Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2026
OR
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number 001-09279
ONE LIBERTY PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND
13-3147497
(State or other jurisdiction of
(I.R.S. employer
incorporation or organization)
identification number)
60 Cutter Mill Road, Great Neck, New York
11021
(Address of principal executive offices)
(Zip code)
(516) 466-3100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange onwhich registered
Common Stock
OLP
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes ⌧ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes ⌧ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ◻
Accelerated filer ◻
Non-accelerated filer ⌧
Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Yes ◻ No ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of May 1, 2026, the registrant had 21,819,448 shares of common stock outstanding.
One Liberty Properties, Inc. and Subsidiaries
Page No.
Part I — Financial Information
Item 1.
Unaudited Consolidated Financial Statements
Consolidated Balance Sheets — March 31, 2026 and December 31, 2025
1
Consolidated Statements of Income — Three months ended March 31, 2026 and 2025
2
Consolidated Statements of Comprehensive Income — Three months ended March 31, 2026 and 2025
3
Consolidated Statements of Changes in Equity — Three months ended March 31, 2026 and 2025
4
Consolidated Statements of Cash Flows — Three months ended March 31, 2026 and 2025
5
Notes to Consolidated Financial Statements
7
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
23
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
35
Item 4.
Controls and Procedures
Part II — Other Information
36
Item 5.
Other Information
Item 6.
Exhibits
Part I — FINANCIAL INFORMATION
Item 1. Financial Statements
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Par Value)
March 31,
December 31,
2026
2025
ASSETS
(Unaudited)
Real estate investments, at cost
Land
$
158,679
153,143
Buildings and improvements
856,848
819,114
Total real estate investments, at cost
1,015,527
972,257
Less accumulated depreciation
196,903
194,663
Real estate investments, net
818,624
777,594
Property held-for-sale
1,283
—
Cash and cash equivalents
20,444
14,434
Unbilled rent receivable
17,613
17,269
Unamortized intangible lease assets, net
28,110
25,501
Escrow, deposits and other assets and receivables
12,563
22,772
Total assets(1)
898,637
857,570
LIABILITIES AND EQUITY
Liabilities:
Mortgages payable, net (see Note 6)
529,470
517,342
Line of credit
32,000
Dividends payable
10,346
10,214
Accrued expenses and other liabilities
15,570
17,271
Unamortized intangible lease liabilities, net
13,692
12,946
Total liabilities(1)
601,078
557,773
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; 21,069 and 20,916 shares issued and outstanding
21,069
20,916
Paid-in capital
342,645
341,389
Accumulated other comprehensive income
9
16
Distributions in excess of net income
(66,353)
(62,718)
Total One Liberty Properties, Inc. stockholders’ equity
297,370
299,603
Non-controlling interest in consolidated joint venture(1)
189
194
Total equity
297,559
299,797
Total liabilities and equity
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
Three Months Ended
Revenues:
Rental income, net
26,963
24,170
Lease termination fees
1,327
Total revenues
28,290
Operating expenses:
Depreciation and amortization
8,570
6,545
Real estate expenses (see Note 11 for related party information)
5,712
5,038
General and administrative (see Note 11 for related party information)
4,338
4,170
State tax expense (benefit)
64
(94)
Total operating expenses
18,684
15,659
Other operating income
Gain on sale of real estate, net
3,876
1,110
Operating income
13,482
9,621
Other income and expenses:
Other income
39
213
Interest:
Expense
(6,958)
(5,432)
Amortization and write-off of deferred financing costs
(323)
(233)
Net income
6,240
4,169
Net income attributable to non-controlling interests
(3)
(14)
Net income attributable to One Liberty Properties, Inc.
6,237
4,155
Weighted average number of common shares outstanding:
Basic
21,054
20,820
Diluted
21,123
20,951
Earnings per common share attributable to common stockholders:
Basic and diluted
.28
.18
Cash distributions per share of common stock
.45
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands)
Other comprehensive income
Net unrealized loss on derivative instruments
(7)
(78)
Comprehensive income
6,233
4,091
Comprehensive income attributable to One Liberty Properties, Inc.
6,230
4,077
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated
Non-Controlling
Other
Distributions
Interests in
Common
Paid-in
Comprehensive
in Excess of
Consolidated
Stock
Capital
Income (loss)
Net Income
Joint Ventures
Total
Balances, December 31, 2025
Cash distributions — common stock ($.45 per share)
(9,872)
Compensation expense — restricted stock and RSUs
1,267
Shares issued through dividend reinvestment plan
135
142
Restricted stock vesting
146
(146)
Distribution to non-controlling interest
(8)
Other comprehensive loss
Balances, March 31, 2026
Balances, December 31, 2024
20,698
335,539
208
(49,020)
1,150
308,575
(9,804)
1,346
180
187
139
(139)
Distributions to non-controlling interests
(63)
14
Balances, March 31, 2025
20,844
336,926
130
(54,669)
1,101
304,332
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Continued on Next Page)
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
(3,876)
(1,110)
Increase in net amortization and write-off of unbilled rental income
(374)
(402)
Amortization and write-off of intangibles relating to leases, net
(334)
(252)
Amortization of restricted stock and RSU compensation expense
323
233
Payment of leasing commissions
(223)
(106)
Equity in (loss) earnings of unconsolidated joint ventures included in other income
6
(25)
Decrease in escrow, deposits, other assets and receivables
609
1,540
Decrease in accrued expenses and other liabilities
(985)
(942)
Net cash provided by operating activities
11,223
10,996
Cash flows from investing activities:
Purchase of real estate
(57,087)
(88,838)
Improvements to real estate
(1,817)
(1,576)
Net proceeds from sale of real estate
9,765
3,456
Distributions of capital from unconsolidated joint venture included in other assets
26
620
Net cash used in investing activities
(49,113)
(86,338)
Cash flows from financing activities:
Proceeds from mortgage financings
17,002
52,121
Repayments of mortgage financings
(2,075)
(3,539)
Scheduled amortization payments of mortgages payable
(2,772)
(2,797)
Proceeds from bank line of credit
38,000
5,000
Repayments on bank line of credit
(6,000)
Issuance of shares through dividend reinvestment plan
Payment of financing costs
(340)
(591)
Cash distributions to common stockholders
(141)
(9,641)
Net cash provided by financing activities
43,808
40,677
Net increase (decrease) in cash, cash equivalents and restricted cash
5,918
(34,665)
Cash, cash equivalents and restricted cash at beginning of year
15,084
45,481
Cash, cash equivalents and restricted cash at end of period
21,002
10,816
Supplemental disclosure of cash flow information:
Cash paid during the period for interest expense
6,719
5,200
Supplemental disclosure of non-cash investing activity:
Purchase accounting allocation - intangible lease assets
4,989
7,888
Purchase accounting allocation - intangible lease liabilities
(1,310)
(1,155)
Supplemental disclosure of non-cash financing activity:
Distributions to common stockholders from other assets
(9,599)
(Unaudited) (Continued)
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:
8,162
Restricted cash included in escrow, deposits and other assets and receivables
558
2,654
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows
Restricted cash included in escrow, deposits and other assets and receivables represents 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MARCH 31, 2026
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 properties. As of March 31, 2026, OLP owns 111 properties, including one property owned by a consolidated joint venture. The 111 properties are located in 33 states.
NOTE 2 – SUMMARY ACCOUNTING POLICIES
Principles of Consolidation/Basis of Preparation
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by U.S. Generally Accepted Accounting Principles (“GAAP”) for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statement disclosures. In the opinion of management, all adjustments of a normal recurring nature necessary for fair presentation have been included. The results of operations for the three months ended March 31, 2026 and 2025 are not necessarily indicative of the results for the full year. These statements should be read in conjunction with the consolidated financial statements and related notes included in OLP’s Annual Report on Form 10-K for the year ended December 31, 2025.
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
The consolidated financial statements include the accounts and operations of OLP, its wholly-owned subsidiaries, its joint venture in which the Company, as defined, has a controlling interest and is a variable interest entity (“VIE”) 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.
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 applicable 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, 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.
MARCH 31, 2026 (CONTINUED)
NOTE 2 – SUMMARY ACCOUNTING POLICIES (CONTINUED)
Variable Interest Entities and Investment in Joint Ventures
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.
Reclassifications
Certain amounts previously reported in the consolidated financial statements have been reclassified in the accompanying consolidated financial statements to conform to the current year’s presentation. The Company reclassified certain amounts so that it presents, as it does for the three months ended March 31, 2026, (i) equity in earnings of unconsolidated joint ventures as part of Other income on the consolidated statements of income for the three months ended March 31, 2025, and (ii) investment in unconsolidated joint ventures as part of Escrow, deposits, and other assets and receivables on the consolidated balance sheets for the year ended December 31, 2025.
NOTE 3 – LEASES
Lessor Accounting
The Company owns rental properties which are leased to tenants under operating leases with current expirations ranging from 2026 to 2042, 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 leases, 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 and (iii) percentage rents. Variable lease revenues are not recognized until the specific events that trigger the variable payments have occurred.
8
NOTE 3 – LEASES (CONTINUED)
The components of lease revenues are as follows (amounts in thousands):
Fixed lease revenues
21,856
19,536
Variable lease revenues
4,773
4,382
Lease revenues (a)
26,629
23,918
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, among other things, reviewing the tenant’s payment history or financial condition. Changes to collectability are recognized as a current period adjustment to rental revenue. As of March 31, 2026, the Company has assessed the collectability of all recorded lease revenues as probable.
Minimum Future Rents
As of March 31, 2026, 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.
From April 1 – December 31, 2026
64,250
For the year ending December 31,
2027
79,965
2028
68,583
2029
56,079
2030
44,333
2031
30,939
Thereafter
58,398
402,547
Lease Termination Fees
In March 2026, the Company recognized an aggregate of $1,327,000 from two industrial tenants in lease buy-out transactions. In connection with these transactions, the Company also wrote-off the tenants’ aggregate unbilled rent receivable balances of $119,000, as a decrease to Rental income, net.
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, 2030 and provides for up to three, five-year renewal options and one seven-month renewal option. As of March 31, 2026, the remaining lease term is 3.9 years. The Company recognized lease expense related to this ground lease of $122,000 for each of the three months ended March 31, 2026 and 2025, respectively, 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 December 31, 2031 and provides for a five-year renewal option. As of March 31, 2026, the remaining lease term, including the renewal option deemed exercised, is 10.8 years. The Company recognized lease expense related to this office lease of $14,000 for each of the three months ended March 31, 2026 and 2025, respectively, which is included in General and administrative expenses on the consolidated statements of income.
Minimum Future Lease Payments
As of March 31, 2026, the minimum future lease payments related to these operating leases are as follows (amounts in thousands):
471
629
630
692
55
301
Total undiscounted cash flows
2,958
Present value discount
(485)
Lease liability
2,473
The lease liability is included in Accrued expenses and other liabilities on the consolidated balance sheet.
10
NOTE 4 – REAL ESTATE ACQUISITIONS
The following tables detail the Company’s real estate asset acquisitions (all of which were acquired on January 29, 2026) and purchase price allocations during the three months ended March 31, 2026 (amounts in thousands):
Contract
Mortgage Terms on Acquired Property
Capitalized
Purchase
Amount of
Interest
Year of
Transaction
Description of Industrial Property
Price
Debt
Rate
Maturity
Costs
Mondelez Global LLC
Greensboro, North Carolina
7,700
4,047
(a)
5.53
%
2033
38
West Columbia, South Carolina
6,600
3,656
33
Omaha, Nebraska
6,900
3,808
Birmingham, Alabama
5,600
45
ABC Supply Interiors, Inc.
Oklahoma City, Oklahoma
2,800
1,581
40
Spanish Fork, Utah
4,000
2,686
48
Husqvarna U.S. Holding, Inc.
Blythewood, South Carolina
15,500
Bimbo Bakeries, Inc.
Richland, Mississippi
2,100
1,224
HABE USA, Inc.
2,000
Owens & Minor Distribution, Inc.
3,500
34
Totals for the three months ended March 31, 2026
56,700
387
Rate (a)
Building &
Intangible Lease
Market
Improvements
Asset
Liability
Cap
Discount
871
6,271
859
(263)
7,738
5.75%
7.25%
501
5,631
805
(304)
6,633
1,707
4,719
897
(385)
6,938
6.25%
7.75%
698
4,759
188
5,645
618
1,864
358
2,840
6.75%
8.25%
1,432
2,384
463
(231)
4,048
526
14,807
206
15,539
578
1,232
329
2,139
9.00%
10.50%
279
1,483
341
(70)
2,033
435
2,613
543
(57)
3,534
8.75%
10.25%
7,645
45,763
57,087
Acquisition subsequent to March 31, 2026
On April 30, 2026, the Company acquired 14 acres of land for $800,000 – this land is adjacent to the Blythewood, South Carolina property acquired on January 29, 2026.
11
NOTE 5 – SALES OF PROPERTIES AND PROPERTY HELD-FOR-SALE
Sales of Properties
The following table details the Company’s sales of real estate during the three months ended March 31, 2026 and 2025 (amounts in thousands):
Gross
Gain on Sale of
Description of Property
City, State
Date Sold
Sales Price
Real Estate, Net
Vacant retail property
Cary, North Carolina
March 13, 2026
6,000
2,518
Havertys retail property
Newport News, Virginia
March 31, 2026
4,200
1,358
10,200
Land and improvements (b)
Lakewood, Colorado
January 16, 2025
400
(44)
(b)
Hooters restaurant property
Concord, North Carolina
January 21, 2025
3,253
1,154
Totals for the three months ended March 31, 2025
3,653
(c)
Property Held-for-Sale
In January 2026, the Company entered into a contract, as thereafter amended, to sell a retail property located in South Euclid, Ohio for $1,483,000. The buyer’s right to terminate the contract without penalty expired on March 18, 2026. At March 31, 2026, the Company classified the $1,283,000 net book value of the property’s land, building, improvements and the unamortized balances of unbilled rent receivable and intangible lease assets and liabilities as Property held-for-sale in the accompanying consolidated balance sheet. The property was sold on April 16, 2026 and the sale will result in a gain of approximately $118,000, which will be recognized as Gain on sale of real estate, net, in the consolidated statements of income for the three and six months ending June 30, 2026.
Sales subsequent to March 31, 2026
During the quarter ended March 31, 2026, the Company entered into contracts to sell the following properties (amounts in thousands):
Estimated Gain
Date Sold/
Gross Sales
on Sale of Real
Held-for-Sale (a)
Estimated Sale
Estate, net (b)
Multi-tenant retail property
Champaign, Illinois
April 22, 2026
May 5, 2026
7,498
3,300
Multi-tenant retail property (c)
El Paso, Texas
April 24, 2026
June 2, 2026
17,500
9,800
12
NOTE 6 – DEBT OBLIGATIONS
Mortgages Payable
The following table details the Mortgages payable, net, balances per the consolidated balance sheets (amounts in thousands):
Mortgages payable, gross
534,656
522,501
Unamortized deferred financing costs
(4,690)
(4,629)
Unamortized mortgage intangible assets
(496)
(530)
Mortgages payable, net
The following table sets forth, as of March 31, 2026, scheduled principal repayments with respect to the Company’s mortgage debt (amounts in thousands):
For the Nine
Months Ending
For the Years Ending
Amortization payments
8,346
10,281
9,656
7,602
6,629
24,498
67,012
Principal due at maturity
17,767
38,525
30,155
79,386
71,429
230,382
467,644
26,113
48,806
39,811
86,988
78,058
254,880
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 each of March 31, 2026 and 2025. An unused facility fee of 0.25% per annum applies to the facility. The Company had $32,000,000 outstanding on the facility at March 31, 2026 and there was no balance outstanding at December 31, 2025. The weighted average interest rate was approximately 5.42% and 6.07% for the three months ended March 31, 2026 and 2025, respectively. The Company was in compliance with all covenants at each of March 31, 2026 and 2025.
At March 31, 2026 and May 1, 2026, $68,000,000 and $74,500,000, respectively, was available to be borrowed under the facility, including an aggregate of up to $32,000,000 and $38,500,000, respectively, available for renovation and operating expense purposes. At May 1, 2026, there was $25,500,000 outstanding on the facility and the interest rate was 5.40%.
At March 31, 2026 and December 31, 2025, the Company had unamortized deferred financing costs of $137,000 and $183,000, respectively, which are included in Escrow, deposits and other assets and receivables on the consolidated balance sheets.
13
NOTE 7 – CONSOLIDATED JOINT VENTURE AND VARIABLE INTEREST ENTITY
Variable Interest Entity – Consolidated Joint Venture
As of March 31, 2026, the Company has one consolidated joint venture in which it holds a 95% interest. The Company has determined that (i) this joint venture is a VIE because the non-controlling interest does not hold substantive kick-out or participating rights and (ii) it is the primary beneficiary of this VIE as it has the power to direct the activities that most significantly impact the 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 this VIE for financial statement purposes. The VIE’s creditors do not have recourse to the assets of the Company other than those held by the joint venture.
The following is a summary of the consolidated VIE’s carrying amounts and classification in the Company’s consolidated balance sheets, none of which are restricted (amounts in thousands):
3,815
Building and improvements, net of accumulated depreciation of $3,290 and $3,215, respectively
6,257
6,332
Cash
328
315
132
138
99
184
Mortgage payable, net of unamortized deferred financing costs of $41 and $45, respectively
7,061
7,143
73
Non-controlling interest in consolidated joint venture
Distributions to our 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.
NOTE 8 – STOCKHOLDERS’ EQUITY
Common Stock Dividend
On March 5, 2026, the Board of Directors declared a quarterly cash dividend of $0.45 per share on the Company’s common stock, totaling approximately $9,816,000. The quarterly dividend was paid on April 6, 2026 to stockholders of record at the close of business on March 27, 2026.
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 7,000 shares of common stock during each of the three months ended March 31, 2026 and 2025, respectively.
Stock Repurchase Program
The Board of Directors authorized a repurchase program pursuant to which the Company can repurchase shares of its common stock in open-market, through privately negotiated transactions or otherwise. No shares were repurchased by the Company during the three months ended March 31, 2026 and 2025. As of March 31, 2026, the Company is authorized to repurchase approximately $8,082,000 of shares of common stock.
Stock Based Compensation
The Company’s 2025, 2022 and 2019 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 were authorized for issuance pursuant to each plan at such plan’s inception.
The following details the shares subject to awards that are outstanding under the Plans as of March 31, 2026:
Restricted Stock
RSUs
Totals
2025 Incentive Plan
154,455
91,075
245,530
2022 Incentive Plan (a)
445,970
172,000
617,970
2019 Incentive Plan (a)
143,825
744,250
263,075
1,007,325
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.
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NOTE 8 – STOCKHOLDERS’ EQUITY (CONTINUED)
The following table reflects the RSUs outstanding as of March 31, 2026:
2025 Grant
2024 Grant
2023 Grant
RSUs outstanding (a)(b)
87,500
84,500
Vesting date (c)(d)
6/30/2028
6/30/2027
6/30/2026
The Metrics and other material terms and conditions of the RSUs are as follows:
Performance Criteria (a)
Year RSU Granted
Metric
Weight
Minimum
Maximum
2023 - 2025 (b)(c)
ROC Metric (d)
50%
Average annual of at least 6.0%
Average annual of at least 8.75%
TSR Metric (e)
Average annual of at least 11.0%
As of March 31, 2026, based on performance and market assumptions, the fair value of the RSUs granted in 2025, 2024 and 2023 is $1,240,000, $1,395,000, and $1,190,000, respectively. Recognition of such deferred compensation will be charged to General and administrative expense over the respective three-year performance cycles.
The following is a summary of the activity of the Plans:
Restricted stock:
Number of shares granted
161,285
154,390
Average per share grant price
21.17
25.52
Deferred compensation to be recognized over vesting period
3,414,000
3,940,000
Number of non-vested shares:
Non-vested beginning of the period
728,795
727,140
Grants
Vested during the period
(145,830)
(139,300)
Forfeitures
(60)
Non-vested end of the period
742,170
RSUs (a):
256,740
Restricted stock and RSU grants (based on grant price):
Weighted average per share value of non-vested shares
24.39
24.52
Value of stock vested during the period
2,972,000
3,914,000
Weighted average per share value of shares forfeited during the period
Total charge to operations:
Outstanding restricted stock grants
1,038,000
938,000
Outstanding RSUs
229,000
408,000
Total charge to operations
1,267,000
1,346,000
As of March 31, 2026, total compensation costs of $9,772,000 and $1,620,000 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 remaining vesting period is 2.8 years for the restricted stock and 1.3 years for the RSUs. The Company recognizes the effect of forfeitures on restricted stock awards and RSUs when they occur, and previously recognized compensation expense is reversed in the period the grant or unit is forfeited.
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NOTE 9 – EARNINGS PER COMMON SHARE
Basic earnings per share was determined by dividing net income allocable to common stockholders for each period by the weighted average number of shares of common stock outstanding during the applicable period. Net income is also allocated to the unvested restricted stock outstanding during each period, as the restricted stock is entitled to receive dividends and is therefore considered a participating security. As of March 31, 2026, the shares of common stock underlying the RSUs (see Note 8) 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):
Numerator for basic and diluted earnings per share:
Deduct net income attributable to non-controlling interests
Deduct earnings allocated to unvested restricted stock (a)
(335)
Net income available for common stockholders: basic and diluted
5,902
3,821
Denominator for basic earnings per share:
Weighted average number of common shares outstanding
Effect of dilutive securities: RSUs
69
131
Denominator for diluted earnings per share:
Weighted average number of shares
Earnings per common share: basic and diluted
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NOTE 9 – 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, for such periods:
As of March 31, 2026:
Total Number
Shares Included Based on (a)
of Underlying
Return on
Stockholder
Shares
Date of Award
Capital Metric
Return Metric
Excluded (b)
July 1, 2025 (c)
45,537
45,538
July 16, 2024 (c)(d)
35,413
52,087
July 1, 2023 (c)(d)
31,637
41,513
73,150
11,350
112,587
154,100
108,975
As of March 31, 2025:
88,250
19,628
44,125
63,753
24,497
85,250
22,856
42,625
65,481
19,769
July 1, 2022 (e)
83,240
30,682
33,760
64,442
18,798
73,166
120,510
193,676
63,064
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NOTE 10 – 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. 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 significantly on “unobservable” market inputs. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
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)
530,252
517,660
Carrying value of mortgages payable, gross
Fair value less than the carrying value
(4,404)
(4,841)
Blended market interest rate (a)
5.47
5.44
Weighted average interest rate
4.91
4.88
Weighted average remaining term to maturity (years)
5.6
5.8
At March 31, 2026, the $32,000,000 carrying amount of the Company’s line of credit approximates its fair value as the line of credit has a variable interest rate and approximates market rates.
Fair Value on a Recurring Basis
As of March 31, 2026, the Company had in effect two interest rate derivatives, both of which were interest rate swaps, related to two outstanding mortgage loans with an aggregate $1,617,000 notional amount. These interest rate swaps, both of which (i) were designated as cash flow hedges, converting SOFR based variable rate mortgages to fixed annual rate mortgages, (ii) mature in July 2026 and (iii) have an interest rate of 3.24%. The Company’s objective in using interest rate swaps is to add stability to interest expense. The Company does not use derivatives for trading or speculative purposes.
Fair values are approximated using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. This fair value 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 March 31, 2026, 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.
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NOTE 10 – FAIR VALUE MEASUREMENTS (CONTINUED)
The carrying and fair value of the Company’s derivative financial instruments was $9,000 and $16,000 as of March 31, 2026 and December 31, 2025, respectively. The fair value of the Company’s derivatives is reflected in Escrow, deposits and other assets and receivables on the consolidated balance sheets. As of March 31, 2026 and December 31, 2025, 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 periods presented (amounts in thousands):
Amount of gain recognized on derivatives in other comprehensive income
Amount of reclassification from Accumulated other comprehensive income into Interest expense
79
During the twelve months ending March 31, 2027, the Company estimates an additional $9,000 will be reclassified from Accumulated other comprehensive income as a decrease to Interest expense.
The derivative agreements in effect at March 31, 2026 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 11 – RELATED PARTY TRANSACTIONS
Compensation and Services Agreement
Pursuant to the compensation and services agreement (“C&SA”) with Majestic Property Management LLC (“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 provides compensation to several of the Company’s executive officers and is indirectly owned by, among others, Matthew J. Gould, the Company’s chairman, and Jeffrey A. Gould, a director and senior vice president of the Company.
In consideration for the Services, the Company paid Majestic $979,000 and $888,000 for the three months ended March 31, 2026 and 2025, respectively. Included in these amounts are fees for property management services of $451,000 and $390,000 for the three months ended March 31, 2026 and 2025, respectively. 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 for property management services with respect to properties managed by third parties. The Company also paid Majestic, pursuant to the C&SA, $92,000 and $87,000 for the three months ended March 31, 2026 and 2025, respectively, for the Company’s share of all direct office expenses, including rent, telephone, postage, computer services, internet usage and supplies.
Executive officers and others providing services to the Company under the C&SA were awarded shares of restricted stock and restricted stock units (“RSUs”) under the Company’s stock incentive plans (described in Note 8). The related expense charged to the Company’s operations was $527,000 and $648,000 for the three months ended March 31, 2026 and 2025, respectively.
The amounts paid under the C&SA (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.
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NOTE 11 – RELATED PARTY TRANSACTIONS (CONTINUED)
During the three months ended March 31, 2026 and 2025, the Company paid quarterly fees of (i) $88,000 and $85,000, respectively, to the Company’s chairman and (ii) $34,000 and $34,000, respectively, to the Company’s vice-chairman. These fees are included in General and administrative expenses on the consolidated statements of income.
The Company obtains its property insurance in conjunction with Gould Investors L.P. (“Gould Investors”), a related party, and reimburses Gould Investors annually for the Company’s insurance cost relating to its properties. Amounts reimbursed to Gould Investors were $104,000 during the three months ended March 31, 2026. Included in Real estate expenses on the consolidated statements of income is insurance expense of $778,000 and $275,000 for the three months ended March 31, 2026 and 2025, respectively, of amounts reimbursed to Gould Investors in prior periods.
NOTE 12 – SEGMENT REPORTING
Substantially all of the Company’s real estate assets, at acquisition, are comprised of real estate owned that is leased to tenants. Therefore, the Company aggregates real estate assets for reporting purposes and operates in one reportable segment.
The Company’s Chief Operating Decision Makers (“CODMs”) are its Chief Executive Officer and Chief Operating Officer. As the Company operates in one reportable segment, the CODMs are provided the consolidated income statement (detailing total revenues, total operating expenses, operating income and net income). This financial report assists the CODMs in assessing the Company’s financial performance and in allocating resources appropriately.
NOTE 13 – NEW ACCOUNTING PRONOUNCEMENT
In November 2024, the FASB issued ASU No. 2024–03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220–40): Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses into specified categories within the footnotes to the financial statements. ASU No. 2024–03 is applicable for fiscal years beginning after December 15, 2026. The Company is in the process of evaluating the new guidance to determine the extent to which it will impact the Company’s consolidated financial statements.
NOTE 14 – SUBSEQUENT EVENTS
Subsequent events have been evaluated and except as previously disclosed herein, there were no other events relative to the consolidated financial statements that require additional disclosure.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q, 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 (the “Securities Act”), 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 base rent, funds from operations, adjusted funds from operations and our dividend. Among other things, forward looking statements with respect to (i) estimates of base rent and rental income exclude variable rent (including tenant reimbursements) and the adjustments required by GAAP to present rental income, (ii) estimates of base rent may not, unless otherwise expressly indicated, reflect the expenses (e.g., real estate expenses, interest, depreciation and amortization or any one or more of the foregoing) with respect to the associated property, (iii) anticipated property purchases, sales, financings and/or refinancings may not be completed during the period or on the terms indicated or at all, (iv) estimates of gains from property sales or proceeds from financing or refinancing transactions are subject to adjustment, among other things, because actual closing costs may differ from the estimated costs and (v) anticipated rent increases, including those tied to filling of vacancies or as a result of market-to-market opportunities (i.e., renewing leased premises at higher rental rates) may not be realized. 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 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:
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 U.S. 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 the St. Louis Park, Minnesota property
As reported in our Annual Report on Form 10-K for the year ended December 31, 2025, we recorded an impairment charge of $3.3 million with respect to our retail property located at St. Louis Park, Minnesota. At March 31, 2026, approximately 75% of the property is vacant. Based on the lease in effect at April 1, 2026, we expect this property to generate rental income (excluding tenant reimbursements) of $505,000 and in 2025, we generated $917,000 of rental income (excluding tenant reimbursements) from this property. We estimate that this property will incur unreimbursed real estate expenses of approximately $400,000 during the nine months ending December 31, 2026. We are pursuing the sale and/or lease of this property and may be required to take additional impairment(s) with respect thereto.
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 properties. As of March 31, 2026, we own 111 properties with approximately 12.4 million square feet, (including 79 industrial properties with approximately 11.0 million square feet) located in 33 states. Based on square footage, our occupancy rate at March 31, 2026 is approximately 98.8%.
We face a variety of risks and challenges in our business, 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 net income and cash for distribution.
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.
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, reviewing 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.
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
24
other things, the estimated value of the property, local competition and 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 Base Rent is approximately $83.2 million; Base Rent represents the base rent payable to us during the twelve months ending March 31, 2027 under leases in effect at April 1, 2026 (excluding tenant reimbursements and after giving effect to any abatements, concessions, deferrals or adjustments). It excludes an aggregate of $2.2 million representing the Base Rent of three retail properties which were sold or are anticipated to be sold during the three months ending June 30, 2026.
The following table sets forth information about our properties by industry sector as of March 31, 2026:
Number of
Building
Percentage of
Type of Property
Tenants
Properties
Square Feet
Base Rent
Industrial
105
11,026,802
70,094,000
84.2
Retail
27
1,093,792
9,398,000
11.3
Other (a)
250,435
3,736,000
4.5
145
111
12,371,029
83,228,000
100.0
The following table sets forth scheduled expirations of leases at our properties as of March 31, 2026 for the years indicated below:
Lease Expirations (a)
for the twelve months ending March 31,
Leases
Square Feet (b)
892,765
3,976,000
4.8
31
2,428,486
15,213,000
18.3
1,312,827
10,077,000
12.1
1,998,503
12,732,000
15.3
25
1,418,910
12,190,000
14.6
2032
1,974,954
11,733,000
14.1
702,324
4,962,000
6.0
2034
762,916
7,279,000
8.7
2035
206,635
1,971,000
2.4
2036 and thereafter
518,529
3,095,000
3.7
166
12,216,849
Property Transactions During the Three Months Ended March 31, 2026
Acquisitions
On January 29, 2026, we acquired a 637,633 square foot portfolio comprised of ten industrial properties located in seven markets and leased to six tenants each of which has a global or national presence, for $56.7 million, incurred $387,000 of transaction costs that were capitalized and simultaneously obtained new mortgage debt of $17.0 million on six of the properties bearing an interest rate of 5.53% and maturing in 2033 (see Note 4 to our consolidated financial statements). We also borrowed $30.0 million from our credit facility in connection with this purchase. We estimate that for the nine months ending December 31, 2026, the rental income (excluding variable lease revenues), depreciation and amortization expense and mortgage interest expense from these properties will be $2.5 million, $2.1 million and $700,000, respectively.
Sales
We sold the following properties (dollars in thousands):
Gain on
Sale of Real
Net Proceeds
Estate, net
on Sale
5,760
4,005
During the three months ended March 31, 2026 and year ended December 31, 2025, these properties contributed $103,000 and $552,000 of rental income net, $49,000 and $283,000 of operating expenses (including $27,000 and $208,000 of depreciation and amortization expense), and $0 and $45,000 of mortgage interest expense, respectively.
Property held-for-sale at March 31, 2026
In January 2026, we entered into a contract, as thereafter amended, to sell an Advance Auto Parts retail property located in South Euclid, Ohio for $1.5 million. The property was sold on April 16, 2026 and the net proceeds were approximately $600,000, after repaying approximately $794,000 of the related mortgage debt. The sale will result in a gain of approximately $118,000, which will be recognized as Gain on sale of real estate, net, in the consolidated statements of income for the three and six months ending June 30, 2026.
During the three months ended March 31, 2026 and year ended December 31, 2025, this property contributed $45,000 and $178,000 of rental income net, $30,000 and $123,000 of operating expenses (including $15,000 and $59,000 of depreciation and amortization expense), and $6,000 and $27,000 of mortgage interest expense, respectively.
Property Transactions Subsequent to March 31, 2026
Acquisition
On April 30, 2026, we acquired 14 acres of land for $800,000 – this land is adjacent to one of the properties acquired in the portfolio on January 29, 2026.
Sales Contracts
During May 2026 and June 2026, we sold and anticipate selling, as indicated below, the following properties (dollars in thousands):
Estimated
Estate, Net (a)
7,000
Multi-tenant retail property (a)
8,700
During the three months ended March 31, 2026 and year ended December 31, 2025, these properties (the “Illinois/Texas Properties”) contributed $616,000 and $2.5 million of rental income net, $308,000 and $1.6 million of operating expenses (including $197,000 and $758,000 of depreciation and amortization expense), and $84,000 and $345,000 of mortgage interest expense, respectively.
Results of Operations
The following table compares total revenues for the periods indicated:
Increase
(Dollars in thousands)
(Decrease)
% Change
2,793
11.6
n/a
4,120
17.0
The following table details the components of rental income, net, for the periods indicated:
Acquisitions (a)
5,082
1,132
3,950
348.9
Dispositions (b)
103
1,352
(1,249)
(92.4)
Same store (c)
21,778
21,686
92
0.4
Changes at same store properties
The change in same store rental income is due primarily to increases of:
The increases were offset by decreases in rental income of:
Lease Termination Fee
In March 2026, we recognized an aggregate of $1.3 million from two industrial tenants in lease buy-out transactions; we replaced such tenancies on economic terms more favorable to us than those of the terminating tenancies.
Operating Expenses
The following table compares operating expenses for the periods indicated:
2,025
30.9
Real estate expenses
674
13.4
General and administrative
168
4.0
158
168.1
3,025
19.3
Depreciation and amortization. The increase is due primarily to (i) $2.3 million from the properties acquired since January 1, 2025, and (ii) $101,000 from improvements at several properties.
The increase was offset primarily by (i) the inclusion, in the corresponding 2025 period, of $303,000 from the properties sold since January 1, 2025, and (ii) decreases of $91,000 related to tenant origination costs at several properties that prior to March 31, 2026 were fully amortized.
Real estate expenses. The increase is due primarily to (i) $919,000 from the properties acquired since January 1, 2025, and (ii) $290,000 primarily related to common area maintenance and utilities at several properties, none of which were individually significant.
The increase was offset by (i) the inclusion, in the corresponding 2025 period, of $309,000 from the properties sold since January 1, 2025, and (ii) decreases of $226,000 related to real estate tax expense primarily at our El Paso, Texas property for which we collected a refund on taxes paid in a prior year.
A substantial portion of real estate expenses is rebilled to tenants and is included in Rental income, net, on the consolidated statements of income. The portion of real estate expenses not reimbursed by our tenants was $1.1 million and $776,000 for the three months ended March 31, 2026 and 2025, respectively.
General and administrative. The change is due primarily to an increase of $116,000 in professional fees related to various matters.
State tax expense (benefit). During the three months ended March 31, 2025, our state tax expense was offset by a $135,000 refund from Tennessee related to franchise taxes paid in 2023, as the state amended the method of calculating such taxes, resulting in an overpayment in such year.
The following table compares gain on sale of real estate, net for the periods indicated:
2,766
249.2
The $3.9 million gain in the 2026 period was related to the sale of two retail properties.
The $1.1 million gain in the 2025 period was primarily related to the sale of a restaurant property in Concord, North Carolina.
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Other Income and Expenses
The following table compares other income and expenses for the periods indicated:
Change
(174)
(81.7)
1,526
28.1
90
38.6
Other income. The three months ended March 31, 2026 primarily reflects a decrease of $124,000 in interest income from the decrease in amounts invested in short-term U.S. treasury bills.
Interest expense. The following table compares interest expense for the periods indicated:
Interest expense:
Mortgage interest
6,626
5,355
1,271
23.7
Credit line interest
332
77
255
331.2
6,958
5,432
The following table reflects the average interest rate on the average principal amount of outstanding mortgage debt for the periods indicated:
Weighted average principal amount
532,183
458,106
74,077
16.2
4.95
4.65
0.30
6.5
The increase in mortgage interest is due to increases in the weighted average principal amount of mortgage debt outstanding and, to a lesser extent, the weighted average interest rate.
We estimate that after giving effect to the sales of the Illinois/Texas Properties and the paydown of any related mortgage debt, and without giving effect to any other mortgage financing transactions, that mortgage interest expense during the nine months ending December 31, 2026 will be approximately $19.2 million.
The following table reflects the average interest rate on the average principal amount of outstanding credit line debt for the periods indicated:
20,556
1,000
19,556
1,955.6
5.42
6.07
(.65)
(10.7)
The increase in credit line interest is due to the increase in the weighted average principal amount outstanding.
We estimate that after giving effect to the sales of the Illinois/Texas Properties and the paydown of approximately $16 million of credit facility debt from the proceeds of such transactions, that interest expense on our credit facility during the nine months ending December 31, 2026 will be approximately $700,000 (assuming an interest rate of 5.42% as of March 31, 2026, that all of such paydowns occur on June 1, 2026 and that there are no other paydowns or drawdowns on the facility).
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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 May 1, 2026, was $79.8 million, including $5.3 million of cash and cash equivalents (including the credit facility’s required minimum $3.0 million average deposit maintenance balance) and up to $74.5 million available under our credit facility. At May 1, 2026, the facility is available for the acquisition of commercial real estate, repayment of mortgage debt, and up to $38.5 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 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 $1.1 million of capital expenditures) from the foregoing, as well as property financings, property sales and sales of our common stock.
At March 31, 2026, we had 61 outstanding mortgages payable secured by 74 properties in the aggregate principal amount of $534.7 million (before netting unamortized deferred financing costs of $4.7 million and mortgage intangibles of $496,000). These mortgages represent first liens on individual real estate investments with an aggregate carrying value of $830.8 million, before accumulated depreciation of $140.0 million. After giving effect to interest rate swap agreements, the mortgage payments bear interest at fixed rates ranging from 3.05% to 6.42% (a 4.91% weighted average interest rate) and mature between 2026 and 2047 (a 5.6 year weighted average remaining term to maturity).
The following table sets forth, as of March 31, 2026, information with respect to our mortgage debt:
35,885
165,833
201,718
Weighted average interest rate on principal due at maturity
3.93
3.64
4.64
4.41
4.22
(1)
We intend to make debt amortization payments from operating cash flow and, although no assurance can be given that we will be successful in this regard, generally intend to refinance, extend or pay off the mortgage loans which mature from 2026 through 2029. We generally 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.
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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 three months ended March 31, 2026 and 2025. 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 5.42% and 5.40% at March 31, 2026 and May 1, 2026.
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 March 31, 2026, we were in compliance with the covenants under this facility.
Application of Critical Accounting Estimates
A complete discussion of our critical accounting estimates is included in our Annual Report. There have been no changes in such estimates.
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 FFO for straight-line rent accruals and amortization of lease intangibles, deducting from income (i) additional rent from a ground lease tenant, (ii) income on settlement of litigation, (iii) income on insurance recoveries from casualties, (iv) lease termination and assignment fees, and adding back to income (i) amortization of restricted stock and restricted stock unit compensation expense, (ii) amortization of costs in connection with its financing activities (including its share of its unconsolidated joint ventures), (iii) debt prepayment costs, (iv) amortization of lease incentives and (v) 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.
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The tables below 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 periods indicated (dollars in thousands, except per share amounts):
GAAP net income attributable to One Liberty Properties, Inc.
Add: depreciation and amortization of properties
8,342
6,334
Add: amortization of deferred leasing costs
228
211
Deduct: gain on sale of real estate, net
Adjustments for non-controlling interests and our share of unconsolidated joint ventures
(5)
(17)
NAREIT funds from operations applicable to common stock
10,926
9,573
Add: amortization of restricted stock and RSU compensation
Add: amortization and write-off of deferred financing costs
Add: amortization of mortgage intangible assets
Add: amortization of lease incentives
Deduct: lease termination fees
(1,327)
Deduct: straight-line rent accruals and amortization of lease intangibles
(708)
(654)
Deduct: other income and income on settlement of litigation
(18)
(27)
Adjusted funds from operations applicable to common stock
10,521
10,510
.39
.30
.01
(.18)
(.05)
NAREIT funds from operations per share of common stock (a)
.50
.44
.06
(.06)
(.03)
Adjusted funds from operations per share of common stock (a)
.48
Three months ended March 31, 2026 and 2025
The $1.4 million, or 14.1%, increase in FFO for the three months ended March 31, 2026 from the corresponding 2025 period is due primarily to:
Offsetting the increase is a:
The $11,000, or 0.1%, increase in AFFO for the three months ended March 31, 2026 from the corresponding 2025 period is due primarily to the factors impacting FFO as described immediately above, excluding the $1.3 million lease termination fee income.
See “—Results of Operations” for further information regarding these changes.
Diluted per share net income, FFO and AFFO were impacted negatively in the three months ended March 31, 2026 compared to the corresponding quarter in the prior year by an average increase of approximately 179,000 in the weighted average number of shares of common stock outstanding as a result of stock issuances in connection with the equity incentive and dividend reinvestment programs.
Item 3. 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 March 31, 2026, we had no liability in the event of the early termination of our swaps.
At March 31, 2026, we had two 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 March 31, 2026, 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 $3,000. 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 $3,000. 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, primarily 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 $32.0 million outstanding balance under this facility at March 31, 2026, a 100 basis point increase of the interest rate would increase our related interest costs over the next twelve months by approximately $320,000 and a 100 basis point decrease of the interest rate would decrease our related interest costs over the next twelve months by approximately $320,000.
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.
Item 4. Controls and Procedures
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 March 31, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 5. Other Information
Disclosure of 10b5-1 Plans
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 March 31, 2026.
Item 6. Exhibits
Exhibit No.
Title of Exhibit
31.1
Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Senior Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Senior Vice President and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
The following financial statements and notes from the One Liberty Properties, Inc. Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026 filed on May 6, 2026, 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; and (vi) Notes to the Consolidated Financial Statements.
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.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
Date: May 6, 2026
/s/ Patrick J. Callan, Jr.
Patrick J. Callan, Jr.
President and Chief Executive Officer
(principal executive officer)
/s/ Isaac Kalish
Isaac Kalish
Senior Vice President and
Chief Financial Officer
(principal financial officer)
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