UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 20, 2006
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ONE LIBERTY PROPERTIES, INC.
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(Exact name of Registrant as specified in charter)
Maryland 001-09279 13-3147497
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(State or other (Commission file No.) (IRS Employer
jurisdiction of I.D. No.)
incorporation)
60 Cutter Mill Road, Suite 303, Great Neck, New York 11021
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 516-466-3100
------------
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b)under the
Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
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EXPLANATORY NOTE
On December 21, 2006, the registrant filed a Current Report on Form 8-K
reporting its acquisition of an industrial building leased to Ferguson
Enterprises, Inc. This amendment on Form 8-K/A hereby amends such Form 8-K to
provide the financial information required by Item 9.01.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
(i) Report of Independent Registered Public Accounting Firm 1
(ii) Statement of Revenues and Certain Expenses 2
(iii) Notes to Statement of Revenues and Certain Expenses 3-4
(b) Pro Forma Financial Information (Unaudited).
(i) Pro Forma Consolidated Financial Statements (Unaudited) 5
(ii) Pro Forma Consolidated Balance Sheet (Unaudited) 6
(iii) Pro Forma Consolidated Income Statements (Unaudited) 7-8
(iv) Notes to Pro Forma Consolidated Income Statements (Unaudited) 9-12
(c) Shell Company Transactions.
Not Applicable.
(d) Exhibits.
Not Applicable.
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.
ONE LIBERTY PROPERTIES, INC.
Dated: Great Neck, NY By: /s/ David W. Kalish
March 2, 2007 ---------------------------
David W. Kalish
Senior Vice President and
Chief Financial Officer
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
One Liberty Properties, Inc.
We have audited the statement of revenues and certain expenses of 4501 Hollins
Ferry Road as described in Note 1 to be acquired by OLP Baltimore LLC, a wholly
owned subsidiary of One Liberty Properties, Inc. (the "Company") for the year
ended December 31, 2005. The statement of revenues and certain expenses is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this statement of revenues and certain expenses based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the statement
of revenues and certain expenses is free of material misstatement. We were not
engaged to perform an audit of the Company's internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statement of
revenues and certain expenses, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall statement
of revenues and certain expenses presentation. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with Rule 3-14 of Regulation S-X of the Securities and
Exchange Commission for inclusion in Form 8-K/A of One Liberty Properties, Inc.
and is not intended to be a complete presentation of 4501 Hollins Ferry Road's
revenues and certain expenses.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the revenues and certain expenses of
4501 Hollins Ferry Road as described in Note 1 for the year ended December 31,
2005, in conformity with U.S. generally accepted accounting principles.
New York, New York /s/ Ernst & Young LLP
March 2, 2007
1
4501 Hollins Ferry Road
Statement of Revenues and Certain Expenses
Nine Months Ended Year Ended
September 30, December 31,
2006 2005
---- ----
(unaudited)
Revenues:
Base rents $ 838,958 $1,524,251
Tenant reimbursements 4,996 179,351
---------- ----------
Total revenues 843,954 1,703,602
---------- ----------
Certain expenses:
Property operating expenses 254,434 350,772
------- -------
Total certain expenses 254,434 350,772
------- -------
Revenues in excess of certain expenses $ 589,520 $1,352,830
========== ==========
See accompanying notes.
2
4501 Hollins Ferry Road
Notes to Statement of Revenues and Certain Expenses
1. Organization and Basis of Presentation
Presented herein is the statement of revenues and certain expenses related to
the operation of 4501 Hollins Ferry Road (the "Property"), an industrial
building situated on approximately 28 acres in Baltimore, Maryland. The Property
has approximately 367,000 square feet of leaseable space. The Property was
purchased from FR Hollins Ferry LLC (the "Seller") on December 20, 2006 by OLP
Baltimore, LLC, a wholly owned subsidiary of One Liberty Properties, Inc. (the
"Company").
The accompanying statement of revenues and certain expenses has been prepared in
accordance with the applicable rules and regulations of the Securities and
Exchange Commission for the acquisition of real estate properties. Accordingly,
the statement of revenues and certain expenses exclude certain expenses that may
not be comparable to those expected to be incurred in the future operations of
the aforementioned property. Items excluded consist of interest, depreciation
and amortization.
2. Use of Estimates
The preparation of the statement of revenues and certain expenses in conformity
with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the statement of
revenues and certain expenses and accompanying notes. Actual results could
differ from those estimates.
3. Concentration of Credit Risk
As of June 29, 2006 the Property is leased to a single tenant, Ferguson
Enterprises, Inc. ("Ferguson"). Therefore, the Property's results of
operations are significantly dependent on the overall health of the Tenant.
4. Revenue Recognition
The leases with the tenants are accounted for as operating leases. Base rents
are recognized on a straight-line basis over the lease terms. Prior to June 29,
2006, the leases required that the tenant reimburse the landlord for certain
operating costs and real estate taxes. As of June 29, 2006, the new lease with
Ferguson is on a triple net lease basis.
3
4501 Hollins Ferry Road
Notes to Statement of Revenues and Certain Expenses (Continued)
5. Leases
For the year ending December 31, 2005, the Property was leased in its entirety.
For the six months ending June 29, 2006, only 36% of the Property's rentable
space was leased. On June 29, 2006, the Ferguson lease commenced and was set to
expire March 31, 2022 with four five year options to renew. The rent will
increase every five years based on the consumer price index. The Ferguson lease
provided for a tenant improvement reserve in the amount of $8,500,000. Such
amount has been provided by the Seller and was in escrow at the time of
purchase. Ferguson can draw on this reserve to apply towards the cost of certain
tenant improvement work at portions of the property. Ferguson's base rent will
increase as they draw down on the tenant improvement reserve. Ferguson will be
subject to the full base rent on the sooner of completion of the improvement
work or July 31, 2007. On December 20, 2006, the Seller posted a rental reserve
for the Company's benefit in the amount of $416,500. This rental reserve is
available each month to insure that the Company receives the full base rent
through July 31, 2007. Payments received from the rental reserve will be
recorded as a reduction to building and improvements rather than rental income
in accordance with Emerging Issues Task Force Issue 85-27, "Recognition of
Receipts From Made-up Rental Shortfalls." Ferguson is an indirect subsidiary of
Wolseley PLC (NYSE:WOS). Wolseley PLC is headquartered in the United Kingdom.
6. Future Minimum Rents
Ferguson's future minimum lease payments to be received as of September 30, 2006
under a noncancellable operating lease are as follows:
2006 $ 406,728
2007 1,892,912
2008 2,298,912
2009 2,298,912
2010 2,298,912
2011 2,298,912
Thereafter 23,563,848
-------------
$35,059,136
=============
7. Interim Unaudited Financial Information
The statement of revenues and certain expenses for the nine months ended
September 30, 2006 is unaudited, however, in the opinion of management, all
adjustments (consisting solely of normal, recurring adjustments) necessary for
the fair presentation of the statement of revenues and certain expenses for the
interim period have been included. The results of the interim period are not
necessarily indicative of the results to be obtained for a full fiscal year.
4
One Liberty Properties, Inc.
Pro Forma Consolidated Financial Statements
(Unaudited)
On December 20, 2006, OLP Baltimore LLC, a wholly-owned subsidiary of One
Liberty Properties, Inc. (the "Company") acquired real estate, in an arms length
transaction, which is leased in its entirety by Ferguson Enterprises, Inc., (the
"Tenant") a distributor of plumbing supplies, heaters and cooling equipment
located in Baltimore, Maryland (the "Property"). On October 5, 2006, the Company
sold one theater and the Company's two 50% owned theater joint ventures sold
eight theaters to a single purchaser (also referred to as the "Nine Theaters").
On September 13, 2006, one of the Company's 50% owned theater joint ventures
sold one theater located in Brooklyn, New York (also referred to as the
"Brooklyn Theater").
The unaudited pro forma consolidated balance sheet of the Company as of
September 30, 2006, has been prepared as if the Company's acquisition of the
Property and sale of the Nine Theaters, sold on October 5, 2006, had been
consummated on September 30, 2006. The unaudited pro forma consolidated income
statements for the year ended December 31, 2005 and for the nine months ended
September 30, 2006, are presented as if the Company's acquisition of the
Property, sale of Nine Theaters and the Brooklyn Theater had occurred on January
1, 2005 and the effect was carried forward through the year ended December 31,
2005 and nine month period ended September 30, 2006.
The pro forma consolidated financial statements do not purport to represent what
the Company's financial position or results of operations would have been
assuming the completion of the Company's acquisition of the Property, sale of
Nine Theaters and the Brooklyn Theater had occurred on January 1, 2005, nor do
they purport to project the Company's financial position or results of
operations at any future date or for any future period. These pro forma
consolidated financial statements should be read in conjunction with (a) the
Company's 2005 annual report on Form 10-K and the Company's Quarterly report on
Form 10-Q for the period ended September 30, 2006, (b) the Company's Form 8-K
filed on December 21, 2006 in connection with the acquisition of the Property
and (c) the Company's Form 8-K's filed on October 11, 2006 in connection with
the sale of the Nine Theaters and on September 14, 2006 in connection with the
sale of the Brooklyn Theater.
5
One Liberty Properties, Inc.
Pro Forma Consolidated Balance Sheet (Unaudited)
As of September 30, 2006
(Amounts in thousands)
The
The Company Purchase Sale of Company
Historical of Nine Pro Forma
(A) Property Theaters as Adjusted
---------- -------- -------- -----------
Assets
Real estate investments, at cost:
Land $ 62,869 $ 6,440 (B) $ - $ 69,309
Buildings 269,924 25,760 (B) - 295,684
---------- --------- --------- ---------
332,793 32,200 - 364,993
Less accumulated depreciation 26,425 - - 26,425
---------- --------- --------- ---------
306,368 32,200 - 338,568
Investment in unconsolidated joint ventures 27,600 - (18,964) (C) 8,636
Cash and cash equivalents 7,508 (9,200) (B) 42,067 (C) 40,375
Unbilled rent receivable 7,922 - (157) (D) 7,765
Property held for sale 11,097 - (11,097) (D) -
Escrow, deposits and other receivables 2,223 - - 2,223
Investment in BRT Realty Trust (related party) 853 - - 853
Deferred financing costs 2,925 - (77) (D) 2,848
Other assets 1,760 - - 1,760
Unamortized intangible lease assets 4,549 - (36) (D) 4,513
---------- -------- --------- ---------
$ 372,805 $ 23,000 $ 11,736 $ 407,541
========== ======== ========= =========
Liabilities and stockholders' equity
Mortgages payable $ 196,936 $ 23,000 (B) $ (6,671) (C) $ 213,265
Line of credit 4,000 - (4,000) (C) -
Dividends payable 3,281 - - 3,281
Accrued expenses and other liabilities 3,780 - - 3,780
Unamortized intangible lease liabilities 6,010 - - 6,010
--------- -------- --------- ---------
Total liabilities 214,007 23,000 (10,671) 226,336
--------- -------- --------- ---------
Stockholders' equity:
Common stock 9,802 - - 9,802
Paid-in capital 134,281 - - 134,281
Accumulated other comprehensive income 1,015 - - 1,015
Accumulated undistributed net income 13,700 - 22,407 (D) 36,107
--------- -------- --------- ---------
Total stockholders' equity 158,798 - 22,407 181,205
--------- -------- --------- ---------
$ 372,805 $ 23,000 $ 11,736 $ 407,541
========= ======== ========= =========
See accompanying notes.
6
One Liberty Properties, Inc.
Pro Forma Consolidated Income Statement (Unaudited)
For the Year Ended December 31, 2005
(Amounts in thousands, except per share data)
Pro The
The Purchase Forma Company
Company of Adjust- Sale of Pro Forma
Historical(A) Property (B) ments Theaters as Adjusted
Revenues:
Rental income $ 28,445 $ 1,704 $ - $ (1,213) (F) $ 28,936
--------- --------- ------- -------- ---------
Operating expenses:
Depreciation and amortization 5,664 - 644 (C) (232) (F) 6,076
General and administrative 4,140 - - - 4,140
Real estate expenses 352 351 (351) (D) (8) (F) 344
Leasehold rent 308 - - - 308
--------- --------- -------- --------- ---------
10,464 351 293 (240) 10,868
--------- --------- -------- --------- ---------
Operating income 17,981 1,353 (293) (973) 18,068
Other income and expenses:
Equity in earnings of unconsol-
idated joint ventures 2,102 - - (2,864) (G) (762)
Interest and other income 314 - - - 314
Interest:
Expense (10,192) - (1,350) (E) 707 (F) (10,835)
Amortization of deferred
financing costs (732) - - 6 (F) (726)
Gain on sale of air rights 10,248 - - - 10,248
-------- --------- -------- -------- --------
Income from continuing operations $ 19,721 $ 1,353 $ (1,643) $ (3,124) $ 16,307
======== ========= ======== ======== ========
Income from continuing operations
per common share
basic and diluted: (H) $2.00 $1.66
===== =====
See accompanying notes.
7
One Liberty Properties, Inc.
Pro Forma Consolidated Income Statement (Unaudited)
For the Nine Months Ended September 30, 2006
(Amounts in thousands, except per share data)
Pro The
The Purchase Forma Company
Company of Adjust- Sale of Pro Forma
Historical(A) Property (B) ments Theaters as Adjusted
------------ ----------- ------- -------- -----------
Revenues:
Rental income $ 24,459 $ 844 $ - $ - $ 25,303
--------- ---------- ------- ---------- ---------
Operating expenses:
Depreciation and amortization 5,086 - 483 (C) - 5,569
General and administrative 4,171 - - - 4,171
Real estate expenses 201 254 (254) (D) - 201
Leasehold rent 231 - - - 231
--------- ---------- ------- ---------- ---------
9,689 254 229 - 10,172
--------- ---------- ------- ---------- ---------
Operating income 14,770 590 (229) - 15,131
Other income and expenses:
Equity in earnings of unconsol-
idated joint ventures 1,924 - - (1,899) (F) 25
Gain on disposition of real estate
related to unconsolidated joint venture 3,294 - - (3,294) (G) -
Interest and other income 303 - - - 303
Interest:
Expense (9,154) - (1,010) (E) 54 (H) (10,110)
Amortization of deferred
financing costs (443) - - - (443)
Gain on sale of land and option
to purchase property 412 - - - 412
-------- --------- ------- -------- ---------
Income from continuing operations $ 11,106 $ 590 $ (1,239) $ (5,139) $ 5,318
======== ========== =========== ======== =========
Income from continuing operations
per common share
basic and diluted: (I) $1.12 $.54
===== ====
See accompanying notes.
8
One Liberty Properties, Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. Notes to Pro Forma Consolidated Balance Sheet as of September 30, 2006
(A) To reflect the unaudited consolidated balance sheet of One Liberty
Properties, Inc. (the "Company") as of September 30, 2006, as reported
on the Company's Quarterly Report on Form 10-Q.
(B) To reflect the December 20, 2006 purchase allocation of the Company's
acquisition of an industrial property located in Baltimore, Maryland
(the "Property"), as of September 30, 2006, for approximately $32.2
million. The Company intends to account for the acquisition in
accordance with SFAS 141 and 142 and is currently in the process of
analyzing the fair value of the Property's in-place lease.
Consequently, no value has yet been assigned to the lease in the
accompanying pro forma balance sheet and therefore, the purchase price
allocation is preliminary and subject to change. The Property was
funded with a $23 million first mortgage and the balance was paid in
cash.
(C) To reflect the October 5, 2006 sale of the Company's wholly-owned
theater and the sale of eight theaters owned by two of the Company's
50% owned joint ventures (the "Nine Theaters") as of September 30,
2006, and the resulting cash proceeds.
Company's
Wholly-Owned Joint Venture
Theater Theaters
------------ -------------
Sales price $ 15,227 $136,658
Repayment of mortgage (6,671) (50,829)
Broker's commission (1) (152) (1,277)
Bonus (1) - (90)
Other transactional fees (49) (603)
Prepayment premium and fees (10) (9,708)
Pay off line of credit (4,000) -
-------- --------
Remaining cash proceeds 4,345 $ 74,151
========
Company's anticipated share of
proceeds from Joint Venture
Theaters, including its share of
excess cash held at the joint ventures 37,722 $ 37,722
---------
Net cash proceeds $ 42,067
=========
Company's anticipated equity in net
earnings on sale of theaters 18,758 (D)
--------
Reduction in investment in
unconsolidated joint ventures $ 18,964
========
9
One Liberty Properties, Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited) - Continued
1. Notes to Pro Forma Consolidated Balance Sheet as of September 30, 2006
(Continued)
(1) Broker's commission of $1,429,000 (approximately 1% of the
gross sales price), was paid to a company wholly-owned by
the Chairman of the Board of Directors and Chief
Executive Officer and in which certain executive offices
of the Company are officers and receive compensation. In
addition, a bonus of $90,000 was paid by the joint ventures
to two other officers of the Company, neither of whom
received any compensation from the Company wholly-owned by
the Chairman of the Board of Directors and Chief Executive
Officer.
(D) To reflect the anticipated net earnings and equity in earnings resulting
from the gain on sale of the Nine Theaters.
Joint Venture Theaters:
----------------------
Sales price $ 136,658
Broker's commission (1,277)(2)
Bonus (90)(2)
Other transactional fees (603)
Basis of assets sold (85,611)
---------
Total gain before prepayment premium and fees 49,077
Prepayment premium and fees (9,708)
---------
Net 39,369
Company's equity share 50%
---------
19,685
Adjustment to remaining basis in investment
in unconsolidated joint venture (927) (3)
--------
Anticipated equity in net earnings - Joint Venture Theaters 18,758
Anticipated net earnings - Chula Vista, California Theater 3,649 (1)
---------
Anticipated net earnings and equity
in net earnings on sale of theaters $ 22,407 (4)
=========
(1) Chula Vista, California Theater:
-------------------------------
Sales price $ 15,227
Broker's commission (152)(2)
Other transactional fees (49)
Basis of assets sold (11,367)
---------
Total gain before prepayment premium and fees 3,659
Prepayment premium and fees (10)
---------
Anticipated net earnings on sale of theater $ 3,649
==========
(2) Broker's commission of $1,429,000 (approximately 1% of the
gross sales price), was paid to a company wholly-owned by
the Chairman of the Board of Directors and Chief
Executive Officer and in which certain executive offices
of the Company are officers and receive compensation. In
addition, a bonus of $90,000 was paid by the joint ventures
to two other officers of the Company, neither of whom
received any compensation from the Company wholly-owned by
the Chairman of the Board of Directors and Chief Executive
Officer.
10
One Liberty Properties, Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited) - Continued
1. Notes to Pro Forma Consolidated Balance Sheet as of September 30, 2006
(continued)
(3) To reflect the adjustment for the difference between the
carrying amount of the Company's investment in one joint
venture and the underlying equity in net assets of such joint
venture.
(4) To be reflected in Company's fourth fiscal quarter.
2. Notes to Pro Forma Consolidated Income Statement for the Year Ended December
31, 2005
(A) To reflect the consolidated historical income statement of the
Company for the year ended December 31, 2005, as reported on the
Company's Form 10-K.
(B) To reflect the historical operations of the Property for the year
ended December 31, 2005.
(C) To reflect straight line depreciation for the Property based on
an estimated useful life of 40 years for the year ended December
31, 2005.
(D) To reflect the removal of real estate expenses due to the fact that
the current lease is on a triple net basis (tenant is responsible for
the expenses).
(E) To reflect the interest expense for borrowings under the mortgage
note (interest at 5.79% per annum) and secured by the Property.
(F) To reflect the removal of the results of operations for the Company's
wholly-owned theater, as if it was sold January 1, 2005. In addition,
to adjust for interest expense which would be avoided as a result of
the sale had the sale occurred on January 1, 2005.
(G) To reflect the removal of the Company's equity share of the income
derived from the eight theaters and an additional theater (the
"Brooklyn Theater") sold by two of the Company's joint ventures as if
they were sold on January 1, 2005.
(H) Basic net income per common share is calculated based on
approximately 9,838,000 weighted average common shares outstanding
and diluted net income per common share is calculated based on
approximately 9,843,000 weighted average common shares and common
share equivalents outstanding.
3. Notes to Pro Forma Consolidated Income Statement for the Nine Months
Ended September 30, 2006
(A) To reflect the consolidated historical income statement of the
Company for the nine months ended September 30, 2006, as reported on
the Company's Quarterly Report on Form 10-Q.
(B) To reflect the historical operations of the Property for the nine
months ended September 30, 2006.
11
One Liberty Properties, Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited) - Continued
3. Notes to Pro Forma Consolidated Income Statement for the Nine Months Ended
September 30, 2006 (Continued)
(C) To reflect straight line depreciation for the Property based on
an estimated useful life of 40 years for the year ended
December 31, 2005.
(D) To reflect the removal of real estate expenses due to the fact that
the current lease is on a triple net basis (tenant is responsible for
the expenses).
(E) To reflect the interest expense for borrowings under the mortgage
note (interest at 5.79% per annum) and secured by the Property.
(F) To reflect the removal of the Company's equity share of the income
derived from the eight theaters and the Brooklyn Theater sold by two of
the Company's joint ventures as if they were sold on January 1, 2005.
(G) To reflect the removal of the Company's share of the net gain on
disposition from the sale of the Brooklyn Theater as if it was sold on
January 1, 2005.
(H) To reflect the removal of interest expense which would have been
avoided as a result of the sale of the Nine Theaters and the Brooklyn
Theater had the sales occurred on January 1, 2005.
(I) Basic net income per common share is calculated based on approximately
9,921,000 weighted average common shares outstanding and diluted net
income per common share is calculated based on approximately 9,924,000
weighted average common shares and common share equivalents
outstanding.
12