Forward-Looking Statements

With the exception of historical information, this Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provision for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may," "will," "could," "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions or variations thereof. Forward-looking statements should not be relied on since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, performance or achievements. Investors are cautioned not to place undue reliance on any forward-looking statements.

Overview

We are a self-administered and self-managed real estate investment trust, or REIT. We primarily own real estate that we net lease to tenants. As of September 30, 2009, we owned 73 properties, including two which were sold in October 2009 and a 50% tenancy in common interest in one property and participated in five joint ventures which owned a total of five properties. These 78 properties are located in 28 states.

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute currently at least 90% of ordinary taxable income to our stockholders. We intend to comply with these requirements and to maintain our REIT status.

Traditionally, we have sought to acquire properties throughout the United States that have locations, demographics and other investment attributes that we believe to be attractive. To fund acquisitions, we typically use available funds or funds borrowed under our credit facility and then seek mortgage indebtedness for the purchased properties on a non-recourse basis, repaying any funds we borrow under our credit facility. Over the past several quarters, institutions have significantly curtailed their lending activities and as a result, it has been challenging to obtain mortgage indebtedness. Due to the current lack of liquidity in the market, we have been monitoring our cash needs, our liquidity and the status of our portfolio to preserve our cash and until the economy stabilizes and credit becomes more available, we will pursue a conservative acquisition strategy.

We are a party to a credit agreement, as amended, with VNB New York Corp., Bank Leumi, USA, Manufacturers and Traders Trust Company and Israel Discount Bank of New York, for a maximum amount of $62.5 million, under which $27 million is currently outstanding. This credit facility expires on March 31, 2010. We are engaged in negotiations for a new and revised credit facility with our current lenders, but we cannot be certain that we will successfully enter into a new credit facility prior to March 31, 2010 and if we do, that the terms will be satisfactory.

Results of Operations

Comparison of Nine and Three Months Ended September 30, 2009 and 2008

Revenues

Rental income increased by $3.2 million, or 12.3%, to $29.2 million for the nine months ended September 30, 2009 from $26 million for the nine months ended September 30, 2008. For the three months ended September 30, 2009, rental income increased by $845,000, or 9.7%, to $9.6 million from $8.7 million for the three months ended September 30, 2008. The increase in rental income is primarily due to rental revenues during the nine and three months ended September 30, 2009 of $3.4 million and $1 million, respectively, earned on twelve properties acquired during 2008. The increase in rental income was offset by a decrease in rent received from two tenants adversely affected by the current recession and by the termination in June 2009 of a property lease, for which we received the lease termination fee referred to below.

The lease termination fee income received in the nine months ended September 30, 2009 resulted from a $1,905,000 lease termination payment from a retail tenant that had been paying its rent on a current basis, but had vacated the property in March 2009, offset by the write off of the entire balance of the unbilled rent receivable and intangible lease asset related to this property, aggregating $121,000. There was no comparable fee income in the nine months ended September 30, 2008.

Operating Expenses

Depreciation and amortization expense increased by $702,000, or 12.4%, and $197,000, or 10.3%, to $6.4 million and $2.1 million, respectively, for the nine and three months ended September 30, 2009. The increase was primarily due to depreciation and amortization increases of $659,000 and $193,000 for the nine and three months ended September 30, 2009, respectively, taken on twelve properties acquired during 2008.

Real estate expenses increased by $380,000, or 252%, and $153,000, or 403%, to $531,000 and $191,000 for the nine and three months ended September 30, 2009, respectively, resulting primarily from real estate taxes and utilities for one of our vacant properties. In addition, the 2009 periods include real estate taxes for another property which became subject to a lease with a new tenant under which we are responsible for the real estate taxes, and an increase in repairs, maintenance and other operating expenses at various properties.

Other Income and Expenses

We recognized a net gain of $297,000 on the sale by a joint venture of a vacant property in the nine months ended September 30, 2008. There was no comparable gain in the nine months ended September 30, 2009.

Interest and other income decreased by $195,000, or 40%, and $72,000, or 45.9%, to $292,000 and $85,000 for the nine and three months ended September 30, 2009, respectively. We had less cash available for investment in short-term cash equivalents in both periods, as we applied available cash to the purchase of nine properties in September 2008. In addition, interest rates earned on short term cash equivalents have declined significantly. Offsetting the decrease in interest income was $110,000 of consulting fee income and $37,000 received for granting an easement at one of our properties, both recorded in the nine months ended September 30, 2009.

Interest expense increased by $123,000, or 1.2%, to $10.3 million for the nine months ended September 30, 2009 and remained constant for the three months ended September 30, 2009 as compared to the three months ended September 30, 2008. The increase results primarily from an increase of $476,000 of interest expense related to our line of credit as we drew down funds for the purchase of eight properties in September 2008. Additionally, the increase was due to interest expense on fixed rate mortgages placed on three properties between September 2008 and March 2009. These increases were offset in part from the payoff in full of a loan payable in October 2008, as well as from monthly principal amortization of mortgages.

Amortization of deferred financing costs increased by $147,000, or 33.6%, and $37,000, or 25.3%, to $585,000 and $183,000 for the nine and three months ended September 30, 2009, respectively. The increase in the nine month period results primarily from $118,000 of accelerated amortization of deferred financing costs relating to a mortgage loan that was refinanced during the quarter ended March 31, 2009. In addition, the nine and three months ended September 30, 2009 includes $37,000 of accelerated amortization of deferred financing costs relating to a mortgage loan that was repaid in full during the three months ended September 30, 2009.

During the nine months ended September 30, 2008, we sold five acres of excess unimproved land that we acquired as part of the purchase of a flex building in 2000 and recognized a gain of $1.8 million. There was no such gain in the nine months ended September 30, 2009.

Discontinued Operations

Income from operations included in discontinued operations decreased by $693,000, or 40.6%, and $353,000, or 51.8%, to $1,012,000 and $328,000 for the nine and three months ended September 30, 2009, respectively. Included are the operations of five properties that were formerly leased to Circuit City Stores, Inc., which filed for protection under the federal bankruptcy laws in November 2008 and rejected leases for two of the properties in December 2008 and the remaining three properties in March 2009. As a result, the Circuit City properties generated net income in the nine and three months ended September 30, 2008, but produced losses in the current nine and three month periods. In addition, the nine months ended September 30, 2009 includes accrued mortgage interest expense totaling $297,000 for the period December 2008 through July 7, 2009 and accrued real estate tax expense totaling $246,000 on these five properties. As discussed below, these properties were conveyed to the mortgagee in July 2009.

The decrease in income from operations included in discontinued operations also resulted from a mortgage and interest rate swap placed on a property in November 2008. This property was sold in October 2009. The interest expense on this mortgage amounted to $411,000 and $208,000 for the nine and three months ended September 30, 2009, respectively, and there was no such expense in the prior nine and three month periods.

Offsetting these losses are the operations of a property for which we received a $400,000 lease termination payment in March 2009 from a retail tenant that had been paying its rent on a current basis, but had vacated the property in 2006. In March 2009, we sold this property and recorded an impairment charge of $229,000 to recognize the loss. This is in addition to an impairment charge of $752,000 taken against this property during the three months ended June 30, 2008.

In July 2009, non-recourse mortgages, secured and cross collateralized by the five former Circuit City properties, had an outstanding balance of $8,706,000. No payments had been made on these mortgages since December 1, 2008 and a letter of default was received on March 16, 2009. In July 2009, these properties were conveyed to the mortgagee by deeds-in-lieu of foreclosure and OLP and the five wholly-owned subsidiaries which owned the Circuit City properties were released from all obligations, including principal, interest and real estate taxes due. The carrying value of the portfolio of the properties transferred of $8,075,000, net of the $5,231,000 of impairment charges taken at December 31, 2008, approximated their fair value and therefore no additional gain or loss was recorded on these assets. In the nine and three months ended September 30, 2009, we recognized an $897,000 gain based on the excess of the carrying amount of the payables (mortgage, real estate taxes and mortgage interest) over the fair value of the portfolio of properties transferred. The gain also reflects the write off of deferred costs and escrows relating to these mortgages totaling $277,000.

Liquidity and Capital Resources

We require capital to fund our operations. Our capital sources include income from operating activities, borrowings under our revolving credit facility and mortgage loans secured by our properties. Our available liquidity at September 30, 2009 includes approximately $10.6 million of cash and cash equivalents, $9.2 million of available-for-sale securities (including $6.5 million of treasury bills) and $35.5 million available under our revolving credit facility (which can be used to pay off existing mortgages, to fund the acquisition of additional properties or to invest in joint ventures). With the tightening of liquidity by lending institutions, it has been difficult to secure mortgage indebtedness and as a result, our ability to make new property acquisitions or increase liquidity will continue to be limited until credit, particularly mortgage loans, become more readily available.

We expect to meet our short-term liquidity requirements generally through our cash and cash equivalents and cash provided by operating activities. The most significant source available to us for a new property acquisition is our revolving credit facility. All of our requests for draw downs under our credit facility have been satisfied to date. However, in view of the current uncertainties in the economy and our limited ability to secure mortgage indebtedness, we have adopted a conservative acquisition strategy.

We expect to meet our long term liquidity requirements through existing cash and available-for-sale securities, proceeds from debt, including under a credit facility, mortgage financings on our properties (including refinances), and if required, the sale of properties. We believe that the value of our real estate portfolio is, and will continue to be, sufficient to allow us to refinance the existing mortgage debt at maturity and repay all indebtedness we owe under our credit facility. We sold two of our properties in October 2009 which resulted in approximately $11 million of net cash to us. In addition, in order to increase our cash position, in January 2009, we reduced our quarterly dividend by 38.8%, to $.22 per share, and in connection with our most recent quarterly dividends of $.22 per share paid in April, July and October 2009, took advantage of a recently adopted Internal Revenue Service Revenue Ruling which allows us to satisfy our REIT dividend requirement relating to taxable income earned in 2009, by paying our quarterly dividend in cash and shares of our common stock, provided the cash portion of the dividend is at least 10% of the aggregate amount.

Our current credit facility matures on March 31, 2010. The growth of our business through acquisitions is dependent on securing an extension of our credit facility or securing a new credit facility. Any decision by our lenders (or potential lenders) to provide us with financing will depend upon a number of factors, such as the continuation of the current economic recession, our compliance with the terms of our existing credit facility, our financial performance, industry and market trends, the general availability of and rates applicable to financing transactions, such lenders' resources and policies concerning the terms under which they make capital commitments and the relative attractiveness of alternative investment or lending opportunities. We owe $27 million under the facility. We are currently engaged in negotiations with our current lending group with respect to a new and revised credit facility, but we cannot be certain that we will successfully consummate a new facility or that the terms will be satisfactory. Given the current economic and lending environment we expect that the terms of a new facility will be less favorable than the terms of the existing facility. If we are not successful in consummating a new facility by March 31, 2010, the sale of some properties may be required to repay the debt.

At September 30, 2009, excluding mortgages payable of our unconsolidated joint ventures, we had 37 outstanding mortgages payable secured by 54 properties, aggregating approximately $211 million in principal amount. All of these mortgages are secured by first liens on individual real estate investments with an aggregate carrying value of approximately $346 million, before accumulated depreciation. The mortgages bear interest at fixed rates ranging from 5.44% to 8.8%, and mature between 2009 and 2037. During the period October 1, 2009 through December 31, 2009, $1.7 million of our mortgage debt will mature and we believe our present and anticipated cash position is sufficient to repay this mortgage debt.

Credit Facility

We are a party to a credit agreement, as amended, with VNB New York Corp., Bank Leumi, USA, Manufacturers and Traders Trust Company and Israel Discount Bank of New York which provides for a $62.5 million revolving credit facility. The credit facility is available to us to pay off existing mortgages, to fund the acquisition of additional properties or to invest in joint ventures. The facility matures on March 31, 2010. Borrowings under the facility bear interest at the lower of LIBOR plus 2.15% or the bank's prime rate and there is an unused facility fee of ¼% per annum. Net proceeds received from the sale or refinancing of properties are required to be used to repay amounts outstanding under the facility if proceeds from the facility were used to purchase or refinance the property. The facility is guaranteed by our subsidiaries that own unencumbered properties and is secured by the outstanding stock of subsidiary entities.

At September 30, 2009, we had no outstanding contingent commitments, such as guarantees of indebtedness, or any other contractual cash obligations, other than mortgage payable debt, interest rate swaps and the amount outstanding under our line of credit.

Distribution Policy

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute currently at least 90% of our ordinary taxable income to our stockholders. It is our current intention to comply with these requirements and maintain our REIT status. As a REIT, we generally will not be subject to corporate federal, state or local income taxes on taxable income we distribute currently (in accordance with the Internal Revenue Code and applicable regulations) to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal, state and local income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent tax years. Even if we qualify as a REIT for federal taxation purposes, we may be subject to certain state and local taxes on our income and to federal income and/or excise taxes on our undistributed taxable income (i.e., taxable income not distributed in the amounts and in the time frames prescribed by the Internal Revenue Code and applicable regulations thereunder).

The following table details the distributions paid in 2009 in cash and our common stock.

                                                      # Common       Per Share Value of
  Payment Date      Total Dividend        Cash         Shares           Common Stock
October 30, 2009   $      2,401,000     $ 240,000       255,000     $               8.45
July 21, 2009      $      2,333,000     $ 234,000       376,000     $               5.58
April 27, 2009     $      2,229,000     $ 223,000       529,000     $               3.79