On Wednesday, B.Riley maintained a Buy rating on One Liberty Properties (NYSE:OLP) stock and raised the shares target to $26.00 from $25.00. The firm highlighted One Liberty's second quarter transaction activities as indicative of its ongoing strategy of active capital recycling.
One Liberty Properties announced the completion of $23.0 million in property dispositions during the second quarter of 2024, with the transactions closing at an average cash capitalization rate of 5.8%, or 8.1% excluding a vacant property.
The company also reported the purchase of two industrial properties for a total of $11.7 million at a 6.8% cash cap rate. Additionally, One Liberty is under contract to acquire a larger industrial property for $33.0 million, which has a cash cap rate of approximately 6.7%. These moves demonstrate One Liberty's continued shift towards industrial assets, away from its non-core single-tenant net lease retail properties.
B.Riley's analysis suggests that One Liberty's strategy of selling retail properties to fund the acquisition of industrial assets is likely to be beneficial for the company's market valuation.
This is due to the higher rent escalators and renewal rates associated with industrial properties compared to retail ones. Moreover, the firm does not foresee significant negative impacts on the company's bottom line from this strategy, despite some short-term dislocations.
The firm noted a slight decrease in their 2024 adjusted funds from operations (AFFO) per share estimate, which fell by 1.4% compared to the previous number. However, the 2025 AFFO per share estimate remains unchanged. The analyst's outlook reflects confidence in the long-term benefits of One Liberty Properties' selective property transactions and focus on industrial assets.
In other recent news, One Liberty Properties has been actively managing its real estate portfolio. The company recently concluded the sale of a vacant retail property in Kennesaw, Georgia, for a gross sales price of $6.7 million, yielding an approximate gain of $2.1 million, according to recent developments. As part of its ongoing portfolio optimization, the company has also announced several transactions involving industrial and retail properties.
One Liberty Properties is set to acquire a newly constructed 302,000-square-foot industrial building near Omaha, Nebraska, for $33 million, with the deal expected to close by the end of September. Additionally, the company recently completed the acquisition of a 35,249-square-foot industrial facility in Savannah, Georgia, for $5.2 million.
In terms of property sales, One Liberty reported various property sales totaling $16.32 million in gross sales price and $5.38 million in net gains. Amid these transactions, the company has also been active in leasing activities, renegotiating a lease with Fitness International, LLC for a property in Secaucus, New Jersey, extending it through 2040 and increasing annual rent.
However, the company is facing challenges with an LA Fitness facility in Hamilton, Ohio, prompting One Liberty to enter into a non-binding letter of intent to sell the property for $4.4 million. These are the recent developments for One Liberty Properties.
InvestingPro Insights
As One Liberty Properties (NYSE:OLP) continues to navigate its strategic shift towards industrial assets, real-time metrics and insights from InvestingPro provide a clearer picture of the company's financial standing. With a market capitalization of $492.72 million and a solid dividend yield of 7.79%, One Liberty Properties stands out for its commitment to shareholder returns, having maintained dividend payments for an impressive 34 consecutive years. This dedication is particularly noteworthy in light of the company's P/E ratio, which stands at 16.89, indicating a potentially reasonable valuation compared to earnings.
InvestingPro Tips highlight the company's ability to pay a significant dividend, which is supported by a strong gross profit margin of 80.87% over the last twelve months as of Q1 2024. Moreover, analysts predict profitability for the company this year, aligning with the positive sentiment from B.Riley's analysis. However, potential investors should be aware that short-term obligations currently exceed liquid assets, which may require careful consideration when assessing the company's financial health.
For those seeking deeper insights and additional tips, InvestingPro offers more detailed analysis, with a total of 6 more InvestingPro Tips available for One Liberty Properties. To access these insights and enhance your investment strategy, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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