ONE LIBERTY PROPERTIES INC (OLP) stock intrinsic value fair value estimate & owner earnings analysis

One Liberty Properties is a small, self-administered real estate investment trust that owns net-leased commercial buildings, where tenants pay most property costs. At year-end 2025 it owned 103 properties; the January 2026 purchase of ten industrial properties (about 638,000 square feet for $56.7 million, with tenants including Mondelez, Husqvarna, L&W Supply, Owens & Minor and Bimbo Bakeries) took it to 113 properties and roughly 12.5 million square feet. Industrial buildings produce 80.9% of 2026 base rent, retail 14.6% and other 4.5%. South Carolina (12.8%) and Pennsylvania (10.8%) are the largest states, and the largest tenant, FedEx, is 5% of rent. Management is shared with an affiliate, Gould Investors, which owns about 10.5% of the shares. What the business earns. We measure the cash an owner could take out: operating cash flow, adjusted for working-capital swings, less stock compensation (about $5.3 million a year, treated as a real cost) and the improvements needed to keep buildings leasable (about $4 million a year). Property purchases are treated as growth investment, not upkeep, and gains on property sales ($18.7 million in 2025) are excluded. On that basis owner earnings per share were $1.50 in 2016 and $1.64 in 2025, and between $1.53 and $1.72 in every year in between except 2022 ($1.97), which included a one-time $4.6 million litigation settlement. A decade of acquisitions therefore has not raised per-share cash: the share count grew from 16.9 million to 21.2 million and mortgages now stand at roughly $534 million. Because borrowing paid for much of the growth, we value the whole business first (cash before interest) and then subtract the debt. Cash before interest was between $2.44 and $2.71 per share in every year from 2016 to 2025 except 2022, with a median of $2.59; 2025 included a one-time $1.3 million litigation settlement. Starting level. The 2025 purchases ($190.5 million) and the January 2026 portfolio were only partly in 2025 results, yet the debt that paid for them is fully on the balance sheet. First-half 2026 cash before interest was $30.9 million against $27.1 million a year earlier (up 14%), on lease income of $55.3 million versus $48.7 million. Management expected about $1.3 million of one-time lease termination fees in early 2026, which we exclude. Rebuilding 2025 for the purchases and sales completed since (properties acquired since January 2024 earned $12.5 million of 2025 rent, while properties sold in 2025 earned $2.4 million) gives a similar figure. We start all three cases at $58.0 million a year ($2.74 per share on 21.2 million shares): above the ten-year median because the added properties are already owned and funded, and below the annualized first half. Last year's owner earnings per share grew 6.3%, but that came from purchases already completed; same-store rent grew just 1.2% in 2025, so the base case assumes 1% in year one. Growth credited. Base: 1% a year for ten years from lease escalators and re-leasing, in line with the 1.2% same-store growth of 2025 (2025 lease amendments and extensions added $1.5 million and new tenants $1.2 million, against $2.0 million lost to expirations). We credit no future acquisitions: the January 2026 portfolio was bought at about a 4.9% initial rent yield ($2.8 million of rent on $56.7 million; management expects $3.6 million after renewals, which we did not credit) against debt costing about 5.5%, so purchases add little for owners. Bull: 2.5% a year if the 2027-2030 expirations (18.3%, 16.0%, 14.3% and 15.2% of rent) re-let at higher rents in a mostly industrial portfolio. Beyond year ten the buildings keep earning but age, with only about $4 million a year of improvements against $27 million of depreciation and amortization. We hold earnings flat for 20 more years in the base and bull cases and 10 in the bear case, after which only the land (15.8% of property cost) is assumed to keep earning. Bear case ($4.68 per share). Modeled on the 2008-2010 commercial-property credit freeze. The weighted average lease term is only 4.4 years and 34% of rent expires in 2027-2028; we assume 40% of that rent sits vacant for about a year and re-lets 15% lower. $253 million of mortgages mature in 2027-2030 ($48.7M, $39.7M, $86.8M and $77.9M); we assume lenders advance less, forcing about $38 million of properties to be sold at 8.5% yields, and that the refinanced loans carry 7.5%, costing about $19 million in present value. Cash before interest falls from $58.0 million to a $46 million trough in year three and settles near $51.5 million, still well above the roughly $27 million annual interest bill. The business is worth $625 million, the debt is $526 million, leaving $4.68 per share. Base case ($17.99 per share). The business is worth $889 million and owes $507 million. The debt is $522.5 million of fixed-rate, generally non-recourse mortgages at a 4.88% average rate with 5.8 years average remaining term at year-end, plus roughly $11 million net added since (including a $17.0 million mortgage at 5.53% due 2033), about $534 million in total. Because the existing fixed rates are below current borrowing costs for years, we reduce the debt figure by $26 million; net debt is $23.93 per share against business value of $41.92 per share. Bull case ($22.96 per share). The business is worth $994 million ($46.89 per share) and owes the same $507 million. The range is narrow on the upside and wide on the downside because debt absorbs about 57% of base business value. A 7% shortfall in starting cash flow (to $54 million) cuts the base to $15.10 per share; zero growth as well gives $12.30. Loose ends. The 10-K does not explain the $8.6 million build in escrow, deposits and receivables in 2025; we treated it as timing and removed it from operating cash flow. Dividends of $39.0 million were paid in 2025 against $34.3 million of owner earnings, and the $1.80 annual dividend is not covered by owner earnings after interest (first half of 2026: $0.82 per share). The $100 million credit line matures December 31, 2026; it appears undrawn at June 30, 2026 after being used for the January purchase. Our previous estimates (bear $4.29, base $13.66, bull $20.74) were built on a different basis and are not comparable. What would make us wrong: failure to re-let the 2027-2028 expirations at current rents, or mortgage markets closing around the 2029-2030 maturities. Margin-of-safety price ($9.00). We are fairly, not highly, sure of the earnings level: rents are contracted and the ten-year record is steady, but the starting level leans on two quarters of the enlarged portfolio. The worst plausible outcome is the bear case, an equity worth about half the margin-of-safety price; the mortgages are generally non-recourse and spread across 61 loans, so lenders could take specific buildings but not the whole company. If we are wrong on the starting level and on growth, the shares are worth $12 to $15; if the buildings earn for only ten years after year ten rather than twenty, about $12. The price assumes a four-to-five-year holding period for rents to re-set, with dividends paid in the meantime. At $9.00, owner earnings of roughly $1.64 per share are an 18% yield on that price, so cash over five years nearly equals the price; if the dividend is held near owner earnings, the shares need only reach about $10 in five years for a 20% annual return. The bear case implies roughly a 48% loss before dividends.