One Liberty Properties
Annual Report 2023

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ONE LIBERTY PROPERTIES, INC. 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 manages a geographically diversified portfolio consisting primarily of industrial and, to a lesser extent, 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 location, 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 weighing of these factors in our analysis enables us to achieve attractive current returns with potential growth through contractual rent increases and property appreciation. LETTER TO STOCKHOLDERS 31 S T A T E S 110 P R O P E R T I E S 10.9 M I L L I O N S Q F T Dear Stockholders, In 2023, we continued to evolve our portfolio to further emphasize our ownership of industrial properties as we believe this asset class will provide significant stability and consistency in generating cash flow. Throughout the year, we enhanced our balance sheet by paying off our credit facility debt, thereby providing us with additional financial capacity and flexibility to continue building our industrial portfolio in a targeted manner. While we are not able to control the economic landscape or interest rate environment, we have effectively navigated the challenges of the past few years and built up our industrial property portfolio. At year end, our industrial portfolio constitutes approximately 66% of the base rent payable by our tenants in 2024. Industrial properties are the backbone of many industries—from manufacturing to businesses capitalizing on e-commerce activities by using warehouses for storing and distributing products. In 2023, rental income was $90.6 million compared to $92.2 million in 2022. A significant contributing factor to the change was the inclusion, in 2022 rental income, of $4.6 million from a litigation settlement. In 2023, we repurchased $9.6 million of our common stock and in March 2024, declared our 125th consecutive quarterly dividend payment. 1 2023 ANNUAL REPORT PERCENT OF RENTAL INCOME NET BY PROPERTY TYPE PERCENT OF RENTAL INCOME NET BY PROPERTY TYPE Industrial Retail Other(1) 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 48.7% 48.7% 35.2% 35.2% 55.4% 55.4% 57.0% 57.0% 57.3% 57.3% 63.3% 63.3% 32.9% 32.9% 30.2% 30.2% 16.1% 16.1% 11.7% 11.7% 12.8% 12.8% 25.7% 25.7% 17.0% 17.0% 2019 2019 2020 2020 2021 2021 2022 2022 25.1% 25.1% 2023 2023 11.6% 11.6% (1)Other consists of the following property types: Restaurant, Health & Fitness, Theater, Apartments, Office and Other. DIVIDEND PER SHARE OF COMMON STOCK $1.80 $1.70 $1.60 $1.50 $1.80 $1.80(1) $1.80 $1.80 $1.80 6.6% Dividend Yield(2) 9.0% Dividend Yield(2) 5.1% Dividend Yield(2) 8.1% Dividend Yield(2) 8.2% Dividend Yield(2) 2019 2020 2021 2022 2023 (1) During 2020, approximately 18.75% of the dividend was paid in shares of our common stock. (2) Calculated based on the closing stock price at December 31. 125 C O N S E C U T I V E Q U A R T E R L Y D I V I D E N D S 2 ONE LIBERTY PROPERTIES, INC. We intend to continue to grow. During the Looking into 2024 and beyond, we are optimistic past year, we purchased an industrial property about the opportunities to grow our industrial for approximately $13.4 million, which together portfolio. We intend to expand on these efforts with the properties added in 2022 represent in an accretive and targeted manner to further an investment of $69.9 million. We also paid strengthen our cash flow. Beyond acquisitions, off our credit facility debt through mortgage we will seek to maintain our active leasing refinancings and by strategically selling efforts and continue to sell properties we believe properties for net proceeds of more than have reached their maximum potential. We $69 million. Our sale of 11 consolidated expect to stay disciplined in our approach to properties resulted in a net gain of $17 million. capital allocation to further enhance value for On the operations front, we amended, extended stockholders, with whom we are well-aligned, and renewed leases with respect to 988,000 given management’s approximate 25% square feet and maintained occupancy over ownership stake in One Liberty. our entire portfolio in excess of 98% for the second consecutive year. We ended the year owning 108 properties that had a net book value of $682 million. We have been disciplined and selective in our pursuit of external growth and expect to maintain that approach as we look to the coming year. When acquiring properties, we focus on long-term value and seek an in-depth understanding of the local market within its broader region, including barriers to entry, key demographics, and the historic and future growth potential for the properties in which we are interested. This strategy enables us to make sense of the competitive environment. An important part of our acquisition approach is carefully evaluating each prospective tenant’s credit profile in light of the economic environment. In using these inputs, we effectively underwrite the long-term potential of a property as if we were to continue to own the asset upon lease expiration, to ensure we include the exit as part of our decision-making process. We would like to thank each of our stockholders, management team and Board of Directors for their insight and ongoing contributions and work to build stockholder value. Sincerely yours, PATRICK J. CALLAN, JR. President and Chief Executive Officer April 5, 2024 MATTHEW J. GOULD Chairman of the Board April 5, 2024 3 2023 ANNUAL REPORT PROPERTY LISTINGS I N D U S T R I A L R E T A I L 55 Total Properties 25 Total States 43 Total Properties 20 Total States O T H E R(1) 12 Total Properties 8 Total States 8,523,115 Total Square Footage 1,658,895 Total Square Footage 715,644 Total Square Footage (1) Other consists of the following property types: Restaurant, Health & Fitness, Theater, Apartments, Office and Other. O N E L I B E R T Y P R O P E R T I E S , I N C . 4 1 BROZZINI (Multi-tenant warehouse) Greenville, SC FEDEX AND CHEP St. Louis, MO HD SUPPLY Omaha, NE NORTHERN TOOL Fort Mill, SC (Charlotte MSA) CONDITIONED AIR Fort Myers, FL COSENTINO Rincon, GA (Savannah MSA) 2 0 2 3 A N N U A L R E P O R T 5 FINANCIAL HIGHLIGHTS (Amounts in Thousands, Except Per Share Data) Year Ended December 31, Total revenues Depreciation and amortization Real estate expenses Other expenses 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. 2023 2022 $ 90,646 $ 92,216 24,789 16,444 16,106 57,339 17,008 23,781 15,508 15,543 54,832 16,762 $ 50,315 $ 54,146 $ 29,918 (304) $ 29,614 $ 42,253 (76) $ 42,177 Net income per common share—diluted $ 1.38 $ 1.99 Weighted average number of common shares—diluted 20,556 20,453 Real estate investments, net Investment in unconsolidated joint ventures Cash and cash equivalents Total assets Mortgages payable, net of deferred financing costs and intangible Line of credit—outstanding, net of deferred financing costs Total liabilities Total equity December 31, 2023 2022 $ 681,950 $ 706,453 2,051 26,430 761,606 418,347 – 453,861 307,745 10,400 6,718 783,255 405,162 21,068 466,318 316,937 O N E L I B E R T Y P R O P E R T I E S , I N C . 6 FORM 10-K ONE LIBERTY PROPERTIES, INC. 52374_3-OLP_2023AR_FN.indd 1 52374_3-OLP_2023AR_FN.indd 1 3/19/24 12:33 PM 3/19/24 12:33 PM UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (cid:2)(cid:3) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 Or (cid:4)(cid:3) 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 (cid:2) No (cid:3) Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes (cid:2) No (cid:3) 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 (cid:3) No (cid:2) 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 (cid:3) No (cid:2) 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 (cid:4)(cid:3) Accelerated filer (cid:4)(cid:3) Non-accelerated filer (cid:2)(cid:3) Smaller reporting company (cid:2)(cid:3)(cid:3)Emerging growth company (cid:4)(cid:3) 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. (cid:2) 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. (cid:4) If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. (cid:4) Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). (cid:4) Indicate by check mark whether registrant is a shell company (defined in Rule 12b-2 of the Act). Yes (cid:4) No (cid:2)(cid:3) As of June 30, 2023 (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 $329 million. As of March 1, 2024, the registrant had 21,253,398 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the proxy statement for the 2024 annual meeting of stockholders of One Liberty Properties, Inc., to be filed pursuant to Regulation 14A not later than April 29, 2024, 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. 1C. 2. 3. 4. PART II 5. Business Risk Factors Unresolved Staff Comments Cybersecurity Properties Legal Proceedings Mine Safety Disclosures Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities [Reserved] 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 6. 7. 7A. 8. 9. 9A. 9B. Other Information 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections PART III 10. 11. 12. 13. 14. 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 PART IV 15. 16. Signatures Exhibits and Financial Statement Schedules Form 10-K Summary Page(s) 1 1 3 11 23 23 23 28 28 29 29 30 47 47 48 48 48 48 49 49 49 50 50 51 52 53 Explanatory Note In the narrative portion of this Annual Report on Form 10-K, except as otherwise indicated or the context otherwise requires: (cid:2) 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. (cid:2) (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. (cid:2) 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. (cid:2) we present information regarding our 2024 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 2024 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”. (cid:2) our use of the term e-commerce includes the provision by the retail, 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. Among other things, forward looking statements with respect to (i) estimates of rental income for 2024 may exclude variable rent, (ii) anticipated property sales may not be completed during the period indicated or at all, and (iii) estimates of gains from property sales are subject to adjustment, among other things, because actual closing costs may differ from the estimated costs. You should not rely on forward-looking statements since they involve known and 1 unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, performance or achievements. The uncertainties, risks and factors which may cause actual results to differ materially from current expectations include, but are not limited to: (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) the financial failure of, or other default in payment by, tenants under their leases and the potential resulting vacancies; adverse changes and disruption in the retail, restaurant, theater and health and fitness sectors, 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; the level and volatility of interest rates; general economic and business conditions and developments, including those currently affecting or that may affect our economy; general and local real estate conditions, including any changes in the value of our real estate; 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; compliance with credit facility and mortgage debt covenants; the availability of, and costs associated with, sources of capital and liquidity; competition in our industry; technological changes, such as autonomous vehicles, reconfiguration of supply chains, robotics, 3D printing or other technologies; potential natural disasters, epidemics, pandemics or outbreak of infectious disease, such as COVID-19, and other potentially catastrophic events such as acts of war and/or terrorism; 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 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. 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. 2 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 of industrial and, to a lesser extent, retail 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, 2023, we own 108 properties and participate in joint ventures that own two properties. These 110 properties are located in 31 states and have an aggregate of approximately 10.9 million square feet (including an aggregate of approximately 46,000 square feet at properties owned by our joint ventures). As of December 31, 2023: (cid:2) our 2024 contractual rental income (as described in “— Our Tenants”) is $71.3 million; (cid:2) the occupancy rate of our properties is 98.8% based on square footage; (cid:2) the weighted average remaining term of our mortgage debt is 5.9 years and the weighted average interest rate thereon is 4.31%; and (cid:2) the weighted average remaining term of the leases generating our 2024 contractual rental income is 5.5 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. 2023 and Recent Developments In 2023, we: (cid:2) sold 10 properties (i.e., seven restaurants and three retail properties) and an out-parcel at a multi-tenant retail property, for an aggregate net gain on sale of real estate of $17.0 million. The properties sold accounted for $2.5 million, or 2.7%, and $3.0 million, or 3.3 %, of 2023 and 2022 rental income, net, respectively. We estimate that, excluding any acquisitions, dispositions or lease amendments in 2024, rental income in 2024 will decrease by approximately $2.5 million from 2023 due to these sales. (cid:2) paid down our credit facility by approximately $21.8 million primarily through the use of net proceeds from property sales – as of December 31, 2023 and March 1, 2024, no amounts were outstanding on the facility. (cid:2) acquired a multi-tenant industrial property for an aggregate purchase price of $13.4 million. This property accounts for $806,000, or 1.1%, of our 2024 contractual rental income. (cid:2) through an unconsolidated joint venture in which we had a 50% equity interest, sold a multi-tenant shopping center located in Manahawkin, NJ for $36.5 million, of which our share was $18.3 million. In 2023, we recognized a $108,000 loss from the sale of this property. Our share of the net proceeds from this sale was $7.1 million. We generated, in 2023, $1.1 million (including our $850,000 share of an impairment charge) of equity in loss and in 2022 and 2021, $210,000 and $11,000, respectively, of equity in earnings from this unconsolidated joint venture. (cid:2) entered into, amended or extended 28 leases with respect to approximately 988,000 square feet. 3 (cid:2) repurchased approximately 499,000 shares of our common stock for an aggregate purchase price of approximately $9.6 million (i.e., an average price of $19.24 per share). Subsequent to December 31, 2023, we: (cid:2) entered into a contract to sell a pad site at a multi-tenant retail shopping center in Lakewood, Colorado, which we own through a consolidated joint venture in which we hold a 90% interest, for $2.9 million. The buyer’s right to terminate the contract expired in February 2024 and the sale is anticipated to close during the quarter ending March 31, 2024. We anticipate recognizing a gain of approximately $1.8 million on this sale during the three months ending March 31, 2024, of which the non-controlling interest’s share will be approximately $180,000. Our Business Objective Our business objective is to increase stockholder value by: (cid:2) identifying opportunistic and strategic property acquisitions consistent with our portfolio and our acquisition strategies; (cid:2) monitoring and maintaining our portfolio, and as appropriate, working with tenants to facilitate the continuation or expansion of their tenancies; (cid:2) managing our portfolio effectively, including opportunistic and strategic property sales; (cid:2) 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; and (cid:2) maintaining and, over time, increasing our dividend. 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 objective is to acquire single-tenant properties, and in particular, industrial 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 have, however, acquired properties, and may continue to acquire properties, that are subject to short-term leases when we believe that such properties represent a favorable opportunity for generating additional income from its re-lease or has significant residual value. Although we are focused on acquiring single-tenant properties subject to net leases, we also consider investments in, among other things, (i) properties that can be re-positioned or re-developed, and (ii) community shopping centers anchored by national or regional tenants. 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. 4 We identify properties through the network of contacts our, and our affiliates, senior management, 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. 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. (“Gould Investors”), a master limited partnership involved primarily in the ownership and operation of a diversified portfolio of real estate assets, BRT Apartments Corp., a NYSE listed multi-family REIT and Majestic Property Management Corp., a property management company, which is wholly owned by Fredric H. Gould, our vice chairman. Investment Evaluation In evaluating potential investments, we consider, among other criteria, the following: (cid:2) the current and projected cash flow of the property; (cid:2) the estimated return on equity to us; (cid:2) an evaluation of the property and improvements, given its location and use; (cid:2) an evaluation of the credit quality of the tenant; (cid:2) alternate uses or tenants for the property; (cid:2) local demographics (population and rental trends); (cid:2) the purpose for which the property is used (i.e., industrial, retail or other); (cid:2) the terms of tenant leases, including co-tenancy provisions and the relationship between current rents and market rents; (cid:2) the potential to finance and/or refinance the property; (cid:2) the projected residual value of the property; (cid:2) 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; (cid:2) potential for income and capital appreciation; (cid:2) occupancy of and demand for similar properties in the market area; and (cid:2) the ability of a tenant and the related property to withstand changing economic conditions and other challenges. 5 Our Tenants The following table sets forth information about the diversification of our tenants by industry sector as of December 31, 2023: Type of Property Industrial Retail—General Retail—Furniture Health & Fitness Retail—Office Supply(2) Other Restaurant Theater Number of Number of Percentage of Properties Rental Income (1) 55 $ 47,114,698 11,160,441 27 3,983,899 10 2,645,989 3 2,085,527 5 1,908,522 3 1,179,911 3 1,176,619 2 108 $ 71,255,606 2024 Contractual 2024 Contractual Rental Income 66.1 15.7 5.6 3.7 2.9 2.7 1.7 1.6 100.0 Tenants 67 53 2 1 1 4 6 1 135 (1) Our 2024 contractual rental income represents, after giving effect to any abatements, concessions, deferrals or adjustments, the base rent payable to us in 2024 through the stated expiration of such leases, under leases in effect at December 31, 2023. Our 2024 contractual rental income: (cid:2) Includes an aggregate of $2.9 million comprised of: (i) $1.3 million based on a negotiated but unsigned lease amendment from a tenant at our Brooklyn, New York office property, (ii) $1.2 million from Regal Cinemas, as to which there is uncertainty as to its collectability, (iii) $325,000 representing the base rent payable by Dick’s Sporting Goods (Champaign, Illinois) in the twelve months ending December 31, 2024, although such lease is subject to termination by the landlord or tenant upon 90 days’ notice and (iv) $120,000 from the LA Fitness lease in Hamilton, Ohio which terminates May 1, 2024. (cid:2) Excludes an aggregate of $1.5 million comprised of: (i) subject to the property generating specified levels of positive operating cash flow, $1.3 million of estimated variable lease payments from The Vue, a multi-family complex which ground leases the underlying land from us and as to which there is uncertainty as to when and whether the tenant will resume paying rent and (ii) $235,000 representing our share of the base rent payable to our joint ventures. (2) 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, Ashley Furniture, Burlington Coat Factory, Cargill, CVS, Famous Footwear, FedEx, Ferguson Enterprises, Hobby Lobby, Home Depot USA, LA Fitness, Marshalls, NARDA Holdings, Inc., Northern Tool, Office Depot, PetSmart, Ross Stores, Shutterfly, The Toro Company, US Lumber and Walgreens, and some of our tenants operate on a regional basis, including Havertys 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. 6 Leases representing 69.2% of our 2024 contractual rental income provide for either periodic contractual rent increases or a rent increase 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 $107,000, $85,000 and $70,000 of rental income in 2023, 2022 and 2021, respectively. 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 weighted average remaining term of our leases was 5.5 years, 5.9 years and 6.0 years at December 31, 2023, 2022 and 2021, respectively. The following table sets forth scheduled expirations of leases at our properties as of December 31, 2023: Year of Lease Expiration (1) 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 and thereafter Number of Expiring Leases Expiring Leases (2) Expiring Leases Approximate Square Footage Subject to 2024 Contractual Percentage of 2024 Contractual Rental Income Rental Income Under Represented by Expiring Leases 3.6 7.7 8.7 20.4 13.8 10.1 9.4 6.1 4.6 10.5 5.1 100.0 2,575,111 5,477,987 6,229,965 14,520,670 9,831,127 7,174,637 6,679,464 4,320,061 3,250,054 7,533,634 3,662,896 71,255,606 647,889 $ 660,289 1,007,595 2,185,789 1,442,680 1,276,554 625,026 864,358 325,456 860,631 829,976 10,726,243 $ 15 15 19 35 22 13 13 7 9 10 7 165 (1) Lease expirations do not give effect to the exercise of existing renewal options. (2) Excludes an aggregate of 125,353 square feet of vacant space. Financing, Re-Renting and Disposition of Our Properties Our credit facility provides us with a source of funds that is used to acquire properties, payoff existing mortgages, and to a more limited extent, invest in joint ventures, improve properties and for working capital purposes. Generally, 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. Generally, the proceeds of mortgage loans are first applied to reduce indebtedness on our credit facility and the balance may be used 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. 7 In advance of the termination or expiration of any lease relating to any of our properties, we explore re-renting or selling such property to maximize our return, 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. In 2023, we sold ten properties (i.e., seven restaurants and three retail) and an out-parcel at a multi-tenant retail property. Generally, we sold these properties due to our belief that such property had achieved its maximum potential value; our concern with respect to the long-term prospects for the tenant or the geographic sub-market; or our concern in our ability, on acceptable terms, to refinance the property’s mortgage debt or re- lease the property. We used a significant portion of these net proceeds to pay off $21.8 million of credit facility debt. Competition The U.S. commercial real estate investment market, and in particular, the market for industrial properties, is highly competitive. We compete with many entities engaged in the acquisition, leasing and operation of commercial properties. As such, we compete with other investors for a limited supply of properties and financing for these properties. Competitors include traded and non-traded public REITs, private equity firms, institutional investment funds, insurance companies and private individuals, many of which have greater financial and other resources than we have and the ability or willingness to accept more risk than we believe appropriate for us. We can provide no assurance that we will be able to compete successfully in the commercial real estate industry. 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 generally obtain a Phase I environmental study (which involves inspection without soil sampling or ground water analysis) conducted by independent environmental consultants prior to acquiring a property 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, 2023, 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. 8 Other Regulations State and local governmental authorities regulate the use of our properties. While many of our leases mandate that the tenant is primarily responsible 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, 2023, we had 10 full-time employees (including 5 full-time 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., which we refer to as “Majestic Property.” Majestic Property is wholly-owned by the Vice Chairman of our Board of Directors and it compensates certain of our executive officers. In 2023, pursuant to the compensation and services agreement, we paid Majestic Property approximately $3.3 million for the Services plus $317,000 for our share of all direct office expenses, including rent, telephone, postage, computer services, internet usage and supplies. Included in the $3.3 million is $1.5 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, 2023, we estimate that the property management fee in 2024 will be approximately $1.4 million. 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. 9 Information about our Executive Officers Set forth below is a list of our executive officers whose terms expire at our 2024 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 with the SEC not later than April 29, 2024: NAME Matthew J. Gould* Fredric H. Gould* Patrick J. Callan, Jr. Lawrence G. Ricketts, Jr. Jeffrey A. Gould* Isaac Kalish** David W. Kalish** Mark H. Lundy Israel Rosenzweig Richard M. Figueroa Justin Clair Mili Mathew Alysa Block AGE 64 88 61 47 58 48 76 61 76 56 41 40 63 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—Financial Officer Senior Vice President Senior Vice President Senior Vice President Executive Vice President Vice President—Financial Treasurer * 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, Executive Vice President since 2006 and served as Vice President from 1999 through 2006. Isaac Kalish. Mr. Kalish has served as our Chief Financial Officer since 2023, as Senior Vice President since 2022 and as Vice President from 2013 through 2022. He has served as Treasurer of the managing general partner of Gould Investors since 2013 and as its Assistant Treasurer from 2012, as Senior Vice President since 2022, as Vice President and Treasurer of BRT Apartments Corp. since 2013 and 2014, respectively, and as its Assistant Treasurer from 2009 through 2013. He is a certified public accountant. David W. Kalish. Mr. Kalish has served since 2023 as our Senior Vice President-Finance, and from 1990 to 2023, as Chief Financial Officer and Senior Vice President. Since 1998, he has served as Senior Vice President, Finance and from 1990 to 1998, as Vice President of BRT Apartments. Since 1990, he has served as Senior Vice President and Chief Financial Officer of the managing general partner of Gould Investors. Mr. Kalish is a certified public accountant. Mark H. Lundy. Mr. Lundy has served as our Senior Vice President since 2006 and as Vice President from 2000 through 2006. He has served as Senior Vice President of BRT Apartments since 2006, and as its Vice President from 1993 to 2006. Mr. Lundy has served as President and Chief Operating Officer of the managing general partner of Gould Investors since 2013 and as its Vice President from 1990 through 2012. 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. He has served as Chairman of the Board of Directors of BRT Apartments since 2013, as Vice Chairman of its Board of Directors from 2012 through 2013, and as its Senior Vice President from 1998 through 2012. Since 1997, he has served as a Vice President of the managing general partner of Gould Investors. 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 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. 10 Justin Clair. Mr. Clair has served as Executive Vice President since 2023, as Senior Vice President— Acquisitions from 2019 through 2023, as Vice President from 2014 through 2019, as Assistant Vice President from 2010 through 2014, and has been employed by us since 2006. Mili Mathew. Ms. Mathew has served as Chief Accounting Officer since 2023, Vice President—Financial, since 2022, as Assistant Vice President—Financial, from 2020 through 2022, and has been employed by us since 2014. Alysa Block. Ms. Block has been our Treasurer since 2007 and served as Assistant Treasurer from 1997 to 2007. Ms. Block also served as the Treasurer of BRT Apartments from 2008 through 2013, and as its Assistant Treasurer from 1997 to 2008. 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 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 2024 through 2029, the following leases expire: Leases Expiring December 31, 2024 - 2026 2027 - 2029 Number of Leases 2024 Contractual Rental Income $ 49 70 14,283,063 31,526,434 Percentage of 2024 Contractual Rental Income 20.0 44.3 If our tenants, and in particular, our significant tenants, (i) do not renew their leases upon lease expiration, (ii) default on their obligations or (iii) seek rent relief, lease renegotiation or other accommodations, our revenues would 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, would become responsible for the operating expenses (e.g., real estate taxes, maintenance and insurance) related to these properties, and, in the event of tenant defaults, would incur expenses in enforcing our rights as landlord. Our efforts to find replacement tenants may be challenged as there are a limited number of tenants interested in certain types of properties, such as our theaters (i.e., Regal Cinemas) and health and fitness centers (i.e., LA Fitness) which accounts in the aggregate for $3.8 million, or 5.4%, of 2024 contractual rental income and the cost of reconfiguring such properties to make them more attractive to a broader set of potential tenants may be prohibitive. Even if we find replacement tenants or renegotiate leases with current tenants, the terms of the new or renegotiated leases, after giving effect to tenant concessions or the cost of required renovations/ reconfigurations may be less favorable than current lease terms and could reduce the amount of cash available to meet expenses and pay dividends. If we are unable to re-rent properties on favorable terms with respect to properties at which tenants default on their rent obligation or do not renew their leases at lease expiration, our results of operations, cash flow and financial condition will be adversely affected. 11 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 66.1% and 24.2% of our 2024 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 would have an adverse effect on our results of operations, liquidity and financial condition. Traditional retail tenants account for 24.2% of our 2024 contractual rental income and the competition that such tenants face from e-commerce retail sales could adversely affect our business. Approximately 24.2% of our 2024 contractual rental income is derived from retail tenants, including 5.6% from tenants engaged in selling furniture (i.e., Havertys Furniture accounts for 4.7% of 2024 contractual rental income) and 2.9% from a tenant engaged in selling office supplies (i.e., Office Depot, a tenant at five properties, one of which is currently closed but for which the tenant continues to pay rent and the lease expires in May 2025). Because e-commerce retailers (unlike “bricks and mortar” or “traditional” 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 extensive competition from e-commerce retailers. E-commerce sales decrease the need for traditional retail outlets and reduce retailers’ space and property requirements. This adversely impacts our ability to rent space at our retail properties and increases competition for retail tenants thereby reducing the rent we would receive at these properties and adversely affecting our results of operations, cash flow and financial condition. Approximately 22.3% of our 2024 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, would significantly reduce our revenues. FedEx, Havertys Furniture, Northern Tool, NARDA Holdings, Inc. and LA Fitness account for approximately 5.5%, 4.7%, 4.3%, 4.1% and 3.7%, respectively, of our 2024 contractual rental income, and the weighted average remaining lease term for such tenants is 3.7 years, 4.4 years, 5.3 years, 9.7 years and 7.0 years, respectively. The default, financial distress or bankruptcy of any of these or other significant tenants or such tenant’s determination not to renew or extend their lease, would 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, 2023, the aggregate of our unbilled rent receivable and intangible lease assets is $31.3 million (including $14.7 million of intangible lease assets): six tenants (i.e., Northern Tool, Famous Footwear, NARDA Holdings, Inc., FedEx, Q.E.P. Co., Inc., and LA Fitness) account for 35.6% 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 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 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. 12 The concentration of our properties in certain states makes our revenues and the value of our portfolio vulnerable to adverse changes in local economic conditions. Approximately 47.2% of our 2024 contractual rental income is derived from properties located in six states — South Carolina (12.0%), New York (9.2%), Texas (7.9%), Pennsylvania (7.6%), New Jersey (5.3%) and Maryland (5.2%). As a result, a decline in the economic conditions in these states or in regions where our properties are concentrated, 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. Declines in the value of our properties could result in impairment charges. If we are presented with indicators of impairment in the value of a particular property or group of properties, we will be required to perform an impairment analysis for 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. Any impairment charge would reduce our net income and stockholder’s equity. 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, which risk is heightened in an inflationary environment, 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. 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, 2023, $422.6 million in mortgage debt outstanding (all of which is non-recourse subject to standard carve-outs). 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. 13 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 2024 through 2028, approximately $168.6 million of our mortgage debt matures. 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. Volatile or increasing interest rates, or credit market tightening, may make it 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 or volatility 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, increasing interest rates could decrease the amount third parties are willing to pay for our assets, thereby limiting our ability to dispose of assets on more favorable terms. Interest rates have been volatile as the interest rate on the 10-year treasury notes ranged from 0.90% to 5.02% during the three years ended December 31, 2023. At March 1, 2024, the interest rate on such notes was 4.19%. 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, 2023, the principal balance of the mortgage payments due at maturity on our properties and the weighted average interest rate thereon (dollars in thousands): Year 2024 2025 2026 2027 2028 2029 and thereafter Principal Balances Due at Maturity $ 49,906 30,850 19,179 38,524 30,155 168,560 Weighted Average Interest Rate Percentage 4.72 4.32 3.88 3.64 4.64 4.29 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 substantially all of our 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 14 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 or are especially volatile. Accordingly, increases and volatility in interest rates may 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, 2023, we had $422.6 million of debt outstanding all related to our mortgage debt and no debt outstanding on 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. 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, we may 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 could place us in default under our credit facility. In such event, if no amounts were outstanding under the facility, we would not be entitled to draw on the facility which could impede our ability, among other things, to acquire properties or fund working capital requirements. If we defaulted on the facility while amounts were outstanding, the lenders could require us to repay the full amount outstanding, and we might be required to rapidly dispose of our properties, which could have an adverse impact on the amounts we receive on such dispositions. 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. Certain of our leases require us to pay property related expenses that are not the obligations of our tenants. In addition to satisfying their rent obligations, our tenants are generally responsible for the payment of real estate taxes, insurance and ordinary maintenance and repairs. However, under the provisions of certain 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. Our failure to comply with our obligations under our mortgages may reduce our stockholders’ equity, and adversely affect our net income and ability to pay dividends. Several of our mortgages include covenants that require us to maintain certain financial ratios, including various coverage ratios, and comply with other requirements. Failure to meet interest and other payment obligations under these mortgages or a breach by us of the covenants to comply with certain financial ratios would place us in non-compliance under such mortgages. If a mortgagee called a default and required us to repay the full amount outstanding under such mortgage, we might be required to rapidly dispose of the property subject to such mortgage which could have an adverse impact on the amounts we receive on such disposition. If we are unable to satisfy the covenants of a mortgage, the mortgagee could exercise remedies available to it under the 15 applicable mortgage and as otherwise provided by law, including the possible appointment of a receiver to manage the property, application of deposits or reserves maintained under the mortgage for payment of the debt, or foreclose and/or cause the forced sale of the property or asset securing such debt. A foreclosure or other forced disposition of our assets could result in the disposition of such assets at below such assets’ carrying values. The disposition of our properties or assets at below their carrying values may adversely affect our net income, reduce our stockholders’ equity and adversely affect our ability to pay dividends. 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. 16 We have been, and will continue to be, subject to significant competition and we may not be able to compete successfully for investments. We have been, and will continue to be, subject to significant competition for attractive investment opportunities, and in particular, opportunities for industrial properties which are the primary focus of our and many of our competitors acquisition efforts. Our competitors include publicly-traded REITs, non-traded REITs, insurance companies, commercial and investment banking firms, private institutional funds, hedge funds, private equity funds and other investors, many of whom have greater financial and other resources than we have. 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. Five properties in which we have an interest are owned through consolidated joint ventures (three properties) and unconsolidated joint ventures (two 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 4.3% of 2024 contractual rental income, and (ii) unconsolidated joint ventures, we own, with one joint venture partner and their affiliates, properties which account for our $235,000 share of 2024 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 17 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 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 2023 we paid, and in 2024 we anticipate paying, Majestic Property, (i) a fee of $3.3 million and $3.3 million, respectively, and (ii) $317,000 and $336,000, 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, our affiliate, and in 2023, reimbursed Gould Investors $1.1 million for our share of the insurance premiums paid by Gould Investors. At December 31, 2023, Gould Investors beneficially owns approximately 10.4% of our outstanding common stock and certain of our senior executive officers are also executive officers of the managing general partner of Gould Investors. 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, Isaac Kalish, our chief financial officer and senior vice president and David W. Kalish, our senior vice president- financial, 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. 18 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: (cid:2) 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; (cid:2) 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 (cid:2) 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: (cid:2) “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 (cid:2) 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. 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. 19 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. 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 hinders 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. It is possible that a portion of the dividends we would pay in 2023 would constitute a return of capital and in such event we would not be required to pay such sum 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. The stock market is volatile, and fluctuations in our operating results, removal from various indices and other factors could cause our stock price to decline. The stock market has experienced, and may continue to experience, fluctuations that significantly impact the market prices of securities issued by many companies. Market fluctuations could adversely affect our stock price. These fluctuations have often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations, as well as general economic, systemic, political and market conditions, such as pandemics, recessions, loss of investor confidence, interest rate changes, government shutdowns, or trade wars, may negatively affect the market price of our common stock. Moreover, our operating results may fluctuate and vary from period to period due to the risk factors set forth herein. 20 Although our common stock is quoted on the New York Stock Exchange, the volume of trades on any given day has been limited historically, as a result of which stockholders might not have been able to sell or purchase our common stock at the volume, price or time desired. Further, if our common stock is removed from the Russell 3000® Index because it does not meet the criteria for continued inclusion in such index, index funds, institutional investors, or other holders attempting to track the composition of that index may be required to sell our common stock, which would adversely impact the price and frequency at which it trades. General Business Risks Enhanced market and economic volatility due to adverse economic and geopolitical conditions, health crises or dislocations in the credit markets, could have a material adverse effect on our results of operations, financial condition and ability to pay dividends. Our business may be adversely affected by market and economic volatility experienced by the U.S. and global economies, the real estate industry as a whole and/or the local economies in the markets in which our properties are located. Such adverse conditions may be due to, among other issues, rising inflation and interest rates, volatility in the public equity and debt markets, labor market challenges and international economic and other conditions, including pandemics, geopolitical instability (such as the war in Ukraine), sanctions and other conditions beyond our control. These current conditions, or similar conditions existing in the future, may adversely affect our results of operations, financial condition and ability to pay dividends as a result of one or more of the following, among other potential consequences: • • • • • • • • the financial condition of our tenants may be adversely affected, which may result in lower rents or tenant defaults; current or potential tenants may delay or postpone entering into long-term net leases with us; the ability to borrow on acceptable terms and conditions may be limited or unavailable, which could reduce our ability to pursue acquisitions, dispositions and refinance existing debt, reduce our returns from acquisition and disposition activities, increase our future interest expense and reduce our ability to make cash distributions to our stockholders; our ability to access the capital markets may be restricted at a time when we would like, or need, to access those markets, which could have an impact on our flexibility to react to changing economic and business conditions; the recognition of impairment charges on or reduced values of our properties, which may adversely affect our results of operations or limit our ability to dispose of assets at attractive prices and may reduce the availability of financing; reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties; our line of credit lenders could refuse to fund their financing commitment to us or could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all; and one or more counterparties to our derivative financial instruments could default on their obligations to us, or could fail, increasing the risk that we may not realize the benefits of these instruments. 21 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, employees and joint venture partners. 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 although 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 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 financial reporting processes and systems. We are dependent on third party software, and in particular, Yardi’s property management software, for generating tenant invoices, collecting receivables, paying payables and preparing financial reports. If the software does not perform as required (including non-performance resulting from the software vendors’ unwillingness or inability to maintain or upgrade the functionality of the software), our ability to conduct operations would be adversely affected. 22 Item 1B. Unresolved Staff Comments. None. Item 1C. Cybersecurity. Our information technology, communication networks, enterprise applications, accounting and financial reporting platforms and related systems are integral to our operations. We use these systems, among others, for internal communications, for accounting and record-keeping functions, and for many other key aspects of our business. Our operations rely on securing, collecting, storing, transmitting, and processing of proprietary and confidential data. We have deployed various safeguards designed to protect our information technology (“IT”) systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls. At the management level, these cybersecurity defense systems are overseen by our network administrator who performs services for us on a part-time basis pursuant to the Compensation and Services Agreement. Our network administrator has more than 20 years of experience with IT systems and holds various IT certifications. Our network administrator reports to, and is in regular contact with, our Chief Financial Officer and Senior Vice President-Financial. These officers do not have formal IT or cybersecurity training. In the event of a cybersecurity incident, among other things, the network administrator and these officers would consult with one another and, as needed or appropriate, other members of management to determine the appropriate course of action (including whether such incident should be reported to other members of management and/or the audit committee and whether public disclosure should, or is, required to be made). Our internal auditor performs certain procedures to test the integrity and functionality of our IT systems (which includes a high-level review of our cybersecurity defenses). In addition, we have retained a third-party cybersecurity consulting firm that (i) advises us as to cybersecurity matters (including prevailing cybersecurity threats), (ii) performs, on a periodic basis, assessments of our cybersecurity defenses and (iii) on a continuous basis, monitors our IT systems for cybersecurity threats and intrusions. We are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us. See “Item 1A. Risk Factors” in this Annual Report for additional discussion about cybersecurity-related risks. To operate our business, we use certain third-party service providers to perform a variety of functions. We seek to engage reliable, reputable service providers that maintain cybersecurity programs and we generally rely on such providers to maintain appropriate cybersecurity practices. At the Board level, our cybersecurity practices are overseen by the audit committee as part of its oversight of our risk management activities. The committee meets periodically with, among others, our internal auditor and network administrator to review and discuss cybersecurity matters. Item 2. Properties. As of December 31, 2023, we own 108 properties with an aggregate net book value of $682.0 million. Our occupancy rate, based on square footage, was 98.8%, 99.8%, and 99.2% as of December 31, 2023, 2022 and 2021, respectively. At December 31, 2023, we participated in joint ventures that owned two properties and at such date, our investment in these unconsolidated joint ventures is $2.1 million. The occupancy rate of our joint venture properties, based on square footage, was 100%, 58.7%, and 59.1% as of December 31, 2023, 2022 and 2021, respectively. Our principal executive office is located at 60 Cutter Mill Road, Suite 303, Great Neck, New York. We believe that our facilities are satisfactory for our current and projected needs. 23 Our Properties The following table details, as of December 31, 2023, 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) El Paso, TX Lebanon, TN Fort Mill, SC Littleton, CO (2) Secaucus, NJ Pittston, PA El Paso, TX (3) McCalla, AL Brooklyn, NY Delport, MO (4) Lowell, AR Moorestown, NJ Ankeny, IA (4) Joppa, MD Englewood, CO Tucker, GA Pennsburg, PA (4) St. Louis Park, MN (4) Dalton, GA Indianapolis, IN Greenville, SC (5) Bakersfield, CA Blythewood, SC (4) Ronkonkoma, NY (4) Greenville, SC (5) Green Park, MO Greensboro, NC Huntersville, NC Ashland, VA Lake Charles, LA (5) New Hope, MN (5) Memphis, TN Lehigh Acres, FL (4) Champaign, IL (4) Chandler, AZ Northwood, OH (4) Moorestown, NJ Louisville, KY Chicago, IL Melville, NY Omaha, NE Wichita, KS Northwood, OH (6) Shakopee, MN Monroe, NC Greenville, SC Saco, ME Cedar Park, TX New Hyde Park, NY Cary, NC Tyler, TX Lexington, KY Indianapolis, IN Type of Property Industrial Industrial Industrial Retail Industrial Industrial Industrial Retail Health & Fitness Industrial Retail Industrial Office Industrial Industrial Industrial Industrial Industrial Industrial Health & Fitness Industrial Retail Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Theater Industrial Industrial Retail—Office Supply Industrial Industrial Industrial Retail Industrial Industrial Industrial Industrial Retail—Office Supply Industrial Industrial Retail—Furniture Industrial Industrial Industrial Industrial Industrial Retail—Furniture Industrial Retail—Office Supply Retail—Furniture Industrial Theater Percentage of 2024 Contractual Rental Income Approximate Square Footage of Building 2024 Contractual Rental Income per Square Foot 4.3 4.1 3.5 3.4 3.3 3.0 2.9 2.3 2.1 2.0 2.0 1.9 1.9 1.8 1.7 1.7 1.7 1.7 1.5 1.4 1.4 1.3 1.3 1.2 1.2 1.1 1.1 1.0 1.0 1.0 1.0 1.0 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 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 0.7 701,595 $ 201,614 367,000 194,600 419,821 540,200 303,188 101,618 44,863 249,600 110,179 294,000 66,000 339,094 248,370 219,881 208,234 258,710 63,882 58,800 291,203 131,710 212,740 125,622 142,200 218,116 177,040 90,599 128,000 119,680 61,213 78,319 88,003 54,229 123,892 224,749 103,044 50,940 62,121 123,500 64,000 125,370 23,939 51,351 101,584 88,108 126,990 114,000 93,170 88,800 131,400 50,810 38,000 33,490 72,000 74,150 57,688 4.40 14.61 6.87 12.52 5.55 3.91 6.75 19.12 33.43 5.81 13.28 4.71 20.39 3.68 4.95 5.57 5.76 4.60 16.47 17.45 3.36 7.14 4.33 6.92 5.83 3.71 4.55 8.15 5.70 6.02 11.41 8.69 7.58 12.07 5.28 2.88 6.28 25.50 10.23 5.14 9.55 4.87 24.37 11.33 5.54 6.35 4.37 4.86 5.87 6.05 3.92 10.00 13.12 14.62 6.75 6.46 8.28 24 Location Rincon, GA Fort Myers, FL Durham, NC Plymouth, MN Highland Ranch, CO (4) Deptford, NJ Eugene, OR Newport, VA Amarillo, TX Newark, DE Hillside, IL (4) Bensalem, PA (5) El Paso, TX Lexington, KY Richmond, VA Woodbury, MN LaGrange, GA Greensboro, NC Somerville, MA Gurnee, IL Selden, NY Naples, FL Bluffton, SC Crystal Lake, IL Pinellas Park, FL Hyannis, MA Myrtle Beach, SC Chandler, AZ Kennesaw, GA Concord, NC Miamisburg, OH Everett, MA Cape Girardeau, MO Marston, MA West Palm Beach, FL Monroeville, PA Batavia, NY Nashville, TN (7) Lawrence, KS Cuyahoga Falls, OH South Euclid, OH Hamilton, OH Hilliard, OH Port Clinton, OH Seattle, WA Rosenberg, TX Louisville, KY Wauconda, IL (8) Bolingbrook, IL (8) Kennesaw, GA (9) Beachwood, OH (10) Type of Property Industrial Industrial Industrial Industrial Retail Retail Retail—Office Supply Retail—Furniture Retail—Furniture Other Industrial Industrial Retail—Office Supply Retail—Furniture Retail—Furniture Retail Industrial Retail Retail Retail—Furniture Retail Retail—Furniture Retail—Furniture Retail Industrial Retail Restaurant Industrial Restaurant Restaurant Industrial Retail Retail Retail Industrial Retail Retail Industrial Retail Retail Retail Health & Fitness Retail Retail Retail Retail Industrial Industrial Retail Retail Land Percentage of 2024 Contractual Rental Income Approximate Square Footage of Building 2024 Contractual Rental Income per Square Foot 0.7 0.7 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.5 0.5 0.5 0.5 0.5 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 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 — — — — 95,000 $ 52,710 46,181 82,565 42,920 25,358 24,978 49,865 72,027 23,547 60,832 85,663 25,000 30,173 38,788 49,406 80,000 12,950 12,054 22,768 14,555 15,912 35,011 32,446 53,064 9,750 6,734 25,035 4,051 4,749 35,707 18,572 13,502 8,775 10,634 6,051 23,483 99,500 8,600 6,796 11,672 38,000 6,751 6,749 3,053 8,000 9,642 53,750 33,111 32,138 349,999 100.0 10,851,596 4.95 8.86 10.00 5.47 10.39 16.90 16.37 8.19 5.64 17.00 6.55 4.61 15.20 12.48 9.12 7.04 4.31 24.00 25.72 13.43 21.00 19.01 7.92 8.25 5.03 24.85 34.85 9.30 54.34 46.24 6.03 11.43 14.71 22.00 14.74 25.74 6.05 5.17 14.04 17.21 9.94 3.16 15.55 15.19 27.50 10.20 6.67 0.49 0.51 — — 25 (1) This property, a community shopping center, is leased to 12 tenants. Contractual rental income per square foot excludes 1,650 square feet of vacant space. (2) This property, a community shopping center, is leased to 20 tenants. Contractual rental income per square foot excludes 14,670 square feet of vacant space. (3) This property has four tenants. Contractual rental income per square foot excludes 2,395 square feet of vacant space. (4) This property has two tenants. (5) This property has three tenants. (6) This property has five tenants. (7) Contractual rental income per square foot excludes 74,500 square feet of vacant space. (8) The tenant’s lease expired January 31, 2024 and we are pursuing the re-lease and/or sale of such property. (9) This property is vacant and was formerly leased to Bed Bath and Beyond which filed for bankruptcy protection and rejected our lease in April 2023. (10) This property is ground leased to a multi-unit apartment complex owner/operator. 2024 contractual rental income excludes $1.3 million of variable rent as there is uncertainty as to whether and when the tenant will resume paying rent. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Challenges and Uncertainties Facing The Vue – Beachwood, Ohio” and Note 6 of our consolidated financial statements. Properties Owned by Joint Ventures As of December 31, 2023, we own a 50% equity interest in two joint ventures that own two properties. At December 31, 2023, our investment in these joint ventures was approximately $2.1 million and the occupancy rate at these properties, based on square footage, was 100%. Based on the leases in effect at December 31, 2023, we anticipate that our share of the base rent payable in 2024 to our joint ventures is approximately $235,000. The following table sets forth, as of December 31, 2023, information about the properties owned by these joint ventures: Location Savannah, GA Savannah, GA (2) Type of Property Retail Restaurant Percentage of Base Rent Payable in 2024 Contributed by the Applicable Joint Venture (1) 86.7 13.3 100.0 Approximate Square Footage of Building 2024 Base Rent per Square Foot 4.43 — 46,058 $ — 46,058 (1) Represents our share of the base rent payable in 2024 with respect to such joint venture property, expressed as a percentage of the aggregate base rent payable in 2024 by all of our joint venture properties. (2) This property is a parking lot which is ground leased to a restaurant. 26 Geographic Concentration As of December 31, 2023, the 108 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, 2023: State South Carolina New York Texas Pennsylvania New Jersey Maryland North Carolina Colorado Georgia Minnesota Tennessee Illinois Missouri Ohio Florida Kentucky Virginia Alabama Indiana Arkansas Iowa Massachusetts Arizona California Kansas Louisiana Nebraska Other (1) 2024 Contractual Number of Properties Rental Income Percentage of 2024 Contractual Rental Income 8 $ 8,543,490 6,558,674 7 5,623,532 7 5,394,302 5 3,763,401 4 3,712,022 2 3,408,365 7 3,160,873 3 2,981,085 6 2,947,312 5 2,886,172 3 2,242,092 7 2,166,440 3 1,965,547 9 1,840,120 5 1,530,082 4 1,429,279 3 1,383,326 1 1,347,066 2 1,230,498 1 1,200,437 1 957,624 4 868,490 2 809,642 1 680,367 2 654,718 1 562,293 1 1,408,357 4 108 $ 71,255,606 Approximate Building 12.0 9.2 7.9 7.6 5.3 5.2 4.8 4.4 4.2 4.1 4.1 3.1 3.0 2.8 2.6 2.1 2.0 1.9 1.9 1.7 1.7 1.3 1.2 1.1 1.0 0.9 0.8 2.1 Square Feet 1,582,568 485,602 757,837 827,117 354,102 625,710 330,072 208,420 482,729 501,573 864,449 277,786 472,276 706,164 235,364 239,335 176,656 294,000 183,310 248,370 208,234 49,151 87,156 218,116 96,708 54,229 101,584 182,978 100.0 10,851,596 (1) These properties are located in four states. The following table sets forth information, presented by state, related to the properties owned by our joint ventures as of December 31, 2023: Our Share of the Number of Base Rent Payable in 2024 to these Properties Joint Ventures Square Feet 46,058 Approximate Building 235,140 2 $ State Georgia 27 Mortgage Debt At December 31, 2023, we had: (cid:2) 68 first mortgages secured by 69 of our 108 properties; and (cid:2) $422.6 million of mortgage debt outstanding with a weighted average interest rate of 4.31% and a weighted average remaining term to maturity of approximately 5.9 years. Substantially all of such mortgage debt bears fixed interest at rates ranging from 3.05% to 8.40% and contains prepayment penalties. The following table sets forth scheduled principal mortgage payments due on our properties as of December 31, 2023 (dollars in thousands): YEAR 2024 2025 2026 2027 2028 Thereafter Total $ PRINCIPAL PAYMENTS DUE 61,779 41,477 29,670 47,923 38,873 202,843 422,565 $ The mortgages on our properties are generally non-recourse, subject to standard carve-outs. Item 3. Legal Proceedings. Not applicable. Item 4. Mine Safety Disclosures. Not applicable. 28 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 1, 2024, there were approximately 241 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 As of March 1, 2024, we are authorized to repurchase up to $8.1 million of shares our common stock through, among other things, open market or privately negotiated transactions. There is no stated expiration date for our stock repurchase program. Set forth below is a table describing the purchases we made in the quarter ended December 31, 2023: Total Number of Approximate Dollar Value of Shares Purchased Total Number Average of Shares Purchased of Shares that May Price Paid Yet Be Purchased per Share Announced Programs Under the Programs 8,655,224 8,081,814 8,081,814 as Part of Publicly 133,667 $ 30,400 — 164,067 $ 18.40 18.80 — 18.47 133,667 $ 30,400 — 164,067 Period October 1, 2023 - October 31, 2023 November 1, 2023 - November 30, 2023 December 1, 2023 - December 31, 2023 Total Item 6. [Reserved.] 29 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 consisting of industrial and, to a lesser extent, retail 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, 2023, we own, in 31 states, 110 properties, including three properties owned by consolidated joint ventures and two properties owned through unconsolidated joint ventures. Challenges and Uncertainties as a Result of the Volatile Economic Environment During the past two years, there has been a significant economic uncertainty due, among other things, to volatile interest rates and the challenges presented by an inflationary/potential recessionary environment. This uncertainty, volatility and the related causes may adversely impact us in the future. Due to this uncertainty, we were especially cautious in pursuing acquisition opportunities in 2023 and may continue to be cautious in pursuing such opportunities in the near future. As a result, our ability, in the near term, to grow revenue and net income through acquisitions may be adversely affected. General Challenges and Uncertainties In addition to the challenges and uncertainties as also described under “Cautionary Note Regarding Forward-Looking Statements”, “Item 1A. Risk Factors”, and “— Challenges and Uncertainties as a Result of the Volatile Economic Environment”, we, among other things, face additional challenges and uncertainties, including the possibility we will not be able to: 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; acquire or dispose of properties on acceptable terms; or grow, through acquisitions or otherwise, our property portfolio so as to generate additional rental and net income. If we are unable to address these challenges successfully, we may be unable to sustain our current level of dividend payments. Other than with respect to our continuing focus on acquiring industrial properties, we generally seek to manage the risk of our real property portfolio and the related financing arrangements by (i) diversifying among 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, 2023: (cid:2) our 2024 contractual rental income is derived from the following property types: 66.1% from industrial, 24.2% from retail, 3.7% from health and fitness, 1.7% from restaurant, 1.6% from theaters, and 2.7% from other properties, (cid:2) there are six states with properties that account for 5% or more of 2024 contractual rental income, and one state that accounts for more than 10.0% of 2024 contractual rental income (i.e., South Carolina at 12.0%), (cid:2) there is one tenant that accounts for more than 5% of 2024 contractual rental income (i.e., FedEx at 5.5%), (cid:2) through 2033, there are four years in which the percentage of our 2024 contractual rental income represented by expiring leases equals or exceeds 10% (i.e., 20.4% in 2027, 13.8% in 2028, 10.1% in 2029 and 10.5% in 2033) — approximately 5.1 % of our 2024 contractual rental income is represented by leases expiring in 2034 and thereafter, (cid:2) after giving effect to interest rate swap agreements, substantially all of our mortgage debt bears interest at fixed rates, (cid:2) in 2024, 2025 and 2026, 14.6%, 9.8% and 7.0%, respectively, of our total scheduled principal mortgage payments (i.e., amortization and balances due at maturity) is due, and 30 (cid:2) there are three different counterparties to our portfolio of interest rate swaps: two counterparties, rated A3 or better by a national rating agency (i.e., Moody’s Long-Term Debt Ratings), account for 88.6%, or $26.3 million, of the notional value of our swaps; and one counterparty, rated A(cid:3) by another rating provider (i.e., Kroll), accounts for 11.4%, or $3.3 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, changes in tenant payment patterns, 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. During the three years ending December 31, 2026, 49 leases for 42 tenants at 35 properties representing $14.3 million, or 20.0%, of 2024 contractual rental income expire. 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. At December 31, 2023, we have unhedged variable rate mortgage debt in the principal amount of $16.0 million of which bears a weighted average interest rate of 5.73%. The table below provides information about such debt as of December 31, 2023. Current Interest Rate Interest Rate Reset Date June 2029 3.85 % 6.50 8.40 3.95 December 2030 n/a February 2026 Property Lexington, Kentucky Kennesaw, Georgia Hamilton, Ohio Deptford, NJ Principal Amount Maturity Date $ $ June 2047 5,279,000 4,467,000 December 2041 September 2024 3,969,000 2,277,000 February 2041 15,992,000 31 Challenges and Uncertainties Facing Certain Properties and Tenants Set forth below is a description of the challenges and uncertainties facing certain tenants or properties. If these challenges, and in particular, the challenges faced by Regal Cinemas, The Vue and LA Fitness, are not resolved in a satisfactory manner, we will be adversely affected. Regal Cinemas Regal Cinemas, or Regal, is a tenant at two properties. Regal’s parent, Cineworld Group plc, filed for Chapter 11 bankruptcy protection in September 2022 and as a result, we and Regal amended the leases at these properties to, among other things, shorten the lease terms and reduce the rent payable. Specifically, prior to the amendments, the leases were scheduled to expire in 2032 and 2035 and as of January 1, 2024, without giving effect to such amendments, would have provided for an aggregate base rent of $21.0 million through the remaining lease term. After giving effect to the amendments, the leases expire in 2030 and as of January 1, 2024 provide for an aggregate base rent of $7.7 million payable over the remaining lease term. At December 31, 2023, our Indianapolis, Indiana property had mortgage debt, intangible lease liabilities and intangible lease assets of approximately $3.6 million, $527,000 and $476,000, respectively. There is no mortgage debt, intangible lease liabilities or intangible lease assets at the Greensboro, North Carolina property at which we lease the underlying fee and in turn lease the property to Regal. We estimate that the carrying costs for these two properties for the twelve months ending December 31, 2024, are approximately $1.3 million, including ground lease rent of $512,000 (which sum has historically been paid directly by Regal to the owner of the Greensboro property), real estate taxes of approximately $356,000, and debt service of $290,000. Regal is the primary obligor with respect to $460,000 of these carrying costs and we are responsible with respect to such amount if it is not paid by Regal. Because the collection of amounts owed by Regal is deemed to be less than probable, we have not accrued Regal’s base rent (but have collected all base rent payable pursuant to the amended leases) and since October 2020, have been reporting same on a cash basis. If Regal continues to face financial challenges, it will be difficult and costly (due, among other things, to the limited number of exhibitors and the unique configuration of theater properties) to find a replacement tenant. 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. Since 2018, the property has faced, and we anticipate that the property will continue to face, occupancy and financial challenges, and our tenant has not paid rent since October 2020 (i.e., an aggregate of $3.9 million that would have been due had it generated specified levels of positive operating cash flow), and we anticipate that it will not pay rent for an extended period. After giving effect to debt service, the property is operating on a negative cash flow basis, and we anticipate that such trend will continue for an extended period. Since 2021 (through March 1, 2024), we provided The Vue with an aggregate of $3.4 million to cover, among other things, operating cash flow shortfalls and capital expenditures, and the amount to be funded in 2024, if any, has not been definitively determined. At December 31, 2023, (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 $17.3 million and is subordinate to $63.6 million of mortgage debt incurred by the owner/operator. Our cash flow will be adversely impacted by our funding of additional capital expenditures and operating expense shortfalls at the property (including our payment of the tenant’s debt service obligations) and the tenant’s continuing non-payment of rent. If we determine that under GAAP the property has been impaired, we may incur a substantial impairment charge and if we sell the property, we may recognize a substantial loss. See Note 6 to our consolidated financial statements. 32 LA Fitness LA Fitness leases from us three properties pursuant to three separate leases, including a 38,000 square foot health and fitness facility in Hamilton, Ohio. LA Fitness terminated the lease at the Hamilton, Ohio property effective as of May 1, 2024. As a result, we estimate that (i) from January 1, 2024 through the remaining lease term, we will generate $120,000 of rental income and (ii) that through 2024, we will incur approximately $230,000, $180,000 and $170,000 of interest expense, real estate operating expense and depreciation and amortization expense, respectively. During 2023, this property accounted for (i) $893,000 of rental income and (ii) $198,000, $188,000 and $206,000 of interest expense, real estate operating expense and depreciation and amortization expense, respectively, and during 2022, this property accounted for (iii) $915,000 of rental income and (iv) $197,000, $170,000 and $210,000 of interest expense, real estate operating expense and depreciation and amortization expense, respectively. At December 31, 2023, the variable rate mortgage debt (bearing an interest rate of daily SOFR plus 300 basis points) on this property is $4.0 million and is scheduled to mature in September 2024. It will be difficult, due to the presence of another health and fitness facility located nearby, to re-lease this property to another health and fitness operator, and if we are unable to re-lease this property to such an operator, it will be costly to reconfigure the space for use other than as a fitness facility. We will be adversely effected if we surrender this property to the lender or if we pay off the mortgage debt without obtaining a suitable replacement tenant at this property. 2023 and Recent Developments In 2023, we: (cid:2) sold 10 properties (i.e., seven restaurants and three retail properties) and an out-parcel at a multi-tenant retail property, for an aggregate net gain on sale of real estate of $17.0 million. The properties sold accounted for $2.5 million, or 2.7%, and $3.0 million, or 3.3 %, of 2023 and 2022 rental income, net, respectively. We estimate that, excluding any acquisitions, dispositions or lease amendments in 2024, rental income in 2024 will decrease by approximately $2.5 million from 2023 due to these sales. (cid:2) paid down our credit facility by approximately $21.8 million primarily through the use of net proceeds from property sales – as of December 31, 2023 and March 1, 2024, no amounts were outstanding on the facility. (cid:2) acquired a multi-tenant industrial property for an aggregate purchase price of $13.4 million. This property accounts for $806,000, or 1.1%, of our 2024 contractual rental income. (cid:2) through an unconsolidated joint venture in which we had a 50% equity interest, sold a multi-tenant shopping center located in Manahawkin, NJ for $36.5 million, of which our share was $18.3 million. In 2023, we recognized a $108,000 loss from the sale of this property. Our share of the net proceeds from this sale was $7.1 million. We generated, in 2023, $1.1 million (including our $850,000 share of an impairment charge) of equity in loss and in 2022 and 2021, $210,000 and $11,000, respectively, of equity in earnings from this unconsolidated joint venture. (cid:2) entered into, amended or extended 28 leases with respect to approximately 988,000 square feet. (cid:2) repurchased approximately 499,000 shares of our common stock for an aggregate purchase price of approximately $9.6 million (i.e., an average price of $19.24 per share). We anticipate that we will continue to repurchase our stock subject to, among other things, the availability of funds and attractiveness of alternative investments. 33 Subsequent to December 31, 2023, we: (cid:2) entered into a contract to sell a pad site at a multi-tenant retail shopping center in Lakewood, Colorado, which we own through a consolidated joint venture in which we hold a 90% interest, for $2.9 million. The buyer’s right to terminate the contract expired in February 2024 and the sale is anticipated to close during the quarter ending March 31, 2024. We anticipate recognizing a gain of approximately $1.8 million on this sale during the three months ending March 31, 2024, of which the non-controlling interest’s share will be approximately $180,000. Our Business Objective Our business objective is to increase stockholder value by: (cid:2) identifying opportunistic and strategic property acquisitions consistent with our portfolio and our acquisition strategies; (cid:2) monitoring and maintaining our portfolio, and as appropriate, working with tenants to facilitate the continuation or expansion of their tenancies; (cid:2) managing our portfolio effectively, including opportunistic and strategic property sales; (cid:2) 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; and (cid:2) maintaining and, over time, increasing our dividend. 34 Comparison of Years Ended December 31, 2023 and 2022 Results of Operations - Revenues The following table compares total revenues for the periods indicated: Year Ended December 31, (Dollars in thousands) Rental income, net Lease termination fees Total revenues Rental income, net. 2023 90,646 $ — 90,646 $ $ $ Increase (Decrease) 2022 92,191 $ 25 92,216 $ % Change (1.7) (100.0) (1.7) (1,545) (25) (1,570) The following table details the components of rental income, net, for the periods indicated: (Dollars in thousands) Acquisitions (1) Dispositions (2) Same store (3) Rental income, net Year Ended December 31, 2023 2022 Increase (Decrease) % Change $ $ 5,413 2,470 82,763 90,646 $ $ 2,472 3,641 86,078 92,191 $ $ 2,941 (1,171) (3,315) (1,545) 119.0 (32.2) (3.9) (1.7) (1) The 2023 column represents rental income from properties acquired since January 1, 2022; the 2022 column represents rental income from properties acquired during the year ended December 31, 2022. (2) The 2023 column represents rental income from properties sold during the year ended December 31, 2023; the 2022 column represents rental income from properties sold since January 1, 2022. (3) Represents rental income from 101 properties that were owned for the entirety of the periods presented. Changes at same store properties The decrease in same store rental income is due to the inclusion in 2022, of $4.6 million from the litigation settlement proceeds from The Vue, and decreases of: - - - $689,000 of rental income from our wholly-owned Regal Cinemas properties due to lease amendments effectuated in connection with its bankruptcy reorganization (see “—Challenges and Uncertainties Facing Certain Tenants and Properties” for further information regarding Regal Cinemas), $654,000 of rental income from leases that expired in 2022 and 2023 at several properties, $461,000 from Bed Bath & Beyond - Kennesaw, Georgia which filed for bankruptcy protection (including the write-off, during 2023, of its $133,000 unbilled rent receivable balance), The decrease was offset by increases of: - - - $1.7 million of rental income from various lease amendments and extensions, $892,000 of rental income due to new tenants at various properties, and $497,000 in tenant reimbursements, of which $443,000 relates to operating expenses generally incurred in the same year. 35 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 Total operating expenses Year Ended December 31, Increase 2023 2022 (Decrease) % Change $ $ 24,789 $ 15,822 16,444 284 57,339 $ 23,781 $ 15,258 15,508 285 54,832 $ 1,008 564 936 (1) 2,507 4.2 3.7 6.0 (0.4) 4.6 Depreciation and amortization. The increase is due primarily to: - - - $1.5 million of such expense from properties acquired in 2023 and 2022 (including $1.1 million from properties acquired in 2022), $434,000 of depreciation from improvements at several same store properties, and $186,000 of leasing commissions at several same store properties. The increase was offset by: - - a decrease, in 2023, of $854,000 related to improvements and tenant origination costs at several properties that prior to December 31, 2023 were fully amortized, and the inclusion, in 2022, of $332,000 of such expense from the properties sold since January 1, 2022. General and administrative. The increase in 2023 is due primarily to increases of (i) $441,000 of compensation expense primarily due to additional employees and higher levels of compensation, and (ii) $150,000 in professional fees related to various matters. Real estate expenses. The increase is primarily due to: - - - $574,000 from properties acquired in 2023 and 2022 (including $407,000 from properties acquired in 2022), an aggregate increase of $224,000 relating to real estate tax expense for several properties, none of which were individually significant, and aggregate increases of $368,000 of other real estate expenses for several properties (primarily related to our Brooklyn, New York property). The increase was offset primarily by a $237,000 decrease related to properties sold in 2022 and 2023. A substantial portion of real estate expenses are rebilled to tenants and are included in Rental income, net, on the consolidated statements of income. 36 Gain on sale of real estate, net The following table lists the sold properties and related gains, net, for the periods indicated: Year Ended December 31, Increase % (Decrease) Change 2022 (Dollars in thousands) TGI Fridays restaurant property - Hauppauge, New York $ Havertys retail property - Duluth, Georgia TGI Fridays restaurant property - Greensboro, North Carolina Land - Lakewood, Colorado (1) Chuck E Cheese restaurant property - Indianapolis, Indiana TGI Fridays restaurant property - Richmond, Virginia Applebee's restaurants (2 properties) - Cartersville & Carrollton, Georgia Applebee's restaurant property - Lawrenceville, Georgia Havertys retail property - Virginia Beach, Virginia Barnes & Noble retail property - Fort Myers, Florida Wendy's restaurants (4 properties) - Various cities, Pennsylvania Orlando Baking industrial property - Columbus, Ohio Havertys retail property - Fayetteville, Georgia Vacant retail property - Columbus, Ohio Total gain on sale of real estate, net (1) The non-controlling interest’s share of the gain is $218. Other Income and Expenses — — — — — — — — — 2023 1,534 $ 3,180 332 2,177 226 265 2,581 989 1,727 3,997 — — — — 4,649 6,925 1,125 4,063 16,762 $ 246 1.5 $ 17,008 $ The following table compares other income and expenses for the periods indicated: (Dollars in thousands) Other income and expenses: Year Ended December 31, Increase 2023 2022 (Decrease) % Change Equity in (loss) earnings of unconsolidated joint ventures Equity in loss from sale of unconsolidated joint venture property Income on settlement of litigation Other income $ (904) $ (108) — 234 400 $ (1,304) (108) (5,388) (769) — 5,388 1,003 (326.0) n/a (100.0) (76.7) Interest: Expense Amortization and write-off of deferred financing costs (18,780) (839) (17,569) (1,115) 1,211 (276) 6.9 (24.8) Equity in (loss) earnings of unconsolidated joint ventures. The decrease in 2023 relates to the multi-tenant shopping center in Manahawkin, New Jersey which we sold in December 2023 and reflects (i) our 50% share, or $850,000, of a $1.7 million impairment charge our joint venture recorded, (ii) a $256,000 decrease in base rent collected primarily from Regal Cinemas, a tenant at this property, due to a lease amendment effectuated in connection with its bankruptcy reorganization, and (iii) a $103,000 debt prepayment charge due to the early payoff of the mortgage on this property in connection with its sale. See Note 7 to our consolidated financial statements. Equity in loss from sale of unconsolidated joint venture property. The 2023 results represent a loss of $108,000 from the sale of our joint venture property in Manahawkin, New Jersey on December 15, 2023. 37 Income on settlement of litigation. In April 2022, we received $5.4 million in connection with the settlement of a lawsuit at our former Round Rock, Texas property (the “Round Rock Settlement”). (See Note 13 to our consolidated financial statements.) Other income. Included in 2022 is $918,000 representing the final property insurance recovery related to our Lake Charles, Louisiana property damaged in a 2020 hurricane. (See Note 13 to our consolidated financial statements.) Interest expense. The following table compares interest expense for the periods indicated: (Dollars in thousands) Interest expense: Mortgage interest Credit line interest Total Mortgage interest Year Ended December 31, 2023 2022 Increase (Decrease) % Change $ $ 17,514 1,266 18,780 $ $ 16,762 807 17,569 $ $ 752 459 1,211 4.5 56.9 6.9 The following table reflects the average interest rate on the weighted average principal amount of outstanding mortgage debt during the applicable year: (Dollars in thousands) Weighted average interest rate Weighted average principal amount Year Ended December 31, 2023 2022 Increase (Decrease) 4.18 % 4.14 % $ 416,517 $ 404,263 $ % Change 1.0 3.0 0.04 % 12,254 The increase in 2023 is due primarily to the increase in the average principal amount of mortgage debt outstanding which resulted from financings effectuated in connection with refinancings and acquisitions. Credit facility interest 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) Weighted average interest rate Weighted average principal amount Year Ended December 31, 2023 2022 Increase (Decrease) 6.69 % 3.42 % $ 15,676 $ 16,222 $ 3.27 % (546) % Change 95.6 (3.4) The increase in 2023 is due to the increase on the weighted average interest rate. Amortization and write-off of deferred financing costs. The decrease in 2023 is primarily due to the $221,000 write-off of deferred costs related to the mortgages on the eleven Havertys properties that were paid off in June 2022. 38 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 straight-line rent accruals and amortization of lease intangibles, deducting from income, additional rent from ground lease tenant, income on settlement of litigation, income on insurance recoveries from casualties, lease termination and assignment fees, and adding back amortization of restricted stock and restricted stock unit compensation expense, amortization of costs in connection with its financing activities (including its share of its unconsolidated joint ventures), debt prepayment costs and amortization of lease incentives and mortgage intangible assets. Since the NAREIT White Paper does not provide guidelines for computing AFFO, the computation of AFFO varies 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 predictably over time. In fact, real estate values 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 in evaluating potential property acquisitions. FFO and AFFO do not represent net income or cash flows from operating, investing or financing activities as defined by GAAP. FFO and AFFO should not be considered to be an alternative to net income as a reliable measure of our operating performance; nor 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. 39 The following tables provide a reconciliation of net income and net income per common share (on a diluted basis) in accordance with GAAP to FFO and AFFO for the years indicated (dollars in thousands, except per share amounts): Year Ended December 31, 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: amortization of deferred leasing costs Add: our share of amortization of deferred leasing costs of unconsolidated joint ventures Add: our share of impairment loss of unconsolidated joint venture property Add: equity in loss from sale of unconsolidated joint venture property Deduct: gain on sale of real estate, net 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: other income and income on settlement of litigation Deduct: additional rent from ground lease tenant Deduct: income on insurance recovery from casualty loss Deduct: lease termination fee income Deduct: our share of unconsolidated joint venture lease termination fee income Add: amortization of restricted stock and RSU compensation Add: amortization and write-off of deferred financing costs Add: amortization of lease incentives Add: amortization of mortgage intangible assets Add: our share of amortization of deferred financing costs of unconsolidated joint venture Adjustments for non-controlling interests Adjusted funds from operations applicable to common stock 2022 2023 $ 29,614 $ 42,177 23,193 519 588 21 — — (16,762) (67) 49,669 (3,240) 24,063 477 726 18 850 108 (17,008) 148 38,996 (2,717) (27) (19) (5,388) (112) (4,626) (16) (918) — (25) — (25) (21) 5,507 5,367 1,115 839 44 121 12 114 17 42 14 1 $ 42,595 $ 42,129 Year Ended December 31, 2022 2023 $ 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: amortization of deferred leasing costs Add: our share of amortization of deferred leasing costs of unconsolidated joint ventures Add: our share of impairment loss of unconsolidated joint venture property Add: equity in loss from sale of unconsolidated joint venture property Deduct: gain on sale of real estate, net Adjustments for non-controlling interests NAREIT funds from operations per share of common stock (a) 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: other income and income on settlement of litigation Deduct: additional rent from ground lease tenant Deduct: income on insurance recovery from casualty loss Deduct: lease termination fee income Deduct: our share of unconsolidated joint venture lease termination fee income Add: amortization of restricted stock and RSU compensation Add: amortization and write-off of deferred financing costs Add: amortization of lease incentives Add: amortization of mortgage intangible assets Add: our share of amortization of deferred financing costs of unconsolidated joint venture Adjustments for non-controlling interests Adjusted funds from operations per share of common stock (a) $ 1.38 $ 1.13 .02 .03 — .04 .01 (.80) .01 1.82 (.13) — (.01) — — — — .25 .04 .01 .01 — — 1.99 $ 1.99 1.09 .02 .03 — — — (.79) — 2.34 (.16) — (.25) (.22) (.04) — — .26 .05 — — — — 1.98 (a) The weighted average number of diluted common shares used to compute FFO and AFFO applicable to common stock includes unvested restricted shares that are excluded from the computation of diluted EPS. 40 The $10.7 million, or 21.5%, decrease in FFO is due primarily to: (cid:2) (cid:2) (cid:2) (cid:2) the inclusion, in the corresponding 2022 period, of (i) $5.4 million from the Round Rock Settlement, (ii) $4.6 million from the litigation settlement proceeds from The Vue (included in rental income), and (iii) $918,000 of income on insurance recovery from casualty loss, a $1.2 million increase in interest expense, a $936,000 increase in real estate operating expenses, and a $564,000 increase in general and administrative expense. Offsetting the decrease is a $3.1 million net increase in rental income. See “—Comparison of Years Ended December 31, 2023 and 2022” for further information regarding these changes. The $466,000, or 1.1%, increase in AFFO is due to the factors impacting FFO as described immediately above, excluding the (i) $5.4 million from the Round Rock Settlement, (ii) $4.6 million from the litigation settlement proceeds from The Vue (included in rental income), and (iii) $918,000 of income on insurance recovery from casualty loss. See “—Comparison of Years Ended December 31, 2023 and 2022” for further information regarding these changes. Diluted per share FFO and AFFO were impacted negatively in the year ended December 31, 2023 by an average increase from December 31, 2022 of approximately 114,000 in the weighted average number of shares of common stock outstanding as a result of stock issuances pursuant to the equity incentive and dividend reinvestment, offset by the Company’s repurchase of shares during 2023. Comparison of Years Ended December 31, 2022 and 2021 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. 41 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 2023, we obtained approximately (i) $46.6 million of net proceeds from property sales (after giving effect to our share of $11.3 million of mortgage debt repayments and $1.8 million of seller-financing), (ii) $22.6 million of proceeds from mortgage financings (after giving effect to $13.8 million of refinanced amounts) and (iii) $4.6 million from the litigation settlement proceeds from The Vue. Our available liquidity at March 1, 2024 was approximately $123.9 million, including approximately $23.9 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 $100.0 million available under our credit facility. Liquidity and Financing We expect to meet our short term (i.e., one year or less) and long term (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 aggregate of $2.7 million of capital expenditures) from the foregoing, as well as property financings, property sales and sales of our common stock. The following table sets forth, as of December 31, 2023, information with respect to our mortgage debt that is payable from January 2024 through December 31, 2026: (Dollars in thousands) Amortization payments Principal due at maturity Total 2025 2026 2024 $ 11,873 $ 10,627 $ 10,491 $ 32,991 99,935 $ 61,779 $ 41,477 $ 29,670 $ 132,926 19,179 30,850 49,906 Total 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 2024 through 2026. 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, although we have done so infrequently and primarily in the context of a tenant default at a property for which we have not found a replacement tenant, if we believe we have negative equity in a property subject to a non-recourse mortgage loan, we may convey such property to the mortgagee 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 under the credit facility, thus providing us with the ability to re-borrow under the credit facility for the acquisition of additional properties. 42 Material Contractual Obligations The following sets forth our material contractual obligations as of December 31, 2023: Payment due by period (Dollars in thousands) 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 $ 28,774 $ 48,305 $ 39,267 $ 64,299 $ 180,645 337,174 — 19,087 $ 82,852 $ 105,759 $ 115,275 $ 233,020 $ 536,906 168,560 — 161 50,029 — 7,425 49,906 — 4,172 68,679 — 7,329 (1) At December 31, 2023 there was no balance outstanding on the credit facility. We may borrow up to $100.0 million pursuant to such facility, subject to compliance with borrowing base requirements. At December 31, 2023, after giving effect to such borrowing base requirements, $100.0 million was available to be borrowed. The facility expires December 31, 2026. See “—Credit Facility”. (2) Assumes that $3.6 million will be payable annually during the next five years pursuant to the compensation and services agreement. Excludes (i) approximately $2.7 million of capital expenditures to be incurred in the ordinary course of business in connection with tenant improvements (including $1.2 million in connection with the Havertys Furniture lease extensions), (ii) amounts required to acquire properties, and (iii) the potential funding in 2024 for capital expenditures and operating cash flow shortfalls at The Vue, which amount, if any, has not been definitively determined. See “—General Challenges and Uncertainties,” and “—Challenges and Uncertainties Facing Certain Properties and Tenants—The Vue”. As of December 31, 2023, we had $422.6 million of mortgage debt outstanding, 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 $77.1 million due through 2026 will be paid primarily from cash generated from our operations. We anticipate that principal balances due at maturity through 2026 of $99.9 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. 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 $40.0 million and 40% of the borrowing base. See “—Liquidity and Capital Resources”. The facility matures December 31, 2026 and bears interest equal to 30-day SOFR 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 275 basis points if such ratio is greater than 60%. The applicable margin was 175 basis points for each of 2023 and 2022. 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 2023, the weighted average interest rate on the facility was approximately 6.69% and as of February 29, 2024, the rate on the facility was 7.08%. The terms of our credit facility include 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. 43 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. Inflation We are exposed to inflation risk as income from long-term leases is the primary source of our cash flows from operations. Approximately 69% of our leases contain provisions intended to mitigate the impact of inflation. These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures). In addition, many of our leases require the tenant to pay, or reimburse us for our payment of, all or a majority of the property’s operating expenses, including real estate taxes, utilities, insurance and building repairs, which may also mitigate our risks associated with rising costs. However, these rent escalation provisions may not adequately offset the effects of inflation. Inflation may also affect the overall cost of our unhedged debt (i.e., primarily debt incurred pursuant to our credit facility) and mortgage debt we may incur in the future. (The interest rate risk associated with substantially all of our current mortgage debt is either mitigated through long-term fixed interest rate loans and interest rate hedges). Increasing interest rates on acquisition mortgage debt limits the acquisition opportunities we can pursue and reduces the prices at which we sell our properties. 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. Although we qualify for federal taxation as a REIT, we are 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 current 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. Our board of directors will continue to evaluate, on a quarterly basis, the amount and nature (i.e., cash, stock or a combination of the foregoing) 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. 44 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. Revenue Recognition Our main source of revenue is rental income from our tenants. Rental income primarily 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 (which includes land, building and building improvements) and identified intangible assets and liabilities (which include the value of above, below and at-market leases and origination costs associated with in-place leases and assumed mortgages) based in each case on their fair values. The fair value of the tangible assets of an acquired property 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 the relative fair values of these assets. We assess the fair value of the lease intangibles and assumed mortgages 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 reasonably certain to be exercised by the tenant 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. 45 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 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. Equity-Based Compensation We grant shares of restricted stock and restricted stock units ("RSUs") to eligible plan participants, subject to the recipient's continued service over a specified period and, with respect to the RSUs, the satisfaction of specified conditions over a specified period. The RSUs vest based upon satisfaction of specified metrics with respect to (i) average of our annual total stockholder return (“TSR Awards”) and/or (ii) average annual return of capital (“ROC Awards”), in each case as calculated pursuant to the applicable award agreement. We account for the restricted stock awards and RSUs in accordance with ASC 718, Compensation - Stock Compensation, which requires that such compensation be recognized in the financial statements based on its estimated grant-date fair value. The value of such awards is recognized as compensation expense in general and administrative expenses in the accompanying consolidated statements of operations over the applicable service periods. Grant date fair value is determined with respect to the (i) the restricted stock awards, by the closing stock price on the date of grant, (ii) TSR Awards, by using a Monte Carlo simulation relying upon various assumptions and (iii) ROC Awards, by using the closing stock price on the grant date, subject to quarterly adjustment based upon management’s projection as to the achievability of the specified metrics related to the ROC Awards. See Note 11 to our consolidated financial statements. 46 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 substantially all 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, 2023, we had no liability in the event of the early termination of our swaps. At December 31, 2023, we had 13 interest rate swap agreements outstanding with an aggregate $29.6 million notional amount. 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, 2023, if there had been an increase of 100 basis points in forward interest rates, the fair market value of the interest rate swaps and the net unrealized gain on derivative instruments would have increased by $309,000. If there were a decrease of 100 basis points in forward interest rates, the fair market value of the interest rate swaps and the net unrealized gain on derivative instruments would have decreased by $316,000. These changes would not have any impact on our net income or cash. 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, 2023: (Dollars in thousands) Fixed rate: Long‑term debt Weighted average interest rate Variable rate: Long‑term debt(1)(2) For the Year Ended December 31, Fair Market 2024 2025 2026 2027 2028 Thereafter Total Value $ 61,779 $ 41,477 $ 29,670 $ 47,923 $ 38,873 $ 202,843 $ 422,565 $ 397,031 4.63 % 4.30 % 4.01 % 3.77 % 4.58 % 4.33 % 4.31 % 5.93 % — $ — $ — $ — $ — $ — $ — $ — $ (1) As of December 31, 2023, there was no balance outstanding on our credit facility. Our credit facility matures on December 31, 2026 and bears interest equal to 30-day SOFR 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.” (2) Excludes $16.0 million of variable rate mortgage debt of which $4.0 million with respect to a property tenanted by LA Fitness (Hamilton, Ohio) matures in 2024. For further information about our variable rate mortgage debt, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—General Challenges and Uncertainties.” 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. 47 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, 2023, 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: (cid:2) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company; (cid:2) 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 (cid:2) 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, 2023. 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, 2023, 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, 2023 that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. Item 9B. Other Information. None of our officers or directors had any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” in effect at any time during the three months ended December 31, 2023. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 48 PART III Item 10. Directors, Executive Officers and Corporate Governance. 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 2024 annual meeting of stockholders, to be filed with the SEC not later than April 29, 2024, 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 2024 annual meeting of stockholders, to be filed with the SEC not later than April 29, 2024, and is incorporated herein by reference. 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 2024 annual meeting of stockholders, to be filed with the SEC not later than April 29, 2024 and is incorporated herein by reference. Equity Compensation Plan Information The following table provides information as of December 31, 2023 about shares of our common stock that may be issued upon the exercise of options, warrants and rights under our 2016 Incentive Plan (the “2016 Plan”), our 2019 Incentive Plan (the “2019 Plan”; and together with the 2016 Plan, the “Prior Plans”) and our 2022 Incentive Plan (the “2022 Plan”; and together with the Prior Plans, the “Incentive Plans”). No further awards may be granted under the Prior Plans. Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) (a) 248,112 — 248,112 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) 428,675 — 428,675 Plan Category Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total (1) Includes up to 79,622 shares, 83,240 shares and 85,250 shares of common stock issuable pursuant to restricted stock units (“RSUs”) that vest as of June 30, 2024, 2025 and 2026, respectively, 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 vesting dates. RSUs granted pursuant to the 2019 Plan and the 2022 Plan account for 79,622 shares and 168,490 shares, respectively. Excludes shares of restricted stock issued pursuant to the Incentive Plans as such shares, although subject to forfeiture, are outstanding. See Note 11 to our consolidated financial statements. (2) Gives effect to the outstanding restricted stock other than the 151,180 shares of restricted stock granted January 12, 2024 pursuant to the 2022 Plan. 49 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 2024 annual meeting of stockholders, to be filed with the SEC not later than April 29, 2024 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 2024 annual meeting of stockholders, to be filed with the SEC not later than April 29, 2024 and is incorporated herein by reference. 50 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 (PCAOB ID 00042) —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 Distribution Agreement, dated September 21, 2023 by and between One Liberty Properties, Inc. (“OLP”) and B. Riley FBR, Inc. (“Riley”) (incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K filed on September 21, 2023). 3.1 Articles of Amendment and Restatement of OLP (incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K for the year ended December 31, 2020). 3.2 Amended and Restated By-Laws of OLP effective as of December 7, 2022 (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on December 12, 2022). 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* OLP Amended and Restated 2016 Incentive Plan (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed June 14, 2023). 4.3* OLP Amended and Restated 2019 Incentive Plan (incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed June 14, 2023). 4.4* OLP 2022 Incentive Plan (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed June 9, 2022). 4.5 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.5 to our Annual Report on Form 10-K for the year ended December 31, 2020). 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 OLP (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 (incorporated by reference to Exhibit 10.4 to our Annual Report on Form 10-K for the year ended December 31, 2020). 51 10.5 Fourth Amendment to Loan Agreement dated as of November 8, 2022 (incorporated by reference to Exhibit 10.1 our Current Report on Form 8-K filed November 9, 2022). 10.6* Compensation and Services Agreement effective as of January 1, 2007 between OLP 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). 10.7* First Amendment to Compensation and Services Agreement effective as of April 1, 2012 between OLP 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). 10.8* Form of Performance Award Agreement for grants in 2019 and 2020 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). 10.9* Form of Restricted Stock Award Agreement for awards granted in 2020 and 2021 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). 10.10* Form of Performance Award Agreement for grants in 2021 pursuant to the 2019 Incentive Plan (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021). 10.11* Form of Performance Award Agreement for grants in 2022 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended June 30, 2022). 10.12* Form of Performance Award Agreement for grants in 2023 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended June 30, 2023). 10.13* Form of Restricted Stock Award Agreement for awards granted in 2023 pursuant to the 2022 Incentive Plan (incorporated by reference to Exhibit 10.16 to our Annual Report on Form 10-K for the year ended December 31, 2022). 10.14* Form of Restricted Stock Award Agreement for awards granted in 2024 pursuant to the 2022 Incentive Plan. 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 97.1 Registrant’s Clawback Policy effective October 2, 2023 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, 2023 filed on March 6, 2024 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. 52 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized. March 6, 2024 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 Securities Exchange Act of 1934, 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 6, 2024 Vice Chairman of the Board of Directors March 6, 2024 /s/ PATRICK J. CALLAN, JR. Patrick J. Callan, Jr. President, Chief Executive Officer and Director (Principal Executive Officer) Charles Biederman 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 53 March 6, 2024 March __, 2024 March 6, 2024 March 6, 2024 March 6, 2024 March 6, 2024 March 6, 2024 Signature Title Date /s/ ISAAC KALISH Isaac Kalish Senior Vice President and Chief Financial Officer (Principal Financial Officer) March 6, 2024 /s/ MILI MATHEW Mili Mathew Vice President, Financial (Principal Accounting Officer) March 6, 2024 54 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, 2023 and 2022, 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, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. 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. Impairment of Real Estate Investments Description of the Matter At December 31, 2023, the Company’s real estate investments totaled approximately $682 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 F-1 rates, which were sensitive to expectations about future operations, market or economic conditions, demand and competition. How We Addressed the Matter in Our Audit 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 6, 2024 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 Mortgages payable, net (see Note 8) Line of credit, net (see Note 8) Dividends payable Accrued expenses and other liabilities Unamortized intangible lease liabilities, net 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 shares authorized; 20,323 and 20,362 shares issued and outstanding Paid-in capital Accumulated other comprehensive income 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 December 31, 2023 2022 $ 172,309 $ 181,805 697,791 692,346 879,596 864,655 173,143 182,705 706,453 681,950 $ $ 10,400 2,051 6,718 26,430 16,079 16,661 19,841 14,681 23,764 19,833 761,606 $ 783,255 418,347 $ 405,162 21,068 9,693 19,270 11,125 466,318 — 9,916 15,502 10,096 453,861 — — 20,323 20,362 326,379 325,895 844 1,810 (40,843) (32,102) 315,965 306,703 1,042 972 316,937 307,745 761,606 $ 783,255 $ (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: $9,917and $10,365 of land, $17,475 and $17,870 of building and improvements, net of $6,380 and $5,670 of accumulated depreciation, $3,158 and $3,518 of other assets included in other line items, $16,660 and $18,500 of real estate debt, net, $1,130 and $1,135 of other liabilities included in other line items, and $1,042 and $972 of non- controlling interests as of December 31, 2023 and 2022, 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, 2021 2022 2023 Revenues: Rental income, net Lease termination fees Total revenues Operating expenses: $ 90,646 $ 92,191 $ 82,180 560 82,740 25 92,216 — 90,646 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 Total operating expenses Other operating income Gain on sale of real estate, net Operating income Other income and expenses: 24,789 15,822 16,444 284 57,339 23,781 15,258 15,508 285 54,832 22,832 14,310 13,802 291 51,235 17,008 50,315 16,762 54,146 25,463 56,968 Equity in (loss) earnings of unconsolidated joint ventures Equity in (loss) earnings from sale of unconsolidated joint venture properties Prepayment costs on debt Income on settlement of litigation (see Note 13) Other income (see Note 13) Interest: Expense Amortization and write-off of deferred financing costs (904) 400 202 (108) — — 234 — — 5,388 1,003 805 (901) — 869 (18,780) (839) (17,569) (1,115) (17,939) (970) 29,918 (304) 39,034 (177) $ 29,614 $ 42,177 $ 38,857 42,253 (76) 20,499 20,556 20,360 20,453 20,086 20,264 $ $ 1.38 $ 1.38 $ 2.00 $ 1.99 $ 1.87 1.85 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, 2022 42,253 $ 2023 29,918 $ 2021 39,034 Other comprehensive income Net unrealized (loss) gain on derivative instruments Comprehensive income (967) 28,951 3,325 45,578 3,497 42,531 Net income attributable to non-controlling interests Adjustment for derivative instruments attributable to non- controlling interests Comprehensive income attributable to One Liberty Properties, Inc. $ (304) (76) (177) 1 28,648 $ (2) 45,500 $ (8) 42,346 See accompanying notes. F-5 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE YEARS ENDED DECEMBER 31, 2023 (Amounts in Thousands, Except Per Share Data) Non- Controlling Accumulated Other Accumulated Interests in Distributions Consolidated Common Stock Paid-in Capital Comprehensive in Excess of Income (Loss) Net Income Ventures Joint Total Balances, December 31, 2020 Distributions — common stock Cash — $1.80 per share Shares issued through dividend reinvestment plan Shares issued through equity offering program, net Restricted stock and RSU vesting Compensation expense — restricted stock and RSUs Contributions from non-controlling interest Distributions to non-controlling interests Net income Other comprehensive income Balances, December 31, 2021 Distributions — common stock Cash — $1.80 per share Repurchases of common stock, net Shares issued through dividend reinvestment plan Shares issued through equity offering program, net Restricted stock and RSU vesting Compensation expense — restricted stock and RSUs Distributions to non-controlling interests Net income Other comprehensive income Balances, December 31, 2022 Distributions — common stock Cash — $1.80 per share Repurchases of common stock, net Shares issued through dividend reinvestment plan Restricted stock and RSU vesting Compensation expense — restricted stock and RSUs Distributions to non-controlling interests Net income Other comprehensive loss Balances, December 31, 2023 $ 19,878 $ 313,430 $ (5,002) $ (37,539) $ 1,193 $ 291,960 — 35 106 220 — — — — — 20,239 — (208) 102 17 212 — — — — 20,362 — 942 3,208 (220) 5,433 — — — — 322,793 — (5,032) 2,293 546 (212) 5,507 — — — 325,895 — — — — — — — — 3,489 (1,513) — — — — — — — — 3,323 1,810 (37,505) — — — — — — 38,857 — (36,187) (38,092) — — — — — — 42,177 — (32,102) — — — — — 25 (457) 177 8 946 — — — — — — (52) 76 2 972 (37,505) 977 3,314 — 5,433 25 (457) 39,034 3,497 306,278 (38,092) (5,240) 2,395 563 — 5,507 (52) 42,253 3,325 316,937 — (499) 233 227 — — — — — (9,139) 4,483 (227) 5,367 — — — $ 20,323 $ 326,379 $ — — — — — — — (966) 844 $ (38,355) — — — — — 29,614 — (40,843) $ — — — — — (233) 304 (1) (38,355) (9,638) 4,716 — 5,367 (233) 29,918 (967) 1,042 $ 307,745 See accompanying notes. F-6 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) Year Ended December 31, 2021 2022 2023 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: $ 29,918 $ 42,253 $ 39,034 (17,008) (1,898) 133 (952) 5,367 904 108 194 24,789 839 (755) 3,818 596 46,053 (16,762) (2,409) — (831) 5,507 (400) — 172 23,781 1,115 (2,561) (6,856) 1,188 44,197 (25,463) (234) — (785) 5,433 (202) (805) 1,440 22,832 970 (1,430) 6,759 1,012 48,561 (9,229) (4,866) (932) 40,839 — 7,143 32,955 (51,217) (4,574) (697) 30,253 918 — (25,317) (24,534) (4,106) (1,746) 52,685 975 97 23,371 (12,405) (14,935) 36,450 40,900 (62,700) 4,716 (9,638) — (716) — (233) (38,132) (56,693) (12,624) (54,585) 70,690 53,300 (43,200) 2,395 (5,240) 563 (1,669) — (52) (37,847) (28,269) (13,957) (30,532) 10,600 21,200 (22,450) 977 — 3,314 (232) 25 (457) (37,318) (68,830) 22,315 7,277 3,102 13,564 $ 29,592 $ 7,277 $ 16,666 (9,389) 16,666 Gain on sale of real estate, net Increase in net amortization of unbilled rental income Write-off of unbilled rent receivable Amortization and write-off of intangibles relating to leases, net Amortization of restricted stock and RSU compensation expense Equity in loss (earnings) of unconsolidated joint ventures Equity in loss (earnings) from sale of unconsolidated joint venture properties Distributions of earnings from unconsolidated joint venture Depreciation and amortization Amortization and write-off of deferred financing costs Payment of leasing commissions Decrease (increase) in escrow, deposits, other assets and receivables Increase 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 Investments in ground leased property Net proceeds from sale of real estate Insurance recovery proceeds due to casualty loss Distributions of capital from unconsolidated joint ventures 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 bank line of credit Repayments on bank line of credit Issuance of shares through dividend reinvestment plan Repurchases of common stock, net Proceeds from sale of common stock, net Payment of financing costs Capital contributions from non-controlling interest Distributions to non-controlling interests Cash distributions to common stockholders Net cash used in 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 (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 supplemental disclosure of cash flow information: Cash paid for interest expense and prepayment costs on debt Year Ended December 31, 2022 17,475 $ 18,972 2023 $ 18,798 $ 2021 Supplemental disclosure of non-cash investing activities: Assumption of mortgages payable upon acquisition of properties Lease liabilities adjustment from the reassessment of right of use assets Loan receivable in connection with sale of a property Purchase accounting allocation - intangible lease assets Purchase accounting allocation - mortgage intangible assets Purchase accounting allocation - intangible lease liabilities $ 4,280 $ 3,366 1,816 871 260 (237) 6,034 $ — — 4,322 670 (2,006) — — — 2,288 — (632) 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: December 31, 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 statements of cash flows $ 29,592 $ 6,718 559 7,277 2022 2023 $ 26,430 $ 3,162 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 or when the related reserve conditions are satisfied. See accompanying notes. F-8 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 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 and, to a lesser extent, retail properties, many of which are subject to long-term net leases. As of December 31, 2023, OLP owns 110 properties, including three properties owned by consolidated joint ventures and two properties owned by unconsolidated joint ventures. The 110 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. 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. 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. Revenue Recognition Rental income includes the base rent that each tenant is required to pay in accordance with the terms of its lease reported over the non-cancelable term of the lease on a straight-line basis, if collectability is probable. 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 a specific tenant is collectable. Any change to the collectability of lease payments or unbilled rent receivables is recognized as a current period adjustment to rental revenue (see Note 3). F-9 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. Some leases provide for an incentive for the lessee to sign a lease, such as a leasehold improvement allowance in which the Company reimburses the tenant for the construction of lessee assets. Such lease incentives are capitalized at lease commencement and recognized on a straight-line basis over the lease term as a reduction to rental income. 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. 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 contracted for share of real estate taxes and operating expenses to the Company. The revenue and expenses associated with properties at which the Company is the primary obligor are generally recorded on a gross basis. During 2023, 2022 and 2021, the Company recorded reimbursements of expenses of $13,636,000, $12,548,000 and $10,938,000, respectively, which are included in 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. 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 (e.g., the value of above, below and at- market leases, and origination costs associated with in-place leases and above or below-market mortgages assumed at the acquisition date). The value, as determined, is allocated to the gross assets acquired based on management’s determination of the relative fair values of these assets and liabilities. The Company assesses the fair value of the gross assets acquired based on available market information which utilize estimated cash flow projections; such inputs are categorized as Level 3 inputs in the fair value hierarchy. In determining fair value, factors considered by management include an evaluation of current market demand, market capitalization rates and discount rates, estimates of carrying costs (e.g., real estate taxes, insurance and other operating expenses), and lost rental revenue during the expected lease-up periods. Management also estimates costs to execute similar leases, including leasing commissions and tenant improvements. 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 F-10 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) period(s). The fair values associated with below-market rental renewal options are determined based on the Company’s experience and other relevant factors 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 32 years. The values of assumed mortgages are recorded based on the present values (using discount rates which reflect the risks associated with the mortgage assumed) of the difference between the contractual amounts to be paid at the stated interest rates and management’s estimate of market interest rates for similar debt, at the time of the acquisition, measured over the terms of the respective debt. The values of above or below-market mortgages are amortized as a decrease or increase, respectively, to interest expense over the term of the respective debt which range from six to seven years. Accounting for Long-Lived Assets and Impairment of Real Estate Owned The Company reviews its real estate portfolio on a quarterly basis for 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, prolonged or significant vacancies, the economic environment of the area in which the asset is located and the industry in which the tenant is involved, the timeliness of the payments made by the tenant under its lease, property inspection reports and communication with, by, or relating to, 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, which are determined using assumptions and estimates, including projected rental rates over an appropriate holding period and property capitalization rates, to (ii) the carrying amount of the asset. If the aggregate undiscounted cash flows are less than the asset’s carrying amount, an impairment 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. During the three years ended December 31, 2023, there were no impairment charges related to the Company’s real estate portfolio. 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. F-11 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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, 2023, 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. F-12 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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 a 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. 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. 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 and the performance assumptions are re-evaluated quarterly. 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. F-13 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. Cash and Cash Equivalents All highly liquid investments with original maturities of three months or less when purchased are considered to be cash equivalents. 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. Only one state, South Carolina, contributed more than 10% (i.e., 10.3%) to the Company’s total revenues in 2023. No real estate investments in any one state contributed more than 10% to the Company’s total revenues in 2022 and 2021. No tenant contributed over 10% to the Company’s total revenues in any of the past three years. Escrows Real estate taxes and other escrows aggregating $3,162,000 and $559,000 at December 31, 2023 and 2022, respectively, are included in Escrow, deposits and other assets and receivables. New Accounting Pronouncements In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting – Improvements to Reportable Segments Disclosures, which enhances disclosures of significant segment expenses regularly provided to the chief operating decision maker, extends certain annual disclosures to interim periods, and permits more than one measure of segment profit or loss to be reported under certain conditions. The amendments are effective for fiscal years beginning after December 15, 2023 and early adoption of the amendment is permitted. The Company has evaluated the guidance and determined it will have no material impact to the financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which was amended in December 2022 by ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. This Topic contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. As of December 31, 2023, the Company has converted all its LIBOR indexed debt and derivatives to SOFR based indexes. For all derivative financial instruments designated as effective hedges, the Company utilized the elective relief in Topic 848 which allows for the continuation of hedge accounting through the transition process. F-14 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 3 — LEASES Lessor Accounting The Company owns rental properties which are leased to tenants under operating leases with current expirations ranging from 2024 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 its respective lease, and any lease incentives paid or payable to the lessee, reported on a straight-line basis over the non-cancelable term of the lease. Variable lease revenues typically 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 and (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): Fixed lease revenues Variable lease revenues Lease revenues (b) $ $ Year Ended December 31, 2022 $ 74,101 17,259 (a) $ 91,360 2023 75,935 $ 13,759 89,694 $ 2021 70,387 11,008 81,395 (a) Includes, for 2022, $4,626 of additional rent accrued from a ground lease tenant – see Note 6. (b) Excludes $952, $831 and $785 of amortization related to lease intangible assets and liabilities for 2023, 2022 and 2021, 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 the Company’s 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. On a quarterly basis, the Company assesses the collectability of substantially all lease payments due by reviewing the tenant’s payment history or financial condition. Changes to collectability are recognized as a current period adjustment to rental revenue. As of December 31, 2023, the Company has assessed the collectability of all recorded lease revenues as probable. F-15 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 3 — LEASES (CONTINUED) Minimum Future Rents As of December 31, 2023, 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 lease intangibles or incentives and (ii) variable lease payments as described above. For the year ending December 31, 2024 2025 2026 2027 2028 Thereafter Total Lease Incentives $ $ 70,906 65,473 61,286 51,983 41,028 127,437 418,113 At December 31, 2023 and 2022, the Company’s unamortized lease incentives aggregating $1,095,000 and $1,300,000, respectively, are recorded in other assets and receivables on the consolidated balance sheets. During 2023 and 2022, the Company amortized $121,000 and $44,000, respectively, of such incentives as a reduction to rental income. During 2023, the Company wrote-off $84,000 of a tenant’s unamortized lease incentive balance as the related property was sold during such year, which reduced the gain on sale reported on the consolidated statement of income. The lease incentives will be amortized against rental income over the term of the leases during the next 10 years. Unbilled Straight-Line Rent At December 31, 2023 and 2022, the Company’s unbilled rent receivables aggregating $16,661,000 and $16,079,000, 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 19 years. During 2023, 2022 and 2021, the Company wrote-off $1,048,000, $519,000 and $1,438,000, 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, 2023 and 2022, the Company’s unearned rental income aggregating $579,000 and $756,000, respectively, represent rent reported on a straight-line basis less than rental payments required under the respective leases. Such amounts are recorded in other liabilities on the consolidated balance sheets. The unearned rental income is to be recognized into revenue over the term of the leases during the next eight years. During 2023, the Company wrote-off $43,000 of a tenant’s unearned rental income as the related property sold was sold during such year, which increased the gain on sale reported on the consolidated statement of income. No such amounts were written off during 2022 or 2021. On a quarterly basis, the Company assesses the collectability of unbilled rent receivable balances by reviewing the tenant’s payment history and financial condition. The Company has assessed the collectability of all unbilled rent receivable balances as probable as of December 31, 2023. During 2023, the Company wrote-off, as a reduction of rental income, net, $133,000 of unbilled rent receivables due from Bed Bath & Beyond as the tenant filed for Chapter 11 bankruptcy protection and rejected its lease in April 2023. F-16 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 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, five-year renewal options and one seven-month renewal option. At December 31, 2023 and 2022, the Company recorded a liability of $2,827,000 and $6,366,000, respectively, for the obligation to make payments under the lease and an asset of $2,246,000 and $5,864,000, respectively, 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 sheets. 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. During 2023, as a result of an amendment to the operating lease at this property, the Company determined it was no longer reasonably certain that the second ground lease extension option would be exercised. As such, the Company reassessed the right of use asset and adjusted the lease liability to reflect the shortened lease term. As of December 31, 2023, the remaining lease term, including renewal options deemed exercised, is 6.2 years. The Company applied a discount rate of 6.91%, 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, 2023, 2022 and 2021, the Company recognized $544,000, $599,000 and $599,000, respectively, of lease expense related to this ground lease which is included in Real estate expenses on the consolidated statements of income. Office Lease The Company is a lessee under a corporate office lease in Great Neck, New York, which is classified as an operating lease. The lease expires on December 31, 2031 and provides a 5-year renewal option. At December 31, 2023 and 2022, the Company recorded a liability of $536,000 and $558,000, respectively, for the obligation to make payments under the lease and an asset of $505,000 and $535,000, respectively, 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 sheets. 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, 2023, the remaining lease term, including the renewal option deemed exercised, is 13.0 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, 2023, 2022 and 2021, the Company recognized $56,000, $56,000 and $55,000, respectively, of lease expense related to this office lease which is included in General and administrative expenses on the consolidated statements of income. Minimum Future Lease Payments As of December 31, 2023, the minimum future lease payments related to the operating ground and office leases are as follows (amounts in thousands): For the year ending December 31, 2024 2025 2026 2027 2028 Thereafter Total undiscounted cash flows Present value discount Lease liability F-17 $ $ $ 557 626 627 629 630 1,229 4,298 (935) 3,363 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 4 — REAL ESTATE INVESTMENTS Acquisitions The following table details the Company’s real estate acquisitions during 2023 and 2022 (amounts in thousands). The Company determined that with respect to each of these acquisitions, the gross assets acquired are concentrated in a single identifiable asset. Therefore, these transactions do not meet the definition of a business and are accounted for as asset acquisitions. As such, direct transaction costs associated with these asset acquisitions have been capitalized to real estate assets and depreciated over their respective useful lives. Date Acquired Contract Purchase Price Terms of Payment Capitalized Transaction Costs Description of Industrial Property Multi-tenant Blythewood, South Carolina Totals for 2023 Conditioned Air Company of Naples LLC Fort Myers, Florida Q.E.P. Co., Inc. Dalton, Georgia Multi-tenant Hillside, Illinois Curaleaf, Inc. Lexington, Kentucky Multi-tenant Northwood, Ohio Multi-tenant Northwood, Ohio Totals for 2022 July 13, 2023 $ $ 13,400 Cash and $4,280 mortgage (a) $ $ 13,400 January 5, 2022 $ 8,100 All cash (b) $ May 12, 2022 May 16, 2022 17,000 All cash (b) 5,770 All cash June 17, 2022 8,430 Cash and $5,480 mortgage (c) November 15, 2022 November 15, 2022 8,629 Cash and $6,034 mortgage (d) 8,561 Cash and $6,034 mortgage (d) $ 56,490 $ 109 109 66 330 112 80 87 86 761 (a) Simultaneously with the acquisition of this property, the Company assumed a $4,280 mortgage, bearing an interest rate of 4.60% and maturing in 2029. (b) Subsequent to the acquisitions of the Fort Myers, Florida and Dalton, Georgia properties, the Company obtained new mortgage debt of $4,860 and $10,000, bearing interest rates of 3.09% and 3.50% and maturing in 2031 and 2032, respectively. (c) Simultaneously with the acquisition of this property, the Company obtained new mortgage debt of $5,480, bearing an interest rate of 3.85% and maturing in 2047. (d) Simultaneously with the acquisition of these properties, the Company assumed a $6,034 mortgage encumbering both properties, bearing an interest rate of 3.57% and maturing in 2030. F-18 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 4 — REAL ESTATE INVESTMENTS (CONTINUED) The following table details the allocation of the purchase price and capitalized transaction costs for the Company’s acquisition of real estate during 2023 and 2022 (amounts in thousands): Description of Industrial Property Multi-tenant Blythewood, South Carolina Totals for 2023 Conditioned Air Company of Naples LLC Fort Myers, Florida Q.E.P. Co., Inc. Dalton, Georgia Multi-tenant Hillside, Illinois Curaleaf, Inc. Lexington, Kentucky Multi-tenant Northwood, Ohio Multi-tenant Northwood, Ohio Totals for 2022 Building & Intangible Lease Mortgage Land Improvements Asset (a) Liability (b) Intangible (c) Total $ $ 311 $ 311 $ 12,304 $ 12,304 $ 871 $ 871 $ (237) $ (237) $ 260 $ 260 $ 13,509 13,509 $ 991 $ 6,876 $ 568 $ (269) $ — $ 8,166 547 15,836 1,223 (276) — 17,330 2,560 1,558 2,975 539 (192) — 5,882 6,881 486 (415) — 8,510 181 8,306 747 (854) 336 8,716 171 6,008 $ $ 7,383 759 48,257 $ 4,322 $ — (2,006) $ 334 670 $ 8,647 57,251 (a) With respect to the intangible lease assets, the weighted average amortization period for the 2023 and 2022 acquisitions is 1.1 years and 6.1 years, respectively. (b) With respect to the intangible lease liabilities, the weighted average amortization period for the 2023 and 2022 acquisitions is 1.1 years and 8.8 years, respectively. (c) With respect to the mortgage intangible assets, the weighted average amortization period for the 2023 and 2022 acquisitions is 5.4 years and 7.1 years, respectively. The following table details the market capitalization and discount rates associated with the assessment of the fair value of the related lease and mortgage intangibles for the Company’s acquisition of real estate: Year Acquired 2023 Description of Industrial Property Multi-tenant Blythewood, South Carolina 2022 Conditioned Air Company of Naples LLC Fort Myers, Florida 2022 Q.E.P. Co., Inc. Dalton, Georgia 2022 Multi-tenant Hillside, Illinois 2022 Curaleaf, Inc. Lexington, Kentucky 2022 Multi-tenant Northwood, Ohio 2022 Multi-tenant Northwood, Ohio Market Cap Rate (a) Lease Intangible Mortgage Intangible Discount Rate (a) 6.75% 5.50% 5.00% 6.25% 5.25% 6.75% 6.75% 6.75% 5.60% 5.69% 6.63% (b) 5.88% 5.60% 5.60% 6.00% — — — — 5.75% 5.75% (a) The fair value of the tangible and intangible leases and mortgages were assessed as of the acquisition date using an income approach and estimated cash flow projections which utilize an appropriate market capitalization rate and discount rate which are categorized as Level 3 unobservable inputs in the fair value hierarchy (as defined in Note 2). (b) Represents the weighted average discount rate of the warehouse lease (i.e., 5.77%) and the office lease (i.e., 9.03%). F-19 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 4 — REAL ESTATE INVESTMENTS (CONTINUED) The following table details the accumulated amortization of acquired intangibles during the periods indicated (amounts in thousands): Accumulated amortization December 31, 2023 Intangible Mortgage Asset (a) 126 $ Lease Assets $ 19,377 $ Lease Liabilities Lease Assets 5,191 $ 23,506 $ December 31, 2022 Intangible Mortgage Asset (a) 12 $ Lease Liabilities 5,061 (a) In connection with the assumption of below-market mortgages in 2022 and 2023 upon the acquisition of the Northwood, Ohio and Blythewood, South Carolina properties. The following table details the amortization of acquired intangibles and the classification in the Company’s consolidated statements of income for the periods indicated (amounts in thousands): Intangible lease assets/liabilities Tenant origination costs Intangible mortgage assets $ 952 $ 831 $ 4,821 114 4,722 12 2021 Classification 785 Rental income, net 4,700 Depreciation and amortization — Interest expense Year Ended December 31, 2022 2023 As of December 31, 2023, the future amortization of the Company’s acquired intangibles are as follows (amounts in thousands): For the year ending December 31, 2024 2025 2026 2027 2028 Thereafter Total Intangible Lease Assets (a) Tenant Origination Costs (b) Intangible Mortgage Assets (c) $ $ 154 $ 128 91 31 28 80 512 $ 3,685 $ 2,672 2,462 1,785 1,103 2,462 14,169 $ 137 $ 137 137 137 137 119 804 $ Intangible Lease Liabilities (d) 1,085 723 704 756 735 6,093 10,096 (a) The result of acquired above-market leases and will be deducted from rental income through 2032. (b) The result of acquired in-place leases and will be charged to Depreciation and amortization expense through 2055. (c) The result of acquired below-market mortgages and will be charged to interest expense through 2030. (d) The result of acquired below-market leases and will be added to rental income through 2055. 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. During 2023, 2022 and 2021, the Company recorded depreciation expense (including amortization of a leasehold position, lease origination costs, and capitalized leasing commissions) of $24,789,000, $23,781,000 and $22,832,000, respectively. F-20 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 5 — SALES OF PROPERTIES The following table details the Company’s sales of real estate during 2023, 2022 and 2021 (amounts in thousands): Description of Property City, State Date Sold Gross Gain on Sale of Sales Price Real Estate, Net TGI Fridays restaurant property Hauppauge, New York February 28, 2023 $ 4,200 $ Havertys retail property Duluth, Georgia May 31, 2023 6,000 TGI Fridays restaurant property Greensboro, North Carolina September 20, 2023 3,250 1,534 3,180 332 Land (a) Lakewood, Colorado November 14, 2023 3,333 (a) 2,177 (a) Chuck E Cheese restaurant property Indianapolis, Indiana November 15, 2023 2,200 TGI Fridays restaurant property Richmond, Virginia November 17, 2023 3,200 Applebee's restaurants (2 properties) Cartersville & Carrollton, Georgia December 5, 2023 7,300 Applebee's restaurant property Lawrenceville, Georgia December 7, 2023 2,903 (b) Havertys retail property Virginia Beach, Virginia December 15, 2023 5,500 Barnes & Noble retail property Fort Myers, Florida December 21, 2023 7,300 226 265 2,581 989 1,727 3,997 Totals for 2023 $ 45,186 $ 17,008 (c) Wendy's restaurants (4 properties) Various cities, Pennsylvania March 22, 2022 $ 10,000 $ Orlando Baking industrial property Columbus, Ohio May 2, 2022 8,500 Havertys retail property Fayetteville, Georgia June 17, 2022 4,800 (d) Vacant retail property Columbus, Ohio August 8, 2022 8,300 4,649 6,925 1,125 4,063 Totals for 2022 $ 31,600 $ 16,762 (e) Whole Foods retail property & parking lot West Hartford, Connecticut June 17, 2021 $ 40,510 $ 21,469 Vacant retail property Wendy's restaurants - 2 properties Philadelphia, Pennsylvania Hanover & Gettysburg, Pennsylvania December 27, 2021 July 1, 2021 8,300 5,700 1,299 (f) 2,695 Totals for 2021 $ 54,510 (g) $ 25,463 (h) (a) A consolidated joint venture, in which the Company holds a 90% interest, sold a land parcel which was part of a multi- tenant shopping center. In connection with the sale of this parcel, the joint venture paid down $1,116 of the mortgage on this property. The non-controlling interest’s share of the gain was $218. (b) In connection with this sale, the Company provided seller-financing of $1,816 which is included in other receivables on the consolidated balance sheet as of December 31, 2023. The loan receivable bears interest at 8.0% and matures on July 1, 2024, with a buyer’s option to extend the maturity an additional six months. (c) As a result of these sales, the Company wrote-off, as a reduction to Gain on sale of real estate, net, an aggregate of $1,005 of unbilled/unearned rent, $982 of net unamortized intangible lease assets and liabilities and $223 of other assets and receivables. (d) In connection with this sale, the Company paid off the $1,563 mortgage on this property. (e) As a result of these sales, the Company wrote-off, as a reduction to Gain on sale of real estate, net, an aggregate of $519 of unbilled rent receivables and $4 of net unamortized intangible lease liabilities and assets. (f) 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 $130. (g) In connection with these sales, the Company paid off mortgages in an aggregate of $20,387 and incurred $848 of prepayment costs on debt. (h) As a result of these sales, the Company wrote-off, as a reduction to Gain on sale of real estate, net, an aggregate of $1,438 of unbilled rent receivables and $967 of unamortized intangible lease assets. F-21 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 5 — SALES OF PROPERTIES (CONTINUED) Sale subsequent to December 31, 2023 On January 19, 2024, the Company entered into a contract to sell a pad site at a multi-tenant shopping center in Lakewood, Colorado, which is owned by a consolidated joint venture in which the Company holds a 90% interest, for $2,900,000. The buyer’s right to terminate the contract expired February 23, 2024 and the sale is anticipated to close during the quarter ending March 31, 2024. The Company anticipates recognizing a gain on sale of real estate, net on its consolidated statement of income of approximately $1,800,000 during the three months ending March 31, 2024, of which the non-controlling interest’s share will be approximately $180,000. NOTE 6 — VARIABLE INTEREST ENTITIES, CONTINGENT LIABILITY AND CONSOLIDATED JOINT VENTURES Variable Interest Entity—Ground Lease The Company determined it has a variable interest through its ground lease at its Beachwood, Ohio property (The Vue Apartments) and the owner/operator is a VIE because its equity investment at risk is insufficient to finance its activities without additional subordinated financial support. The Company further determined that it is not the primary beneficiary of this VIE because the Company 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. The 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. No ground lease rental income has been collected since October 2020 other than the proceeds from the settlement of the Proceedings (as defined under “Additional rent income – Ground Lease Tenant”). As of December 31, 2023, the VIE’s maximum exposure to loss was $17,276,000 which represented the carrying amount of the land. In purchasing the property in 2016, the owner/operator obtained a $67,444,000 mortgage from a third party which, together with the Company’s purchase of the land, provided substantially all of the funds to acquire the multi-family property. 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 $63,569,000 as of December 31, 2023. Pursuant to the ground lease, as amended in November 2020, the Company agreed, in its discretion, to fund 78% of (i) any operating expense shortfalls at the property and (ii) any capital expenditures required at the property. The Company funded $932,000 and $697,000 during the years ended December 31, 2023 and 2022, respectively. These amounts are included as part of the carrying amount of the land. Additional rent income—Ground Lease Tenant The Company’s ground lease tenant was a plaintiff/claimant in various legal proceedings (the “Proceedings”) against, among others, the developer of such apartment complex alleging, among other things, that the buildings’ construction was flawed. The Proceedings were settled in the quarter ended December 31, 2022 and although the Company was not a party to the Proceedings, pursuant to the lease with the tenant, the Company received $4,642,000 from the settlement. At December 31, 2022, $4,626,000 of such sum was accrued as rental income, net on the consolidated statement of income and as other receivables on the consolidated balance sheet. F-22 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 6 — VARIABLE INTEREST ENTITIES, CONTINGENT LIABILITY AND CONSOLIDATED JOINT VENTURES (CONTINUED) Variable Interest Entities—Consolidated Joint Ventures The Company has determined that the three 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. 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, 2023 (a) 2022 $ Land 9,917 $ 10,365 Buildings and improvements, net of accumulated depreciation of $6,380 and $5,670, respectively 17,870 17,475 Cash 1,163 1,059 Unbilled rent receivable 1,111 938 Unamortized intangible lease assets, net 472 412 Escrow, deposits and other assets and receivables 772 749 Mortgages payable, net of unamortized deferred financing costs of $109 and $152, respectively 18,500 16,660 Accrued expenses and other liabilities 711 745 Unamortized intangible lease liabilities, net 424 385 Accumulated other comprehensive income 22 2 Non-controlling interests in consolidated joint ventures 972 1,042 (a) A consolidated joint venture located in Lakewood, Colorado, in which the Company holds a 90% interest, sold a portion of land at this property in November 2023 and paid down the related mortgage by $1,116 (see Note 5). As of December 31, 2023 and 2022, MCB Real Estate, LLC and its affiliates (‘‘MCB’’) are the Company’s joint venture partner in two consolidated joint ventures in which the Company has aggregate equity investments of approximately $4,448,000 and $4,563,000, respectively. Distributions to each joint venture partner are determined pursuant to the applicable operating agreement and, in the event of a sale of, or refinancing of the mortgage encumbering, the property owned by such venture, the distributions to the Company may be less than that implied by the Company’s equity ownership interest in the venture. F-23 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 7 — INVESTMENT IN UNCONSOLIDATED JOINT VENTURES In September 2023, an unconsolidated joint venture in which the Company had a 50% interest entered into a contract to sell this multi-tenant shopping center in Manahawkin, New Jersey for $36,500,000. As a result, the joint venture recorded an impairment charge of $1,699,000, of which the Company’s 50% share was $850,000 and was recorded in Equity in loss from unconsolidated joint ventures on the consolidated statement of income for the year ended December 31, 2023. On December 15, 2023, this property was sold for $35,070,000, net of closing costs. The Company’s 50% share of the loss from this sale was $108,000, which is included in Equity in loss from sale of unconsolidated joint venture properties on the consolidated statement of income for the year ended December 31, 2023. In July 2021, an unconsolidated joint venture in which the Company had a 50% interest sold a portion of its land in Savannah, Georgia for $2,559,000, net of closing costs. The Company’s 50% share of the gain from this sale was $805,000, 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, 2021. The unconsolidated joint venture retained approximately 2.2 acres of land at this property. The Company’s remaining two unconsolidated joint ventures each own and operate one property. As of December 31, 2023 and 2022, the Company’s equity investment in unconsolidated joint ventures totaled $2,051,000 and $10,400,000, respectively. The Company recorded equity in loss of $904,000 during 2023 and equity in earnings of $400,000 and $202,000 during 2022 and 2021, respectively. 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 Unamortized mortgage intangible assets (a) Mortgages payable, net December 31, 2023 422,565 (3,414) (804) 418,347 $ $ 2022 409,175 (3,355) (658) 405,162 $ $ (a) In connection with the assumption of two below-market mortgages upon the acquisition of the Northwood, Ohio and Blythewood, South Carolina properties (see Note 4). At December 31, 2023, there were 68 outstanding mortgages payable, all of which are secured by first liens on individual real estate investments with an aggregate gross carrying value of $670,157,000 before accumulated depreciation of $127,325,000. After giving effect to interest rate swap agreements (see Note 9), the mortgage payments bear interest at fixed rates ranging from 3.05% to 8.40% and mature between 2024 and 2047. The weighted average interest rate on all mortgage debt was 4.31% and 4.10% at December 31, 2023 and 2022, respectively. Scheduled principal repayments during the years indicated are as follows (amounts in thousands): Year Ending December 31, Amortization payments Principal due at maturity Total 2025 2024 2026 $ 11,873 $ 10,627 $ 10,491 $ 9,399 $ 8,718 $ 19,179 85,391 337,174 38,524 $ 61,779 $ 41,477 $ 29,670 $ 47,923 $ 38,873 $ 202,843 $ 422,565 Thereafter Total 34,283 $ 168,560 49,906 30,850 30,155 2028 2027 F-24 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 8 — DEBT OBLIGATIONS (CONTINUED) Line of Credit The Company’s credit facility with Manufacturers and Traders Trust Company and VNB New York, LLC, provides that 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 $40,000,000 and 40% of the borrowing base. 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 is required to pledge to the lenders the equity interests in such subsidiaries. The facility, which matures December 31, 2026, provides for an interest rate equal to 30-day SOFR plus an applicable margin ranging from 175 basis points to 275 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 175 basis points at December 31, 2023 and 2022. An unused facility fee of .25% per annum applies to the facility. The weighted average interest rate on the facility was approximately 6.69%, 3.42% and 1.86% during 2023, 2022 and 2021, 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, 2023. 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, 2023 $ $ $ — — (a) — $ 2022 21,800 (732) 21,068 (a) In accordance with ASU 2015-15, the Company reclassified the $549 balance of unamortized deferred financing costs to other assets and receivables on the consolidated balance sheet at December 31, 2023, as there was no balance outstanding on the Line of credit. At each of December 31, 2023 and March 1, 2024, $100,000,000 was available to be borrowed under the facility, including an aggregate of up to $40,000,000 available for renovation and operating expense purposes. 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, 2023 and 2022, accumulated amortization of such costs was $5,298,000 and $4,791,000, respectively. The Company generally presents unamortized deferred financing costs as a direct deduction from the carrying amount of the associated debt liability. F-25 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 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, are not measured at fair value on a recurring basis but are considered to be recorded at amounts that approximate fair value. The fair value and carrying amounts of the Company’s mortgages payable are as follows (dollars in thousands): Fair value of mortgages payable (a) Carrying value of mortgages payable, gross Fair value less than the carrying value Blended market interest rate (a) Weighted average interest rate Weighted average remaining term to maturity (years) $ $ $ December 31, 2023 397,031 422,565 (25,534) $ $ $ 5.93 % 4.31 % 5.9 2022 378,943 409,175 (30,232) 5.87 % 4.10 % 6.5 (a) 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. At December 31, 2023 and 2022, the carrying amount of the Company’s line of credit (before unamortized deferred financing costs) of $0 and $21,800,000, respectively, approximates its fair value. Considerable judgment is necessary to interpret market data and develop the estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Fair Value on a Recurring Basis As of December 31, 2023, the Company had in effect 13 interest rate derivatives, all of which were interest rate swaps, related to 13 outstanding mortgage loans with an aggregate $29,650,000 notional amount maturing between 2024 and 2026 (weighted average remaining term to maturity of 1.2 years). These interest rate swaps, all of which were designated as cash flow hedges, converted SOFR based variable rate mortgages to fixed annual rate mortgages. The interest rates range from 3.22% to 4.55% with a weighted average interest rate of 3.88% at December 31, 2023. 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 associated credit valuation adjustments 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, 2023, 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. F-26 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 9 — FAIR VALUE MEASUREMENTS (CONTINUED) The fair value of the Company’s derivative financial instruments was determined to be the following (amounts in thousands): Financial assets: Interest rate swaps As of December 31, Carrying and Fair Value Balance Sheet Classification 2023 2022 $ 824 Other assets 1,811 Other assets As of December 31, 2023 and 2022, there were no derivatives in a liability position. The following table presents the effect of the Company’s derivative financial instruments on the consolidated statements of income for the years presented (amounts in thousands): Year Ended December 31, 2022 2021 2023 Amount of gain (loss) recognized on derivatives in other comprehensive income (loss) Amount of reclassification from Accumulated other comprehensive income (loss) into Interest expense $ 328 $ 3,028 $ 1,179 1,295 (297) (2,318) During 2021, in connection with the sale of two properties and the early payoff of the related mortgages, the Company discontinued hedge accounting on the related interest rate swaps as the hedged forecasted transactions were no longer probable to occur. As such, the Company accelerated the reclassification of $867,000 from Accumulated other comprehensive loss to interest expense which is included as part of Prepayment costs on debt in the consolidated statement of income for the year ended December 31, 2021. During the twelve months ending December 31, 2024, the Company estimates an additional $714,000 will be reclassified from Accumulated other comprehensive income as a decrease to Interest expense. The derivative agreements in effect at December 31, 2023 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. 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 certain (i) executive, administrative, legal, accounting, clerical, property management, property acquisition, consulting (i.e., sale, leasing, brokerage, and mortgage financing), and construction supervisory services (collectively, the “Services”) and (ii) facilities and other resources. Majestic is wholly owned by the Company’s vice chairman and it provides compensation to several of the Company’s executive officers. F-27 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 10 — RELATED PARTY TRANSACTIONS (CONTINUED) During 2023, 2022, and 2021, in consideration for the Services, the Company paid Majestic $3,317,000, $3,067,000 and $3,111,000, respectively. Included in these fees are $1,510,000 in 2023, $1,346,000 in 2022 and $1,365,000 in 2021 of property management services. The amounts paid for property management services are 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. During 2023, 2022 and 2021, the Company also paid Majestic, pursuant to the compensation and services agreement, $317,000, $317,000 and $295,000, respectively, for the Company’s share of all direct office expenses, including rent, telephone, postage, computer services, internet usage and supplies. Executive officers and all others providing services to the Company under the compensation and services agreement were awarded shares of restricted stock and restricted stock units (“RSUs”) under the Company’s stock incentive plans. During 2023, 2022 and 2021, the related expense charged to the Company’s operations was $2,499,000, $2,572,000 and $2,590,000, respectively. The amounts paid under the compensation and services agreement (except for the property management services 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. Joint Venture Partners and Affiliates During 2023, 2022 and 2021, the Company paid an aggregate of $90,000, $84,000 and $83,000, respectively, to its consolidated joint venture partner 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. During 2023, 2022 and 2021, the Company’s unconsolidated joint ventures paid management fees of $115,000, $131,000 and $118,000, respectively, to the other partner of the ventures, which increased Equity in loss on the consolidated statement of income by $57,000 during 2023 and reduced Equity in earnings on the consolidated statements of income by $66,000 and $59,000 during 2022 and 2021, respectively. Other During 2023, 2022 and 2021, the Company paid fees of (i) $313,000, $313,000 and $298,000, respectively, to the Company’s chairman and (ii) $125,000, $125,000 and $119,000, 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, 2023 and 2022, Gould Investors L.P. (“Gould Investors”), a related party, owned 2,180,931 and 1,998,535 shares of the outstanding common stock of the Company, respectively, or approximately 10.4% and 9.5%, 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 $1,093,000, $586,000 and $1,402,000 during 2023, 2022 and 2021, respectively. Included in Real estate expenses on the consolidated statements of income is insurance expense of $893,000, $944,000 and $1,267,000 during 2023, 2022 and 2021, 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-28 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 11 — STOCKHOLDERS’ EQUITY Common Stock Dividend In each of 2023, 2022 and 2021, the Board of Directors declared an aggregate $1.80 per share in cash distributions. On March 4, 2024, the Board of Directors declared a quarterly cash dividend of $0.45 per share on the Company’s common stock, totaling approximately $9,500,000. The quarterly dividend is payable on April 4, 2024 to stockholders of record on March 27, 2024. Stock Repurchase Program During 2022 and 2023, the Board of Directors authorized and/or amended repurchase programs pursuant to which the Company could repurchase shares of its common stock in open-market, through privately negotiated transactions or otherwise. During 2023 and 2022, the Company repurchased approximately 499,000 and 208,000 shares of common stock, for total consideration of $9,638,000 and $5,214,000, net of commissions of $30,000 and $12,000, respectively. As of December 31, 2023, the Company is authorized to repurchase approximately $8,082,000 of shares of common stock. No shares were repurchased by the Company during 2021. Shares Issued through the At-the-Market Equity Offering Program The Company did not sell any shares during 2023. During 2022, the Company sold approximately 17,000 shares for proceeds of $604,000, net of commissions of $12,000, and incurred offering costs of $41,000 for professional fees. During 2021, the Company sold 106,290 shares for proceeds of $3,379,000, net of commissions of $69,000, and incurred offering costs of $65,000 for professional fees. Dividend Reinvestment Plan The Company’s Dividend Reinvestment Plan (the “DRP”), among other things, provides 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, determined in the Company’s sole discretion, of up to 5% from the market price (as such price is calculated pursuant to the DRP). The discount is currently being offered at 3%. Under the DRP, the Company issued approximately 233,000, 102,000 and 35,000 shares of common stock during 2023, 2022 and 2021, respectively. Stock Based Compensation The Company’s 2022, 2019 and 2016 Incentive Plans (collectively, the “Plans”) permit 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 was authorized for issuance pursuant to each plan at such plan’s inception. F-29 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 11 — STOCKHOLDERS’ EQUITY (CONTINUED) The following details the shares subject to awards that are outstanding under the Plans as of December 31, 2023: Restricted stock RSUs Totals 2022 2019 2016 Incentive Plan (a) Incentive Plan (b) Incentive Plan (b) 136,600 — 136,600 149,335 168,490 317,825 426,625 79,622 506,247 (a) On January 12, 2024, 151,180 restricted shares were issued pursuant to this plan, having an aggregate value of approximately $3,265,000 and are scheduled to vest in January 2029. (b) No additional awards may be granted under such 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. The following table reflects the activities involving RSUs that were outstanding during the year ended December 31, 2023: RSUs granted (a) RSUs vested RSUs forfeited RSUs outstanding Vesting Date (f) (g) 2023 85,250 — — 85,250 6/30/2026 2022 85,350 — 2,110 (d) 83,240 6/30/2025 2021 80,700 — 1,078 (d) 79,622 6/30/2024 2020 75,026 74,988 (b) 38 (d) — 6/30/2023 2019 77,776 64,488 (c) 13,288 (e) — 6/30/2022 (a) The shares underlying the RSUs are excluded from the shares shown as outstanding on the balance sheet until they have vested and been issued. (b) Such shares were issued in August 2023. (c) Such shares were issued in August 2022. (d) Such shares were forfeited due to the retirement of a recipient before the completion of the applicable three-year performance cycle. (e) Of the shares forfeited from the 2019 grant, 10,538 shares were not earned in 2022 because the applicable market condition was only partially satisfied and the remaining 2,750 shares were forfeited in 2019. (f) Generally, the recipient must maintain a relationship with the Company during the applicable three-year performance cycle. (g) RSUs vest upon satisfaction of metrics related to average annual total stockholder return (“TSR Metric”) and average annual return on capital (“ROC Metric”; together with the TSR Metric, the “Metrics”) and are issued to the extent the Compensation Committee determines that the Metrics with respect to the vesting of such shares have been satisfied. F-30 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 11 — STOCKHOLDERS’ EQUITY (CONTINUED) The specific metrics and other material terms and conditions of the RSUs are as follows: Year RSU Granted 2019 - 2020 (b) 2021 - 2023 (e) (f) Metric ROC Metric (c) TSR Metric (d) ROC Metric (c) TSR Metric (d) Weight 50% 50% 50% 50% Performance Criteria (a) Minimum Maximum Average annual of at least 7.0% Average annual of at least 7.0% Average annual of at least 6.0% Average annual of at least 6.0% Average annual of at least 9.75% Average annual of at least 12.0% Average annual of at least 8.75% Average annual of at least 11.0% (a) If the average annual ROC or TSR falls between the applicable minimum and maximum performance criteria, a pro-rata portion of such units, as applicable, vest. (b) Such RSUs were not entitled to voting or dividend rights. (c) The ROC Metrics meet the definition of a performance condition. Fair value is based on the market value on the date of grant. For ROC Awards, the Company does not recognize expense when performance conditions are not expected to be met; such performance assumptions are re-evaluated quarterly. (d) The TSR Metrics meet the definition of a market condition. A third-party appraiser prepares a Monte Carlo simulation pricing model to determine the fair value of such awards, which is recognized ratably over the three- year service period. For these TSR awards, the per unit or share fair value was estimated using the following assumptions: TSR Award Year 2023 2022 2021 (1) Calculated based on the historical and implied volatility. Expected Life (yrs) 3 3 3 Dividend Rate 8.72% 7.10% 5.91% Risk-Free Interest Rate 4.42% - 5.28% 1.58% - 3.33% 0.03% - 0.35% Expected Price Volatility (1) 28.69% - 30.05% 29.37% - 39.87% 26.74% - 41.53% (e) Such RSUs are (i) not entitled to voting rights and (ii) upon vesting, the holders receive an amount equal to the dividends that would have been paid on the underlying shares had such shares been outstanding during the three- year performance cycle. (f) As of December 31, 2023 and 2022, the Company accrued an aggregate of $450,000 and $210,000 of dividend equivalents, respectively, for the 2023, 2022 and 2021 RSUs based on the number of shares that would have been issued, underlying such RSUs, using performance and market assumptions determined as of such dates. As of December 31, 2023, based on performance and market assumptions, the fair value of the RSUs granted in 2023, 2022 and 2021 is $958,000, $1,371,000 and $1,822,000, respectively. Recognition of such deferred compensation will be charged to General and administrative expense over the respective three-year performance cycle. F-31 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 11 — STOCKHOLDERS’ EQUITY (CONTINUED) The following is a summary of the activity of the equity incentive plans: Year Ended December 31, 2022 2023 2021 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 the year Grants Vested during the year Forfeitures Non-vested end of the year RSU grants: Number of underlying shares Average per share grant price Deferred compensation to be recognized over vesting period Number of non-vested shares: Non-vested beginning of the year Grants Vested during the year Forfeitures Non-vested end of the year Restricted stock and RSU grants (based on grant price): Weighted average per share value of non-vested shares Value of stock vested during the year Weighted average per share value of shares forfeited during the year 152,955 151,500 $ 20.34 $ 3,379,000 $ 5,183,000 $ 3,082,000 33.75 $ 22.09 $ 153,575 712,375 152,955 (152,300) (470) 712,560 706,450 153,575 (146,900) (750) 712,375 701,675 151,500 (145,725) (1,000) 706,450 85,250 80,700 $ 30.46 $ 958,000 $ 1,420,000 $ 1,808,000 26.44 $ 20.32 $ 85,350 241,076 85,250 (74,988) (3,226) 248,112 230,752 85,350 (64,488) (10,538) 241,076 223,802 80,700 (73,750) — 230,752 25.90 $ 25.04 $ $ 5,165,000 $ 5,535,000 $ 5,165,000 24.62 $ 26.26 $ 29.12 $ 27.52 $ Total charge to operations: Outstanding restricted stock grants Outstanding RSUs Total charge to operations $ 3,979,000 $ 4,057,000 $ 3,734,000 1,388,000 1,699,000 1,450,000 $ 5,367,000 $ 5,507,000 $ 5,433,000 As of December 31, 2023, total compensation costs of $7,627,000 and $1,797,000 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-32 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 12 — 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, 2023, the shares of common stock underlying the RSUs (see Note 11) are excluded from the basic earnings per share calculation, as these units are not participating securities until they vest and are issued. 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, 2022 2023 2021 Numerator for basic and diluted earnings per share: Net income Deduct net income attributable to non-controlling interests Deduct earnings allocated to unvested restricted stock (a) Net income available for common stockholders: basic and diluted $ $ 29,918 $ (304) (1,291) 28,323 $ 42,253 $ 39,034 (177) (76) (1,434) (1,326) 40,743 $ 37,531 Denominator for basic earnings per share: Weighted average number of common shares outstanding Effect of dilutive securities: RSUs Denominator for diluted earnings per share: Weighted average number of shares Earnings per common share, basic Earnings per common share, diluted 20,499 57 20,360 93 20,086 178 20,556 20,453 20,264 $ $ 1.38 $ 1.38 $ 2.00 $ 1.99 $ 1.87 1.85 (a) Represents an allocation of distributed earnings to unvested restricted stock that, as participating securities, are entitled to receive dividends. F-33 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 12 — 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, 2023: Date of Award July 1, 2023 (c) July 1, 2022 (c)(d) August 3, 2021 (c)(d) Totals Year Ended December 31, 2022: Date of Award July 1, 2022 (c) August 3, 2021 (c) August 3, 2020 (e) Totals Year Ended December 31, 2021: Date of Award August 3, 2021 (c) August 3, 2020 (e) July 1, 2019 (f) Totals Total Number of Underlying Shares Shares Included Based on (a) Return on Stockholder Capital Metric Return Metric Total 85,250 83,240 79,622 248,112 23,237 35,050 39,811 98,098 42,625 — — 65,862 35,050 39,811 42,625 140,723 Shares Excluded (b) 19,388 48,190 39,811 107,389 Total Number of Underlying Shares Shares Included Based on (a) Return on Stockholder Capital Metric Return Metric Total 85,350 80,700 75,026 241,076 40,222 40,350 37,513 118,085 40,222 — 40,350 — 37,513 75,026 37,513 155,598 Shares Excluded (b) 45,128 40,350 — 85,478 Total Number of Underlying Shares Shares Included Based on (a) Return on Stockholder Capital Metric Return Metric Total 80,700 75,026 75,026 230,752 40,350 37,513 37,513 115,376 40,350 37,513 37,513 80,700 75,026 75,026 115,376 230,752 Shares Excluded (b) — — — — (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 of the applicable year. (b) Excluded as the applicable conditions had not been met for these shares at the applicable measurement dates. (c) The RSUs awarded in 2023, 2022 and 2021 vest, subject to satisfaction of the applicable market and/or performance conditions, as of June 30, 2026, 2025 and 2024, respectively (see Note 11). (d) As of December 31, 2023, 1,078 shares of the 2021 award and 2,110 shares of the 2022 award were forfeited due to the retirement of a recipient before the completion of the applicable three-year performance cycle. (e) With respect to the RSUs awarded August 3, 2020, 74,988 shares were deemed to have vested and the balance of 38 shares were forfeited in June 2023. The vested shares were issued in August 2023 (see Note 11). (f) With respect to the RSUs awarded July 1, 2019, 64,488 shares were deemed to have vested and the balance of 10,538 shares were forfeited in June 2022. The vested shares were issued in August 2022 (see Note 11). There were no options outstanding to purchase shares of common stock or other rights exercisable for, or convertible into, common stock in 2023, 2022 and 2021. F-34 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 13 — OTHER INCOME Settlement of Litigation During 2022, the Company received $5,388,000 in connection with the settlement of a lawsuit which was recognized as Income on settlement of litigation on the consolidated statement of income for such year. Insurance Recoveries on Hurricane Casualty During 2022 and 2021, the Company recognized a gain on insurance recoveries of $918,000 and $695,000, respectively, which is included in Other income on the consolidated statements of income for such years, related to hurricane damage to one of its properties in 2020. No such gain was recognized during 2023. Lease Assignment Fee Income During 2021, the Company received $100,000 from a tenant in connection with consenting to a lease assignment related to six of its properties; such amount is included in Other income on the consolidated statement of income for such year. No such income was recognized during 2023 and 2022. NOTE 14 — 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 $436,000, $349,000 and $301,000 for 2023, 2022 and 2021, respectively, and is included in General and administrative expense on the consolidated statements of income. The Company is party to (i) leases obligating it to provide tenant improvement allowances and (ii) various legal proceedings. Management believes these allowances and proceedings are routine, incidental to the operation of the Company’s business and that such allowance payments or proceedings will not have a material adverse effect upon the Company’s consolidated financial statements taken as a whole. F-35 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 15 — 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 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, 2023, tax returns for the calendar years 2020 through 2022 remain subject to examination by the Internal Revenue Service and various state and local tax jurisdictions. During 2023, 2022 and 2021, the Company did not incur any federal income tax expense. The Company does not have any deferred tax assets or liabilities at December 31, 2023 and 2022. The approximate allocation of the distributions made to stockholders is as follows for the years indicated: Ordinary income (a) Capital gains Year Ended December 31, 2023 53 % 47 100 % 2022 54 % 46 100 % 2021 43 % 57 100 % (a) In 2023, 2022 and 2021, 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. 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 Plus: Dividends designated from prior year Plus: Dividends designated from following year Dividends paid deduction 2023 Estimate 2022 Actual 2021 Actual $ $ 38,116 $ 157 38,273 (4,240) — — 737 34,770 $ 37,915 $ 102 38,017 — — 2,085 4,240 44,342 $ 37,478 35 37,513 — (2,085) 9,261 — 44,689 (a) Reflects the discount on common stock purchased through the dividend reinvestment plan of 3%. F-36 ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 16 — 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. NOTE 17 — QUARTERLY FINANCIAL DATA (Unaudited): (In Thousands, Except Per Share Data) 2023 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: Quarter Ended Total March 31 June 30 Sept. 30 Dec. 31 For Year $ 22,952 $ 22,407 $ 22,546 $ 22,741 $ 90,646 1,534 $ 3,180 $ $ 332 $ 11,962 $ 17,008 5,408 $ 6,539 $ 2,769 $ 15,202 $ 29,918 $ 5,386 $ 6,519 $ 2,747 $ 14,962 $ 29,614 $ 20,514 20,579 20,571 20,642 20,567 20,596 20,342 20,383 20,499 20,556 Basic and Diluted $ .25 $ .30 $ .12 $ .71 $ 1.38 (a) 2022 Total revenues (b) Gain on sale of real estate, net Net income (c) Net income attributable to One Liberty Properties, Inc. (c) 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 $ 21,556 $ 21,472 $ 21,473 $ 27,715 $ 92,216 4,649 $ 8,050 $ 4,063 $ $ — $ 16,762 9,340 $ 16,785 $ 7,221 $ 8,907 $ 42,253 $ 9,323 $ 16,767 $ 7,204 $ 8,883 $ 42,177 $ 20,379 20,541 20,364 20,480 20,340 20,416 20,358 20,406 20,360 20,453 $ $ .44 $ .44 $ .80 $ .79 $ .34 $ .34 $ .42 $ .42 $ 2.00 (a) 1.99 (a) (a) Calculated on weighted average shares outstanding for the year. (b) Includes $4,626 of additional rent from a ground lease tenant recognized in the quarter ended December 31, 2022 – see Note 6. (c) Includes $5,388 of income from the settlement of a lawsuit received in the quarter ended June 30, 2022 – see Note 13. F-37 S E I R A I D I S B U S D N A . 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I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I F-38 e t a D f o e t a D d e t a l u m u c c A d e r i u q c A n o i t c u r t s n o C ) 1 ( n o i t a i c e r p e D d e i r r a C h c i h W t a t n u o m A s s o r G 3 2 0 2 , 1 3 r e b m e c e D t a & g n i d l i u B n o i t i s i u q c A d n a g n i d l i u B t s o C d e z i l a t i p a C o t t n e u q e s b u S y n a p m o C o t t s o C l a i t i n I l a t o T s t n e m e v o r p m I d n a L s t n e m e v o r p m I s t n e m e v o r p m I d n a L s e c n a r b m u c n E n o i t a c o L 9 1 0 2 9 1 0 2 0 2 0 2 0 2 0 2 1 2 0 2 1 2 0 2 1 2 0 2 2 2 0 2 2 2 0 2 2 2 0 2 2 2 0 2 2 2 0 2 2 2 0 2 3 2 0 2 4 1 0 2 8 9 9 1 3 0 0 2 6 1 0 2 2 1 0 2 3 1 0 2 3 1 0 2 7 8 9 1 5 9 9 1 9 9 9 1 9 9 9 1 9 9 9 1 0 0 0 2 3 0 0 2 8 0 0 2 8 0 0 2 8 0 0 2 8 0 0 2 0 1 0 2 0 1 0 2 1 1 0 2 1 1 0 2 2 1 0 2 4 1 0 2 4 1 0 2 4 1 0 2 6 1 0 2 6 1 0 2 6 1 0 2 6 1 0 2 6 1 0 2 2 1 0 2 2 1 0 2 5 1 0 2 8 9 9 1 7 0 0 2 7 0 0 2 7 1 0 2 0 0 0 2 2 0 0 2 8 8 9 1 0 2 0 2 6 9 9 1 2 0 0 2 1 0 0 2 9 9 9 1 1 0 0 2 4 0 0 2 4 9 9 1 3 7 9 1 6 9 9 1 / A N 9 8 9 1 0 0 0 2 8 7 9 1 6 8 9 1 4 9 9 1 7 9 9 1 8 9 9 1 5 8 9 1 4 7 9 1 3 9 9 1 8 9 9 1 8 9 9 1 / A N 5 9 9 1 1 0 0 2 4 9 9 1 1 0 0 2 7 9 9 1 5 1 9 1 2 0 0 2 5 9 9 1 6 0 0 2 4 0 0 2 7 0 0 2 5 0 0 2 5 7 9 1 2 6 9 1 1 8 9 1 4 9 9 1 5 8 9 1 8 3 6 2 9 1 9 9 7 3 1 6 , 1 1 5 3 7 3 4 0 6 3 8 5 3 6 4 6 1 3 1 6 7 2 2 4 2 8 1 2 7 4 1 8 1 6 , 2 9 3 0 , 5 8 7 9 , 1 — 3 9 2 8 3 3 2 5 3 2 8 1 6 5 6 7 9 4 , 1 2 8 2 , 1 4 8 1 , 2 4 9 6 , 8 1 5 0 , 1 7 2 9 8 1 9 — 3 0 4 , 2 7 3 3 , 1 7 9 2 3 1 7 9 5 7 7 2 3 0 5 4 5 3 9 8 9 0 , 1 1 7 2 8 1 2 1 4 2 3 4 3 1 2 6 , 2 9 3 1 , 1 4 8 4 8 7 2 , 3 $ 9 2 0 , 6 9 5 8 , 2 2 9 2 , 8 5 7 8 , 6 1 3 0 0 , 6 7 2 3 , 9 4 5 5 , 7 7 6 8 , 7 3 8 3 , 6 1 5 3 5 , 5 9 3 4 , 8 7 8 4 , 8 4 5 5 , 7 5 1 6 , 2 1 3 6 3 , 3 1 9 8 9 , 9 6 5 8 , 4 6 7 2 , 7 1 8 1 6 , 1 5 7 0 , 2 3 6 2 , 2 5 2 4 5 4 1 , 1 9 0 0 , 3 6 7 5 , 2 6 8 4 , 4 7 2 5 , 2 6 2 1 , 3 4 7 7 , 2 5 3 9 , 1 8 8 9 , 6 7 5 7 , 6 1 2 1 2 , 3 2 0 7 3 , 1 2 2 8 , 2 9 4 0 , 3 9 7 2 , 1 7 2 6 , 2 1 8 5 , 5 3 9 1 , 5 2 4 4 , 1 7 7 3 , 1 9 3 2 , 1 9 4 8 , 1 6 5 0 , 3 2 9 0 , 2 8 2 6 , 6 1 4 1 3 , 8 1 $ 8 6 9 , 5 5 9 6 , 1 1 0 9 , 7 8 8 1 , 5 1 6 0 1 , 5 3 9 3 , 7 3 5 5 , 6 6 7 8 , 6 6 3 8 , 5 1 5 7 9 , 2 1 8 8 , 6 6 0 3 , 8 3 8 3 , 7 4 0 3 , 2 1 8 4 5 , 9 8 0 6 , 8 1 2 9 , 3 — 6 1 9 6 7 0 , 1 1 6 1 , 1 4 2 2 9 2 9 7 3 4 , 2 1 6 0 , 2 5 9 6 , 3 6 3 9 , 3 1 7 1 0 , 2 4 2 3 , 2 3 1 3 , 2 — 7 8 4 , 5 4 7 6 , 3 0 2 9 8 8 9 , 1 4 3 4 , 2 5 4 1 , 1 1 8 5 , 1 0 2 2 , 3 3 0 0 , 4 1 7 3 , 1 7 7 0 , 1 7 8 1 , 1 9 1 6 , 1 4 8 4 , 2 7 4 5 , 1 0 4 2 , 3 1 7 5 7 , 2 1 $ 1 6 1 9 3 4 6 1 , 1 7 8 6 , 1 7 9 8 4 3 9 , 1 1 0 0 , 1 1 9 9 7 4 5 0 6 5 , 2 8 5 5 , 1 1 8 1 1 7 1 1 1 3 5 1 8 , 3 1 8 3 , 1 5 3 9 6 7 2 , 7 1 2 0 7 9 9 9 2 0 1 , 1 1 0 2 6 1 2 2 7 5 5 1 5 1 9 7 0 1 5 2 0 8 1 6 4 1 2 8 , 2 5 3 9 , 1 1 0 5 , 1 8 3 5 , 9 1 0 5 4 4 3 8 5 1 6 4 3 1 6 4 0 , 1 1 6 3 , 2 0 9 1 , 1 1 7 2 5 0 0 3 0 3 2 2 7 5 5 4 5 8 8 3 , 3 7 5 5 , 5 $ 4 — — — — — 6 — — — — — — — 6 0 4 , 1 1 6 1 , 3 8 7 2 5 7 3 , 3 — — — 5 3 6 6 — 0 5 1 0 3 5 3 1 8 , 2 4 2 — — — 8 3 1 , 1 7 5 4 2 5 1 0 1 5 3 5 7 0 2 9 2 6 9 2 — — — — 3 5 2 5 1 5 0 7 — 7 3 0 , 1 $ 8 6 9 , 5 1 9 6 , 1 1 0 9 , 7 8 8 1 , 5 1 6 0 1 , 5 3 9 3 , 7 7 4 5 , 6 6 7 8 , 6 6 3 8 , 5 1 5 7 9 , 2 1 8 8 , 6 6 0 3 , 8 3 8 3 , 7 4 0 3 , 2 1 2 4 1 , 8 7 4 4 , 5 3 4 6 , 3 — 6 1 9 6 7 0 , 1 1 6 1 , 1 9 8 1 3 6 8 7 8 2 , 2 1 6 0 , 2 5 6 1 , 3 3 2 1 , 1 1 — 3 9 9 , 1 4 2 3 , 2 3 1 3 , 2 9 4 3 , 4 0 5 1 , 3 3 6 8 7 8 8 , 1 9 9 8 , 1 8 3 9 2 5 5 , 1 4 2 9 , 2 3 0 0 , 4 1 7 3 , 1 7 7 0 , 1 7 8 1 , 1 6 6 5 , 1 9 7 7 , 1 7 4 5 , 1 8 8 0 , 3 1 2 7 2 , 1 1 $ 1 6 1 9 3 4 6 1 , 1 7 8 6 , 1 7 9 8 4 3 9 , 1 1 0 0 , 1 1 9 9 7 4 5 0 6 5 , 2 8 5 5 , 1 1 8 1 1 7 1 1 1 3 5 1 8 , 3 1 8 3 , 1 5 3 9 1 0 9 , 3 1 2 0 7 9 9 9 2 0 1 , 1 1 0 2 6 1 2 2 7 5 5 1 5 1 9 7 0 1 5 2 0 8 1 6 4 1 2 8 , 2 5 3 9 , 1 1 0 5 , 1 8 3 5 , 9 1 0 5 4 4 3 8 5 1 6 4 3 1 6 4 0 , 1 1 6 3 , 2 0 9 1 , 1 1 7 2 5 0 0 3 0 3 2 2 7 5 5 4 5 8 8 3 , 3 5 0 0 , 6 — 1 3 1 , 5 5 6 2 , 1 1 5 8 1 , 4 7 2 7 , 5 — 7 1 6 , 4 0 1 7 , 9 — 9 7 2 , 5 3 2 8 , 5 — 6 3 2 , 4 9 5 8 , 7 — 7 5 1 , 1 — — 0 4 2 , 1 0 4 2 , 1 — — — — 4 1 3 , 2 7 5 1 , 9 — — — — 7 6 4 , 4 5 6 1 , 8 1 — — — — — — 8 0 9 5 0 8 9 7 7 2 8 8 — 5 0 4 , 2 2 6 8 7 7 2 , 2 8 4 0 , 8 $ 5 7 6 , 3 $ Z A , r e l d n a h C A V , d n a l h s A A G , n o c n i R R A , l l e w o L C N , e o r n o M L F , s e r c A h g i h e L L F , s r e y M t r o F E N , a h a m O H O H O , d o o w h t r o N , d o o w h t r o N C S , d o o w e h t y l B Y K , n o t g n i x e L Y N , n y l k o o r B E D , k r a w e N D M , a p p o J A G , n o t l a D L I , e d i s l l i H H O , d o o w h c a e B A G , w a s e n n e K C N , d r o c n o C C S , h c a e B e l t r y M X T , g r e b n e s o R A W , e l t t a e S Y N , n e d l e S Y N , a i v a t a B L I , n g i a p m a h C X T , o s a P l E A M , e l l i v r e m o S A M , s i n n a y H A M , s l l i M n o t s r a M A G , w a s e n n e K A P , d r o f s r e y o R A P , e l l i v e o r n o M L I , k o o r b g n i l o B L I , e k a L l a t s y r C C N , o r o b s n e e r G S K , e c n e r w a L A M , t t e r e v E O C , h c n a R s d n a l h g i H H O , s l l a F a g o h a y u C N M , y r u b d o o W H O , n o t n i l C t r o P H O , d i l c u E h t u o S N M , k r a P s i u o L t S J N , d r o f t p e D H O , d r a i l l i H O M , u a e d r a r i G e p a C O C , n o t e l t t i L l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I l a i r t s u d n I e p y T e c i f f O r e h t O r e h t O t n a r u a t s e R t n a r u a t s e R t n a r u a t s e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R l i a t e R F-39 e t a D f o e t a D d e t a l u m u c c A d e i r r a C h c i h W t a t n u o m A s s o r G 3 2 0 2 , 1 3 r e b m e c e D t a & g n i d l i u B n o i t i s i u q c A d n a g n i d l i u B t s o C d e z i l a t i p a C o t t n e u q e s b u S y n a p m o C o t t s o C l a i t i n I d e r i u q c A n o i t c u r t s n o C ) 1 ( n o i t a i c e r p e D l a t o T s t n e m e v o r p m I d n a L s t n e m e v o r p m I s t n e m e v o r p m I d n a L s e c n a r b m u c n E n o i t a c o L 6 0 0 2 6 0 0 2 6 0 0 2 6 0 0 2 6 0 0 2 6 0 0 2 6 0 0 2 6 0 0 2 6 0 0 2 8 0 0 2 2 0 0 2 8 0 0 2 8 0 0 2 8 0 0 2 8 0 0 2 4 0 0 2 4 1 0 2 6 9 9 1 9 9 9 1 4 9 9 1 6 9 9 1 1 0 0 2 1 0 0 2 5 9 9 1 9 7 9 1 4 9 9 1 2 9 9 1 8 9 9 1 4 9 9 1 5 9 9 1 4 9 9 1 3 9 9 1 9 9 9 1 7 9 9 1 5 2 3 , 2 7 8 5 , 1 8 5 1 , 1 7 8 6 , 1 8 3 1 , 3 9 2 0 , 2 1 7 4 , 1 8 9 6 , 1 1 7 5 , 1 4 0 2 , 1 3 6 0 , 3 2 6 8 1 0 8 8 2 4 , 1 2 3 0 , 1 2 4 1 , 9 4 9 2 , 1 3 6 5 , 6 8 9 5 , 4 9 5 3 , 3 2 7 6 , 4 9 8 7 , 8 3 5 7 , 5 6 9 2 , 4 0 6 8 , 4 9 6 4 , 4 1 1 1 , 6 9 5 9 , 7 3 3 1 , 6 5 6 8 , 4 8 4 0 , 4 5 3 7 , 3 3 4 3 , 8 8 2 3 , 1 1 4 7 3 , 5 8 9 7 , 3 0 7 7 , 2 2 1 8 , 3 2 0 2 , 7 2 2 7 , 4 5 4 5 , 3 3 9 9 , 3 5 3 6 , 3 1 4 0 , 3 2 9 7 , 6 6 5 2 , 2 6 3 7 , 3 6 9 0 , 2 0 0 7 , 2 4 4 2 , 5 8 2 3 , 1 1 0 0 8 9 8 5 0 6 8 9 8 1 , 1 7 8 5 , 1 1 3 0 , 1 1 5 7 7 6 8 4 3 8 0 7 0 , 3 7 6 1 , 1 7 7 8 , 3 9 2 1 , 1 2 5 9 , 1 5 3 0 , 1 — 9 9 0 , 3 6 2 1 6 6 2 0 7 1 2 2 9 1 8 6 1 9 2 2 4 6 1 — 5 9 1 5 0 9 , 2 — — — — 9 1 0 0 0 , 3 8 4 2 , 5 2 3 5 , 3 0 0 6 , 2 0 1 8 , 3 0 1 0 , 7 4 5 5 , 4 6 1 3 , 3 9 2 8 , 3 5 3 6 , 3 6 4 8 , 2 7 8 8 , 3 6 5 2 , 2 6 3 7 , 3 6 9 0 , 2 0 0 7 , 2 8 2 3 , 8 5 2 2 , 5 0 0 8 9 8 5 0 6 8 9 8 1 , 1 7 8 5 , 1 1 3 0 , 1 1 5 7 7 6 8 4 3 8 0 7 0 , 3 7 6 1 , 1 7 7 8 , 3 9 2 1 , 1 2 5 9 , 1 5 3 0 , 1 — 9 9 0 , 3 — — — — — — — — — 4 8 6 , 1 — 6 7 0 , 3 5 9 5 , 2 2 1 3 , 2 1 2 0 , 2 — 8 4 6 , 3 5 0 7 , 2 8 1 $ 5 5 6 , 4 6 8 $ 6 4 3 , 2 9 6 $ 9 0 3 , 2 7 1 $ 6 2 8 , 3 5 $ 7 4 4 , 1 4 6 $ 2 8 3 , 9 6 1 $ 5 6 5 , 2 2 4 $ A V , s w e N t r o p w e N A V , d n o m h c i R L I , e e n r u G L F , s e l p a N ) 2 ( A L , s e l r a h C e k a L ) 2 ( L I , o g a c i h C ) 2 ( C N , y r a C ) 2 ( ) 2 ( R O X T , e n e g u E , o s a P l E C N , o r o b s n e e r G N I , s i l o p a n a i d n I Y K , n o t g n i x e L S K , a t i h c i W C S , n o t f f u l B X T , o l l i r a m A X T , n i t s u A X T , r e l y T e r u t i n r u F - l i a t e R e r u t i n r u F - l i a t e R e r u t i n r u F - l i a t e R e r u t i n r u F - l i a t e R e r u t i n r u F - l i a t e R e r u t i n r u F - l i a t e R e r u t i n r u F - l i a t e R e r u t i n r u F - l i a t e R e r u t i n r u F - l i a t e R e r u t i n r u F - l i a t e R e p y T y l p p u S e c i f f O - l i a t e R y l p p u S e c i f f O - l i a t e R y l p p u S e c i f f O - l i a t e R y l p p u S e c i f f O - l i a t e R y l p p u S e c i f f O - l i a t e R s s o r c n i a t n o c s e s a e l e s e h t f o r u o F . s e s a e l e t a r a p e s o t t n a u s r u p , t n a n e t e m a s e h t o t d e s a e l t e n s e r o t s y l p p u s e c i f f o l i a t e r e r a s e i t r e p o r p e v i f e s e h T — 2 e t o N . s n o i s i v o r p t l u a f e d . s r a e y 0 4 o t 2 m o r f e g n a r h c i h w , s t n e m e v o r p m i d n a s g n i d l i u b e h t f o s e v i l l u f e s u d e t a m i t s e e h t r e v o d e d i v o r p s i n o i t a i c e r p e D — 1 r e t a e h T r e t a e h T e t o N 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) Investment in real estate: Balance, beginning of year Addition: Land, buildings and improvements Deduction: Properties sold Deduction: Property held-for-sale Balance, end of year Accumulated depreciation: Balance, beginning of year Addition: Depreciation Deduction: Accumulated depreciation related to properties sold Deduction: Accumulated depreciation related to property held-for-sale Balance, end of year Year Ended December 31, 2022 2021 2023 $ 879,596 $ 837,641 $ 839,058 28,837 (28,064) (2,190) $ 864,655 $ 879,596 $ 837,641 59,654 (17,699) — 18,176 (33,117) — (b) $ 173,143 $ 160,664 $ 147,136 17,694 (3,246) (920) $ 182,705 $ 173,143 $ 160,664 18,471 (5,992) — 19,242 (9,680) — (b) At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $20,749 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 and Manager of Georgetown Partners LLC, Managing General Partner of Gould Investors L.P.; Director and Senior Vice President of BRT Apartments Corp.; Chairman of Rainbow MJ Advisors LLC; Director of Halsa Holdings LLC; Director of MJ Real Estate Investment Trust FREDRIC H. GOULD Vice Chairman of the Board of Directors; Director of BRT Apartments Corp.; Sole Shareholder of Majestic Property Management Corp. LAWRENCE G. RICKETTS, JR. Executive Vice President and Chief Operating Officer DAVID W. KALISH Senior Vice President—Financial; Senior Vice President—Finance of BRT Apartments Corp.; Senior Vice President and Chief Financial Officer of Georgetown Partners LLC MARK H. LUNDY Senior Vice President and Assistant Secretary; Senior Vice President of BRT Apartments Corp.; President and Chief Operating Officer of Georgetown Partners LLC PATRICK J. CALLAN, JR. Director; President and Chief Executive Officer JEFFREY A. GOULD Director and Senior Vice President; Director, President and Chief Executive Officer of BRT Apartments Corp.; Senior Vice President and Manager of Georgetown Partners LLC CHARLES L. BIEDERMAN Director; Real Estate Developer; President of CLB, Inc.; Former Registered Architect EDWARD GELLERT Director; Senior 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 LLC RICHARD M. FIGUEROA Senior Vice President, Counsel and Assistant Secretary; Vice President and Assistant Secretary of BRT Apartments Corp.; Vice President of Georgetown Partners LLC ISAAC KALISH Chief Financial Officer and Senior Vice President; Senior Vice President and Treasurer of BRT Apartments Corp.; Vice President and Treasurer of Georgetown Partners LLC JUSTIN CLAIR Executive Vice President J. ROBERT LOVEJOY Independent Lead Director; Principal of J.R. Lovejoy & Co. LLC ALYSA BLOCK Treasurer LEOR SIRI Director; Chief Financial Officer of Rosen Equities MILI MATHEW Vice President, Financial KAREN A. TILL Director; Chief Financial Officer of Miller & Milone, P.C.; Executive Vice President, Corporate Tax and Compliance at Med-Metrix LLC EXECUTIVE OFFICES 60 Cutter Mill Road Suite 303 Great Neck, NY 11021 516-466-3100 REGISTRAR, TRANSFER AGENT, DISTRIBUTION DISBURSING AGENT Equiniti Trust Company, LLC 55 Challenger Road Ridgefield Park, NJ 07660 877-814-9664 www.equiniti.com INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP One Manhattan West New York, NY 10001 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 website. 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, 2024 at the Company’s Executive Offices at 9:00 a.m. WEBSITE ADDRESS www.1liberty.com 3 2023 ANNUAL REPORT 60 CUTTER MILL ROAD SUITE 303 GREAT NECK, NY 11021 516.466.3100 1LIBERTY.COM

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