconda, IL
Bensalem, PA
Chandler, AZ
LaGrange, GA
Shakopee, MN
4,434
8,028
—
—
2,345
5,446
24,954
2,490
5,306
18,860
2,534
2,183
—
7,487
5,402
22,811
3,960
2,083
—
9,443
10,706
4,672
5,192
13,243
20,792
4,707
6,587
8,030
4,864
7,808
3,160
8,010
3,812
8,481
—
6,148
—
5,022
—
3,958
5,048
3,111
4,872
807 $
1,483
5,449
435
181
182
1,042
1,951
774
1,027
6,474
1,043
1,231
165
1,840
1,224
1,804
881
578
51
1,588
3,728
693
528
3,691
2,094
1,046
999
1,351
140
1,776
1,121
1,562
1,822
1,443
1,988
1,421
186
1,058
67
1,602
1,335
297
1,877
3,027 $
5,953
9,873
1,703
724
728
4,171
10,954
3,029
3,623
25,282
2,404
1,669
1,348
12,687
6,935
33,650
6,064
3,727
230
14,682
13,006
6,893
8,074
17,904
30,039
6,674
9,922
11,607
7,952
11,126
4,429
11,300
5,056
10,898
9,998
7,835
6,419
6,350
3,423
4,323
7,379
4,500
5,462
3,420 $
—
—
52
235
281
2,920
9,600
1,170
2,050
—
44
—
83
55
—
—
81
34
—
—
739
236
127
350
44
—
250
—
—
—
—
—
—
—
—
—
—
—
41
—
—
—
10
F-38
807 $
1,483
5,449
435
181
182
1,042
1,951
774
1,027
6,474
1,043
1,231
165
1,840
1,224
1,804
881
578
51
1,588
3,728
693
528
3,691
2,094
1,046
999
1,351
140
1,776
1,121
1,562
1,822
1,443
1,988
1,421
186
1,058
67
1,602
1,335
297
1,877
6,447 $
5,953
9,873
1,755
959
1,009
7,091
20,554
4,199
5,673
25,282
2,448
1,669
1,431
12,742
6,935
33,650
6,145
3,761
230
14,682
13,745
7,129
8,201
18,254
30,083
6,674
10,172
11,607
7,952
11,126
4,429
11,300
5,056
10,898
9,998
7,835
6,419
6,350
3,464
4,323
7,379
4,500
5,472
7,254 $
7,436
15,322
2,190
1,140
1,191
8,133
22,505
4,973
6,700
31,756
3,491
2,900
1,596
14,582
8,159
35,454
7,026
4,339
281
16,270
17,473
7,822
8,729
21,945
32,177
7,720
11,171
12,958
8,092
12,902
5,550
12,862
6,878
12,341
11,986
9,256
6,605
7,408
3,531
5,925
8,714
4,797
7,349
2,857
1,612
2,000
875
432
477
2,882
7,350
1,671
1,488
8,875
690
392
324
2,632
1,672
7,781
965
572
34
2,044
1,974
896
1,032
2,180
3,338
638
958
1,055
665
861
294
649
283
599
536
412
334
263
153
169
299
171
187
1988
2008
1986
1979
1973
1960
1986
1982
1982
2001
1960
1991
1995
1987
1992
1997
1997
1967
1974
1974
2003
1969
1997
2000
1997
1996
2014
1990
2016
1979
1986
1978
2013
1990
1972
1980
2008
2008
1974
1998
1975
2004
2013
1998
2002
2011
2012
1995
1998
1999
2000
2000
2003
2006
2006
2011
2012
2012
2013
2013
2013
2014
2015
2015
2015
2015
2016
2016
2016
2016
2017
2017
2017
2017
2018
2018
2018
2018
2018
2018
2018
2018
2019
2019
2019
2019
2019
2019
Type
Industrial
Industrial
Industrial
Industrial
Industrial
Office
Other
Other
Restaurant
Restaurant
Restaurant
Restaurant
Restaurant
Restaurant
Restaurant
Restaurant
Restaurant
Restaurant
Restaurant
Restaurant
Restaurant
Restaurant
Restaurant
Restaurant
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Location
Encumbrances
Land
Initial Cost to Company
Cost
Capitalized
Subsequent to
Acquisition
Building and
Improvements Improvements
Gross Amount at Which Carried
at December 31, 2020
Building &
Improvements
Total
Land
Accumulated
Date of
Date
Depreciation (1) Construction Acquired
Rincon, GA
Chandler, AZ
Ashland, VA
Lowell, AR
Joppa, MD
Brooklyn, NY
Newark, DE
Beachwood, OH
Hauppauge, NY
Palmyra, PA
Reading, PA
Reading, PA
Hanover, PA
Gettysburg, PA
Trexlertown, PA
Carrollton, GA
Cartersville, GA
Kennesaw, GA
Lawrenceville, GA
Concord, NC
Myrtle Beach, SC
Greensboro, NC
Richmond, VA
Indianapolis, IN
Seattle, WA
Rosenberg, TX
Ft. Myers, FL
Selden, NY
Batavia, NY
Champaign, IL
El Paso, TX
Somerville, MA
Hyannis, MA
Marston Mills, MA
Everett, MA
Kennesaw, GA
Royersford, PA
Monroeville, PA
Bolingbrook, IL
Crystal Lake, IL
Lawrence, KS
Greensboro, NC
Highlands Ranch, CO
Woodbury, MN
Cuyahoga Falls, OH
Hilliard, OH
Port Clinton, OH
South Euclid, OH
4,000
—
5,592
12,266
8,777
1,692
1,459
—
—
663
655
645
725
743
632
1,428
1,351
1,107
1,063
1,394
1,394
3,045
—
—
—
—
—
2,528
—
1,371
10,179
—
—
—
—
4,961
19,207
—
—
—
—
1,250
—
2,700
1,016
900
871
987
61
1,164
391
1,687
3,815
1,381
935
13,901
725
650
655
618
736
754
800
796
786
702
866
999
1,102
1,770
1,680
853
201
216
1,013
572
515
791
2,821
510
802
461
1,935
1,501
19,538
450
834
615
134
1,046
2,361
1,190
71
300
52
230
5,968
1,691
7,901
15,188
8,142
5,447
3,643
—
2,963
650
625
643
686
704
439
1,458
1,346
916
899
1,076
1,161
1,237
1,341
1,465
189
863
4,054
2,287
2,061
3,165
11,123
1,993
2,324
2,313
—
4,349
3,150
863
1,887
1,899
938
1,552
2,924
4,003
1,371
1,077
1,187
1,566
—
4
—
—
1,473
3,013
278
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
35
66
—
150
—
530
2,587
24
—
—
—
1,138
524
—
101
—
157
29
296
—
—
—
—
53
F-39
61
1,164
391
1,687
3,815
1,381
935
13,901
725
650
655
618
736
754
800
796
786
702
866
999
1,102
1,770
1,680
853
201
216
1,013
572
515
791
2,821
510
802
461
1,935
1,501
19,538
450
834
615
134
1,046
2,361
1,190
71
300
52
230
5,968
1,695
7,901
15,188
9,615
8,460
3,921
—
2,963
650
625
643
686
704
439
1,458
1,346
916
899
1,076
1,161
1,237
1,341
1,465
224
929
4,054
2,437
2,061
3,695
13,710
2,017
2,324
2,313
—
5,487
3,674
863
1,988
1,899
1,095
1,581
3,220
4,003
1,371
1,077
1,187
1,619
6,029
2,859
8,292
16,875
13,430
9,841
4,856
13,901
3,688
1,300
1,280
1,261
1,422
1,458
1,239
2,254
2,132
1,618
1,765
2,075
2,263
3,007
3,021
2,318
425
1,145
5,067
3,009
2,576
4,486
16,531
2,527
3,126
2,774
1,935
6,988
23,212
1,313
2,822
2,514
1,229
2,627
5,581
5,193
1,442
1,377
1,239
1,849
183
55
180
364
1,747
4,314
1,617
—
1,120
170
163
169
178
182
114
379
373
227
264
240
270
329
225
297
162
578
2,445
1,314
1,127
1,853
7,121
900
753
744
—
1,776
1,008
229
551
551
220
322
612
756
163
131
145
192
1998
2007
2007
2017
1994
1973
1996
N/A
1992
1981
1981
1983
1992
1991
1994
1996
1995
1989
1988
2000
1978
1983
1983
1982
1986
1994
1995
1997
1998
1985
1974
1993
1998
1998
N/A
1995
2001
1994
2001
1997
1915
2002
1995
2006
2004
2007
2005
1975
2019
2019
2020
2020
2014
1998
2003
2016
2005
2010
2010
2010
2010
2010
2010
2012
2012
2012
2012
2013
2013
2013
2013
2014
1987
1995
1996
1999
1999
1999
2000
2003
2008
2008
2008
2008
2010
2010
2011
2011
2012
2014
2014
2014
2016
2016
2016
2016
Initial Cost to Company
Encumbrances
Land
Building and
Improvements Improvements
Cost
Capitalized
Subsequent to
Acquisition
Gross Amount at Which Carried
at December 31, 2020
Building &
Improvements
Total
Land
Accumulated
Depreciation (1) Construction Acquired
Date of
Date
Location
St Louis Park, MN
Deptford, NJ
Cape Girardeau, MO
Littleton, CO
Type
Retail
Retail
Retail
Retail
Retail - Supermarket West Hartford, CT
Retail - Supermarket West Hartford, CT
Retail - Supermarket Philadelphia, PA
Retail-Furniture
Retail-Furniture
Retail-Furniture
Retail-Furniture
Retail-Furniture
Retail-Furniture
Retail-Furniture
Retail-Furniture
Retail-Furniture
Retail-Furniture
Retail-Furniture
Retail-Furniture
Retail-Furniture
Retail-Furniture
Retail-Office Supply Lake Charles, LA (4)(5)
Retail-Office Supply Chicago, IL (5)
Retail-Office Supply Cary, NC (5)
Retail-Office Supply Eugene, OR (5)
Retail-Office Supply El Paso, TX (5)
Greensboro, NC
Theater
Indianapolis, IN
Theater
Columbus, OH
Duluth, GA (3)
Fayetteville, GA (3)
Wichita, KS (3)
Lexington, KY (3)
Bluffton, SC (3)
Amarillo, TX (3)
Austin, TX (3)
Tyler, TX (3)
Newport News, VA (3)
Richmond, VA (3)
Virginia Beach, VA (3)
Gurnee, IL
Naples, FL
$
—
2,529
1,042
10,277
15,675
—
3,687
—
1,368
1,718
2,092
1,406
1,036
1,512
2,792
1,813
1,321
1,525
1,501
—
1,885
4,673
3,427
2,892
2,574
2,250
—
3,964
433,549 $
3,388
572
545
6,005
9,296
2,881
1,793
1,445
778
976
1,189
800
589
860
1,587
1,031
751
867
854
834
3,070
1,167
3,877
1,129
1,952
1,035
—
3,099
190,391 $
13,088
1,779
1,547
11,272
4,813
94
5,640
5,431
3,436
4,308
5,248
3,532
2,600
3,810
7,010
4,554
3,316
3,829
3,770
3,635
2,846
3,887
2,256
3,736
2,096
2,700
8,328
5,225
609,545 $
152
705
—
451
261
326
80
460
—
—
—
—
—
—
—
—
—
—
—
—
189
1,199
—
—
—
—
3,000
19
39,122 $
3,388
572
545
6,005
9,296
2,881
1,793
1,445
778
976
1,189
800
589
860
1,587
1,031
751
867
854
834
3,070
1,167
3,877
1,129
1,952
1,035
—
3,099
190,391 $
13,240
2,484
1,547
11,723
5,074
420
5,720
5,891
3,436
4,308
5,248
3,532
2,600
3,810
7,010
4,554
3,316
3,829
3,770
3,635
3,035
5,086
2,256
3,736
2,096
2,700
11,328
5,244
648,667 $
16,628
3,056
2,092
17,728
14,370
3,301
7,513
7,336
4,214
5,284
6,437
4,332
3,189
4,670
8,597
5,585
4,067
4,696
4,624
4,469
6,105
6,253
6,133
4,865
4,048
3,735
11,328
8,343
839,058 $
1,550
859
360
2,127
1,489
235
999
3,360
1,264
1,585
1,931
1,299
957
1,397
2,577
1,674
1,220
1,408
1,387
1,299
952
2,177
693
1,148
644
830
8,459
872
147,136
1962
1981
1994
1985
2005
N/A
1992
1996
1987
1987
1996
1999
1994
1996
2001
2001
1995
1979
1995
1994
1992
1998
1994
1995
1994
1993
1999
1997
2016
2012
2012
2015
2010
2010
2014
1997
2006
2006
2006
2006
2006
2006
2006
2006
2006
2006
2006
2006
2008
2002
2008
2008
2008
2008
2004
2014
Note 1—Depreciation is provided over the estimated useful lives of the buildings and improvements, which range from 5 to 40 years.
Note 2—Upon purchase of the property in December 2006, a $416 rental income reserve was posted by the seller for the Company’s benefit, since the
property was not producing sufficient rent at the time of acquisition. The Company recorded the receipt of this rental reserve as a reduction to land and
building.
Note 3—These 11 properties are retail furniture stores covered by one master lease and one loan that is secured by cross-collateralized mortgages.
Note 4—Amounts for this property’s building and improvements and accumulated depreciation are show net of $782 and $352, respectively, resulting from a
2020 impairment write-off due to casualty loss.
Note 5—These five properties are retail office supply stores net leased to the same tenant, pursuant to separate leases. Four of these leases contain cross
default provisions.
F-40
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
Notes to Schedule III
Consolidated Real Estate and Accumulated Depreciation
(a) Reconciliation of “Real Estate and Accumulated Depreciation”
(Amounts in Thousands)
Year Ended December 31,
2019
2020
2018
Investment in real estate:
Balance, beginning of year
Addition: Land, buildings and improvements
Deduction: Properties sold
Deduction: Impairment due to casualty loss
Balance, end of year
Accumulated depreciation:
Balance, beginning of year
Addition: Depreciation
Deduction: Impairment due to casualty loss
Deduction: Accumulated depreciation related to properties sold
Balance, end of year
$ 835,837 $ 829,143 $ 775,327
86,117
(32,301)
—
$ 835,837 $ 829,143
26,444
(22,441)
(782)
$ 839,058
49,669
(42,975)
—
(b)
$ 135,302 $ 123,684 $ 108,953
16,615
—
(1,884)
$ 147,136 $ 135,302 $ 123,684
17,941
(352)
(5,755)
17,534
—
(5,916)
(b) At December 31, 2020, the aggregate cost for federal income tax purposes is approximately $19,599 greater
than the Company’s recorded values.
F-41
CORPORATE
INFORMATION
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
MATTHEW J. GOULD
Chairman of the Board of Directors;
Chairman and Chief Executive Officer of
Georgetown Partners, Inc., the Managing
General Partner of Gould Investors L.P.;
Director and Senior Vice President of BRT
Apartments Corp.; Chief Executive Officer of
Rainbow MJ Advisors LLC; Vice President of
Majestic Property Management Corp.
FREDRIC H. GOULD
Vice Chairman of the Board of Directors;
Director of BRT Apartments Corp.; Director
of Georgetown Partners, Inc.; Chairman of
the Board of Directors of Majestic Property
Management Corp.
PATRICK J. CALLAN, JR.
Director; President
and Chief Executive Officer
JEFFREY A. GOULD
Director; Senior Vice President;
Director, President and Chief Executive
Officer of BRT Apartments Corp.; Senior
Vice President and Director of Georgetown
Partners, Inc.; Vice President of Majestic
Property Management Corp.
CHARLES L. BIEDERMAN
Director; Real Estate Developer;
President of CLB, Inc.
JOSEPH A. DELUCA
Director; Principal of Joseph A. DeLuca, Inc.;
Member of Board of Managers of
Wrightwood Capital LLC
EDWARD GELLERT
Director; Vice President and Managing
Director for Commercial Real Estate Debt
Investments at Alliance Bernstein
ISRAEL ROSENZWEIG
Senior Vice President; Chairman of BRT
Apartments Corp.; Senior Vice President of
Georgetown Partners, Inc.; Vice President of
Majestic Property Management Corp.
KAREN DUNLEAVY
Senior Vice President, Financial
RICHARD M. FIGUEROA
Senior Vice President, Counsel and Assistant
Secretary; Vice President and Assistant
Secretary of BRT Apartments Corp.; Vice
President of Georgetown Partners, Inc.
ISAAC KALISH
Vice President and Assistant Treasurer; Vice
President and Treasurer of BRT Apartments
Corp.; Vice President and Treasurer of
Georgetown Partners, Inc.; Treasurer of
Majestic Property Management Corp.
JUSTIN CLAIR
Senior Vice President, Acquisitions
ALYSA BLOCK
Treasurer; Vice President of Majestic
Property Management Corp.
J. ROBERT LOVEJOY
Independent Lead Director;
Principal of J.R. Lovejoy & Co. LLC
LEOR SIRI
Director; Chief Financial Officer
of Silverstein Properties, Inc.
KAREN A. TILL
Director; Chief Financial Officer of Miller
& Milone, P.C.
EUGENE I. ZURIFF
Director
LAWRENCE G. RICKETTS, JR.
Executive Vice President
and Chief Operating Officer
DAVID W. KALISH
Senior Vice President and Chief Financial
Officer; Senior Vice President—Finance of
BRT Apartments Corp.; Senior Vice President
and Chief Financial Officer of Georgetown
Partners, Inc.; Vice President of Majestic
Property Management Corp.
MARK H. LUNDY
Senior Vice President and Assistant
Secretary; Senior Vice President of BRT
Apartments Corp.; President and Chief
Operating Officer of Georgetown Partners,
Inc.; Secretary of Majestic Property
Management Corp.
EXECUTIVE OFFICES
60 Cutter Mill Road
Suite 303
Great Neck, NY 11021
516-466-3100
REGISTRAR, TRANSFER AGENT,
DISTRIBUTION DISBURSING AGENT
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
718-921-8124 800-937-5449
www.astfinancial.com
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Ernst & Young LLP
5 Times Square
New York, NY 10036
FORM 10-K AVAILABLE
A copy of the Annual Report on Form 10-K
filed with the Securities and Exchange
Commission is included as part of this
Annual Report. Exhibits to the Form 10-K
may be obtained by writing to the Secretary,
One Liberty Properties, Inc., 60 Cutter Mill
Road, Suite 303, Great Neck, NY 11021 or by
accessing our web site.
COMMON STOCK
The Company’s common stock is listed on
the New York Stock Exchange under the
ticker symbol OLP.
ANNUAL MEETING
The annual meeting will be held on June 10,
2021 at the Company’s Executive Offices
at 9:30 a.m.
WEB SITE ADDRESS
1liberty.com
60 CUTTER MILL ROAD
SUITE 303
GREAT NECK, NY 11021
516.466.3100
1LIBERTY.COM