What changed in this filing

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Item 1. Business

2022-03-30 compared with 2021-04-13 · 228 added, 183 removed, 158 unchanged (72% of the section changed)

Strategic Overview

Our corporate strategy is to pursue entitlements to increase the values of Cortlandt Manor and Flowerfield, our two remaining properties, so that they can be sold to one or more developers at higher prices and maximize value and distributions. 

Gyrodyne intends to dissolve after we complete the disposition of our assets, apply the proceeds to settle debts and claims, and then pay liquidating distributions to our shareholders.

Gyrodyne filed subdivision applications in March 2017 with respect to Cortlandt Manor and Flowerfield. 

The COVID-19 pandemic caused significant delays in the regulatory approval process, as state, county and local staff charged with processing our subdivision applications all postponed activity due to work-from-home transitions.

Various factors will continue to impact the timeline to achieve approvals, including the backlog of land use applications, labor shortages and climate change concerns.

Nevertheless, we anticipate receiving preliminary approval of our subdivision applications for Flowerfield and Cortlandt Manor sometime in 2022 and then executing purchase agreements on such properties. 

The Company intends to aggressively market its properties, negotiate contracts and complete their sale as soon as practicable. 

The Company expects that such purchase agreements, however, will include both final subdivision approval and final unappealable site plan approval as conditions to closing. 

Based on this and the aforementioned factors, the Company currently expects the timeline for the process to extend to year-end 2024, with the ultimate timing being largely dependent on factors outside the Company’s control. 

Moreover, as we have previously disclosed, even if the Company is successful in securing approval of its subdivision applications, there is significant risk that opponents of our subdivision plans may challenge the approval through a lawsuit under Article 78 of New York’s Civil Practice Law & Rules, which could take two years or more to run its course given the likelihood of appeal and the impact the ongoing pandemic has had on the court system.

Although we believe that selling individual lots will maximize value, we are also pursuing prospective purchasers who may be willing to pay purchase prices for the entire undivided Flowerfield or Cortlandt Manor property, or for the entire Company itself, that the Company finds more attractive from a timing and value perspective.

Description of the Company's Business

Gyrodyne, LLC (including its subsidiaries, “Gyrodyne”, the “Company” or the “Registrant”) is a limited liability company formed under the laws of the State of New York whose primary business is the management of a portfolio of medical office and industrial properties and the pursuit of entitlement on such properties located in Suffolk (“Flowerfield”) and Westchester (“Cortlandt Manor”) Counties, New York.

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

or the “Registrant”) is a limited liability company formed under the laws of the State of New York whose primary business is the management of a portfolio of medical office and industrial properties and the pursuit of entitlement on such properties located in Suffolk (“Flowerfield”) and Westchester (“Cortlandt Manor”) Counties, New York.

Substantially all of our developed properties are subject to leases in which the tenant reimburses the Company for a portion, all of or substantially all of the costs and/or cost increases for utilities, insurance, repairs, maintenance and real estate taxes.

Certain leases provide that the Company is responsible for certain operating expenses.

Gyrodyne’s corporate strategy is to enhance the value of Flowerfield and Cortlandt Manor by pursuing entitlement opportunities and enhancing the value of its leases.

The Company believes the aforementioned strategy will improve the chances of increasing the values for such properties.

Gyrodyne’s corporate strategy is to enhance the value of Flowerfield and Cortlandt Manor by pursuing entitlement opportunities and enhancing the value of its leases.

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 December 31, 2021 (predicated on current asset values) includes some, but not all of the potential value impact that may result from such value enhancement efforts.

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Our efforts to generate the highest values for Flowerfield and Cortlandt Manor may involve in limited circumstances various other strategies to enhance the net value of Flowerfield and Cortlandt Manor to maximize the returns for our shareholders.

Gyrodyne intends to dissolve after it completes the disposition of all of its real property assets, applies the proceeds of such dispositions first to settle any debts and claims, pending or otherwise, against Gyrodyne, and then makes distributions to holders of Gyrodyne common shares.

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 pays liquidating distributions to holders of Gyrodyne common shares.

The process of seeking entitlements to enhance property values and the amount and timing of distributions from proceeds of asset sales involve risks and uncertainties.

As such, it is impossible at this time to determine the ultimate amount of proceeds that will actually be distributed to our shareholders or the timing of such payments.

As such, it is impossible at this time to determine with certainty the ultimate amount of proceeds that will actually be distributed to our shareholders or the timing of such payments.

Accordingly, no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in our Consolidated Statements of Net Assets.

The actual nature, amount and timing of all distributions will be determined by Gyrodyne’s Board in its sole discretion and will depend in part upon the Company’s ability to convert our remaining assets into cash in compliance with our obligations under the Stipulation of Settlement entered into in connection with the class action lawsuit (See Item 3 – Legal Proceedings) and settle and pay our remaining liabilities and obligations.

Under Gyrodyne’s Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”), dissolution of the Company may be effected upon the vote of holders of a majority of Gyrodyne common shares or, in the Company’s discretion and without any separate approval by the holders of the Gyrodyne common shares, at any time the value of Gyrodyne’s assets, as determined by the Company in good faith, is less than $1,000,000.

Legal Proceedings) and settle and pay our remaining liabilities and obligations.

Under Gyrodyne’s Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”), dissolution of the Company may be effected upon the vote of holders of a majority of Gyrodyne common shares or, in the Board’s discretion and without any separate approval by the holders of the Gyrodyne common shares, at any time the value of Gyrodyne’s remaining assets, as determined by the Board in good faith, is less than $1,000,000.

We remain committed on (1) enhancing the net value of Flowerfield and Cortlandt Manor to maximize the returns for our shareholders, (2) completing the disposition of our assets, (3) making timely distributions to our shareholders, (4) managing capital and liquidity, (5) mitigating risks relating to interest rates and real estate cycles and (6) completing the liquidation of the Company.

After giving effect to the Company’s dispositions of real property through December 31, 2020, the Company owns the following properties:

After giving effect to the Company’s dispositions of real property through December 31, 2021, the Company owns the following properties:

Cortlandt Manor:

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James, New York, including a 14-acre multi-tenanted industrial park comprising 127,000 rentable square feet.

63 of the 68 acres are included in the subdivision application filed with the Town of Smithtown.

5 acres of the 68 acres are zoned residential and non-contiguous to the Flowerfield property.

There were an additional 5 acres of two parcels that were zoned residential and non-contiguous to the Flowerfield property which the Company sold in April 2021.

Each of the Cortlandt Manor medical office park and the Flowerfield Industrial Park (including its undeveloped portion) is individually owned in a single asset limited liability company wholly owned by the Company.

Strategic Plan to Enhance Property Values, Liquidate and Dissolve

Strategic Plan to Enhance Property Values, Liquidate/Distribute Proceeds and Dissolve

Our corporate strategy is to pursue entitlement opportunities intended to increase the values of our two remaining properties so that they can be sold to one or more developers at higher prices (than those achievable under their current entitlements) that will maximize value and distributions.

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 pays liquidating distributions to holders of Gyrodyne common shares.

We are unable to predict the precise nature, amount or timing of such distributions.

To accomplish this, the Company’s plan consists of:

managing the real estate portfolio to improve operating cash flow while simultaneously increasing the market values of the underlying properties;

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balancing working capital and funds available for the entitlement process.

Gyrodyne’s dual strategy is to enhance the value of Flowerfield and Cortlandt Manor by pursuing entitlement opportunities while simultaneously enhancing the value of its leases.

The Company believes the aforementioned dual strategy will improve the chances of increasing the values for such properties.

Gyrodyne’s dual strategy is to enhance the value of Flowerfield and Cortlandt Manor by pursuing entitlement opportunities while simultaneously enhancing the value of its leases.

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 December 31, 2021 (predicated on current asset values) includes some but not all of the potential value impact that may result from such value enhancement efforts.

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A sale of substantially all of the assets of the Company would require shareholder approval under New York law.

However, in the event of the sale of individual properties, that do not constitute substantially all of the Company’s assets, it is not required or anticipated that any shareholder votes will be solicited.

The prices at which the various assets may be sold depend largely on factors beyond our control, including, without limitation, the condition of financial and real estate markets, the availability of financing to prospective purchasers of the assets, regulatory approvals, public market perceptions, and limitations on transferability of certain assets.

We cannot give any assurance on the timing of the ultimate sale of all of the Company’s properties.

Assuming the process of seeking entitlements and selling assets is completed by December 31, 2022 and giving effect to the estimated cash flows from the operation of our existing properties, we expect that Gyrodyne will have a cash balance on December 31, 2022 of approximately $22.49 million, prior to any future special distributions based on the estimate of net assets presented in our Consolidated Statements of Net Assets.

Such cash would equate to future distributions of $15.17 per share based on Gyrodyne having 1,482,680 common shares outstanding.

These estimated distributions are based on values on December 31, 2020 and include some but not all of the potential value that may be derived from the entitlement efforts to maximize the value of Flowerfield and Cortlandt Manor.

In the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, we stated that our objective was to complete the process of property enhancement and subsequent sale of all our properties by December 31, 2022.

We also stated, however, that we cannot give any assurance on such timing inasmuch as completing this process was dependent upon certain factors largely outside our control, such as the regulatory review processes of municipality planning boards and other governmental authorities, the vagaries of the market for developed and undeveloped commercial real estate and community opposition.

Gyrodyne filed subdivision applications in March 2017 with respect to the Cortlandt Manor and Flowerfield properties.

The COVID-19 pandemic has resulted in significant delays in the regulatory approval process, as state, county and local staff charged with processing the Company’s subdivision applications postponed activity as work-from-home transitions occurred.

We anticipate receiving approval of our subdivision applications for both the Cortlandt Manor and Flowerfield properties sometime in 2022, and that we will generally be able to seek to identify purchasers for such properties and execute purchase agreements after subdivision approval is received.

The Company believes that standard market terms for real property transactions in both Cortlandt Manor and the Town of Smithtown would include both final subdivision approval and final unappealable site plan approval as conditions to closing. 

There are various factors that have impacted and may continue to impact the timeline to achieve the aforementioned approvals which include but are not limited to the backlog of land use applications at the town, county and state level and the continuing slower approval process which may in part be attributable to a combination of further regulatory delays resulting from the pandemic and climate change concerns. 

Based on the aforementioned factors, the Company is extending the timeline to December 31, 2024. 

The Company intends to aggressively market its properties and negotiate contracts in an effort to complete the process as soon as practicable, perhaps even earlier than 2024, with the ultimate timeline being largely dependent on factors outside the Company’s control, and therefore there can be no assurance that the Company will be able to meet such earlier timeline or even our formal stated deadline of December 2024. 

If such litigation is commenced, consummation of the sale of our properties could extend beyond 2024. 

Assuming the process of seeking entitlements and selling assets is completed by December 31, 2024 and giving effect to the estimated cash flows from the operation of our existing properties, we expect that Gyrodyne will have a cash balance on December 31, 2024 of approximately $23.03 million, prior to any future special distributions based on the estimate of net assets in liquidation presented in our Consolidated Statements of Net Assets. 

Such cash would equate to future distributions of $15.53 per share based on Gyrodyne having 1,482,680 common shares outstanding. 

These estimated distributions are based on values on December 31, 2021 and include some but not all of the potential value that may be derived from the entitlement efforts to maximize the value of Flowerfield and Cortlandt Manor. 

The Consolidated Statements of Net Assets is based on certain estimates.

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Land entitlement costs, claims, liabilities and expenses from operations, including operating costs, salaries, real estate taxes, payroll and local taxes, legal, accounting and consulting fees and miscellaneous office expenses, will continue to be incurred during our process of seeking entitlements and selling assets, which includes certain enhancement efforts.

Excluding the value that may be achieved from the entitlement efforts, expenses incurred in pursuing the Company’s business plan will reduce the amount of assets available for ultimate distribution to shareholders, and, while a precise estimate of those expenses cannot currently be made, management and our Board believe that available cash (including amounts available under our credit facilities) and amounts received on the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims (including contingent liabilities) and to make cash distributions to shareholders.

However, no assurances can be given that available cash (including amounts available under our credit facilities) and amounts received on the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims and to make cash distributions to shareholders.

Such expenses will reduce the amount of assets available for ultimate distribution to shareholders, and, while a precise estimate of those expenses cannot currently be made, management and our Board believe that available cash (including proceeds received under our credit facilities) and amounts received on the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims (including contingent liabilities).

However, no assurances can be given that available cash and amounts received on the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims and to make cash distributions to shareholders.

If such available cash and amounts received on the sale of assets are not adequate to provide for our obligations, liabilities, expenses and claims, distributions of cash and other assets to our shareholders would be eliminated.

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Property Transactions

Properties Under Contract

On May 11, 2020, the Company’s wholly owned subsidiary GSD Flowerfield, LLC entered into a Purchase and Sale Agreement (the “Non-Contiguous Property Agreement”) for the sale of a 5.0-acre parcel of vacant land (the “Non-Contiguous Property”) that is non-contiguous to and not part of the Flowerfield complex in Smithtown, New York for a purchase price of $500,000.

Under the Non-Continuous Property Agreement, $25,000 of the purchase price was deposited in escrow at signing with the $475,000 balance payable at closing, subject to Buyer’s right to terminate as described below.

Under the Non-Contiguous Property Agreement:

(i) Buyer will have the right during an investigation period to conduct a phase 1 environmental survey and or other related analysis.

Buyer will have the right to terminate the Non-Contiguous Property Agreement, during the investigation period, by written notice to GSD Flowerfield if Buyer is not fully satisfied, in its sole discretion, as to the status of title, suitability of the property and all factors concerning same, in which case Buyer will have the right to receive a refund of its down payment;

(ii) unless Buyer terminates the Non-Contiguous Property Agreement on or prior to the end of the investigation period, the closing will occur on the 20th day following the earlier of (y) the Town of Smithtown’s granting of the Approvals (as defined in the Non-Contiguous Property Agreement and as described below);

or (z) Buyer’s waiver of such Approvals.

The Non-Contiguous Property Agreement is also contingent on the receipt of a Certificate of Correction/Subdivision Plan (“Correction Plan”) signed and approved by the Town of Smithtown and the Suffolk County Department of Health Services (“SCDHS”) for the Non-Contiguous Property and the recharge basin and building Permits Approval (as defined in the Non-Contiguous Property Agreement and as described below).

The Approval condition requires that the Buyer obtain the Correction Plan to create the two parcels and the recharge basin (as generally depicted in the Non-Contiguous Property Agreement) within a specified time (the “Approval Period”) following the last day of the investigation period.

The Correction Plan is specifically delineated in the Non-Contiguous Property Agreement.

In March 2021, the Buyer received the Correction Plan signed and approved by the Town of Smithtown and the SCDHS for the Non-Contiguous Property and the recharge basin.

As a result, the Company anticipates the closing to occur during the second quarter of 2021.

Termination of Purchase Agreements

The Company received notices on February 1, 2021 and on March 16, 2021 terminating purchase and sale agreements with respect to portions of the Company’s Cortlandt Manor and Flowerfield properties, respectively.

See, “ Part I, Item 1, Business – Subsequent Business Events – Contract Terminations ”, and “ Part II, Item 9B, Other Information – Subsequent Events – Terminated Contracts ”.

On April 26, 2021, the Company closed on the sale of approximately 5.0 acres comprising two parcels of vacant land which 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.

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 was 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.

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 was 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.

Property Value Enhancement

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

During the year ended December 31, 2020, the Company incurred approximately $1,014,000 of land entitlement costs, consisting primarily of engineering costs to support the Company’s respective entitlement efforts.

We estimate that the Company may incur approximately $1.5 million in additional land entitlement costs (an aggregate of approximately $321,000 of which Company vendors have agreed to defer until the first post subdivision property lot is sold) through December 31, 2022 in pursuit of entitlements (approximately $500,000 in Cortlandt Manor and $1.0 million in Flowerfield).

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

During the year ended December 31, 2021, the Company incurred approximately $567,000 of land entitlement costs (approximately $179,000 of which certain of the Company’s service vendors have agreed to defer 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 $1,368,000 in additional land entitlement costs (approximately $266,000 of which Company vendors have agreed to defer until the first post subdivision property lot is sold) through December 31, 2024 in pursuit of entitlements (approximately $431,000 in Cortlandt Manor and $937,000 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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Cortlandt Manor .

On March 15, 2016, the Town of Cortlandt Manor (the “Town”) adopted a 2016 Sustainable Comprehensive Plan (the “Plan”) of which one key strategy was the simultaneous creation of a Medical Oriented District.

The purpose of the proposed Medical Oriented District (“MOD”) is to expand the Town’s existing medical infrastructure and encourage economic development, including capital investment, job creation and housing options.

The purpose of the proposed MOD is to expand the Town’s existing medical infrastructure and encourage economic development, including capital investment, job creation and housing options.

The MOD would allow for a continuum of care, i.e., independent living, assisted living and nursing/hospital care, within or in neighboring facilities by centralizing medical services and related activities.

As a designated zoning district, the MOD could include hospital, ambulatory surgery, primary and urgent care, hospice, laboratories, social services, boutique hotels, retail and a wide range of housing.

The Company’s existing 33,871 square foot Cortlandt Medical Center, situated on 13.8 acres, is located directly opposite New York Presbyterian’s Hudson Valley Hospital Center and within the boundaries of the MOD.

The Company has committed resources toward both market research and feasibility studies in support of achieving entitlements to maximize the value of the property.

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Multi-family apartments

In response to the extensive public comments and Town Board input received during the State Environmental Quality Review “(SEQR”) Draft Generic Environmental Impact Statement (“DGEIS”) public hearing process, the Company amended the site plan and subdivision application with the Town to develop the Cortlandt property as follows:

SUBDIVISION LOT #

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Once designated, the parcels would be governed by the use, dimensional and other provisions of the MOD zoning regulations and MOD zoning would replace the existing zoning.

While the MOD zoning has not been formally adopted, Gyrodyne is currently proposing a two-phase medical office campus with limited retail and has designed the site to function as part of a future "hamlet center” with streetscape improvements.

with streetscape improvements.

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 was submitted as part of the SEQRA process.

The alternate mixed-use plan includes the following:

SUBDIVISION LOT #

BUILDING SIZE/YIELD

Medical office Lot #1

Retail (Lot #1)

Multi-Family Residential Lot #2

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.

The alternate is not anticipated to impact the estimated timeline of approvals.

The Town of Cortlandt Planning Department hosted two public community outreach meetings in June and August 2018 where the Company presented its development plan for the Cortlandt Manor property.

As anticipated, on August 7, 2018, the Town Board formally issued a “positive declaration” under the State Environmental Quality Review Act (“SEQRA”), i.e., a declaration that the project may result in one or more significant environmental impacts and will require the preparation of an Environmental Impact Statement (“EIS”), the scope of which was also adopted.

As anticipated, on August 7, 2018, the Town Board formally issued a “positive declaration”

under the State Environmental Quality Review Act (“SEQRA”), i.e., a declaration that the project may result in one or more significant environmental impacts and will require the preparation of an Environmental Impact Statement (“EIS”), the scope of which was also adopted.

On August 28, 2018, the Town filed the Scope for a DGEIS with input from Gyrodyne for both the MOD zoning and the proposed uses so that upon adoption, minimal further SEQRA review should be required to develop the property.

On September 17, 2019, the Town of Cortlandt Town Board as Lead Agency under SEQR adopted a resolution accepting the DGEIS as complete for public review.

The Town of Cortlandt Town Board hosted two public hearings on the DGEIS on November 19, 2019 and January 14, 2020.

The Town of Cortlandt Planning Board extended the public comment period 90 days with the next public hearing scheduled for April 14, 2020.

As a result of the New York State’s stay-at-home-order, the April 14, 2020 public hearing was postponed to June 2020.

On September 17, 2019, the Town of Cortlandt Town Board as Lead Agency under SEQR adopted a resolution accepting the DGEIS as complete for public review. The Town of Cortlandt Town Board hosted two public hearings on the DGEIS on November 19, 2019 and January 14, 2020. The Town of Cortlandt Planning Board extended the public comment period 90 days with the next public hearing scheduled for April 14, 2020. As a result of the New York State’s stay-at-home-order, the April 14, 2020 public hearing was postponed to June 2020.

The public hearing was then held on June 16, 2020 on a virtual platform.

The Town closed the public comment period on June 30, 2020 and is in the process of reviewing the public comments and preparing the Final GEIS.

The Company anticipates the Final GEIS will reflect the Company’s Cortlandt Manor property proposed uses comprising 184,600 square feet of medical office space and 1,500 square feet of retail space.

It is anticipated that the Final GEIS will be accepted by the Town Board with SEQR completed in the second quarter of 2021.

Following such approval, we anticipate subdivision and site plan public hearings will occur with the Town Planning Board during the fourth quarter of 2021 and the first quarter of 2022.

The Town Board is anticipated to adopt a MOD designation for the property in early 2022 with subdivision approval granted by the Town Planning Board occurring in the first quarter of 2022.

The Final GEIS reflects the Cortlandt Manor property’s proposed uses comprising 184,600 square feet of medical office space and 4,000 square feet of retail space (together with an Alternate Mixed-Use Plan).

It is anticipated that the Final GEIS will be accepted by the Town Board with SEQR completed in the Summer of 2022. The Town Board is anticipated to adopt a MOD designation for the property at the same time, with subdivision approval granted by the Town Planning Board occurring in the third quarter of 2022.

The Company does not plan on developing the property but rather positioning the property to be sold with all entitlements necessary to achieve maximum pre-construction value for the Company in the shortest period of time with the least amount of risk to the Company.

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Following market research and related feasibility studies, we identified the entitlements that we believe will maximize the value of Flowerfield in the shortest amount of time with the lowest amount of risk.

The Company has been in discussions with the Town of Smithtown on the potential real estate development projects identified by the market research and feasibility studies, all of which currently fall within our “as of right to build” zoning.

We are also exploring with the Town of Smithtown whether it would be amenable to certain entitlements, special permits, or other concessions that would allow for the identified development projects.

In March 2017, the Company filed a pre-subdivision application with the Town of Smithtown (the “Pre-application”) for the Flowerfield property along with the previously sold (2002) catering hall facility for an eight-lot subdivision which the Town of Smithtown has determined must be processed as a nine-lot subdivision in response to certain comments received from the planning department (The final approved (in 2021) FEIS included an eight-lot subdivision).

In June 2017, the Company filed a subdivision application with the Town of Smithtown based on feedback provided by the Town of Smithtown staff in the pre-application process.

Because of the property’s location within 500 feet of a municipal boundary and a state road, the Town of Smithtown referred the Company’s subdivision application to the Suffolk County Planning Commission as required by the Suffolk County Administrative Code and the New York State General Municipal Law.

On August 2, 2017, the Suffolk County Planning Commission voted 11-0 to approve Gyrodyne’s subdivision application without conditions.

Although the approval by the Suffolk County Planning Commission is not binding on the Town of Smithtown, the approval without conditions means that the requisite vote threshold for the application at the Town of Smithtown’s Planning Board is a simple majority.

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 Environmental Impact Statement (“EIS”).

On August 2, 2017, the Suffolk County Planning Commission voted 11-0 to approve Gyrodyne’s subdivision application without conditions.

On November 15, 2017, the Town of Smithtown Planning Board conducted a public hearing in which the Company presented its subdivision plan for 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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Furthermore, the Town Planning Board held and closed the public hearing for the DEIS on January 8, 2020.

Following the closing of the public comment period, the Company received a copy of the public comments in February 2020, accordingly.

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

Following the closing of the public comment period, the Company received a copy of the public comments in February 2020.

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.

The FEIS was accepted by the Town Planning Board on March 10, 2021.

Following a public comment period that closed on March 31, 2021, the Town of Smithtown will forward the public comments and the FEIS to the Suffolk County Planning Commission to who will vote accordingly within 45 days of receipt of a complete referral package from the Town of Smithtown.

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

Preliminary Approval of the subdivision may occur simultaneously or shortly after the Findings Statement.

Following Preliminary Approval, the Company will pursue technical approvals after which Final Subdivision approval will be applied for.

The entitlement costs for the year ended December 31, 2020 associated with the ownership and development of this property consisted of engineering costs, legal expenses, economic analysis, soil management and surveys were approximately $814,000.

The FEIS was accepted by the Town Planning Board on March 10, 2021. 

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 Company anticipates that the Smithtown Planning Board will adopt the Findings Statement by resolution, closing SEQR the end of March 2022, and will hold a public hearing for the approval of the Preliminary Subdivision at the same meeting. 

Approval of the Preliminary Subdivision may occur at that meeting, or the hearing can be kept open, and approval can be granted at a subsequent meeting of the Planning Board. 

Following the Preliminary Subdivision approval, the Company will pursue Final Subdivision approval, expected 3Q or 4Q of 2022.

The entitlement costs for the year ended December 31, 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 $391,000.

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.

The pandemic has negatively impacted demand for office (including medical office) and hotel development “on spec”.

The Company’s subdivision plan at Flowerfield will allow for any combination of the aforementioned uses and is marketing the undeveloped lots to reflect such flexibility.

The pandemic has negatively impacted demand for office (including medical office) and hotel development “on spec”.

The Company’s subdivision plan at Flowerfield will allow for any combination of the aforementioned uses and is marketing the undeveloped lots to reflect such flexibility.

Health Care Industry

Our tenants in our Cortlandt Manor property are healthcare service providers.

Furthermore, the Company has expanded its leasing relationship with Stony Brook University, Stony Brook University Hospital and affiliates of Stony Brook University Hospital at our Flowerfield property which may increase its exposure to the healthcare industry.

Furthermore, the Company’s previous expansion of its leasing relationship with Stony Brook University, Stony Brook University Hospital and affiliates of Stony Brook University Hospital at our Flowerfield property increased its exposure to the healthcare industry.

The healthcare industry is subject to substantial regulation and faces increased regulation particularly relating to fraud, waste and abuse, cost control and healthcare management.

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.

Our tenants’ failure to comply with any of these laws could result in loss of licensure, denial of reimbursement, imposition of fines or other penalties, suspension or exclusion from the government sponsored Medicare and Medicaid programs, loss of accreditation or certification, or closure of the facility.

Our tenants’

failure to comply with any of these laws could result in loss of licensure, denial of reimbursement, imposition of fines or other penalties, suspension or exclusion from the government sponsored Medicare and Medicaid programs, loss of accreditation or certification, or closure of the facility.

In addition, efforts by third-party payors, such as the Medicare and Medicaid programs and private insurance carriers, including health maintenance organizations and other health plans, impose greater discounts and more stringent cost controls upon healthcare provider operations (through changes in reimbursement rates and methodologies, discounted fee structures, the assumption by healthcare providers of all or a portion of the financial risk or otherwise).

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James, New York, the Company owns a 63-acre site called Flowerfield, primarily zoned for light industry, which is located approximately 50 miles east of New York City on the North Shore of Long Island in the Town of Smithtown.

Approximately 5 acres of the 68 acres at Flowerfield, are non-contiguous to the Flowerfield industrial park and zoned residential.

In May 2020, the Company’s wholly owned subsidiary, GSD Flowerfield, LLC, entered into a purchase and sale agreement for the sale of the 5-acre lot (See “ Properties Under Contract ” above).

Flowerfield's location places it in Hydrogeologic Zone VIII , one of the most liberal with respect to effluent discharge rates.

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In Cortlandt Manor, New York, the Company owns 13.8 acres inclusive of the 33,871 square foot Cortlandt Medical Center.

The property is located directly opposite New York Presbyterian’s Hudson Valley Hospital Center and within the boundaries of the MOD.

The property consists of six office buildings.

As of December 31, 2020, there were four tenants, comprising four leases.

As of December 31, 2021, there were three tenants, comprising four leases.

The annual base rent based on the rates in effect as of December 2021, is approximately $804,000.

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Impact of COVID-19

The following discussion is intended to provide shareholders with certain information regarding the impacts of the COVID-19 pandemic on the Company’s business and management’s efforts to respond to those impacts.

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 year ended December 31, 2021 and future periods.

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

economy, the economies of the local markets in which the Company’s properties are located and the broader financial markets.

Nearly every industry has been impacted directly or indirectly and has come under severe pressure due to numerous factors, including preventative measures taken by local, state and federal authorities to alleviate the public health crisis such as mandatory business closures, quarantines, restrictions on travel and “shelter-in-place” or “stay-at-home” orders.

These containment measures, which generally do not apply to businesses designated as “essential,” have affected the operations of our tenants, as non-essential businesses generally have been forced to close.

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

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

economy, the economies of the local markets in which the Company’s properties are located and the broader financial markets.

or “stay-at-home”

These containment measures, which generally do not apply to businesses designated as “essential,”

have affected the operations of our tenants, as non-essential businesses generally forced to close.

There is uncertainty as to the time, date and extent to which these restrictions will be relaxed or lifted, businesses of tenants that have closed, either voluntarily or by mandate, will reopen or when customers will re-engage with tenants as they have in the past.

The Company’s properties and tenants have been impacted by these and other factors as follows:

As of the date of this Annual Report on Form 10-K, both of the Company’s properties are open and the Company believes are operating in compliance with federal, state and local COVID-19 guidelines and mandates.

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

Approximately 37% of the Company’s tenants (based on 2021 projected annual revenues) are not-for-profit corporations or tenants that are neither medical offices nor part of or affiliated with SBU or SBU Hospital.

The COVID-19 public health crisis has and will likely continue to adversely impact the timeline to secure entitlements and the sale of our real estate.

Furthermore, the real estate market has and is expected to continue to be adversely affected which could further negatively impact the timing of sales and the resulting value of our real estate.

The Company has taken a number of proactive measures to maintain the strength of its business and manage the impact of COVID-19 on the Company’s operations and liquidity, including the following:

Along with the Company’s tenants and the communities they and the Company together serve, the health and safety of the Company’s employees and their families is a top priority.

The Company has adapted its operations to protect employees, including by implementing a work from home policy, and the Company’s IT systems have enabled its team to work seamlessly.

The Company’s properties and tenants have been impacted by these and other factors as follows:

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

Approximately 40% of the Company’s tenants (based on 2022 projected annual revenues) are not-for-profit corporations or tenants that are neither medical offices nor part of or affiliated with Stony Brook University (“SBU”) or SBU 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.

However, this favorable outlook could be affected materially by adverse developments, if any, related to the COVID-19 pandemic, including resurgence of COVID-19 cases due to more contagious variants, such as the Omicron and possible other variants, or new or more restrictive public health requirements recommended or imposed by federal, state and local authorities.

There remains uncertainty as to the ultimate duration and severity of the pandemic on commercial activities, including risks that may arise from mutations or related strains of the virus, and the ability to successfully administer vaccinations to a sufficient number of persons or attain immunity to the virus by natural, vaccination or other means to achieve herd immunity.

Until the COVID-19 pandemic has been resolved as a public health crisis, it retains the potential to cause further and more severe disruption of national and regional economies, cause political uncertainty and civil unrest, and diminish consumer confidence, all of which could impact the local real estate market and our business.

The Company has taken a number of proactive measures to maintain the strength of its business and manage the impact of COVID-19 on the Company’s operations and liquidity, including the following:

Along with the Company’s tenants and the communities they and the Company together serve, the health and safety of the Company’s employees and their families is a top priority.

The Company has adapted its operations to protect employees, including by implementing a work from home policy, and the Company’s IT systems have enabled its team to work seamlessly.

To enhance our liquidity position and maintain financial flexibility, the Company secured a loan for up to $2,500,000, evidenced by a non-revolving business line of credit agreement and promissory note, which closed on July 16, 2020.

As of December 31, 2020, the Company has approximately $1.63 million in cash and cash equivalents, and an additional $3,340,167 available under its credit facilities of which $800,000 is only available for certain capital improvements.

In January 2021, the Company drew an additional $1,090,167.

The Company has taken proactive measures to manage costs, including securing agreements from certain of the Company’s major service vendors to defer approximately $651,000 of land development fees and other professional fees incurred to date plus approximately $321,000 of forecasted land development fees until the first post subdivision property lot is sold.

On February 22, 2021, the working capital GSD Cortlandt loan was amended to remove the purchase agreement condition for drawing down on the line.

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 pay-off 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 $909,000 of land development fees and other professional fees incurred to date plus approximately $266,000 of forecasted land development fees until the first post subdivision property lot is sold.

The only significant expenditures the Company plans to make at this time on our properties relate to obtaining entitlements.

Further, the Company expects that the only material capital expenditures at the Company’s properties will be tenant improvements and/or other leasing costs associated with existing and new leases.

We adopted a Deferred Compensation Plan effective as of January 1, 2020 pursuant to which officers and directors may elect to defer a portion of their compensation until the earlier of December 15, 2026 or adoption of a Plan of Liquidation, together with interest on such deferred payments at a fixed rate of 5%.

The Company’s ability to operate seamlessly and limit any adverse impact on its forecasted net asset value will also depend, in part, on whether any of its key employees or key advisors are infected by the Coronavirus and become ill from COVID-19.

The unanticipated loss or unavailability of key employees and advisors due to COVID-19 or any similar pandemic could harm our ability to operate our business or execute our business strategy.

As of December 31, 2021, directors have deferred $722,694 (inclusive of interest) and have committed to an additional $330,000, plus interest, through 2022.

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 governmental, regulatory and private sector actions and responses, actions taken to contain or prevent further spread, and actions taken in an effort to recover economically, each of which are highly uncertain and cannot be predicted.

As a result of the foregoing developments, we are unable to determine what the ultimate impact will be on our timeline for seeking entitlements and selling properties, and ultimately on the amount proceeds and distributions from those sales.

For more information and risks relating to the pandemic on us and our business, see Part I, Item 1A, “Risk Factors”

- Our business, operations and timelines for pursuing entitlements, property sales and distributions of proceeds could be adversely affected by the Coronavirus pandemic ”.

Gyrodyne is a limited liability company.

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.

The Bipartisan Budget Act of 2015 (the “2015 Act”) changed this procedure for partnership tax audits and audit adjustments for partnership returns of large partnerships for fiscal years beginning after December 31, 2017.

Pursuant to the 2015 Act, if any audit by the IRS of our income tax returns for any fiscal year beginning after December 31, 2017 results in any adjustments, the IRS may collect any resulting taxes, including any applicable penalties and interest, directly from Gyrodyne.

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These entities and others may be prospective buyers, as well as competitors, with respect to both properties when we expect to sell such properties, which would be following the receipt of entitlements.

Principal factors of competition in the Company’s rental property business are the quality of properties, leasing terms (including rent and other charges and allowances for tenant improvements), attractiveness and convenience of location, financial strength of its competitors, the quality and breadth of tenant services provided and reputation as an owner and operator of quality office properties in its relevant market.

Additionally, the Company’s ability to compete depends upon, among other factors, trends in the national and local economies, investment alternatives, financial condition and operating results of current and prospective tenants, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population trends.

In pursuit of its business plan, and the sale of properties, the Company competes with other real estate investors, including pension funds, insurance companies, foreign investors, real estate partnerships, public and private real estate investment trusts, private individuals and other domestic real estate companies, many of which have greater financial and other resources than the Company.

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We seek to extend leases at the Flowerfield Industrial Park in advance of expirations to achieve high occupancy levels.

We are seeking to convert the Cortlandt Manor leases to long-term leases with a landlord option to terminate the lease early contingent on the new100,000 square foot medical office buildings’ completion date.

We are seeking to convert the Cortlandt Manor leases to long-term leases with a landlord option to terminate the lease early contingent on the new 100,000 square foot medical office buildings’

completion date.

The strategy will improve the value of the operating lot (Lot 2) as it will allow Gyrodyne to market lot one using a lower market-based cap rate plus a premium for development rights.

Financing Strategy

The Company believes it is currently capitalized with adequate cash levels and adequate access to its credit facilities to operate our business and complete our strategic plan of positioning our remaining properties for sale at enhanced values and making distributions to our shareholders.

The Company believes it is currently capitalized with adequate cash levels, including proceeds from its credit facilities, to operate our business and complete our strategic plan of positioning our remaining properties for sale at enhanced values and making distributions to our shareholders.

The Company focuses its available capital to operate the Company and pursue the entitlements strategy.

To finance the capital improvements, most of which relate to leasing activity, the Company secured a non-revolving credit line for up to $3,000,000 (the “Original Line”) with a bank, which closed on March 21, 2018.

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”).

The interest rate, as amended, during the Interest-Only Phase is a variable rate equal to the daily highest prime rate published by the Wall Street Journal plus 150 basis points (1.5% rounded up to the nearest 1/8 percent), adjusted daily, but shall not be less than 4.75%.

During the Permanent Phase, the Company will pay interest at a fixed rate based on the Federal Home Loan Bank rate for a 7-year maturity as made available by the Federal Home Loan Bank of New York plus a margin of 200 basis points (2%) rounded up to the nearest 1/8 percent, but shall not be less than 3.85%, plus principal based on a 20-year amortization period.

The Permanent Phase interest rate currently would be 3.85%.

The first advance of $1.1 million was used to finance the tenant improvements pursuant to the amended and expanded signed lease with Stony Brook University Hospital (“SBU Hospital”).

An additional advance of $1.1 million was drawn on March 29, 2019 to finance the buildouts on leases signed through December 31, 2018.

The balance of the loan can be drawn upon for improvements to be completed by the Company, as landlord, pursuant to future leases with the State University of New York or institutions affiliated with it (or other tenants subject to the bank’s approval) anytime during the Interest-Only Phase.

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 the earlier of May 20, 2021 or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of May 20, 2028 or 84 months after conversion to a permanent loan.

The interest rate during the Interest-Only Phase shall be a variable rate equal to the daily highest prime rate published by the Wall Street Journal plus 100 basis points (1% rounded up to the nearest 1/8 percent), but in no event less than 4.75%.

Permanent Phase interest rate currently would be 3.85%.

Pursuant to the terms of the loan, the bank is in the process of converting the loan to a permanent loan following the drawdowns of $1,580,068, $1,000,000 and $419,932 in 2019, 2020 and January 2021, respectively.

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

As of December 31, 2020, the Company is in compliance with the loan covenants.

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

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 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.

We finance our operations through cash on hand, including proceeds from the Company’s credit facilities.

Certain of the Company’s major vendors (including land development vendors) have agreed to defer payment on 50% of their fees until the subdivided lot is sold.

Additionally, 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.

The plan is a nonqualified deferred compensation plan maintained for officers and directors of the Company. 

Under the DCP, officers and directors may elect to defer a portion of their compensation to the DCP and receive interest on such deferred payments at a fixed rate of 5%. 

All DCP benefits will be paid in a single lump sum cash payment on December 15, 2026, unless a Plan of Liquidation is established for Gyrodyne before the distribution date in which case all benefits will be paid in a single lump sum cash payment after execution of an amendment to terminate the DCP ( See Deferred Compensation Plan below) .

We entered into a credit facility on March 21, 2018 which was amended and extended that provided up to $3.0 million in financing for tenant improvements (the “Original Line”).

The Company has drawn down approximately $2.2 million for tenant and associated common area improvements.

Pursuant to the terms of the loan, on April 30, 2021, the loan converted to the permanent phase with an outstanding principal balance of $2,200,000.

The Company no longer has access to the $800,000 unused balance.

The loan matures on April 30, 2028.

The Company is paying interest at a fixed rate of 3.85% plus principal based on a 20-year amortization period.

On January 24, 2019, the Company secured a loan evidenced by a secured non-revolving business line of credit and promissory note with the Original Line bank for up to $3,000,000 to provide access to additional working capital to fund entitlements and operations through final liquidation.

As of January 28, 2021, the line is fully drawn.

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

The loan matures on May 20, 2028.

The Company is paying interest at a fixed rate of 3.85% plus principal based on a 20-year amortization period.

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 Manor property lots.

On February 22, 2021, the loan 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 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 were 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 be 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 percent (70%), or the property does not support a debt service coverage ratio (as calculated by the lender) of at least 1.3 to 1, in each case on the date the extension is exercised.

GSD Cortlandt also is 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, 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 Manor 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 Manor property located at 1985 Crompond Road (5.01 acres).

Environmental Matters

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The Company carries comprehensive liability, property, terrorism and umbrella insurance coverage which includes fire, flood, earthquakes and business interruption insurance on all our properties.

The Company annually reviews its policies with regard to both risk management and the underlying premiums and believes the policy specifications, insurance limits and deductibles are appropriate given the relative risk of loss, the cost of the coverage and industry practice and, in the opinion of the Company’s management, all its properties are adequately insured.

Major Tenants

For the year ended December 31, 2020, rental income from the Company’s three largest tenants represented approximately 24%, 21% and 9%, respectively, of total rental income.

For the year ended December 31, 2021, rental income from the Company’s three largest tenants represented approximately 23%, 22% and 10%, respectively, of total rental income.

The three largest tenants by revenue as of December 31, 2021, consist of Stony Brook University Hospital, located in the industrial park, a medical tenant in the Cortlandt Manor Medical Center and a tenant in the industrial park that previously expanded its space.

For the year ended December 31, 2019, rental income from the Company’s three largest tenants represented approximately 23%, 20% and 7%, respectively, of total rental income.

The three largest tenants by revenue as of December 31, 2019, consist of Stony Brook University Hospital, located in the industrial park, a medical tenant in the Cortlandt Manor Medical Center and a tenant in the industrial park that recently expanded its space.

For the year ended December 31, 2020, rental income from the Company’s three largest tenants represented approximately 24%, 21% and 9%, respectively, of total rental income.

The three largest tenants by revenue as of December 31, 2020, consist of Stony Brook University Hospital, located in the industrial park, a medical tenant in the Cortlandt Manor Medical Center and an athletics facility in the industrial park.

Fiscal Year 2021 Transaction Summary

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Disposition Activity.

Flowerfield - On May 11, 2020, the Company’s wholly owned subsidiary GSD Flowerfield, LLC entered into a Purchase and Sale Agreement (the “Non-Contiguous Property Agreement”) for the sale of a 5.0-acre parcel of vacant land (the “Non-Contiguous Property”) that is non-contiguous to and not part of the Flowerfield complex in Smithtown, New York for a purchase price of $500,000.

See, “ Business-Property Transactions--Properties Under Contract--Flowerfield ”, above, for more detailed disclosure.

Flowerfield - On April 26, 2021, the Company closed on the sale of its approximate 5.0 acres comprising of two parcels 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.

Termination of Purchase Agreements.

Flowerfield - On March 16, 2021, the Company received a notice (the “BSL Termination Notice”) from BSL that it was 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.

Cortlandt Manor - On February 1, 2021, the Company received a notice (the “SC Termination Notice”) from SC, LLC that it was 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.

Leasing Activity.

During 2020, the Company signed four new leases comprising 2,105 square feet, annual base rent of approximately $36,800 and total lease commitments of approximately $82,400, excluding tenant reimbursements, at an average rate per square foot of $17.48, which were offset by ten terminations comprising 12,217 square feet, approximately $174,500 in annual revenue, excluding tenant reimbursements at an average rate per square foot of $14.28.

The net impact was a decrease in annual lease commitments and rented square footage of approximately $137,700 and 10,112 square feet, respectively.

During 2021, the Company signed ten new leases comprising 9,232 square feet, annual base rent of approximately $141,000 and total lease commitments of approximately $363,000, excluding tenant reimbursements, at an average rate per square foot of $15.26, which were offset by one termination comprising 2,767 square feet, approximately $70,600 in annual revenue, excluding tenant reimbursements at an average rate per square foot of $25.50.

The net impact was an increase in annual lease commitments and rented square footage of approximately $70,334 and 6,465 square feet, respectively.

A total of 20 lease renewals were signed during 2021 comprising approximately 34,900 square feet, $842,600 in annual revenue and $3,043,800 in total commitments.

There were no incentives, lease concessions in the form of rent abatements or commissions paid during the year ended 2020.

There were no incentives, lease concessions in the form of rent abatements.

Commissions paid during the year ended 2021 were approximately $21,600.

Financing Activity.

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

See, “ Business — Financing Strategy ”, above, for more detailed disclosure.

On September 15, 2021, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”), secured a $4.95 million term 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.

See, “

Business —

Financing Strategy ”, above, for more detailed disclosure.

Deferred Compensation Plan

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

The DCP is a nonqualified deferred compensation plan maintained for officers and directors of the Company.

Under the DCP, officers and directors may elect to defer a portion of their compensation to the DCP and receive interest on such deferred payments at a fixed rate of 5%.

The DCP is a nonqualified deferred compensation plan maintained for officers and directors of the Company. 

Under the DCP, officers and directors may elect to defer a portion of their compensation to the DCP and receive interest on such deferred payments at a fixed rate of 5%. 

The foregoing description of the DCP does not purport to be complete and is qualified in its entirety by reference to the full text of the DCP, which was filed as an exhibit to the Company’s Form 8-K, filed with the Securities and Exchange Commission on November 2, 2018 and incorporated herein by reference.

Each of the Directors elected (under the DCP) to defer 100% of their director fees for 2020, 2021 and 2022.

Subsequent Business Events

Termination of Purchase Agreements.

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.

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.

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 1,500 square feet of retail space.

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

Leasing Activity .

Subsequent to December 31, 2020, the Company signed one new lease and four lease extensions comprising approximately 6,000 square feet, $82,000 in annual revenue and $149,000 in total lease commitments.

Credit Facility.

The Company amended and extended the working capital line which included extending the conversion date of the Interest-Only Phase to the earlier of May 20, 2021 or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of May 20, 2028 or 84 months after conversion to a permanent loan (the “Permanent Phase”).

On February 22, 2021, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”) amended its line to remove the contingency that required signed purchase and sale agreements on Cortlandt Manor to be able to draw on the line.

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.

Board of Directors.

On March 26, 2022, Elliot Levine notified the Company that in connection with the combination of Levine & Seltzer LLP, of which Mr.

Levine is a partner, and Weaver and Tidwell, LLP, Mr.

Levine agreed to resign from the board of directors of any U.S.

public company on which he serves, and that accordingly he intended to resign from the Board of Directors of Gyrodyne. 

On March 27, 2022, the Board of Directors agreed to reduce the number of seats on the Board from six to five, subject to and effective upon receiving formal confirmation from Mr.

Levine of his resignation from the Board. 

On March 29, 2022, Mr.

Levine delivered written confirmation to the Company that he has resigned from the Board, effective March 28, 2022.

Levine’s decision to resign from the Board was not the result of any disagreement with the Company.

Leasing Activity . 

Subsequent to December 31, 2021, the Company signed one new lease and three lease extensions comprising approximately 11,000 square feet, $126,000 in annual revenue and $572,000 in total lease commitments. 

As of December 31, 2021 and 2020 we had 4 employees.

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We electronically file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, and proxy statements, with the SEC.

You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C.

20549, or you may obtain information by calling the SEC at 1-800-SEC-0330.

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We make available, free of charge, on or through the Investor Relations section of our website, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as prospectuses and Proxy Statements, as soon as reasonably practicable following the electronic filing of such material with the U.S.

Securities and Exchange Commission (“SEC”).

Also available on our website is our Audit Committee Charter and our Code of Business Conduct and Ethics governing our directors, officers and employees.

In addition, our web site includes information with respect to purchases and sales of securities by our officers, directors as well as any non-GAAP financial disclosures (defined by SEC’s Regulation G) that we may make public orally, or in writing.

We are not incorporating our website or any information from the website into this Form 10-K.

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631-584-5400.

Principal Executive Offices – Our principal executive office is located at One Flowerfield, Suite 24, St James, New York 11780.

Principal Executive Offices –

Our principal executive office is located at One Flowerfield, Suite 24, St James, New York 11780.

Our telephone number is 631-584-5400.

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-K

Item 1. Business