Gyrodyne(US:GYRO)2021-05-07 16:09Business Overview - Gyrodyne's primary business involves managing a portfolio of medical office and industrial properties located in Suffolk and Westchester Counties, New York[98]. - Gyrodyne's strategy includes pursuing entitlement opportunities to increase property values and maximize shareholder returns[104]. - The company intends to dissolve after completing the disposition of all real property assets and making liquidating distributions to shareholders[101]. - Gyrodyne's dual strategy aims to enhance the value of its properties while managing the strategic sale of real estate assets[105]. Financial Position and Projections - The company expects to have a cash balance of approximately $22.56 million by December 31, 2022, which would equate to future liquidating distributions of $15.22 per share based on 1,482,680 common shares outstanding[108]. - Estimated net assets in liquidation as of March 31, 2021, are $22,560,059, resulting in estimated liquidating distributions of approximately $15.22 per common share based on 1,482,680 shares outstanding[176]. - The company estimates total gross cash proceeds from the sale of its assets to be approximately $39.05 million, with an estimated distributable cash of around $22.56 million from the liquidation process[195]. - The cash balance at the end of the liquidation period is estimated to be $2.37 million, plus adjustments for various items through December 31, 2022[178]. Entitlement and Development Efforts - The Company has applied for a zoning amendment to rezone the Cortlandt property into a Medical Oriented District (MOD) and seeks approval for a unified site plan[119]. - The amended site plan includes a two-lot subdivision with a total of 184,600 square feet of medical office space and 1,500 square feet of retail space[120]. - The Company is pursuing entitlements for the Flowerfield property to maximize its value, with ongoing discussions with the Town of Smithtown regarding potential development projects[130]. - The Company anticipates incurring approximately $1.32 million in costs over the liquidation period ending December 31, 2022, to obtain entitlements for the Flowerfield and Cortlandt Manor properties[186]. Risks and Challenges - The company faces risks and uncertainties related to economic conditions, regulatory approvals, and the ongoing COVID-19 pandemic, which may impact its business operations[95]. - The pandemic has negatively impacted demand for office and hotel development, influencing the Company's subdivision plan at Flowerfield[135]. - The healthcare industry, which includes the Company's tenants, is facing increased regulation that could materially impact operations and marketability of properties[137]. - The company is required to make adequate provisions to satisfy known and unknown liabilities, which could delay or limit future distributions to shareholders[189]. Financial Management and Costs - The Company has incurred approximately $174,000 in land entitlement costs during the three months ended March 31, 2021, with an estimated additional $1.3 million in costs through December 31, 2022[122]. - The Company has taken proactive measures to manage costs, deferring approximately $717,000 in land development fees and other professional fees[144]. - The Company secured a second loan for up to $3,000,000, which includes an interest-only phase for the first 24 months, converting to a permanent loan maturing on January 20, 2028[146]. - The Company has secured a loan for up to $2,500,000 to enhance liquidity, with a variable interest rate not less than 4.75%[148]. Lease and Revenue Activities - During the three months ended March 31, 2021, the Company executed three new leases and four renewals, generating annual revenue of approximately $42,000 and $67,000 respectively[151]. - The Company has deferred approximately $97,000 of rental revenue due to tenants affected by COVID-19, with all deferred rent expected to be collected under alternate arrangements[150]. - The company reported cash flows for the three months ended March 31, 2021, including $634,806 in rent and reimbursements and $431,814 in operating costs, resulting in a net cash use[204]. Property Sales and Liquidation - The estimated gross real estate proceeds are $39.05 million, with selling costs on real estate estimated at $3.08 million[184]. - General and administrative expenses are estimated at $2.77 million, while retention bonus plan costs for directors, officers, and employees are estimated at $2.91 million[184]. - The company does not intend to develop properties but will focus on positioning them for sale with necessary entitlements to maximize value[179]. - The company is considering various options to maximize total value during the liquidation process, including entertaining offers from potential buyers for the properties[186].