What changed in this filing

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Item 1. Business

2023-03-30 compared with 2022-03-30 · 175 added, 172 removed, 214 unchanged (62% 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.

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 entitlements 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 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.

Gyrodyne’s corporate strategy is to enhance the value of Flowerfield and Cortlandt Manor by pursuing entitlement opportunities to provide purchasers increased development flexibility, and by enhancing the value of our leases.

The Board believes the aforementioned strategy will increase the aggregate value for such properties as a whole.

The value of the real estate reported in the consolidated statement of net assets as of December 31, 2022 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.

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 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 with certainty the ultimate amount of proceeds that will actually be distributed to our shareholders or the timing of such payments.

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

Gyrodyne intends to dissolve after we complete the disposition of all of our real property assets, apply the proceeds of such dispositions first to settle any debts and claims, pending or otherwise, against Gyrodyne, and then pay liquidating distributions to holders of Gyrodyne common shares.

The process of seeking entitlements 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.

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.

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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, 2021, the Company owns the following properties:

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

We remain committed to (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.

As of December 31, 2022, the Company owns the following properties:

Cortlandt Manor:

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James, New York, including a 14-acre multi-tenanted industrial park comprising 135,000 rentable square feet.

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.

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

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.

Our corporate strategy is to pursue entitlements on our two remaining properties so that they can be sold to one or more developers with increased development flexibility and thus maximize value and distributions to our shareholders.

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

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

To accomplish our goal of maximizing asset values and distributions to our shareholders, 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;

managing the strategic sale of real estate assets;

pursuing the entitlement efforts of the Flowerfield and Cortlandt Manor properties, to maximize value;

pursuing the entitlement efforts of the Flowerfield and Cortlandt Manor properties, to increase development flexibility;

focusing use of capital by the Company to preserve or improve the market value of the real estate portfolio;

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 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.

Gyrodyne’s dual strategy is to enhance the value of Flowerfield and Cortlandt Manor by pursuing entitlement opportunities to provide purchasers with increased development flexibility, and by enhancing the value of our leases.

The Company believes the aforementioned dual strategy will increase the aggregate value for such properties as a whole.

The value of the real estate reported in the consolidated statement of net assets as of December 31, 2022 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.

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

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

Sales of properties by Gyrodyne could take the form of individual sales of assets, sales of groups of assets, a single sale of all or substantially all of the assets or some other form of sale.

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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.

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.

Uncertainties as to the precise value of our non-cash assets, which include some but not all of the estimated potential additional value from the costs incurred to pursue the maximum value on Flowerfield and Cortlandt Manor through the entitlement efforts (including the pursuit of special permits) and the ultimate amount of our liabilities make it impracticable to predict the aggregate net value ultimately distributable to shareholders in a liquidation.

On March 30, 2022, the Town of Smithtown Planning Board (the “Planning Board”) unanimously granted Gyrodyne’s application for preliminary approval to divide the Flowerfield property into eight lots, subject to certain conditions (the “Flowerfield Subdivision Application”).

On April 26, 2022, the Incorporated Village of Head of the Harbor and certain other parties commenced a special proceeding (the “Article 78 Proceeding”), against the Town of Smithtown and certain other parties, including the Company, seeking to annul the Planning Board’s determinations relating to the Flowerfield Subdivision Application.

The Article 78 Proceeding was commenced by the filing of a petition (the “Petition”) in the Supreme Court of the State of New York, Suffolk County, pursuant to Article 78 of New York’s Civil Practice Law and Rules (“Article 78”).

Specifically, the Petition seeks to annul the Planning Board’s (i) approval of a findings statement, pursuant to the State Environmental Quality Review Act (“SEQRA”), dated September 16, 2021, and adopted by the Planning Board on March 30, 2022, concerning the Flowerfield Subdivision Application, and (ii) preliminary approval on March 30, 2022, of the Flowerfield Subdivision Application.

The arguments made in the Petition are substantially similar to those made by opponents of the Flowerfield Subdivision Application during the SEQRA and subdivision process.

The Company and the Town of Smithtown are vigorously defending the Planning Board’s determinations against the Petition.

An Article 78 proceeding 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.

Nevertheless, the Company remains confident that the process of negotiating purchase agreements, securing final subdivision approval and final unappealable site plan approval and consummating the sale of our properties will culminate by year-end 2024, although there can be no assurance that the Company and the Town of Smithtown will be successful in the defense of the Planning Board’s determinations against the Petition or that other factors beyond our control (i.e., potential contract contingencies including site plan approval (excluding the existing industrial buildings situated on two separate lots which can be sold together or separately upon the resolution of the Article 78 Proceeding and the conclusion of the subdivision, without any site plan approvals)) will necessitate an extension of the timeline.

The Flowerfield subdivision will remain subject to the Article 78 Proceeding unless Gyrodyne and the Town of Smithtown prevail in their defense of the Planning Board’s determinations against the Petition. 

Nevertheless, the Company will continue its efforts to identify one or more purchasers for Flowerfield and execute purchase agreements, and it is unclear at this time what impact, if any, the Article 78 Proceeding will have on such efforts.

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

Nevertheless, we have begun the process of marketing the properties and, although there can be no assurances, the Company believes, for Flowerfield, subdivision approval will be received in the second half of 2023, and for Cortlandt Manor, contingent on the timing for entering contracts (which we anticipate will include closing terms conditioned upon receiving site plan approval), the subdivision and site plan approval could be received by the middle of 2024 and that we will generally be able to consummate the sale of the properties 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, as conditions to closing, final subdivision approval, final unappealable site plan approval and the resolution of the Article 78 Proceeding.

Based on the aforementioned factors, the Company believes the process of negotiating purchase agreements, securing final approvals and consummating the sale of our properties will culminate by year-end 2024.

The Company intends to aggressively market its properties and negotiate contracts in an effort to complete the process as soon as practicable 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.

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 $30.37 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 $20.48 per share based on Gyrodyne having 1,482,680 common shares outstanding.

These estimated distributions are based on values as of December 31, 2022 and include some but not all of the potential value that may be derived from the entitlement efforts.

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

Uncertainties as to the precise value of our non-cash assets, which include some but not all of the estimated potential additional value from the efforts to maximize value of Flowerfield and Cortlandt Manor and the ultimate amount of our liabilities make it impracticable to predict the aggregate net value ultimately distributable to shareholders in a liquidation.

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.

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).

Nevertheless, the Company is considering seeking supplemental funding in the form of a new credit facility, a pro-rata rights offering or other appropriate funding mechanism to fortify our cash position to ensure we are operating through a position of strength through the duration of the liquidation to negotiate and enforce purchase agreements and defend our property rights in the Article 78 proceeding and in any other such proceeding that may arise. 

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.

In the event our shareholders receive distributions from Gyrodyne and there are insufficient funds to pay any creditors who seek payment of claims against Gyrodyne, shareholders could be held liable for payments made to them and could be required to return all or a part of the distributions made to them.

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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.

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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.

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 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.

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Property Value Enhancement

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.

During the process of pursuing such entitlements, the Company may entertain offers from potential buyers who may be willing to pay prices for the properties that the Company finds more attractive from a timing or value perspective than values we believe may be reasonably achievable through completing the entitlement process ourselves.

The Company is pursuing entitlements to increase the development flexibility of its Flowerfield and Cortlandt Manor properties.

During the year ended December 31, 2022, the Company incurred approximately $315,500 of land entitlement costs (approximately $103,000 of which certain of the Company’s service vendors 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 $1.2 million in additional land entitlement costs (approximately $231,000 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 $360,000 in Cortlandt Manor and $840,000 in Flowerfield).

The Company is focusing its resources on positioning the properties to be sold with all entitlements to achieve increased development flexibility in the shortest period of time with the least amount of risk to the Company.

Because of the vagaries of the real estate market, however, 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.

During the process of pursuing such entitlements, the Company may entertain offers from potential buyers who may be willing to pay prices for the properties on an “as is basis”

that the Company finds more attractive from a timing or value perspective than values we believe may be reasonably achievable through completing the entitlement process ourselves.

Cortlandt Manor .

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

For approximately four years the Company along with its planner and engineers have been working closely with the Town to identify issues and solutions involved in creating the Plan and more specifically, the MOD.

For approximately eight years the Company along with its planner and engineers have been working closely with the Town to help plan the MOD, identify issues and solutions involved in creating the Plan and more specifically, the MOD.

On March 31, 2017, The Company filed an application with the Town to develop the Cortlandt Manor property, as follows:

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Medical Office Lot #2

The entitlement costs for the year ended December 31, 2021 associated with the ownership and development of this property were approximately $176,000.

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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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 alternate was reviewed for all categories of impacts in the SEQRA documentation similar to the primary proposal, and if approved as anticipated, would have allowed Gyrodyne the option to proceed with either program following MOD designation and subdivision.

The alternate was 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.

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.

under the 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 (other than site plan 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 issued in March 2020, 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 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.

The Town closed the public comment period on June 30, 2020 and proceeded to review the public comments and prepare the Final GEIS (“FGEIS”). 

The FGEIS 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). 

A Town Board work session was conducted March 7, 2022 for the primary purpose of having stakeholders present their current development programs for the benefit of the new Town Board members elected in November 2021.

Although not required by SEQRA, the Town Board conducted another public hearing on May 2, 2022 and closed the hearing that evening while leaving the public comment period open for twenty days.

The additional public comments are being reviewed and will require formal written responses by stakeholders including Gyrodyne.

The Cortlandt Manor Town Board held a public work session on October 24, 2022.

During late 2022, the Company’s management team, based on discussions with the Town of Cortlandt, amended its mixed-use campus to reflect the following:

SUBDIVISION LOT #

BUILDING SIZE/YIELD

Medical office Lot #1

Retail (Lot #1)

Medical office (inclusive of the existing operating building) Lot #2

*Lot lines could change until formal subdivision occurs.

On March 20, 2023, the Town of Cortlandt Town Board adopted the SEQRA Findings Statement and local law establishing the MOD designation for the property reflecting a total density of 154,000 square feet to be comprised of 150,000 square feet of medical use and 4,000 square feet of retail (lot lines and their respective density could change until formal subdivision occurs).

The Company does not plan on developing the property but rather positioning the property to be sold with the MOD designation necessary for increased development flexibility in the shortest period of time with the least amount of risk to the Company.

The Company believes, contingent on the timing for entering contracts (which we anticipate will include closing terms conditioned upon receiving site plan approval), the subdivision and site plan approval could be received by the middle of 2024.

The entitlement costs for the year ended December 31, 2022 associated with the ownership and development of this property were approximately $109,900.

Flowerfield .

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.

Following market research and related feasibility studies, we identified the entitlements that we believed 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”

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).

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.

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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.

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. 

The then current Town Planning Board Chairman communicated that a Positive Declaration would require up to one year to complete the SEQRA process.

The Town issued the Final Scope on July 7, 2018.

On August 15, 2018, the Company submitted the EIS to the Town of Smithtown Planning Department prior to the public hearing.

On August 15, 2018, the Company submitted the Draft EIS to the Town of Smithtown Planning Department prior to the public hearing.

The Company received comments on its EIS at the end of the third quarter of 2018 and submitted its response to the Town of Smithtown Planning Department on February 15, 2019.

In May 2019, the Company received additional comments on its EIS and submitted its responses to the Town on June 4, 2019.

On May 24, 2019, the Company received additional comments on its EIS and submitted its responses to the Town on June 4, 2019.

On July 3, 2019, the Company received additional comments on its EIS and submitted its response to the Town of Smithtown Planning Department on August 28, 2019.

On September 24, 2019, the Company received additional comments on its EIS and submitted its response to the Town of Smithtown Planning Department on September 25, 2019.

On September 24, 2019, the Company received additional comments on its EIS and submitted its response to the Town of Smithtown Planning Department on October 25, 2019.

The Town of Smithtown Planning Board as Lead Agency under SEQRA adopted a resolution accepting the DEIS as complete for public review on December 11, 2019 and announced a public comment period that closed on January 24, 2020.

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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.

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. 

Following the receipt of additional comments on May 29 and June 9, 2020, the Company filed its FEIS on July 24, 2020.

Following State DOT comments received July 31, 2020 and Town comments dated August 21, 2020, the Company filed a revised FEIS on September 16, 2020 and received new comments on October 16, 2020.

The Company filed a revised FEIS on October 29, 2020. 

Upon addressing final Town comments received December 4, 2020, the Company filed its Final FEIS on December 9, 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 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.

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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.

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).

On March 30, 2022, the Smithtown Planning Board voted unanimously to adopt the Findings Statement by resolution, closing SEQR and held a public hearing for the approval of the Preliminary Subdivision at the same meeting.

Approval of the Preliminary Subdivision was granted at that meeting.

Technical comments on the Final Subdivision Plans received from the Suffolk County Department of Health Services on January 26, 2023, Suffolk County Department of Public Works, New York State Department of Environmental Conservation on January 31, 2023, and New York State Department of Transportation on January 24, 2023 are being addressed and prepared for resubmission to each agency for their final review and approvals. 

The Final Subdivision application is being assembled for submission to the Town for review.

Final Subdivision approval is expected in the second half of 2023.

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 entitlement costs for the year ended December 31, 2022 associated with the ownership and development of this property consisting of architectural and engineering costs, legal expenses, economic analysis, soil management and surveys were approximately $205,600.

While we cannot predict the outcome of the subdivision application, we undertook to subdivide the Flowerfield property in a manner that we believed will result in increased development flexibility in the shortest amount of time and limited risk (i.e., 

included in our subdivision application is the separation of the existing industrial buildings  into two separate lots which upon resolution of the article 78 proceeding and final subdivision approval will allow us to sell the two lots together or separately, without any site plan approval). 

There can be no assurance, however, 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 pandemic has negatively impacted demand for office (including medical office) and hotel development “on spec”.

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

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.

Furthermore, the Company’s previous expansion of its leasing relationship with Stony Brook University (“SBU”), SBU Hospital and affiliates of SBU 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.

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

As of December 31, 2021, there were 36 tenants, including two tenants under month-to-month commitments, comprising 40 leases.

As of December 31, 2022, there were 34 tenants, including one tenant under month-to-month commitments, comprising 37 leases.

The annual base rent at Flowerfield based on the rates in effect as of December 2022 is approximately $1,706,000 which included month-to-month annualized base rent of approximately $35,500 on 3,550 square feet.

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Cortlandt Manor, New York .

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.

In Cortlandt Manor, New York, the Company owns 13.8 acres inclusive of the 31,421 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 proposed MOD. 

The property consists of five office buildings.

As of December 31, 2022, there were three tenants, comprising four leases.

The annual base rent based on the rates in effect as of December 2022, is approximately $908,000.

The property was 77% occupied as of December 31, 2021.

The property was 92% occupied as of December 31, 2022. 

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 has had a significant impact on the global economy, the U.S.

Unless otherwise specified, the statistical and other information regarding the Company’s properties and tenants are estimates based on information currently available to the Company, may 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, 2022 and future periods.

The spread of COVID-19 had, and to a lesser extent is expected to continue to have, 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”

Nearly every industry has been impacted directly or indirectly and has come under severe pressure due to numerous factors, including preventive 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”

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.

affected the operations of our tenants.

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

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Approximately 39% of the Company’s tenants (based on 2023 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 COVID-19 pandemic has adversely impacted, and is expected to continue to impact adversely, the timeliness of local government in granting required approvals.

Accordingly, COVID-19 has caused, and is expected to continue to cause, the completion of important stages in our efforts to secure entitlements to be delayed.

Until recently, the U.S economy had been growing as COVID-19 vaccinations were increasingly administered and many commercial activities returned to pre-pandemic practices and operations.

However, this favorable outlook could be affected materially by adverse developments related to the extent to which U.S Federal Reserve interest rate hikes in reaction to persistent inflationary pressures have led or could lead to a recession in the U.S and more recently to the crisis in the banking industry, including the second and third largest bank failures in U.S.

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:

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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.

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.

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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%.

As of December 31, 2022, directors have deferred $1,065,971 (inclusive of interest) and have committed to an additional $288,000, plus interest, through 2023.

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.

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.

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.

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.

The extent of the impact of these public health and macroeconomic risks 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 and other mitigation efforts, and the extent to which interest rate hikes to combat inflation and the banking crisis have a recessionary effect.

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.

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The Company competes in the leasing of medical, professional and general office space and engineering, manufacturing and warehouse space with a considerable number of other real estate companies, some of which may have greater marketing and financial resources than the Company and may generally be able to accept more risk than we can prudently manage, including risk with respect to creditworthiness of tenants.

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.

These entities and others may be prospective buyers, as well as competitors, with respect to both properties.

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.

With respect to properties presently owned by the Company, it competes with other owners of like properties for tenants.

In pursuit of our 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.

With respect to properties presently owned by the Company, we compete with other owners of like properties for tenants and purchasers.

Internal Growth and Effective Asset Management

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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 new 100,000 square foot medical office buildings’

We converted 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.

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Financing Strategy

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.

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

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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%. 

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% (per annum). 

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.

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 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.

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”). 

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.

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 of 3.85%, plus principal based on a 20-year amortization period.

The loan will mature on April 30, 2028.

The outstanding balance as of December 31, 2022 was $2,075,005.

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.

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 of 3.85%, plus principal based on a 20-year amortization period.

The loan will mature on May 20, 2028.

The outstanding balance as of December 31, 2022 was $2,838,477.

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

As of December 31, 2022, 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.

On September 15, 2021, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”), secured a $4.95 million term loan (the “Mortgage Loan”) with Signature Bank, the proceeds of which were 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 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. 

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.

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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 outstanding balance as of December 31, 2022 was $4,846,601.

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

On March 12, 2023, Signature Bank was closed by the New York State Department of Financial Services, which appointed the Federal Deposit Insurance Corporation (the “FDIC”) as receiver.

To protect depositors, the FDIC transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders.

On March 12, 2023, the Company had approximately $61,000 on deposit and approximately $97,000 in a real estate tax escrow account (escrow balance will not exceed approximately $109,000) at Signature Bank.

Based upon the announcement on March 12, 2023, from the U.S.

Department of the Treasury, the U.S.

Federal Reserve and the FDIC that all depositors of Signature Bank would have access to all of their deposits and the fact that the amount on deposit is below the $250,000 cap on FDIC deposit insurance, the Company expects to have access to all of its cash on deposit at Signature Bank.

As of March 12, 2023, there were no undrawn amounts under the Mortgage Loan.

Environmental Matters

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For the year ended December 31, 2022, rental income from the Company’s three largest tenants represented approximately 23%, 21% and 9%, 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, 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, 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.

The three largest tenants by revenue as of December 31, 2022 and 2021, consist of a New York State Agency located in the industrial park, a medical tenant in the Cortlandt Manor Medical Center and an athletics facility in the industrial park. 

Fiscal Year 2022 Transaction Summary

The following summarizes our significant transactions and other activity during the year ended December 31, 2022.

Disposition Activity.

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 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.

During 2022, the Company signed three new leases comprising 4,227 square feet, annual base rent of approximately $78,000 and total lease commitments of approximately $297,000, excluding tenant reimbursements, at an average rate per square foot of $18.40, which were offset by three terminations comprising 3,252 square feet, approximately $46,000 in annual revenue, excluding tenant reimbursements at an average rate per square foot of $14.23.

The net impact was an increase in annual lease commitments and rented square footage of approximately $32,000 and 975 square feet, respectively.

A total of 16 lease renewals were signed during 2022 comprising approximately 26,000 square feet, $337,000 in annual revenue and $739,000 in total commitments.

Additionally, there was one expansion comprising 2,056 square feet, annual revenues of approximately $24,700 and total commitments of approximately $123,000.

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

Commissions paid during the year ended 2022 were approximately $66,500.

Financing Activity.

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 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

Board of Directors.

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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.

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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. 

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 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% (per annum). 

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 December 13, 2019 and incorporated herein by reference.

Each of the Directors elected (under the DCP) to defer 100% of their director fees for 2020, 2021, 2022 and 2023.

Subsequent Business Events

Leasing Activity .

Subsequent to December 31, 2022, the Company signed four lease extensions comprising approximately 4,000 square feet, $66,000 in annual revenue and $75,000 in total lease commitments.

There was one termination (for use of a parking lot) comprising approximately $75,000 in annual revenue.

Closure of Financial Institutions.

On March 12, 2023, Signature Bank was closed by the New York State Department of Financial Services, which appointed the Federal Deposit Insurance Corporation (the “FDIC”) as receiver.

Based upon the announcement on March 12, 2023, from the U.S.

Department of the Treasury, the U.S.

As of March 12, 2023, there were no undrawn amounts under the Mortgage Loan.

As of December 31, 2022 and 2021 we had 4 employees.

21 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business