Description of the Company's Business
−Removed: Gyrodyne, LLC (including its subsidiaries, “Gyrodyne”, the “Company” or the “Registrant”) is a limited liability company formed under the laws of the State of New York whose primary business is the management of a portfolio of medical office and industrial properties and the pursuit of entitlement on such properties located in Suffolk and Westchester Counties, New York.
+Added: Gyrodyne, LLC (including its subsidiaries, “Gyrodyne”, the “Company” or the “Registrant”) is a limited liability company formed under the laws of the State of New York whose primary business is the management of a portfolio of medical office and industrial properties and the pursuit of entitlement on such properties located in Suffolk (“Flowerfield”) and Westchester (“Cortlandt Manor”) Counties, New York.
Substantially all of our developed properties are subject to leases in which the tenant reimburses the Company for a portion, all of or substantially all of the costs and/or cost increases for utilities, insurance, repairs, maintenance and real estate taxes.
1 unchanged sentence
Gyrodyne’s corporate strategy is to enhance the value of Flowerfield and Cortlandt Manor by pursuing entitlement opportunities and enhancing the value of its leases.
−Removed: The Board believes the aforementioned strategy will improve the chances of increasing the values for such properties.
+Added: The Company believes the aforementioned strategy will improve the chances of increasing the values for such properties.
The value of the real estate reported in the consolidated statement of net assets as of December 31, 2020 (predicated on current asset values) includes some, but not all of the potential value impact that may result from such value enhancement efforts.
There can be no assurance that our value enhancement efforts will result in property value increases that exceed the costs we incur in such efforts, or even any increase at all.
−Removed: Our efforts to generate the highest values for Flowerfield and Cortlandt Manor may involve in limited circumstances the pursuit of joint venture relationships, entitlements, other investments and/or other strategies to enhance the net value of Flowerfield and Cortlandt Manor to maximize the returns for our shareholders.
−Removed: The Company does not expect the pursuit of joint ventures, if any, to adversely affect the timing of distributions to our shareholders.
−Removed: Gyrodyne intends to dissolve after it completes the disposition of all of its real property assets, applies the proceeds of such dispositions first to settle any debts and claims, pending or otherwise, against Gyrodyne, and then makes liquidating distributions to holders of Gyrodyne common shares.
−Removed: The liquidation process and the amount and timing of distributions involve risks and uncertainties.
+Added: Our efforts to generate the highest values for Flowerfield and Cortlandt Manor may involve in limited circumstances various other strategies to enhance the net value of Flowerfield and Cortlandt Manor to maximize the returns for our shareholders.
+Added: Gyrodyne intends to dissolve after it completes the disposition of all of its real property assets, applies the proceeds of such dispositions first to settle any debts and claims, pending or otherwise, against Gyrodyne, and then makes distributions to holders of Gyrodyne common shares.
+Added: The process of seeking entitlements to enhance property values and the amount and timing of distributions from proceeds of asset sales involve risks and uncertainties.
As such, it is impossible at this time to determine the ultimate amount of proceeds that will actually be distributed to our shareholders or the timing of such payments.
−Removed: Accordingly, no assurance can be given that the distributions will equal or exceed the estimate of net assets in liquidation presented in our Consolidated Statements of Net Assets.
−Removed: The actual nature, amount and timing of all distributions will be determined by Gyrodyne’s Board in its sole discretion and will depend in part upon the Company’s ability to convert our remaining assets into cash in compliance with our obligations under the Stipulation entered into in connection with the class action lawsuit (See Item 3 – Legal Proceedings) and settle and pay our remaining liabilities and obligations.
−Removed: Under Gyrodyne’s Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”), dissolution of the Company may be effected upon the vote of holders of a majority of Gyrodyne common shares or, in the Board’s discretion and without any separate approval by the holders of the Gyrodyne common shares, at any time the value of Gyrodyne’s assets, as determined by the Board in good faith, is less than $1,000,000.
+Added: Accordingly, no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in our Consolidated Statements of Net Assets.
+Added: The actual nature, amount and timing of all distributions will be determined by Gyrodyne’s Board in its sole discretion and will depend in part upon the Company’s ability to convert our remaining assets into cash in compliance with our obligations under the Stipulation of Settlement entered into in connection with the class action lawsuit (See Item 3 – Legal Proceedings) and settle and pay our remaining liabilities and obligations.
+Added: Under Gyrodyne’s Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”), dissolution of the Company may be effected upon the vote of holders of a majority of Gyrodyne common shares or, in the Company’s discretion and without any separate approval by the holders of the Gyrodyne common shares, at any time the value of Gyrodyne’s assets, as determined by the Company in good faith, is less than $1,000,000.
We remain committed on (1) enhancing the net value of Flowerfield and Cortlandt Manor to maximize the returns for our shareholders, (2) completing the disposition of our assets, (3) making timely distributions to our shareholders, (4) managing capital and liquidity, (5) mitigating risks relating to interest rates and real estate cycles and (6) completing the liquidation of the Company.
After giving effect to the Company’s dispositions of real property through December 31, 2020, the Company owns the following properties:
−Removed: the Cortlandt Manor Medical Center comprising approximately 34,000 square feet residing on approximately 13.8 acres;
−Removed: the Flowerfield Industrial Park comprising approximately 127,000 rentable square feet.
−Removed: The industrial park is multi-tenanted and situated on ten acres of a 68-acre property in St.
−Removed: James, New York, all of which is owned by the Company.
−Removed: Approximately 62 of the 68 acres are included in the subdivision application filed with the Town of Smithtown.
−Removed: Approximately 5 of the 68 acres are zoned residential and are being actively marketed for sale.
−Removed: Each of the medical office park in Cortlandt Manor and the Flowerfield Industrial Park (including its undeveloped portion) is individually owned in a single asset limited liability company wholly owned by the Company.
−Removed: Properties S old
−Removed: Port Jefferson Professional Park .
−Removed: During the year ended December 31, 2018, the Company sold its remaining building (approximately 4,000 square feet) located at 11 Medical Drive, in the Port Jefferson Professional Park for $800,000 Following this sale, the Company no longer owns any buildings in the Port Jefferson Professional Park
−Removed: Properties Under Contract
−Removed: Flowerfield .
−Removed: On August 27, 2019, the Company’s wholly-owned subsidiary GSD Flowerfield, LLC entered into a Purchase and Sale Agreement (the “BSL Agreement”) for the sale of an approximately 9.0 acre parcel of vacant land in the Flowerfield complex in Smithtown, New York for $16,800,000 to BSL St.
−Removed: James LLC, a Delaware limited liability company (“BSL”).
−Removed: Under the BSL Agreement:
−Removed: (i) BSL will have the right to terminate the BSL Agreement during an investigation period by written notice to GSD if BSL is not fully satisfied, in its sole discretion, as to the status of title, suitability of the Premises and all factors concerning same, in which case BSL will have the right to receive a refund of its earnest money deposit;
−Removed: (ii) if BSL does not terminate the BSL Agreement on or prior to the end of the investigation period, BSL will be obligated to deliver an additional earnest money deposit to the escrow agent, which together with the initial earnest money deposit will be applied toward the purchase price at closing;
−Removed: (iii) unless BSL terminates the BSL Agreement on or prior to the end of the investigation period, the closing will occur on the 30th day following the earlier of (y) the Town of Smithtown’s granting of the Site Plan Approval (as defined in the BSL Agreement and as described below);
−Removed: or (z) BSL’s waiver of the Site Plan Approval.
−Removed: The BSL Agreement is also contingent on the receipt of Subdivision Approval (as defined in the BSL Agreement and as described below).
−Removed: The Subdivision Approval condition requires that GSD obtain a subdivision of the Gyrodyne/Flowerfield complex into separate parcels to create the Property (as generally depicted in the BSL Agreement) within a specified time (the “Subdivision Approval Period”) following the last day of the investigation period.
−Removed: If the Subdivision Approval is not obtained within the Subdivision Approval Period, each of GSD and BSL have the right to terminate the BSL Agreement.
−Removed: BSL will also have a limited right to terminate the BSL Agreement in the event the Subdivision Approval contains requirements specified in the BSL Agreement.
−Removed: If Subdivision Approval has not been denied by the Town of Smithtown at or prior to the last day of the Subdivision Approval Period, GSD shall have the right to extend its time to obtain the Subdivision Approval for a specified period of time.
−Removed: If Subdivision Approval is not obtained within such additional time, each of GSD and BSL have the right to terminate the BSL Agreement.
−Removed: The Site Plan Approval is specifically delineated in the BSL Agreement.
−Removed: If BSL fails to obtain the Site Plan Approval prior to the end of the site plan approval period, BSL may cancel the BSL Agreement, waive the Site Plan Approval contingency, or extend the site plan period for a specified period upon the payment of an extension fee.
−Removed: If, after such extension, BSL fails to obtain the Site Plan Approval, BSL may cancel the BSL Agreement, waive the Site Plan Approval contingency, or extend the site plan period for an additional specified period with a second non-refundable extension fee.
−Removed: The BSL Agreement also contains additional customary covenants, conditions, representations and warranties.
Cortlandt Manor:
−Removed: Gyrodyne, LLC, a New York limited liability company (the “Company”), has announced the execution by its subsidiaries GSD Cortlandt, LLC, a New York limited liability company (“GSD”), and Buttonwood Acquisition, LLC (“Buttonwood” and together with GSD, the “Cortlandt Subsidiaries”), of a Purchase and Sale Agreement (the “Agreement”) effective as of December 7, 2019 (the “Effective Date”) for the sale of approximately 4.5 acres of its real property located in Cortlandt Manor, New York, together with the improvements thereon (the “Property”), to Sound Cortlandt, LLC, a Delaware limited liability company (“SC LLC”), for a purchase price of $5,720,000.
−Removed: The Town of Cortlandt (the “Town”) is processing a proposed zoning initiative to create a Medical Oriented District (“MOD”) that would include the entire Cortlandt property (owned by the Cortlandt Subsidiaries) within its boundaries.
−Removed: Included in the Town’s initiative is the Company’s site plan to subdivide the entire property into three parcels for the development of (i) a medical office building with retail, (ii) a multi-family residential housing project and (iii) an open space, passive recreation parcel.
−Removed: The Property that is the subject of the Agreement consists of the medical office building with ancillary retail space and does not include the multi-family residential housing parcel or the open space, passive recreation parcel.
−Removed: The Agreement requires:
−Removed: (i) an inspection period that will expire after a set period, during which time SC LLC will have the right to terminate the Agreement by written notice to GSD if SC LLC will not be fully satisfied, in SC LLC’s sole discretion, as to the status of title, suitability of the Property and all factors concerning same, prior to the expiration of the inspection period, in which case SC LLC will have the right to receive a refund of its earnest money deposit;
−Removed: (ii) if SC LLC does not terminate the Agreement on or prior to the end of the inspection period, SC LLC will be obligated to deliver an additional earnest money deposit to the escrow agent, which together with the initial earnest money deposit will be applied toward the purchase price at closing;
−Removed: (iii) unless SC LLC terminates the Agreement on or prior to the end of the inspection period, the closing will occur on the 60th day following the earlier of (y) the applicable governmental authorities granting of the Final Project Approvals (as defined in the Agreement and as described below);
−Removed: or (z) SC LLC’s waiver of the Final Project Approvals.
−Removed: The Final Project Approvals are also contingent on the receipt of Subdivision Approval and Site Plan Approval (each as defined in the Agreement and as described below).
−Removed: The Subdivision Approval condition requires that the Cortlandt Subsidiaries obtain approval as and to the extent necessary to allow for the conveyance of the medical office building parcel to SC LLC and the conveyance of the recreation parcel to the owner’s association within a specified time following the last day of the inspection period.
−Removed: If such Subdivision Approval is not obtained within such specified time following the last day of the inspection period, SC LLC has the right to terminate the Agreement.
−Removed: The Agreement provides SC LLC with a limited right to terminate the Agreement in the event the Subdivision Approval contains requirements specified in the Agreement.
−Removed: In the event the Subdivision Approval has not been denied by the Town at or prior to the last day of the specified period, SC LLC shall have the right to extend the time to obtain the Subdivision Approval for a specified period of time.
−Removed: If such Subdivision Approval is not obtained within such additional time, SC LLC has the right to terminate the Agreement.
−Removed: The Site Plan Approval is specifically delineated in the Agreement.
−Removed: If SC LLC fails to obtain the Site Plan Approval prior to the closing date (expected to be May 4, 2021), SC LLC may cancel the Agreement, waive the Site Plan Approval contingency, or extend the closing date.
−Removed: The Agreement also contains additional customary covenants, conditions, representations and warranties.
+Added: 13.8 acres in Cortlandt Manor, New York, including the 34,000 square foot Cortlandt Medical Center;
+Added: 68 acres in St.
+Added: James, New York, including a 10-acre multi-tenanted industrial park comprising 127,000 rentable square feet.
+Added: 63 of the 68 acres are included in the subdivision application filed with the Town of Smithtown.
+Added: 5 acres of the 68 acres are zoned residential and non-contiguous to the Flowerfield property.
+Added: Each of the Cortlandt Manor medical office park and the Flowerfield Industrial Park (including its undeveloped portion) is individually owned in a single asset limited liability company wholly owned by the Company.
Strategic Plan to Enhance Property Values, Liquidate and Dissolve
−Removed: Our corporate strategy is to pursue entitlement opportunities intended to increase the values of our two remaining properties so that they can be sold to one or more developers at higher prices (than those achievable under their current entitlements) that will maximize value during the liquidation process.
−Removed: Gyrodyne intends to dissolve after it completes the disposition of all of its real property assets, applies the proceeds of such dispositions first to settle any debts and claims, pending or otherwise, against Gyrodyne, and then makes liquidating distributions to holders of Gyrodyne common shares.
+Added: Our corporate strategy is to pursue entitlement opportunities intended to increase the values of our two remaining properties so that they can be sold to one or more developers at higher prices (than those achievable under their current entitlements) that will maximize value and distributions.
+Added: Gyrodyne intends to dissolve after it completes the disposition of all of its real property assets, applies the proceeds of such dispositions first to settle any debts and claims, pending or otherwise, against Gyrodyne, and then makes distributions to holders of Gyrodyne common shares.
We are unable to predict the precise nature, amount or timing of such distributions.
6 unchanged sentences
Gyrodyne’s dual strategy is to enhance the value of Flowerfield and Cortlandt Manor by pursuing entitlement opportunities while simultaneously enhancing the value of its leases.
−Removed: The Board believes the aforementioned dual strategy will improve the chances of increasing the values for such properties.
+Added: The Company believes the aforementioned dual strategy will improve the chances of increasing the values for such properties.
The value of the real estate reported in the consolidated statement of net assets as of December 31, 2020 (predicated on current asset values) includes some but not all of the potential value impact that may result from such value enhancement efforts.
There can be no assurance that our value enhancement efforts will result in property value increases that exceed the costs we incur in such efforts, or even any increase at all.
−Removed: Our efforts to generate the highest values for Flowerfield and Cortlandt Manor may involve, in limited circumstances, the pursuit of joint venture relationships, and other investments and/or other strategies to maximize the returns for our shareholders.
−Removed: The Company does not expect the pursuit of joint ventures, if any, to adversely affect the timing of the distributions to our shareholders.
−Removed: Sales of properties by Gyrodyne could take the form of individual sales of assets, as has been our recent experience in Port Jefferson, sales of groups of assets, a single sale of all or substantially all of the assets or some other form of sale.
+Added: Our efforts to generate the highest values for Flowerfield and Cortlandt Manor may involve, in limited circumstances, other strategies to maximize the returns for our shareholders.
+Added: Sales of properties by Gyrodyne could take the form of individual sales of assets, sales of groups of assets, a single sale of all or substantially all of the assets or some other form of sale.
The assets may be sold to one or more purchasers in one or more transactions over a period of time.
3 unchanged sentences
We cannot give any assurance on the timing of the ultimate sale of all of the Company’s properties.
−Removed: Assuming the liquidation process is completed by December 31, 2021 and giving effect to the estimated cash flows from the operation of our existing properties, we expect that Gyrodyne will have a cash balance at December 31, 2021 of approximately $31.4 million, prior to any future special distributions based on the estimate of net assets in liquidation presented in our Consolidated Statements of Net Assets.
−Removed: Such cash would equate to future liquidating distributions of $21.16 per share based on Gyrodyne having 1,482,680 common shares outstanding.
−Removed: These estimated distributions are based on values at December 31, 2019 and include some but not all of the potential value that may be derived from the entitlement efforts to maximize the value of Flowerfield and Cortlandt Manor.
−Removed: While the real estate market is dynamic and the economy is volatile, the Company believes that the increase in estimated distributions resulting from these enhancement efforts will exceed the remaining estimated $1.8 million investment in those efforts, although there can be no assurance of such excess or whether any appreciation at all will be realized.
+Added: Assuming the process of seeking entitlements and selling assets is completed by December 31, 2022 and giving effect to the estimated cash flows from the operation of our existing properties, we expect that Gyrodyne will have a cash balance on December 31, 2022 of approximately $22.49 million, prior to any future special distributions based on the estimate of net assets presented in our Consolidated Statements of Net Assets.
+Added: Such cash would equate to future distributions of $15.17 per share based on Gyrodyne having 1,482,680 common shares outstanding.
+Added: These estimated distributions are based on values on December 31, 2020 and include some but not all of the potential value that may be derived from the entitlement efforts to maximize the value of Flowerfield and Cortlandt Manor.
The Consolidated Statements of Net Assets is based on certain estimates.
Uncertainties as to the precise value of our non-cash assets, which include some but not all of the estimated potential additional value from the costs incurred to pursue the maximum value on Flowerfield and Cortlandt Manor through the entitlement efforts (including the pursuit of special permits) and the ultimate amount of our liabilities make it impracticable to predict the aggregate net value ultimately distributable to shareholders in a liquidation.
−Removed: Land entitlement costs, claims, liabilities and expenses from operations, including operating costs, salaries, income taxes, payroll and local taxes, legal, accounting and consulting fees and miscellaneous office expenses, will continue to be incurred during our liquidation process, which includes certain enhancement efforts.
−Removed: Excluding the value that may be achieved from the entitlement efforts, expenses incurred in pursuing the Company’s business plan will reduce the amount of assets available for ultimate distribution to shareholders, and, while a precise estimate of those expenses cannot currently be made, management and our Board believe that available cash and amounts received on the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims (including contingent liabilities) and to make cash distributions to shareholders.
+Added: Land entitlement costs, claims, liabilities and expenses from operations, including operating costs, salaries, real estate taxes, payroll and local taxes, legal, accounting and consulting fees and miscellaneous office expenses, will continue to be incurred during our process of seeking entitlements and selling assets, which includes certain enhancement efforts.
+Added: Excluding the value that may be achieved from the entitlement efforts, expenses incurred in pursuing the Company’s business plan will reduce the amount of assets available for ultimate distribution to shareholders, and, while a precise estimate of those expenses cannot currently be made, management and our Board believe that available cash (including amounts available under our credit facilities) and amounts received on the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims (including contingent liabilities) and to make cash distributions to shareholders.
However, no assurances can be given that available cash (including amounts available under our credit facilities) and amounts received on the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims and to make cash distributions to shareholders.
1 unchanged sentence
In the event our shareholders receive distributions from Gyrodyne and there are insufficient funds to pay any creditors who seek payment of claims against Gyrodyne, shareholders could be held liable for payments made to them and could be required to return all or a part of the distributions made to them.
+Added: Property Transactions
+Added: Properties Under Contract
+Added: On May 11, 2020, the Company’s wholly owned subsidiary GSD Flowerfield, LLC entered into a Purchase and Sale Agreement (the “Non-Contiguous Property Agreement”) for the sale of a 5.0-acre parcel of vacant land (the “Non-Contiguous Property”) that is non-contiguous to and not part of the Flowerfield complex in Smithtown, New York for a purchase price of $500,000.
+Added: Under the Non-Continuous Property Agreement, $25,000 of the purchase price was deposited in escrow at signing with the $475,000 balance payable at closing, subject to Buyer’s right to terminate as described below.
+Added: Under the Non-Contiguous Property Agreement:
+Added: (i) Buyer will have the right during an investigation period to conduct a phase 1 environmental survey and or other related analysis.
+Added: Buyer will have the right to terminate the Non-Contiguous Property Agreement, during the investigation period, by written notice to GSD Flowerfield if Buyer is not fully satisfied, in its sole discretion, as to the status of title, suitability of the property and all factors concerning same, in which case Buyer will have the right to receive a refund of its down payment;
+Added: (ii) unless Buyer terminates the Non-Contiguous Property Agreement on or prior to the end of the investigation period, the closing will occur on the 20th day following the earlier of (y) the Town of Smithtown’s granting of the Approvals (as defined in the Non-Contiguous Property Agreement and as described below);
+Added: or (z) Buyer’s waiver of such Approvals.
+Added: The Non-Contiguous Property Agreement is also contingent on the receipt of a Certificate of Correction/Subdivision Plan (“Correction Plan”) signed and approved by the Town of Smithtown and the Suffolk County Department of Health Services (“SCDHS”) for the Non-Contiguous Property and the recharge basin and building Permits Approval (as defined in the Non-Contiguous Property Agreement and as described below).
+Added: The Approval condition requires that the Buyer obtain the Correction Plan to create the two parcels and the recharge basin (as generally depicted in the Non-Contiguous Property Agreement) within a specified time (the “Approval Period”) following the last day of the investigation period.
+Added: The Correction Plan is specifically delineated in the Non-Contiguous Property Agreement.
+Added: In March 2021, the Buyer received the Correction Plan signed and approved by the Town of Smithtown and the SCDHS for the Non-Contiguous Property and the recharge basin.
+Added: As a result, the Company anticipates the closing to occur during the second quarter of 2021.
+Added: Termination of Purchase Agreements
+Added: The Company received notices on February 1, 2021 and on March 16, 2021 terminating purchase and sale agreements with respect to portions of the Company’s Cortlandt Manor and Flowerfield properties, respectively.
+Added: See, “ Part I, Item 1, Business – Subsequent Business Events – Contract Terminations ”, and “ Part II, Item 9B, Other Information – Subsequent Events – Terminated Contracts ”.
Property Value Enhancement
−Removed: The Company is pursuing entitlements to maximize the value of Flowerfield and Cortlandt Manor.
−Removed: During the year ended December 31, 2019, the Company incurred approximately $1,422,000 of land entitlement costs, consisting predominantly of engineering costs to support the Company’s respective entitlement efforts.
−Removed: We estimate that the Company may incur approximately $1.8 million in additional land entitlement costs (an aggregate of approximately $556,000 which Company vendors have agreed to defer until the first post subdivision property lot is sold) through December 31, 2021 in pursuit of entitlements (approximately $600,000 in Cortlandt Manor and $1.2 million in Flowerfield).
+Added: The Company is pursuing entitlements to maximize the value of Flowerfield and Cortlandt Manor properties.
+Added: During the year ended December 31, 2020, the Company incurred approximately $1,014,000 of land entitlement costs, consisting primarily of engineering costs to support the Company’s respective entitlement efforts.
+Added: We estimate that the Company may incur approximately $1.5 million in additional land entitlement costs (an aggregate of approximately $321,000 of which Company vendors have agreed to defer until the first post subdivision property lot is sold) through December 31, 2022 in pursuit of entitlements (approximately $500,000 in Cortlandt Manor and $1.0 million in Flowerfield).
The Company is focusing its resources on positioning the properties to be sold with all entitlements necessary to achieve maximum pre-construction values in the shortest period of time with the least amount of risk to the Company.
During the process of pursuing such entitlements, the Company may entertain offers from potential buyers who may be willing to pay prices for the properties that the Company finds more attractive from a timing or value perspective than values we believe may be reasonably achievable through completing the entitlement process ourselves.
−Removed: While the real estate market is dynamic, the economy is uncertain and there can be no assurances, we anticipate that these expenditures will result in higher sale prices of the properties and larger liquidating distributions to our shareholders than could otherwise be achievable.
Cortlandt Manor .
3 unchanged sentences
As a designated zoning district, the MOD could include hospital, ambulatory surgery, primary and urgent care, hospice, laboratories, social services, boutique hotels, retail and a wide range of housing.
−Removed: The Company’s existing 33,871 square foot Cortlandt Medical Center and its approximate 13.8 acres are located directly opposite New York Presbyterian’s Hudson Valley Hospital Center and within the boundaries of the MOD.
+Added: The Company’s existing 33,871 square foot Cortlandt Medical Center, situated on 13.8 acres, is located directly opposite New York Presbyterian’s Hudson Valley Hospital Center and within the boundaries of the MOD.
The Company has committed resources toward both market research and feasibility studies in support of achieving entitlements to maximize the value of the property.
5 unchanged sentences
Multi-family apartments
−Removed: The Company has been working with Town officials on entitlement complexity, environmental impact studies, traffic mitigation, effluent mitigation, financial impact and other variables to conform our application with the Town’s vision on the MOD.
−Removed: The entitlement costs for the years ended December 31, 2019 and 2018 associated with the ownership and development of this property were $425,699 and $414,982, respectively.
+Added: In response to the extensive public comments and Town Board input received during the State Environmental Quality Review “(SEQR”) Draft Generic Environmental Impact Statement (“DGEIS”) public hearing process, the Company amended the site plan and subdivision application with the Town to develop the Cortlandt property as follows:
+Added: SUBDIVISION LOT #
+Added: BUILDING SIZE/YIELD
+Added: Medical office Lot #1
+Added: Retail (Lot #1)
+Added: Medical Office Lot #2
+Added: The entitlement costs for the year ended December 31, 2020 associated with the ownership and development of this property were approximately $200,000.
As a property owner with eligible parcels in this district, Gyrodyne submitted an Environmental Assessment Form to the Town of Cortlandt Planning Department in December 2017 to support its application to receive a MOD campus designation.
Once designated, the parcels would be governed by the use, dimensional and other provisions of the MOD zoning regulations and MOD zoning would replace the existing zoning.
−Removed: While the MOD zoning has not been formally adopted, Gyrodyne is proposing medical office and residential use with limited retail and has designed the site to function as part of a future "hamlet center” with mixed use, streetscape improvements, a hamlet green and public plaza, and significant open space around Orchard Lake.
−Removed: The Town of Cortlandt Planning Department hosted two public hearing community outreach meetings in June and August 2018 where the Company presented its development plan for the Cortlandt Manor property.
−Removed: As anticipated, on August 7, 2018, the Town Planning Board formally issued a “positive declaration” under the State Environmental Quality Review Act (“SEQRA”), i.e., a declaration that the project may result in one or more significant environmental impacts and will require the preparation of an Environmental Impact Statement (“EIS”), the scope of which was also adopted.
−Removed: On August 28, 2018, the Town filed the Scope for a Draft Generic Environmental Impact Statement (“DGEIS”) with input from Gyrodyne for both the MOD zoning and the proposed uses so that upon adoption, minimal further SEQRA review should be required to develop the property.
−Removed: On September 17, 2019 the Town of Cortlandt Town Board as Lead Agency under SEQRA adopted a resolution accepting the DGEIS as complete for public review.
−Removed: The first public hearing on the DGEIS was held on November 19, 2019.
−Removed: A second public hearing on the DGEIS was held on January 14, 2020.
+Added: While the MOD zoning has not been formally adopted, Gyrodyne is currently proposing a two-phase medical office campus with limited retail and has designed the site to function as part of a future "hamlet center” with streetscape improvements.
+Added: The existing medical office will remain operational until phase 2 is implemented.
+Added: The Town of Cortlandt Planning Department hosted two public community outreach meetings in June and August 2018 where the Company presented its development plan for the Cortlandt Manor property.
+Added: As anticipated, on August 7, 2018, the Town Board formally issued a “positive declaration” under the State Environmental Quality Review Act (“SEQRA”), i.e., a declaration that the project may result in one or more significant environmental impacts and will require the preparation of an Environmental Impact Statement (“EIS”), the scope of which was also adopted.
+Added: On August 28, 2018, the Town filed the Scope for a DGEIS with input from Gyrodyne for both the MOD zoning and the proposed uses so that upon adoption, minimal further SEQRA review should be required to develop the property.
+Added: On September 17, 2019, the Town of Cortlandt Town Board as Lead Agency under SEQR adopted a resolution accepting the DGEIS as complete for public review.
+Added: The Town of Cortlandt Town Board hosted two public hearings on the DGEIS on November 19, 2019 and January 14, 2020.
The Town of Cortlandt Planning Board extended the public comment period 90 days with the next public hearing scheduled for April 14, 2020.
−Removed: Subsequent to DGEIS public hearings and public comment period, a Final Generic EIS will be prepared and is anticipated to be accepted by the Town Board with SEQRA completed in the third quarter of 2020.
−Removed: Subdivision and site plan public hearings will occur simultaneous with the Town Planning Board during the third and fourth quarters of 2020.
−Removed: The Town Board is anticipated to adopt a MOD designation for the property in the fourth quarter of 2020 with subdivision and site plan approval granted by the Town Planning Board occurring in early 2021.
+Added: As a result of the New York State’s stay-at-home-order, the April 14, 2020 public hearing was postponed to June 2020.
+Added: The public hearing was then held on June 16, 2020 on a virtual platform.
+Added: The Town closed the public comment period on June 30, 2020 and is in the process of reviewing the public comments and preparing the Final GEIS.
+Added: The Company anticipates the Final GEIS will reflect the Company’s Cortlandt Manor property proposed uses comprising 184,600 square feet of medical office space and 1,500 square feet of retail space.
+Added: It is anticipated that the Final GEIS will be accepted by the Town Board with SEQR completed in the second quarter of 2021.
+Added: Following such approval, we anticipate subdivision and site plan public hearings will occur with the Town Planning Board during the fourth quarter of 2021 and the first quarter of 2022.
+Added: The Town Board is anticipated to adopt a MOD designation for the property in early 2022 with subdivision approval granted by the Town Planning Board occurring in the first quarter of 2022.
The Company does not plan on developing the property but rather positioning the property to be sold with all entitlements necessary to achieve maximum pre-construction value for the Company in the shortest period of time with the least amount of risk to the Company.
3 unchanged sentences
We are also exploring with the Town of Smithtown whether it would be amenable to certain entitlements, special permits, or other concessions that would allow for the identified development projects.
−Removed: In March 2017, the Company filed a pre-subdivision application with the Town of Smithtown (the “Pre-application”) for the Flowerfield property along with the previously sold (2002) catering hall facility for an eight-lot subdivision which the Town of Smithtown has determined must be processed as a nine-lot subdivision in response to certain comments received from the planning department.
+Added: In March 2017, the Company filed a pre-subdivision application with the Town of Smithtown (the “Pre-application”) for the Flowerfield property along with the previously sold (2002) catering hall facility for an eight-lot subdivision which the Town of Smithtown has determined must be processed as a nine-lot subdivision in response to certain comments received from the planning department (The final approved (in 2021) FEIS included an eight-lot subdivision).
In June 2017, the Company filed a subdivision application with the Town of Smithtown based on feedback provided by the Town of Smithtown staff in the pre-application process.
15 unchanged sentences
Following the closing of the public comment period, the Company received a copy of the public comments in February 2020, accordingly.
−Removed: The company is reviewing the public comments and will respond by submitting a Final EIS (“FEIS”).
−Removed: The FEIS is anticipated to be accepted by the Planning Board with SEQRA completed in the second quarter or early third quarter of 2020.
−Removed: The entitlement costs for the years ended December 31, 2019 and 2018 associated with the ownership and development of this property consisted of architectural and engineering costs, legal expenses, economic analysis, soil management and surveys were $996,493 and $846,066, respectively.
−Removed: The Company owns and is actively marketing for sale an additional 5.2 acres bordering the industrial park that are currently zoned residential and are not part of the subdivision application.
+Added: The company reviewed the public comments and responded by submitting a Final EIS (“FEIS”) on April 20, 2020.
+Added: Following the receipt of additional comments in June 2020, the Company filed its FEIS in September 2020 and received final comments on October 16 th , 2020.
+Added: The Company filed its Final FEIS in November 2020 reflecting an eight-lot subdivision.
+Added: The FEIS was accepted by the Town Planning Board on March 10, 2021.
+Added: Following a public comment period that closed on March 31, 2021, the Town of Smithtown will forward the public comments and the FEIS to the Suffolk County Planning Commission to who will vote accordingly within 45 days of receipt of a complete referral package from the Town of Smithtown.
+Added: The Town of Smithtown will review the County determination and the Town Planning Board will issue a Findings Statement.
+Added: Preliminary Approval of the subdivision may occur simultaneously or shortly after the Findings Statement.
+Added: Following Preliminary Approval, the Company will pursue technical approvals after which Final Subdivision approval will be applied for.
+Added: The entitlement costs for the year ended December 31, 2020 associated with the ownership and development of this property consisted of engineering costs, legal expenses, economic analysis, soil management and surveys were approximately $814,000.
While we cannot predict the outcome of the subdivision application, we have undertaken to subdivide the Flowerfield property in a manner that we believe will result in maximum pre-construction values in the shortest amount of time and limited risk.
−Removed: Flowerfield Industrial Park Value Enhancement Strategy .
−Removed: The Company’s strategy is to:
−Removed: a) pursue entitlements to maximize the pre-construction value of Flowerfield and b) enhance the value of the Flowerfield Industrial Park’s current buildings even further by expanding our relationship with our largest tenant, Stony Brook University and institutions affiliated with it.
−Removed: The Company’s strategy to maximize the value of the Flowerfield Industrial Park includes repositioning the park’s industrial buildings to service Stony Brook University and institutions affiliated with it, inclusive of Stony Brook University Hospital, while also making it a cultural destination (arts, health and wellness center) for the community.
−Removed: The Company believes this strategy will enhance the value of the entitlements while also increasing the cashflow and market value of the industrial buildings.
−Removed: Our business relationship with Stony Brook University and institutions affiliated with it has expanded from approximately 16,000 square feet in the third quarter of 2017 (the beginning of the repositioning strategy) to approximately 27,000 square feet.
−Removed: The annual lease commitments (as of December 31, 2019) to service Stony Brook University and institutions affiliated with it, inclusive of Stony Brook University Hospital is $628,440 (most of which is not up for renewal until 2025).
+Added: The pandemic has negatively impacted demand for office (including medical office) and hotel development “on spec”.
+Added: The Company’s subdivision plan at Flowerfield will allow for any combination of the aforementioned uses and is marketing the undeveloped lots to reflect such flexibility.
Health Care Industry
4 unchanged sentences
The Patient Protection and Affordable Care Act of 2010 (the “ACA”) impacted the healthcare marketplace by decreasing the number of uninsured individuals in the United States through the establishment of health insurance exchanges to facilitate the purchase of health insurance, expanded Medicaid eligibility, subsidized insurance premiums and included requirements and incentives for businesses to provide healthcare benefits.
−Removed: The ACA remains subject to continuing and increasing legislative and administrative scrutiny, including current efforts by Congress and the current presidential administration to repeal, alter and replace the ACA in total or in part.
−Removed: In 2017, Congress unsuccessfully sought to replace substantial parts of the ACA with different mechanisms for facilitating insurance coverage in the commercial and Medicaid markets, but was able to enact legislation eliminating the tax penalty for individuals who do not purchase insurance.
−Removed: Additionally, the Centers for Medicare and Medicaid Services (“CMS”) discontinued providing cost-sharing reduction subsidies to insurance providers, which is expected to have the result of increasing the cost of insurance premiums.
−Removed: Further, CMS has begun approving waivers permitting states to alter state Medicaid programs by, among other things, requiring individuals to meet certain requirements, such as work requirements, in order to maintain eligibility for Medicaid.
−Removed: These and other actions may impact the insurance markets and reduce the number of individuals purchasing insurance or qualifying for Medicaid and may negatively impact the operations and financial condition of our medical office tenants, which in turn may adversely impact us.
−Removed: Congress may revisit ACA or Medicaid reform legislation in 2020 or shortly thereafter.
−Removed: If the ACA is repealed or further substantially modified, or if implementation of certain aspects of the ACA are suspended, such actions could negatively impact the operations and financial condition of our medical office tenants, which in turn may adversely impact us.
+Added: There have been executive, judicial and Congressional challenges to certain aspects of the ACA.
+Added: Although the U.S.
+Added: Supreme Court has not yet ruled on the constitutionally of the ACA, on January 28, 2021, President Biden issued an executive order that instructs certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among other policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.
+Added: It is unclear how the Supreme Court ruling, other such litigation, and the healthcare reform measures of the Biden administration will impact the ACA and the operations and financial condition of our medical office tenants, which in turn may adversely impact us.
Our tenants are subject to extensive federal, state, and local licensure laws, regulations and industry standards governing business operations, the physical plant and structure, patient rights and privacy and security of health information.
7 unchanged sentences
Approximately 5 acres of the 68 acres at Flowerfield, are non-contiguous to the Flowerfield industrial park and zoned residential.
−Removed: The Company is actively marketing the 5-acre lot for sale.
+Added: In May 2020, the Company’s wholly owned subsidiary, GSD Flowerfield, LLC, entered into a purchase and sale agreement for the sale of the 5-acre lot (See “ Properties Under Contract ” above).
Flowerfield's location places it in Hydrogeologic Zone VIII , one of the most liberal with respect to effluent discharge rates.
6 unchanged sentences
The property consists of six office buildings.
−Removed: As of December 31, 2019, there were 6 tenants, comprising 7 leases.
+Added: As of December 31, 2020, there were four tenants, comprising four leases.
The annual base rent based on the rates in effect as of December 2020, is approximately $740,000.
The property was 73% occupied as of December 31, 2020.
−Removed: The Company is actively repositioning the Cortlandt Manor property toward short-term leases to allow for a more timely and efficient transition into a development property.
−Removed: During early 2019, the Company terminated a long-term lease for 3,943 square feet and annual revenue of $115,380.
−Removed: The Company is negotiating agreements with all of its Cortlandt Manor tenants granting the landlord an early termination option to allow buyers of the property maximum flexibility to begin development following receipt of site approvals.
+Added: Impact of COVID-19
+Added: The following discussion is intended to provide shareholders with certain information regarding the impacts of the COVID-19 pandemic on the Company’s business and management’s efforts to respond to those impacts.
+Added: Unless otherwise specified, the statistical and other information regarding the Company’s properties and tenants are estimates based on information available to the Company.
+Added: As a result of the rapid development, fluidity and uncertainty surrounding this situation, the Company expects that such statistical and other information will change, potentially significantly, going forward, and may not be indicative of the actual impact of the COVID-19 pandemic on the Company’s business, operations, cash flows and financial condition for the year ended December 31, 2021 and future periods.
+Added: The spread of COVID-19 is having a significant impact on the global economy, the U.S.
+Added: economy, the economies of the local markets in which the Company’s properties are located and the broader financial markets.
+Added: Nearly every industry has been impacted directly or indirectly and has come under severe pressure due to numerous factors, including preventative measures taken by local, state and federal authorities to alleviate the public health crisis such as mandatory business closures, quarantines, restrictions on travel and “shelter-in-place” or “stay-at-home” orders.
+Added: These containment measures, which generally do not apply to businesses designated as “essential,” have affected the operations of our tenants, as non-essential businesses generally have been forced to close.
+Added: There is uncertainty as to the time, date and extent to which these restrictions will be relaxed or lifted, businesses of tenants that have closed, either voluntarily or by mandate, will reopen or when customers will re-engage with tenants as they have in the past.
+Added: The Company’s properties and tenants have been impacted by these and other factors as follows:
+Added: As of the date of this Annual Report on Form 10-K, both of the Company’s properties are open and the Company believes are operating in compliance with federal, state and local COVID-19 guidelines and mandates.
+Added: Both of the Company’s properties feature tenants designated as “essential”.
+Added: Approximately 37% of the Company’s tenants (based on 2021 projected annual revenues) are not-for-profit corporations or tenants that are neither medical offices nor part of or affiliated with SBU or SBU Hospital.
+Added: The COVID-19 public health crisis has and will likely continue to adversely impact the timeline to secure entitlements and the sale of our real estate.
+Added: Furthermore, the real estate market has and is expected to continue to be adversely affected which could further negatively impact the timing of sales and the resulting value of our real estate.
+Added: The Company has taken a number of proactive measures to maintain the strength of its business and manage the impact of COVID-19 on the Company’s operations and liquidity, including the following:
+Added: Along with the Company’s tenants and the communities they and the Company together serve, the health and safety of the Company’s employees and their families is a top priority.
+Added: The Company has adapted its operations to protect employees, including by implementing a work from home policy, and the Company’s IT systems have enabled its team to work seamlessly.
+Added: To enhance our liquidity position and maintain financial flexibility, the Company secured a loan for up to $2,500,000, evidenced by a non-revolving business line of credit agreement and promissory note, which closed on July 16, 2020.
+Added: As of December 31, 2020, the Company has approximately $1.63 million in cash and cash equivalents, and an additional $3,340,167 available under its credit facilities of which $800,000 is only available for certain capital improvements.
+Added: In January 2021, the Company drew an additional $1,090,167.
+Added: The Company has taken proactive measures to manage costs, including securing agreements from certain of the Company’s major service vendors to defer approximately $651,000 of land development fees and other professional fees incurred to date plus approximately $321,000 of forecasted land development fees until the first post subdivision property lot is sold.
+Added: The only significant expenditures the Company plans to make at this time on our properties relate to obtaining entitlements.
+Added: Further, the Company expects that the only material capital expenditures at the Company’s properties will be tenant improvements and/or other leasing costs associated with existing and new leases.
+Added: We adopted a Deferred Compensation Plan effective as of January 1, 2020 pursuant to which officers and directors may elect to defer a portion of their compensation until the earlier of December 15, 2026 or adoption of a Plan of Liquidation, together with interest on such deferred payments at a fixed rate of 5%.
+Added: The extent of the impact of COVID-19 on the Company's operational and financial performance and ultimately its net asset value, will depend on current and future developments, including the duration and spread of the outbreak and related governmental or other regulatory actions.
+Added: The Company’s ability to operate seamlessly and limit any adverse impact on its forecasted net asset value will also depend, in part, on whether any of its key employees or key advisors are infected by the Coronavirus and become ill from COVID-19.
+Added: The unanticipated loss or unavailability of key employees and advisors due to COVID-19 or any similar pandemic could harm our ability to operate our business or execute our business strategy.
Gyrodyne is a limited liability company.
12 unchanged sentences
Internal Growth and Effective Asset Management
−Removed: Tenant Relations and L ease C ompliance .
+Added: Tenant Relations and Lease Compliance .
We strive to maintain strong contacts with our tenants in order to understand their current and future real estate rental and development needs.
We directly monitor each of our rental properties to ensure they are properly maintained and meet the needs of our tenants.
−Removed: Extending Lease M aturitie s .
+Added: Extending Lease Maturities .
We seek to extend leases at the Flowerfield Industrial Park in advance of expirations to achieve high occupancy levels.
−Removed: Additionally, our strategy includes expanding our leasing relationship with Stony Brook University and institutions affiliated with it, inclusive of Stony Brook University Hospital, which we believe will enhance the value of the existing buildings as well as the entitlements being pursued.
−Removed: We are seeking to covert the Cortlandt Manor leases to predominantly short-term leases to allow prospective buyers the maximum flexibility to begin development following receipt of site approvals.
−Removed: The entitlements being pursued, if secured, would allow for a 100,000 square foot medical building and a 200-unit multitenant residential building.
+Added: We are seeking to convert the Cortlandt Manor leases to long-term leases with a landlord option to terminate the lease early contingent on the new100,000 square foot medical office buildings’ completion date.
+Added: The strategy will improve the value of the operating lot (Lot 2) as it will allow Gyrodyne to market lot one using a lower market-based cap rate plus a premium for development rights.
Financing Strategy
−Removed: The Company believes it is currently capitalized with adequate cash levels and adequate access to its credit facilities to operate our business and complete our strategic plan of positioning our remaining properties for sale at enhanced values and making liquidating distributions to our shareholders.
+Added: The Company believes it is currently capitalized with adequate cash levels and adequate access to its credit facilities to operate our business and complete our strategic plan of positioning our remaining properties for sale at enhanced values and making distributions to our shareholders.
The Company focuses its available capital to operate the Company and pursue the entitlements strategy.
To finance the capital improvements, most of which relate to leasing activity, the Company secured a non-revolving credit line for up to $3,000,000 (the “Original Line”) with a bank, which closed on March 21, 2018.
−Removed: There was an interest only phase for the first eight months of the loan (“Interest-Only Phase”) after which it automatically converts to a permanent loan maturing on November 30, 2025 (84 months after conversion to a permanent loan) (the “Permanent Phase”).
−Removed: On January 24, 2019, the Company amended and extended the Original Line which included extending the maturity date of the interest only phase to the earlier of January 20, 2020 or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of January 20, 2027 or 84 months after conversion to a permanent loan (the “Permanent Phase”).
−Removed: The Company amended and extended the Original Line which included extending the maturity date of the Interest-Only Phase to the earlier of April 30, 2020 or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of April 30, 2027 or 84 months after conversion to a permanent loan (the “Permanent Phase”).
−Removed: The interest rate during the Interest-Only Phase shall be a variable rate equal to the daily highest prime rate published by the Wall Street Journal plus 100 basis points (1% rounded up to the nearest 1/8 percent), but in no event less than the initial interest rate in effect on the closing date (6.5%).
−Removed: During the Permanent Phase, the Company will pay interest at a fixed rate based on the Federal Home Loan Bank rate for a 7-year maturity as made available by the Federal Home Loan Bank of New York plus a margin of 200 basis points (2%) rounded up to the nearest 1/8 percent, plus principal based on a 20-year amortization period.
+Added: The Original Line included an interest only phase for the first eight months of the loan (as amended, the “Interest-Only Phase”).
+Added: The Company amended and extended the Original Line which included extending the conversion date of the Interest-Only Phase to the earlier of April 30, 2021 or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of April 30, 2028 or 84 months after conversion to a permanent loan (the “Permanent Phase”).
+Added: The interest rate, as amended, during the Interest-Only Phase is a variable rate equal to the daily highest prime rate published by the Wall Street Journal plus 150 basis points (1.5% rounded up to the nearest 1/8 percent), adjusted daily, but shall not be less than 4.75%.
+Added: During the Permanent Phase, the Company will pay interest at a fixed rate based on the Federal Home Loan Bank rate for a 7-year maturity as made available by the Federal Home Loan Bank of New York plus a margin of 200 basis points (2%) rounded up to the nearest 1/8 percent, but shall not be less than 3.85%, plus principal based on a 20-year amortization period.
The Permanent Phase interest rate currently would be 3.85%.
−Removed: The first advance, drawn in March 2018, of $1.1 million was used to finance the work required for the lease amendment with Stony Brook University Hospital (“SBU Hospital”).
+Added: The first advance of $1.1 million was used to finance the tenant improvements pursuant to the amended and expanded signed lease with Stony Brook University Hospital (“SBU Hospital”).
An additional advance of $1.1 million was drawn on March 29, 2019 to finance the buildouts on leases signed through December 31, 2018.
The balance of the loan can be drawn upon for improvements to be completed by the Company, as landlord, pursuant to future leases with the State University of New York or institutions affiliated with it (or other tenants subject to the bank’s approval) anytime during the Interest-Only Phase.
−Removed: To secure access to additional working capital, if needed, through the final sale date of the Flowerfield industrial buildings, the Company secured a second loan evidenced by a secured non-revolving business line of credit agreement and promissory note with a bank for up to $3,000,000, which closed on January 24, 2019.
−Removed: There is an interest only phase for the first twenty-four months of the loan (“Interest-Only Phase”) after which it automatically converts to a permanent loan maturing on January 20, 2028 (84 months after conversion to a permanent loan) (the “Permanent Phase”).
−Removed: The interest rate during the Interest-Only Phase shall be a variable rate equal to the daily highest prime rate published by the Wall Street Journal plus 100 basis points (1% rounded up to the nearest 1/8 percent), but in no event less than the initial interest rate in effect on the closing date (6.5%).
−Removed: During the Permanent Phase, the Company will pay interest at a fixed rate based on the Federal Home Loan Bank rate for a 7-year maturity as made available by the Federal Home Loan Bank of New York plus a margin of 200 basis points (2%) rounded up to the nearest 1/8 percent, plus principal based on a 20-year amortization period.
−Removed: The Permanent Phase interest rate currently would be 3.25%.
−Removed: Two advances of $1,000,000 and $500,000 were drawn on September 30 and December 31, 2019, respectively.
−Removed: The balance of $1,419,932, net of closing costs of $80,068, is available to be drawn down.
−Removed: Both are secured by approximately 31.8 acres of the Flowerfield Industrial Park including the related buildings and leases.
−Removed: The only significant financial covenant associated with the loan is a debt service ratio on GSD Flowerfield, LLC of 1.35 to 1.
−Removed: The Company is in compliance with the loan covenants.
−Removed: The Company anticipates modifying the terms of the loan following the completion of its subdivision.
−Removed: To secure access to additional working capital through the final sale date of the Cortlandt Property lots (“Lots”), the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”) signed a commitment letter for a third loan evidenced by a non-revolving business line of credit agreement and promissory note with the Original Line bank for up to $2,500,000, which is scheduled to close in the second quarter of 2020.
+Added: To secure access to additional working capital through the final sale date of the Flowerfield industrial buildings, the Company secured a second loan evidenced by a non-revolving business line of credit agreement and promissory note with the Original Line bank for up to $3,000,000, which closed on January 24, 2019.
+Added: This loan included an interest only phase for the first twenty-four months of the loan (“Interest-Only Phase”) after which it automatically converts to a permanent loan maturing on January 20, 2028 (84 months after conversion to a permanent loan) (the “Permanent Phase”).
+Added: The Company amended and extended the line which included extending the conversion date of the Interest-Only Phase to the earlier of May 20, 2021 or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of May 20, 2028 or 84 months after conversion to a permanent loan.
+Added: The interest rate during the Interest-Only Phase shall be a variable rate equal to the daily highest prime rate published by the Wall Street Journal plus 100 basis points (1% rounded up to the nearest 1/8 percent), but in no event less than 4.75%.
+Added: During the Permanent Phase, the Company will pay interest at a fixed rate based on the Federal Home Loan Bank rate for a 7-year maturity as made available by the Federal Home Loan Bank of New York plus a margin of 200 basis points (2%) rounded up to the nearest 1/8 percent, but shall not be less than 3.85%, plus principal based on a 20-year amortization period.
+Added: Permanent Phase interest rate currently would be 3.85%.
+Added: Pursuant to the terms of the loan, the bank is in the process of converting the loan to a permanent loan following the drawdowns of $1,580,068, $1,000,000 and $419,932 in 2019, 2020 and January 2021, respectively.
+Added: Both lines are secured by approximately 31.8 acres of the Flowerfield Industrial Park including the related buildings and leases.
+Added: As of December 31, 2020, the Company is in compliance with the loan covenants.
+Added: The Company anticipates modifying the terms of the loans following the completion of the subdivision so that the loans remain secured by the subdivided industrial park lot only.
+Added: To secure access to additional working capital, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”) secured a loan evidenced by a non-revolving business line of credit agreement and promissory note with the Original Line bank for up to $2,500,000 which closed on July 16, 2020.
The term is 24 months, with an option to extend for an additional 12 months.
The interest rate is a variable rate equal to the daily highest prime rate published by the Wall Street Journal plus 100 basis points (1%), rounded up to the nearest 1/8 percent, but in no event less than four and three quarters percent (4.75%).
−Removed: The ability to draw upon the line is limited to certain amounts, contingent upon whether GSD Cortlandt delivered signed contracts for one or both Lots.
−Removed: The line is secured by the Cortlandt property (approximately 14 acres) and cross collateralized by approximately 31.8 acres of the Flowerfield Industrial Park including the related buildings and leases.
+Added: The terms of the loan originally limited access to certain amounts, contingent upon GSD Cortlandt securing purchase and sale agreements for one or both Cortlandt Property lots.
+Added: On February 22, 2021, the loan was amended to remove such limitation on draws.
+Added: Advances of $379,765 and $670,235, were drawn at closing and on January 28, 2021, respectively.
+Added: Under the line, the balance of $1,450,000 is available at the lender’s sole discretion.
+Added: The line is secured by the Cortlandt property (13.8 acres) and cross collateralized by 31.8 acres of the Flowerfield Industrial Park including the related buildings and leases.
The Company anticipates modifying the terms of the loans following the completion of the subdivision so that the loans remain cross collateralized by the subdivided industrial park lot only.
−Removed: Effective February 27, 2020, the Company entered into an engagement letter with a national real estate finance firm (the “Firm”) pursuant to which the Firm agreed to assist the Company secure financing with prospective lenders, and the Company agreed to pay the Firm an origination fee equal to one percent (1%) of any loan secured by the Company with any lender introduced to the Company by the Firm other than designated excluded lenders with whom the Company has a preexisting relationship.
−Removed: The intended use of this facility is to finance tenant improvements on new leases, if any, and a reserve for additional working capital.
Environmental Matters
7 unchanged sentences
For the year ended December 31, 2020, rental income from the Company’s three largest tenants represented approximately 24%, 21% and 9%, respectively, of total rental income.
+Added: The three largest tenants by revenue as of December 31, 2020, consist of Stony Brook University Hospital, located in the industrial park, a medical tenant in the Cortlandt Manor Medical Center and a tenant in the industrial park that previously expanded its space.
+Added: For the year ended December 31, 2019, rental income from the Company’s three largest tenants represented approximately 23%, 20% and 7%, respectively, of total rental income.
The three largest tenants by revenue as of December 31, 2019, consist of Stony Brook University Hospital, located in the industrial park, a medical tenant in the Cortlandt Manor Medical Center and a tenant in the industrial park that recently expanded its space.
−Removed: For the year ended December 31, 2018, pro forma rental income (excluding revenue related to assets sold on or prior to December 31, 2018) from the three largest tenants represented approximately 21%, 21% and 6% of total rental income.
−Removed: The three largest tenants by revenue as of December 31, 2018, consist of Stony Brook University Hospital, located in the industrial park and two medical tenants in the Cortlandt Manor Medical Center.
−Removed: The current economic challenges facing state and local budgets impacted most of the Company’s largest tenants.
−Removed: In addition, the current economic challenges stemming from the coronavirus are disproportionately impacting small businesses which comprise 39% of our expected 2020 rental revenue.
−Removed: There can be no assurance that the Company’s leases will renew for the same square footage, at favorable rates net of tenant improvements, if at all.
−Removed: Fiscal Y ear 20 1 9 Transaction Summary
+Added: Fiscal Year 2020 Transaction Summary
The following summarizes our significant transactions and other activity during the year ended December 31, 2020.
Disposition Activity.
−Removed: Flowerfield - On August 27, 2019, the Company’s wholly-owned subsidiary GSD Flowerfield, LLC entered into a Purchase and Sale Agreement (the “BSL Agreement”) for the sale of an approximately 9.0 acre parcel of vacant land in the Flowerfield complex in Smithtown, New York for $16,800,000 to BSL St.
−Removed: James LLC, a Delaware limited liability company (“BSL”).
−Removed: See, “ Business--Properties Under Contract--Flowerfield ”, above, for more detailed disclosure.
−Removed: Cortlandt Manor - Gyrodyne, LLC, a New York limited liability company (the “Company”), has announced the execution by its subsidiaries GSD Cortlandt, LLC, a New York limited liability company (“GSD”), and Buttonwood Acquisition, LLC (“Buttonwood” and together with GSD, the “Cortlandt Subsidiaries”), of a Purchase and Sale Agreement (the “Agreement”) effective as of December 7, 2019 (the “Effective Date”) for the sale of approximately 4.5 acres of its real property located in Cortlandt Manor, New York, together with the improvements thereon (the “Property”), to Sound Cortlandt, LLC, a Delaware limited liability company (“SC LLC”), for a purchase price of $5,720,000.
−Removed: See, “Business--Properties Under Contract—Cortlandt Manor ”, above, for more detailed disclosure.
+Added: Flowerfield - On May 11, 2020, the Company’s wholly owned subsidiary GSD Flowerfield, LLC entered into a Purchase and Sale Agreement (the “Non-Contiguous Property Agreement”) for the sale of a 5.0-acre parcel of vacant land (the “Non-Contiguous Property”) that is non-contiguous to and not part of the Flowerfield complex in Smithtown, New York for a purchase price of $500,000.
+Added: See, “ Business-Property Transactions--Properties Under Contract--Flowerfield ”, above, for more detailed disclosure.
Leasing Activity.
−Removed: During 2019, the Company signed five new leases comprising 4,606 square feet, annual base rent of approximately $51,500 and total lease commitments of approximately $128,000, excluding tenant reimbursements, at an average rate per square foot of $11.18, which were offset by seven terminations comprising 8,981 square feet, approximately $187,000 in annual revenue, excluding tenant reimbursements at an average rate per square foot of $20.85.
+Added: During 2020, the Company signed four new leases comprising 2,105 square feet, annual base rent of approximately $36,800 and total lease commitments of approximately $82,400, excluding tenant reimbursements, at an average rate per square foot of $17.48, which were offset by ten terminations comprising 12,217 square feet, approximately $174,500 in annual revenue, excluding tenant reimbursements at an average rate per square foot of $14.28.
The net impact was a decrease in annual lease commitments and rented square footage of approximately $137,700 and 10,112 square feet, respectively.
−Removed: A total of ten lease renewals were signed during 2019 comprising approximately 17,600 square feet, $,332,200 in annual revenue and $375,900 in total commitments.
−Removed: In addition, there were a total of two expansion/downsizing signed in 2019 with no change in square footage and a net increase of approximately $2,700 in annual revenue and $4,700 in total commitments.
−Removed: There were no incentives or lease concessions in the form of rent abatements during the year ended 2019.
−Removed: The Company paid commissions of approximately $10,900.
+Added: A total of 22 lease renewals were signed during 2020 comprising approximately 36,600 square feet, $583,500 in annual revenue and $778,000 in total commitments.
+Added: There were no incentives, lease concessions in the form of rent abatements or commissions paid during the year ended 2020.
Financing Activity.
−Removed: To finance capital improvements, most of which relate to leasing activity, the Company secured a non-revolving credit line for up to $3,000,000 (the “Original Line”) with a bank, which closed on March 21, 2018.
−Removed: There was an interest only phase for the first eight months of the loan (“Interest-Only Phase”) after which it automatically converts to a permanent loan maturing on November 30, 2025 (84 months after conversion to a permanent loan) (the “Permanent Phase”).
−Removed: On January 24, 2019, the Company amended and extended the Original Line which included extending the maturity date of the interest only phase to the earlier of January 20, 2020 (which has since been extended to April 30,2020) or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of January 20, 2027 or 84 months after conversion to a permanent loan.
+Added: To secure access to additional working capital, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”) secured a loan evidenced by a non-revolving business line of credit agreement and promissory note with the Original Line bank for up to $2,500,000 which closed on July 16, 2020.
+Added: The term is 24 months, with an option to extend for an additional 12 months.
See, “ Business — Financing Strategy ”, above, for more detailed disclosure.
−Removed: Retention B onus P lan
−Removed: In May 2014, the Board of Directors approved a retention bonus plan (as amended, the “Plan”) designed to recognize the nature and scope of the responsibilities of our directors, executives and employees related to the Company’s strategic plan to enhance the property values, liquidate and dissolve, to reward and incent performance in connection therewith, to align the interests of directors, executives and employees with our shareholders and to retain such persons during the term of such plan.
−Removed: The Plan provides for bonuses to directors, officers and employees determined by the gross sales proceeds from the sale of each property and the date of sale.
−Removed: The summary appearing below reflects the terms set forth in the Plan as modified by three amendments.
−Removed: There were no further amendments to the terms of the Plan during the current reporting period.
−Removed: See, “ Item 1., Executive Compensation—Retention Bonus Plan” below for more detailed disclosure.
Deferred Compensation Plan
On December 6, 2019, the Company’s Board of Directors (the “Board”) approved the Gyrodyne, LLC Nonqualified Deferred Compensation Plan for Employees and Directors (the “DCP”) effective as of January 1, 2020.
−Removed: The plan is a nonqualified deferred compensation plan maintained for officers and directors of the Company.
+Added: The DCP is a nonqualified deferred compensation plan maintained for officers and directors of the Company.
Under the DCP, officers and directors may elect to defer a portion of their compensation to the DCP and receive interest on such deferred payments at a fixed rate of 5%.
All DCP benefits will be paid in a single lump sum cash payment on December 15, 2026, unless a Plan of Liquidation is established for Gyrodyne before the distribution date in which case all benefits will be paid in a single lump sum cash payment after execution of an amendment to terminate the DCP.
−Removed: The foregoing description of the DCP does not purport to be complete and is qualified in its entirety by reference to the full text of the DCP, which is attached hereto as Exhibit 10.12.
−Removed: Each of the Directors elected (under the DCP) to defer 100% of their director fees for 2020.
−Removed: Subsequent Business Event s
+Added: The foregoing description of the DCP does not purport to be complete and is qualified in its entirety by reference to the full text of the DCP, which was filed as an exhibit to the Company’s Form 8-K, filed with the Securities and Exchange Commission on November 2, 2018 and incorporated herein by reference.
+Added: Each of the Directors elected (under the DCP) to defer 100% of their director fees for 2020 and 2021.
+Added: Subsequent Business Events
+Added: Termination of Purchase Agreements.
+Added: On August 27, 2019, the Company’s wholly owned subsidiary GSD Flowerfield, LLC entered into a Purchase and Sale Agreement (the “BSL Agreement”) for the sale of a 9.0-acre parcel of vacant land (the “BSL Agreement Property”) in the Flowerfield complex in Smithtown, New York for $16,800,000 to BSL St.
+Added: James LLC, a Delaware limited liability company (“BSL”).
+Added: The Agreement provided that BSL would have the right to terminate the BSL Agreement by written notice to GSD Flowerfield prior to the expiration of a defined inspection period (which had been extended via amendments to the BSL Agreement) if BSL was not fully satisfied, in BSL’s sole discretion, as to the status of title, suitability of the Property and all factors concerning same, in which case BSL would have the right to receive a refund of its earnest money deposit.
+Added: On March 16, 2021, the Company received a notice (the “BSL Termination Notice”) from BSL that it is terminating the BSL Agreement.
+Added: The BSL Termination Notice referenced the foregoing termination right and requested the return of the earnest money deposit to BSL in accordance with the provisions of the BSL Agreement.
+Added: The BSL Agreement Property is included in the Company’s subdivision application with the Town of Smithtown, New York, to subdivide the entire Flowerfield property into eight separate parcels (one parcel of which is a catering hall facility sold by the Company in 2002).
+Added: The Company believes the termination of the BSL Agreement should have no impact on the subdivision application, and will continue to actively market its entire Flowerfield property on the basis of eight subdivided lots subject to and contingent upon approvals for the subdivision and related entitlements.
+Added: Cortlandt Manor.
+Added: As of December 7, 2019, the Company’s wholly owned subsidiaries GSD Cortlandt, LLC, a New York limited liability company and Buttonwood Acquisitions, LLC (together the “Cortlandt Subsidiaries”), executed a Purchase and Sale Agreement (the “SC Agreement”) for the sale of approximately 4.5 acres of its real property located in Cortlandt Manor, New York, together with improvements thereon (the “SC Agreement Property”) to Sound Cortlandt, LLC, a Delaware limited liability company (“SC LLC”) for a purchase price of $5,720,000.
+Added: The SC Agreement provided that SC LLC would have the right to terminate the SC Agreement by written notice to the Cortlandt Subsidiaries prior to the expiration of a defined inspection period (which had been extended via amendments to the SC Agreement) if SC LLC was not fully satisfied, in SC LLC’s sole discretion, as to the status of title, suitability of the SC Agreement Property and all factors concerning same, in which case SC LLC would have the right to receive a refund of its earnest money deposit.
+Added: On February 1, 2021, the Company received a notice (the “SC Termination Notice”) from SC, LLC that it is terminating the SC Agreement.
+Added: The SC Termination Notice referenced the foregoing termination right and called for the Escrow Agent (as defined in the SC Agreement) to return the earnest money deposit immediately to SC LLC in accordance with the provisions of the SC Agreement.
+Added: The Company has made applications to the Town of Cortlandt (the “Town”) for a zoning amendment to rezone the entire Cortlandt property (owned by the Cortlandt Subsidiaries) into a Town Medical Oriented District (an “MOD) and to seek approval for a unified site plan.
+Added: The Company’s original site plan at the time of executing the SC Agreement sought to subdivide its entire Cortlandt Manor property into three parcels for the development of (i) a medical office building with retail, (ii) a multi-family residential housing project and (iii) an open space, passive recreation parcel.
+Added: The SC Agreement Property, which was the subject of the SC Agreement, is on the subdivision parcel in the original site plan for medical office building with ancillary retail space, but not on the multi-family residential housing parcel or the open space, passive recreation parcel.
+Added: In response to extensive public comments received during the Cortlandt Manor public hearing process and input from the Cortlandt Manor Town Board, the Company amended the site plan and subdivision application with the Town to reflect a two-lot subdivision comprising a combined total of 184,600 square feet of medical office space and 1,500 square feet of retail space.
+Added: The Company believes that the Town Board is expected to adopt a MOD designation for the Company’s Cortlandt property (inclusive of the two-lot subdivision and conceptual site plan approval) in early 2022.
Leasing Activity .
Subsequent to December 31, 2020, the Company signed one new lease and four lease extensions comprising approximately 6,000 square feet, $82,000 in annual revenue and $149,000 in total lease commitments.
−Removed: Subsequent to December 31, 2019, the Company experienced one lease termination comprising approximately 1,300 square feet and $34,000 in annual revenue.
−Removed: No rental income from this lease was included in the estimated liquidation and operating costs net of receipts in the consolidated statement of net assets for December 31, 2019.
−Removed: The net increase in annual rent from subsequent leasing activity is approximately $122,000.
Credit Facility.
−Removed: The Company amended and extended the Original Line which included extending the maturity date of the Interest-Only Phase to the earlier of April 30, 2020 or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of April 30, 2027 or 84 months after conversion to a permanent loan (the “Permanent Phase”).
−Removed: To secure access to additional working capital through the final sale date of the Cortlandt Property lots (“Lots”), the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”) signed a commitment letter for a third loan evidenced by a non-revolving business line of credit agreement and promissory note with the Original Line bank for up to $2,500,000, which is scheduled to close in the second quarter of 2020.
−Removed: The term is 24 months, with an option to extend for an additional 12 months.
−Removed: The interest rate is a variable rate equal to the daily highest prime rate published by the Wall Street Journal plus 100 basis points (1%), rounded up to the nearest 1/8 percent), but in no event less than four and three quarters percent (4.75%).
−Removed: The ability to draw upon the line is limited to certain amounts, contingent upon whether GSD Cortlandt delivered signed contracts for one or both Lots.
−Removed: The line is secured by the Cortlandt property (approximately 14 acres) and cross collateralized by approximately 31.8 acres of the Flowerfield Industrial Park including the related buildings and leases.
−Removed: The Company anticipates modifying the terms of the loans following the completion of the subdivision so that the loans remain cross collateralized by the subdivided industrial park lot only.
−Removed: Effective February 27, 2020, the Company entered into an engagement letter with a national real estate finance firm (the “Firm”) pursuant to which the Firm agreed to assist the Company secure financing with prospective lenders, and the Company agreed to pay the Firm an origination fee equal to one percent (1%) of any loan secured by the Company with any lender introduced to the Company by the Firm other than designated excluded lenders with whom the Company has a preexisting relationship.
−Removed: The intended use of this facility is to finance tenant improvements on new leases, if any, and a reserve for additional working capital.
−Removed: Coronavirus/COVID-19 Pandemic.
−Removed: In December 2019, a novel strain of coronavirus was reported in Wuhan, Hubei province, China In the first several months of 2020, the virus, SARS-CoV-2, and resulting disease, COVID-19, spread to the United States, including New York State, the geographic location in which the Company operates.
−Removed: In February and March 2020, some of our tenants began to experience decreasing demand for their products and services which may impact their ability to timely meet their lease obligations.
−Removed: On March 21, 2020, New York Governor Andrew Cuomo issued an Executive Order entitled “New York State on PAUSE” (Policy that Assures Uniform Safety for Everyone) (the “Order”), pursuant to which all non-essential employees (as defined by the State) must stay at home starting March 22, 2020 through April 19, 2020.
−Removed: The Order also includes a 90-day moratorium on any residential or commercial evictions.
−Removed: Although it is difficult to estimate the duration and full extent of this disruption, the impact of COVID-19 on our future results could be significant and will largely depend on future developments.
−Removed: We are actively working with our tenants to manage and mitigate the impact to COVID-19 on the Company’s operations, liquidity and resulting Net Asset Value.
−Removed: The COVID-19 public health crisis may also adversely impact our efforts to secure entitlements and the sale of our real estate.
−Removed: State and local governments are prioritizing COVID-19 crisis management and, to the extent possible, re-allocating resources accordingly which may adversely impact the timeline of our entitlements and technical approvals.
−Removed: Furthermore, the real estate market is also expected to be adversely affected which could further negatively impact the timing of sales and the resulting value of our real estate.
−Removed: See, “ Management’s Discussion and Analysis of Financial Conditions and Results of Operations ”, for more detailed disclosure.
+Added: The Company amended and extended the working capital line which included extending the conversion date of the Interest-Only Phase to the earlier of May 20, 2021 or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of May 20, 2028 or 84 months after conversion to a permanent loan (the “Permanent Phase”).
+Added: On February 22, 2021, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”) amended its line to remove the contingency that required signed purchase and sale agreements on Cortlandt Manor to be able to draw on the line.
+Added: Advances of $379,765 and $670,235, were drawn at closing and on January 28, 2021, respectively.
+Added: Under the line, the balance of $1,450,000 is available at the lender’s sole discretion.
As of December 31, 2020 and 2019 we had 4 employees.
20 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.