What changed in this filing

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Item 1. Financial Statements

2021-11-10 compared with 2021-08-06 · 211 added, 236 removed, 700 unchanged (39% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF NET ASSETS

AS OF JUNE 30, 2021 (UNAUDITED) AND DECEMBER 31, 2020

AS OF SEPTEMBER 30, 2021 (UNAUDITED) AND DECEMBER 31, 2020

(Liquidation Basis)

September 30,

Real estate held for sale

6 unchanged sentences

169,000  

Rent receivable

33 unchanged sentences

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

FOR THE SIX-MONTHS ENDED JUNE 30, 2021

FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 2021

(Liquidation Basis)

5 unchanged sentences

25,025  

Net decrease in liquidation value

Net assets in liquidation, as of June 30, 2021

Net increase in liquidation value

25,025  

Net assets in liquidation, as of September 30, 2021

$ 22,512,969  

See notes to consolidated financial statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (LIQUIDATION BASIS) FOR THE SIX-MONTHS ENDED JUNE 30, 2021 (unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (LIQUIDATION BASIS) FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 2021 (unaudited)

Gyrodyne, LLC (including its subsidiaries, “Gyrodyne”, the “Company”

4 unchanged sentences

The Company believes the aforementioned strategy will increase the values for such properties.

The value of the real estate reported in the consolidated statements of net assets as of June 30, 2021 and 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.

The value of the real estate reported in the consolidated statements of net assets as of September 30, 2021 and 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.

9 unchanged sentences

Cortlandt Manor:13.8 acres in Cortlandt Manor, New York, consisting of the 34,000 square foot Cortlandt Manor Medical Center;

63 acres  in St.

James, New York, including a 10 -acre multi-tenanted industrial park comprising 127,000 rentable square feet.

63 acres in St.

James, New York, including a 10 -acre multi-tenanted industrial park comprising 127,000 rentable square feet.

There were an additional 5 acres comprising of two parcels that were zoned residential and non-contiguous to the Flowerfield property which the Company sold in April 2021 ( See Note 6 – Disposition Activities).

1 unchanged sentence

The accompanying interim quarterly financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”).

The consolidated financial statements of the Company included herein have been prepared by the Company pursuant to the rules and regulations of the SEC and, in the opinion of management, reflect all adjustments which are necessary to present fairly the results for the six -months ended June 30, 2021.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations;

44 unchanged sentences

Estimated Distributions per Share –

Under the liquidation basis of accounting, the Company reports estimated distributions per share data by dividing net assets in liquidation by the number of shares outstanding. 

New Accounting Pronouncements - Management has evaluated the impact of newly issued accounting pronouncements, whether effective or not as of June 30, 2021, and has concluded that they will not have a material impact on the Company’s consolidated financial statements since the Company reports on a liquidation basis.

Under the liquidation basis of accounting, the Company reports estimated distributions per share data by dividing net assets in liquidation by the number of shares outstanding.  

New Accounting Pronouncements - Management has evaluated the impact of newly issued accounting pronouncements, whether effective or not as of September 30, 2021, and has concluded that they will not have a material impact on the Company’s consolidated financial statements since the Company reports on a liquidation basis.

Statements of Net Assets in Liquidation

Net assets in liquidation on June 30, 2021 and December 31, 2020 would result in estimated liquidating distributions of $ 22,468,881 and $ 22,487,944 , or approximately $ 15.15 and $ 15.17 per common share, respectively, based on 1,482,680 shares outstanding.

The decrease of $ 19,063 or $ 0.02 per share is attributable to the change in the estimated liquidation and operating costs net of receipts, mainly due to additional interest expense and closing/prepayment fees on the loan that is the subject to the commitment letter the Company executed in August 2021 ( see Note 17 ) of approximately $ 107,000 and $ 223,000 , respectively, and additional property operating expenses and selling costs of $ 40,035 and $ 20,737 , respectively, offset by additional rental revenue and savings in corporate expenditures of approximately $ 270,000 and $ 101,000 , respectively.

Net assets in liquidation on September 30, 2021 and December 31, 2020 would result in estimated liquidating distributions of $ 22,512,969 and $ 22,487,944 , or approximately $ 15.18 and $ 15.17 per common share, respectively, based on 1,482,680 shares outstanding.

The increase of $ 25,025 or $ 0.01 per share is attributable to the change in the estimated liquidation and operating costs net of receipts, mainly due to additional rental revenue, savings in general and administrative expenses and an increase in miscellaneous other income of approximately $ 362,000 , $ 153,000 and $ 6,000 , respectively, offset by additional interest expense and closing/prepayment fees on the loan that the Company secured in September 2021 ( see Note 7 ) of approximately $ 117,000 and $ 266,000 , respectively, and additional property operating expenses and selling costs of $ 91,745 and $ 20,737 , respectively.

The cash balance at the end of the liquidation period (currently estimated to be December 31, 2022, although the estimated completion of the liquidation period may change), excluding any interim distributions, is estimated based on adjustments for the following items which are estimated through December 31, 2022:

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To the extent the Company underestimates or overestimates forecasted cash outflows (capital improvements, lease commissions and operating costs) or overestimates or underestimates forecasted cash inflows (rental revenue rates), the estimated net realizable value of its real estate assets could be overstated or understated.

The Company estimates that it will incur approximately $ 1.11 million (included in the consolidated statement of net assets as part of the estimated liquidation and operating costs net of receipts, See Note 5 ) in land entitlement costs from July 2021 through the end of the liquidation period, currently estimated to conclude on or about December 31, 2022, in an effort to obtain entitlements, including special permits.

The Company believes the commitment of these resources will enable the Company to position the properties for sale with all entitlements necessary to maximize the Flowerfield and Cortlandt Manor property values and resulting distributions.

During the six months ended June 30, 2021, the Company incurred approximately $ 384,000 of land entitlement costs, consisting predominantly of engineering fees, legal fees and real estate taxes.

The Company believes the remaining balance of $1.11 million (approximately $ 210,000 of which certain of the Company service vendors have agreed to defer until the first post subdivision property lot is sold) will be incurred from July 2021 through the end of the liquidation period.

The Company does not intend to develop the properties but rather to commit resources to position the properties for sale in a timely manner with all entitlements necessary to achieve maximum pre-construction values.

The costs and time frame to achieve the entitlements could change due to a range of factors including a shift in the value of certain entitlements making it more profitable to pursue a different mix of entitlements and the dynamics of the real estate market.

As a result, the Company has focused and will continue to focus its land entitlement efforts on achieving the highest and best use while considering the time necessary to achieve such entitlements.

During the process of pursuing such entitlements, the Company may entertain offers from potential buyers who may be willing to pay premiums for the properties that the Company finds more acceptable from a timing or value perspective than completing the entitlement processes itself.

The value of the real estate reported in the statement of net assets as of June 30, 2021 ( predicated on current asset values) includes some but not all of the potential value impact that may result from the land entitlement efforts.

The Company estimates that it will incur approximately $ 998,000 (included in the consolidated statement of net assets as part of the estimated liquidation and operating costs net of receipts, See Note 5 ) in land entitlement costs from October 2021 through the end of the liquidation period, currently estimated to conclude on or about December 31, 2022, in an effort to obtain entitlements, including special permits.

During the nine months ended September 30, 2021, the Company incurred approximately $ 493,000 of land entitlement costs (of which certain of the Company’s service vendors agreed to defer approximately $ 166,000 until the first post subdivision property lot is sold), consisting predominantly of engineering fees, legal fees and real estate taxes. 

The Company believes the remaining balance of $998,000 (approximately $170,000 of which certain of the Company service vendors have agreed to defer until the first post subdivision property lot is sold) will be incurred from October 2021 through the end of the liquidation period.

As a result, the Company has focused and will continue to focus its land entitlement efforts on achieving the highest and best use while considering the time necessary to achieve such entitlements. 

The value of the real estate reported in the statement of net assets as of September 30, 2021 ( predicated on current asset values) includes some but not all of the potential value impact that may result from the land entitlement 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.

The net assets as of June 30, 2021 ( $ 22,468,881 ) and December 31, 2020 ( $ 22,487,944 ) results in estimated distributions of approximately $ 15.15 and $ 15.17 , respectively, per common share (based on 1,482,680 shares outstanding), based on estimates and other indications of sales value (predicated on current asset values) which includes some but not all of the potential sales proceeds that may result directly or indirectly from our land entitlement efforts.

Some of the additional value that may be derived from the land entitlement efforts is not included in the estimated distributions as of June 30, 2021 because the amount of such additional value that may result from such efforts are too difficult to predict with sufficient certainty.

The net assets as of September 30, 2021 ( $ 22,512,969 ) and December 31, 2020 ( $ 22,487,944 ) results in estimated distributions of approximately $ 15.18 and $ 15.17 , respectively, per common share (based on 1,482,680 shares outstanding), based on estimates and other indications of sales value (predicated on current asset values) which includes some but not all of the potential sales proceeds that may result directly or indirectly from our land entitlement efforts.

Some of the additional value that may be derived from the land entitlement efforts is not included in the estimated distributions as of September 30, 2021 because the amount of such additional value that may result from such efforts are too difficult to predict with sufficient certainty.

The Company believes the land entitlement efforts will enhance estimated distributions per share through the improved values (a large amount of which has already been included in the reported value for real estate held for sale) from the sales of the Flowerfield and Cortlandt Manor properties net of the costs to achieve the improved values and other expenses.

3 unchanged sentences

The liquidation basis of accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the plan of liquidation.

The Company currently estimates that it will incur liquidation and operating costs net of estimated receipts during the liquidation period, excluding the net proceeds from the real estate sales.

The Company currently estimates that it will incur liquidation and operating costs net of estimated receipts during the liquidation period of $ 9,697,881 , excluding the gross proceeds from the real estate sales.

These amounts can vary significantly due to, among other things, land entitlement costs, the timing and estimates for executing and renewing leases, capital expenditures to maintain the real estate at its current estimated realizable value and estimates of tenant improvement costs, the timing of property sales and any direct/indirect costs incurred that are related to the sales (e.g., retention bonuses on the sale of the Cortlandt Manor and Flowerfield properties, costs to address buy side due diligence inclusive of administrative fees, legal fees and property costs to address items arising from such due diligence and not previously known), the timing and amounts associated with discharging known and contingent liabilities and the costs associated with the winding up of operations.

These costs are estimated and are anticipated to be paid during the liquidation period.

The change in the liability for estimated operating costs in excess of estimated receipts during liquidation from January 1, 2021 through June 30, 2021 has been calculated as follows:

January 1, 2021

Expenditures/

The change in the liability for estimated operating costs in excess of estimated receipts during liquidation from January 1, 2021 through September 30, 2021 has been calculated as follows:

Expenditures/ (Receipts)

Remeasurement of

Assets and Liabilities

June 30, 2021

September 30,

Estimated rents and reimbursements

3 unchanged sentences

$ 3,311,415  

Prepaid expenses and other assets  

848,972  

149,723  

998,695  

Property operating costs

9 unchanged sentences

492,672  

( 1,106,397 )*

Corporate expenditures

11 unchanged sentences

( 2,913,480 )

Less prepaid expenses and other assets

848,972  

66,894  

915,866  

Liability for estimated liquidation and operating costs net of estimated receipts

3 unchanged sentences

$ ( 9,697,881 )

* The Company reached agreements with certain service vendors to defer payment of approximately $ 210,000 of the $ 1.11 million until the closing of the first property lot sale that is the subject of either the Flowerfield or Cortlandt Manor subdivision, respectively.

* The Company reached agreements with certain service vendors to defer payment of approximately $ 170,000 of the $ 998,000 until the closing of the first property lot sale that is the subject of either the Flowerfield or Cortlandt Manor subdivision, respectively.

** The amounts reported are based on the provisions of the retention bonus plan and the reported amount of the real estate assets estimated net realizable value.

3 unchanged sentences

Terminated Contracts

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 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.

James LLC, a Delaware limited liability company (“BSL”).

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.

On March 16, 2021, the Company received a notice (the “BSL Termination Notice”) from BSL that it is terminating the BSL Agreement.

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.

Flowerfield -

On March 16, 2021, the Company received a notice (the “BSL Termination Notice”) from BSL ST.

James, LLC, a Delaware limited liability company (“BSL”), that it is terminating the Purchase and Sale Agreement (originally dated August 27, 2019, the “BSL Agreement”) for the sale of a 9.0 -acre parcel of vacant land in the Flowerfield complex in Smithtown, New York for $ 16,800,000 . 

The BSL Termination Notice referenced the termination right and requested the return of the earnest money deposit to BSL in accordance with the provisions of the BSL Agreement.

Such earnest money deposit has been returned to BSL.

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 ).

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.

Cortlandt Manor - 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 .

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.

On February 1, 2021, the Company received a notice (the “SC Termination Notice”) from SC, LLC that it is terminating the SC Agreement.

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.

Cortlandt Manor -

On February 1, 2021, the Company received a notice (the “SC Termination Notice”) from Sound Cortlandt, LLC, a Delaware limited liability company (“SC LLC”)  that it is terminating the Purchase and Sale Agreement (the “SC Agreement”) (originally dated December 7, 2019) 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”) for a purchase price of $ 5,720,000 . 

The SC Termination Notice referenced the 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.

Such earnest money deposit has been returned to SC LLC.

Loans Payable

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.

The original line included an interest only phase for the first eight months of the loan (as amended the “Interest-Only Phase”).

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”).

On April 30, 2021, the loan converted to the Permanent Phase with an outstanding principal balance of $ 2,200,000 .

During the Permanent Phase, the Company is paying 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 is 3.85 %.

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. 

The original line included an interest only phase for the first eight months of the loan (as amended the “Interest-Only Phase”). 

On April 30, 2021, the loan converted to the Permanent Phase with an outstanding principal balance of $ 2,200,000 . 

The Permanent Phase interest rate currently is 3.85 %. 

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”).

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The remaining $ 800,000 went unused and the Company no longer has access to that amount.

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.

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”).

The Company amended and extended the line which included extending the conversion date of the Interest-Only Phase to May 20, 2021 after which it automatically converts to a permanent loan maturing on May 20, 2028 ( 84 months after conversion to a permanent loan).

On May 20, 2021, the loan converted to the Permanent Phase with an outstanding principal balance of $ 3,000,000 .

During the Permanent Phase, the Company pays 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 is 3.85 %.

Both lines are secured by approximately 31.8 acres of the Flowerfield Industrial Park including the related buildings and leases.

2 unchanged sentences

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 %).

The term was 24 months, with an option to extend for an additional 12 months.

The interest rate was 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 %).

The terms of the loan originally limited access to certain amounts, contingent upon GSD Cortlandt securing purchase agreements for one or both Cortlandt Property lots.

1 unchanged sentence

Advances of $ 379,765 and $ 670,235 , were drawn at closing and on January 28, 2021, respectively.

Under the line, a balance of $ 1,450,000 is available at the Lender’s discretion.

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.

The loans payable mature upon the earlier of the sale of the Flowerfield Industrial Park or as follows:

Years Ending June 30,

The loan was paid in full and closed on September 15, 2021.

On September 15, 2021, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”), secured a $ 4.95 million term loan (the “Mortgage Loan”), the proceeds of which was used to pay off the previous GSD Cortlandt debt facility of which $ 1,050,000 was outstanding. 

The term of the Mortgage Loan is five years with an option to extend for an additional five years (the “Extension Period”). 

Until the initial maturity date, the Mortgage Loan bears interest at an annual rate equal to 3.75 %.

If the maturity date is extended for the Extension Period, the rate of interest on the Mortgage Loan will adjust and be fixed for the Extension Period to the greater of (i) 3.75% or (ii) 275 basis points in excess of the weekly average yield on United States Treasury Securities adjusted to a constant maturity of five years as most recently made available by the Federal Reserve Board as of thirty days prior to the first day of the Extension Period. 

The Mortgage Loan will be paid in monthly installments of principal and interest calculated on the basis of a thirty -year amortization schedule.

The lender has the right, but not the obligation, to decline to extend the term of the Mortgage Loan if the loan to value ratio of the property is greater than seventy ( 70 %) percent on the date the extension is exercised, or the property does not support a debt service coverage ratio (as calculated by the lender) of at least 1.3 to 1 on the date the extension is exercised.

The borrower shall also be responsible for all fees and expenses associated with the extension including, but not limited to, the lender’s reasonable legal fees, an inspection fee in the amount of $ 150.00 , and a tax service fee.

The Mortgage Loan may be prepaid in whole or in part, at any time, provided the borrower (GSD Cortlandt) pays the bank with each prepayment a prepayment fee equal to (i) during the first loan year and, if applicable, the first loan year of the Extension Period, five percent of the amount of such prepayment;

(ii) during the second loan year and, if applicable, during the second loan year of the Extension Period, four percent of the amount of such prepayment;

(iii) during the third loan year and, if applicable, during the third loan year of the Extension Period, three percent of the amount of such prepayment;

(iv) during the fourth loan year and, if applicable, during the fourth loan year of the Extension Period, two percent of the amount of such prepayment;

and (v) during the fifth loan year and, if applicable, during the fifth loan year of the Extension Period, one percent of the amount of such prepayment.

There will be no prepayment fee for any prepayment made during the sixty -day period immediately preceding the initial maturity date or the last sixty days of the Extension Period.

All prepayments must include accrued and unpaid interest through the date of prepayment.

If the Cortlandt property is sold to a bona fide third -party purchaser within the initial two years of the term of the Mortgage Loan, the prepayment fee to be paid upon repayment of the Mortgage Loan in full will be reduced by fifty percent.

The Mortgage Loan is secured by the Cortlandt property located at 1985 Crompond Road ( 5.01 acres).

The total debt payable mature as follows:

Years Ending September 30,

$ 269,636  

8 unchanged sentences

Accrued Liabilities

June 30, 2021

December 31, 2020

June 30, 2021

December 31, 2020

September 30,

Current accounts payable

4 unchanged sentences

$ 188,554  

Other accounts payable (a)

Deferred accounts payable (a)

877,207  

7 unchanged sentences

$ 556,926  

(a) The Company reached agreements with certain service vendors to defer payment until the closing of the first property lot sale that is the subject of either the Flowerfield or Cortlandt Manor subdivision, respectively.

(b) The director fees and interest accrued under the deferred Compensation Plan where each director elected to defer 100 % of his fees for 2021 and 2020.

This amount also includes the deferred compensation of a Board advisor per an agreement to defer payments due.

The Company reached agreements with certain service vendors to defer payment until the closing of the first property lot sale that is the subject of either the Flowerfield or Cortlandt Manor subdivision, respectively.

The director fees and interest accrued under the deferred Compensation Plan where each director elected to defer 100% of his fees for 2021 and 2020.

This amount also includes the deferred compensation of a former Board advisor per an agreement to defer payments due.

As a limited liability company, Gyrodyne is not subject to an entity level income tax but rather is treated as a partnership for tax purposes, with its items of income, gain, deduction, loss and credit being reported on the Company’s information return, on Form 1065, and allocated annually on Schedule K- 1 to its members pro rata.

15 unchanged sentences

The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant credit risk on cash.

Management does not believe significant credit risk existed on June 30, 2021 and December 31, 2020.

Management does not believe significant credit risk existed on September 30, 2021 and December 31, 2020.

As the Company executes on the sale of its assets, its regional concentration in tenants will lessen thereby resulting in the increased credit risk from exposure of the local economies.

For the six months ended June 30, 2021 rental income from the Company’s three largest tenants represented approximately 23 %, 22 % and 9 % of total rental income.

The three largest tenants by revenue as of June 30, 2021 consist of Stony Brook University Hospital located in the industrial park, the Westchester Medical Practice in the Cortlandt Manor Medical Center and Apex Gymnastics Athletics Inc.

For the nine months ended September 30, 2021 rental income from the Company’s three largest tenants represented approximately 23 %, 22 % and 10 % of total rental income.

The three largest tenants by revenue as of September 30, 2021 consist of Stony Brook University Hospital located in the industrial park, the Westchester Medical Practice in the Cortlandt Manor Medical Center and Apex Gymnastics Athletics Inc.

in the industrial park.

The current economic challenges facing state and local budgets impacted most of the Company’s largest tenants.

In addition, the current economic challenges stemming from the coronavirus are disproportionately impacting not -for-profit tenants and other tenants that are neither medical offices nor part of or affiliated with SBU or SBU Hospital which together comprise 40 % of our expected 2021 rental revenue.

The current economic challenges facing state and local budgets impacted most of the Company’s largest tenants. 

In addition, the current economic challenges stemming from the coronavirus are disproportionately impacting tenants that are not part of or affiliated with a major hospital which together comprise 39 % of our expected 2021 rental revenue. 

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.

As of June 30, 2021, other commitments and contingencies are summarized in the below table:

As of September 30, 2021, other commitments and contingencies are summarized in the below table:

Management employment agreements with bonus* and severance commitment contingencies

39 unchanged sentences

It also provides for entitlement to a future benefit in the event of death, voluntary termination following substantial reduction in compensation or board fees, mutually agreed separation to right-size the board or involuntary termination without cause, except that a participant will only be eligible to receive a benefit to the extent that a property is sold within three years following the separation event and the sale produces an internal rate of return equal to at least four percent of the property’s value as of December 31 immediately preceding such event and that the sale exceeded the Adjusted Appraised Value.

Under the Plan, there were no payments made during the six months ended June 30, 2021.

Under the Plan, there were no payments made during the nine months ended September 30, 2021.

Deferred Compensation Plan - On December 6, 2019, the Company’s Board of Directors approved the Gyrodyne, LLC Nonqualified Deferred Compensation Plan for Employees and Directors (the “DCP”) effective as of January 1, 2020.

5 unchanged sentences

Putative Class Action Lawsuit - On August 14, 2015, the Company entered a Stipulation of Settlement (the "Settlement") providing for the settlement of a putative class action lawsuit against the Company and certain related parties.

Under the 

Settlement, Gyrodyne agreed that any sales of its properties would be effected only in arm's-length transactions at prices at or above their appraised values as of 2014.

As of June 30, 2021 and December 31, 2020, the value of the remaining unsold properties exceeded the respective 2014 appraised value.

Under the Settlement, Gyrodyne agreed that any sales of its properties would be effected only in arm's-length transactions at prices at or above their appraised values as of 2014.

General - In the normal course of business, the Company is a party to various legal proceedings.

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Small businesses have been and are expected to continue to be adversely affected disproportionately by the economic ramifications of COVID- 19.

In terms of its own tenants, the Company deems as small businesses those that are neither part of or affiliated with Stony Brook University or SBU Hospital, non-medical offices and not -for-profit corporations, which in the aggregate account for approximately 40 % ($ 888,000 ) of the Company’s projected annual rental revenues for 2021.

Although it is difficult to estimate the duration and full extent of the COVID- 19 pandemic, its impact on our future results could be significant and will largely depend on future developments which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the novel coronavirus, risks that may arise from mutations or related strains of the virus, the success of actions taken to contain or treat COVID- 19 and reactions by real estate developers and investors, consumers, companies, governmental entities and capital markets.

In terms of its own tenants, the Company deems as small businesses those that are not part of or affiliated with a major hospital, which in the aggregate account for approximately 39 % ($ 859,000 ) of the Company’s projected annual rental revenues for 2021.

We are actively working with our tenants to manage and mitigate the impact of COVID- 19 on the Company’s operations, liquidity and resulting Net Asset Value.

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 and the effectiveness of the COVID- 19 vaccine program.

In addition, the pandemic has resulted in a seismic shift toward commercial acceptance of remote working and telemedicine which may adversely impact our occupancy rate and average rate per square foot.

In addition, the pandemic has resulted in a significant shift toward commercial acceptance of remote working and telemedicine which may adversely impact our occupancy rate and average rate per square foot. 

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 advisers are infected by the Coronavirus and become ill from COVID- 19.

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For more information and risks relating to the pandemic on us and our business, see “Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations –

COVID- 19 Pandemic”

and Part I, Item 1A, “Risk Factors”, of our Annual Report for the year ended December 31, 2020 and as amended in this Report on Form 10 -Q.

Impact of COVID- 19”

and Part I, Item 1A, “Risk Factors”, of our Annual Report for the year ended December 31, 2020 and as amended in this Quarterly Report on Form 10 -Q.

Related Party Transactions

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Any space not subleased may be used by the tenant rent-free for certain stated art uses, although the tenant is responsible for certain passthrough expenses such as electric and heat.

Since rent is only due if the space is sublet, the Company believes the fair value of the space to the extent not sublet reflects a below market lease over the six months ending June 30, 2021 of $ 9,085 and total commitments of up to $ 36,340 .

During the six -months ended June 30, 2021, the Company received rental revenue of $ 17,804 related to these lease agreements.

Since rent is only due if the space is sublet, the Company believes the fair value of the space to the extent not sublet reflects a below market lease over the nine months ending September 30, 2021 of $ 13,627 and total commitments of up to $ 36,340 .

During the nine -months ended September 30, 2021, the Company received rental revenue of $ 26,705 related to these lease agreements.

The independent members of the Board of the Company approved all of the leasing transactions described above.

The Chairman is also a partner of the firm Lamb & Barnosky, LLP that provided pro bono legal representation to the aforementioned not -for-profit corporation on the lease.

Subsequent Events

In August 2021, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”), executed a commitment letter for a $ 4.95 million term loan (“Mortgage Loan”), a portion of the proceeds will be used to pay off the existing GSD Cortlandt debt facility of which $ 1,050,000 is outstanding.

The term of the Mortgage Loan is five years with an option to extend an additional five years (“Extension Period”).

Until the initial maturity date, the Mortgage Loan shall bear interest at an annual rate of interest equal at all times to 3.75 %.

If the maturity date is extended for the Extension Period, the rate of interest on the Mortgage Loan shall adjust and be fixed for the Extension Period to an annual rate of interest equal at all times to the greater of (i) 3.75 % or (ii) 275 basis points in excess of the weekly average yield on United States Treasury Securities adjusted to a constant maturity of five years as most recently made available by the Federal Reserve Board as of thirty days prior to the first day of the extended term.

The Mortgage Loan will be paid in monthly installments of principal and interest calculated on the basis of a thirty -year amortization schedule.

If the maturity date is extended for the Extension Period, the amount of each monthly installment shall be recalculated for the Extension Period based on the adjusted interest rate on the Mortgage Loan and an amortization schedule of twenty-five years.

The Mortgage Loan may be prepaid in whole or in part, at any time, provided that the borrower shall pay to the bank with each such prepayment a prepayment fee equal to (i) during the first loan year and, if applicable, the first loan year of the Extension Period, five percent of the amount of such prepayment;

(ii) during the second loan year and, if applicable, during the second loan year of the Extension Period, four percent of the amount of such prepayment;

(iii) during the third loan year and, if applicable, during the third loan year of the Extension Period, three percent of the amount of such prepayment;

(iv) during the fourth loan year and, if applicable, during the fourth loan year of the Extension Period, two percent of the amount of such prepayment;

and (v) during the fifth loan year and, if applicable, during the fifth an year of the Extension Period, one percent of the amount of such prepayment.

There shall be no prepayment fee for any prepayment made during the sixty day period immediately preceding the initial maturity date or the last sixty days of the Extension Period.

All prepayments shall be accompanied with accrued and unpaid interest through the date of prepayment.

Notwithstanding the foregoing, in the event the premises are sold to a bona fide third -party purchaser within the initial two years of the term of the Mortgage Loan, the prepayment fee to be paid upon repayment of the Mortgage Loan in full shall be reduced by fifty percent.

The loan will be secured by the Cortlandt property located at 1985 Crompond Road ( 5.01 acres) and is expected to close in the third quarter of 2021.

Management ’

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in this report refer to Gyrodyne, LLC’s common shares representing limited liability company interests.

References herein to our Quarterly Report are to this Quarterly Report on Form 10-Q for the six-months ended June 30, 2021.

References herein to our Quarterly Report are to this Quarterly Report on Form 10-Q for the nine-months ended September 30, 2021.

Cautionary Statements Concerning Forward –

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The Board believes the aforementioned strategy will increase the values for such properties.

The value of the real estate reported in the consolidated statement of net assets as of June 30, 2021 (predicated on current asset values) includes some, but not all of the potential value impact that may result from such value enhancement efforts.

The value of the real estate reported in the consolidated statement of net assets as of September 30, 2021 (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.

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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 June 30, 2021, the Company owns the following properties:

After giving effect to the Company’s dispositions of real property through September 30, 2021, the Company owns the following properties:

Cortlandt Manor:

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The Company believes the aforementioned dual strategy will increase the values for such properties.

The value of the real estate reported in the consolidated statement of net assets as of June 30, 2021 (predicated on current asset values) includes some but not all of the potential value impact that may result from such value enhancement efforts.

The value of the real estate reported in the consolidated statement of net assets as of September 30, 2021 (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.

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Such cash would equate to future liquidating distributions of $15.18 per share based on Gyrodyne having 1,482,680 common shares outstanding.

These estimated distributions are based on values on June 30, 2021 and include some but not all the potential value that may be derived from the entitlement efforts to maximize the value of Flowerfield and Cortlandt Manor.

These estimated distributions are based on values on September 30, 2021 and include some but not all 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 are based on certain estimates.

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Properties Transactions

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.

James LLC, a Delaware limited liability company (“BSL”).

On March 16, 2021, the Company received a notice (the “BSL Termination Notice”) from BSL that it is terminating the BSL Agreement.

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.

Flowerfield -

On March 16, 2021, the Company received a notice (the “BSL Termination Notice”) from BSL ST.

James, LLC, a Delaware limited liability company (“BSL”), that it is terminating the Purchase and Sale Agreement (originally dated August 27, 2019, the “BSL Agreement”) for the sale of a 9.0-acre parcel of vacant land in the Flowerfield complex in Smithtown, New York for $16,800,000. 

The BSL Termination Notice referenced the termination right and requested the return of the earnest money deposit to BSL in accordance with the provisions of the BSL Agreement.

Such earnest money deposit has been returned to BSL.

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).

On April 26, 2021, the Company closed on the sale of its 5.0-acre parcel of vacant land that is non-contiguous to and not part of the Flowerfield complex in Smithtown, New York for a purchase price of $500,000 as per the purchase and sale agreement signed on May 11, 2020.

Cortlandt Manor -

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.

On February 1, 2021, the Company received a notice (the “SC Termination Notice”) from SC, LLC that it is terminating the SC Agreement.

On February 1, 2021, the Company received a notice (the “SC Termination Notice”) from Sound Cortlandt, LLC, a Delaware limited liability company (“SC LLC”) that it is terminating the Purchase and Sale Agreement (the “SC Agreement”) (originally dated December 7, 2019) 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”) for a purchase price of $5,720,000.

Such earnest money deposit has been returned to SC LLC.

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.

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.

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.

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 4,000 square feet of retail space.

The Company believes that the Town Board is expected to adopt an MOD designation for the Company’s Cortlandt property (inclusive of the two-lot subdivision and conceptual site plan approval) in early 2022.

Property Value Enhancement

The Company is pursuing entitlements to maximize the value of the Flowerfield and Cortlandt Manor properties.

During the six-months ended June 30, 2021, the Company incurred approximately $384,000 of land entitlement costs, consisting primarily of engineering costs, legal fees and real estate taxes to support the Company’s respective entitlement efforts.

We estimate that the Company may incur approximately $1.11 million in additional land entitlement costs through December 31, 2022 in pursuit of entitlements (approximately $410,000 in Cortlandt Manor and $696,000 in Flowerfield).

During the nine-months ended September 30, 2021, the Company incurred approximately $493,000 of land entitlement costs (of which certain of the Company’s service vendors agreed to defer approximately $166,000 until the first post subdivision property lot is sold), consisting primarily of engineering costs, legal fees and real estate taxes to support the Company’s respective entitlement efforts.

We estimate that the Company may incur approximately $998,000 in additional land entitlement costs through December 31, 2022 in pursuit of entitlements (approximately $358,000 in Cortlandt Manor and $640,000 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.

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Medical Office Lot #2

The entitlement costs for the six-months ended June 30, 2021 associated with the ownership and development of this property were approximately $110,000.

The entitlement costs for the nine-months ended September 30, 2021 associated with the ownership and development of this property were approximately $162,000.

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.

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The existing medical office will remain operational until phase 2 is implemented.

In addition to the primary proposal noted above, an alternate mixed-use plan is submitted as part of the SEQRA process.

In addition to the primary proposal noted above, an alternate mixed-use plan was submitted as part of the SEQRA process.

The alternate mixed-use plan includes the following:

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Retail (Lot #1)

 1,500 sft

Multi-Family Residential Lot #2

 160 Units

The alternate is being reviewed for all categories of impacts in the SEQRA documentation similar to the primary proposal, and if approved as anticipated, will allow Gyrodyne the option to proceed with either program following MOD designation and subdivision.

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On November 15, 2017, the Town of Smithtown Planning Board conducted a public hearing where the Company presented its subdivision plan of the Flowerfield property.

On April 11, 2018, the Planning Board determined that the subdivision plan may result in one or more significant environmental impacts which will require the preparation of an EIS.

As a result, at the April 11, 2018 Planning Board meeting, the Planning Board issued a SEQRA Positive Declaration, which was rescinded and re-issued by Planning Board Resolution dated May 9, 2018 to include a public scoping process.

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The company reviewed the public comments and responded by submitting a Final EIS (“FEIS”) on April 20, 2020.

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.

The Company filed its Final FEIS in November 2020 reflecting an eight-lot subdivision.

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Following a public comment period that closed on March 31, 2021, the Town of Smithtown forwarded the public comments and the FEIS to the Suffolk County Planning Commission. 

On May 5, 2021, the Suffolk County Planning Commission voted 5 to 4 to approve the application as a matter for local determination.

Based on the fact that less than a majority of the 18 total members (10 members needed) voted to either approve or deny the application, the application is deemed approved as a matter for local determination.

Thus, the Smithtown Planning Board may act and approve the matter with a simple majority vote.

On September 20, 2021, the Town of Smithtown Conservation Board voted unanimously to recommend the Town of Smithtown Planning Board issue a SEQRA Negative Declaration, Determination of Non -Significance (an environmental Impact Statement is Not necessary based on certain stated reasons and approve the Subdivision Application (eight lots inclusive of the lot for the proposed sewage treatment plant).

The Town of Smithtown will review the County determination and the Town Planning Board will issue a Findings Statement. 

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Following Preliminary Approval, the Company will pursue Final Subdivision approval.

The entitlement costs for the six-months ended June 30, 2021 associated with the ownership and development of this property consisted of architectural and engineering costs, legal expenses, economic analysis, soil management and surveys were approximately $274,000.

The entitlement costs for the nine-months ended September 30, 2021 associated with the ownership and development of this property consisted of architectural and engineering costs, legal expenses, economic analysis, soil management and surveys were approximately $331,000.

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.

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The healthcare industry may experience a significant expansion of applicable federal, state or local laws and regulations, previously enacted or future healthcare reform, new interpretations of existing laws and regulations or changes in enforcement priorities, all of which could materially impact the business and operations of our tenants and therefore the marketability of our properties.

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.

There have been executive, judicial and Congressional challenges to certain aspects of the ACA.

Although the U.S.

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.

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.

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Unless otherwise specified, the statistical and other information regarding the Company’s properties and tenants are estimates based on information available to the Company.

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 first two quarters of 2021 and future periods.

The spread of COVID-19 is having a significant impact on the global economy, the U.S.

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Both of the Company’s properties feature tenants designated as “essential”.

Approximately 40% of the Company’s tenants (based on 2021 projected annual revenues) are not-for-profit corporations or other tenants that are neither medical nor part of or affiliated with SBU or SBU Hospital.

Approximately 39% of the Company’s tenants (based on 2021 projected annual rental revenues) are from tenants that are not part of or affiliated with a major hospital.

The U.S economy has been growing as COVID-19 vaccinations are increasingly administered, commercial activities increasingly return to pre-pandemic practices and operations, and as a result of recent and expected future government spending on COVID-19 pandemic relief, infrastructure and other matters.

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On February 22, 2021, the working capital GSD Cortlandt loan was amended to remove the contingency of purchase agreements to be able to draw on the line.

Consequently, the Company was not required to make a principal reduction under the credit facility and the remaining undrawn balance of $1,450,000 is available at the lender’s discretion.

Consequently, the Company was not required to make a principal reduction under the credit facility and the remaining undrawn balance was available at the lender’s discretion.

This loan was paid in full and closed on September 15, 2021.

On September 15, 2021, the Company secured a loan for $4.95 million.

Part of the proceeds were used to payoff the existing working capital GSD Cortlandt loan.

The Company has taken proactive measures to manage costs, including securing agreements from certain of the Company’s major service vendors to defer approximately $877,000 of land development fees and other professional fees incurred to date plus approximately $170,000 of forecasted land development fees and $68,000 in other professional fees until the first post subdivision property lot is sold.

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For more information and risks relating to the pandemic on us and our business, see “Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations –

COVID-19 Pandemic”

Impact of COVID-19”

and Part I, Item 1A, “Risk Factors”, of our Annual Report for the year ended December 31, 2020 and as amended in this Report on Form 10-Q.

Transaction Summary for the Six-Months Ended June 30, 2021

The following summarizes our significant transactions and other activity during the six-months ended June 30, 2021.

Transaction Summary for the Nine-Months Ended September 30, 2021

The following summarizes our significant transactions and other activity during the nine-months ended September 30, 2021.

Debt Facility.

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The Permanent Phase interest rate currently is 3.85%.

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”).

During the Permanent Phase, the Company pays 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.

Permanent Phase interest rate currently is 3.85%.

The aforementioned loans are secured by 31.8 acres of the Flowerfield Industrial Park including the related buildings and leases.

The Working Capital Line 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”). 

The Company amended and extended the Working Capital Line which included extending the conversion date of the Interest-Only Phase to May 20, 2021 after which it automatically converted to a permanent loan maturing on May 20, 2028 (84 months after conversion to a permanent loan). 

During the Permanent Phase, the Company pays 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. 

Permanent Phase interest rate currently is 3.85%. 

The Original and Working Capital Lines are secured by 31.8 acres of the Flowerfield Industrial Park including the related buildings and leases.

The only significant financial covenant associated with the loan is a debt service ratio on GSD Flowerfield, LLC of 1.25 to 1, per latest modification.

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The Company anticipates modifying the terms of the loan following the completion of its subdivision so that the loans are secured by the subdivided industrial park lot only.

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%).

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.

On February 22, 2021, the loan was amended to remove such limitation on draws.

The term was 24 months, with an option to extend for an additional 12 months.

The interest rate was 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%).

The terms of the Cortlandt Line originally limited access to certain amounts, contingent upon GSD Cortlandt securing purchase and sale agreements for one or both Cortlandt Property lots. 

On February 22, 2021, the Cortlandt line was amended to remove such limitation on draws.

Advances of $379,765 and $670,235, were drawn at closing and on January 28, 2021, respectively.

Under the line, the balance of $1,450,000 is available at the lender’s sole discretion.

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.

The Cortlandt Line was paid on full and closed on September 15, 2021.

The Cortlandt Line was 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.

On September 15, 2021, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”), secured a $4.95 million term loan (the “Mortgage Loan”), the proceeds of which was used to pay off the Cortlandt Line of which $1,050,000 was outstanding. 

The term of the Mortgage Loan is five years with an option to extend for an additional five years (the “Extension Period”). 

Until the initial maturity date, the Mortgage Loan bears interest at an annual rate equal to 3.75%.

The Mortgage Loan will be paid in monthly installments of principal and interest calculated on the basis of a thirty-year amortization schedule.

The lender has the right, but not the obligation, to decline to extend the term of the Mortgage Loan if the loan to value ratio of the property is greater than seventy (70%) percent on the date the extension is exercised, or the property does not support a debt service coverage ratio (as calculated by the lender) of at least 1.3 to 1 on the date the extension is exercised.

(ii) during the second loan year and, if applicable, during the second loan year of the Extension Period, four percent of the amount of such prepayment;

(iii) during the third loan year and, if applicable, during the third loan year of the Extension Period, three percent of the amount of such prepayment;

(iv) during the fourth loan year and, if applicable, during the fourth loan year of the Extension Period, two percent of the amount of such prepayment;

and (v) during the fifth loan year and, if applicable, during the fifth loan year of the Extension Period, one percent of the amount of such prepayment.

There will be no prepayment fee for any prepayment made during the sixty-day period immediately preceding the initial maturity date or the last sixty days of the Extension Period.

All prepayments must include accrued and unpaid interest through the date of prepayment.

If the Cortlandt property is sold to a bona fide third-party purchaser within the initial two years of the term of the Mortgage Loan, the prepayment fee to be paid upon repayment of the Mortgage Loan in full will be reduced by fifty percent.

The Mortgage Loan is secured by the Cortlandt property located at 1985 Crompond Road (5.01 acres).

Small businesses are expected to be adversely affected disproportionately by the economic ramifications of COVID-19.

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Leasing Activity.

During the six-months ended June 30, 2021, the Company executed four new leases and thirteen renewals comprising approximately 3,200 and 22,000 square feet and annual revenue of approximately $45,000 and $573,000, respectively.

There were also two expansions during the six months ended June 30, 2021 comprising approximately 4,100 square feet and approximately $112,000 in annual revenue.

There was one termination during the six-months ended June 30, 2021 comprising approximately 2,800 square feet and approximately $70,600 in annual revenue.

During the nine-months ended September 30, 2021, the Company executed seven new leases and eighteen renewals comprising approximately 6,900 and 33,000 square feet and annual revenue of approximately $83,000 and $821,000, respectively.

There were also two expansions during the nine months ended September 30, 2021 comprising approximately 4,100 square feet and approximately $112,000 in annual revenue.

There was one termination during the nine-months ended September 30, 2021 comprising approximately 2,800 square feet and approximately $70,600 in annual revenue.

The Company incurred commission fees of approximately $19,000 relating to total rental revenue of approximately $209,000.

Disposition Activities.

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Termination of Purchase Agreements.

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 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.

James LLC, a Delaware limited liability company (“BSL”).

On March 16, 2021, the Company received a notice (the “BSL Termination Notice”) from BSL that it is terminating the BSL Agreement.

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.

Flowerfield -

On March 16, 2021, the Company received a notice (the “BSL Termination Notice”) from BSL that it is terminating the BSL Agreement (originally dated August 27, 2019) 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.

James LLC, a Delaware limited liability company (“BSL”). 

The BSL Termination Notice referenced the termination right and requested the return of the earnest money deposit to BSL in accordance with the provisions of the BSL Agreement. 

Such earnest money deposit has been returned to BSL.

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).

On February 1, 2021, the Company received a notice (the “SC Termination Notice”) from SC, LLC that it is terminating the SC Agreement.

Cortlandt Manor -

On February 1, 2021, the Company received a notice (the “SC Termination Notice”) from SC, LLC that it is terminating the SC Agreement (originally dated December 7, 2019) 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. 

Such earnest money deposit has been returned to SC LLC.

The Company has made applications to the Town of Cortlandt for a zoning amendment to rezone the entire Cortlandt property (owned by the Cortlandt Subsidiaries) into a MOD and to seek approval for a unified site plan.

Critical Accounting Policies

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Level 1 – observable inputs in an active market on or around the measurement date, Level 2 – observable inputs that are based on prices not quoted on active markets but corroborated by market data and Level 3 – unobservable inputs utilized when no other data is available.

Estimated Distributions per Share  – Under the liquidation basis of accounting, the Company reports estimated distributions per share data by dividing net assets by the number of shares outstanding.

New accounting pronouncements - Management has evaluated the impact of newly issued accounting pronouncements, whether effective or not as of June 30, 2021, and has concluded that they will not have a material impact on the Company’s consolidated financial statements since the Company reports on a liquidation basis.

New accounting pronouncements - Management has evaluated the impact of newly issued accounting pronouncements, whether effective or not as of September 30, 2021, and has concluded that they will not have a material impact on the Company’s consolidated financial statements since the Company reports on a liquidation basis.

Discussion of the Statements of Net Assets

Net assets in liquidation on June 30, 2021 and December 31, 2020 would result in estimated liquidating distributions of $22,468,881 and $22,487,944, or approximately $15.15 and $15.17 per common share, respectively, based on 1,482,680 shares outstanding.

The decrease of $19,063 or $0.02 per share is attributable to the change in the estimated liquidation and operating costs net of receipts, mainly due to additional interest expense and closing/prepayment fees on the loan that is the subject to the commitment letter the Company executed in August 2021 (see Note 17) of approximately $107,000 and $223,000, respectively, and additional property operating expenses and selling costs of $40,035 and $20,737, respectively, offset by additional rental revenue and savings in corporate expenditures of approximately $270,000 and $101,000, respectively.

The comparability of the Company’s net assets in liquidation on June 30, 2021 to future measurement dates may be significantly impacted by the effects of the outbreak of the COVID-19 pandemic.

The cash balance at the end of the liquidation period (currently estimated to be December 31, 2022, although the estimated completion of the liquidation period may change), excluding any interim distributions, is estimated based on the June 30, 2021 cash balance of $2.41 million plus adjustments for the following items which are estimated through December 31, 2022:

Net assets in liquidation on September 30, 2021 and December 31, 2020 would result in estimated liquidating distributions of $22,512,969 and $22,487,944, or approximately $15.18 and $15.17 per common share, respectively, based on 1,482,680 shares outstanding.

The increase of $25,025 or $0.01 per share is attributable to the change in the estimated liquidation and operating costs net of receipts, mainly due to additional rental revenue, savings in general and administrative expenses and an increase in miscellaneous other income of approximately $362,000, $153,000 and $6,000, respectively, offset by additional interest expense and closing/prepayment fees on the loan that the Company secured in September 2021 (see Note 7) of approximately $117,000 and $266,000, respectively, and additional property operating expenses and selling costs of $92,000 and $21,000, respectively.

The cash balance at the end of the liquidation period (currently estimated to be December 31, 2022, although the estimated completion of the liquidation period may change), excluding any interim distributions, is estimated based on the September 30, 2021 cash balance of $6.02 million (includes net proceeds from the new mortgage loan) plus adjustments for the following items which are estimated through December 31, 2022:

The estimated cash receipts from the operation of the properties net of rental property related expenditures as well as costs expected to be incurred to preserve or improve the net realizable value of the properties at their estimated gross sales proceeds.

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Costs, including principal payments, net of drawdowns on the credit facilities to fund tenant improvements and working capital and related fees.

The Company estimates the net realizable value of its real estate assets by using income and market valuation techniques.

The Company may estimate net realizable values using market information such as broker opinions of value, appraisals, and recent sales data for similar assets or discounted cash flow models, which primarily rely on Level 3 inputs as defined under FASB ASC Topic No.

The Company estimates the net realizable value of its real estate assets by using market information such as broker opinions of value, appraisals, and recent sales data for similar assets or discounted cash flow models, which primarily rely on Level 3 inputs as defined under FASB ASC Topic No.

820, Fair Value Measurement.

The cash flow models include estimated cash inflows and outflows over a specified holding period.

These cash flows may include contractual rental revenues, projected future rental revenues and expenses and forecasted capital improvements and lease commissions based upon market conditions determined through discussion with local real estate professionals and relevant Company experience with its current and previously owned properties.

Capitalization rates and discount rates utilized in these models are estimated by management based upon rates that management believes to be within a reasonable range of current market rates for the respective properties based upon an analysis of factors such as property and tenant quality, geographical location and local supply and demand observations.

The Company estimates that it will incur approximately $1.11 million (included in the statements of net assets as part of the estimated liquidation and operating costs net of receipts) in land entitlement costs from July 2021 through the end of the liquidation period, currently estimated to conclude on or about December 31, 2022, in an effort to obtain entitlements, including special permits.

The Company estimates that it will incur approximately $998,000 (included in the statements of net assets as part of the estimated liquidation and operating costs net of receipts) in land entitlement costs from October 2021 through the end of the liquidation period, currently estimated to conclude on or about December 31, 2022, in an effort to obtain entitlements, including special permits.

During the six-months ended June 30, 2021, the Company incurred approximately $384,000 of land entitlement costs, consisting primarily of engineering fees, legal fees and real estate taxes.

The Company believes the remaining balance of $1.11 million (approximately $210,000 of which the Company’s service vendors have agreed to defer until the first post subdivision property lot is sold) will be incurred from July 2021 through the end of the liquidation period.

During the nine-months ended September 30, 2021, the Company incurred approximately $493,000 of land entitlement  costs (of which certain of the Company’s service vendors agreed to defer approximately $166,000 until the first post subdivision property lot is sold), consisting primarily of engineering fees, legal fees and real estate taxes.

The Company believes the remaining balance of $998,000 (approximately $170,000 of which the Company’s service vendors have agreed to defer until the first post subdivision property lot is sold) will be incurred from October 2021 through the end of the liquidation period.

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The value of the real estate reported in the statement of net assets as of June 30, 2021 (predicated on current asset values) includes some but not all of the potential value impact that may result from the land entitlement efforts.

The value of the real estate reported in the statement of net assets as of September 30, 2021 (predicated on current asset values) includes some but not all of the potential value impact that may result from the land entitlement 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.

The net assets in liquidation at June 30, 2021 ($22,468,881) results in estimated liquidating distributions of approximately $15.15 per common share (based on 1,482,680 shares outstanding), based on estimates and other indications of sales value (predicated on current asset values) which includes some but not all of the actual potential sales proceeds that may result directly or indirectly from our land entitlement efforts.

Some of the additional value that may be derived from the land entitlement efforts is not included in the estimated liquidating distributions as of June 30, 2021 because the amount of such additional value that may result from such efforts is too difficult to predict with sufficient certainty.

The net assets in liquidation at September 30, 2021 ($22,512,969) results in estimated liquidating distributions of approximately $15.18 per common share (based on 1,482,680 shares outstanding), based on estimates and other indications of sales value (predicated on current asset values) which includes some but not all of the actual potential sales proceeds that may result directly or indirectly from our land entitlement efforts.

Some of the additional value that may be derived from the land entitlement efforts is not included in the estimated liquidating distributions as of September 30, 2021 because the amount of such additional value is too difficult to predict with sufficient certainty.

This estimate of liquidating distributions includes projections of costs and expenses to be incurred during the period required to complete the plan of liquidation.

There is inherent uncertainty with these projections, and they could change materially based on the timing of the sales, changes in values of the Cortlandt Manor and/or Flowerfield properties (whether market driven or resulting from the land entitlement efforts) net of any bonuses (if such values exceed the minimum values required to pay bonuses under the retention bonus plan), favorable or unfavorable changes in the land entitlement costs, the performance of the underlying assets, the market for commercial real estate properties generally and any changes in the underlying assumptions of the projected cash flows.

The following table summarizes the estimates to arrive at the Net Assets in Liquidation as of June 30, 2021 (dollars are in millions).

June 30, 2021 cash and cash equivalents balance

Restricted cash

The following table summarizes the estimates to arrive at the Net Assets in Liquidation as of September 30, 2021 (dollars are in millions).

September 30, 2021 cash and cash equivalents balance

Principal payments on loan

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The general and administrative expenses, excluding final liquidation costs, is estimated to be ($2.65).

The Company is considering various options to maximize total value during the liquidation process.

The Company estimates that it will incur approximately $1.11 million in costs over the liquidation period ending December 31, 2022 to obtain entitlements, inclusive of special permits that it believes will result in maximizing the values in the Flowerfield and Cortlandt Manor properties.

The costs represent all anticipated costs to liquidate the Company including D&O tail, severance and professional fees.

The Company estimates interest income will be offset by interest expense and the settlement of its working capital accounts resulting in a balance of $(1.89).

The net assets in liquidation on June 30, 2021 would result in liquidating distributions of approximately $15.15 per common share ($22.47 million with 1,482,680 shares outstanding).

The Company believes the land entitlement efforts will enhance estimated distributions per share through the improved values from the sales of the Flowerfield and Cortlandt Manor properties.

This estimate of liquidating distributions includes projections of costs and expenses to be incurred during the period required to complete the liquidation process.

There is inherent uncertainty with these projections, and they could change materially based on the timing of the sales, favorable or unfavorable changes in the land entitlement costs, the performance of the underlying assets and any changes in the underlying assumptions of the projected cash flows.

Discussion of Changes in Net Assets

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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.

Therefore, the Company includes in its financial statements the Consolidated Statement of Changes in Net Assets for the six-months ended June 30, 2021, which is discussed below:

Therefore, the Company includes in its financial statements the Consolidated Statement of Changes in Net Assets for the nine-months ended September 30, 2021, which is discussed below:

Net assets in liquidation on January 1, 2021

Changes in net assets in liquidation from January 1 through June 30, 2021:

Changes in net assets in liquidation from January 1 through September 30, 2021:

Change in liquidation value of real estate

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Total change in net assets in liquidation

Net assets in liquidation on June 30, 2021

Net assets in liquidation on September 30, 2021

Liquidity and Capital Resources

As we pursue our plan to sell our properties strategically, including certain enhancement efforts, we believe that a main focus of management is to effectively manage our net assets through cash flow management of our tenant leases, maintaining or improving occupancy, and enhance the value of the Flowerfield and Cortlandt Manor properties via the pursuit of the associated change in entitlements.

As the Company executes on the sale of assets, it will review its capital needs and make prudent distribution decisions regarding any excess cash.

Upon completion of these activities, Gyrodyne will distribute the remaining cash to its shareholders and then proceed to complete the dissolution of the Company, delist its shares from Nasdaq or other exchange platform and terminate its registration and reporting obligations under the Securities Exchange Act of 1934, as Amended (the “Exchange Act”).

As we pursue our plan to sell our properties strategically, including certain enhancement efforts, we believe that a main focus of management is to effectively manage our net assets through cash flow management of our tenant leases, maintaining or improving occupancy, and enhancing the value of the Flowerfield and Cortlandt Manor properties via the pursuit of the associated change in entitlements.

As the Company executes on the liquidation plan, it will review its capital needs and make prudent distribution decisions regarding any excess cash.

Gyrodyne is required to make adequate provisions to satisfy its known and unknown liabilities which could substantially delay or limit its ability to make future distributions to shareholders.

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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%).

The term was 24 months, with an option to extend for an additional 12 months.

The interest rate was 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%).

The terms of the loan originally limited access to certain amounts, contingent upon GSD Cortlandt securing purchase agreements for one or both Cortlandt Property lots.

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Advances of $379,765 and $670,235, were drawn at closing and on January 28, 2021, respectively.

Under the line, the balance of $1,450,000 is available upon the Lender’s discretion.

In August 2021, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”), received a commitment letter for a $4.95 million term loan (“Mortgage Loan”), a portion of the proceeds will be used to pay off the existing GSD Cortlandt debt facility of which $1,050,000 is outstanding.

The term of the Mortgage Loan is five years with an option to extend an additional five years (“Extension Period”).

Until the initial maturity date, the Mortgage Loan shall bear interest at an annual rate of interest equal at all times to 3.75%.

If the maturity date is extended for the Extension Period, the rate of interest on the Mortgage Loan shall adjust and be fixed for the Extension Period to an annual rate of interest equal at all times to the greater of (i) 3.75% or (ii) 275 basis points in excess of the weekly average yield on United States Treasury Securities adjusted to a constant maturity of five years as most recently made available by the Federal Reserve Board as of thirty days prior to the first day of the extended term.

The line was paid in full and closed on September 15, 2021.

On September 15, 2021, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”), secured a $4.95 million term loan (the “Mortgage Loan”), the proceeds of which was used to pay off the existing GSD Cortlandt debt facility of which $1,050,000 was outstanding. 

The term of the Mortgage Loan is five years with an option to extend for an additional five years (the “Extension Period”). 

Until the initial maturity date, the Mortgage Loan bears interest at an annual rate equal to 3.75%.

If the maturity date is extended for the Extension Period, the rate of interest on the Mortgage Loan will to the greater of (i) 3.75% or (ii) 275 basis points in excess of the weekly average yield on United States Treasury Securities adjusted to a constant maturity of five years as most recently made available by the Federal Reserve Board as of thirty days prior to the first day of the Extension Period. 

The Mortgage Loan will be paid in monthly installments of principal and interest calculated on the basis of a thirty-year amortization schedule.

If the maturity date is extended for the Extension Period, the amount of each monthly installment will be recalculated for the Extension Period based on the adjusted interest rate on the Mortgage Loan and an amortization schedule of twenty-five years The lender has the right, but not the obligation, to decline to extend the term of the Mortgage Loan if the loan to value ratio of the property is greater than seventy (70%) percent on the date the extension is exercised, or the property does not support a debt service coverage ratio (as calculated by the lender) of at least 1.3 to 1 on the date the extension is exercised.

(ii) during the second loan year and, if applicable, during the second loan year of the Extension Period, four percent of the amount of such prepayment;

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(iv) during the fourth loan year and, if applicable, during the fourth loan year of the Extension Period, two percent of the amount of such prepayment;

and (v) during the fifth loan year and, if applicable, during the fifth an year of the Extension Period, one percent of the amount of such prepayment.

There shall be no prepayment fee for any prepayment made during the sixty day period immediately preceding the initial maturity date or the last sixty days of the Extension Period.

All prepayments shall be accompanied with accrued and unpaid interest through the date of prepayment.

Notwithstanding the foregoing, in the event the premises are sold to a bona fide third-party purchaser within the initial two years of the term of the Mortgage Loan, the prepayment fee to be paid upon repayment of the Mortgage Loan in full shall be reduced by fifty percent.

The loan will be secured by the Cortlandt property located at 1985 Crompond Road (5.01 acres) and is expected to close in the third quarter of 2021.

and (v) during the fifth loan year and, if applicable, during the fifth loan year of the Extension Period, one percent of the amount of such prepayment.

There will be no prepayment fee for any prepayment made during the sixty-day period immediately preceding the initial maturity date or the last sixty days of the Extension Period.

All prepayments must include accrued and unpaid interest through the date of prepayment.

If the Cortlandt property is sold to a bona fide third-party purchaser within the initial two years of the term of the Mortgage Loan, the prepayment fee to be paid upon repayment of the Mortgage Loan in full will be reduced by fifty percent.

The Mortgage Loan is secured by the Cortlandt property located at 1985 Crompond Road (5.01 acres).

We believe leveraging our capital improvements will allow us to continue focusing our cash on funding the pursuit of entitlements and our operations.

The Company believes the combination of the investments in tenant improvements related to strategically important leases and the pursuit of entitlements will enable the Company to maximize the ultimate real estate value and the distributions per share.

As of June 30, 2021, the Company had cash and cash equivalents totaling approximately $2.41 million.

As of September 30, 2021, the Company had cash and cash equivalents totaling approximately $6.02 million.

The Company anticipates that its current cash and cash equivalent balance and access to credit facilities will be adequate to fund its process of seeking entitlements and selling assets and subsequent dissolution.

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In addition, the Company has and will continue to review operating activities for possible cost reductions throughout the liquidation process.

Major elements of the Company’s cashflows for the six-months ended June 30, 2021 were as follows:

Major elements of the Company’s cashflows for the nine-months ended September 30, 2021 were as follows:

Operating cashflows

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($1,362,775) in corporate expenditures.

($109,675) of land entitlement costs incurred for the Cortlandt Manor property.

($274,627) of land entitlement costs incurred for the Flowerfield property.

($226,672) in interest expense.

($184,062) in non-recurring loan closing fees.

($492,672) of land entitlement costs.

$430,702 of net proceeds from the sale of real estate.

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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.

What changed 10-Q

Item 1. Financial Statements