One Liberty Properties, Inc. (OLP): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at One Liberty Properties, Inc. (OLP)'s competitive standing in late 2025, and honestly, the net-lease REIT space is defintely getting tighter, especially as they've pushed $\mathbf{80\%}$ of their assets into the hot industrial sector. I've mapped out the five forces so you can see the real pressure points: while long-term leases keep tenant power low-evidenced by that $\mathbf{99.1\%}$ occupancy in Q3 2025-the cost of capital is giving lenders serious leverage. We need to see if OLP's focus on smaller deals is enough to fend off bigger rivals and the threat of tenants simply buying their own buildings. Keep reading to see the full breakdown.

One Liberty Properties, Inc. (OLP) - Porter's Five Forces: Bargaining power of suppliers

When you look at One Liberty Properties, Inc. (OLP)'s financing structure, you see immediately where some suppliers-the capital providers-get their leverage. The company is definitely more leveraged than some of its peers, which means lenders and debt holders have a stronger negotiating position when OLP needs to refinance or raise new funds. This is a classic supplier power dynamic in real estate finance.

Here's a quick look at the leverage situation as of late 2025, based on the latest figures we have:

The cost of that capital is also a major factor. You've seen interest rates stay elevated, and that directly translates to a higher cost of debt for One Liberty Properties, Inc. (OLP). For instance, new mortgage debt secured for acquisitions in the latter half of 2025 carried rates like 5.77% and 5.10%, strengthening the hand of lenders who are pricing risk in a higher-rate environment. This is evident when you see that net expenses, which include interest expense, were higher in Q2 2025 compared to Q2 2024, driven by both higher debt balances and higher rates. For the period ending June 30, 2025, the reported Interest Expense was $22.2 million.

Now, let's talk about the suppliers of physical assets-the property sellers. One Liberty Properties, Inc. (OLP) is aggressively pursuing its industrial pivot, having completed or agreed to acquire approximately $189 million in industrial properties through late 2025. This active buying in a focused sector means One Liberty Properties, Inc. (OLP) is competing for assets against other well-capitalized buyers. Even if the broader industrial market shows signs of softening-like the national vacancy rate hitting 7.4% in Q2 2025-the competition for high-quality, well-located, net-leased industrial properties remains fierce, giving sellers leverage on price and terms.

Finally, consider the suppliers for day-to-day operations, like property management services or specialized maintenance contracts. One Liberty Properties, Inc. (OLP)'s scale is relatively small in the REIT world, owning only 98 properties as of September 30, 2025, with a market capitalization around $433.73 million in September 2025. This limits its ability to demand deep volume discounts from service providers compared to much larger players. You can't push suppliers around when you're not buying in massive bulk.

The power of these suppliers is clear through several channels:

• Capital providers benefit from OLP's debt-to-assets ratio of 61.89% (Q3 2025 estimate) versus peers around 37% to 41%.
• Lenders gain power as high rates push interest expense up, evidenced by Q2 2025 interest expenses contributing to higher net expenses.
• Property sellers maintain leverage due to One Liberty Properties, Inc. (OLP)'s aggressive $189 million acquisition pipeline in 2025.
• OLP's smaller scale (98 properties as of Q3 2025) restricts its ability to negotiate lower service costs.

Finance: draft 13-week cash view by Friday.

One Liberty Properties, Inc. (OLP) - Porter's Five Forces: Bargaining power of customers

You're analyzing One Liberty Properties, Inc. (OLP) and the customer power dynamic is generally favorable for the company, but not without nuances driven by their specific portfolio structure. The core strength here lies in the lease structure itself.

Customer power is low because One Liberty Properties, Inc. primarily utilizes long-term, triple-net leases. Under this structure, the tenant shoulders the burden for the property's real estate taxes, insurance, and routine maintenance and repairs. This effectively shifts the majority of the operating cost risk away from One Liberty Properties, Inc. and onto the customer base.

The current high occupancy rate provides a strong operational backdrop, limiting tenant negotiation leverage, especially when seeking renewals. As of the third quarter of 2025, the occupancy rate stood at a very solid 98.2%. This is slightly above the historical average of about 98.9%. When space is this tight, tenants have less leverage to demand steep concessions upon lease expiration.

The tenant base itself is reasonably well-diversified, which mitigates the risk associated with any single customer. The largest tenant, FedEx, represents only about 5.5% of total rent. This concentration level is low for a REIT of this size. However, the overall tenant credit quality presents a slight counterpoint to the low power dynamic. While the top tenant, FedEx, carries an investment-grade rating (S&P BBB/Moody's Baa2), the second-largest tenant, Haverty Furniture Companies, lacks a public credit rating and appears to be facing some financial headwinds. This mixed quality means One Liberty Properties, Inc. must place a significant focus on tenant retention, which can slightly increase tenant leverage as lease expiration dates approach.

The near-term lease expiration schedule is a key factor influencing this leverage. While the long-term structure is beneficial, a significant portion of the portfolio is rolling over in the next several years, giving tenants a defined window to negotiate. Here's the quick math on lease expirations based on recent data:

Overall, over 91% of leases are set to expire within the next 8 years. This concentration of near-term expirations means that while current occupancy is high, management's preparation for these renewal cycles will be critical to maintaining favorable terms, especially with a portion of the tenant roster being less financially robust than the top-tier industrial names.

One Liberty Properties, Inc. (OLP) - Porter's Five Forces: Competitive rivalry

You're looking at the competitive landscape for One Liberty Properties, Inc. (OLP) right now, late in 2025, and the rivalry in the net-lease space is definitely heating up, especially as OLP pivots its focus.

• Rivalry is intense from massive, scaled net-lease REITs like Realty Income, which holds an estimated 15-20% market share in the broader net-lease sector.
• OLP's transition to industrial properties (80% of Annual Base Rent as of the third quarter of 2025) increases competition in a hot sector.
• The company's smaller market capitalization, reported around $447.19 million as of November 21, 2025, limits its capacity for large-scale, low-cap-rate acquisitions compared to giants.
• OLP competes by focusing on niche, smaller deal sizes that larger rivals often overlook.

The sheer scale of the competition means OLP cannot compete head-to-head on the biggest deals. Realty Income, for example, reported a market capitalization of $52.18 billion as of late 2025 and invested $3.9 billion in 2025 alone. That difference in capital access is stark.

Here's a quick look at the scale difference you are facing:

That shift to industrial properties, while strategically sound given sector tailwinds, places OLP directly in the crosshairs of well-capitalized peers who can deploy billions quickly. OLP's strategy is a direct response to this. You see this in their transaction profile for 2025, which centers on recycling capital from non-core assets to fund targeted industrial buys.

Consider the recent activity that defines this niche focus:

• Completed acquisition of an industrial property for $24.0 million in August 2025.
• Closed on an industrial property in October 2025 for $23.0 million.
• Agreed to acquire a six-building industrial portfolio for $53.5 million subsequent to Q3 2025.
• Total acquisitions completed and to be completed in 2025 reached approximately $189 million.
• Completed the sale of three retail assets in Q2 2025 for a $6.5 million gain.

This approach-buying single assets or smaller portfolios in the $20 million to $55 million range-is how you avoid direct bidding wars with the REITs whose market caps are over 100 times larger. It's about finding value where the massive players are structurally unable to look due to internal mandates or deal size minimums. Finance: draft a comparison of OLP's average acquisition cap rate versus Realty Income's for the last four quarters by next Tuesday.

One Liberty Properties, Inc. (OLP) - Porter's Five Forces: Threat of substitutes

The primary substitute is a tenant choosing to own their real estate (fee simple ownership) instead of leasing.

Investor capital can substitute OLP stock for other high-yield asset classes, especially with an estimated 2025 AFFO of \$1.90 per share.

Substitution risk from alternative property types is mitigated by One Liberty Properties, Inc.'s focus on essential industrial assets.

Here's the quick math on the portfolio shift and recent financial performance:

The shift away from non-core assets is evident in the capital recycling:

• Completed sale of four non-core properties resulting in net proceeds of \$16.3 million during Q3 2025.
• Subsequent to Q3 2025 end, completed sale of a non-core asset generating net proceeds of approximately \$17.7 million.
• Total debt as of June 30, 2025, was \$455.0 million.
• Total stockholders' equity at June 30, 2025, was \$303.4 million.

One Liberty Properties, Inc. (OLP) - Porter's Five Forces: Threat of new entrants

High capital requirements and the need for established lending relationships create a significant barrier to entry for One Liberty Properties, Inc. (OLP). As of March 31, 2025, One Liberty Properties, Inc. reported total assets of $811.7 million and total debt of $471 million. The company's Q1 2025 interest expense was $5.4 million. A new entrant must secure similar financing capacity to compete effectively in acquiring institutional-grade, net-leased industrial assets.

New entrants face high costs of capital, given the current interest rate environment. Commercial mortgage rates for 2025 have been reported in a range from 5% to 14%. Debt incurred by One Liberty Properties, Inc. for four industrial properties acquired in Q1 2025 carried a weighted average interest rate of 6.2%. The projected target federal funds rate by late 2025 is 3.9%, yet long-term borrowing costs remain elevated compared to the previous decade.

One Liberty Properties, Inc.'s small portfolio size of around 103 properties as of June 30, 2025, means a well-funded new entrant could quickly gain scale parity. However, the capital required to assemble a portfolio of this size, even with the company actively recycling capital, presents a hurdle. For context, One Liberty Properties, Inc. completed acquisitions totaling approximately $189 million in completed and to-be-completed transactions for 2025.

Securing long-term, credit-worthy net leases is a major hurdle for any new player to replicate One Liberty Properties, Inc.'s stable cash flow. As of the end of Q3 2025, approximately 80% of One Liberty Properties, Inc.'s Annual Base Rent (ABR) was generated by industrial properties. Many of these properties are subject to long-term net leases that include periodic contractual rental increases. The stability of this cash flow is tied to the credit quality of the underlying tenants, which is a relationship that takes time to establish.

The relative scale and financing profile of One Liberty Properties, Inc. compared to the current cost of capital for new entrants can be summarized:

The barriers are reinforced by the current cost of debt. For instance, the required Debt Service Coverage Ratio (DSCR) for many lenders is at least 1.25, meaning the property must net $1.25 in Net Operating Income (NOI) for every dollar of mortgage payment. Due to higher market rates in 2025, most properties only cash flow at 65% or 70% loan-to-value (LTV) ratios.

The established nature of One Liberty Properties, Inc.'s lease structure presents a specific challenge:

• Leases include periodic contractual rental increases.
• Industrial assets generate about 75% of base rent (Q1 2025).
• The company has a presence in 32 states.
• Q1 2025 Rental Income was $24.2 million.