Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We are a self-administered and self-managed REIT focused on acquiring, owning and managing a geographically diversified portfolio consisting primarily of industrial properties. As of February 1, 2026 and after giving effect to the ten industrial properties we acquired in January 2026, we own 113 properties with approximately 12.5 million square feet, including 79 industrial properties with approximately 11.0 million square feet, and we anticipate that our industrial properties will generate approximately 81.6% of our 2026 base rent.
General Challenges and Uncertainties
In addition to the challenges and uncertainties described under “Cautionary Note Regarding Forward-Looking Statements”, and “Item 1A. Risk Factors”, we, among other things, face additional challenges and uncertainties, 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 rental and net income. If we are unable to address these challenges successfully, we may be unable to sustain our current level of dividend payments.
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. As a result, as of December 31, 2025:
● the weighted average remaining term on our leases is 4.4 years,
● substantially all of our mortgage debt bears interest at fixed rates, and
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.
We monitor, on an ongoing basis, our expiring leases and generally approach tenants with expiring leases (including those subject to renewal options) at least a year prior to lease expiration to determine their interest in renewing their leases. During the three years ending December 31, 2028, 70 leases for 64 tenants at 47 properties representing $30.9 million, or 37.4%, of 2026 base rent expire.
In acquiring properties, we balance an evaluation of the terms of the leases and the credit of the existing tenants with a fundamental analysis of the real estate to be acquired, which analysis takes into account, among
27
Table of Contents
other things, the estimated value of the property, local demographics and the ability to re-rent or dispose of the property on favorable terms upon lease expiration or early termination.
2025 Activities
In 2025, we:
Recent Developments
We purchased, on January 29, 2026, a 637,633 square foot portfolio comprised of ten industrial properties (the “Portfolio Acquisition”) located in seven markets (i.e., Greensboro, North Carolina, Columbia, South Carolina, Birmingham, Alabama, Omaha, Nebraska, Oklahoma City, Oklahoma, Salt Lake City, Utah and Jackson, Mississippi) and leased to six tenants (i.e., Mondelez Global, Husqvarna U.S. Holdings, L&W Supply Corporation, Owens & Minor Distribution, Bimbo Bakeries USA, and HABE USA), for $56.7 million, including new mortgage debt on six of the properties of $17.0 million bearing an interest rate of 5.53% and maturing in 2033. We also borrowed $30.0 million from our credit facility (which bears a fluctuating interest rate of 5.45% at January 29, 2026) in connection with this purchase. We anticipate paying down our credit facility debt from the net proceeds of property sales and mortgage financing on two of the unencumbered properties included in the Portfolio Acquisition. As of January 29, 2026, the base rent in 2026 for these properties is approximately $2.8 million, and we estimate that after giving effect to anticipated lease renewals (as to which no assurance can be provided), the 2026 base rent for these properties will be approximately $3.6 million. We also estimate that in 2026, these properties will generate $2.6 million of interest expense (including $1.7 million of such expense from the credit facility assuming an interest rate of 5.45% and that $30.0 million remains outstanding thereon).
As of February 27, 2026, $30.0 million is outstanding under our credit facility bearing a floating rate of interest of 5.42% per year.
Pending Transactions
We entered into a contract in:
28
Table of Contents
Comparison of Years Ended December 31, 2025 and 2024
Results of Operations -
Revenues
The following table compares total revenues for the periods indicated:
Year Ended December 31, Increase
(Dollars in thousands) 2025 2024 (Decrease) % Change
Rental income, net.
The following table details the components of rental income, net, for the periods indicated:
Year Ended December 31, Increase
(Dollars in thousands) 2025 2024 (Decrease) % Change
Changes at same store properties
The increase in same store rental income is due to increases of:
The increase was offset by decreases in rental income of $2.0 million from leases that expired in 2024 and 2025 at several properties.
Lease Termination Fees
In 2024, a consolidated joint venture in Lakewood, Colorado, in which we held a 90% interest, received a lease termination fee of $250,000 from a tenant due to the early termination of its lease in connection with the sale of the related restaurant parcel. We anticipate recognizing, during the quarter ending March 31, 2026, aggregate lease termination fees of approximately $1.3 million, and that in the aggregate, we will replace such tenancies on economic terms more favorable to us than those of the terminating tenancies.
29
Table of Contents
Operating Expenses
The following table compares operating expenses for the periods indicated:
Year Ended December 31, Increase
(Dollars in thousands) 2025 2024 (Decrease) % Change
Operating expenses:
Depreciation and amortization. The increase is due primarily to:
- $415,000 of depreciation from improvements at several same store properties.
The increase was offset by:
Real estate expenses.
The increase is primarily due to:
The increase was offset primarily by a $1.1 million decrease related to properties sold in 2024 and 2025.
A substantial portion of real estate expenses (i.e., $16.6 million and $14.8 million in 2025 and 2024, respectively) are rebilled to tenants and are included in Rental income, net, on the consolidated statements of income.
General and administrative. The increase in 2025 is due primarily to increases of (i) non-cash expense of $371,000 from the re-assessment of the achievability of performance metrics related to the RSUs and (ii) $208,000 due to higher levels of compensation and compensation-related expense. The balance of the increase is due to various factors, none of which was individually significant.
Impairment losses. During 2025, we recorded an aggregate impairment loss of $4.6 million at our St. Louis Park, Minnesota and Beachwood, Ohio properties. During 2024, we recorded a $1.1 million impairment loss at our former Hamilton, Ohio property. (See Note 5 to our consolidated financial statements).
30
Table of Contents
Gain on sale of real estate, net
The following table lists the sold properties and related gains, net, for the periods indicated:
Year Ended
December 31,
Retail property - Bluffton, South Carolina $ 1,617 $ —
Retail property - Port Clinton, Ohio 225 —
Land - Beachwood, Ohio (a) 135
Vacant retail property - Bolingbrook, Illinois 489 —
Veterinary hospital - Newark, Delaware 3,236 —
Retail property - Eugene, Oregon 2,497 —
Land parcel - Lakewood, Colorado (b) 2,849 —
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) —
Restaurant parcel - Lakewood, Colorado (b) — 1,784
Restaurant property - Kennesaw, Georgia — 964
Industrial property - Miamisburg, Ohio — 1,507
Retail property - Wichita, Kansas — 1,884
Retail property - Lawrence, Kansas — 43
Retail property - Cape Girardeau, Missouri (c) — 978
Vacant retail property - Kennesaw, Georgia — 2,072
Vacant health and fitness property - Hamilton, Ohio (d) — 17
Vacant industrial property - Wauconda, Illinois — 1,177
Retail property - Woodbury, Minnesota — 921
Retail property - Hilliard, Ohio — 224
Health and fitness property - Secaucus, New Jersey — 6,436
Total Gain on sale of real estate, net $ 18,689 $ 18,007
31
Table of Contents
Other Income and Expenses
The following table compares other income and expenses for the periods indicated:
Year Ended December 31, Increase
(Dollars in thousands) 2025 2024 (Decrease) % Change
Other income and expenses:
Income on settlement of litigation 1,300 — 1,300 n/a
Interest:
Equity in earnings from sale of unconsolidated joint venture properties. The 2025 results reflect 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 7 to our consolidated financial statements).
Income on settlement of litigation. During the quarter ended December 31, 2025, we received $1.3 million in connection with the settlement of a lawsuit at our former Beachwood, Ohio property. (See Note 13 to our consolidated financial statements).
Other income. The change in 2025 is due to a decrease of $478,000 in interest income primarily from the decrease in amounts available for investment in short-term U.S. treasury bills.
Interest expense. The following table compares interest expense for the periods indicated:
Year Ended December 31, Increase
(Dollars in thousands) 2025 2024 (Decrease) % Change
Interest expense:
Mortgage interest
The following table reflects the weighted average interest rate on the weighted average principal amount of outstanding mortgage debt during the applicable year:
Year Ended December 31, Increase
(Dollars in thousands) 2025 2024 (Decrease) % Change
Weighted average interest rate 4.75 % 4.47 % 0.28 % 6.3
The increase in 2025 is due primarily to the increases in the weighted average principal amount of mortgage debt outstanding and weighted average interest rate. Among other things, the mortgages (i) that we refinanced generally bore a higher interest rate than the mortgages we paid off and (ii) obtained in connection with acquisitions generally bore a higher rate of interest than the mortgages on properties we sold.
We estimate that after giving effect to the Portfolio Acquisition, that mortgage interest expense in 2026 will be approximately $25.9 million.
32
Table of Contents
Credit facility interest
During 2025, the weighted average interest rate was 6.07% and the weighted average principal amount outstanding was $3.4 million.
We estimate that after giving effects to the Portfolio Acquisition, that in 2026, interest expense on our credit facility will be approximately $1.7 million (assuming an interest rate of 5.45% as of January 29, 2026 and that there are no paydowns or drawdowns on the facility).
During 2024, there was no balance outstanding and the interest expense of $254,000 constitutes the unused facility fee.
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) 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 predictably 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 in evaluating potential property acquisitions.
FFO and AFFO do not represent net income or cash flows from operating, investing or financing activities as defined by GAAP. FFO and AFFO should not be considered to be an alternative to net income as a reliable measure of our operating performance; nor 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.
33
Table of Contents
The following tables 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 years indicated (dollars in thousands, except per share amounts):
Year Ended
December 31,
Add: depreciation and amortization of properties 26,354 23,495
Add: impairment losses 4,593 1,086
Add: amortization of deferred leasing costs 842 796
Deduct: gain on sale of real estate, net (18,689) (18,007)
Adjustments for non-controlling interests 1,567 206
NAREIT funds from operations applicable to common stock 39,171 38,027
Deduct: lease termination fees (66) (250)
Add: amortization of restricted stock and RSU compensation 5,333 4,962
Add: amortization and write-off of deferred financing costs 1,005 968
Add: amortization of lease incentives 107 119
Add: amortization of mortgage intangible assets 137 137
Adjustments for non-controlling interests (14) 30
Adjusted funds from operations applicable to common stock $ 41,556 $ 41,157
Year Ended
December 31,
GAAP net income attributable to One Liberty Properties, Inc. $ 1.15 $ 1.40
Add: depreciation and amortization of properties 1.23 1.10
Add: impairment losses .21 .05
Add: amortization of deferred leasing costs .04 .04
Deduct: gain on sale of real estate, net (.86) (.84)
Adjustments for non-controlling interests .08 .02
NAREIT funds from operations per share of common stock (a) 1.80 1.77
Deduct: lease termination fees — (.01)
Deduct: other income and income on settlement of litigation (.06) (.01)
Add: amortization of restricted stock and RSU compensation .24 .23
Add: amortization and write-off of deferred financing costs .05 .04
Add: amortization of lease incentives — .01
Add: amortization of mortgage intangible assets .01 .01
Adjustments for non-controlling interests — —
Adjusted funds from operations per share of common stock (a) $ 1.91 $ 1.91
(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.
34
Table of Contents
The $1.1 million, or 3.0%, net increase in FFO is due primarily to:
● $6.8 million increase in rental income, net, and
● $1.3 million proceeds from a litigation settlement.
Offsetting the increase is a:
● $3.3 million increase in interest expense,
● $2.0 million increase in real estate operating expenses,
● $879,000 increase in general and administrative expenses,
● $577,000 decrease in other income, and
● $184,000 decrease in lease termination fee income.
See “—Comparison of Years Ended December 31, 2025 and 2024” for further information regarding these changes.
The $399,000, or 1.0%, net increase in AFFO is primarily due to the factors impacting FFO as described immediately above, including a $371,000 decrease (to $508,000) in general and administrative expenses due to the exclusion of the amortization of restricted stock and RSU compensation and excluding the (i) $1.3 million proceeds from a litigation settlement and (ii) $184,000 decrease in lease termination fee income.
See “—Comparison of Years Ended December 31, 2025 and 2024” for further information regarding these changes.
Comparison of Years Ended December 31, 2024 and 2023
As we qualify as a smaller reporting company, this comparison is omitted in accordance with Instruction 1 to Item 303(a) of Regulation S-K.
35
Table of Contents
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. In 2025, we obtained approximately (i) $61.3 million of net proceeds from property sales (after giving effect to $7.5 million of mortgage debt repayments) and (ii) $129.0 million of proceeds from mortgage financings (after giving effect to $3.8 million of refinanced amounts). Our available liquidity at February 27, 2026 was approximately $78.5 million, including approximately $8.5 million of cash and cash equivalents (including the credit facility’s required $3.0 million average deposit maintenance balance) and, subject to borrowing base requirements, up to $70.0 million available under our credit facility.
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 $2.7 million of capital expenditures) from the foregoing, as well as property financings, property sales and sales of our common stock.
The following table sets forth, as of December 31, 2025, information with respect to our mortgage debt that is payable from January 2026 through December 31, 2028:
(Dollars in thousands) 2026 2027 2028 Total
We intend to make debt amortization payments from operating cash flow and, though no assurance can be given that we will be successful in this regard, generally intend to refinance, extend or payoff the mortgage loans which mature in 2026 through 2028. We intend to repay the amounts not refinanced or extended from our existing funds and sources of funds, including our available cash, proceeds from one or more property sales, 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.
Typically, we utilize funds from our credit facility 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.
36
Table of Contents
Material Contractual Obligations
The following sets forth our material contractual obligations as of December 31, 2025:
Payment due by period
Less than More than
(Dollars in thousands) 1 Year 1 ‐ 3 Years 4 ‐ 5 Years 5 Years Total
Credit facility (a) — — — — —
As of December 31, 2025, we had $522.5 million of mortgage debt outstanding, all of which is non-recourse (subject to standard carve-outs). We expect that mortgage interest and amortization payments (excluding repayments of principal at maturity) of approximately $100.6 million due through 2028 will be paid primarily from cash generated from our operations. We anticipate that principal balances due at maturity through 2028 of $86.4 million will be paid primarily from cash and cash equivalents and mortgage financings and refinancings. If we are unsuccessful in refinancing our existing indebtedness or financing our unencumbered properties, our cash flow, funds available under our credit facility and available cash, if any, may not be sufficient to repay all debt obligations when payments become due, and we may need to issue additional equity, obtain long or short-term debt, or dispose of properties on unfavorable terms.
Credit Facility
Our credit facility provides that subject to borrowing base requirements, we can borrow up to $100.0 million for the acquisition of commercial real estate, repayment of mortgage debt, and renovation and operating expense purposes; provided, that if used for renovation and operating expense purposes, the amount outstanding for such purposes will not exceed the lesser of $40.0 million and 40% of the borrowing base. See “—Liquidity and Capital Resources”. The facility matures December 31, 2026 and we anticipate that it will be renewed prior thereto. The facility bears interest equal to 30-day SOFR plus the applicable margin. The applicable margin ranges from 175 basis points if our ratio of total debt to total value (as calculated pursuant to the facility) is equal to or less than 50%, increasing to a maximum of 275 basis points if such ratio is greater than 60%. The applicable margin was 175 basis points for each of 2025 and 2024. There is an unused facility fee of 0.25% per annum on the difference between the outstanding loan balance and $100.0 million. The credit facility requires the maintenance of $3.0 million in average deposit balances. For 2025, the weighted average interest rate on the facility was approximately 6.07% and as of February 27, 2026, the rate on the facility was 5.42%.
The terms of our credit facility include certain restrictions and covenants which may limit, among other things, the incurrence of liens, and which require compliance with 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 debt to value, the minimum level of net income, certain investment limitations and the minimum value of unencumbered properties and the number of such properties. Net proceeds received from the sale, financing or refinancing of properties are generally required to be used to repay amounts outstanding under our credit facility.
37
Table of Contents
Inflation
We are exposed to inflation risk as income from long-term leases is the primary source of our cash flows from operations. Many of our leases contain provisions, including provisions providing for periodic fixed rate rent increases), intended to mitigate the impact of inflation. In addition, many of our leases require the tenant to pay, or reimburse us for our payment of, all or a majority of the property’s operating expenses, including real estate taxes, utilities, insurance and building repairs, which may also mitigate our risks associated with rising costs. However, these rent escalation or reimbursement provisions may not adequately offset the effects of inflation.
Inflation will also affect the overall cost of our floating rate debt (i.e., primarily debt incurred pursuant to our credit facility) and affects the mortgage debt we may incur in the future. (The interest rate risk associated with substantially all of our current mortgage debt is generally mitigated through long-term fixed interest rate loans). Increasing interest rates on acquisition mortgage debt limits the acquisition opportunities we can pursue and reduces the prices at which we sell our properties.
Distribution Policy
We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. Accordingly, to qualify as a REIT, we must, among other things, 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. Although we qualify for federal taxation as a REIT, we are subject to certain state and local taxes on our income and to federal income 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) and are subject to Federal excise taxes on our undistributed taxable income.
It is our current intention to pay to our stockholders within the time periods prescribed by the Internal Revenue Code no less than 90%, and, if possible, 100% of our annual taxable income, including taxable gains from the sale of real estate. It will continue to be our policy to make sufficient distributions to stockholders in order for us to maintain our REIT status under the Internal Revenue Code.
Our board of directors will continue to evaluate, on a quarterly basis, the amount and nature (i.e., cash, stock or a combination of the foregoing) of dividend payments based on its assessment of, among other things, our short and long-term cash and liquidity requirements, prospects, debt maturities, maintenance of our REIT status, projections of our REIT taxable income, net income, funds from operations and adjusted funds from operations.
38
Table of Contents
Critical Accounting Estimates
Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we reconsider and evaluate our estimates and assumptions.
We base our estimates on historical experience, current trends and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could materially differ from any of our estimates under different assumptions or conditions. Our significant accounting policies are discussed in Note 2 of our consolidated financial statements in this report. We believe the accounting estimates listed below are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.
Revenue Recognition
Our main source of revenue is rental income from our tenants. Rental income primarily includes: (i) base rents that our tenants pay in accordance with the terms of their respective leases reported on a straight-line basis over the non-cancellable term of each lease and (ii) reimbursements by tenants of certain real estate operating expenses. Since many of our leases provide for rental increases at specified intervals, straight-line basis accounting requires us to record as an asset and include in revenues, unbilled rent receivables which we will only receive if the tenant makes all rent payments required through the expiration of the term of the lease. Accordingly, our management must determine, in its judgment, that the unbilled rent receivable applicable to each specific tenant is collectable. We review unbilled rent receivables on a quarterly basis and take into consideration, among other things, the tenant’s payment history and the financial condition of the tenant. In the event that the collectability of an unbilled rent receivable is unlikely, we are required to write-off the receivable, which has an adverse effect on net income for the year in which the direct write-off is taken, and will decrease total assets and stockholders’ equity.
Purchase Accounting for Acquisition of Real Estate
The fair value of real estate acquired is allocated to acquired tangible assets (which includes land, building and building improvements) and identified intangible assets and liabilities (which include the value of above, below and at-market leases, origination costs associated with in-place leases and above and below-market mortgages assumed) based in each case on their relative fair values. The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land, building and building improvements based on our determination of the relative fair values of these assets. We assess the fair value of the lease intangibles and assumed mortgages based on estimated cash flow projections that utilize appropriate discount rates and available market information. The fair values associated with below-market rental renewal options are determined based on our experience and the relevant facts and circumstances that existed at the time of the acquisitions. The portion of the values of the leases associated with below-market renewal options that we deem reasonably certain to be exercised by the tenant are amortized to rental income over the respective renewal periods. The allocation made by us may have a positive or negative effect on net income and may have an effect on the assets and liabilities on the balance sheet.
39
Table of Contents
Carrying Value of Real Estate Portfolio
We review our real estate portfolio on a quarterly basis to ascertain if there are any indicators of impairment to the value of any of our real estate assets, including deferred costs and intangibles, to determine if there is any need for an impairment charge. In reviewing the portfolio, we examine, among other things, the type of asset, the current financial statements or other available financial information of the tenant, the economic situation in the area in which the asset is located, the economic situation in the industry in which the tenant is involved and the timeliness of the payments made by the tenant under its lease, as well as any current correspondence that may have been had with the tenant, including property inspection reports. For each real estate asset owned for which indicators of impairment exist, we perform a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the asset to its carrying amount. Management’s assumptions and estimates include projected rental rates during the holding period and property capitalization rates in order to estimate undiscounted future cash flows. If the undiscounted cash flows are less than the asset’s carrying amount, an impairment loss is recorded to the extent that the estimated fair value is less than the asset’s carrying amount. The estimated fair value is determined using a discounted cash flow model of the expected future cash flows through the useful life of the property. Real estate assets that are expected to be disposed of are valued at the lower of carrying amount or fair value less costs to sell on an individual asset basis. We generally do not obtain any independent appraisals in determining value but rely on our own analysis and valuations. Any impairment charge taken with respect to any part of our real estate portfolio will reduce our net income and reduce assets and stockholders’ equity to the extent of the amount of any impairment charge, but it will not affect our cash flow or our distributions until such time as we dispose of the property.
Equity-Based Compensation
We grant shares of restricted stock and restricted stock units (“RSUs”) to eligible plan participants, subject to the recipient’s continued service over a specified period and, with respect to the RSUs, the satisfaction of specified conditions over a specified period. The RSUs vest based upon satisfaction of specified metrics with respect to the (i) average of our annual total stockholder return (“TSR Awards”) and/or (ii) average annual return of capital (“ROC Awards”), in each case as calculated pursuant to the applicable award agreement. We account for the restricted stock awards and RSUs in accordance with ASC 718, Compensation - Stock Compensation, which requires that such compensation be recognized in the financial statements based on its estimated grant date fair value. The value of such awards is recognized as compensation expense in general and administrative expenses in the accompanying consolidated statements of operations over the applicable service periods. Grant date fair value is determined with respect to the (i) restricted stock awards, by the closing stock price on the date of grant, (ii) TSR Awards, by using a Monte Carlo simulation relying upon various assumptions and (iii) ROC Awards, by the closing stock price on the date of grant, subject to quarterly adjustment based upon management’s projections as to the achievability of the specified metrics related to the ROC Awards (the “ROC Metrics”). There is substantial subjectivity in (i) the inputs selected for the Monte Carlo simulation used in determining the grant date fair value of the TSR Awards and the use of different inputs would change the expense we recognize with respect to such awards and (ii) management’s projections as to the achievability of the ROC Metrics and changes in such projections will cause fluctuations in our results of operations. See Note 10 to our consolidated financial statements.
40
Table of Contents
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Our primary market risk exposure is the effect of changes in interest rates on the interest cost of draws on our revolving variable rate credit facility and the effect of changes in the fair value of our interest rate swap agreements. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control.
We use interest rate swaps to limit interest rate risk on substantially all variable rate mortgages. These swaps are used for hedging purposes-not for speculation. We do not enter into interest rate swaps for trading purposes. At December 31, 2025, we had no liability in the event of the early termination of our swaps.
At December 31, 2025, we had two interest rate swap agreements outstanding with an aggregate $1.6 million notional amount. The fair market value of the interest rate swaps is dependent upon existing market interest rates and swap spreads, which change over time. As of December 31, 2025, if there had been an increase of 100 basis points in forward interest rates, the fair market value of the interest rate swaps and the net unrealized gain on derivative instruments would have increased by $7,000. If there were a decrease of 100 basis points in forward interest rates, the fair market value of the interest rate swaps and the net unrealized gain on derivative instruments would have decreased by $7,000. These changes would not have any impact on our net income or cash.
The fair market value of our long-term debt is estimated based on discounting future cash flows at interest rates that our management believes reflect the risks associated with long-term debt of similar risk and duration.
The following table sets forth our debt obligations by scheduled principal cash flow payments and maturity date, weighted average interest rates and estimated fair market value at December 31, 2025:
For the Year Ended December 31,
Market
Fixed rate:
Variable rate:
Long‐term debt (b) $ — $ — $ — $ — $ — $ — $ — $ —
Item 8. Financial Statements and Supplementary Data.
This information appears in Item 15(a) of this Annual Report on Form 10-K and is incorporated into this Item 8 by reference thereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
41
Table of Contents
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
A review and evaluation was performed by 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 such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Annual Report on Form 10-K. Based on that review and evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures, as designed and implemented as of December 31, 2025, were effective.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, our management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).
Based on its assessment, our management concluded that, as of December 31, 2025, our internal control over financial reporting was effective based on those criteria.
Changes in Internal Controls over Financial Reporting
There have been no changes in our internal controls over financial reporting, as defined in in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, that occurred during the three months ended December 31, 2025 that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
42
Table of Contents
Item 9B. Other Information.
Disclosure of 10b5-1 Plans
None of our officers or directors had any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” in effect at any time during the three months ended December 31, 2025.
Impact of the One Big Beautiful Bill Act on the Company and its Stockholders
The discussion under “Federal Income Tax Considerations” in our prospectus dated September 1, 2023, as the same may have been amended or supplemented from time-to-time (the “Prospectus”), is hereby modified to reflect legislation commonly referred to as the One Big Beautiful Bill Act. Capitalized terms used in this section without being defined herein shall have the meanings ascribed to them by the Prospectus.
Enactment of the One Big Beautiful Bill Act: On July 4, 2025, legislation commonly referred to as the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law. Among other changes, the OBBBA included a number of changes to the Code that affect the U.S. federal income tax laws applicable to REITs and their security holders. The most significant of those changes are described below. Prospective investors should consult their tax advisors regarding the effects of the OBBBA on their investment.
REIT Asset Tests: The OBBBA increases the ownership limit applicable to TRSs for taxable years ending after December 31, 2025. For taxable years ending after December 31, 2017 through December 31, 2025, not more than 20% of the value of our total assets may be represented by securities of one or more TRSs. For taxable years ending after December 31, 2025, not more than 25% of the value of our total assets may be represented by securities of one or more TRSs.
Pass-Through Business Income Tax Rate Lowered through Deduction: The OBBBA permanently extends the provisions allowing individuals and some trusts and estates to deduct up to 20% of “qualified REIT dividends,” which are REIT dividends other than capital gain dividends, dividends designated as eligible for capital gain tax rates and certain other income items discussed under “Impact of the Tax Cuts and Jobs Act on the Company and its Stockholders-Pass-Through Business Income Tax Rate Lowered through Deduction.”
Limitations on Interest Deductibility: The OBBBA eases the limitation on the deduction for net interest expense discussed under “Impact of the Tax Cuts and Jobs Act on the Company and its Stockholders-Limitations on Interest Deductibility,” by modifying the definition of “adjusted taxable income” which is one of the limitations on the deduction. For taxable years beginning after December 21, 2025, adjusted taxable income will again be calculated before any deductions for depreciation, amortization, and depletion.
Revised Individual Tax Rates and Deductions: The OBBBA permanently extends the individual income tax changes discussed under “Impact of the Tax Cuts and Jobs Act on the Company and its Stockholders-Revised Individual Tax rates and Deduction.”
The changes made by the OBBBA are complex and we cannot predict the long-term impact of the OBBBA, other new U.S. federal tax laws, and whether, when and how the OBBBA and other new U.S. federal tax laws will be affected by any administrative and judicial interpretations. Stockholders and prospective investors should consult their tax advisors regarding the effects of the OBBBA on their investment.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
43
Table of Contents
PARTIII
Item 10. Directors, Executive Officers and Corporate Governance.
Apart from certain information concerning our executive officers which is set forth in Part I of this Annual Report, additional information required by this Item 10 shall be included in our proxy statement for our 2026 annual meeting of stockholders, to be filed with the SEC not later than April 30, 2026, and is incorporated herein by reference.
Item 11. Executive Compensation.
The information required by this Item 11 will be included in our proxy statement for our 2026 annual meeting of stockholders, to be filed with the SEC not later than April 30, 2026, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Apart from the equity compensation plan information required by Item 201(d) of Regulation S-K which is set forth below, the information required by this Item 12 will be included in our proxy statement for our 2026 annual meeting of stockholders, to be filed with the SEC not later than April 30, 2026 and is incorporated herein by reference.
Equity Compensation Plan Information
The following table provides information as of December 31, 2025 about shares of our common stock that may be issued upon the exercise of options, warrants and rights under our 2019 Incentive Plan (the “2019 Plan”), our 2022 Incentive Plan (the “2022 Plan”; and together with the 2019 Plan, the “Prior Plans”) and our 2025 Incentive Plan (the “2025 Plan”; and together with the Prior Plans, the “Incentive Plans”). No further awards may be granted under the Prior Plans.
Number of Number of securities
securities Weighted average remaining available
to be issued exercise price for future issuance
upon exercise of outstanding under equity
of outstanding options, compensation plans
options, warrants warrants (excluding securities
Plan Category and rights(a) and rights reflected in column(1))(b)
Equity compensation plans approved by security holders 263,075 — 658,925
Equity compensation plans not approved by security holders — — —
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this Item 13 will be included in our proxy statement for our 2026 annual meeting of stockholders, to be filed with the SEC not later than April 30, 2026 and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
The information required by this Item 14 will be included in our proxy statement for our 2026 annual meeting of stockholders, to be filed with the SEC not later than April 30, 2026 and is incorporated herein by reference.
44
Table of Contents
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) Documents filed as part of this Report:
—Statements:
Consolidated Balance Sheets F-3
Consolidated Statements of Income F-4
Consolidated Statements of Comprehensive Income F-5
Consolidated Statements of Changes in Equity F-6
Consolidated Statements of Cash Flows F-7 through F-8
Notes to Consolidated Financial Statements F-9 through F-34
(2) Financial Statement Schedules:
—Schedule III—Real Estate and Accumulated Depreciation F-35 through F-38
All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or the notes thereto.
(b) Exhibits:
In reviewing the agreements included as exhibits to this Annual Report on Form10-K, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements. Certain agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
Exhibit No. Title of Exhibit
45
Table of Contents
46
Table of Contents
19.1 Insider Trading Policy dated as of March 5, 2026
21.1 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP
31.1 Certification of President and Chief Executive Officer
31.2 Certification of Senior Vice President and Chief Financial Officer
32.1 Certification of President and Chief Executive Officer
32.2 Certification of Senior Vice President and Chief Financial Officer
* Indicates a management contract or compensatory plan or arrangement.
The file number for all the exhibits incorporated by reference is 001- 09279 other than exhibit 4.1 whose file number is 333-86850.
Item 16. Form 10-K Summary
Not applicable.
47
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized.
March 6, 2026 ONE LIBERTY PROPERTIES, INC.
By: /s/ PATRICK J. CALLAN, JR.
Patrick J. Callan, Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
Fredric H. Gould Vice Chairman of the Board of Directors March __, 2026
/s/ CHARLES BIEDERMAN
Charles Biederman Director March 6, 2026
/s/ EDWARD GELLERTEdward Gellert Director March 6, 2026
/s/ JEFFREY A. GOULDJeffrey A. Gould Director March 6, 2026
/s/ J. ROBERT LOVEJOYJ. Robert Lovejoy Director March 6, 2026
/s/ LEOR SIRILeor Siri Director March 6, 2026
/s/ KAREN A. TILLKaren A. Till Director March 6, 2026
Isaac Kalish
Mili Mathew
48
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of One Liberty Properties, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of One Liberty Properties, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.
Impairment of Real Estate Investments
F-1
Table of Contents
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1989.
New York, New York
March 6, 2026
F-2
Table of Contents
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Par Value)
December 31,
ASSETS
Real estate investments, at cost
Investment in unconsolidated joint ventures 203 2,101
Unamortized intangible lease assets, net 25,501 13,649
Escrow, deposits and other assets and receivables 22,569 19,596
LIABILITIES AND EQUITY
Liabilities:
Line of credit — —
Accrued expenses and other liabilities 17,271 16,023
Unamortized intangible lease liabilities, net 12,946 11,752
Commitments and contingencies
Equity:
One Liberty Properties, Inc. stockholders’ equity:
Preferred stock, $1 par value; 12,500 shares authorized; none issued — —
Accumulated other comprehensive income 16 208
Distributions in excess of net income (62,718) (49,020)
Total One Liberty Properties, Inc. stockholders’ equity 299,603 307,425
Non-controlling interests in consolidated joint ventures(1) 194 1,150
See accompanying notes.
F-3
Table of Contents
ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
Year Ended December 31,
Revenues:
Lease termination fees 66 250 —
Operating expenses:
Impairment losses 4,593 1,086 —