# One Liberty Properties Inc: Form 10-Q for the period ended Jun 30, 2023

- Company: [One Liberty Properties Inc](/companies/olp.md) (CIK 712770)
- Form: 10-Q
- Filed: 2023-08-04
- Accepted by EDGAR: Aug 4, 2023, 14:15 ET
- Period: 2023-06-30
- Accession: 0001558370-23-013390
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/712770/000155837023013390/olp-20230630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/712770/000155837023013390/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | $11.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | $21.4m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-04-01 to 2023-06-30 | $4.6m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2023-01-01 to 2023-06-30 | $9.2m | us-gaap:InterestExpense |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | $6.5m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | $11.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | $0.30 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | $0.55 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | $0.30 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | $0.55 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 20,642,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 20,612,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | $24.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 6 months, 2023-01-01 to 2023-06-30 | $19.1m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2023-01-01 to 2023-06-30 | $1.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-06-30 | $8.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2023-06-30 | $769.4m | us-gaap:Assets |
| Total liabilities | at 2023-06-30 | $456.4m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-06-30 | $312.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 54,338 characters.

#### Forward-Looking Statements

This Quarterly Report on Form 10-Q, together with other statements and information publicly disseminated by us, contain 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. 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 limitations, statements regarding our future estimated rental income, funds from operations, adjusted funds from operations and our dividend. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect our results of operations, financial condition, cash flows, 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:

- 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 in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”) under the caption “Item 1A. Risk Factors” for a discussion of certain factors which may cause actual results to differ materially from current.

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.

#### Challenges and Uncertainties Facing Certain Tenants and Properties

As more fully described in (i) our Annual Report, and in particular, the sections thereof entitled “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations”, and (ii) our Quarterly Report on Form 10-Q for the period ended March 31, 2023, and in particular, the section thereof entitled “Management's Discussion and Analysis of Financial Condition and Results of Operations” (the “March 10-Q”; and together with the Annual Report, the “Reports”), we face challenges due to the volatile economic environment, and certain of our properties and tenants (including Regal Cinemas, our Manahawkin, New Jersey property (the “Manahawkin Property”), The Vue Apartments, LA Fitness, Bed Bath and Beyond and Party City) face various challenges. There have been no material changes to the status of such tenants/properties from that described in our Reports except as described below:

#### Manahawkin Property

As more fully disclosed in our Annual Report, we have been exploring various alternatives with respect to the Manahawkin Property, which is owned by an unconsolidated joint venture in which we have a 50% equity interest. For the past several years, we had pursued a re-development of this property. We are currently pursuing, as an alternative to the re-development or the sale of a portion of such property, the sale of the entire Manahawkin Property. We have not entered into a contract to sell this property, and we anticipate that if we do enter into such a contract, the closing of the sale will be subject to the satisfaction of various conditions and will take, at least, several months. We can provide no assurance that a contract for the sale of this property will be signed, that if signed, that this sale will be completed and that if completed, that such transaction will be profitable for us. If we (i) do not complete this sale, we may be adversely impacted and (ii) complete this sale, may be required to write off, or otherwise account for, capitalized soft costs of approximately $586,000 incurred in connection with our development activities, which may adversely impact our results. If we are unable to complete this sale and resume re-development efforts, we may be unable to complete such re-development in a manner that will generate positive operating results at this property.

#### Bed Bath and Beyond

On April 23, 2023, Bed Bath and Beyond (“BBBY”) filed for Chapter 11 bankruptcy protection and is closing its retail locations. BBBY had leased our 32,138 square foot property located in Kennesaw, Georgia, which lease was rejected in April 2023. In 2022, this property accounted for (i) $629,000 of rental income, net and (ii) $218,000, $168,000 and $56,000 of depreciation and amortization expense, interest expense and real estate operating expense, respectively. At June 30, 2023, the mortgage debt with respect to this property was $4.5 million and we wrote-off, during the quarter ended June 30, 2023, $133,000 of the unbilled rent receivable balance related to this tenant.

#### LA Fitness

We and LA Fitness are negotiating, for a significantly reduced rental rate from the rate currently in effect, a short-term extension to their lease (which expires in November 2023) of a 38,000 square foot health and fitness facility in Hamilton, Ohio. This property accounted, in 2022, for (i) $915,000 of rental income and (ii) $197,000, $170,000 and $210,000 of interest expense, real estate operating expense and depreciation and amortization expense, respectively. At June 30, 2023, the mortgage debt, unbilled rent receivable and tenant origination cost with respect to this property was $4.0 million, $19,000 and $15,000, respectively. We can provide no assurance that this lease will be extended and if extended, this property, as a result of the significantly reduced rental rate, may operate on a negative cash flow basis. Further, if we are unable to extend the lease with the current tenant, it may 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 may be costly to reconfigure the space for use other than as a fitness facility.

#### Regal Cinemas

Regal Cinemas, or Regal, is a tenant at three properties, including the Manahawkin Property (the “Unconsolidated Regal Property”). Regal’s parent, Cineworld Group plc (“Cineworld”), filed for Chapter 11 bankruptcy protection in September 2022, and as a result, we and Regal amended the leases at these properties. Although these lease amendments became effective on or about July 31, 2023, when Cineworld’s plan of reorganization (the “Reorganization Plan”) became effective, we and Regal have, since May 10, 2023, operated in a manner assuming that the Reorganization Plan will become effective. These lease amendments provide that:

- subject to Regal’s renewal options, the lease expiration dates for our wholly-owned properties in Greensboro, North Carolina and Indianapolis, Indiana were amended from March 2035 and December 2032, respectively, to March 2030 and December 2030, respectively, and the lease expiration date of the Unconsolidated Regal Property was amended from November 2026 to December 2024;
- Regal is obligated to pay us, with respect to our wholly-owned properties, (i) from July 1 through December 31, 2023, approximately $488,000, and (ii) from January 1, 2024 through 2030, an aggregate of approximately $7.7 million of base rent;
- Regal was relieved of its obligation to pay $138,000 of deferred rent at our wholly-owned properties, which was otherwise payable from May 10, 2023 through June 30, 2023; and
- effective as of November 1, 2022, the rent obligation with respect to the Unconsolidated Regal Property consists solely of monthly percentage rent based on gross sales and accordingly it would be speculative to estimate the amount, if any, Regal will pay at this property.

Since October 2020, we have not accrued Regal’s rent and have been (and anticipate for the near term) reporting same on a cash basis. In 2022 and the six months ended June 30, 2023, we recorded $2.6 million and $1.4 million, respectively, of rent from our wholly-owned Regal properties, including $885,000 and $424,000, respectively, of deferred rent. In 2022 and the six months ended June 30, 2023, we recorded $328,000 and $152,000, respectively, representing our 50% share of the base rent from the Unconsolidated Regal Property, including $111,000 and $51,000, respectively, of deferred rent. At June 30, 2023, (i) the wholly-owned Regal properties had aggregate mortgage debt, intangible lease liabilities and intangible lease assets of approximately $3.7 million, $548,000 and $535,000, respectively, and (ii) our 50% share of the mortgage debt at the Unconsolidated Regal Property was $10.5 million. We estimate that the carrying costs for the wholly-owned properties for the six months ending December 31, 2023, are approximately $724,000, including ground lease rent of $232,000 (which sum has historically been paid directly by Regal to the owner of the Greensboro property), real estate taxes of approximately $176,000, and debt service of $212,000 (including $54,000 of deferred interest payments). Regal is the primary obligor with respect to $279,000 of these carrying costs and we are responsible with respect to such amount if it is not paid by Regal.

Although the Reorganization Plan became effective, Regal may continue to face the challenges generally facing the movie exhibition industry; accordingly, we can provide no assurance that Regal will be able to continue operations and if it is unable to continue operations, we will be adversely impacted.

Our cash flow and profitability will be adversely impacted by the modifications to Regal’s leases or if the issues with respect to the other challenged tenants/properties identified in this Quarterly Report or the Reports are not resolved in a satisfactory manner.

#### Overview

We are a self-administered and self-managed real estate investment trust, or REIT. To qualify as a REIT, under the Internal Revenue Code of 1986, as amended, we must meet a number of organizational and operational requirements, including a requirement that we distribute currently at least 90% of ordinary taxable income to our stockholders. We intend to comply with these requirements and to maintain our REIT status.

We acquire, own and manage a geographically diversified portfolio consisting primarily of industrial and retail properties, and to a lesser extent, health and fitness, restaurant, theater, and other properties, many of which are subject to long-term net leases. As of June 30, 2023, we own 118 properties (including three properties owned by consolidated joint ventures and three properties owned by unconsolidated joint ventures) located in 31 states. Based on square footage, our occupancy rate at June 30, 2023 is approximately 97.5%.

We face a variety of risks and challenges in our business, including the possibility we will not be able to: acquire or dispose of properties on acceptable terms, lease our properties on terms favorable to us or at all, collect amounts owed to us by our tenants, renew or re-let, on acceptable terms, leases that are expiring or otherwise terminating.

We seek to manage the risk of our real property portfolio and the related financing arrangements by (i) diversifying among locations, tenants, scheduled lease expirations, mortgage maturities and lenders, and (ii) minimizing our exposure to interest rate fluctuations. Substantially all of our mortgage debt either bears interest at fixed rates or is subject to interest rate swaps, limiting our exposure to fluctuating interest rates on our outstanding mortgage debt.

We monitor the risk of tenant non-payments through a variety of approaches tailored to the applicable situation. Generally, based on our assessment of the credit risk posed by our tenants, we monitor a tenant’s financial condition through one or more of the following actions: reviewing tenant financial statements or other financial information, obtaining other tenant related information, regular contact with tenant’s representatives, tenant credit checks and regular management reviews of our tenants and their payment practices. We may sell a property if a tenant’s financial condition is unsatisfactory.

In acquiring and disposing of properties, among other things, we evaluate the terms of the leases, the credit of the existing tenants, the terms and conditions of the related financing arrangement (including any contemplated financing) and engage in a fundamental analysis of the real estate to be bought or sold. This fundamental 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. In addition, in evaluating property sales, we take into account, among other things, the property type (*i.e.,* industrial, retail or other), our perception of the property’s long-term prospects (including the likelihood for, and the extent of, any further appreciation or diminution in value), the term remaining on the related lease and mortgage debt, the price and other terms and conditions for the sale of such property and the returns anticipated to be generated from the reinvestment of the net proceeds to us from such property sale.

Our 2023 contractual base rent is approximately $70.3 million and represents, after giving effect to any abatements, concessions, deferrals or adjustments, the base rent payable to us during the twelve months ending June 30, 2024 under leases in effect at June 30, 2023. Included in such contractual rental income is an aggregate of $1.2 million of base rent due from Regal Cinemas. Excluded from such contractual rental income is an aggregate of $4.0 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, (ii) $1.2 million representing our share of the base rent payable to our joint ventures (which excludes amounts from Unconsolidated Regal Property), and (iii) approximately $736,000 of straight-line rent and $733,000 of amortization of lease-related intangibles.

The following table sets forth scheduled expirations of leases for our properties as of June 30, 2023 for the periods indicated below:

| ​ Lease Expiration (1) 12 Months Ending June 30, | ​ ​ ​ | ​ Number of Expiring Leases | ​ ​ ​ | ​ Approximate Square Footage Subject to Expiring Leases (2) | ​ ​ ​ | ​ ​ Contractual Base Rent Under Expiring Leases | ​ ​ ​ | ​ ​ Contractual Base Rent Represented by Expiring Leases |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| 2024 |  | 21 | ​ | 746,285 | ​ | $3,185,516 | ​ | 4.5% |
| 2025 |  | 21 | ​ | 865,888 | ​ | 7,160,307 | ​ | 10.20 ​ |
| 2026 |  | 11 | ​ | 665,774 | ​ | 3,939,278 | ​ | 5.60 ​ |
| 2027 |  | 26 | ​ | 876,589 | ​ | 6,570,630 | ​ | 9.40 ​ |
| 2028 |  | 24 | ​ | 2,094,611 | ​ | 12,313,240 | ​ | 17.50 ​ |
| 2029 |  | 16 | ​ | 1,676,173 | ​ | 9,632,111 | ​ | 13.70 ​ |
| 2030 |  | 6 | ​ | 510,702 | ​ | 4,122,322 | ​ | 5.90 ​ |
| 2031 |  | 12 | ​ | 996,075 | ​ | 6,452,933 | ​ | 9.20 ​ |
| 2032 |  | 8 | ​ | 267,839 | ​ | 2,477,614 | ​ | 3.50 ​ |
| 2033 | ​ | 16 | ​ | 876,233 | ​ | ​ 6,962,474 | ​ | 9.90 ​ |
| 2034 and thereafter |  | 11 | ​ | 1,099,146 | ​ | 7,465,264 | ​ | 10.60 ​ |
| ​ |  | 172 |  | 10,675,315 | ​ | $70,281,689 |  | 100.0% |

(1) Lease expirations assume tenants do not exercise existing renewal or termination options.

(2) Excludes an aggregate of 132,685 square feet of vacant space.

#### Property Transaction During the Three Months Ended June 30, 2023

On May 31, 2023, we sold the Havertys retail property - Duluth, Georgia, for a gross sales price of $6.0 million and recognized a gain of $3.2 million from this sale. This property contributed a nominal amount to revenues and total operating expenses in the six months ended June 30, 2023 and 2022.

#### Equity Incentive Program Activity

On June 22, 2023, we awarded an aggregate of 85,250 shares subject to restricted stock units (“RSUs”), and related dividend equivalent rights, to 18 individuals. Generally, the awards vest in 2026 subject to satisfaction of, among other things, market and performance conditions similar to the conditions applicable to the RSUs granted in 2022 and 2021.

On August 3, 2023, we determined that the performance and market conditions with respect to the 74,988 RSUs granted in 2020 had been met and authorized the issuance of the underlying shares of common stock.

#### Stock Repurchase Program

During the three and six months ended June 30, 2023, we repurchased approximately 73,000 shares of common stock for total consideration of approximately $1.5 million. After giving effect to such repurchases, we are authorized to repurchase, from time-to-time in open market or privately negotiated transactions, approximately $6.0 million of shares of our common stock.

#### Property Transaction Subsequent to June 30, 2023

On July 13, 2023, we acquired for $13.4 million (including the assumption of $4.3 million of mortgage debt) a 177,040 square foot industrial property located in Blythewood, South Carolina, and leased by two tenants. The mortgage debt bears an interest rate of 4.6% and matures in June 2029. The weighted average remaining lease term of the tenancies is approximately 1.6 years. We estimate that during the six months ending December 31, 2023, this property will generate $367,000 of base rent and $91,000 of interest expense; the real estate and depreciation and amortization expense associated with this property are currently not quantifiable.

#### Results of Operations

#### Total revenues

The following table compares total revenues for the periods indicated:

*(Dollars in thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Increase (Decrease) | ​ ​ ​ ​ ​ ​ % Change | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Increase (Decrease) | ​ ​ ​ ​ ​ ​ % Change |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- | ---: | --- | ---: | --- | ---: | ---: |
| Rental income, net | ​ | $22,407 | ​ | $21,472 | ​ | $935 | 4.4 | ​ | $45,359 | ​ | $43,003 | ​ | $2,356 | 5.5 |
| Lease termination fees | ​ | ​ — | ​ | ​ — | ​ | ​ — | — | ​ | ​ — | ​ | ​ 25 | ​ | ​ (25) | (100.0) |
| Total revenues | ​ | $22,407 | ​ | $21,472 | ​ | $935 | 4.4 | ​ | $45,359 | ​ | $43,028 | ​ | $2,331 | 5.4 |

#### Rental income, net.

The following table details the components of rental income, net, for the periods indicated:

*(Dollars in thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Increase (Decrease) | ​ ​ ​ | ​ ​ ​ % Change | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Increase (Decrease) | ​ ​ ​ | ​ ​ ​ % Change |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Acquisitions (1) | ​ | $1,168 | ​ | $388 | ​ | $780 | ​ | 201.0 | ​ | $2,366 | ​ | $515 | ​ | $1,851 | ​ | 359.4 |
| Dispositions (2) | ​ | ​ 90 | ​ | ​ 303 | ​ | ​ (213) | ​ | (70.3) | ​ | ​ 217 | ​ | ​ 913 | ​ | ​ (696) | ​ | (76.2) |
| Same store (3) | ​ | ​ 21,149 | ​ | ​ 20,781 | ​ | ​ 368 | ​ | 1.8 | ​ | ​ 42,776 | ​ | ​ 41,575 | ​ | ​ 1,201 | ​ | 2.9 |
| Rental income, net | ​ | $22,407 | ​ | $21,472 | ​ | $935 | ​ | 4.4 | ​ | $45,359 | ​ | $43,003 | ​ | $2,356 | ​ | 5.5 |

(1) Represents rental income from properties acquired since January 1, 2022.

(2) Represents rental income from properties sold since January 1, 2022.

(3) Represents rental income from 109 properties that were owned for the entirety of the periods presented.

#### Changes due to acquisitions and dispositions

The three and six months ended June 30, 2023 reflect increases of $780,000 and $1.9 million, respectively, generated by six properties acquired in 2022. Offsetting the increases are decreases due to the inclusion, in the three and six months ended June 30, 2022, of rental income of $213,000 and $696,000, respectively, from properties sold during 2022 and 2023 (*i.e.*, for the three and six months ended June 30, 2023, $134,000 and $594,000, respectively, from seven properties sold in 2022 and $79,000 and $102,000, respectively, from the two properties sold in 2023).

#### Changes at same store properties

The increases in same store rental income during the three and six months ended June 30, 2023 are due primarily to increases of:

- $426,000 and $873,000, respectively, of rental income from various lease amendments and extensions at our properties (including $263,000 and $527,000, respectively, at our Fort Mill, South Carolina property, and for the six months ended June 30, 2023, $119,000 at our Indianapolis, Indiana property),
- $169,000 and $638,000, respectively, of rental income due to new tenants at various properties (including, for the six months ended June 30, 2023, $306,000 and $109,000 from Lion Brewery - Pittston, Pennsylvania and Dick’s Sporting Goods - Champaign, Illinois, respectively), and
- $192,000 and $306,000, respectively, in tenant reimbursements, of which $102,000 and $163,000, respectively, relates to real estate taxes and $90,000 and $143,000, respectively, relates to operating expenses generally incurred in the same period.

The increases were offset during the three and six months ended June 30, 2023 by decreases of:

- $175,000 and $175,000, respectively, from Bed Bath & Beyond - Kennesaw, Georgia which filed for bankruptcy (including the write-off, during the quarter ended June 30, 2023, of the $133,000 unbilled rent receivable balance),
- $163,000 and $329,000, respectively, of rental income from lease expirations at four of our properties (including $105,000 and $105,000, respectively, from Zwanenberg Food Group - Nashville, Tennessee), and
- $164,000 and $113,000, respectively, of rental income from our wholly-owned Regal properties due to bankruptcy related lease amendments. See “ – *Challenges and Uncertainties Facing Certain Tenants and Properties”* for further information regarding Regal Cinemas.

#### Operating Expenses

The following table compares operating expenses for the periods indicated:

*(Dollars in thousands)*

| ​ ​ ​ Operating expenses: | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ ​ | ​ ​ ​ ​ Increase (Decrease) ​ | ​ ​ ​ ​ ​ ​ % Change | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ ​ | ​ ​ ​ ​ Increase (Decrease) ​ | ​ ​ ​ ​ ​ ​ % Change |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- | ---: | --- | ---: | --- | ---: | ---: |
| Depreciation and amortization | ​ | $6,114 | ​ | $5,905 | ​ | $209 | 3.5 | ​ | $12,259 | ​ | $11,748 | ​ | $511 | 4.3 |
| General and administrative | ​ | 4,165 | ​ | 3,973 | ​ | 192 | 4.8 | ​ | 8,204 | ​ | 7,765 | ​ | 439 | 5.7 |
| Real estate expenses | ​ | 3,954 | ​ | 3,549 | ​ | 405 | 11.4 | ​ | 8,078 | ​ | 7,236 | ​ | 842 | 11.6 |
| State taxes | ​ | 88 | ​ | 77 | ​ | 11 | 14.3 | ​ | 156 | ​ | 151 | ​ | 5 | 3.3 |
| Total operating expenses | ​ | $14,321 | ​ | $13,504 | ​ | $817 | 6.1 | ​ | $28,697 | ​ | $26,900 | ​ | $1,797 | 6.7 |

*Depreciation and amortization.* The increases in the three and six months ended June 30, 2023 are due primarily to (i) $348,000 and $808,000, respectively, of such expense from properties acquired in 2022, and (ii) $119,000 and $223,000, respectively, of depreciation from improvements at several properties. In addition, the six months ended June 30, 2023 includes $121,000 of amortization of leasing commissions at several properties.

The increases were offset by:

- decreases of $227,000 and $458,000, respectively, related to improvements and tenant origination costs at several properties that prior to June 30, 2023 were fully amortized, and
- the inclusion of $172,000 of such expense, in the six months ended June 30, 2022, from the properties sold since January 1, 2022.

*General and administrative.* The increases in the three and six months ended June 30, 2023 are primarily due to increases of $242,000 and $356,000, respectively, of compensation expense due to additional employees and higher levels of compensation.

*Real estate expenses.* The increases in the three and six months ended June 30, 2023 are primarily due to:

- $184,000 and $464,000, respectively, from properties acquired in 2022,
- $137,000 and $275,000, respectively, relating to real estate tax expense (primarily related to our El Paso, Texas and Ankeny, Iowa properties), and
- $92,000 and $173,000, respectively, of other real estate expenses, and $89,000 and $150,000, respectively, of insurance expenses for several properties, none of which were individually significant.

These increases were offset in the three and six months ended June 30, 2023 primarily by decreases of $97,000 and $220,000, respectively, from the properties sold since January 1, 2022.

A substantial portion of real estate expenses is rebilled to tenants and are included in Rental income, net, on the consolidated statements of income.

#### Gain on sale of real estate, net.

The following table compares gain on sale of real estate, net for the periods indicated:

*(Dollars in thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Increase (Decrease) | ​ ​ ​ ​ ​ ​ % Change | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Increase (Decrease) | ​ ​ ​ ​ ​ ​ % Change |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- | ---: | --- | ---: | --- | ---: | ---: |
| Gain on sale of real estate, net | ​ | $3,180 | ​ | $8,050 | ​ | $(4,870) | (60.5) | ​ | $4,714 | ​ | $12,699 | ​ | $(7,985) | (62.9) |

The following table lists the sold properties and the related gains, net for the periods indicated:

*(Dollars in thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Havertys retail property - Duluth, Georgia | ​ | $3,180 | ​ | $— | ​ | $3,180 | ​ | $— |
| TGI Fridays restaurant property - Hauppauge, New York | ​ | ​ — | ​ | ​ — | ​ | ​ 1,534 | ​ | ​ — |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Havertys retail property - Fayetteville, Georgia | ​ | ​ — | ​ | ​ 1,125 | ​ | ​ — | ​ | ​ 1,125 |
| Orlando Baking industrial property - Columbus, Ohio | ​ | ​ — | ​ | ​ 6,925 | ​ | ​ — | ​ | ​ 6,925 |
| Wendy's restaurants (4 properties) - Various cities, Pennsylvania | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ 4,649 |
| Total gain on sale of real estate, net | ​ | $3,180 | ​ | $8,050 | ​ | $4,714 | ​ | $12,699 |

#### Other Income and Expenses

The following table compares other income and expenses for the periods indicated:

*(Dollars in thousands)*

| ​ ​ ​ Other income and expenses: | ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Increase (Decrease) ​ ​ | ​ ​ ​% ​ | ​ ​ Change ​ | ​ ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Increase (Decrease) ​ ​ | ​ ​ ​% ​ | ​ ​ Change ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | ---: | --- | --- | --- | --- | --- | --- | --- | ---: |
| Equity in earnings of unconsolidated joint ventures | ​ | $60 | ​ | $112 | ​ | $(52) | ​ | (46.4) | ​ | $145 | ​ | $228 | ​ | $(83) | ​ | (36.4) |
| Income on settlement of litigation | ​ | ​ — | ​ | ​ 5,388 | ​ | ​ (5,388) | ​ | (100.0) | ​ | ​ — | ​ | ​ 5,388 | ​ | ​ (5,388) | ​ | (100.0) |
| Other income | ​ | ​ 28 | ​ | ​ 54 | ​ | ​ (26) | ​ | (48.1) | ​ | ​ 43 | ​ | ​ 980 | ​ | ​ (937) | ​ | (95.6) |
| Interest: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ |
| Expense | ​ | ​ (4,610) | ​ | ​ (4,353) | ​ | ​ 257 | ​ | 5.9 | ​ | ​ (9,210) | ​ | ​ (8,659) | ​ | ​ 551 | ​ | 6.4 |
| Amortization and write-off of deferred financing costs | ​ | ​ (205) | ​ | ​ (434) | ​ | ​ (229) | ​ | (52.8) | ​ | ​ (407) | ​ | ​ (639) | ​ | ​ (232) | ​ | (36.3) |

*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.* The six months ended June 30, 2022 includes $918,000 representing the final property insurance recovery related to our Lake Charles, Louisiana property damaged in an 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: | ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ ​ | ​ ​ ​ ​ Increase (Decrease) ​ | ​ ​ ​ ​ ​% Change | ​ ​ ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ ​ | ​ ​ ​ ​ Increase (Decrease) ​ | ​ ​ ​ ​ ​% Change |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- | ---: | --- | ---: | --- | ---: | ---: |
| Mortgage interest | ​ | $4,282 | ​ | $4,200 | ​ | $82 | 2.0 | ​ | $8,522 | ​ | $8,385 | ​ | $137 | 1.6 |
| Credit line interest | ​ | ​ 328 | ​ | ​ 153 | ​ | ​ 175 | 114.4 | ​ | ​ 688 | ​ | ​ 274 | ​ | ​ 414 | 151.1 |
| Total | ​ | $4,610 | ​ | $4,353 | ​ | $257 | 5.9 | ​ | $9,210 | ​ | $8,659 | ​ | $551 | 6.4 |

#### Mortgage interest

The following table reflects the average interest rate on the average principal amount of outstanding mortgage debt for the periods indicated:

*(Dollars in thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Three Months Ended June 30, 2023 | ​ ​ ​ ​ ​ 2022 | ​ ​ ​ ​ ​ ​ Increase ​% (Decrease) | ​ ​ Change | ​ ​ ​ ​ | ​ ​ ​ Six Months Ended June 30, 2023 | ​ ​ ​ ​ ​ 2022 | ​ ​ ​ ​ ​ ​ Increase ​% (Decrease) | ​ ​ Change |
| --- | --- | ---: | ---: | ---: | ---: | --- | ---: | ---: | ---: | ---: |
| Weighted average interest rate | ​ | ​ 4.14% | ​ 4.17% | ​ (0.03)% | (0.7) | ​ | ​ 4.13% | ​ 4.17% | ​ (0.04)% | (1.0) |
| Weighted average principal amount | ​ | $411,537 ​ | $402,788 ​ | $8,749 | 2.2 | ​ | $410,783 ​ | $402,510 ​ | $8,273 | 2.1 |

The increases in mortgage interest in the three and six months ended June 30, 2023 are due primarily to increases in the average principal amount of mortgage debt outstanding as a result of refinancings and acquisitions. The increase was offset by mortgages payoffs (generally in connection with current maturity dates) and scheduled amortization payments.

#### Credit line interest

The following table reflects the weighted average interest rate on the weighted average principal amount of outstanding credit line debt for the periods indicated:

*(Dollars in thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Three Months Ended June 30, 2023 | ​ ​ ​ ​ ​ 2022 | ​ ​ ​ ​ ​ ​ Increase ​% (Decrease) | ​ ​ Change | ​ ​ ​ ​ | ​ ​ ​ Six Months Ended June 30, 2023 | ​ ​ ​ ​ ​ 2022 | ​ ​ ​ ​ ​ ​ Increase ​% (Decrease) | ​ ​ Change |
| --- | --- | ---: | ---: | ---: | ---: | --- | ---: | ---: | ---: | ---: |
| Weighted average interest rate | ​ | ​ 6.69% | ​ 2.67% | ​ 4.02% | 150.6 | ​ | ​ 6.44% | ​ 2.31% | ​ 4.13% | 178.8 |
| Weighted average principal amount | ​ | $16,577 ​ | $14,851 ​ | $1,726 | 11.6 | ​ | $18,371 ​ | $14,886 ​ | $3,485 | 23.4 |

The increases in credit line interest in the three and six months ended June 30, 2023 are due primarily to increases in the weighted average interest rates, and, to a lesser extent, increases of $1.7 million and $3.5 million, respectively, in the weighted average balance outstanding under our credit line.

At August 1, 2023, we had $16.5 million outstanding under our credit facility. Accordingly, we anticipate that over the short-term, until such outstanding amount is reduced, our interest expense will be higher than the interest expense incurred during the corresponding 2022 periods.

*Amortization and write-off of deferred financing costs.* The decreases in the three and six months ended June 30, 2023 are 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.

#### 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. Our available liquidity at August 1, 2023, was $90.8 million, including $7.3 million of cash and cash equivalents (including the credit facility’s required minimum $3.0 million average deposit maintenance balance) and $83.5 million available under our credit facility. At August 1, 2023, the facility is available for the acquisition of commercial real estate, repayment of mortgage debt, and up to $32.0 million for renovation and operating expense purposes.

#### 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, anticipated dividend payments and repurchases, if any, of our common stock (we are authorized to repurchase up to $6.0 million of common stock) 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 $2.4 million of capital and other expenditures) from the foregoing, as well as property financings and refinancings and property sales.

At June 30, 2023, excluding the mortgage debt of our unconsolidated joint venture, we had 67 outstanding mortgages payable secured by 68 properties in the aggregate principal amount of $419.7 million (before netting unamortized deferred financing costs of $3.4 million and mortgage intangibles of $612,000). These mortgages represent first liens on individual real estate investments with an aggregate carrying value of $657.4 million, before accumulated depreciation of $119.8 million. After giving effect to interest rate swap agreements, the mortgage payments bear interest at fixed rates ranging from 2.97% to 5.56% (a 4.17% weighted average interest rate) and mature between 2023 and 2047 (a 6.2 year weighted average remaining term to maturity).

The following table sets forth, as of June 30, 2023, information with respect to our mortgage debt that is payable during the six months ending December 31, 2023 and for each of the subsequent twelve months through December 31, 2026 (excludes our unconsolidated joint venture’s $21.0 million mortgage debt bearing an interest rate of 4.0% and maturing in 2025):

*(Dollars in thousands)*

| ​ | ​ | ​ ​ ​ 2023 | ​ ​ ​ 2024 | ​ ​ | ​ ​ ​ 2025 | ​ ​ ​ 2026 | ​ ​ Total |
| --- | --- | ---: | ---: | --- | ---: | ---: | ---: |
| Amortization payments | ​ | $6,216 ​ | $11,642 ​ | ​ | $10,355 ​ | $10,249 ​ | $38,462 |
| Principal due at maturity | ​ | 6,238 ​ | 50,695 (1) | ​ | 32,063 ​ | 19,179 ​ | 108,175 |
| Total | ​ | $12,454 ​ | $62,337 ​ | ​ | $42,418 ​ | $29,428 ​ | $146,637 |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ |
| Weighted average interest rate % on principal due at maturity | ​ | ​ 4.09% | ​ 4.37% | ​ | ​ 4.28% | ​ 3.98% | ​ ​ |

(1)

(1) Approximately $29.4 million (bearing a weighted average interest rate of 4.7%) of such debt matures in the six months ending June 30, 2024. We anticipate refinancing a substantial portion of such debt although we can provide no assurance that we will be able to do so on terms as favorable as those currently in effect or at all.

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 2023 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.

#### 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. 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 the six months ended June 30, 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. The interest rate on the facility was 6.89% and 6.91% at June 30, 2023 and July 31, 2023, respectively.

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. 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. At June 30, 2023, we were in compliance with the covenants under this facility.

#### Other Financing Sources and Arrangements

We own a land parcel located in Beachwood, Ohio which is improved by a multi-family complex (*i.e.,* The Vue Apartments) that we ground lease to the owner/operator of such complex. This ground lease did not generate any rental income during the six months ended June 30, 2023 and 2022. At June 30, 2023, the carrying value of the land on our balance sheet was approximately $17.0 million; our leasehold position is subordinate to $64.2 million of mortgage debt incurred by our tenant, the owner/operator of the multi-family complex. In addition, we have agreed, in our discretion, to fund certain capital expenditures and operating cash flow shortfalls at this property. We do not believe that this type of off-balance sheet arrangement has been or will be material to our liquidity and capital resource positions, except to the extent we determine to continue to fund the capital expenditures required by, and the operating cash flow shortfalls at, this property. See Note 6 to our consolidated financial statements for additional information regarding this arrangement.

#### Application of Critical Accounting Estimates

A complete discussion of our critical accounting estimates is included in our Form 10-K for the year ended December 31, 2022. There have been no significant changes in such estimates since December 31, 2022.

#### 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 our financing activities (including our share of our 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 predictability 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 to us in evaluating potential property acquisitions.

FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. FFO and AFFO and should not be considered to be an alternative to net income as a reliable measure of our operating performance; nor should FFO and AFFO be considered an alternative to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity. FFO and AFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization, capital improvements and distributions to stockholders.

Management recognizes that there are limitations in the use of FFO and AFFO. In evaluating our performance, management is careful to examine GAAP measures such as net income and cash flows from operating, investing and financing activities.

The tables below provides 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 periods indicated (dollars in thousands, except per share amounts):

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 |
| --- | --- | ---: | --- | --- | --- | --- | --- | --- |
| GAAP net income attributable to One Liberty Properties, Inc. | ​ | $6,519 | ​ | $16,767 | ​ | $11,905 | ​ | $26,090 |
| Add: depreciation and amortization of properties | ​ | 5,925 | ​ | ​ 5,772 | ​ | ​ 11,894 | ​ | ​ 11,497 |
| Add: our share of depreciation and amortization of unconsolidated joint ventures | ​ | 130 | ​ | ​ 130 | ​ | ​ 259 | ​ | ​ 259 |
| Add: amortization of deferred leasing costs | ​ | 189 | ​ | ​ 133 | ​ | ​ 365 | ​ | ​ 251 |
| Add: our share of amortization of deferred leasing costs of unconsolidated joint ventures | ​ | 5 | ​ | ​ 6 | ​ | ​ 10 | ​ | ​ 11 |
| Deduct: gain on sale of real estate, net | ​ | (3,180) | ​ | (8,050) | ​ | (4,714) | ​ | (12,699) |
| Adjustments for non-controlling interests | ​ | (18) | ​ | ​ (17) | ​ | ​ (35) | ​ | ​ (32) |
| NAREIT funds from operations applicable to common stock | ​ | 9,570 | ​ | 14,741 | ​ | 19,684 | ​ | 25,377 |
| Deduct: straight-line rent accruals and amortization of lease intangibles | ​ | (626) | ​ | ​ (917) | ​ | ​ (1,520) | ​ | ​ (1,483) |
| Deduct: our share of straight-line rent accruals and amortization of lease intangibles of unconsolidated joint ventures | ​ | (4) | ​ | ​ (7) | ​ | ​ (9) | ​ | ​ (16) |
| Deduct: income on settlement of litigation | ​ | ​ — | ​ | ​ (5,388) | ​ | ​ — | ​ | ​ (5,388) |
| Deduct: additional rent from ground lease tenant | ​ | ​ (16) | ​ | ​ — | ​ | ​ (16) | ​ | ​ — |
| Deduct: income on insurance recovery from casualty loss | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ (918) |
| Deduct: lease termination fee income | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ (25) |
| Deduct: our share of unconsolidated joint venture lease termination fee income | ​ | ​ — | ​ | ​ (25) | ​ | ​ — | ​ | ​ (25) |
| Add: amortization of restricted stock and RSU compensation | ​ | 1,564 | ​ | 1,559 | ​ | 2,892 | ​ | 2,884 |
| Add: amortization and write-off of deferred financing costs | ​ | 205 | ​ | 434 | ​ | 407 | ​ | 639 |
| Add: amortization of lease incentives | ​ | ​ 30 | ​ | ​ — | ​ | ​ 61 | ​ | ​ — |
| Add: amortization of mortgage intangible asset | ​ | ​ 23 | ​ | ​ — | ​ | ​ 46 | ​ | ​ — |
| Add: our share of amortization of deferred financing costs of unconsolidated joint venture | ​ | 4 | ​ | ​ 4 | ​ | ​ 8 | ​ | ​ 8 |
| Adjustments for non-controlling interests | ​ | — | ​ | ​ 3 | ​ | ​ — | ​ | ​ 5 |
| Adjusted funds from operations applicable to common stock | ​ | $10,750 | ​ | $10,404 | ​ | $21,553 | ​ | $21,058 |

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| GAAP net income attributable to One Liberty Properties, Inc. | ​ | $.30 | ​ | $.79 | ​ | $.55 | ​ | $1.23 |
| Add: depreciation and amortization of properties | ​ | .28 | ​ | ​ .26 | ​ | ​ .56 | ​ | ​ .54 |
| Add: our share of depreciation and amortization of unconsolidated joint ventures | ​ | .01 | ​ | ​ .01 | ​ | ​ .01 | ​ | ​ .01 |
| Add: amortization of deferred leasing costs | ​ | .01 | ​ | ​ .01 | ​ | ​ .02 | ​ | ​ .01 |
| Add: our share of amortization of deferred leasing costs of unconsolidated joint ventures | ​ | — | ​ | ​ — | ​ | ​ — | ​ | ​ — |
| Deduct: gain on sale of real estate, net | ​ | (.15) | ​ | ​ (.38) | ​ | ​ (.22) | ​ | ​ (.60) |
| Adjustments for non-controlling interests | ​ | — | ​ | ​ — | ​ | ​ — | ​ | ​ — |
| NAREIT funds from operations per share of common stock (a) | ​ | .45 | ​ | .69 | ​ | .92 | ​ | 1.19 |
| Deduct: straight-line rent accruals and amortization of lease intangibles | ​ | (.03) | ​ | ​ (.04) | ​ | ​ (.06) | ​ | ​ (.08) |
| Deduct: our share of straight-line rent accruals and amortization of lease intangibles of unconsolidated joint ventures | ​ | — | ​ | ​ — | ​ | ​ — | ​ | ​ — |
| Deduct: income on settlement of litigation | ​ | ​ — | ​ | ​ (.25) | ​ | ​ — | ​ | ​ (.25) |
| Deduct: additional rent from ground lease tenant | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — |
| Deduct: income on insurance recovery from casualty loss | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ (.04) |
| Deduct: lease termination fee income | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — |
| Deduct: our share of unconsolidated joint venture lease termination fee income | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — |
| Add: amortization of restricted stock and RSU compensation | ​ | .07 | ​ | ​ .07 | ​ | ​ .13 | ​ | ​ .14 |
| Add: amortization and write-off of deferred financing costs | ​ | ​ .01 | ​ | ​ .02 | ​ | ​ .02 | ​ | ​ .03 |
| Add: amortization of lease incentives | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — |
| Add: amortization of mortgage intangible asset | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — |
| 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) | ​ | $.50 | ​ | $.49 | ​ | $1.01 | ​ | $.99 |

(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.

#### Three Months Ended June 30, 2023 and 2022

The $5.2 million, or 35.1%, decrease in FFO for the three months ended June 30, 2023 from the corresponding 2022 period is due primarily to:

- the inclusion, in the 2022 period, of $5.4 million from the Round Rock settlement,
- a $405,000 increase in real estate expenses,
- a $257,000 increase in interest expense, and
- a $192,000 increase in general and administrative expenses.

Offsetting the decrease is a $935,000 net increase in rental income.

See “—*Results of Operations”* for further information regarding these changes.

The $346,000, or 3.3%, increase in AFFO is primarily due to the factors impacting FFO as described immediately above, excluding the $5.4 million from the Round Rock Settlement.

See “—*Results of Operations”* for further information regarding these changes.

#### Six Months Ended June 30, 2023 and 2022

The $5.7 million, or 22.4%, decrease in FFO for the six months ended June 30, 2023 from the corresponding 2022 period is due primarily to:

- the $5.4 million from the Round Rock Settlement,
- the $918,000 income on insurance recovery from casualty loss recognized in the correspond 2022 period,
- an $842,000 increase in real estate expenses,
- a $551,000 increase in interest expense, and
- a $439,000 increase in general and administrative expenses.

Offsetting the decrease is a $2.4 million net increase in rental income.

See “—*Results of Operations”* for further information regarding these changes.

The $495,000, or 2.4%, increase in AFFO is due to the factors impacting FFO as described immediately above, excluding the (i) $5.4 million Round Rock Settlement and (ii) $918,000 income on insurance recovery from casualty loss.

See “—*Results of Operations”* for further information regarding these changes.

## Market risk

As filed, 2,379 characters.

Our primary market risk exposure is the effect of changes in interest rates on the interest cost of draws on our revolving variable rate credit facility and the effect of changes in the fair value of our interest rate swap agreements. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control.

We use interest rate swaps to limit interest rate risk on variable rate mortgages. These swaps are used for hedging purposes-not for speculation. We do not enter into interest rate swaps for trading purposes. At June 30, 2023, we had no liability in the event of the early termination of our swaps.

At June 30, 2023, we had 16 interest rate swap agreements outstanding. The fair market value of the interest rate swaps is dependent upon existing market interest rates and swap spreads, which change over time. As of June 30, 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 $486,000. 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 $498,000. These changes would not have any impact on our net income or cash.

Our variable mortgage debt, after giving effect to the interest rate swap agreements, bears interest at fixed rates and accordingly, the effect of changes in interest rates would not impact the interest expense we incur under these mortgages.

Our variable rate credit facility is sensitive to interest rate changes. Based on the $2.5 million outstanding balance under this facility at June 30, 2023, a 100 basis point increase of the interest rate would increase our related interest costs over the next twelve months by approximately $25,000 and a 100 basis point decrease of the interest rate would decrease our related interest costs over the next twelve months by approximately $25,000.

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.

## Controls and procedures

As filed, 622 characters.

Based on their evaluation as of the end of the period covered by this report, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are effective.

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) promulgated under the Exchange Act) during the three months ended June 30, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Filed Aug 4, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-013390. Last ingested by Listed: Nov 3, 2026, 20:05 ET. No prices; not investment advice.