UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2005 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) Registrant's telephone number, including area code: (516) 466-3100 -------------- 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 X No --- --- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X 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 November 4, 2005, the registrant had 9,862,880 shares of common stock outstanding.
Part I - FINANCIAL INFORMATION Item 1. Financial Statements <TABLE> <CAPTION> ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in Thousands, Except Per Share Data) September 30, December 31, 2005 2004 ------------- ------------ (Unaudited) <S> <C> <C> Assets Real estate investments, at cost Land $ 53,120 $ 47,447 Buildings and improvements 223,152 199,736 -------- -------- 276,272 247,183 Less accumulated depreciation 20,425 18,647 -------- -------- 255,847 228,536 Investment in unconsolidated joint ventures 27,398 37,023 Cash and cash equivalents 8,632 6,051 Unbilled rent receivable 6,202 5,301 Properties held for sale 5,634 - Escrow, deposits and other receivables 1,900 2,285 Investment in BRT Realty Trust (related party) 702 731 Deferred financing costs 2,624 2,408 Other assets (including available-for-sale securities at market of $173 in each period) 3,709 2,051 -------- -------- Total assets $312,648 $284,386 ======== ======== Liabilities and Stockholders' Equity Liabilities: Mortgages payable $142,495 $124,019 Line of credit 8,000 7,600 Dividends payable 3,251 3,230 Accrued expenses and other liabilities 3,962 3,422 -------- -------- Total liabilities 157,708 138,271 -------- -------- Commitments and contingencies - - Stockholders' equity: Preferred stock, $1 par value; 12,500 shares authorized; none issued - - Common stock, $1 par value; 25,000 shares authorized; 9,760 and 9,728 shares issued and outstanding 9,760 9,728 Paid-in capital 134,466 133,350 Accumulated other comprehensive income - net unrealized gain on available-for-sale securities 806 717 Unearned compensation (1,338) (926) Accumulated undistributed net income 11,246 3,246 -------- -------- Total stockholders' equity 154,940 146,115 -------- -------- Total liabilities and stockholders' equity $312,648 $284,386 ======== ======== See accompanying notes to consolidated financial statements. </TABLE>
<TABLE> <CAPTION> ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands, Except Per Share Data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 ---- ---- ---- ---- <S> <C> <C> <C> <C> Revenues: Rental income $ 7,107 $ 5,550 $20,900 $15,666 ------- ------- ------- ------- Operating expenses: Depreciation and amortization 1,403 1,032 4,119 2,913 General and administrative (including $315, $258, $935 and $747, respectively, to related party) 1,347 801 3,199 2,402 Real estate expenses 103 170 285 337 Leasehold rent 77 42 231 42 ------- ------- ------- ------- Total operating expenses 2,930 2,045 7,834 5,694 ------- ------- ------- ------- Operating income 4,177 3,505 13,066 9,972 Other income and expenses: Equity in earnings (loss) of unconsolidated joint ventures (524) 669 1,327 1,639 Interest and other income 150 71 230 225 Interest: Expense (2,505) (2,054) (7,529) (5,997) Amortization of deferred financing costs (135) (149) (421) (349) Gain on sale of air rights - - 10,248 - Gain on sale of real estate - 73 - 73 (Loss) gain on sale of available-for-sale securities - - (1) 1 ------- ------- ------- ------- Income from continuing operations 1,163 2,115 16,920 5,564 ------- ------- ------- ------- Discontinued operations: (Loss) income from operations (65) 384 (405) 1,401 Net gain on sale 631 - 1,221 - ------- ------- ------- ------- Income from discontinued operations 566 384 816 1,401 ------- ------- ------- ------- Net income $ 1,729 $ 2,499 $17,736 $ 6,965 ======= ======= ======= ======= Weighted average number of common shares outstanding: Basic 9,852 9,749 9,830 9,711 ===== ===== ===== ===== Diluted 9,857 9,762 9,835 9,729 ===== ===== ===== ===== Net income per common share - basic and diluted: Income from continuing operations $ .12 $ .22 $ 1.72 $ .57 Income from discontinued operations .06 .04 .08 .15 ------- ------- ------- ------- Net income per common share $ .18 $ .26 $ 1.80 $ .72 ======= ======= ======= ======= Cash distributions per share of common stock $ .33 $ .33 $ .99 $ .99 ======= ======= ======= ======= See accompanying notes to consolidated financial statements. </TABLE>
<TABLE> <CAPTION> ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the nine month period ended September 30, 2005 (Unaudited) and the year ended December 31, 2004 (Amounts in Thousands) Accumulated Other Unearned Accumulated Common Paid-in Comprehensive Compen- Undistributed Stock Capital Income sation Net Income Total ----- ------- ------ ------ ---------- ----- <S> <C> <C> <C> <C> <C> <C> Balances, January 1, 2004 $ 9,605 $130,863 $ 823 $ (447) $ 5,125 $145,969 Distributions - common stock - - - - (12,853) (12,853) Exercise of options 49 543 - - - 592 Shares issued through dividend reinvestment plan 72 1,247 - - - 1,319 Issuance of restricted stock - 699 - (699) - - Restricted stock vesting 2 (2) - - - - Compensation expense - restricted stock - - - 220 - 220 Net income - - - - 10,974 10,974 Other comprehensive income- net unrealized loss on available-for-sale securities - - (106) - - (106) ------ Comprehensive income 10,868 ------- -------- ------- ------- ------- ------ Balances, December 31, 2004 9,728 133,350 717 (926) 3,246 146,115 Distributions - common stock - - - - (9,736) (9,736) Exercise of options 11 109 - - - 120 Shares issued through dividend reinvestment plan 21 390 - - - 411 Issuance of restricted stock - 617 - (617) - - Compensation expense - restricted stock - - - 205 - 205 Net income - - - - 17,736 17,736 Other comprehensive income- net unrealized gain on available-for-sale securities - - 89 - - 89 -------- Comprehensive income 17,825 ------- -------- -------- -------- -------- -------- Balances, September 30, 2005 $ 9,760 $134,466 $ 806 $ (1,338) $ 11,246 $154,940 ======= ======== ======== ======== ======== ======== See accompanying notes to consolidated financial statements. </TABLE>
<TABLE> <CAPTION> ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) (Unaudited) Nine Months Ended September 30, ------------- 2005 2004 ---- ---- <S> <C> <C> Cash flows from operating activities: Net income $ 17,736 $ 6,965 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of real estate (11,469) (73) Loss (gain) on sale of available-for-sale securities 1 (1) Increase in rental income from straight-lining of rent (901) (645) Decrease in rental income from amortization of intangibles relating to leases 18 30 Provision for valuation adjustment 469 - Amortization of restricted stock expense 205 163 Equity in earnings of unconsolidated joint ventures (1,327) (1,639) Distributions of earnings from unconsolidated joint ventures 2,329 1,637 Depreciation and amortization 4,361 3,334 Amortization of financing costs 448 351 Changes in assets and liabilities: Decrease (increase) in escrow, deposits and other receivables 321 (610) Increase in accrued expenses and other liabilities 540 23 -------- -------- Net cash provided by operating activities 12,731 9,535 -------- -------- Cash flows from investing activities: Additions to real estate (55,715) (31,646) Net proceeds from sale of real estate 27,797 1,302 Investment in unconsolidated joint ventures (282) (6,186) Distribution of capital from unconsolidated joint ventures 9,018 192 Net proceeds from sale of available-for-sale securities 4 3 -------- -------- Net cash used in investing activities (19,178) (36,335) -------- -------- Cash flows from financing activities: Repayment of mortgages payable (13,680) (1,725) Proceeds from mortgages payable 32,156 5,250 Payment of financing costs (664) (823) Proceeds from bank line of credit, net 400 - Cash distributions - common stock (9,715) (9,803) Exercise of stock options 120 462 Issuance of shares through dividend reinvestment plan 411 981 -------- -------- Net cash provided by (used in) financing activities 9,028 (5,658) -------- -------- Net increase (decrease) in cash and cash equivalents 2,581 (32,458) Cash and cash equivalents at beginning of period 6,051 45,944 -------- -------- Cash and cash equivalents at end of period $ 8,632 $ 13,486 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 7,511 $ 6,027 Supplemental schedule of non-cash investing and financing activities: Assumption of mortgages payable in connection with purchase of real estate $ - $ 7,085 Reclassification of assets from real estate to properties held for sale 5,634 - See accompanying notes to consolidated financial statements. </TABLE>
One Liberty Properties, Inc. and Subsidiaries Notes to Consolidated Financial Statements Note 1 - Organization and Background --------------------------- One Liberty Properties, Inc. (the "Company") was incorporated in 1982 in the state of Maryland. The Company is a self-administered and self-managed real estate investment trust ("REIT"). The Company acquires, owns and manages a geographically diversified portfolio of retail, industrial, office, movie theater, health and fitness and other properties, a substantial portion of which are under long-term net leases. The Company owns forty-six properties, including three properties held for sale, participates in six joint ventures which own a total of fourteen properties, including one property held for sale and holds a 50% tenancy in common interest in one property. The sixty-one properties are located in twenty-three states. Note 2 - Basis of Preparation -------------------- The accompanying interim unaudited consolidated financial statements as of September 30, 2005 and for the nine and three months ended September 30, 2005 and 2004 reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for such interim periods. The results of operations for the nine and three months ended September 30, 2005 are not necessarily indicative of the results for the full year. The preparation of the financial statements in conformity with U.S. generally accepted accounting principles 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 of One Liberty Properties, Inc. and its wholly-owned subsidiaries (collectively, the "Company"). The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting as the Company exercises significant influence over, but does not control, these entities. Material intercompany items and transactions have been eliminated. Certain amounts reported in previous consolidated financial statements have been reclassified in the accompanying consolidated financial statements to conform to the current year's presentation. These statements should be read in conjunction with the consolidated financial statements and related notes which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2004. Note 3 - Earnings Per Common Share ------------------------- For the nine and three months ended September 30, 2005 and 2004, basic earnings per share were determined by dividing net income for the period by the weighted average number of shares of the Company's Common Stock outstanding, which includes restricted stock, during each period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts exercisable for, or convertible into, Common Stock were exercised or converted or resulted in the issuance of Common Stock that shared in the earnings of the Company. For the nine and three month periods ended September 30, 2005 and 2004, diluted earnings per share were determined by dividing net income applicable to common stockholders for the period by the total of the weighted average number of shares of Common Stock outstanding plus the dilutive effect of the Company's outstanding options (5,227 and 4,488 for the nine and three months ended September 30, 2005 and 18,190 and 13,761 for the nine and three months ended September 30, 2004, respectively) using the treasury stock method.
One Liberty Properties, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 4 - Investment in Unconsolidated Joint Ventures ------------------------------------------- The Company is a member in six unconsolidated joint ventures which own and operate fourteen properties. The following tables present unaudited condensed financial statements of the two most significant joint ventures, both of which own movie theater properties, are with MTC Investors LLC, an unrelated party, and in which the Company is the managing member (amounts in thousands): Joint Venture #1 Condensed Balance Sheets September 30, December 31, 2005 2004 ---- ---- (audited) Cash and cash equivalents $ 342 $ 720 Real estate investments, net 53,672 54,533 Deferred financing costs 475 527 Unbilled rent receivable 1,329 1,105 Other assets 3 3 ------- ------- Total assets $55,821 $56,888 ======= ======= Mortgage loans payable $31,946 $32,600 Other liabilities 291 687 Equity 23,584 23,601 ------- ------- Total liabilities and equity $55,821 $56,888 ======= ======= Company's equity investment (A) $12,729 $12,752 ======= ======= <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30, September 30, Condensed Statements of Operations 2005 2004 2005 2004 - ---------------------------------- ---- ---- ---- ---- <S> <C> <C> <C> <C> Rental income $ 1,838 $ 1,834 $ 5,513 $ 5,501 ------- ------- ------- ------- Depreciation and amortization 289 289 866 866 Operating expenses 74 65 223 221 ------- ------- ------- ------- Total operating expenses 363 354 1,089 1,087 ------- ------- ------- ------- Operating income 1,475 1,480 4,424 4,414 Other income and expenses: Interest income - - 3 - Interest: Expense (627) (644) (1,893) (1,942) Amortization of deferred financing costs (17) (17) (52) (52) ------- ------- ------- ------- Net income attributable to members $ 831 $ 819 $ 2,482 $ 2,420 ======= ======= ======= ======= Company's share of net income $ 415 $ 410 $ 1,241 $ 1,210 ======= ======= ======= ======= Amount recorded in income statement (A) $ 411 $ 405 $ 1,226 $ 1,195 ======= ======= ======= ======= Distributions received by the Company: From operations $ 412 $ 386 $ 1,235 $ 1,176 ======= ======= ======= ======= From capital $ 15 $ - $ 15 $ 21 ======= ======= ======= ======= (A) The difference between the carrying amount of the Company's investment in Joint Venture # 1 and the underlying equity in net assets is a premium amortized as an adjustment to equity in earnings of unconsolidated joint ventures over 40 years. </TABLE>
One Liberty Properties, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 4 - Investment in Unconsolidated Joint Ventures (Continued) <TABLE> <CAPTION> Joint Venture #2 Condensed Balance Sheets September 30, December 31, - ------------------------ ------------- ------------ 2005 2004 ----- ---- (audited) <S> <C> <C> Cash and cash equivalents $ 562 $ 413 Real estate investments, net 38,192 42,012 Property held for sale (A) 640 - Deferred financing costs 427 450 Unbilled rent receivable 1,061 839 Other assets, primarily investment in AIX stock 418(B) 18 -------- -------- Total assets $ 41,300 $ 43,732 ======== ======== Mortgage loans payable $ 25,269 $ 25,606 Other liabilities 646 610 Equity 15,385 17,516 -------- -------- Total liabilities and equity $ 41,300 $ 43,732 ======== ======== Company's equity investment $ 7,589 $ 8,652 ======== ======== </TABLE> <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30, September 30, Condensed Statements of Operations 2005 2004 2005 2004 - ---------------------------------- ---- ---- ---- ---- <S> <C> <C> <C> <C> Rental income $ 1,203 $ 1,131 $ 4,206(B) $ 2,890 ------- ------- ------- ------- Depreciation and amortization 203 202 608 607 Operating expenses 19 28 126 60 ------- ------- ------- ------- Total operating expenses 222 230 734 667 ------- ------- ------- ------- Operating income 981 901 3,472 2,223 Other income and expenses: Interest: Expense (498) (509) (1,494) (1,528) Amortization of deferred financing costs (8) (8) (24) (24) ------- ------- ------- ------- Income from continuing operations 475 384 1,954 671 Loss from discontinued operations (A) (2,580) - (2,580) (83) ------- ------- ------- ------- Net (loss) income attributable to members $(2,105) $ 384 $ (626) $ 588 ======= ======= ======= ======= Company's share of net (loss) income $(1,052) $ 192 $ (313) $ 294 ======= ======= ======= ======= Distributions received by the Company: From operations $ - $ 146 $ 629 $ 297 ======= ======= ======= ======= From capital $ 235 $ - $ 235 $ 141 ======= ======= ======= ======= </TABLE> (A) At September 30, 2005, the joint venture determined that the fair value of one of the five properties owned by it, where the joint venture was funding the construction of a six screen movie theater pursuant to the lease entered into with the former tenant, was lower than its carrying value. The lease with the former tenant was terminated by mutual agreement in September 2004 and construction was suspended. The joint venture is seeking alternative uses for this property and is also offering this property for sale. The provision for valuation adjustment of $2,562,000 in the nine and three months ended September 30, 2005 is based on a recently obtained third party appraisal which values the land only and a report by an independent engineering firm which
One Liberty Properties, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 4 - Investment in Unconsolidated Joint Ventures (Continued) ------------------------------------------------------- estimates the value of the construction completed to date, against which management has taken a significant discount. The provision was recorded as a direct write down on the balance sheet. (B) During February 2005, the tenant/operator of one of the joint venture's movie theaters sold its business to an independent third party, which sale accelerated the payment of arrearages of rent and other miscellaneous charges that were originally due to the joint venture in August 2005. Revenues for the nine months ended September 30, 2005 include $592,000 of such rent arrearages. This tenant had the same principal as the tenant described in (A) above. In consideration of the joint venture's consent to the lease assignment and a lease amendment and its waiver of the requirement for a security deposit under the amended lease, the joint venture received 40,000 restricted shares of Class A common stock of Access Integrated Technologies, Inc., the new tenant's parent company (AMEX:AIX). The closing price per share on the date of the transaction for these shares was $4.40 and at September 30, 2005 was $10.03. These shares have certain restrictions regarding the disposition thereof. At September 30, 2005, the remaining four unconsolidated joint ventures each own one property. At September 30, 2005 and December 31, 2004, the Company's equity investment in these four joint ventures totaled $7,080,000 and $15,619,000, respectively. The September 30, 2005 balance is net of distributions of refinancing proceeds the Company received from two of the joint ventures aggregating $8,715,000. These unconsolidated joint ventures contributed $414,000 and $117,000, respectively, in equity earnings for the nine and three months ended September 30, 2005 and $150,000 and $72,000, respectively, in equity earnings for the nine and three months ended September 30, 2004, prior to the Company's sixth joint venture being formed. Note 5 - Gain on Sale of Air Rights -------------------------- On June 30, 2005, the Company sold the unused development or "air" rights relating to a property located in Brooklyn, New York for a sales price of approximately $11,000,000, which resulted in a gain of approximately $10,250,000 for financial statement purposes. This gain will be deferred for federal tax purposes in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended. In connection with this sale, a brokerage fee of $205,000 was paid to a company wholly owned by the Chairman of the Board of Directors and in which certain officers of the Company have management positions. Note 6 - Discontinued Operations ----------------------- In October and November 2005, the Company sold two properties for a total sales price of $4,525,000. The carrying amount of $3,647,000 is included in "Properties held for sale" on the accompanying consolidated balance sheet at September 30, 2005 and the results of operations are included as income from discontinued operations in accordance with SFAS 144, "Accounting for Impairment or Disposal of Long-Lived Assets." The sales resulted in gains totaling approximately $690,000, which will be included in "Net gain on sale of discontinued operations" in the results of operations for the year ended December 31, 2005. On September 23, 2005, the Company sold a property located in Cedar Rapids, Iowa for a price of $1,846,000, resulting in a gain of approximately $639,000. In accordance with SFAS 144, "Accounting for Impairment or Disposal of Long-Lived Assets," the Company recorded the results of operations and the related gain as income from discontinued operations for this sale and the sale described below.
One Liberty Properties, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 6 - Discontinued Operations (Continued) ----------------------------------- On May 17, 2005, the Company sold a property located in Jupiter, Florida for a price of approximately $16,500,000, resulting in a gain of approximately $582,000. In connection with this sale, a brokerage fee of $165,000 was paid to a company wholly owned by the Chairman of the Board of Directors and in which certain officers of the Company have management positions. Also included in discontinued operations are the results of operations of a property that is considered as held-for-sale and which has a carrying amount of $1,987,000. At December 31, 2004 the Company determined that the estimated fair value of this property, where the tenant filed for bankruptcy protection and vacated the premises, was lower than its carrying value and recorded a $366,000 provision for the difference. At June 30, 2005, the Company wrote down the asset by an additional $469,000 based on an updated evaluation of market conditions in the geographic area in which the property is located. The provisions were recorded as direct write-downs of the investment on the balance sheet and depreciation was calculated using the new basis. The following is a summary of income from discontinued operations for the nine and three months ended September 30, 2005 and 2004 (in thousands): <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2005 2004 2005 2004 ---- ---- ---- ---- <S> <C> <C> <C> <C> Revenues, primarily rental income $ 131 $ 725 $1,005 $2,304 ------ ------ ------ ------ Depreciation and amortization 39 140 241 421 Real estate expenses 157 151 581 329 Interest expense - 50 119 153 Provision for valuation adjustment of real estate - - 469 - ------ ------ ------ ------ Total expenses 196 341 1,410 903 ------ ------ ------ ------ (Loss) income from discontinued operations before gain on sale (65) 384 (405) 1,401 Net gain on sale of discontinued operations 631 - 1,221 - ------ ------ ------ ------ Income from discontinued operations $ 566 $ 384 $ 816 $1,401 ====== ====== ====== ====== </TABLE> Note 7 - Common Stock Dividend Distribution ---------------------------------- On September 9, 2005, the Board of Directors declared a quarterly cash distribution of $.33 per share on the Company's Common Stock which was paid on October 3, 2005 to stockholders of record on September 22, 2005.
One Liberty Properties, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 8 - Comprehensive Income --------------------- Comprehensive income for the nine and three month periods ended September 30, 2005 and 2004 are as follows (amounts in thousands): <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2005 2004 2005 2004 ---- ---- ---- ---- <S> <C> <C> <C> <C> Net income $ 1,729 $ 2,499 $17,736 $ 6,965 Other comprehensive income - Unrealized gain (loss) on available-for-sale securities 23 66 89 (211) ------- ------- ------- ------- Comprehensive income $ 1,752 $ 2,565 $17,825 $ 6,754 ======= ======= ======= ======= </TABLE> Accumulated other comprehensive income, which is solely comprised of the net unrealized gain on available-for-sale securities was $806,000 and $717,000 at September 30, 2005 and December 31, 2004, respectively. Note 9 - Restricted Stock ---------------- As of September 30, 2005, a total of 94,475 shares have been issued under the Company's 2003 Incentive Plan, including 37,450 restricted shares that were awarded in April 2005. The total number of shares issuable under this Plan is 275,000. The restricted stock issued to date under the Plan vest five years from the date of issuance and under certain circumstances, may vest earlier. For accounting purposes, the restricted stock is not included in the outstanding shares shown on the balance sheet until they vest. The Company records compensation expense over the vesting period, measuring the compensation cost based on the market value of the stock on the date of grant. For the nine and three months ended September 30, 2005, the Company recorded $205,000 and $57,000 of compensation expense, respectively. For the nine and three months ended September 30, 2004, the Company recorded $163,000 and $60,000 of compensation expense, respectively. Note 10 - Preferred Stock --------------- At the Company's Annual Meeting of Stockholders held on June 14, 2005, the stockholders approved an Amendment to the Company's Restated Articles of Incorporation to increase the aggregate number of shares of authorized capital stock by authorizing the issuance of 12,500,000 shares of preferred stock, par value $1.00 per share. To date none have been issued. Note 11 - New Accounting Pronouncements ----------------------------- Emerging Issues Task Force ("EITF") Issue 04-5, "Investor's Accounting for an Investment in a Limited Partnership when the Investor is the Sole General Partner and the Limited Partners Have Certain Rights" was ratified by the Financial Accounting Standards Board ("FASB") in June 2005. This EITF provides guidance in determining whether a general partner controls a limited partnership and what rights held by the limited partners(s) preclude the sole general partner from consolidating the limited partnership in accordance with the U.S. generally accepted accounting principles. This issue is effective no later than for fiscal years beginning after December 15, 2005 and as of June 29, 2005 for new or modified arrangements.
One Liberty Properties, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 11 - New Accounting Pronouncements (Continued) ----------------------------------------- On December 16, 2004, the FASB issued Statement No. 123 (revised 2004), "Share-Based Payment," which is a revision of FASB Statement No. 123, "Accounting for Stock-Based Compensation." Statement 123 (R) supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees," and amends FASB Statement No. 95, "Statement of Cash Flows." Statement 123 (R) requires all share-based payments to employees, including grants of employee stock options, be recognized in the financial statements based on their fair value. The pro forma disclosure is no longer an alternative. The Statement is effective for public companies as of January 1, 2006. Management is evaluating the impact of the pronouncement and EITF issue and does not anticipate that their adoption will have a significant effect on earnings or the financial position of the Company. Note 12 - President Resignation and Contingency ------------------------------------- On July 21, 2005, the Company announced that Jeffrey Fishman, the Company's President, Chief Executive Officer and a member of its Board of Directors resigned. Mr. Fishman's resignation followed the discovery by the Company of what appeared to be inappropriate financial dealings by Mr. Fishman with a former tenant of a property owned by a joint venture in which the Company is a 50% venture partner and the managing member. The Audit Committee of the Board of Directors is conducting an investigation of this matter and related matters and retained special counsel to assist the committee in the investigation. The investigation is on going. On August 12, 2005, the former tenant, Pritchard Square Cinema LLC, and an entity related to the former tenant, commenced a litigation in the Supreme Court of the State of New York, Nassau County, against the Company, certain of its affiliated entities, Mr. Fishman and Britannia Management, LLC ("Britannia"), a company which the Company believes is owned and/or controlled by Mr. Fishman. The related entity was the seller and Pritchard Square Cinema LLC was the tenant of the property when it was acquired by the joint venture and the joint venture was the purchaser and landlord of such property. The property is still owned by the joint venture and is now leased to a party unrelated to the former tenant. The former tenant and the related entity allege that it or its affiliates paid $815,000 in the aggregate to Mr. Fishman and/or Britannia. The complaint alleges as against Mr. Fishman, Britannia, the Company and affiliated entities, fraud, breach of contract, intentional tort, negligent supervision, respondeat superior, negligent misrepresentation, tortious interference with prospective economic relations and conduct in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The damages sought in the complaint are $9 million plus punitive damages, interest and costs and a demand for treble damages under RICO. The Company believes that the Plaintiff's claims are without merit as against the Company and its affiliates and the Company will vigorously defend this action. On the same date the complaint was filed against the Company, certain of its affiliated entities, Mr. Fishman and Britannia, the Company filed a suit in the Supreme Court of the State of New York, Nassau County against the former tenant, Norman Adie, the former tenant's principal, Jeffrey Fishman, Britannia and others. The Company's complaint alleges that Mr. Adie, Mr. Fishman and other defendants conspired to defraud the Company. The Company's lawsuit alleges commercial bribery, fraud, breach of fiduciary duty, tortious interference, intentional tort, violation of the New York Enterprise Corruption Act, respondeat superior, unjust enrichment and violations of RICO. The damages alleged in this lawsuit exceed $1 million, plus punitive damages, interest and costs. Both litigations are in preliminary stages where discovery has not yet commenced.
One Liberty Properties, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 13 - Unaudited Pro Forma Information ------------------------------- On September 16, 2005, the Company purchased a property located in New Jersey for $30,000,000. The following table summarizes, on an unaudited pro forma basis, the combined results of continuing operations of the Company for the nine and three months ended September 30, 2005 and 2004 as though the acquisition of this property in September 2005 was completed on January 1, 2004. The information does not purport to be indicative of what the operating results of the Company would have been had the acquisition been consummated on January 1, 2004. (Amounts in thousands, except per share data.) <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2005 2004 2005 2004 ---- ---- ---- ---- <S> <C> <C> <C> <C> Pro forma revenues $ 7,527 $ 6,358 $22,953 $18,089 Pro forma net income from continuing operations $ 1,357 $ 2,396 $17,629 $ 6,405 Pro forma common shares: Basic 9,852 9,749 9,830 9,711 Diluted 9,857 9,762 9,835 9,729 Pro forma net income per common share from continuing operations - Basic and Diluted $ .14 $ .25 $ 1.79 $ .66 </TABLE>
Item 2. Management's Discussion And Analysis Of Financial Condition And Results ----------------------------------------------------------------------- Of Operations ------------- Forward-Looking Statements - -------------------------- With the exception of historical information, this quarterly report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, 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," "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions or variations thereof. Forward-looking statements should not be relied on 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. Investors are cautioned not to place undue reliance on any forward-looking statements. Overview - -------- We are a self-administered and self-managed real estate investment trust, or REIT, and we primarily own real estate that we net lease to tenants. At September 30, 2005, we own 46 properties, including three properties held for sale, participate in six joint ventures which own a total of 14 properties, including one property held for sale, and hold a 50% tenancy in common interest in one property. These 61 properties are located in 23 states. We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To qualify as a REIT, 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. Our principal business strategy is to acquire improved, commercial properties subject to long-term net leases. We acquire properties for their value as long-term investments and for their ability to generate income over an extended period of time. We have borrowed funds in the past to finance the purchase of real estate and we expect to do so in the future. Our rental properties are generally leased to corporate tenants under operating leases substantially all of which are noncancellable. Substantially all of our lease agreements are net lease arrangements that require the tenant to pay not only rent, but also substantially all of the operating expenses of the leased property, including maintenance, taxes, utilities and insurance. A majority of our lease agreements provide for periodic rental increases and certain of our other leases provide for increases based on the consumer price index. At September 30, 2005, excluding mortgages payable of our unconsolidated joint ventures, we had 35 outstanding mortgages payable, aggregating approximately $142 million in principal amount, each of which is secured by a first lien on an individual real estate property. The real properties securing our outstanding mortgages payable have an aggregate carrying value of approximately $220 million before accumulated depreciation. The mortgages bear interest at fixed rates ranging from 5.125% to 8.8%, and mature between 2006 and 2023. On July 21, 2005, the Company announced that Jeffrey Fishman, the Company's President, Chief Executive Officer and a member of its Board of Directors resigned. Mr. Fishman's resignation followed the discovery by the Company of what appeared to be inappropriate financial dealings by Mr. Fishman with a former tenant of a property owned by a movie theater joint venture in which the Company is a 50% venture partner and the managing member. The Audit Committee of the Board of Directors is conducting an investigation of this matter and related matters and retained special counsel to assist the committee in the investigation. The investigation is ongoing. On August 12, 2005, the former tenant, Pritchard Square Cinema LLC, and an entity related to the former tenant, commenced a litigation in the Supreme Court of the State of New York, Nassau County, against the Company, certain of its affiliated entities, Mr. Fishman and Britannia Management, LLC, a company which we believe is owned and/or controlled by Mr. Fishman. The related entity was the seller and Pritchard Square Cinema LLC was the tenant of the property located in Brooklyn, New York and improved with an eight screen movie theater when it was acquired by the joint venture and the joint venture was the purchaser and landlord of such property. The property is still owned by the joint venture and is now leased to a party unrelated to the former tenant. The former tenant and the related entity allege that it or its affiliates paid $815,000 in the aggregate to Mr. Fishman and/or Britannia. The complaint alleges as against Mr. Fishman, Britannia, the Company and affiliated entities, fraud, breach of contract, intentional tort, negligent supervision, respondeat superior, negligent misrepresentation, tortious interference with prospective economic relations and conduct in violation of the Racketeer Influenced and Corrupt Organizations Act. The damages sought in the complaint are $9 million plus punitive damages, interest and costs and a demand for treble damages under RICO. The Company believes that the Plaintiff's claims are without merit as against the Company and its affiliates and the Company will vigorously defend this action. On the same date the complaint was filed against the Company, certain of its affiliated entities, Mr. Fishman and Brittania, the Company filed a suit in the Supreme Court of the State of New York, Nassau County against the former tenant, Norman Adie, the former tenant's principal, Jeffrey Fishman, Britannia and others. The Company's complaint alleges that Mr. Adie, Mr. Fishman and other defendants conspired to defraud the Company. The Company's lawsuit alleges commercial bribery, fraud, breach of fiduciary duty, tortious interference, intentional tort, violation of the New York Enterprise Corruption Act, respondeat superior, unjust enrichment and violations of RICO. The damages alleged in this lawsuit exceed $1 million, plus punitive damages, interest and costs. Both litigations are in preliminary stages where discovery has not yet commenced. In the three and nine months ended September 30, 2005 one of the move theater joint ventures took a $2.56 million provision for valuation adjustment against a five screen movie theater under construction located in Monroe, New York, of which the Company has a 50% ($1.3 million) equity share. The joint venture had been funding construction at this property pursuant to a lease with an entity controlled by Norman Aide, who was also the principal of Pritchard Square Cinema LLC. The lease for the Monroe theater was terminated by mutual agreement in September 2004 and construction suspended at that time. The provision for valuation adjustment is based on a recently obtained third party appraisal which values the land only and a report by an independent engineering firm which estimates the value of the construction completed to date against which management has taken a significant discount. The Company has not to its knowledge engaged in any other transactions, direct or indirect, with Mr. Adie or any entity controlled or affiliated with him. Results of Operations - --------------------- Comparison of Nine and Three Months Ended September 30, 2005 and 2004 - --------------------------------------------------------------------- Revenues Rental income increased by $5.2 million, or 33.4%, to $20.9 million for the nine months ended September 30, 2005 from $15.7 million for the nine months ended September 30, 2004. For the three months ended September 30, 2005, rental income increased by $1.5 million, or 28.1%, to $7.1 million from $5.6 million for the three months ended September 30, 2004. The increase in rental income is primarily due to $4.8 million and $1.4 million of rental revenues earned during the nine and three months ended September 30, 2005, respectively, on thirteen properties acquired by us between March 2004 and September 2005. Operating Expenses Depreciation and amortization expense increased by $1.2 million, or 41.4%, and $371,000, or 35.9%, to $4.1 million and $1.4 million for the nine and three months ended September 30, 2005, respectively. The increase in depreciation and amortization expense was primarily due to the acquisition of thirteen properties between March 2004 and September 2005. General and administrative expenses increased by $797,000, or 33.2%, to $3.2 million for the nine months ended September 30, 2005. For the three months ended September 30, 2005, general and administrative expenses increased by $546,000, or 68.2%, to $1.3 million. The Company incurred fees of $536,000 during the nine and three months ended September 30, 2005 relating to the investigation conducted by our Audit Committee into certain financial dealings of our former President and Chief Executive Officer, primarily fees of special counsel retained by the Audit Committee to assist the committee in its investigation. In addition, there were increases of approximately $182,000 and $58,000, respectively, for executive and support personnel, primarily for legal and accounting services, including additional staffing requirements, allocated to us pursuant to a Shared Services Agreement among us and related entities. Also included in the nine months ended September 30, 2005 is an increase in compensation expense of $42,000 relating to the issuance of restricted stock and an increase in the fees of our independent public accounting firm of approximately $77,000, including $30,000 of costs associated with the internal control procedures related to compliance with Section 404 of the Sarbanes-Oxley Act. Professional fees also increased by $35,000 in the three months ended September 30, 2005 primarily due to an increase in fees to our independent public accounting firm. Additionally, for the nine and three months ended September 30, 2005, state taxes increased by approximately $33,000 and $10,000, director and officer liability insurance and directors' fees increased by approximately $39,000 and $-0-, and travel and other miscellaneous expenses decreased by approximately $11,000 and increased by $12,000, respectively. Payroll and related expenses decreased by $105,000 for the three months ended September 30, 2005 primarily because the Company did not make salary payments for our President and Chief Executive Officer after July 2005. Offsetting the increases in the nine months ended September 30, 2005 is a one-time expense of $101,000 we incurred in 2004 in connection with the initial listing of our common stock on the New York Stock Exchange. Real estate expenses decreased by $52,000, or 15.4%, and $67,000, or 39.4%, for the nine and three months ended September 30, 2005, resulting primarily from a decrease in real estate taxes and operating expenses incurred in the 2004 nine and three month periods relating to two vacant properties. Other Income and Expenses Our equity in earnings of unconsolidated joint ventures decreased by $312,000, or 19%, to $1.3 million for the nine months ended September 30, 2005. For the three months ended September 30, 2005, equity in earnings of unconsolidated joint ventures decreased by $1.2 million, or 178%, to a loss of $524,000. The decreases result from a $2.56 million provision for valuation adjustment taken by one of our movie theater joint ventures against one of its five properties, of which 50%, or $1.3 million, is our equity share. The joint venture based this provision on a recently obtained third party appraisal on such property which valued the land only and a report by an independent engineering firm which estimated the value of the construction completed at such property to date, against which management has taken a significant discount. This decrease was offset in part by our equity share of income earned by two joint ventures organized in the second half of 2004. These joint ventures each purchased one property and we recognized equity in earnings of $333,000 and $84,000, respectively, from these joint ventures in the nine and three months ended September 30, 2005 compared to $58,000 in equity recognized in the nine and three months ended September 30, 2004. Additionally, in February 2005, the operator of one of the movie theaters owned by one of our joint ventures sold its business to an independent third party, which sale accelerated rent arrearages totaling $592,000 that were due in August 2005. We have a 50% interest in this joint venture and the accelerated payment resulted in an additional $296,000 of equity in earnings to us in the nine months ended September 30, 2005. Additional increases in equity earnings to us in the 2005 nine and three month periods resulted from rent payments from this new tenant and the write off during the nine months ended September 30, 2004 of the entire balance of unbilled rent receivable relating to this movie theater. Interest and other income increased by $5,000, or 2.2%, and $79,000, or 111%, to $230,000 and $150,000, respectively, for the nine and three months ended September 30, 2005. The primary reason for the increase was interest earned during the three months ended September 30, 2005 on our investment of proceeds received from the sale of a property and mortgage financings in short-term cash equivalents. Interest expense increased by $1.5 million, or 25.5%, and $451,000, or 22%, to $7.5 million and $2.5 million, respectively, for the nine and three months ended September 30, 2005. This includes increases of $1.2 million and $426,000, respectively, on our mortgages payable principally resulting from mortgages placed on ten properties between September 2004 and June 2005 and the assumption of mortgages in connection with the purchase of one property during March 2004 and one property during November 2004. In addition, interest expense related to our line of credit increased by $285,000 and $25,000, respectively, for the nine and three months ended September 30, 2005 resulting from borrowings made to facilitate the purchase of several properties. Amortization of deferred financing costs increased by $72,000, or 20.6%, and decreased by $14,000, or 9.4%, to $421,000 and $135,000, respectively, for the nine and three months ended September 30, 2005. The increase for the nine month period results from mortgages placed on ten properties between September 2004 and June 2005. The decrease for the three month period results from the completed write off of old credit line costs in March 2005. On June 30, 2005, we closed on the sale of unused developmental or "air" rights relating to our property located in Brooklyn, New York. The purchase price was approximately $11 million and in addition, the purchaser paid some of our closing expenses. The financial statement gain of approximately $10.25 million, recognized in the nine months ended September 30, 2005, will be tax deferred since we entered into a 1031 tax deferred exchange and used the sales proceeds to acquire an additional property. Discontinued Operations During the nine months ended September 30, 2005, we determined that the estimated fair value of a property held for sale was lower than the carrying amount and we recorded a $469,000 provision for the difference. This provision was in addition to the $366,000 provision on this property recorded by us at December 31, 2004. In early 2004, the retail tenant at this property filed for bankruptcy protection, disaffirmed its lease and vacated this store. There was no comparable provision in the nine and three months ended September 30, 2004. On September 23, 2005, we sold a property located in Iowa for a sale price of approximately $1.8 million and recognized a gain of $639,000 in the nine and three months ended September 30, 2005. On May 17, 2005, we sold a property located in Florida for a sale price of approximately $16.5 million and recognized a gain of $582,000 in the nine months ended September 30, 2005, which includes an expense of $8,000 incurred in the three months ended September 30, 2005 relating to this sale.
Liquidity and Capital Resources - ------------------------------- We had cash and cash equivalents of approximately $8.6 million at September 30, 2005. Our primary sources of liquidity are cash and cash equivalents, our revolving credit facility and cash generated from operating activities, including mortgage financings. We have a $62.5 million revolving credit facility with Valley National Bank, Merchants Bank Division, Bank Leumi USA, Manufacturers and Traders Trust Company and Israel Discount Bank of New York. The facility is available to us to pay down existing and maturing mortgages, to fund the acquisition of properties or to invest in joint ventures. The facility matures on June 30, 2007. Borrowings under the facility bear interest at the lower of LIBOR plus 2.5% or the bank's prime rate, and there is an unused facility fee of one-quarter of 1% per annum. Net proceeds received from the sale or refinancing of properties are required to be used to repay amounts outstanding under the facility if proceeds from the facility were used to purchase or refinance such properties. At November 4, 2005, there is no balance outstanding under the facility. We are actively engaged in seeking additional property acquisitions, including the possibility of acquiring properties with joint venture partners, and we are involved in various stages of negotiation with respect to the acquisition of additional properties. We will fund our real estate acquisitions by using cash and cash equivalents, cash provided from operations, cash provided from mortgage financings and funds available under our credit facility. We had no outstanding contingent commitments, such as guarantees of indebtedness, or any other contractual cash obligations at September 30, 2005. Cash Distribution Policy We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute currently at least 90% of our ordinary taxable income to our stockholders. It is our current intention to comply with these requirements and maintain our REIT status. As a REIT, we generally will not be subject to corporate federal, state or local income taxes on taxable income we distribute currently (in accordance with the Internal Revenue Code and applicable regulations) to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal, state and local income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent tax years. Even if we qualify as a REIT for federal taxation purposes, we may be subject to certain state and local taxes on our income and to federal income and excise taxes on our undistributed taxable income (i.e., taxable income not distributed in the amounts and in the time frames prescribed by the Internal Revenue Code and applicable regulations thereunder). It is our intention to pay to our stockholders within the time periods prescribed by the Internal Revenue Code no less than 90% of our annual taxable income, including gains on the sale of real estate except where we elect to defer gains for tax purposes and invest the proceeds in new properties under applicable rules of the Internal Revenue Code. It will continue to be our policy to make sufficient cash distributions to stockholders in order for us to maintain our REIT status under the Internal Revenue Code.
Item 3. - Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- All of our long-term mortgage debt bears interest at fixed rates and accordingly, the effect of changes in interest rates would not impact the amount of interest expense that we incur under these mortgages. Our credit line is a variable rate facility which is sensitive to interest rates. However, for the nine and three months ended September 30, 2005, due to a low average balance outstanding on the credit line, we do not believe that the effect of changes in interest rates would materially impact the amount of interest expense incurred. Item 4. - Controls and Procedures ----------------------- As required under Rules 13a-15 (e) and 15d-15 (e) under the Securities Exchange Act of 1934, as amended, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of September 30, 2005 are effective. There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the first nine months of the fiscal year ending December 31, 2005 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION Item 1. Legal Proceedings ----------------- For a description of all material proceedings, please see Note 12 to the Consolidated Financial Statements included in Part I, Item 1 of this report and the Company's Current Report on Form 8-K filed on August 16, 2005, which Current Report is incorporated herein by reference. Item 6. Exhibits -------- Exhibit 31.1 Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed with this Form 10-Q.) Exhibit 31.2 Certification of Senior Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed with this Form 10-Q.) Exhibit 32.1 Certification of President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed with this Form 10-Q.) Exhibit 32.2 Certification of Senior Vice President and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed with this Form 10-Q.)
ONE LIBERTY PROPERTIES, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. One Liberty Properties, Inc. ---------------------------- (Registrant) November 9, 2005 /s/ Fredric H. Gould - ---------------- --------------------------- Date Fredric H. Gould President and Chief Executive Officer (authorized officer) November 9, 2005 /s/ David W. Kalish - ---------------- ---------------------------- Date David W. Kalish Senior Vice President and Chief Financial Officer (principal financial officer)
EXHIBIT 31.1 CERTIFICATION I, Fredric H. Gould, President and Chief Executive Officer of One Liberty Properties, Inc. certify that: 1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005 of One Liberty Properties, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 9, 2005 /s/ Fredric H. Gould ------------------------------- Fredric H. Gould President and Chief Executive Officer
EXHIBIT 31.2 CERTIFICATION I, David W. Kalish, Senior Vice President and Chief Financial Officer of One Liberty Properties, Inc. certify that: 1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005 of One Liberty Properties, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 9, 2005 /s/ David W. Kalish ------------------------ David W. Kalish Senior Vice President and Chief Financial Officer
EXHIBIT 32.1 CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. 1350 (SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002) The undersigned, Fredric H. Gould, President and Chief Executive Officer of One Liberty Properties, Inc., (the "Registrant"), does hereby certify, pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based upon a review of the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005 of the Registrant, as filed with the Securities and Exchange Commission on the date hereof (the "Report"): (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: November 9, 2005 /s/ Fredric H. Gould ----------------------- Fredric H. Gould President and Chief Executive Officer
EXHIBIT 32.2 CERTIFICATION OF SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. 1350 (SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002) The undersigned, David W. Kalish, Senior Vice President and Chief Financial Officer of One Liberty Properties, Inc. (the "Registrant"), does hereby certify, pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based upon a review of the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005 of the Registrant, as filed with the Securities and Exchange Commission on the date hereof (the "Report"): (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: November 9, 2005 /s/ David W. Kalish ----------------------------- David W. Kalish Senior Vice President and Chief Financial Officer