ONE LIBERTY PROPERTIES INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION L3 OR L5(D)
OF THE SECURITIES EXCHANGE ACT OF L934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

COMMISSION FILE NUMBER 0-11083

ONE LIBERTY PROPERTIES, INC.
(Exact name of registrant as specified in its charter)

MARYLAND 13-3147497
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
60 CUTTER MILL ROAD, GREAT NECK, NEW YORK 11021
(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (5L6)466-3L00

Securities registered pursuant to Section l2(b) of the Act:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, par value $1.00................................ American Stock Exchange
$16.50 Cumulative Convertible Preferred Stock, par value
$1.00....................................................... American Stock Exchange

Securities registered pursuant to Section l2(g) of the Act:

NONE

Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section l3 or l5(d) of the Securities Exchange Act of
l934 during the preceding l2 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].

As of March l, 1996 the aggregate market value of all voting stock (Common
Stock and Preferred Stock) held by non-affiliates of the Registrant was
approximately $19,000,000.

As of March l, 1996, the Registrant had 1,416,119 shares of Common Stock and
808,776 shares of $16.50 Cumulative Convertible Preferred Stock outstanding.

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DOCUMENTS INCORPORATED BY REFERENCE

The proxy statement for the Registrant's Annual Meeting of Stockholders,
scheduled for June 7, 1996, will be filed with the Securities and Exchange
Commission within 120 days after the end of the Registrant's fiscal year covered
by this Form 10-K. The information required by Part III (Item 10-Directors and
Executive Officers of the Registrant, Item 11 -Executive Compensation, Item 12 -
Security Ownership of Certain Beneficial Owners and Management, and Item 13
- -Certain Relationships and Related Transactions) will be incorporated by
reference from the definitive proxy statement to be filed by the Registrant
pursuant to Regulation 14A under the Securities Exchange Act of 1934.

PART I

ITEM 1. -- BUSINESS

GENERAL

One Liberty Properties, Inc. (with its wholly-owned subsidiaries being
referred to herein as the "Company" or "One Liberty") is a self managed real
estate investment trust ("REIT") incorporated under the laws of Maryland on
December 20, 1982. The policy of the Company is to invest in improved,
commercial real estate under long-term net lease. Under the typical net lease,
rental and other payments to be made by the lessee are payable without
diminution for any reason. The lessee, in addition to its rent obligation, is
generally responsible for payment of all charges attributable to the property,
such as taxes, assessments, water and sewer rents and charges, governmental
charges, and all utility and other charges incurred in the operation of the
property. The lessee, is also generally responsible for maintaining the
property, including ordinary maintenance and repair and restoration following a
casualty or partial condemnation. The rental provisions in a net lease
transaction may include, but may not be limited to, rent payable on a stepped
basis (rentals increase at specified intervals), an indexed basis (rentals
increase pursuant to a formula such as cost-of-living index), a percentage basis
(minimum rental payments plus additional rentals in the form of participation in
the sales derived from the business conducted at the property), or a combination
of the foregoing.

INVESTMENT POLICY

The Company's investment policies, as presently in effect, are set forth in
Section 17 of Article 3 of the By-Laws of the Company (the By-Laws, as amended
were filed as an exhibit to the Company's Form 10-Q for the quarter ended June
30, 1989 and an amendment thereto was filed as an exhibit to the Company's Form
10-Q for the quarter ended June 30, 1990). The current policy of the Company is
to purchase improved commercial real property which is net leased on a long term
basis. The Company's investment policies, as articulated in its by-laws, are as
follows:

Types of Investments -- The By-Laws, as amended, permit the Company to
invest in any type of real property, mortgage loans (and in both cases in
interests therein) and other investments of any nature, without limitation,
provided such investment does not adversely affect the Company's ability to
qualify as a REIT under the Internal Revenue Code. No limitation is set on the
number of properties or mortgage loans in which the Company may invest, the
amount or percentage of the Company's assets which may be invested in any
specific property or on the concentration of investments in any geographic area
in the United States. The Company will consider investments in any type of real
property and in mortgage loans secured by real property; however as stated
above, the current policy of the Company is to invest in improved, commercial
real estate under long term net lease. The Company does not intend to make
construction loans or loans secured by mortgages on undeveloped land.

Incurrence of Debt -- The By-Laws, as amended, permit the directors of the
Company, in the exercise of their business judgment, to determine the level of
debt and the terms and conditions of any financing or refinancing.

The investment objectives of the Company are (i) to provide current income;
(ii) to provide the opportunity for increases in income and capital
appreciation; and (iii) to protect the Company's capital. In evaluating
potential net lease investments, the Company considers, among other factors (i)
the current and anticipated cash flow of the proposed net lease, (ii) the
intrinsic value of the property, given its location, use and the property's and
the lessee's adequacy to meet operational needs and lease obligations, (iii) the
return on equity to the Company, and (iv) potential for capital appreciation.

From time to time, the Company may invest in shares of another REIT or in
the shares of an entity not involved in real estate investments, provided that
any such investment does not adversely affect the Company's ability to qualify
as a REIT under the Internal Revenue Code.

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Pursuant to current policy, after termination of any lease relating to any
of the Company's properties, the Company will seek to relet or sell such
property in a manner which will maximize the return to the Company, considering
the income and residual potential of such property. The Company may also
consider the sale or other disposition of any of the properties prior to
termination of the relevant leases if such sale or other disposition appears to
be advantageous. The Company may take purchase money obligations as part payment
in lieu of cash in connection with any sales and may take into account local
custom and prevailing market conditions in negotiating the terms of repayment.
It will be the Company's policy to reinvest any cash realized from the sale or
other disposition of properties, net of required distributions to shareholders,
to maintain its REIT status.

CREDIT AGREEMENT

On March 1, 1996 the Company entered into a revolving credit agreement
("Credit Agreement") with Bank Leumi Trust Company of New York ("Bank Leumi").
Borrowings under the Credit Agreement will be used to provide the Company with
funds to acquire properties. The Credit Agreement will mature February 28, 1999
with a right for the Company to extend the Credit Agreement until February 29,
2000. Bank Leumi has agreed to advance up to $5,000,000 on a revolving basis and
has agreed to a total $15,000,000 facility (including the $5,000,000) on a pro
rata participating basis. At this date no other institution has joined in the
Credit Agreement. The Company will pay interest at the rate of prime plus 1/2%
on funds borrowed under the Credit Agreement on an interest only basis, except
that the net proceeds of certain events (e.g. sale of property, financing of
properties) must be applied to reduce the loan.

As collateral for any advances taken by the Company under the Credit
Agreement, the Company has pledged the stock of each of its subsidiaries and
certain mortgages receivable, including the wrap around mortgage receivable the
Company holds on a property located on East 16th Street in New York City (see
"Mortgages Receivable" below). In order to obtain the senior mortgagees consent
to the assignment of the Company's wrap around mortgage receivable as collateral
security for the loan, the Company agreed to guarantee six months of debt
service on the senior mortgage. In addition the Company's subsidiaries have
guaranteed all loans under the Credit Agreement. The Company has agreed to
maintain at least $250,000 on deposit with Bank Leumi.

The Credit Agreement contains affirmative and negative covenants including a
covenant that (i) through February 28, 1999 the Company's net worth will not be
less than the greater of $28,000,000 and two times (2x) the revolving credit
loans outstanding and thereafter the $28,000,000 increases to $30,000,000; (ii)
that cash flow for each fiscal year through the 1998 fiscal year shall be at
least $3,000,000, increasing to $3,400,000 for the 1997 fiscal year and
thereafter, and (iii) at least two of Fredric H. Gould, Matthew J. Gould and
Jeffrey A. Gould shall be involved in the day to day management of the Company.

The Company has not drawn down any funds under the Credit Agreement.

MORTGAGES RECEIVABLE

In 1992 and 1993 the Company, in order to improve its return on investment,
invested in mortgages and a senior secured note receivable. The material
receivables at December 31, 1995 were as follows:

-In January, 1992 the Company made a first mortgage loan to an entity
substantially owned by Gould Investors L.P. ("Gould"), an affiliated entity
(see below), in the amount of $1,200,000. The mortgage had a maturity date
of January 31, 1995, carried an interest rate of 11% through January 31,
1994 and thereafter at 10% per annum through the maturity date, and
provided for minimum amortization of $5,000 per month. The mortgage was
extended to January 31, 1997 and the interest rate fixed at 11% per annum
for the extended term. The $5,000 monthly amortization continues during the
extended term. The mortgage is secured by a wraparound

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mortgage on the residential portion and a commercial condominium unit
containing approximately 3,600 square feet of retail space in a building
located on East 86th Street in Manhattan, New York. The principal balance
outstanding on this mortgage at December 31, 1995 was $860,000.

-On July 30, 1993, the Federal Deposit Insurance Corporation ("FDIC") sold,
to an entity related to the Company, a $23,000,000 first mortgage secured
by an office building located on East 16th Street in Manhattan, New York.
The sale was made by the FDIC pursuant to public auction. The successful
bidder paid $19,000,300 for the mortgage, which carries an interest rate of
8% per annum. The office building which secures this mortgage is owned by a
partnership in which Gould is general partner and owns substantially all
partnership interests. Simultaneously with the closing an unrelated party
advanced $13,181,000 (balance at December 31, 1995 of $11,527,000), the
Company advanced $6,080,000 (including closing costs), and the mortgage was
severed into a first mortgage of $13,181,000 paying interest at 9 1/2% per
annum held by such unrelated party and a subordinate wrap mortgage of
$9,819,000 held by the Company. Both the first mortgage and wrap mortgage
mature in 2005 at which time the first mortgage will have been fully
amortized and the wrap mortgage will have a principal balance of
approximately $4,000,000. The principal balance of the wrap mortgage held
by the Company was $8,816,652 and the net principal balance was $5,834,234
at December 31, 1995.

The building which secures the first mortgage and the wrap mortgage is
net leased to the City of New York. The lease expires in 2005 with one
renewal option of five years. The City has a limited right to terminate the
lease. The first mortgage and the wrap mortgage are nonrecourse.

-In February, 1993 the Company purchased from an unrelated entity 28.9% of a
16.67% portion of an indebtedness due to various institutions by BRT Realty
Trust ("BRT"), an affiliated entity. Fredric H. Gould, Chairman of the
Board of the Company, and Marshall Rose, Vice Chairman, are Chairman of the
Board (and Chief Executive Officer) and Vice Chairman, respectively, of
BRT, and Matthew Gould, Israel Rosenzweig, Jeffrey Gould, Nathan Kupin,
Simeon Brinberg and David W. Kalish are officers of the Company and BRT. In
addition, Arthur Hurand is a trustee of BRT and a director of the Company.
The Company paid $3,215,142 for a $4,626,720 share of the principal amount
of such indebtedness. The principal earns interest at prime plus 1% and
requires certain annual minimum principal payments. The indebtedness is
senior indebtedness and is collateralized by all of BRT's mortgages
receivable and up-stream guaranties by BRT's subsidiaries. At December 31,
1995 the amount due to the Company on its share of this receivable was
$760,638, and the book value thereof was $528,575.

Gould owns 715,227 shares of the Company's Common Stock, representing
39.3% of the voting stock and 50.5% of the outstanding common stock of the
Company. The individual general partners of Gould, Fredric H. Gould and
Marshall Rose, are Chairman of the Board and Vice Chairman of the Board,
respectively, of the Company, Matthew Gould, President of the Company, is
an officer of the corporate Managing General Partner of Gould, and David W.
Kalish, Simeon Brinberg, Israel Rosenzweig, Jeffrey Gould, Nathan Kupin and
Mark Lundy, officers of the Company, are officers of the Managing General
Partner of Gould.

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EXECUTIVE OFFICERS OF THE COMPANY

The following sets forth information with respect to the executive officers
of the Company:

NAME AGE POSITION WITH THE COMPANY
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Fredric H. Gould 60 Chairman of the Board of the Company since June, 1989
Marshall Rose 59 Vice Chairman of the Board of the Company since June, 1989
Matthew J. Gould 36 President and Chief Executive Officer of the Company since
June, 1989
Simeon Brinberg 62 Vice President of the Company since June, 1989
Israel Rosenzweig 48 Senior Vice President of the Company since June, 1989
David W. Kalish 48 Vice President and Chief Financial Officer of the Company
since June, 1990
Nathan Kupin 81 Senior Vice President of the Company since June, 1989
Jeffrey A. Gould 30 Vice President of the Company since June, 1989
Mark H. Lundy 33 Secretary of the Company since June, 1993
Seth D. Kobay 41 Vice President and Treasurer of the Company since August,
1994
Karen Dunleavy 37 Vice President, Financial of the Company since August, 1994

Each of the above listed executive officers will hold office until the next
annual meeting of the Board of Directors, scheduled for June 7, 1996, or until
their respective successors shall be elected and shall qualify. The information
below sets forth the business experience of the officers of the Company for at
least the past five years.

Fredric H. Gould -- In addition to serving as Chairman of the Board of the
Company, Mr. Gould has served as Chairman of the Board of Trustees of BRT Realty
Trust, a real estate investment trust, since 1984 and as Chief Executive Officer
of BRT since March 1995. Since 1985 Mr. Gould has been a principal executive
officer of the managing general partner of Gould Investors L.P., a limited
partnership primarily engaged in the ownership and operation of real properties
and he also serves as an individual general partner of Gould Investors L.P. He
is President of REIT Management Corp., the Advisor to BRT Realty Trust, a
director of BFS Bankorp, Inc. and its subsidiary Bankers Federal Savings and
Loan Association FSB and a director of Sunstone Hotel Investors, Inc., a real
estate investment trust.

Marshall Rose -- In addition to serving as Vice Chairman of the Board of
Directors of the Company, Mr. Rose has served as Vice Chairman of the Board of
Trustees of BRT Realty Trust since 1986. He is also a principal executive
officer of the managing general partner of Gould Investors L.P. since 1985 and
an individual general partner of Gould Investors L.P. Mr. Rose is also President
and Chief Executive Officer of Georgetown Equities, Inc., a real estate
consulting firm.

Matthew J. Gould -- In addition to serving as President and Chief Executive
Officer of the Company, Mr. Gould serves as a Vice President of REIT Management
Corp. since 1986.

Simeon Brinberg -- In addition to serving as Vice President of the Company,
Mr. Brinberg has been Secretary of BRT Realty Trust since 1983, a Senior Vice
President of BRT Realty Trust since 1988 and a Vice President of the managing
general partner of Gould Investors L.P. since 1988. He is a director of Witco
Corporation.

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Israel Rosenzweig -- Mr. Rosenzweig has been Executive Vice President of
Bankers Federal Savings & Loan Association FSB since November 1994. He has been
President of BRT Realty since 1984 and served as Chief Executive Officer of BRT
from 1984 until March 1995. Mr. Rosenzweig is a Senior Vice President of the
Company. Mr. Rosenzweig is a director of Nautica Enterprises, Inc.

David W. Kalish -- Mr. Kalish has served as Vice President and Chief
Financial Officer of One Liberty Properties, Inc. since June, 1990. Mr. Kalish
is also a Vice President and Chief Financial Officer of BRT Realty Trust and
REIT Management Corp. and Vice President and Chief Financial Officer of the
managing general partner of Gould Investors L.P. since June, 1990. Mr. Kalish is
a certified public accountant.

Nathan Kupin -- In addition to serving as a Senior Vice President of the
Company, Mr. Kupin has been a Trustee and Vice President of BRT Realty Trust
since 1983.

Jeffrey A. Gould -- In addition to being a Vice President of the Company,
Mr. Gould has been a Vice President of BRT Realty Trust since January 1988 and
Executive Vice President and Chief Operating Officer of BRT since March 1993.

Mark H. Lundy -- In addition to being Secretary of the Company since June,
1993, Mr. Lundy has been a Vice President of BRT since April 1993 and a Vice
President of the managing general partner of Gould Investors L.P. since July
1990.

Seth D. Kobay -- In addition to serving as Vice President and Treasurer of
the Company, Mr. Kobay has been Vice President and Treasurer of BRT Realty Trust
since March 1994 and Vice President of Operations of the managing general
partner of Gould Investors L.P. since 1986. Mr. Kobay is a certified public
accountant.

Karen Dunleavy -- In addition to serving as Vice President, Financial of the
Company, Ms. Dunleavy has been Treasurer of the managing general partner of
Gould Investors L.P. since 1986. Ms. Dunleavy is a certified public accountant.

Fredric H. Gould is Matthew and Jeffrey Gould's father.

ITEM 2. -- PROPERTIES

The Company, at December 31, 1995, owned fee title to thirty-two properties
and a "sandwich" lease position with respect to one property. All properties are
"net leased" to unrelated third parties. The Company obtained title insurance
with respect to all properties owned by it in amounts equal to their respective
purchase prices, insuring that the Company holds fee simple title to each
property owned in fee and the leasehold position to the one lease position the
Company holds, free and clear of all liens and encumbrances, except those
approved by the Company and those which have been created since the Company's
acquisition of the properties, none of which materially impairs the value of the
properties.

The following sets forth information relating to the materially important
properties owned by the Company.

THE MAY PROPERTIES

DESCRIPTION OF MAY PROPERTIES

The eleven May Properties, which are located in eight states, are
freestanding retail stores operated under the trade name Payless Shoe Source, as
discount family shoe stores.

The typical May Property is a freestanding one story building containing
approximately 3,100 square feet of space on a parcel of land containing
approximately 15,000 square feet and located on a major commercial thoroughfare.
Each building contains both storage and retail space.

DESCRIPTION OF MAY LEASES

LEASE TERM. The May Properties have 11 separate but identical leases ("May
Leases"). The primary lease term for the May Properties is ten years ending on
December 31, 1996. May has the

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right to extend each lease for up to four additional terms of five years each.
May has exercised its option to renew with respect to three locations and has
otherwise extended a lease with respect to one location. As to the remaining
locations the Company will seek to extend the lease with May or seek a new
tenant or a buyer for each such property.

AMOUNTS PAYABLE UNDER THE MAY LEASES. From January 1, 1995 through December
31, 1996 the aggregate annual guaranteed minimum rental under the May leases is
$540,201. Other than rentals, the provisions of each May Lease is substantially
the same.

The May Leases are "net leases" and May is required to pay, in addition to
the minimum rent, as additional rent, when due, together with every fine,
penalty, interest and cost which may be added for nonpayment or late payment
thereof, all taxes, assessments, levies, fees, water and sewer rents, charges,
licenses, permit fees and all governmental charges with respect to the May
Properties, and all utility and other charges incurred in the operation of each
of the May Properties.

MAINTENANCE AND MODIFICATIONS. May is required, at its expense to maintain
the May Properties, structural or otherwise, in a neat, clean and orderly
condition, reasonable wear and tear excepted.

May, at its expense, is permitted to make interior nonstructural alterations
and remodelings as it deems necessary or desirable for its purposes. Any
exterior or structural alterations may be made only with the prior written
consent of the Company.

INSURANCE. So long as May has a net worth of $100,000,000 or more, May may
self-insure the May Properties. If its consolidated net worth falls below the
above amount, May will maintain insurance on each May Property at its expense
providing for fire, with extended coverage, comprehensive general public
liability, workman's compensation and other insurance appropriate for properties
similar to the May Properties in the states in which the May Properties are
located.

DAMAGE TO, OR CONDEMNATION OF, A PROPERTY. In the event of a casualty, May
is required at its expense to rebuild, replace or repair the damage to the
Property so as to restore the Property to the condition and market value
immediately prior to the occurrence. The cost thereof is first paid by May and
the Company is then required to pay over to May the insurance proceeds. If,
however, the Property shall be substantially damaged or destroyed so that the
improvements are unsuitable or uneconomic for restoration for continued use and
occupancy in the business of May, then May within time periods set forth in the
leases, may terminate the lease on not less than 90 days notice and the
insurance proceeds shall belong to the Company and the lease shall terminate on
the specified termination date, except with respect to obligations and
liabilities which arose prior to the termination date. The condemnation
provisions of the leases provide in the event of a condemnation which affects
all or a substantial portion of a Property and renders it unsuitable or
uneconomical for restoration for continued use and occupancy in May's business
then May within time periods set forth in the lease may terminate the lease upon
not less than 90 days notice. If May is not entitled to or does not give notice
of termination, then May is required at its expense to rebuild, replace or
repair any damage to the Property, the restoration cost is to be paid initially
by May out of its own funds with the condemnation proceeds then paid over to
May.

MORTGAGE

The Company owns these properties on a free and clear basis.

KROGER PROPERTY

DESCRIPTION OF KROGER PROPERTY

The Kroger Property, located in Houston, Texas, is operated by Kroger as a
supermarket. The Kroger Property is a one story freestanding building containing
38,448 square feet, located on an approximately 116,000 square foot parcel of
land situated on a major commercial thoroughfare. The parcel contains 175
parking spaces.

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DESCRIPTION OF KROGER LEASE

LEASE TERM. The term for the Kroger lease ("Kroger Lease") will expire on
March 31, 2000. Kroger has the right to extend the Kroger Lease for up to five
additional five-year renewal terms.

AMOUNTS PAYABLE UNDER THE KROGER LEASE. The fixed annual rental under the
Kroger Lease is $149,947. During each year of the Kroger Lease, Kroger is also
obligated to pay the Company an amount equal to 1% of Kroger's sales in such
year in excess of $12,000,000. Expenses for taxes, insurance, common area
maintenance and roof and structural repairs are to be credited to Kroger, for
the year in which such expenses are paid, against the additional rent that might
otherwise be due during such year.

Under the Kroger Lease, Kroger is required to pay, in addition to the
minimum rent, all real estate taxes, assessments, water and sewer and other
charges imposed by governmental authorities now or in the future which are
applicable to the Kroger Property.

MAINTENANCE AND MODIFICATIONS. Kroger is required, at its expense, to
maintain and keep in good repair the structure and the exterior of the building,
including all equipment therein and to make all structural and nonstructural
repairs and replacements. The Company is not required to repair or rebuild the
Kroger Property or maintain it.

All remodeling, alterations and additions to the Property which Kroger may
deem necessary are to be made at Kroger's expense. Major structural changes may
only be made with the Company's written consent, which is not to be unreasonably
withheld.

INSURANCE. Kroger is required to maintain insurance at its expense
providing for fire, with extended coverage, in an amount not less than the full
replacement value of the Kroger Property, and public liability insurance. Kroger
may self insure if it has a net worth in excess of $300,000,000.

DAMAGE TO OR CONDEMNATION OF, THE KROGER PROPERTY. Subject to the rights of
any mortgagee, all proceeds of casualty insurance shall be made available to pay
for the cost of restoration and repair if the Kroger Property is damaged or
destroyed in whole or in part by fire or other casualty. The proceeds of any
insurance policy shall be used for the purpose of defraying the cost of
repairing, reconstructing or replacing the damaged or destroyed building or
improvements thereof or the construction of a new building substantially the
same as the damaged or destroyed building and in the event the insurance
proceeds are insufficient to completely repair, reconstruct or replace the
damaged or destroyed improvement substantially to the condition of such
improvement prior to the casualty, and all of the insurance proceeds shall have
been used for such purpose and none of such proceeds shall have been paid or
applied against any mortgage indebtedness, then Kroger is to pay the difference
between the total insurance collected and the total cost of repairing,
reconstructing or replacing the damaged or destroyed building and improvements.

If the Kroger Property is taken in condemnation proceedings, or if a part of
the property is taken in condemnation so that the property is unsatisfactory for
Kroger's business operation, Kroger may cancel the lease, or at its option
remain, in which event the Company is required to restore the property to proper
rentable condition.

MORTGAGE

The Company owns this property on a free and clear basis.

MADISON AVENUE PROPERTY

DESCRIPTION OF MADISON AVENUE PROPERTY

The Madison Avenue Property, located on East 30th Street and Madison Avenue
in New York, New York, is improved with two multi-family properties -- a
thirteen story penthouse elevator building and a seven story elevator building,
containing an aggregate of 126 apartments and ground floor retail stores. The
property is located in mid-Manhattan, in primarily a commercial area, with some
residential and hotels. The two buildings are located on a 13,000 square foot
plot of land, have

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frontage on both Madison Avenue and East 30th Street, and were constructed
separately and subsequently joined. The properties were constructed in about
1910 and substantially renovated in approximately 1988.

DESCRIPTION OF MADISON AVENUE LEASE

LEASE TERM. The Madison Avenue Property is leased to an unaffiliated entity
for a term expiring February 28, 2038. If tenant exercises its right to convert
the property to cooperative ownerships then effective with the assignment of the
lease the lease can be extended for 150 years. To the Company's knowledge, the
tenant is not contemplating a cooperative conversion at the present time.

AMOUNTS PAYABLE UNDER THE MADISON AVENUE PROPERTY LEASE. The basic annual
rental is $550,000 increasing to $600,000 in 1999 and by $50,000 each five years
thereafter. If the conversion option is exercised, the basic annual rent is
fixed for ten years from the date of conversion at the basic annual rental then
being paid, increasing by $75,000 each ten years thereafter. If the conversion
option is exercised, the Company is to receive a conversion premium which the
Company has agreed to divide 50-50 with BRT, provided the conversion takes place
on or before June 14, 2004. The Company acquired this property from BRT, an
affiliated entity in June 1994 (see Form 8-K of the Company dated June 27,
1994).

The lease is a net lease and requires tenant to pay, in addition to basic
annual rent, all real estate taxes and all utility and other charges applicable
to the property during the term.

MAINTENANCE AND MODIFICATIONS. Tenant, at its expense, is required to make
all structural and non-structural repairs and is required to maintain the
property in good repair and condition, reasonable wear and tear excepted.

Tenant is permitted, under the lease, to make structural and non-structural
alterations, improvements and additions provided (i) any such alteration,
improvement or addition does not materially adversely affect the structural
integrity or strength of the buildings or the value of the property, or any
interest of Landlord and does not include structural demolition, and (ii) if the
anticipated cost exceeds a specified amount (currently $150,000, increasing
$50,000 each ten years commencing with 1999) Tenant is to give Landlord prior
notice and furnish Landlord with such information as Landlord may reasonably
request. In any event Tenant can't demolish any structural portions of the
buildings without consent of Landlord. The lease specifies other Tenant
obligations prior to Tenant commencing alterations, improvements or additions.

INSURANCE. Tenant is required to maintain fire insurance, with extended
coverage, in an amount equal to 100% of replacement value, exclusive of footings
and foundations with the deductible not to exceed $25,000, increasing every five
years by the increase in the consumer price index. Tenant is also required to
maintain rent insurance, comprehensive general public liability insurance,
elevator and boiler insurance, and such other insurance, in such amounts, as
reasonably required by Landlord.

DAMAGE TO OR CONDEMNATION OF MADISON AVENUE PROPERTY. In the event of a
casualty, Tenant at its expense, whether or not the insurance proceeds are
sufficient, is required to repair the damage and restore, replace and rebuild
the premises, at least to the extent of the value and as near as possible to the
character prior to the casualty.

If there is a condemnation of all or substantially all the premises, Tenant
may elect to terminate the lease, and in such event the lease shall terminate on
the date the condemning authority takes title to the property. In the event of a
condemnation of all or substantially all the property, the award is to be
divided between Landlord and Tenant in the proportion each party's interest in
the premises bears to the aggregate value of both party's interest in the
property, as determined by arbitration, provided the Landlord is to receive as a
priority payment an amount equal to the fixed annual rent then being paid under
the lease multiplied by 10, with interest from the date of taking and then
Tenant is to

8

receive the greater of (i) the sum of all amounts paid by Tenant for capital
improvements, not to exceed $3,000,000 and (ii) all unpaid principal and
interest and other sums due on any leasehold mortgage.

If there is a partial taking Tenant, at its sole expense, is to repair and
reconstruct the premises. Any award is to be applied to such repair and
reconstruction, and if the award exceeds the cost of repair and reconstruction,
the excess is divided between Landlord and Tenant as provided in the Lease.

MORTGAGE

Simultaneously with its purchase of the property in June, 1994 for a
consideration of $5,525,000 (plus closing costs) the Company obtained a
$4,250,000 non-recourse first mortgage loan from East New York Savings Bank. The
mortgage bears interest at 8.75% per annum during the initial 5 year term. The
Company has an option to renew the mortgage for an additional five year term
upon payment of a 1% extension fee. The interest rate during the extension
period will be the greater of 8.75% or 275 basis points above U.S. Treasuries as
defined in the mortgage agreement. The mortgage is being amortized based on a 25
year amortization schedule.

The Tenant has the right to mortgage the lease under terms and conditions
set forth in the lease. Any fee mortgage on the premises is superior to any
leasehold mortgage.

* * * * * * * * * * *

1995 TRANSACTION

On January 19, 1995 the Company acquired sixteen net lease investments and
one mortgage receivable from Gould Investors L.P., an affiliated entity, i.e.
the Kroger Freezer Warehouse - Columbus, Ohio, 13 Total Petroleum service
stations-all located in the State of Michigan, the United Artists Theater -
Seattle, Washington (and a second mortgage secured by this property) and the
Zero City Frozen Food Warehouse - Miami, Florida. For a more detailed
description of materially important properties acquired in the 1995 Transaction
see the discussion below. In consideration of the acquisition of these
properties, the Company transferred to Gould 1,030,000 shares of BRT Preferred
Stock and 173,719 shares of beneficial interest of BRT, the Company took title
to the 13 Total Petroleum service stations subject to a $6,850,000 blanket first
mortgage (held by the Company and cancelled as a matter of law in the
transaction) and the Company paid Gould $3.29 in cash. The Company recorded the
assets acquired at the carrying amount of the assets exchanged, plus transaction
costs.

DESCRIPTION OF MATERIAL PROPERTIES ACQUIRED IN 1995 TRANSACTION

ZERO CITY FROZEN FOOD WAREHOUSE

DESCRIPTION OF ZERO CITY FROZEN FOOD WAREHOUSE

This property, located in Miami, Florida, is improved with a one story
industrial building, with a partial mezzanine, cold rooms, freezers and
processing area constructed on a 12 1/2 acre site. The Company is the tenant
under a ground lease and landlord under an operating lease (holding what is
commonly referred to in the real estate industry as a "sandwich position").

GROUND LEASE

An unrelated third party owns the fee title to this property, which is
leased to the Company for a term which expires April 30, 2010, with three
remaining 15 year renewal options and one 14 year renewal option. Through April
30, 1995 the Company paid rent at the annual rate of $322,300 and from May 1,
1995 to April 30, 2010 the Company will pay annual rent at the rate of $288,833.
If the Company exercises the remaining renewal options the rental will be the
greater of $288,833 and 7.5% of the value of the land and its improvements. If
the fee owner refinances the mortgage on this property the Company is to receive
1/3 of the net proceeds thereof and/or 1/3 of any reduction in debt service, and
will be obligated for 1/3 of the debt service obligation. The Company, pursuant
to this ground lease, is obligated to pay all taxes and insurance and is
responsible for structural repairs.

9

OPERATING LEASE

LEASE TERM. The Company is lessee of the ground lease which it holds
subject to an operating lease with United States Cold Storage, Inc. The
operating lease is for a term expiring April 30, 2010 with one remaining 15 year
renewal option.

AMOUNT PAYABLE UNDER THE OPERATING LEASE. The tenant under the operating
lease paid to the Company annual fixed rent of $475,200 to April 30, 1995 and
will pay $425,000 thereafter through April 30, 2010 and the renewal term, if the
option to renew is exercised. The operating lease is net to Landlord and Tenant
is required to pay all taxes, insurance premiums and utility costs.

MAINTENANCE AND MODIFICATIONS. Tenant is to take good care of the premises
and at its expense, make all repairs, structural and non-structural.

Tenant has the right during the lease to make alterations to the premises,
but it requires the consent of Landlord if it substantially alters the basic
structure or value of the improvements and any repair in excess of $50,000
requires Landlord's approval. Tenant cannot demolish any improvements to the
premises without Landlord's consent. Tenant can construct an addition to any
building or construct a new building on the property, but it requires Landlord's
consent if the cost exceeds $50,000 and such addition or new construction, in
any event, cannot detract from the existing improvements.

INSURANCE. Tenant, at its cost, is required to maintain fire insurance,
with extended coverage in an amount not less than 80% of full repair and
replacement value, boiler insurance and liability insurance. Tenant is also
required to maintain insurance, in such amounts, as Landlord shall reasonably
require against other insurable hazards.

DAMAGE TO OR CONDEMNATION OF ZERO CITY FROZEN FOOD WAREHOUSE. In the event
of damage or destruction of the premises as a result of fire or other casualty,
Tenant can not terminate the lease and at its cost and expense, is to repair and
restore the improvements to at least as good a condition as existed immediately
prior to the casualty.

If there is a total condemnation of the property, the lease terminates as of
the date of taking and any award is allocated as follows: (i) to Landlord such
portion as is necessary to discharge all mortgages, provided such mortgages do
not exceed $6,700,000, (ii) to Landlord the difference, if any between
$6,700,000 and the amount received by Landlord to discharge mortgages, (iii) to
Tenant an amount equal to the book value of Tenant's property, and (iv) the
balance 50-50 to Landlord and Tenant.

MORTGAGE

The Company holds its leasehold position on a free and clear basis.

TOTAL PETROLEUM PROPERTIES

DESCRIPTION OF TOTAL PETROLEUM PROPERTIES

The Total Petroleum Properties, which are located in the State of Michigan,
are all service stations and include gasoline pumping islands, a service area
and a retail building used as a convenience store. The Total Petroleum
Properties are on parcels of land ranging from 45,000 square feet to 183,000
square feet and the buildings on the properties range from 6,000 square feet to
13,000 square feet.

DESCRIPTION OF TOTAL PETROLEUM LEASES

LEASE TERM. The Total Petroleum Properties have 13 separate but identical
leases dated as of May 15, 1991 (Total Petroleum Leases). The primary lease term
for the Total Petroleum Properties is 20 years ending on May 31, 2011. Total
Petroleum has the right to extend the leases for two 10 year renewal terms, but
the renewal option can only be exercised on an all or none basis. The Total
Petroleum Leases contain a cross default provision which provides that on a
monetary default resulting in the termination of a lease, the Landlord has a
right to terminate any or all of the other leases.

10

AMOUNTS PAYABLE UNDER THE TOTAL PETROLEUM LEASES. The combined annual rent
for all 13 properties is $860,075 through May 14, 1996, increasing by 3% each
May 15th throughout the term of the lease. The leases are net leases, which
requires Total to pay all real estate taxes, assessments, and all utility
charges.

MAINTENANCE AND MODIFICATIONS. Total Petroleum is required, at its expense,
to maintain the Total Petroleum Properties in good repair and is responsible to
keep each property in reasonably clean condition. The Tenant at its sole expense
may make any non-structural alterations, additions, replacements or improvements
to the property without the Landlord's consent. The lessee is required to obtain
the Landlord's prior written consent for structural alterations, additions,
replacements or improvements which consent will not be unreasonably withheld.

INSURANCE. Total Petroleum is required to maintain insurance at its expense
providing for fire with standard extended risk coverage to the extent of the
full replacement cost. So long as the Tenant's net worth exceeds $100,000,000
the deductible may be that which is provided in Total Petroleum's master
corporate insurance policy, and if its net worth falls below $100,000,000 then
the deductible shall not exceed $250,000 without Landlord's consent.

DAMAGE TO OR CONDEMNATION OF PROPERTY. If the premises are damaged or
destroyed by fire or other casualty there is to be no rent abatement and Total
Petroleum is required to repair and restore the premises in a reasonable
diligent manner. If, however, the premises are rendered untenantable Total
Petroleum may terminate the lease in which event it shall pay to the Company an
amount sufficient to restore the premises to the condition existing as of the
date the lease was executed, reasonable wear and tear excepted.

If all or any part of any of the properties is taken by condemnation so as
to render the remaining portion of the property unsuitable for lessee's
business, then the rent due under the lease shall be equitably adjusted until
such time as the Tenant provides Landlord with written notice that it is
electing to terminate the lease. If however, the Tenant does not vacate the
property within ninety days of such taking then it is conclusively presumed that
such taking is not extensive enough to render the premises unsuitable for Total
Petroleum business. In the event of a taking, damages awarded are payable as
follows: (i) Total Petroleum is entitled to the portion of the award
attributable to the value of its leasehold and (ii) Landlord is entitled to the
value of its reversion. In allocating between the value of the leasehold and the
reversion, the value of improvements and betterments made by the lessee is to be
equitably divided between leasehold and reversion. Each party is entitled to
file a claim in any condemnation proceeding.

OPTION TO PURCHASE. Total Petroleum has been granted an option to purchase
all locations at fair market value, excluding the value of the improvements made
by it. This option may be exercised during the last six months of the term of
the lease. Fair market value is to be determined by an appraisal process.

RIGHT OF FIRST REFUSAL. Total Petroleum has been granted a right of first
refusal to purchase a Total Petroleum Property from the Landlord for the same
purchase price and on the same terms and conditions as a bonafide offer to
purchase received by the Landlord from an unrelated party which is engaged in,
or plans to engage in the business of selling petroleum products, which offer
the Landlord intends to accept.

MORTGAGE

The Total Petroleum Properties are owned free and clear of mortgages.

* * * * * * * * * * *

11

ADDITIONAL 1995 ACQUISITIONS

In fiscal 1995 the Company acquired fee title to three additional net lease
investments, described more particularly below.

KILLEEN, TEXAS PROPERTY

DESCRIPTION OF KILLEEN, TEXAS PROPERTY

The Killeen, Texas property is one of two front out-parcels of a newly
developed shopping center anchored by an Albertson's supermarket, located at 900
West Central Texas Expressway, Killeen, Texas. The property is improved with a
one story, free standing building having approximately 8,000 square feet of
space and 39 parking spaces located on a parcel of land of approximately 1.106
acres. The building, a prototypical Hollywood Video Store, was built in 1995.

DESCRIPTION OF HOLLYWOOD VIDEO LEASE

LEASE TERM. The property is leased to Hollywood Entertainment Corporation
d/b/a/ Hollywood Video pursuant to a "net lease" which has an initial term of
approximately fifteen years ending June 30, 2010. The tenant has the right to
extend the lease for two additional five year terms.

AMOUNTS PAYABLE UNDER THE LEASE. The annual basic rent payable under the
lease is $141,200, increasing to $162,380 in July, 2000. Tenant is required to
pay all real estate taxes, assessments, water and sewer charges and other
governmental charges.

MAINTENANCE AND MODIFICATIONS. Tenant at its expense is required to
maintain (and where necessary replace) the premises, including all structural
systems, load bearing walls, floor slabs and HVAC systems and equipment. The
Landlord warranted and guaranteed that the building was constructed in a first
class manner for a period of 12 months from the commencement date of the lease
and after the expiration of said 12 month period Landlord is to assign to the
Tenant any and all warranties and guaranties of third parties held by the
Landlord, except in the event such warranties and guaranties are not assignable,
the Landlord is to enforce the warranties and guaranties for the benefit of the
Tenant.

The Tenant is not to make any exterior or structural alterations to the
premises without the prior written consent of the Landlord which is not to
unreasonably withheld. Tenant is permitted to make interior non structural
alterations, additions and improvements costing less than $50,000 without the
Landlord's prior written consent.

INSURANCE. Landlord is to obtain general liability insurance with coverage
of not less than $3,000,000, all risk property insurance covering fire and
extended coverage for the replacement value thereof and rental interruption
insurance covering a period not to exceed one year. The Tenant is to reimburse
the Landlord for Landlord's annual costs for premiums for such insurance. The
Tenant has the right to elect to carry some or all of such insurance upon ten
days prior written notice to Landlord and if Tenant gives such notice, the
Landlord is relieved of its obligations to obtain and maintain the insurance.

DAMAGE TO OR CONDEMNATION OF PROPERTY. If the premises are damaged or
destroyed by fire or other casualty the Landlord is to repair, restore or
rebuild as is necessary to substantially return the premises to the condition
existing immediately prior to such damage or destruction and the lease remains
in full force and effect. If however, any repair, restoration or reconstruction
may not commence within 90 days from the date of the casualty and are not
repaired, restored or reconstructed within eight months of the date of the
casualty, the Tenant may terminate the lease on 30 days prior written notice to
the Landlord. The Landlord is not required to expend funds in excess of the
insurance proceeds for such repairing, restoring, and rebuilding.

If the premises or any portion thereof are taken by condemnation, the lease
terminates as to the portion taken as of the date the condemning authority takes
title or possession. If more than 5% of the floor area of the building, or more
than 20% of the common area designated as parking is taken by condemnation
Tenant at its option may terminate the lease. If the tenant does not terminate
the lease,

12

the lease remains in full force and effect as to the portion of the premises
remaining except that the rent shall be reduced in the proportion that the floor
area of the premises so taken bears to the total floor area of the premises. Any
condemnation award shall be the property of the Landlord, but Tenant is entitled
to any award for loss or damage to Tenant's property and relocation expenses.

MORTGAGE

The property is encumbered by a first mortgage held by Bank One, Texas, N.A.
in the original principal amount of $731,250. The loan bears interest at 9.1%
per annum, is amortizing over a 25 year period and is due on August 14, 2002. At
December 31, 1995 $729,311 was due and owing on this mortgage.

ROSENBERG, TEXAS PROPERTY

DESCRIPTION OF ROSENBERG, TEXAS PROPERTY

The Rosenberg, Texas property, constructed in 1995, is located on an out
parcel of a recently developed free standing Super Kmart in Rosenberg, Texas (a
suburb of Houston, Texas). There are other out parcels occupied by a
Jack-in-the-Box, Payless Shoe Source, Peppermill Restaurant and
Texaco/McDonalds. The property is improved with a free standing prototypical
Hollywood Video store, having approximately 8,000 square feet of space and 44
parking spaces.

DESCRIPTION OF HOLLYWOOD VIDEO LEASE

The property is leased to Hollywood Entertainment Corp. d/b/a Hollywood
Video pursuant to a "net lease" which has an initial term of approximately
fifteen years ending January 31, 2010. The Tenant has the right to extend the
lease for two additional five year terms.

AMOUNTS PAYABLE UNDER THE LEASE. The annual basic rent under the lease is
$111,800, increasing to $128,750 in January 2000. The lease requires the Tenant
to pay all real estate taxes, assessments, water and sewer charges and other
governmental charges.

MAINTENANCE AND MODIFICATIONS. Tenant at its expense is required to
maintain (and where necessary replace) the premises, including all structural
systems, load bearing walls, floor slabs and HVAC systems and equipment. The
Landlord warranted and guaranteed that the building was constructed in a first
class manner for a period of 12 months from the commencement date of the lease
and after the expiration of said 12 month period Landlord is to assign to the
Tenant any and all warranties and guaranties of third parties held by the
Landlord except in the event such warranties and guaranties are not assignable,
the Landlord is to enforce the warranties and guaranties for the benefit of the
Tenant.

The Tenant is not to make any exterior or structural alterations to the
premises without the prior written consent of the Landlord which is not to
unreasonably withheld. Tenant is permitted to make interior non structural
alterations, additions and improvements costing less than $50,000 without the
Landlord's prior written consent.

INSURANCE. Landlord is to obtain general liability insurance with coverage
of not less than $3,000,000, all risk property insurance covering fire and
extended coverage for the replacement value thereof and rental interruption
insurance covering a period not to exceed one year and the Tenant is to
reimburse the Landlord for Landlord's annual costs for premiums for such
insurance. The Tenant has the right to elect to carry some or all of such
insurance upon ten days prior written notice to Landlord and if Tenant gives
such notice, the Landlord is relieved of its obligations to obtain and maintain
the insurance.

DAMAGE TO OR CONDEMNATION OF PROPERTY. If the premises are damaged or
destroyed by fire or other casualty the Landlord is to repair, restore or
rebuild as is necessary to substantially return the premises to the condition
existing immediately prior to such damage or destruction and the lease remains
in full force and effect. If however, any repair, restoration or reconstruction
may not commence within 90 days from the date of the casualty and are not
repaired, restored or reconstructed

13

within eight months of the date of the casualty, the Tenant may terminate the
lease on 30 days prior written notice to the Landlord. The Landlord is not
required to expend funds in excess of the insurance proceeds for such repairing,
restoring, rebuilding.

If the premises or any portion thereof are taken by condemnation, the lease
terminates as to the parcel taken as of the date the condemning authority takes
title or possession. If more than 5% of the floor area of the building, or more
than 20% of the common area designated as parking is taken by condemnation,
Tenant, at its option may terminate the lease. If the tenant does not terminate
the lease, the lease remains in full force and effect as to the portion of the
premises remaining except that the rent shall be reduced in the proportion that
the floor area of the premises so taken bears to the total floor area of the
premises. Any condemnation award shall be the property of the Landlord, but
Tenant is entitled to any award for loss or damage to Tenant's property and
relocation expenses.

MORTGAGE

The property is encumbered by a first mortgage held by Bank One, Texas, N.A.
in the original principal amount of $692,100. The loan bears interest of 8.55%
per annum, is amortizing over 25 years and is due on December 5, 2002. The
entire original principal amount was outstanding on December 31, 1995.

CEDAR RAPIDS, IOWA PROPERTY

DESCRIPTION OF CEDAR RAPIDS, IOWA PROPERTY

The Cedar Rapids property is located at 4701 First Avenue, S.E., a major
commercial thoroughfare in Cedar Rapids, Iowa. The property, contains
approximately 1.52 acres, is improved with a 15,400 square foot single story
retail store completed in 1995, and has 77 parking spaces.

DESCRIPTION OF AUDIO KING LEASE

LEASE TERM. The property is leased to Audio King Corporation pursuant to a
net lease which has an initial term of approximately twenty years expiring June
30, 2015. The Tenant has the right to extend the lease for four additional 5
year terms.

AMOUNTS PAYABLE UNDER THE LEASE. The annual basic rent under the lease is
$157,850, increasing to $180,950 in July 2000, $204,050 in July 2005 and
$227,150 in July 2010. The lease requires Tenant to pay all real estate taxes,
assessments and other government charges.

MAINTENANCE AND MODIFICATION. The Tenant is required to keep the premises,
including the foundation, exterior walls, roof and heating and ventilating and
air conditioning systems and any equipment serving the premises in good order,
condition and repair and in a clean and safe condition; provided however, during
the last 5 years of the initial term and during any extension term the Landlord
is responsible for replacement of the foundation, exterior walls, roof and HVAC
systems.

The Tenant is not to make any alterations or additions to the premises in
excess of $25,000 without first obtaining the Landlord's consent.

INSURANCE. The Tenant is required to maintain general liability insurance
in the initial amount of $1,000,000 per occurrence and the Landlord is to
maintain casualty insurance covering loss of or damage to the property in the
full amount of its replacement value. With respect to the casualty insurance
maintained by the Landlord, the Tenant is to pay to the Landlord, as additional
rent, the premiums for such policy within 15 days of receiving the statement
therefor. The casualty insurance provides protection against all risks including
fire, vandalism, malicious mischief, special extended perils, sprinkler leakage,
etc.

DAMAGE TO OR CONDEMNATION PROPERTY. If the premises or any portion of the
building is damaged by fire or other casualty the Landlord is to promptly repair
the damage if the repair, in Landlord's opinion, can be completed within 90
days. The Landlord does not have any obligation to repair in the event that the
insurance proceeds it receives are insufficient to cover the expected cost of
the repairs. If in Landlord's opinion the repairs cannot be completed within 90
days, the Landlord may elect to

14

repair the damage in which event the lease continues in full force and effect,
but the rent is partially abated to the extent Tenant's use of the premises is
impaired. If Landlord does not elect to make the repairs, the lease terminates
as of the date of the casualty.

If the whole of the building is taken by condemnation the lease will
terminate as of the date of taking. If less than the whole building is taken,
the lease shall be unaffected by the taking, provided that the Tenant has the
right to terminate the lease if 20% or more of the premises is taken and the
remaining area of the premises is not reasonably sufficient for Tenant to
continue to operate its business. In the event of a partial taking which does
not result in a termination of the lease, the Landlord is to restore the
remaining portion of the premises as nearly as practicable to its condition
prior to the condemnation. All damages awarded for any taking and condemnation
shall be the property of the Landlord except for value allocated to alterations
and additions made by Tenant after the lease was entered into. Tenant is also
entitled to a separate award for loss of business, depreciation, and removal of
stock and fixtures.

MORTGAGE

The property is encumbered by a first mortgage held by Firstar Bank Cedar
Rapids, N.A. in the original principal amount of $990,000. The loan bears
interest at 8 1/2% per annum and matures December 21, 2000. The loan provides
for amortization over 20 years. The entire principal balance was outstanding on
December 31, 1995.

ITEM 3. -- LEGAL PROCEEDINGS

There are no pending material legal proceedings to which the Company is a
party.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this Form 10-K.

PART II

ITEM 5. -- MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The following table sets forth the high and low prices for the Common Stock
of the Company as reported by the American Stock Exchange, and the per share
cash distributions paid by the Company on the Common Stock during each quarter
of the years ended December 31, 1994 and 1995:

HIGH LOW DIVIDEND
------- ------- -----------

L994
First Quarter....................................................... 10 7/8 10 1/8 $ .10
Second Quarter...................................................... 10 3/8 9 1/8 $ .125
Third Quarter....................................................... 11 1/4 10 3/8 $ .505
Fourth Quarter...................................................... 11 1/4 10 1/2 $ .125*

L995
First Quarter....................................................... 10 7/8 10 1/4 $ .125
Second Quarter...................................................... 12 3/4 10 1/4 $ .30
Third Quarter....................................................... 13 3/4 12 1/4 $ .30
Fourth Quarter...................................................... 14 1/8 12 3/4 $ .30*

15

The following table sets forth the high and low prices for the $16.50
Cumulative Convertible Preferred Stock of the Company as reported by the
American Stock Exchange and the per share cash distributions paid by the Company
on the Preferred Stock during each quarter of the years ended December 31, 1994
and 1995:

HIGH LOW DIVIDEND
------- ------- ------------

L994
First Quarter....................................................... 17 1/8 16 1/2 $ .40
Second Quarter...................................................... 17 1/2 16 1/2 $ .40
Third Quarter....................................................... 17 16 1/2 $ .40
Fourth Quarter...................................................... 16 7/8 15 7/8 $ .40**

1995
First Quarter....................................................... 16 7/8 15 3/4 $ .40
Second Quarter...................................................... 17 1/8 15 3/4 $ .40
Third Quarter....................................................... 16 7/8 16 1/8 $ .40
Fourth Quarter...................................................... 16 7/8 16 1/4 $ .40**

- ------------------------
* Cash distributions of $.30 and $.12 1/2 per share were paid on the Common
Stock on January 3, 1996 and January 2, 1995. These two distributions are
reflected as being paid in the 1995 and 1994 fourth quarters, respectively.

** A cash distribution of $.40 per share was paid on the Preferred Stock on
January 3, 1996 and January 2, 1995. These two distributions are reflected
as being paid in the fourth quarter of 1995 and 1994, respectively.

The Common Stock and Preferred Stock of the Company trade on the American
Stock Exchange, under the symbols OLP and OLP Pr, respectively. As of March 1,
1996 there were 350 common and 200 preferred stockholders of record and the
Company estimates that at such date there were approximately 1,600 and 725
beneficial owners of the Company's Common and Preferred Stock, respectively.

16

ITEM 6. -- SELECTED FINANCIAL DATA

The following are highlights of the Company's operations which are derived
from the audited financial statements of the Company for the years ended
December 31, 1995, 1994, 1993, 1992 and 1991.

1995 1994 1993 1992 1991
-------------- -------------- -------------- -------------- --------------

INCOME STATEMENT DATA
Revenues................................ $ 4,890,962 $ 4,041,378 $ 3,348,419 $ 2,967,919 $ 2,475,952
Gain on sales of real estate............ -- -- -- 8,528,684(a)
Gain on sale of investments............. -- -- 168,631 303,130 --
Provision for valuation adjustment and
impairment............................. -- -- (258,744) -- (4,090,000)
Net income.............................. 3,096,302 2,861,137 2,435,269 2,436,315 5,782,678
Calculation of net income applicable to
common stockholders:
Net income............................ 3,096,302 2,861,137 2,435,269 2,436,315 5,782,678
Less: dividends and accretion on
preferred stock........................ 1,446,519 1,444,703 1,442,907 1,442,372 1,538,935
Net income applicable to common
stockholders........................... $ 1,649,783 $ 1,416,434 $ 992,362 $ 993,943 $ 4,243,743
Weighted average number of common shares
outstanding............................ 1,409,371 1,356,989 1,338,619 1,338,619 1,338,619
Net income per common share............. $ 1.17 $ 1.04 $ .74 $ .74 $ 3.17
Cash distributions per share of:
Common Stock.......................... $ 1.03 $ .86 $ .94 $ .70 $ 2.25
Preferred Stock....................... 1.60 1.60 1.60 1.60 1.60

BALANCE SHEET DATA
Total real estate investments, net...... $ 24,253,765 $ 10,996,534 $ 5,627,909 $ 6,271,828 $ 6,375,043
Investments in U.S. Government
obligations and securities............. 1,274,747 3,972,256 4,856,453 13,954,329 19,888,950
Mortgages and note receivables.......... 7,564,716 16,096,224 17,274,039 10,614,040 7,180,387
Total assets............................ 38,040,246 37,652,773 32,383,674 32,339,558 36,019,492
Total liabilities....................... 7,532,267 7,680,937 3,360,236 3,199,045 6,377,989
Redeemable convertible preferred
stock.................................. 12,796,475 12,643,998 12,493,337 12,344,472 13,041,045
Total stockholders' equity.............. 17,711,504 17,327,838 16,530,101 16,796,041 16,600,458

- ------------------------
Notes:

(a) Represents primarily a gain on sale of properties net leased to Firestone
Tire & Rubber Company.

ITEM 7. -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1995, the Company's primary source of liquidity was
approximately $3,844,000 in cash and $1,275,000 in investments in U.S.
Government obligations and securities. Long term debt at December 31, 1995
consisted of $6,590,154 of mortgages payable which is secured by certain real
estate investments.

The Company is currently in discussions concerning the acquisition of other
net leased properties. In management's judgement, cash provided from operations,
the Company's cash position and holdings in marketable government securities
will provide adequate funds for cash distributions to shareholders, operating
expenses and funds for a few investment opportunities. On March 1, 1996, the

17

Company entered into a revolving credit agreement with Bank Leumi Trust Company
of New York, which makes available to the Company up to $5,000,000 for
additional property acquisitions. The Credit Agreement provides for additional
institutions to become parties to a total credit facility of $15,000,000
(including the $5,000,000 commitment of Bank Leumi). There is no assurance that
additional institutions will become parties to the Credit Agreement. It will
continue to be the Company's policy to make sufficient cash distributions to
shareholders in order for the Company to maintain its real estate investment
trust status under the Internal Revenue Code.

In connection with the lease agreements with Total Petroleum, Inc. ("Total
Petroleum") consummated in 1991, the Company agreed to expend certain funds to
remediate environmental problems discovered at certain locations that were net
leased to Total Petroleum. It was agreed that the net cost to the Company would
not exceed $350,000 per location, with any excess cost being the responsibility
of Total Petroleum. At that time the Company deposited $2,000,000 with an
independent escrow agent to insure compliance by the Company with its
obligations with respect to the environmental clean up. The escrow agent held
approximately $1,345,000 as of December 31, 1995 which the Company deems
adequate to cover any additional environmental costs.

The Michigan Underground Storage Tank Fund Administration ("MUSTFA") has
been reimbursing qualified companies for environmental costs incurred in "clean
up" associated with underground storage tanks. In 1995, the Company received or
accrued approximately $66,000 regarding this fund. The Company cannot estimate
the amount, if any, which will be reimbursed by MUSTFA in the future due to an
announced termination of the program.

RESULTS OF OPERATIONS

COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND 1994

Total revenues increased to $4,890,962 for the year ended December 31, 1995
from $4,041,378 for the year ended December 31, 1994. The increase of
approximately $850,000 is the result of a substantial increase in rental income,
offset in part by decreases in interest, dividends and other income, resulting
from Management's decision during 1994 to concentrate on investments in improved
real estate net leased on a long term basis. Rental income increased by
$1,682,084, from $983,373 in 1994 to $2,665,457 in 1995, primarily due to rents
earned on sixteen properties acquired from Gould Investors L.P. ("Gould") in
January 1995 ("January 1995 Transaction") and four other properties acquired
during 1995 and 1994. Interest income from related parties decreased from
$2,361,013 in 1994 to $1,878,262 in 1995, principally due to the extinguishment
of a mortgage receivable as part of the January 1995 Transaction. The decrease
was partly offset by an increase in the discount amortization of a senior note
receivable resulting from an increase in principal collections on such note
during 1995.

Dividends from related party decreased to $13,940 in 1995 from $270,000 in
1994 due to the transfer of preferred shares of BRT Realty Trust as part of the
January 1995 Transaction. Interest and other income decreased to $333,303 in
1995 from $426,992 in 1994 primarily due to a decrease in the amount received or
accrued from MUSTFA.

The $266,280 increase in depreciation from $180,557 in 1994 to $446,837 in
1995 results from depreciation on properties acquired during 1995 and 1994. The
decrease in interest -- mortgages payable from $484,440 in 1994 to $453,684 in
1995 is the net result of the elimination of interest paid on a $2,753,700
mortgage loan which was fully repaid in March 1995, offset by interest paid on
new mortgages obtained in connection with property acquisitions during 1995 and
1994.

Effective January 1, 1995, the Company became self-managed, thereby
eliminating the management fee. In connection with the January 1995 Transaction,
the Company must pay annual fixed leasehold rent on one property of $289,000
through April 2010. There was no such expense in 1994.

18

General and administrative costs increased in 1995 to $609,745 from $412,158
in 1994 substantially due to salary and related payroll costs for the Company's
President, as the Company converted to self-management effective January 1995.
To a lesser extent, the increase results from additional payroll charges, as the
Company's level of activity increased.

COMPARISON OF YEARS ENDED DECEMBER 31, 1994 AND 1993

Total revenues increased to $4,041,378 for the year ended December 31, 1994
from $3,348,419 for the year ended December 31, 1993. The $257,037 increase in
rental income results from the acquisition of a long term net leased property in
June 1994, offset to a limited extent by the sale of a parcel of real estate in
November 1993. Interest income from related parties increased to $2,361,013 in
1994 from $1,907,286 in 1993. The increase of $453,727 is due primarily to
interest earned in 1994 on a mortgage loan purchased from the FDIC at a
substantial discount on July 30, 1993 and interest earned on a senior secured
note receivable acquired in February 1993, offset in part by the exchange of a
mortgage receivable for preferred shares in September 1993. Dividends of
$270,000 and $79,500 were paid on the preferred shares during 1994 and 1993,
respectively.

Interest and other income decreased from $635,297 for the year ended
December 31, 1993 to $426,992 for the year ended December 31, 1994. The $208,305
decrease is substantially due to a decrease of interest earned on U.S.
Government securities resulting from the sale of such investments during 1993,
the proceeds of which were used to invest in the mortgage loan purchased from
the FDIC and the senior secured note receivable. The decrease was partly offset
during 1994 due to an increase in other income of approximately $50,000,
representing a partial return of unexpended escrow funds.

The $78,604 increase in depreciation expense to $180,557 in 1994 results
substantially from the purchase of a property in June 1994. In connection with
this purchase, the Company obtained a $4,250,000 mortgage loan, resulting in
interest on mortgages payable increasing in 1994 by $202,186.

The increases in management fees of $19,376 is due to the increase in gross
revenues on which the management fee was based. Effective January 1, 1995 the
management fee was eliminated as the Company became a self administered real
estate investment trust.

General and administrative costs of $412,158 in 1994 reflect an increase of
$57,038 from the prior year expense of $355,120 and is substantially due to an
increase in expenses allocated by Gould Investors L.P. caused by an increase in
the usage of staff, as the Company's level of activity increased.

Gain on sale of investments in 1993 resulted from the sale of U.S.
Government obligations and securities.

In August, 1993, the Company entered into a contract for the sale of real
estate at a sales price lower than the carrying amount. The Company recorded a
provision for valuation adjustment for this difference of $258,744. The sale
closed during November 1993. There was no comparable provision in 1994.

ITEM 8. -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data listed in Items 14(a)(1) and
14(a)(2) hereof are incorporated herein by reference.

ITEM 9. -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

Information required by Part III (Item 10 -- "Directors and Executive
Officers of the Registrant", Item 11 -- "Executive Compensation", Item 12 --
"Security Ownership of Certain Beneficial Owners and Management" and Item 13 --
"Certain Relationships and Related Transactions") will be contained in the
definitive proxy statement to be filed within 120 days of the end of the
Company's fiscal year.

19

PART IV

ITEM 14. -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)Documents filed as part of this Report:

1. The following financial statements of the Company are included in this
Report on Form 10-K:

PAGE
-----------

-- Report of independent auditors (Ernst & Young LLP, successor to F-1
Kenneth Leventhal & Company, Independent Certified Public
Accountants)......................................................
-- Statements:
F-2
Consolidated Balance Sheets........................................
F-3
Consolidated Statements of Income..................................
F-4
Consolidated Statements of Stockholders' Equity....................
F-5-F-6
Consolidated Statements of Cash Flows..............................
F-7-F-16
Notes to Consolidated Financial Statements.........................

2. Financial Statement Schedules:

-- Schedule III -- Real Estate and Accumulated F-17-F-18
Depreciation........................................
-- Schedule IV -- Mortgage Loans on Real Estate......... F-19-F-20

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.

3. EXHIBITS
3.1 Articles of Incorporation, as amended, of the Company, filed as Exhibit 3.1 to the
Company's Form 10-Q for the quarter ended September 30, 1985, which Exhibit is incorporated
herein by reference.
3.2 Amendment to Articles of Incorporation, filed as Exhibit to the Company's Form 10-Q for the
quarter ended June 30, 1989, which Exhibit is incorporated herein by reference.
3.3 Amendment to Articles of Incorporation, filed as an Exhibit to the Company's Form 10-Q for
the quarter ended June 30, 1990, which Exhibit is incorporated herein by reference.
3.4 By-Laws of the Company, as amended, filed as an Exhibit to the Company's Form 10-Q for the
quarter ended June 30, 1989, which Exhibit is incorporated herein by reference.
3.5 Amendment to By-Laws filed as an Exhibit to the Company's Form 10-Q for the quarter ended
June 30, 1990, which Exhibit is incorporated herein by reference.
10.1 Lease, dated July 24, 1975, between Harvest of Texas, Inc., landlord, and The Kroger Co.,
tenant, as amended, filed as Exhibit 10.5 to the Company's Form 10-K for the year ended
December 31, 1987, which Exhibit is incorporated herein by reference.
10.2 (i) Lease dated December 2, 1986 between Golden Plaza (1513) Associates, as
landlord, and The May Department Store Company ("May"), as tenant, for the
Chicago (Ashland Avenue), Illinois Property, filed as Exhibit b(i) to the
Company's Form 8-K dated September 1, 1987, which Exhibit is incorporated herein
by reference.

20

(ii) Lease dated December 2, 1986 between Golden Plaza (812) Associates, as landlord,
and May, as tenant, for the Nashville, Tennessee property, filed as Exhibit
b(ii) to the Company's Form 8-K dated September 1, 1987, which Exhibit is
incorporated herein by reference.
(iii) Lease dated December 2, 1986 between Golden Plaza (717) Associates, as landlord,
and May, as tenant, for the Ottumwa, Iowa Property, filed as Exhibit b(iii) to
the Company's Form 8-K dated September 1, 1987, which Exhibit is incorporated
herein by reference.
(iv) Lease dated December 2, 1986 between Golden Plaza (1466) Associates, as
landlord, and May, as tenant, for the Chicago Heights, Illinois Property, filed
as Exhibit b(iv) to the Company's Form 8-K dated September 1, 1987, which
Exhibit is incorporated herein by reference.
(v) Lease dated December 2, 1986 between Golden Plaza (1485) Associates, as
landlord, and May, as tenant, for the West Valley City, Utah Property, filed as
Exhibit b(v) to the Company's Form 8-K dated September 1, 1987, which Exhibit is
incorporated herein by reference.
(vi) Lease dated December 2, 1986 between Golden Plaza (2652) Associates, as
landlord, and May, as tenant, for the Baltimore, Maryland Property, filed as
Exhibit b(vi) to the Company's Form 8-K dated September 1, 1987, which Exhibit
is incorporated herein by reference.
(vii) Lease dated December 2, 1986 between Golden Plaza (94) Associates, as landlord,
and May, as tenant, for the Kansas City, Kansas Property, filed as Exhibit
b(vii) to the Company's Form 8-K dated September 1, 1987, which Exhibit is
incorporated herein by reference.
(viii) Lease dated December 2, 1986 between Golden Plaza (1530) Associates, as
landlord, and May, as tenant, for the Seattle, Washington Property, filed as
Exhibit b(viii) to the Company's Form 8-K dated September 1, 1987, which Exhibit
is incorporated herein by reference.
(ix) Lease dated December 2, 1986 between Golden Plaza (1508) Associates, as
landlord, and May, as tenant, for the Chicago (E. 47th St.), Illinois Property,
filed as Exhibit b(ix) to the Company's Form 8-K dated September 1, 1987, which
Exhibit is incorporated herein by reference.
(x) Lease dated December 2, 1986 between Golden Plaza (822) Associates, as landlord,
and May, as tenant, for the Decatur, Illinois Property, filed as Exhibit b(x) to
the Company's Form 8-K dated September 1, 1987, which Exhibit is incorporated
herein by reference.
(xi) Lease dated December 2, 1986 between Golden Plaza (2633) Associates, as
landlord, and May, as tenant, for the Dallas, Texas Property, filed as Exhibit
b(xi) to the Company's Form 8-K dated September 1, 1987, which Exhibit is
incorporated herein by reference.
On September 1, 1987 the leases referred to in 10.3 were assigned to the
Company, as landlord.
10.3 Lease dated January 17, 1989 and modification thereof dated as of February 15, 1989 between
Crystal Management, Inc., as Landlord and Stamford Realty Associates, Inc. as tenant with
respect to Madison Avenue, New York, New York, filed as an exhibit to the Company's Form
8-K dated June 27, 1994 and incorporated herein by reference.
10.4 Purchase and Sale Agreement dated as of December 28, 1994 with Gould Investors L.P. with
respect to the acquisition of sixteen net leased properties, filed as an exhibit to the
Company's Form 8-K dated February 2, 1995 and incorporated herein by reference.

21

10.5 Lease dated April 30, 1970 between Arthur L. Feinstein, et. ano and Prudent Resources
Trust, as Tenant (Ground Lease) with respect to Zero City Frozen Food Warehouse, Miami,
Florida filed as an exhibit to the Company's Form 10-K dated March 23, 1995 and
incorporated herein by reference.
10.6 Lease dated April 30, 1970 between Prudent Resources Trust, as Landlord, and Zero Food
Storage, Inc. as Tenant (Operating Lease) with respect to Zero City Frozen Food Warehouse,
Miami, Florida filed as an exhibit to the Company's Form 10-K dated March 23, 1995 and
incorporated herein by reference.
10.7 Form of lease entered into with Total Petroleum with respect to 13 Total Petroleum
properties filed as an exhibit to the Company's Form 10-K dated March 23, 1995 and
incorporated herein by reference.
10.8 Lease dated March 1, 1995 between Hollywood Video Partners LLC, as Landlord, and Hollywood
Entertainment Corporation, as Tenant, with respect to Killeen, Texas property. This exhibit
is filed herewith. The lease was assigned to OLP Texas, Inc., a wholly owned subsidiary of
the Company.
10.9 Lease dated September 20, 1994 between HWD Video Partners, Inc., as Landlord and Hollywood
Entertainment Corporation, as Tenant, with respect to Rosenberg, Texas property. The
exhibit is filed herewith. This lease was assigned to OLP Texas, Inc., a wholly owned
subsidiary of the Company.
10.10 Lease dated June 28, 1995 between OLP Iowa, Inc. (a wholly owned subsidiary of the
Company), as Landlord, and Audio King Corporation, as Tenant, with respect to Cedar Rapids,
Iowa property. This exhibit is filed herewith.
10.11 Credit Agreement dated March 1, 1996 between the Company and Bank Leumi Trust Company of
New York. This exhibit is filed herewith.
21.1 Subsidiaries of registrant (filed herewith)
27 Financial Data Statements
(b) No reports on Form 8-K were filed by the Registrant during the last quarter of
the period covered by this report.

22

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.
ONE LIBERTY PROPERTIES, INC.

Dated: March , 1996
By: /s/ MATTHEW GOULD

-----------------------------------
Matthew Gould
PRESIDENT

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 in the capacities indicated on the dates indicated.

SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------- -----------------------

/s/ FREDRIC H. GOULD
------------------------------------------- Chairman of the Board of March 12, 1996
Fredric H. Gould Directors

/s/ MATTHEW GOULD
------------------------------------------- President and Chief Executive March 12, 1996
Matthew Gould Officer

/s/ MARSHALL ROSE
------------------------------------------- Director March 12, 1996
Marshall Rose

/s/ JOSEPH A. AMATO
------------------------------------------- Director March 12, 1996
Joseph A. Amato

/s/ CHARLES BIEDERMAN
------------------------------------------- Director March 12, 1996
Charles Biederman

/s/ ARTHUR HURAND
------------------------------------------- Director March 12, 1996
Arthur Hurand

/s/ DAVID W. KALISH
------------------------------------------- Vice President and Chief March 12, 1996
David W. Kalish Financial Officer

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of
One Liberty Properties, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of One Liberty
Properties, Inc. and subsidiaries (the "Company") as of December 31, 1995 and
1994, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1995. Our audits also included the financial statement schedules listed in the
Index at Item 14(a). These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
One Liberty Properties, Inc. and subsidiaries at December 31, 1995 and 1994, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.

ERNST & YOUNG LLP

New York, New York
February 9, 1996
except for Note 10, as to which the date is
March 1, 1996

F-1

ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS

DECEMBER 31,
------------------------------
1995 1994
-------------- --------------

Real estate investments, at cost (Notes 3 and 4)
Land........................................................................... $ 7,299,417 $ 3,586,317
Buildings...................................................................... 18,154,919 8,163,951
-------------- --------------
25,454,336 11,750,268
Less accumulated depreciation................................................ 1,200,571 753,734
-------------- --------------
24,253,765 10,996,534
Mortgages receivable -- less unamortized discount -- (substantially all from
related parties) -- (Note 3).................................................... 7,036,141 13,988,031
Senior secured note receivable -- less unamortized discount -- (related party) --
(Note 3)........................................................................ 528,575 2,108,193
Cash and cash equivalents........................................................ 3,844,409 2,701,456
Unbilled rent receivable......................................................... 86,767 173,547
Rent, interest, deposits and other receivables................................... 696,790 360,599
Investments in U.S. Government obligations and securities -- (Note 2)............ 1,274,747 3,972,256
Investments in BRT Realty Trust -- (related party) -- (Notes 2 and 3)............ 127,704 3,219,481
Other............................................................................ 191,348 132,676
-------------- --------------
$ 38,040,246 $ 37,652,773
-------------- --------------
-------------- --------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgages payable (Note 4)..................................................... $ 6,590,154 $ 6,983,647
Accounts payable and accrued expenses.......................................... 193,767 198,890
Dividends payable.............................................................. 748,346 498,400
-------------- --------------
7,532,267 7,680,937
-------------- --------------
Commitments and contingencies (Notes 5, 6 and 7)................................. -- --
Redeemable Convertible Preferred Stock, $1 par value; $1.60 cumulative annual
dividend; 2,300,000 shares authorized; 808,776 shares issued; liquidation and
redemption values of $16.50 (Note 5)............................................ 12,796,475 12,643,998
-------------- --------------
Stockholders' equity:
Common Stock, $1 par value; 25,000,000 shares authorized; 1,416,119 and
1,399,119 shares issued and outstanding....................................... 1,416,119 1,399,119
Paid-in capital................................................................ 13,218,757 13,233,109
Net unrealized loss on available-for-sale securities (Note 2).................. (6,758) (34,913)
Accumulated undistributed net income........................................... 3,083,386 2,730,523
-------------- --------------
17,711,504 17,327,838
-------------- --------------
$ 38,040,246 $ 37,652,773
-------------- --------------
-------------- --------------

See accompanying notes to consolidated financial statements.

F-2

ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------

Revenues:
Rental income (Note 6)............................................. $ 2,665,457 $ 983,373 $ 726,336
Interest from related parties (Note 3)............................. 1,878,262 2,361,013 1,907,286
Dividends from related party (Note 3).............................. 13,940 270,000 79,500
Interest and other income.......................................... 333,303 426,992 635,297
------------- ------------- -------------
4,890,962 4,041,378 3,348,419
------------- ------------- -------------
Expenses:
Depreciation....................................................... 446,837 180,557 101,953
Interest -- mortgages payable...................................... 453,684 484,440 282,254
Management fee (Note 7)............................................ -- 103,086 83,710
Leasehold rent..................................................... 284,394 -- --
General and administrative (Note 7)................................ 609,745 412,158 355,120
------------- ------------- -------------
1,794,660 1,180,241 823,037
------------- ------------- -------------
Operating income..................................................... 3,096,302 2,861,137 2,525,382
------------- ------------- -------------
Gain on sale of investments.......................................... -- -- 168,631
Provision for valuation adjustment of real estate realized upon sale
of real estate...................................................... -- -- (258,744)
------------- ------------- -------------
Loss on sale of real estate and investments.......................... -- -- (90,113)
------------- ------------- -------------
Net income........................................................... $ 3,096,302 $ 2,861,137 $ 2,435,269
------------- ------------- -------------
------------- ------------- -------------
Calculation of net income applicable to common stockholders:
Net income......................................................... $ 3,096,302 $ 2,861,137 $ 2,435,269
Less dividends and accretion on preferred stock.................... 1,446,519 1,444,703 1,442,907
------------- ------------- -------------
Net income applicable to common stockholders......................... $ 1,649,783 $ 1,416,434 $ 992,362
------------- ------------- -------------
------------- ------------- -------------
Weighted average number of common shares outstanding................. 1,409,371 1,356,989 1,338,619
------------- ------------- -------------
------------- ------------- -------------
Net income per common share (Note 2):
Operating income................................................... $ 1.17 $ 1.04 $ .81
Loss on sale of real estate and investments........................ -- -- (.07)
------------- ------------- -------------
Net income......................................................... $ 1.17 $ 1.04 $ .74
------------- ------------- -------------
------------- ------------- -------------
Cash distributions per share:
Common Stock....................................................... $ 1.03 $ .86 $ .94
------------- ------------- -------------
------------- ------------- -------------
Preferred Stock.................................................... $ 1.60 $ 1.60 $ 1.60
------------- ------------- -------------
------------- ------------- -------------

See accompanying notes to consolidated financial statements.

F-3

ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 1995

NET
UNREALIZED
GAIN (LOSS) ON
AVAILABLE-FOR- ACCUMULATED
COMMON PAID-IN SALE UNDISTRIBUTED
STOCK CAPITAL SECURITIES NET INCOME TOTAL
------------- -------------- -------------- -------------- --------------

Balances, January 1, 1993................ $ 1,338,619 $ 13,003,572 $ -- $ 2,453,850 $ 16,796,041
Net income............................... -- -- -- 2,435,269 2,435,269
Distributions -- Common Stock
($.94 per share)....................... -- -- -- (1,258,302) (1,258,302)
Distributions -- Preferred Stock
($1.60 per share)...................... -- -- -- (1,294,042) (1,294,042)
Accretion on Preferred Stock............. -- (148,865) -- -- (148,865)
------------- -------------- -------------- -------------- --------------
Balances, December 31, 1993.............. 1,338,619 12,854,707 -- 2,336,775 16,530,101
Net income............................... -- -- -- 2,861,137 2,861,137
Distributions -- Common Stock
($.86 per share)....................... -- -- -- (1,173,347) (1,173,347)
Distributions -- Preferred Stock
($1.60 per share)...................... -- -- -- (1,294,042) (1,294,042)
Accretion on Preferred Stock............. -- (150,661) -- -- (150,661)
Exercise of options...................... 60,500 529,063 -- -- 589,563
Net unrealized loss on available-for-sale
securities (Note 2)..................... -- -- (34,913) -- (34,913)
------------- -------------- -------------- -------------- --------------
Balances, December 31, 1994.............. 1,399,119 13,233,109 (34,913) 2,730,523 17,327,838
Net income............................... 3,096,302 3,096,302
Distributions -- Common stock
($1.03 per share)...................... (1,449,397) (1,449,397)
Distributions -- Preferred stock
($1.60 per share)...................... (1,294,042) (1,294,042)
Accretion on preferred stock............. (152,477) (152,477)
Exercise of options...................... 17,000 138,125 155,125
Net unrealized gain on available-for-sale
securities (Note 2)..................... 28,155 28,155
------------- -------------- -------------- -------------- --------------
Balances, December 31, 1995.............. $ 1,416,119 $ 13,218,757 $ (6,758) $ 3,083,386 $ 17,711,504
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------

See accompanying notes to consolidated financial statements.

F-4

ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------

Cash flows from operating activities:
Net income........................................................ $ 3,096,302 $ 2,861,137 $ 2,435,269
Adjustments to reconcile net income to net cash provided by
operating activities:
(Gain) on sale of investments................................... -- -- (168,631)
Provision for valuation adjustment.............................. -- -- 258,744
Depreciation and amortization................................... 479,645 236,841 148,200
Amortization of discount on mortgage receivable -- related
party.......................................................... -- -- (151,784)
Changes in assets and liabilities:
(Increase) decrease in rent, interest, deposits and other
receivables.................................................. (241,681) (54,660) 141,358
(Decrease) increase in accounts payable and accrued
expenses..................................................... (5,123) 49,726 27,329
------------- ------------- -------------
Net cash provided by operating activities................... 3,329,143 3,093,044 2,690,485
------------- ------------- -------------
Cash flows from investing activities:
Additions to real estate.......................................... (3,819,323) (5,549,182) --
Costs of acquisition of real estate and mortgage receivable from
Gould Investors L.P. -- related party............................ (90,514) -- --
Collection of mortgages receivable -- (including $148,291,
$236,625 and $141,432 from related parties in 1995, 1994 and
1993)............................................................ 169,388 249,712 153,308
Collection of senior secured note receivable -- BRT Realty Trust
-- related party................................................. 1,579,618 928,103 178,846
Investment in mortgages receivable -- related parties, net of
discount......................................................... -- -- (6,080,582)
Investment in senior secured note receivable -- BRT Realty Trust
-- related party, net of discount................................ -- -- (3,215,142)
Sale of real estate, net.......................................... -- -- 283,222
Investment in BRT Realty Trust shares of beneficial interest...... -- -- (583,142)
Sale of U.S. Government obligations and securities, net........... 2,806,713 739,188 9,266,507
Other............................................................. (14,986) -- --
------------- ------------- -------------
Net cash provided by (used in) investing activities......... 630,896 (3,632,179) 3,017
------------- ------------- -------------
Cash flows from financing activities:
Proceeds from mortgages payable................................... 2,413,350 4,250,000 --
Satisfaction of mortgage payable.................................. (2,753,700) -- --
Payment of financing costs........................................ (85,225) (100,355) --
Repayment of mortgages payable.................................... (53,143) (20,053) --
Exercise of stock options......................................... 155,125 589,563 --
Cash distributions -- Common Stock................................ (1,199,451) (1,132,319) (1,124,440)
Cash distributions -- Preferred Stock............................. (1,294,042) (1,294,042) (1,294,042)
------------- ------------- -------------
Net cash (used in) provided by financing activities......... (2,817,086) 2,292,794 (2,418,482)
------------- ------------- -------------
Net increase in cash and cash equivalents........................... 1,142,953 1,753,659 275,020
Cash and cash equivalents at beginning of year...................... 2,701,456 947,797 672,777
------------- ------------- -------------
Cash and cash equivalents at end of year............................ $ 3,844,409 $ 2,701,456 $ 947,797
------------- ------------- -------------
------------- ------------- -------------

See accompanying notes to consolidated financial statements.

F-5

ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEAR ENDED DECEMBER 31,
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1995 1994 1993
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Supplemental disclosures of cash flow information:
Cash paid during the year for interest expense...................... $ 467,116 $ 430,076 $ 282,254
Cash paid during the year for income taxes.......................... 43,784 10,981 13,849
Supplemental schedule of noncash investing and financing activities:
Acquisition of real estate and mortgage receivable from Gould
Investors L.P., a related party..................................