One Liberty Properties Raises $63 Million From Sale of 12 Assets in 2023

Rhea-AI Summary

One Liberty Properties, Inc. (NYSE: OLP) completes the sale of 12 assets for $63 million in 2023, with an estimated net proceeds of $19 million and an aggregate gain of approximately $9 million. The industrial portfolio is expected to contribute 66% of the 2024 base rent. The company plans to use the proceeds to pay down credit facility balance, for general working capital purposes, and potential property acquisition, mortgage debt reduction, and stock repurchase.

Insights

Financial Analyst

The completion of asset sales by One Liberty Properties, Inc. is a significant financial event that warrants analysis. The sale of 12 assets totaling $63 million in 2023, with a focus on divesting restaurant and retail properties, indicates a strategic shift towards an industrial portfolio. This shift is underscored by the projection that industrial properties will constitute 66% of the company's 2024 base rent.

The net proceeds of approximately $19 million and the recognized aggregate gain of $9 million from the fourth quarter sales enhance the company's financial position. This is further supported by the reduction of the credit facility balance and the anticipated use of remaining proceeds for working capital and potential property acquisitions, debt reduction, or stock repurchases. The investment of sale proceeds in short-term Treasury bills is a conservative approach to manage liquidity in the short term. With $120 million in available liquidity, the company appears well-positioned to execute its strategy.

However, the divestiture of income-generating assets may affect the company's revenue stream in the short term. The reported rental income and operating expense figures for the nine-month period ending September 30, 2023, provide a glimpse into the financial contribution of the sold properties. It is crucial to monitor how the company's revenue composition will change with a larger industrial portfolio and whether this aligns with industry trends towards industrial real estate investment.

Industry Analyst

The real estate industry is witnessing a growing emphasis on industrial properties, driven by e-commerce growth and supply chain demands. One Liberty Properties' strategic pivot towards an industrial portfolio aligns with this trend. The company's estimation that industrial properties will represent a significant portion of its 2024 base rent suggests a focused approach to capitalize on the robust industrial real estate market.

The asset sales and the subsequent financial maneuvers, including paying down debt and preparing for future acquisitions or stock repurchases, reflect proactive financial management. The company's liquidity position, with $120 million available, provides flexibility to navigate market conditions and invest in growth opportunities. The decision to temporarily invest in short-term Treasury bills is a prudent measure to preserve capital while assessing the market for further investments.

From an industry perspective, the move towards industrial assets may offer higher yields and longer lease terms, which are favorable for real estate investment trusts (REITs). However, the success of this strategy will depend on the company's ability to acquire quality industrial assets and manage them effectively in a competitive market landscape.

Real Estate Investment Trust (REIT) Expert

One Liberty Properties, Inc.'s asset sales and strategic realignment towards industrial properties is indicative of broader trends within the REIT sector. The focus on industrial real estate, particularly net-leased industrial properties, is a response to the increased demand for logistics and distribution centers. As a REIT, the company's ability to generate reliable rental income streams is critical and industrial assets often provide stable, long-term leases.

The financial implications of these transactions, including the reduction of debt and the fortification of working capital reserves, are positive indicators for the company's financial health. The strategic use of proceeds to potentially acquire more industrial properties or reduce mortgage debt can lead to a stronger asset base and improved debt profile. Additionally, the repurchase of company stock could signal confidence in the company's valuation and future prospects.

It is essential to consider the impact of these changes on the company's overall portfolio diversification. While a concentrated focus on industrial properties may capitalize on current market demand, it also exposes the company to sector-specific risks. As such, the long-term success of this strategy will hinge on the company's ability to maintain a balanced and resilient portfolio amid changing market conditions.

– Closes On Six Previously Announced Asset Sales in Fourth Quarter –
– Industrial Portfolio Expected to Represent 66% of 2024 Base Rent –

GREAT NECK, N.Y., Dec. 21, 2023 (GLOBE NEWSWIRE) -- One Liberty Properties, Inc. (NYSE: OLP), an owner and manager of a geographically diversified portfolio consisting primarily of net-leased industrial properties, announced that it completed the sale of 12 assets for $63 million in 2023.

During the fourth quarter, the Company closed on previously announced sales of three restaurant properties and two retail properties for an aggregate sales price of $23 million. The Company estimates it will receive approximately $19 million of net proceeds from these sales and recognize an aggregate gain of approximately $9 million. For the nine months ended September 30, 2023, these properties contributed approximately $1.2 million of rental income and $305,000 of operating expense, including $265,000 of depreciation and amortization expense.

In addition, during the fourth quarter, the Company closed on the previously reported sale of a multi-tenant shopping center in Manahawkin, NJ, owned by a joint venture in which the Company has a 50% equity interest. The property was sold for $36.5 million, of which the Company’s share was $18.2 million. After paying down its share of the mortgage debt, the Company received approximately $7.1 million.

The Company anticipates that its industrial portfolio will contribute approximately $47 million, or 66%, of expected 2024 base rent.

The Company used the net proceeds from the fourth quarter transactions to pay down the approximate $7.5 million balance outstanding on its credit facility as of December 1,2023; the Company anticipates that the approximate $19 million sales’ proceeds balance will be used for general working capital purposes and, as market conditions warrant, to acquire properties, reduce mortgage debt and repurchase Company stock. In the short term, the Company anticipates investing the sale proceeds in short-term Treasury bills.

As of December 15, 2023, OLP’s available liquidity was approximately $120 million, including approximately $20 million of cash and cash equivalents (including the credit facility’s required $3 million average deposit maintenance balance) and $100 million available under its credit facility.

Forward-Looking Statements:

Certain information contained in this press release, together with other statements and information publicly disseminated by One Liberty Properties, Inc. is forward looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. 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 estimates of gains from property sales and the use of proceeds from such property sales. One Liberty intends 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 the purpose of complying with these safe harbor provisions. Factors that could cause actual outcomes or other events to differ materially from any such forward-looking statements appear in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 and the Quarterly Reports on Form 10-Q filed thereafter and in particular, the sections of such reports entitled “Risk Factors” and “Management Discussion and Analysis of Financial Condition and Results of Operations.” Estimates of 2024 base rent exclude $235,000 representing our share of base rent from unconsolidated joint ventures and make certain other assumptions, including that we will collect an aggregate of approximately $806,000 in 2024 from non-industrial tenants whose leases may terminate or at which a property may be sold. In addition, estimates of gains and proceeds from property sales are subject to adjustment, among other things, because actual closing costs may differ from the estimated costs, and the net proceeds from the sale of properties described above may be applied in a manner other than as described above. 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.

About One Liberty

One Liberty is a self-administered and self-managed real estate investment trust incorporated in Maryland in 1982. The Company acquires, owns and manages a geographically diversified portfolio consisting primarily of industrial and retail properties. Many of these properties are subject to long-term net leases under which the tenant is typically responsible for the property’s real estate taxes, insurance and ordinary maintenance and repairs.

Contact:
One Liberty Properties
Investor Relations
Phone: (516) 466-3100
www.1liberty.com.

FAQ

How many assets did One Liberty Properties, Inc. (NYSE: OLP) sell in 2023?

One Liberty Properties, Inc. (NYSE: OLP) completed the sale of 12 assets for $63 million in 2023.

What is the expected contribution of the industrial portfolio to the 2024 base rent?

The industrial portfolio is expected to represent 66% of the 2024 base rent for One Liberty Properties, Inc. (NYSE: OLP).

How does the company plan to use the proceeds from the asset sales?

The company plans to use the proceeds to pay down credit facility balance, for general working capital purposes, and potential property acquisition, mortgage debt reduction, and stock repurchase.