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

You're looking at One Liberty Properties, Inc. (OLP) to see if its net lease model still holds up in late 2025's tricky market. The quick answer is that OLP's long-term, triple-net leases deliver reliable cash flow, evidenced by a typical occupancy near 99.0%, but you can't ignore the rising cost of capital and the risk tied to a small group of tenants. We'll map out exactly how OLP's strong industrial exposure balances its struggling office sector assets and what actions you should consider right now.

One Liberty Properties, Inc. (OLP) - SWOT Analysis: Strengths

Stable revenue from long-term, triple-net leases (tenants cover most operating costs)

One Liberty Properties has a rock-solid foundation built on its use of long-term, triple-net leases (NNN). This means the tenants, not OLP, are responsible for the vast majority of property operating costs, including real estate taxes, building insurance, and routine maintenance. This structure creates a highly predictable and stable revenue stream for the company, insulating cash flow from unexpected operational expense spikes.

For the first three quarters of 2025, the company's rental income has been consistently strong. For the quarter ended September 30, 2025, rental income was approximately $23.77 million. This stability allows OLP to focus its capital on accretive acquisitions, rather than managing day-to-day property expenses. That's a huge advantage in a volatile market.

High occupancy rate, typically near 99.0%, providing reliable cash flow

A high occupancy rate is the clearest sign of strong asset quality and tenant demand, and OLP defintely delivers here. The portfolio's occupancy rate remains exceptionally high, providing highly reliable cash flow for shareholders. As of the end of the third quarter of 2025, the occupancy rate stood at a very solid 98.2%.

To be fair, this is slightly below the 99.1% reported earlier in the year, but still well above the industry average, and it shows the stickiness of their triple-net lease tenants. This consistent performance directly supports the Adjusted Funds From Operations (AFFO), which was $10.1 million, or $0.46 per diluted share, for Q3 2025.

• Q2 2025 Occupancy: Approximately 98.8%.
• Q3 2025 Occupancy: A strong 98.2%.
• Reliable cash flow is key.

Diversified portfolio across industrial, retail, and office properties, reducing single-sector risk

While OLP is actively transitioning its focus, the current portfolio still benefits from a degree of diversification across property types. This mix helps mitigate the risk of a downturn in any single real estate sector. The strategic shift is clear, but the remaining non-industrial assets still contribute to the overall revenue base, which is important for managing risk during a portfolio transformation.

Here's the quick math on the portfolio mix based on Annual Base Rent (ABR) as of Q3 2025, showing the concentration but also the remaining diversification:

Significant exposure to the industrial sector, which is a strong growth area in late 2025

The most compelling strength is OLP's aggressive pivot to industrial properties, which now accounts for approximately 80% of its ABR. This positioning aligns the company with the most robust trend in commercial real estate: the logistics and e-commerce boom. Demand for warehouses and distribution centers remains high, supporting rent growth and property values.

The company is backing this strategy with capital. In 2025, OLP completed or agreed to industrial acquisitions totaling approximately $189 million. This includes a 199,919 square foot property in Oakdale, Minnesota, for $23.0 million, with an estimated annual base rent of $1.5 million. The industrial property sector itself is projected to grow by around 6.6% CAGR (Compound Annual Growth Rate) through the end of the decade. This means OLP is riding a powerful, multi-year market tailwind. The strategic shift is not just a bet; it's a move into the strongest part of the market.

One Liberty Properties, Inc. (OLP) - SWOT Analysis: Weaknesses

Higher tenant concentration risk; a small number of tenants contribute a large percentage of revenue.

The core weakness for any single-tenant net lease Real Estate Investment Trust (REIT) like One Liberty Properties is the binary risk of a tenant vacancy. While OLP has done a defintely good job diversifying its tenant base for its sector, a single tenant's failure still results in a 100% loss of rent for that property, which is a much higher impact than in a multi-tenant model. Honestly, your exposure is less concentrated than many peers, but the risk remains inherent to the business model.

As of the most recent data, the largest tenant, FedEx, accounts for only about 5.5% of total rent, which is a manageable figure and better than many net-lease REITs. However, the top five tenants still represent approximately 20% of the company's total rent. This means a default by just a few key tenants could significantly impact the company's Annual Base Rent (ABR) and cash flow, especially when compared to a major diversified REIT.

Exposure to the struggling office sector, which saw vacancy rates rise in 2025.

Despite One Liberty Properties' aggressive and successful portfolio transformation toward industrial assets, it still carries exposure to non-industrial sectors, including office and retail. As of the end of the third quarter of 2025 (Q3 2025), approximately 20% of the portfolio's ABR was still generated from non-industrial properties. This is the part of the portfolio that remains vulnerable to secular headwinds.

The US office market continues to face challenges due to remote work trends. While the national office vacancy rate showed some signs of stabilization, it remained elevated, sitting between 18.3% and 18.8% in Q3 2025. For non-prime assets, which OLP may hold, the vacancy rate was even higher at 19.1%. This high vacancy environment makes re-leasing non-industrial properties, especially older office stock, a difficult and costly endeavor if a tenant vacates.

Limited internal growth potential compared to non-net lease REITs, relying heavily on acquisitions.

The net lease structure, while providing stable income, inherently limits organic or internal growth. Net lease contracts typically feature fixed, contractual rent escalations-often 1% to 2% annually, or based on the Consumer Price Index (CPI) with caps-which are significantly lower than the market-rate rent increases seen in multi-tenant industrial or residential properties. This means OLP must rely on accretive acquisitions to drive meaningful growth in Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO).

Here's the quick math: to fuel its growth, OLP completed or agreed to approximately $189 million in acquisitions during 2025 alone. This heavy reliance means the company is constantly exposed to capital market conditions and competition for quality assets. Plus, the high AFFO payout ratio, which was a risky ~96.7% in Q3 2025, means very little cash is retained internally to fund this growth, making external financing absolutely crucial.

Smaller market capitalization limits access to cheaper equity capital for growth.

One Liberty Properties is classified as a small-cap REIT, with a market capitalization of approximately $447.19 million as of November 2025. This smaller size is a structural weakness when it comes to funding the acquisition-heavy growth model.

• Higher Cost of Equity: Smaller market caps often translate into less trading liquidity and higher volatility, which generally results in a higher cost of equity (the required return for investors).
• Limited Access to Capital: Larger, investment-grade REITs can issue new shares (equity) at lower dilution or secure cheaper, unsecured debt. OLP's smaller size and reliance on secured mortgage debt for acquisitions, like the $13.8 million mortgage at 5.10% for a $23 million property acquisition in Q4 2025, limits its flexibility.
• Valuation Discount: The stock often trades at a valuation discount compared to its larger, more liquid peers, making it less attractive to institutional investors who prefer scale.

The high cost of capital makes it harder for OLP to execute accretive acquisitions, especially when competing with massive players like Prologis or Blackstone, which have access to significantly cheaper funding.

One Liberty Properties, Inc. (OLP) - SWOT Analysis: Opportunities

Acquire industrial properties in high-demand logistics corridors to capitalize on e-commerce growth.

The core opportunity for One Liberty Properties is to double down on its successful pivot to industrial real estate, specifically targeting Class A properties in major logistics corridors. This aligns directly with the explosive growth of e-commerce, which is expected to see its share of total retail sales reach 25.0% by year-end 2025. The US e-commerce market itself is projected to hit $1.25 trillion in 2025.

Your strategy should focus on markets like the Inland Empire, Dallas-Ft. Worth, Atlanta, and the New Jersey/Pennsylvania region, where demand from third-party logistics (3PL) providers is strongest, accounting for roughly 35% of overall industrial leasing activity in 2025. OLP is already executing this well, with approximately 80% of Annual Base Rent (ABR) now coming from industrial assets as of Q3 2025. In 2025 alone, OLP completed or agreed to acquire approximately $189 million of industrial assets. That's a strong pipeline.

Here's the quick math on recent industrial deals:

• Blythewood, South Carolina: $24.0 million acquisition, 210,600 square feet.
• Oakdale, Minnesota: $23.0 million acquisition, 199,919 square feet.
• Six-building portfolio: $53.5 million under agreement, expected to close by year-end 2025.

This focus on new, high-quality buildings with modern features like 32-foot clear heights and ESFR sprinklers is defintely the right move for long-term cash flow stability.

Dispose of non-core, lower-quality office assets to improve portfolio metrics.

The market continues to punish real estate investment trusts (REITs) with heavy exposure to non-core, particularly office, assets. While OLP's portfolio is now heavily industrial, the opportunity remains to accelerate the sale of the remaining non-industrial properties. The goal is to fully transition to a pure-play industrial net-lease structure.

The company has demonstrated a clear commitment to this asset recycling strategy. In 2024, OLP sold twelve properties (including retail, restaurant, and some industrial) for net proceeds of $38.2 million and a net gain of $18.0 million. This momentum carried into 2025, with sales of non-core assets generating $16.3 million in net proceeds during Q3 2025 alone, plus another post-quarter sale generating approximately $17.7 million in net proceeds.

Selling these older, non-core assets achieves two things: it removes the drag of less-resilient property types and provides a source of equity to fund higher-quality industrial acquisitions, which is a much cleaner use of capital.

Execute sale-leaseback transactions with financially strong corporations seeking to free up capital.

Sale-leaseback transactions are the lifeblood of a net-lease REIT, and the current economic climate is ripe for them. Financially strong corporations are looking for ways to free up capital tied up in their real estate-their non-core assets-to reinvest in their core business operations. OLP is perfectly positioned to be the buyer.

The opportunity is to proactively approach investment-grade companies, offering them a long-term triple-net lease (NNN) structure. This immediately converts their illiquid real estate into working capital while allowing them to maintain operational control of the facility. OLP's recent acquisitions of single-tenant industrial properties, such as the $24.0 million asset in South Carolina and the $23.0 million asset in Minnesota, are essentially the successful execution of this model. The key is to secure leases with annual rent escalations, like the 4.0% increase structured into the Oakdale, Minnesota property's lease.

Refinance maturing debt at lower rates if the Federal Reserve eases policy in 2026.

The biggest near-term financial risk is also a potential opportunity: refinancing debt. OLP's total debt stood at $458.7 million as of September 30, 2025. The company faces a headwind as the weighted average interest rate on mortgages maturing in the six months ending December 31, 2025, is only 3.78%, and for the full year 2026, it is 3.91%. Compare that to the weighted average rate of 6.21% on new mortgages OLP obtained in the first half of 2025.

However, the Federal Reserve has already begun easing, dropping the Federal Funds Rate into the 3.75% to 4.00% range in October 2025. The forecast for 2026 projects the rate to trend around 3.50%. If the Fed continues this measured easing, OLP's refinancing costs in late 2026 and 2027 could be significantly lower than the 6.21% rate seen earlier in 2025. This would mitigate the anticipated increase in interest expense and protect the Funds From Operations (FFO) margin.

The table below shows the refinancing challenge and the potential for a 2026 opportunity:

The opportunity is to use the company's $109.4 million in available liquidity as of October 31, 2025, to strategically pay down the highest-rate maturing debt or wait for the projected rate drop in 2026 to secure a lower long-term fixed rate.

One Liberty Properties, Inc. (OLP) - SWOT Analysis: Threats

Rising interest rates increase the cost of capital, making new acquisitions less accretive

The biggest near-term threat to One Liberty Properties' (OLP) growth is the sustained high-interest rate environment, which directly increases the cost of capital and compresses the spread on new acquisitions. While OLP has done a good job locking in its existing debt-with a weighted average interest rate of approximately 4.79% and nearly 98.9% of its debt being fixed-rate-the cost for new financing is significantly higher.

For example, new mortgage debt secured in 2025 for industrial property acquisitions has been consistently priced above the portfolio average. This makes it harder to find deals that are immediately profitable (accretive) after financing. Here's the quick math on recent debt rates:

• New mortgage debt in February 2025 was secured at 6.09%.
• A Q3 2025 acquisition included new debt at 5.77%.
• A post-Q3 acquisition in October 2025 was financed at 5.10%, and another anticipated closing will bear a 5.45% rate.

This rising cost of debt is pushing the overall weighted average cost of capital (WACC) higher, making it defintely more difficult to justify the purchase price of new assets. Your cost of money is your margin's enemy right now.

Tenant bankruptcies or lease defaults, especially if a recession hits the retail sector hard in 2026

While OLP's portfolio is strong, showing a solid occupancy rate of 98.2% as of the end of Q3 2025, the risk of tenant default remains a threat, particularly in the non-industrial segment. The company has successfully transitioned approximately 80% of its Annual Base Rent (ABR) to the more resilient industrial sector, but the remaining 20% exposure to retail and other non-industrial assets is a vulnerability if a recession materializes in 2026.

What this estimate hides is the potential impact on cash flow and dividend coverage. The high Adjusted Funds From Operations (AFFO) payout ratio, which was around 96.7% as of Q3 2025, means there is very little margin for error. A single major tenant default could force a dividend cut, which would be a significant negative signal to the market.

To be fair, tenant concentration risk is low, as the top five tenants account for only about 20% of total rent, but any unexpected default would immediately strain the tight dividend coverage.

Increased competition for high-quality net lease assets from larger, better-capitalized REITs

One Liberty Properties operates at a significant capital disadvantage when competing for high-quality industrial net lease properties. The industrial sector is highly competitive, and OLP's relatively small size makes it tough to win bids against industry giants.

As of September 30, 2025, OLP's total assets were $802.3 million. This is dwarfed by the capital bases of competitors, which can leverage massive scale and lower borrowing costs to bid more aggressively. This is a simple scale problem.

This competition means OLP must either settle for secondary market assets, which carry higher risk, or pay a premium for core assets, which further erodes the accretion from new acquisitions already challenged by rising interest rates.

Inflationary pressure on operating expenses not fully covered by certain lease structures

While OLP is primarily a net lease REIT-meaning tenants are responsible for most property operating expenses (like taxes, insurance, and maintenance)-not all leases are structured as true triple-net (NNN) agreements. This leaves a small but measurable exposure to inflation, especially for properties under modified gross or double-net leases.

Total operating expenses for the first nine months of 2025 were $38.46 million (in thousands), compared to $38.25 million in the corresponding period of 2024. For the third quarter of 2025, total operating expenses were $11.843 million, a slight increase from $11.752 million in Q3 2024. The company notes that a substantial portion of the increase in real estate expenses is reimbursed by tenants, which mitigates the direct impact.

Still, for the portion of the portfolio that is not NNN, unexpected spikes in costs like insurance premiums or property taxes due to inflation can directly hit OLP's bottom line, reducing net income and AFFO. This is a particularly acute threat for the remaining non-industrial assets that OLP is trying to sell.