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Financial Services

One Liberty Properties Inc.

11/04/2026 | Press release | Distributed by Public on 11/04/2026 14:40

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, together with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend such forward-looking statements to be covered by the safe harbor provision for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may," "will," "could," "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions or variations thereof and include, without limitation, statements regarding our future estimated base rent, funds from operations, adjusted funds from operations and our dividend. Among other things, forward looking statements with respect to (i) estimates of base rent and rental income exclude variable rent (including tenant reimbursements) and the adjustments required by GAAP to present rental income, (ii) estimates of base rent may not, unless otherwise expressly indicated, reflect the expenses (e.g., real estate expenses, interest, depreciation and amortization or any one or more of the foregoing) with respect to the associated property, (iii) anticipated property purchases, sales, financings and/or refinancings may not be completed during the period or on the terms indicated or at all, (iv) estimates of gains from property sales or proceeds from financing or refinancing transactions are subject to adjustment, among other things, because actual closing costs may differ from the estimated costs and (v) anticipated rent increases, including those tied to filling of vacancies or as a result of market-to-market opportunities (i.e., renewing leased premises at higher rental rates) may not be realized. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, performance or achievements.

The uncertainties, risks and factors which may cause actual results to differ materially from current expectations include, but are not limited to:

●

the financial failure of, or other default in payment by, tenants under their leases and the potential resulting vacancies;

●

adverse changes and disruption in the sectors in which our tenants operate which could impact our tenants' ability to pay rent and expense reimbursement;

●

the level and volatility of interest rates;

●

loss or bankruptcy of one or more of our tenants, and bankruptcy laws that may limit our remedies if a tenant becomes bankrupt and rejects its lease;

●

general economic and business conditions and developments, including those currently affecting or that may affect our economy;

●

general and local real estate conditions, including any changes in the value of our real estate;

●

our ability to renew or re-lease space as leases expire;

●

our ability to pay dividends;

●

the effect of changes in political conditions in the U.S., including in connection with the administration's policies and priorities, or otherwise;

●

changes in governmental laws and regulations relating to real estate and related investments;

●

compliance with credit facility and mortgage debt covenants;

●

the availability of, and costs associated with, sources of capital and liquidity;

●

competition in our industry;

●

technological changes, such as artificial intelligence, autonomous vehicles, reconfiguration of supply chains, robotics, 3D printing or other technologies;

●

potential natural disasters, epidemics, pandemics or outbreak of infectious disease, such as COVID-19, and other potentially catastrophic events such as acts of war and/or terrorism; and

●

the other risks, uncertainties and factors described in the reports and documents we file with the SEC including the risks, uncertainties and factors described in our Annual Report on Form 10-K for the year ended December 31, 2025 (the "Annual Report") under the caption "Item 1A. Risk Factors" for a discussion of certain factors which may cause actual results to differ materially from current.

In light of the factors referred to above, the future events discussed or incorporated by reference in this report and other documents we file with the SEC may not occur, and actual results, performance or achievements could differ materially from those anticipated or implied in the forward-looking statements. Given these uncertainties, you should not rely on any forward-looking statements.

Except as may be required under the U.S. federal securities laws, we undertake no obligation to publicly update our forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make in our reports that are filed with or furnished to the SEC.

Challenges and uncertainties facing the St. Louis Park, Minnesota property

As reported in our Annual Report on Form 10-K for the year ended December 31, 2025, we recorded an impairment charge of $3.3 million with respect to our retail property located at St. Louis Park, Minnesota. Approximately 75% of this property has been vacant since August 2025. Based on the lease in effect at October 1, 2026, we expect this property to generate rental income (excluding tenant reimbursements) of approximately $500,000 for 2026 and, in 2025, we generated $917,000 of rental income (excluding tenant reimbursements) from this property. We estimate that this property will incur unreimbursed real estate expenses of approximately $570,000 during the year ending December 31, 2026. We are pursuing the sale of this property and/or the lease of the vacant space and may be required to take additional impairment(s) with respect thereto.

Overview

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

We acquire, own and manage a geographically diversified portfolio consisting primarily of industrial properties (and in particular, warehouse and distribution facilities). As of September 30, 2026, we own 108 properties with approximately 12.3 million square feet (including 81 industrial properties with approximately 11.1 million square feet) located in 33 states. Based on square footage, our overall occupancy rate at September 30, 2026 is approximately 97.5% and the occupancy rate by property type is: 98.3% for our industrial properties, 87.6% for our retail properties and 100% for our other properties.

We face a variety of risks and challenges in our business, including the possibility we will not be able to: lease our properties on terms favorable to us or at all; collect amounts owed to us by our tenants; renew or re-let, on acceptable terms, leases that are expiring or otherwise terminating; acquire or dispose of properties on acceptable terms; or grow, through acquisitions or otherwise, our property portfolio so as to generate additional net income and cash for distribution.

Other than with respect to our continuing focus on acquiring industrial properties, we generally seek to manage the risk of our real property portfolio and the related financing arrangements by (i) diversifying among locations, tenants, scheduled lease expirations, mortgage maturities and lenders, and (ii) minimizing our exposure to interest rate fluctuations.

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

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

Our Base Rent is approximately $83.1 million; Base Rent represents the base rent payable to us during the twelve months ending September 30, 2027 under leases in effect at October 1, 2026 (excluding tenant reimbursements and after giving effect to any abatements, concessions, deferrals or adjustments). It excludes an aggregate of $1.6 million representing the Base Rent from two industrial and three retail properties which were sold in October 2026 and November 2026 (i.e., Louisville, Kentucky, El Paso, Texas, Amarillo, Texas and Austin, Texas).

The following table sets forth information about our properties by industry sector as of September 30, 2026:


	Number of	Number of	Building				Percentage of
Type of Property	Tenants	Properties	Square Feet		Base Rent (a)		Base Rent
Industrial	107	81	11,127,302		$	71,565,000	86.1
Retail	29	22	891,011			7,816,000	9.4
Other (b)	4	5	250,435			3,736,000	4.5
	140	108	12,268,748		$	83,117,000	100.0

(a)	Our base rent, as reported in our Quarterly Report on Form 10-Q for the period ended September 30, 2025 was $77.4 million.

(b)	Includes an office building, two theaters, a health and fitness center and a restaurant.

The following table sets forth scheduled expirations of leases at our properties as of September 30, 2026 for the years indicated below:


Lease Expirations (a)		Number of		Building					Percentage of
for the twelve months ending September 30,		Leases		Square Feet (b)		Base Rent			Base Rent
2027		21		1,078,202		$	4,762,000		5.7
2028		24		1,484,336			10,078,000		12.1
2029		20		1,938,855			12,946,000		15.6
2030		27		1,631,697			11,973,000		14.4
2031		22		2,079,005			14,639,000		17.6
2032		22		2,005,926			13,190,000		15.9
2033		11		1,033,312			10,017,000		12.1
2034		5		207,607			2,132,000		2.6
2035		1		6,796			117,000		0.1
2036 and thereafter		4		501,996			3,263,000		3.9
		157		11,967,732		$	83,117,000		100.0

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

(b)	Excludes an aggregate of 301,016 square feet of vacant space.

Property Transactions During the Three Months Ended September 30, 2026 and Subsequent Thereto

Acquisitions

Property Acquisition During the Three Months Ended September 30, 2026

On September 23, 2026, we acquired a 100,000 square foot industrial building in Ocala, Florida for $11.3 million, and incurred $64,000 of transaction costs that were capitalized. The Company anticipates, in November 2026, financing this property with new mortgage debt of $6.7 million bearing an interest rate of 6.2% (interest only through maturity) and maturing in 2032. We estimate that for the three months ending December 31, 2026, the rental income (excluding variable lease revenues), depreciation and amortization expense and mortgage interest expense from this property will be $223,000, $134,000 and $66,000, respectively.

Acquisition Contract During the Three Months Ended September 30, 2026

On September 30, 2026, we entered into a contract to purchase for approximately $34.0 million a 277,117 square foot portfolio comprised of four industrial properties located in the Milwaukee, Wisconsin MSA. We anticipate financing this purchase with new mortgage debt of approximately $20.6 million bearing an interest rate of 6.36% (interest only through maturity) and maturing in 2031, and paying the balance of the purchase price from our available cash, including the net proceeds from property sales and, if needed, our line of credit. The properties are leased to seven tenants with a weighted average remaining lease term of approximately six years. We estimate the base rent in 2027 from these tenants will be approximately $2.3 million (with annual base rent increases ranging from 2.0% to 4.1%) and anticipate the closing will occur during the three months ending December 31, 2026.

Sales

Property Sales During the Three Months Ended September 30, 2026

We sold the following properties (dollars in thousands):


					Gain on
			Gross Sales		Sale of Real			Net Proceeds
Description of Property	City, State	Date Sold	Price		Estate, net			on Sale
Men's Wearhouse retail property	Monroeville, Pennsylvania	July 28, 2026	$	2,050	$	887		$	1,942
TVI, Inc. retail property	Chicago, Illinois	September 30, 2026		5,700		-	(a)		4,247
			$	7,750	$	887		$	6,189

(a)	During the three and nine months ended September 30, 2026, we recognized impairment losses of $1.4 million and $1.6 million, respectively, in connection with the sale of this property.

During the nine months ended September 30, 2026 and year ended December 31, 2025, these properties contributed $464,000 and $431,000 of rental income, net, $371,000 and $359,000 of operating expenses (including $91,000 and $83,000 of depreciation and amortization expense and excluding the impairment loss during the nine months ended September 30, 2026), and $0 and $53,000 of mortgage interest expense, respectively.

Property Sales Subsequent to September 30, 2026

We sold the following properties (dollars in thousands):


			Gross		Estimated Gain		Estimated
			Sales		on Sale of Real		Net Proceeds
Description of Property	City, State	Date Sold	Price		Estate, Net		on Sale
HD Supply & Archway Roofing industrial properties	Louisville, Kentucky	October 20, 2026	$	9,163	$	4,280	$	9,138
Office Depot retail property	El Paso, Texas	October 21, 2026		4,308		1,600		4,158
Havertys retail property	Amarillo, Texas	October 28, 2026		5,050		1,760		4,891
Havertys retail property	Austin, Texas	November 2, 2026		6,550		1,008		6,349
			$	25,071	$	8,648	$	24,536

During the nine months ended September 30, 2026 and year ended December 31, 2025, these properties contributed $1.7 million and $2.2 million of rental income, net, $638,000 and $867,000 of operating expenses (including $518,000 and $713,000 of depreciation and amortization expense), and $0 and $36,000 of mortgage interest expense, respectively.

Results of Operations

Total revenues

The following table compares total revenues for the periods indicated:


		Three Months Ended											Nine Months Ended
		September 30,						Increase					September 30,						Increase
(Dollars in thousands)		2026			2025			(Decrease)			% Change		2026			2025			(Decrease)			% Change
Rental income, net		$	26,602		$	23,771		$	2,831		11.9		$	80,565		$	72,420		$	8,145		11.2
Lease termination fees			-			-			-		-			1,327			66			1,261		1,910.6
Total revenues		$	26,602		$	23,771		$	2,831		11.9		$	81,892		$	72,486		$	9,406		13.0

Rental income, net

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


		Three Months Ended											Nine Months Ended
		September 30,						Increase					September 30,						Increase
(Dollars in thousands)		2026			2025			(Decrease)			% Change		2026			2025			(Decrease)			% Change
Acquisitions (a)		$	5,570		$	2,202		$	3,368		153.0		$	16,247		$	5,277		$	10,970		207.9
Dispositions (b)			169			830			(661)		(79.6)			1,425			5,048			(3,623)		(71.8)
Same store (c)			20,863			20,739			124		0.6			62,893			62,095			798		1.3
Rental income, net		$	26,602		$	23,771		$	2,831		11.9		$	80,565		$	72,420		$	8,145		11.2

(a)	Represents rental income from 25 properties acquired since January 1, 2025.

(b)	Represents rental income from 15 properties sold since January 1, 2025.

(c)	Represents rental income from 83 properties that were owned for the entirety of the periods presented.

Changes at same store properties

The changes in same store rental income during the three and nine months ended September 30, 2026 are due primarily to increases of:

$409,000 and $1.1 million, respectively, due to new tenants at several properties,

$195,000 and $958,000, respectively, from lease amendments and/or extensions at several properties, and

$303,000, in the nine months ended September 30, 2026, related to the write-off of a tenant's unamortized intangible lease liability due to renewal options that were not exercised.

The increases were offset during the three and nine months ended September 30, 2026 by decreases in rental income of:

$518,000 and $1.4 million, respectively, from lease expirations at various properties, several of which we have entered into new leases with replacement tenants, and

$182,000, in the nine months ended September 30, 2026, from tenant reimbursements, primarily related to real estate tax expenses generally incurred during such period.

Lease termination fees

In March 2026, we recognized an aggregate of $1.3 million from two industrial tenants in lease buy-out transactions; we replaced such tenancies on economic terms more favorable to us than those of the terminating tenancies.

Operating Expenses

The following table compares operating expenses for the periods indicated:


		Three Months Ended											Nine Months Ended
		September 30,						Increase					September 30,						Increase
(Dollars in thousands)		2026			2025			(Decrease)			% Change		2026			2025			(Decrease)			% Change
Operating expenses:
Depreciation and amortization		$	8,311		$	6,698		$	1,613		24.1		$	25,339		$	20,070		$	5,269		26.3
Real estate expenses			5,281			4,824			457		9.5			15,922			14,753			1,169		7.9
General and administrative			4,288			4,128			160		3.9			12,616			12,236			380		3.1
Impairment losses			1,422			1,300			122		9.4			1,564			1,300			264		20.3
State tax expense			30			29			1		3.4			210			2			208		10,400.0
Total operating expenses		$	19,332		$	16,979		$	2,353		13.9		$	55,651		$	48,361		$	7,290		15.1

Depreciation and amortization. The increases in the three and nine months ended September 30, 2026 are due primarily to $1.9 million and $6.3 million, respectively, from the properties acquired since January 1, 2025.

The increases were offset primarily by the inclusion, in the corresponding 2025 periods, of $305,000 and $996,000, respectively, from the properties sold since January 1, 2025.

Real estate expenses. The increases in the three and nine months ended September 30, 2026 are due primarily to $679,000 and $2.4 million, respectively, from the properties acquired since January 1, 2025.

The increases were offset primarily by the inclusion, in the corresponding 2025 periods, of $275,000 and $1.2 million, respectively, from the properties sold since January 1, 2025.

A substantial portion of real estate expenses is rebilled to tenants and is included in Rental income, net, on the consolidated statements of income. The portion of real estate expenses not reimbursed by our tenants was approximately $780,000 and $2.6 million for the three and nine months ended September 30, 2026, respectively, and $840,000 and $2.4 million for the three and nine months ended September 30, 2025, respectively.

General and administrative. The increase in the nine months ended September 30, 2026 is due primarily to increases of (i) $210,000 in payroll and payroll-related expenses related to higher compensation levels, (ii) $177,000 in professional fees and (iii) $103,000 payable pursuant to the compensation and services agreement. The increase was offset by a decrease in non-cash compensation expense of $133,000 related to reduced expectations as to the vesting of our RSUs.

Impairment losses. During the three and nine months ended September 30, 2026, we recorded impairment losses of $1.4 million and $1.6 million, respectively, at our former Chicago, Illinois property. During the three and nine months ended September 30, 2025, we recorded a $1.3 million impairment loss at our former Beachwood, Ohio property (see Note 5 to our consolidated financial statements).

State tax expense. During the nine months ended September 30, 2025, our state tax expense was offset by a $135,000 refund from Tennessee related to franchise taxes paid in 2023, as the state amended the method of calculating such taxes, resulting in an overpayment in such year.

Gain on sale of real estate, net

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

Three Months Ended

Nine Months Ended

September 30,

Increase

September 30,

Increase

(Dollars in thousands)

 

2026

 

2025

 

(Decrease)

 

% Change

2026

 

2025

 

(Decrease)

 

% Change

 

Gain on sale of real estate, net

887

9,071

(8,184)

(90.2)

18,196

16,712

1,484

8.9

The following table lists the sold properties and the related gains (loss), net, for the periods indicated (see Note 5 to our consolidated financial statements):


		Three Months Ended										Nine Months Ended
		September 30,						Increase			%	September 30,						Increase			%
(Dollars in thousands)		2026			2025			(Decrease)			Change	2026			2025			(Decrease)			Change
Retail property - Monroeville, Pennsylvania		$	887		$	-						$	887		$	-
Retail property - Chicago, Illinois (a)			-			-							-			-
Multi-tenant retail property - El Paso, Texas			-			-							9,989			-
Multi-tenant retail property - Champaign, Illinois			-			-							3,326			-
Retail property - South Euclid, Ohio			-			-							118			-
Retail property - Newport News, Virginia			-			-							1,358			-
Vacant retail property - Cary, North Carolina			-			-							2,518			-
Land parcel - Lakewood, Colorado (b)			-			2,849							-			2,849
Retail property - Eugene, Oregon			-			2,497							-			2,497
Veterinary hospital - Newark, Delaware			-			3,236							-			3,236
Vacant retail property - Bolingbrook, Illinois			-			489							-			489
Retail property - Gurnee, Illinois			-			-							-			1,023
Retail property - Greensboro, North Carolina			-			-							-			2,232
Multi-tenant retail stores - Lakewood, Colorado (b)			-			-							-			3,276
Restaurant property - Concord, North Carolina			-			-							-			1,154
Land and improvements - Lakewood, Colorado (b)			-			-							-			(44)
Total Gain on sale of real estate, net		$	887		$	9,071		$	(8,184)		(90.2)	$	18,196		$	16,712		$	1,484		8.9

(a)	We recorded impairment losses of $1.4 million and $1.6 million during the three and nine months ended September 30, 2026, respectively, in connection with the sale of this property.

(b)	These parcels were part of a property which was owned by a consolidated joint venture in which we held a 90% interest. For the three and nine months ended September 30, 2025, the non-controlling interest's share of the net gain on these sales was $641 and $1,609, respectively.

Other Income and Expenses

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


		Three Months Ended										Nine Months Ended
		September 30,						Increase			%	September 30,						Increase			%
(Dollars in thousands)		2026			2025			(Decrease)			Change	2026			2025			(Decrease)			Change
Other income and expenses:
Other income		$	53		$	109		$	(56)		(51.4)		103			511			(408)		(79.8)
Equity in earnings from sale of unconsolidated joint venture properties			-			991			(991)		(100.0)		-			991			(991)		(100.0)
Interest:
Expense			(6,795)			(5,617)			1,178		21.0		(20,613)			(16,896)			3,717		22.0
Amortization and write-off of deferred financing costs			(311)			(241)			70		29.0		(918)			(751)			167		22.2

Other income. The decrease in the nine months ended September 30, 2026 is due to the inclusion, in the corresponding period of 2025, of (i) interest income from a seller-financing receivable that was repaid in June 2025, (ii) equity in earnings from two unconsolidated joint venture properties in Savannah, Georgia, that were sold in August 2025 and (iii) income from more investments in short-term U.S. treasury bills.

Equity in earnings from sale of unconsolidated joint venture properties. The three and nine months ended September 30, 2025 include our 50% share of the gain on the sales of our two Savannah, Georgia joint venture properties which were sold in August 2025. (See Note 5 to our consolidated financial statements).

Interest expense. The following table compares interest expense for the periods indicated:


		Three Months Ended										Nine Months Ended
		September 30,						Increase			%	September 30,						Increase			%
(Dollars in thousands)		2026			2025			(Decrease)			Change	2026			2025			(Decrease)			Change
Interest expense:
Mortgage interest		$	6,724		$	5,544		$	1,180		21.3	$	19,939		$	16,508		$	3,431		20.8
Credit line interest			71			73			(2)		(2.7)		674			388			286		73.7
Total		$	6,795		$	5,617		$	1,178		21.0	$	20,613		$	16,896		$	3,717		22.0

Mortgage interest

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


		Three Months Ended										Nine Months Ended
		September 30,						Increase			%	September 30,						Increase			%
(Dollars in thousands)		2026			2025			(Decrease)			Change	2026			2025			(Decrease)			Change
Weighted average principal amount		$	538,968		$	456,187		$	82,781		18.1	$	534,152		$	459,835		$	74,317		16.2
Weighted average interest rate			4.97	%		4.79	%		0.18	%	3.7		4.95	%		4.74	%		0.21	%	4.4

The increases in mortgage interest in the three and nine months ended September 30, 2026 are due to increases in the weighted average principal amount of mortgage debt outstanding and, to a lesser extent, the weighted average interest rate.

Credit line interest

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


	Nine Months Ended
	September 30,						Increase			%
(Dollars in thousands)	2026			2025			(Decrease)			Change
Weighted average principal amount	$	12,421		$	4,516		$	7,905		175.0
Weighted average interest rate		5.42	%		6.07	%		(.65)	%	(10.7)

The increase in credit line interest in the nine months ended September 30, 2026 is due to the increase in the weighted average principal amount of credit line debt outstanding, offset by the decrease in the weighted average interest rate.

Liquidity and Capital Resources

Our sources of liquidity and capital include cash flow from operations, cash and cash equivalents, borrowings under our credit facility, refinancing existing mortgage loans, obtaining mortgage loans secured by our unencumbered properties, issuance of our equity securities and property sales. Our available liquidity at October 30, 2026, was $104.8 million, including $21.0 million of cash and cash equivalents (including the credit facility's required minimum $3.0 million average deposit maintenance balance) and up to $83.8 million available thereunder.

Liquidity and Financing

We expect to meet our short-term (i.e., one year or less) and long-term (i) operating cash requirements (including debt service and anticipated dividend payments) principally from cash flow from operations, our available cash and cash equivalents, proceeds from and, to the extent permitted and needed, our credit facility and (ii) investing and financing cash requirements (including an estimated aggregate of $600,000 of capital expenditures and, subject to market and other conditions, repurchasing our shares under our share repurchase program) from the foregoing, as well as property financings and property sales.

At September 30, 2026, we had 58 outstanding mortgages payable secured by 72 properties in the aggregate principal amount of $538.4 million (before netting unamortized deferred financing costs of $4.5 million and mortgage intangibles of $427,000). These mortgages represent first liens on individual real estate investments with an aggregate carrying value of $826.6 million, before accumulated depreciation of $139.1 million. The mortgage payments bear interest at fixed rates ranging from 3.05% to 6.42% (a 4.98% weighted average interest rate) and mature between 2027 and 2047 (a 5.3 year weighted average remaining term to maturity).

The following table sets forth, as of September 30, 2026, information with respect to our mortgage debt:


		For the Three
		Months Ending			For the Years Ending
		December 31,			December 31,
(Dollars in thousands)		2026			2027			2028			2029			Total
Amortization payments		$	2,812		$	10,279		$	9,654		$	7,601		$	30,346
Principal due at maturity			-			38,525			30,155			79,386			148,066
Total		$	2,812		$	48,804		$	39,809		$	86,987		$	178,412

Weighted average interest rate on principal due at maturity			-			3.64	%		4.64	%		4.41	%		4.26	%

(1)

We intend to make debt amortization payments from operating cash flow and although no assurance can be given that we will be successful in this regard, generally intend to refinance, extend or pay off the mortgage loans which mature from 2027 through 2029. We generally intend to repay the amounts not refinanced or extended from our existing funds and other sources of funds, including our available cash, proceeds from the sale of our common stock and our credit facility (to the extent available).

We continually seek to refinance existing mortgage loans on terms we deem acceptable to generate additional liquidity. Additionally, in the normal course of our business, we sell properties when we determine that it is in our best interests, which also generates additional liquidity. Further, although we have done so infrequently and primarily in the context of a tenant default at a property for which we have not found a replacement tenant, if we believe we have negative equity in a property subject to a non-recourse mortgage loan, we may convey such property to the mortgagee to terminate our mortgage obligations, including payment of interest, principal and real estate taxes, with respect to such property.

We utilize funds from our credit facility, as needed, to acquire a property and, thereafter secure long-term, fixed rate mortgage debt on such property. We apply the proceeds from the mortgage loan to repay borrowings under the credit facility, thus providing us with the ability to re-borrow under the credit facility for the acquisition of additional properties.

Credit Facility

Our credit facility with Manufacturers and Traders Trust Company and Valley National Bank provides that subject to borrowing base requirements, we can borrow up to $100.0 million for general corporate purposes. The facility is scheduled to mature on December 31, 2029, subject to a built-in right to extend such maturity to December 31, 2030, upon satisfaction of certain conditions and payment of a nominal extension fee. The facility bears interest equal to 30-day SOFR plus the applicable margin, which ranges from 175 basis points if our ratio of total debt to total value (as calculated pursuant to the credit facility) is equal to or less than 50%, increasing to a maximum of 250 basis points if such ratio is greater than 55%. As of September 30, 2026, the applicable margin was 175 basis points. There is an unused facility fee ranging from 0.20% to 0.25% per annum on the difference between $100.0 million and the outstanding loan balance. The credit facility requires the maintenance of at least $3.0 million in average deposit balances with the credit facility's administrative agent. The facility also includes an accordion feature pursuant to which we can request up to three increases in the total commitments by an amount not to exceed $50.0 million in the aggregate, subject to satisfaction of specified conditions.

The facility includes certain restrictions and covenants which limit, among other things, the incurrence of liens, and which require ongoing compliance with certain financial ratios relating to, among other things, the minimum amount of tangible net worth, the minimum amount of debt service coverage, the minimum amount of fixed charge coverage, the maximum amount of total debt to total value and the minimum value of unencumbered properties and the number of such properties. The facility also contains certain investment limitations. Net proceeds received from the sale, financing or refinancing of properties are generally required to be used to repay amounts outstanding thereunder if proceeds of the facility were used to purchase or refinance such property.

Application of Critical Accounting Estimates

A complete discussion of our critical accounting estimates is included in our Annual Report. There have been no changes in such estimates.

Funds from Operations and Adjusted Funds from Operations

We compute funds from operations, or FFO, in accordance with the "White Paper on Funds From Operations" issued by the National Association of Real Estate Investment Trusts ("NAREIT") and NAREIT's related guidance. FFO is defined in the White Paper as net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment write-downs of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. In computing FFO, we do not add back to net income the amortization of costs in connection with our financing activities or depreciation of non-real estate assets.

We compute adjusted funds from operations, or AFFO, by adjusting FFO for straight-line rent accruals and amortization of lease intangibles, deducting from income (i) additional rent from a ground lease tenant, (ii) income on settlement of litigation, (iii) income on insurance recoveries from casualties, (iv) lease termination and assignment fees, and adding back to income (i) amortization of restricted stock and restricted stock unit compensation expense, (ii) amortization of costs in connection with its financing activities (including its share of its unconsolidated joint ventures), (iii) debt prepayment costs, (iv) amortization of lease incentives and (v) amortization of mortgage intangible assets. Since the NAREIT White Paper does not provide guidelines for computing AFFO, the computation of AFFO varies from one REIT to another.

We believe that FFO and AFFO are useful and standard supplemental measures of the operating performance for equity REITs and are used frequently by securities analysts, investors and other interested parties in evaluating equity REITs, many of which present FFO and AFFO when reporting their operating results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization of real estate assets, which assumes that the value of real estate assets diminish predictability over time. In fact, real estate values have historically risen and fallen with market conditions. As a result, we believe that FFO and AFFO provide a performance measure that when compared year over year, should reflect the impact to operations from trends in occupancy rates, rental rates, operating costs, interest costs and other matters without the inclusion of depreciation and amortization, providing a perspective that may not be necessarily apparent from net income. We also consider FFO and AFFO to be useful to us in evaluating potential property acquisitions.

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

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

The tables below provide a reconciliation of net income and net income per common share (on a diluted basis) in accordance with GAAP to FFO and AFFO for the periods indicated (dollars in thousands, except per share amounts):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2026		2025		2026			2025
GAAP net income attributable to One Liberty Properties, Inc.	$	1,096	$	10,478	$	22,991		$	23,064
Add: depreciation and amortization of properties		8,094		6,492		24,680			19,437
Add: impairment losses		1,422		1,300		1,564			1,300
Add: amortization of deferred leasing costs		217		206		659			633
Deduct: gain on sale of real estate, net		(887)		(9,071)		(18,196)			(16,712)
Deduct: equity in earnings from sale of unconsolidated joint venture properties		-		(991)		-			(991)
Adjustments: non-controlling interests and our share of unconsolidated joint ventures		(5)		643		(14)			1,594
NAREIT funds from operations applicable to common stock		9,937		9,057		31,684			28,325
Add: amortization of restricted stock and RSU compensation		1,394		1,399		3,908			4,041
Add: amortization and write-off of deferred financing costs		311		241		918			751
Add: amortization of mortgage intangible assets and lease incentives		58		58		174			186
Deduct: lease termination fees		-		-		(1,327)			(66)
Deduct: straight-line rent accruals and amortization of lease intangibles		(693)		(650)		(2,582)			(1,909)
Deduct: other income and income on settlement of litigation		-		(27)		(19)			(82)
Adjustments: non-controlling interests and our share of unconsolidated joint ventures		-		(6)		-			(43)
Adjusted funds from operations applicable to common stock	$	11,007	$	10,072	$	32,756		$	31,203


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2026			2025		2026			2025
GAAP net income attributable to One Liberty Properties, Inc.	$	.04		$	.48	$	1.04		$	1.05
Add: depreciation and amortization of properties		.38			.31		1.13			.90
Add: impairment losses		.06			.06		.07			.06
Add: amortization of deferred leasing costs		.01			.01		.03			.03
Deduct: gain on sale of real estate, net		(.04)			(.42)		(.83)			(.77)
Deduct: equity in earnings from sale of unconsolidated joint venture properties		-			(.05)		-			(.05)
Adjustments: non-controlling interests and our share of unconsolidated joint ventures		-			.03		-			.08
NAREIT funds from operations per share of common stock (a)		.45			.42		1.44			1.30
Add: amortization of restricted stock and RSU compensation		.06			.06		.18			.19
Add: amortization and write-off of deferred financing costs		.01			.01		.04			.03
Add: amortization of mortgage intangible assets and lease incentives		-			-		.01			-
Deduct: lease termination fees		-			-		(.06)			-
Deduct: straight-line rent accruals and amortization of lease intangibles		(.02)			(.03)		(.12)			(.08)
Deduct: other income and income on settlement of litigation		-			-		-			-
Adjustments: non-controlling interests and our share of unconsolidated joint ventures		-			-		-			-
Adjusted funds from operations per share of common stock (a)	$	.50		$	.46	$	1.49		$	1.44

(a)	The weighted average number of diluted common shares used to compute FFO and AFFO applicable to common stock includes unvested restricted shares that are excluded from the computation of diluted EPS.

Three months ended September 30, 2026 and 2025

The $880,000, or 9.7%, increase in FFO for the three months ended September 30, 2026 from the corresponding 2025 period is due primarily to the $2.8 million increase in rental income.

Offsetting the increase is a:

●

$1.2 million increase in interest expense,

●

$457,000 increase in real estate operating expenses, and

●

$160,000 increase in general and administrative expenses.

The $935,000, or 9.3%, increase in AFFO for the three months ended September 30, 2026 from the corresponding 2025 period is due primarily to the factors impacting FFO as described immediately above.

Nine months ended September 30, 2026 and 2025

The $3.4 million, or 11.9%, increase in FFO for the nine months ended September 30, 2026 from the corresponding 2025 period is due primarily to a:

●

$8.1 million increase in rental income, net, and

●

$1.3 million increase in lease termination fee income.

Offsetting the increase is a:

●

$3.7 million increase in interest expense,

●

$1.2 million increase in real estate operating expenses,

●

$408,000 decrease in other income,

●

$380,000 increase in general and administrative expenses, and

●

$208,000 increase in state tax expense.

The $1.6 million, or 5.0%, increase in AFFO for the nine months ended September 30, 2026 from the corresponding 2025 period is due primarily to the factors impacting FFO as described immediately above, excluding (i) the $1.3 million increase in lease termination fee income, (ii) a $685,000 decrease (to $7.5 million) in rental income, net, due to the exclusion of the amortization of straight line rent and lease-related intangibles and (iii) a $133,000 increase (to $513,000) in general and administrative expenses due to the exclusion of the amortization of restricted stock and RSU compensation.

See "-Results of Operations" for further information regarding these changes.

Diluted per share net income, FFO and AFFO were impacted negatively in the three and nine months ended September 30, 2026 compared to the corresponding quarters in the prior year by an average increase of approximately 224,000 and 230,000, respectively, in the weighted average number of shares of common stock outstanding as a result of stock issuances in connection with the equity incentive and dividend reinvestment programs.

One Liberty Properties Inc. published this content on November 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 04, 2026 at 20:40 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]