One Liberty (OLP) Adds $13.4M Asset to Industrial Portfolio
One Liberty Properties OLP has taken an assertive step to expand its primarily industrial property portfolio through the purchase of a 177,040-square-foot industrial distribution center in a suburb of Columbia, SC, for $13.4 million. The acquisition, which includes the assumption of $4.3 million of mortgage debt, underlines One Liberty's strategic efforts to bolster future cash flow growth.
Located on a 10.5-acre plot, the modern facility enjoys the advantages of concrete tilt-wall construction, 28-foot clear height and a shallow bay design. It is favorably situated quarter of a mile from Interstate 77, offering connectivity between Columbia and Charlotte, NC. The Columbia industrial market is a sizable one, totaling 73 million square feet, with a modest 4.5% vacancy rate, indicating robust demand for industrial real estate in the region. Hence, the acquisition seems a strategic fit for OLP.
The newly acquired property is currently leased to two tenants, with one tenant accounting for about 53% of the aggregate annual base rent. The leases contribute to a combined annual base rent of about $784,000, increasing roughly 3% annually. These leases have a weighted average remaining term of 1.6 years and are currently below market rates, indicating a forthcoming opportunity to elevate these rents, thereby potentially increasing revenues.
According to Patrick J. Callan, Jr., the president and chief executive officer of One Liberty, “The below replacement cost purchase, favorable interest rate on the assumed debt and below market rent, positions this property to contribute to future cash flow growth.”
This acquisition is expected to have positive implications for One Liberty's business growth and stock. By strategically adding to its industrial property portfolio, the company is not only enhancing its real estate assets but also setting the stage for a potential increase in revenue streams from these properties. It demonstrates OLP's proactive approach to identifying growth opportunities and its consistent focus on delivering long-term shareholder value.
One Liberty acquires, owns and manages a geographically diversified portfolio consisting primarily of industrial and retail properties, many of which are subject to long-term net leases. While the latest expansion of its industrial portfolio seems a strategic fit, the volatile economic environment and exposure to troubled tenants remain a concern.
Shares of this Zacks Rank #3 (Hold) company have declined 7.9% in the past three months against the industry’s increase of 1.9%.
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Stocks to Consider
Some better-ranked stocks from the REIT sector are Ventas VTR and EastGroup Properties EGP, each presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Ventas’ 2023 funds from operations (FFO) per share has risen marginally over the past two months to $2.98.
The Zacks Consensus Estimate for EastGroup Properties’ current-year FFO per share has moved marginally north over the past two months to $7.56.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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