Gyrodyne(US:GYRO)2023-08-09 21:28Cash Position and Distributions - Gyrodyne expects to have a cash balance of approximately $29.87 million by December 31, 2024, prior to any future special distributions, equating to future distributions of $20.14 per share based on 1,482,680 common shares outstanding [125]. - The company plans to dissolve after completing the disposition of all real property assets and settling any debts, with distributions to shareholders dependent on the successful sale of assets [110]. - If available cash and asset sale proceeds are insufficient to meet obligations, cash distributions to shareholders may be eliminated [126]. - As of June 30, 2023, the company's net assets in liquidation are estimated at $29,866,455, resulting in estimated liquidating distributions of approximately $20.14 per common share based on 1,482,680 shares outstanding [183]. - The cash balance at the end of the liquidation period is estimated to be $3.1 million, with adjustments for various costs and revenues expected through December 31, 2024 [184]. - The company estimates total gross cash proceeds from the sale of its assets to be approximately $53.67 million, leading to an estimated distributable cash of approximately $29.87 million from the liquidation [196]. Real Estate Assets and Development - The company aims to complete the disposition of its real estate assets and make timely distributions to shareholders, with a focus on enhancing the net value of its properties [112]. - Gyrodyne's remaining real estate investments include 63 acres in Flowerfield and 13.8 acres in Cortlandt Manor, with the latter designated for a total density of 154,000 square feet, including 150,000 square feet for medical use [118][122]. - The Flowerfield property has received preliminary approval for subdivision into eight lots, but is currently subject to an Article 78 Proceeding that could delay the process [117][121]. - The Town of Cortlandt adopted a SEQRA Findings Statement on March 20, 2023, establishing a MOD designation for the property, allowing for a total density of 154,000 square feet [137]. - The Company is focusing on positioning properties for sale with all entitlements to maximize development flexibility while minimizing risk [130]. - The Company is exploring potential real estate development projects for the Flowerfield property, which currently falls within "as of right to build" zoning [139]. - The Company anticipates that subdivision and site plan approval could be received by mid-2024, contingent on contract timing [137]. - The company is focused on negotiating purchase agreements and securing final approvals to maximize property values and distributions [174]. Financial Performance and Costs - The Company incurred approximately $342,000 in land entitlement costs during the six months ended June 30, 2023, primarily for engineering, legal fees, and real estate taxes [129]. - An estimated additional $862,000 in land entitlement costs is expected through December 31, 2024, with $105,000 of this amount informally deferred by vendors [129]. - The entitlement costs for the six months ended June 30, 2023, associated with the ownership and development of the Cortlandt Manor property were approximately $50,700 [138]. - The entitlement costs for the six months ended June 30, 2023, were approximately $291,800, covering architectural, engineering, legal, and survey expenses [143]. - Corporate expenditures for the same period amounted to $1,487,718, with additional capital expenditures of $115,531 [203]. - The company estimates that the final liquidation and dissolution costs will amount to approximately $1.51 million [189]. Risks and Challenges - Risks affecting the company's future results include ongoing litigation, community activism, and economic factors such as inflation and rising interest rates [105][106]. - The company has no assurance that the timeline for liquidation will be met due to factors outside its control, including ongoing legal proceedings [170]. - The COVID-19 pandemic has caused delays in local government approvals, affecting the completion of important stages in securing entitlements [150]. - The healthcare industry, which comprises the Company’s tenants, faces increased regulation that could materially impact their operations and ability to pay rent [146]. - The U.S. Federal Reserve raised interest rates a total of seven times in 2022 and four times in 2023, significantly increasing market interest rates and potentially leading to a recession [153]. Lease Activity - During the six months ended June 30, 2023, the Company executed 7 lease renewals totaling approximately 8,700 square feet, generating annual revenue of approximately $125,000 and total commitments of approximately $258,000 [157]. - The Company experienced two terminations of land leases, resulting in a loss of $8,960 in monthly rent [157]. - Four expansions were executed, comprising approximately 2,300 square feet, generating $40,000 in annual revenue and approximately $185,000 in total commitments [158]. - The company reported $1,562,118 in rent and reimbursements, with a net operating income of $731,543 for the six months ended June 30, 2023 [203]. Funding and Financial Strategy - The company is considering seeking supplemental funding to strengthen its cash position during the liquidation process [126]. - Major vendors have informally agreed to defer payment on 50% of their fees until the first subdivided lot is sold, aiding cash flow management [195]. - The company secured a $4.95 million term loan in September 2021, which was used to pay off a previous debt facility [199].