One Liberty Properties Inc. Reports Operating Results (10-Q)
One Liberty Properties Inc. has a market cap of $173.8 million; its shares were traded at around $15.27 with and P/S ratio of 4.3. OLP is in the portfolios of Michael Price of MFP Investors LLC, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:We are a party to a credit agreement, as amended, with VNB New York Corp., Bank Leumi, USA, Manufacturers and Traders Trust Company and Israel Discount Bank of New York, for a maximum amount of $62.5 million, under which $27 million is currently outstanding. This credit facility matured on March 31, 2010. We have negotiated a Second Amended and Restated Loan Agreement with our current lenders that reduces permitted borrowings from $62.5 million to $40 million. The documents to consummate the Second Amended and Restated Loan Agreement have been substantially finalized. However, there can be no assurance that the transaction will be consummated.
Rental income increased by $262,000, or 2.7%, to $10.1 million for the three months ended March 31, 2010 from $9.8 million for the three months ended March 31, 2009. The increase in rental income is primarily due to rental revenues of $198,000 earned during the three months ended March 31, 2010 on a neighborhood shopping center we acquired on February 24, 2010.
Equity in earnings of unconsolidated joint ventures decreased by $36,000, or 22.5%, to $124,000 for the three months ended March 31, 2010 from $160,000 for the three months ended March 31, 2009. The decrease results primarily from a $27,000 decrease in rental income at one of our joint venture properties. Also contributing to the decrease is our share of expenses incurred in connection with the possible sale or re-renting of a property where the lease expired April 30, 2010.
Interest expense decreased by $105,000, or 3.1%, to $3.3 million for the three months ended March 31, 2010, from $3.4 million for the three months ended March 31, 2009. This decrease resulted from the payoff in full of three mortgage loans between July 2009 and January 2010, as well as from the monthly principal amortization of other mortgages. In addition, interest expense relating to our line of credit decreased by $36,000 during the three months ended March 31, 2010 due to a decrease in interest rates. These decreases were offset by interest expense on a mortgage assumed in connection with the purchase of a property in February 2010, as well as from fixed rate mortgages placed on two properties in March 2009 and March 2010.
Amortization of deferred financing costs decreased by $114,000, or 44.5%, to $142,000 for the three months ended March 31, 2010. The decrease results primarily from accelerated amortization of deferred financing costs of $118,000 relating to a mortgage loan that was refinanced during the three months ended March 31, 2009.
We have negotiated a Second Amended and Restated Loan Agreement with our lending syndicate to be dated as of March 31, 2010 and the documents have been substantially finalized. The Second Amended and Restated Loan Agreement will reduce the permitted borrowings from $62.5 million to $40 million, extend the expiration date from March 31, 2010 to March 31, 2012, increase the interest rate from the lower of LIBOR plus 2.15% or the bank s prime rate to 90 day LIBOR plus 3%, with a minimum interest rate of 6% per annum. Until the Second Amended and Restated Loan Agreement is executed, our lending syndicate has advised us that our current credit facility will remain in place, but we will not be permitted to draw down any additional funds. Although, we are highly confident that the Second Amended and Restated Loan Agreement will be consummated, there can be no assurance that it will be consummated and our lending syndicate may demand prompt re-payment of the $27 million outstanding under the existing credit facility. If that occurs, we expect to have sufficient liquidity available to us to fully repay the $27 million outstanding. However, if we are unable to fully repay the $27 million outstanding from our cash and cash equivalents and available-for-sale securities and we have been unable to (i) obtain a new credit facility, (ii) secure adequate funds by refinancing existing mortgages and/or mortgaging unencumbered properties, or (iii) unable to raise funds by other means (whether by equity or debt offerings or securing short term financing, etc.), we may be required to sell certain of our properties at prices we may deem inadequate in order to secure funds to repay all amounts outstanding under our existing credit facility.
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