One Liberty Properties(US:OLP)2025-03-06 21:42Part I Business The company is a self-administered REIT managing 102 industrial and retail properties across 31 states, totaling 10.9 million sq ft with 99.2% occupancy Portfolio Overview as of December 31, 2024 | Metric | Value | | :--- | :--- | | Number of Properties | 102 (100 owned, 2 in JVs) | | Total Square Feet | 10.9 million | | Occupancy Rate | 99.2% | | 2025 Contractual Rental Income | $72.0 million | | Weighted Avg. Remaining Lease Term | 5.0 years | | Weighted Avg. Mortgage Debt Term | 6.1 years | | Weighted Avg. Mortgage Interest Rate | 4.56% | - In 2024, the company acquired three industrial properties for $44.7 million and sold 11 properties for net proceeds of $38.2 million, resulting in an $18.0 million net gain. No amounts were outstanding on its $100.0 million credit facility at year-end21 - Subsequent to year-end 2024, the company acquired two industrial properties in Alabama for $49.0 million and one in Kansas for $13.3 million. It also contracted to buy another in Iowa for $26.0 million, which is expected to increase 2025 contractual rental income to approximately $77.3 million202523 2025 Contractual Rental Income by Property Type | Type of Property | 2025 Contractual Rental Income ($M) | Percentage of Total | | :--- | :--- | :--- | | Industrial | $52.1 | 72.4% | | Retail—General | $10.3 | 14.2% | | Retail—Furniture | $3.4 | 4.8% | | Other | $2.0 | 2.8% | | Retail—Office Supply | $1.5 | 2.1% | | Theater | $1.2 | 1.6% | | Health & Fitness | $1.0 | 1.4% | | Restaurant | $0.5 | 0.7% | | Total | $72.0 | 100.0% | Lease Expiration Schedule by 2025 Contractual Rental Income | Year of Expiration | % of 2025 Contractual Rental Income | | :--- | :--- | | 2025 | 2.1% | | 2026 | 8.6% | | 2027 | 19.8% | | 2028 | 16.2% | | 2029 | 12.9% | | 2030 and thereafter | 39.4% | Risk Factors The company faces risks from tenant and geographic concentration, significant lease expirations, and substantial mortgage debt refinancing requirements - A significant portion of revenue is concentrated with five key tenants: FedEx (5.2%), Northern Tool (4.3%), NARDA Holdings, Inc. (4.2%), Havertys (3.9%), and Ferguson (3.5%), totaling 21.1% of 2025 contractual rental income72 - The company has geographic concentration risk, with 46.9% of its 2025 contractual rental income derived from properties in six states: South Carolina (11.7%), New York (9.5%), Texas (7.9%), Pennsylvania (7.9%), Maryland (5.2%), and Iowa (4.7%)73 - The portfolio is concentrated in the industrial (72.4% of 2025 contractual rental income) and retail (21.1%) sectors, making it vulnerable to downturns in these areas. Competition from e-commerce poses a threat to the retail tenants7478 Maturing Mortgage Debt (2025-2029) | Year of Maturity | Principal Balance Due ($ thousands) | Weighted Average Interest Rate | | :--- | :--- | :--- | | 2025 | $22,458 | 4.17% | | 2026 | $18,461 | 3.91% | | 2027 | $38,525 | 3.64% | | 2028 | $30,155 | 4.64% | | 2029 | $79,386 | 4.41% | | Total (2025-2029) | $188,985 | | - Potential conflicts of interest exist due to transactions with affiliated entities. The company pays Majestic Property Management Corp. significant fees for services ($3.3 million in 2024) and obtains property insurance through Gould Investors L.P., which owns 10.6% of the company's stock101 Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments120 Cybersecurity The company's cybersecurity program is managed by a network administrator, overseen by the Audit Committee, and utilizes third-party assessments and safeguards - Cybersecurity defense systems are overseen at the management level by a network administrator who reports to the CFO and Senior Vice President-Financial122 - The company retains a third-party cybersecurity consulting firm for periodic assessments and continuous monitoring of its IT systems for threats123 - The Audit Committee provides Board-level oversight of cybersecurity practices as part of its risk management activities126 Properties The company owns 100 properties with a $672.3 million net book value and 99.2% occupancy, diversified across 31 states, with $425.0 million in mortgage debt - The company owns 100 properties with an aggregate net book value of $672.3 million and a 99.2% occupancy rate as of December 31, 2024129 Top 5 States by 2025 Contractual Rental Income | State | Number of Properties | 2025 Contractual Rental Income ($M) | % of Total | | :--- | :--- | :--- | :--- | | South Carolina | 8 | $8.4 | 11.7% | | New York | 7 | $6.8 | 9.5% | | Texas | 7 | $5.7 | 7.9% | | Pennsylvania | 5 | $5.7 | 7.9% | | Maryland | 2 | $3.7 | 5.2% | - The company holds a 50% equity interest in two joint ventures that own two properties, contributing approximately $233,000 to its share of 2025 base rent134 - As of year-end 2024, the company had $425.0 million of mortgage debt outstanding across 62 first mortgages, with a weighted average interest rate of 4.56% and a weighted average remaining term of 6.1 years137140 Legal Proceedings The company is a defendant in a lawsuit regarding deed restrictions on its Beachwood, Ohio land parcel, believing it has meritorious defenses - A subsidiary is a defendant in a lawsuit regarding deed restrictions on its Beachwood, Ohio land parcel. The company believes it has meritorious defenses138 Mine Safety Disclosures This item is not applicable to the company - Not applicable139 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the NYSE under "OLP," with an $8.1 million stock repurchase authorization remaining as of February 2025 - The company's common stock trades on the New York Stock Exchange under the symbol "OLP"142 - As of February 28, 2025, the company is authorized to repurchase up to $8.1 million of its common stock. No shares were repurchased in 2024144 Management's Discussion and Analysis of Financial Condition and Results of Operations Total revenues slightly decreased in 2024 due to dispositions, operating expenses rose, FFO and AFFO declined, but liquidity remains strong with $110.1 million available Comparison of Years Ended December 31, 2024 and 2023 Total revenues slightly decreased by 0.1% in 2024 due to dispositions, while operating expenses rose 2.3% and interest expense increased 3.6% Comparison of Revenues (2024 vs. 2023) | (In thousands) | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Rental income, net | $90,313 | $90,646 | $(333) | (0.4)% | | Lease termination fees | $250 | $— | $250 | n/a | | Total revenues | $90,563 | $90,646 | $(83) | (0.1)% | Components of Rental Income Change (2024 vs. 2023) | (In thousands) | 2024 | 2023 | Change ($) | | :--- | :--- | :--- | :--- | | Acquisitions | $3,356 | $612 | $2,744 | | Dispositions | $2,718 | $7,569 | $(4,851) | | Same store | $84,239 | $82,465 | $1,774 | | Total Rental income, net | $90,313 | $90,646 | $(333) | Comparison of Operating Expenses (2024 vs. 2023) | (In thousands) | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Depreciation and amortization | $24,291 | $24,789 | $(498) | (2.0)% | | Real estate expenses | $17,904 | $16,444 | $1,460 | 8.9% | | General and administrative | $15,388 | $15,822 | $(434) | (2.7)% | | Impairment loss | $1,086 | $— | $1,086 | n/a | | Total operating expenses | $58,670 | $57,339 | $1,331 | 2.3% | - Interest expense increased by $683,000 (3.6%) in 2024, primarily due to a rise in the weighted average interest rate on mortgage debt from 4.18% in 2023 to 4.47% in 2024173 Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) NAREIT FFO decreased by 2.5% to $38.0 million, and AFFO decreased by 3.4% to $41.2 million in 2024, primarily due to higher expenses FFO and AFFO Reconciliation Summary (in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | GAAP net income attributable to OLP | $30,417 | $29,614 | | NAREIT FFO applicable to common stock | $38,027 | $38,996 | | Adjusted FFO applicable to common stock | $41,157 | $42,595 | FFO and AFFO Per Share | Metric | 2024 | 2023 | | :--- | :--- | :--- | | GAAP net income per diluted share | $1.40 | $1.38 | | NAREIT FFO per share | $1.77 | $1.82 | | Adjusted FFO per share | $1.91 | $1.99 | - The $969,000 decrease in FFO was primarily due to a $1.5 million increase in real estate expenses, a $683,000 increase in interest expense, and a $333,000 decrease in rental income, partially offset by a $952,000 increase in other income and a $434,000 decrease in G&A expenses183 Liquidity and Capital Resources Available liquidity was $110.1 million as of February 2025, with $111.6 million in mortgage payments due by 2027, planned to be met through operations and refinancing - As of February 28, 2025, available liquidity was approximately $110.1 million, including **$10.1 million in cash** and $100.0 million available under the credit facility187 Mortgage Debt Payments Due (2025-2027, in thousands) | (In thousands) | 2025 | 2026 | 2027 | Total | | :--- | :--- | :--- | :--- | :--- | | Amortization payments | $11,084 | $11,038 | $9,999 | $32,121 | | Principal due at maturity | $22,458 | $18,461 | $38,525 | $79,444 | | Total | $33,542 | $29,499 | $48,524 | $111,565 | - The company has a $100.0 million credit facility maturing December 31, 2026. As of December 31, 2024, there was no balance outstanding, and the full amount was available to be borrowed194195 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate exposure, managed through swaps, with $425.0 million in fixed-rate debt having an estimated fair value of $398.9 million - The primary market risk exposure is from changes in interest rates on its variable rate credit facility. The company uses interest rate swaps to limit this risk on its variable rate mortgages211212 Debt Obligations and Fair Value as of Dec 31, 2024 (in thousands) | Metric | Value | | :--- | :--- | | Total Fixed Rate Long-Term Debt | $424,978 | | Weighted Average Interest Rate | 4.56% | | Estimated Fair Market Value | $398,934 | Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024, with no material changes - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2024218 - Based on an assessment using the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2024220221 Part III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 proxy statement - Required information is incorporated by reference from the proxy statement for the 2025 annual meeting of stockholders227 Executive Compensation Executive compensation information is incorporated by reference from the 2025 proxy statement - Required information is incorporated by reference from the proxy statement for the 2025 annual meeting of stockholders228 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security ownership information is incorporated by reference, with 256,740 securities to be issued and 189,245 available under equity plans Equity Compensation Plan Information as of December 31, 2024 | Plan Category | Securities to be issued upon exercise | Securities remaining for future issuance | | :--- | :--- | :--- | | Approved by security holders | 256,740 | 189,245 | | Not approved by security holders | — | — | | Total | 256,740 | 189,245 | Certain Relationships and Related Transactions, and Director Independence Information on related transactions and director independence is incorporated by reference from the 2025 proxy statement - Required information is incorporated by reference from the proxy statement for the 2025 annual meeting of stockholders232 Principal Accountant Fees and Services Principal accountant fees and services information is incorporated by reference from the 2025 proxy statement - Required information is incorporated by reference from the proxy statement for the 2025 annual meeting of stockholders233 Part IV Exhibits and Financial Statement Schedules This section details the financial statements, schedules, and exhibits filed as part of the Form 10-K report, including consolidated financials - This section contains the list of financial statements and exhibits filed with the report, including the Report of Independent Registered Public Accounting Firm, Consolidated Financial Statements, and Schedule III for Real Estate235