What changed in this filing

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Item 1. Business

2025-03-28 compared with 2024-03-29 · 95 added, 155 removed, 281 unchanged (47% of the section changed)

2 unchanged sentences

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 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, 2023 includes some, but not all of the potential value impact that may result from such value enhancement efforts.

The Board and Management believe 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, 2024 and December 31, 2023 includes some, but not all of the potential value impact that may result from such value enhancement efforts.

There can be no assurance that our value enhancement efforts will result in property value increases that exceed the costs we incur in such efforts, or even any increase at all.

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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 entered into in connection with the class action lawsuit (See Item 3 – Legal Proceedings) settled in 2015 and satisfy our remaining liabilities and obligations.

Under Gyrodyne’s Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”), such dissolution would occur upon an election to dissolve the Company by the Board that is approved by the vote of holders of a majority of Gyrodyne common shares or, in the Board’s sole discretion and without any separate approval by the holders of 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.

The actual nature, amount and timing of all distributions will be determined by Gyrodyne’s Board in its sole discretion and will depend in part upon the Company’s ability to convert our remaining assets into cash in compliance with our obligations under the Stipulation entered into in connection with a class action lawsuit settled in 2015 and satisfy our remaining liabilities and obligations.

Under Gyrodyne’s Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”), such dissolution may be effected upon an election to dissolve the Company by the Board that is approved by the vote of holders of a majority of Gyrodyne common shares or, in the Board’s sole discretion and without any separate approval by the holders of 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.

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

ensuring sufficient capital 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;

ensuring sufficient capital to operate 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;

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 to provide purchasers with increased development flexibility, and by enhancing the value of our leases.

Gyrodyne’s corporate 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, and then selling our properties in an orderly manner at higher values.

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

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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.

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 March 30, 2022, the Town of Smithtown Planning Board (the “Planning Board”) voted four to zero with one abstention to grant 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 (collectively, the “Petitioners”) commenced a special proceeding under Article 78 of New York’s Civil Practice Law & Rules (the “Article 78 Proceeding”) against the Town of Smithtown and certain other parties, including Gyrodyne, seeking to annul the Planning Board’s determinations relating to the Flowerfield Subdivision Application.

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Specifically, the Order (i) denied the Motions as to three individual Petitioners and the St.

James-Head of the Harbor Neighborhood Preservation Coalition, Inc., (ii) granted the Motions as to the remaining twenty (20) individual Petitioners and the Village of Head of the Harbor, (iii) denied the branch of Gyrodyne’s motion alleging that Petitioners failed to state a claim, and (iv) requires Gyrodyne to serve an answer within twenty (20) days of service of the Order.

The parties will submit their respective briefs on the merits of the remaining Petitioners’ contentions after which we believe the Court will render a decision.

The Article 78 Proceeding could take an additional six months or more for a decision given the impact the pandemic has had on the court system with additional time needed for an appeal, if one is filed.

Nevertheless, Gyrodyne 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 2025, although there can be no assurance that Gyrodyne 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 for the undeveloped portion of Flowerfield (the developed portion, situated on two separate lots may 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 not 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.

On October 11, 2024, the Supreme Court of the State of New York issued a ruling in favor of the Company dismissing the Article 78 petition in its entirety.

On October 28, 2024, the Company received a notice of appeal filed by the petitioners in this proceeding seeking to appeal the court’s dismissal of the Article 78 petition, citing as grounds for appeal “whether the court erred in denying the petition and dismissed the Article 78 proceeding, and any and all other issues which may arise upon further review of the record on appeal”.

On November 12, 2024, the petitioners filed a notice of motion to renew and reargue, seeking to have the court direct the respondentsvto undertake a supplemental environmental impact statement to address retaining of storm water at the property being developed in light of a recent storm, and to annul the resolution approving the preliminary site plan.

On March 17, 2025, the Supreme Court of the State of New York, Suffolk County issued an order denying the appellants motion to stay enforcement of the order, pending hearing and determination of appeal.

On March 21, 2025, the Supreme Court of the State of New York, Suffolk County issued an order denying the Petitioners motion to renew and reargue.

Pleadings filed in the Article 78 Proceeding may be accessed through a link (and related instructions) to the New York State Unified Court System which appears on the Company’s website at https://www.gyrodyne.com.

An Article 78 Proceeding could take up to two years or more to run its course given the likelihood of appeals and other motions.

Nevertheless, Gyrodyne remains confident in its defense of the appeal and the motion to renew and reargue.

Due to the anticipated time it may take for the appeal and any other motions in the Article 78 Proceeding to be finally resolved.

Gyrodyne believes that the process of negotiating purchase agreements, securing final subdivision approval and final unappealable site plan approval and consummating the sale of our properties could extend into 2026, although there can be no assurance that Gyrodyne and the Town of Smithtown will be successful in the defense of the appeal and any other motions or that other factors beyond our control will not necessitate a further extension of the timeline.

The developed portion of Flowerfield, situated on two separate lots, may be sold together or separately upon the resolution of the Article 78 Proceeding and the filing of the final subdivision map without site plan approval.

The estimated timeline assumes that Flowerfield is not sold until the culmination of the Article 78 Proceeding.

Although Gyrodyne believes that selling individual lots will maximize value, it is also pursuing prospective purchasers who may be willing to purchase all of Flowerfield as an undivided parcel for terms that Gyrodyne finds more attractive from a timing and value perspective and which may allow for a sale before 2026.

On March 20, 2023, the Town of Cortlandt Town Board adopted the SEQRA findings statement and approved local law establishing the Medical Oriented Zoning District (the “MOD”) which includes Gyrodyne’s Cortlandt Manor property.

Pursuant to the adopted MOD, Gyrodyne received designation for 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 use (lot lines and their respective density could change until formal subdivision occurs).

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.

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

Nevertheless, we will continue to market the properties and, although there can be no assurances, the Company believes subdivision approval will be received in mid-2025 for Flowerfield, and could be received for Cortlandt Manor in mid-2026, contingent on the timing for entering contracts (which we anticipate will include closing terms conditioned upon receiving subdivision (if requested) and site plan approval which the Company believes can be pursued simultaneously rather than sequentially).

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 2025.

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, including without limitation the Article 78 Proceeding and delays in securing final regulatory approvals caused by the ongoing backlog of land use applications, government labor shortages and the pandemic.

Consequently, there can be no assurance that the Company will be able to meet our formal stated deadline of December 2025.

Assuming the process of seeking entitlements and selling assets is completed by December 31, 2025 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, 2025 of approximately $30.72 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 $19.51 per share based on Gyrodyne having 1,574,308 common shares outstanding (inclusive of the issuance of shares and net proceeds from the Rights Offering, the December 31, 2023 estimated net assets in liquidation would be $16.12 per share based on 2,199,308 shares outstanding – See Subsequent Business Events -Rights Offering ).

These estimated distributions are based on values as of December 31, 2023 and include some but not all of the potential value that may be derived from the entitlement efforts.

The Company believes that standard market terms for real property transactions in both the Town of 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 in 2026.

Consequently, there can be no assurance that the Company will be able to meet our formal stated deadline of 2026.

Assuming the process of seeking entitlements and selling assets is completed in 2026 and giving effect to the estimated cash flows from the operation of our existing properties, we expect that Gyrodyne will have a cash balance of approximately $30.6 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 $13.91 per share based on Gyrodyne having 2,199,308 common shares outstanding.

These estimated distributions are based on values and outstanding share numbers effective as of December 31, 2024 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, if they exceed estimates, will reduce the estimated 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 supplemented by the net proceeds received in the rights offering which closed on March 7, 2024) and amounts received on the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims (including contingent liabilities).

Uncertainties as to the precise value of our non-cash assets 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, but not limited to, 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, if exceeding our estimates, will reduce the amount of assets available for ultimate distribution to shareholders, and, while a precise estimate of those expenses cannot currently be made, management and our Board believe that available cash and amounts received on the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims (including contingent liabilities).

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.

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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 recommendation of a Medical Oriented District (“MOD”).

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 recommendation of a MOD.

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.

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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.

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

While the MOD zoning had not been formally adopted, Gyrodyne was 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.

The existing medical office space 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:

The alternate mixed-use plan included the following:

SUBDIVISION LOT #

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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 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 initially determined must be processed as a nine-lot subdivision in response to certain comments received from the planning department.

The final accepted FEIS (in 2021) 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 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.

On March 30, 2022, the Smithtown Planning Board voted four to zero with one abstention 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 July 7, 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.

Technical comments on the Final Subdivision Plans received from the Suffolk County Department of Health Services and Suffolk County Department of Public Works on March 10, 2025, New York State Department of Environmental Conservation Wetland Permit issued on October 28, 2024, and New York State Department of Transportation plans are being submitted for NYS 25A-Stony Brook Road in March 2025 (no prior design comments) and prepared for resubmission to each agency for their final review and approvals.

Final Subdivision approval is expected in mid-2025.

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

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 healthcare 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.

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Our tenants may also face significant limits on the scope of services reimbursed and on reimbursement rates and fees, all of which could impact their ability to pay rent or other obligations to us.

Referral sources, including physicians and managed care organizations, may change their lists of hospitals or physicians to which they refer patients.

Competition and loss of referrals could adversely affect our tenants’ ability to make rental payments, which could adversely affect our rental revenues.

Any reduction in rental revenues resulting from the inability of our medical office buildings and our tenants to compete successfully may have an adverse effect on our business, financial condition and results of operations and our ability to make distributions to our shareholders.

The Company owns properties in St.

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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, 2023, there were 32 tenants, including one tenant under month-to-month commitments, comprising 39 leases.

As of December 31, 2024, there were 30 tenants, including four tenants under month-to-month commitments, comprising 35 leases.

The annual base rent at Flowerfield based on the rates in effect as of December 2024 is approximately $1,637,000 which included month-to-month annualized base rent of approximately $138,000 on 9,824 square feet.

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The property consists of five office buildings.

As of December 31, 2023, there were three tenants, comprising four leases.

As of December 31, 2024, there were two tenants, comprising two leases.

The annual base rent based on the rates in effect as of December 2024, is approximately $803,000.

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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 residual impact of the COVID-19 pandemic on the Company’s business, operations, cash flows and financial condition for the year ended December 31, 2024 and future periods.

The COVID-19 pandemic has adversely impacted, and may continue to impact adversely, the timeliness of local government in granting required approvals.

The COVID-19 pandemic has also adversely impacted, and may continue to impact adversely, the timeliness of local government in granting required approvals, as state and local staff charged with processing our subdivision applications all postponed activity due to work-from-home transitions.

Accordingly, COVID-19 has caused, and may 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 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.

Concurrently, the war between Russia and Ukraine increased uncertainty during 2022 and 2023 with such uncertainty being exacerbated by the war between Israel and Hamas in Gaza and a threat of a broader conflict.

Inflation has caused an increase in consumer prices, thereby reducing purchasing power and elevating the risks of a recession.

Due to increased inflation, the U.S.

Federal Reserve raised the federal funds rate a total of seven times during 2022 and four times in 2023.

In response, market interest rates have increased significantly during this time.

At the same time, the labor market remains historically tight, and companies continue to look to add employees, pushing unemployment lower.

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 residual effects of the COVID-19 pandemic and the extent to which interest rate hikes to combat inflation and the banking crisis have a recessionary effect.

The pandemic has also 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, although medical office has faced less of a challenge from work-from-home shifts.

We are affected by the fiscal and monetary policies of the United States Government and its agencies, including the policies of the Federal Reserve, which regulates the supply of money and credit in the United States.

The combination of elevated interest rates and persistent inflation (or the perception that any of these events may continue) have contributed to continued weakness in commercial real estate markets, including in those real estate markets in which we operate.

Changes in fiscal and monetary policies are beyond our control and are difficult to predict.

Although the Federal Reserve decreased the federal funds rate multiple times in 2024, the rate continues to be elevated and there can be no assurance that the rate will continue to decrease or that it will not be increased in 2025 and beyond.

While lower market rates and increased capital markets liquidity supports commercial real estate property transactions and values, regulated lending institutions are adjusting their business models to increase capital requirements for direct loans to real estate and thus continue to be constrained in providing capital for commercial real estate properties.

Changes in the federal funds rate as well as the other policies of the Federal Reserve affect interest rates, which have a significant impact on our financial condition.

The extent of the continuing 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 residual effects of the COVID-19 pandemic and the extent to which persistently high interest rates continue to have an adverse impact on the real estate industry and a recessionary effect generally.

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 of proceeds and distributions from those sales.

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James and Cortlandt Manor, New York.

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.

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 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.

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Extending Lease Maturities .

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

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.

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.

We seek to extend leases in advance of expirations to achieve high occupancy levels.

Financing Strategy

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The lender has the right, but not the obligation, to decline to extend the term of the 2021 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.

Following the closure of Signature Bank on March 12, 2023 by the New York State Department of Financial Services and the appointment of the Federal Deposit Insurance Corporation (the “FDIC”) as receiver, the FDIC transferred the 2021 Mortgage Loan on December 14, 2023 to SIG CRE 2023 Venture LLC, which continues to be the holder of the 2021 Mortgage Loan.

See, Item 7A, Quantitative and Qualitative Disclosures About Material Risk .

There are no undrawn amounts under the Mortgage Loan.

The 2021 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;

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The 2023 Mortgage Loan is secured by a first mortgage in the amount of $1,500,000 on the interests of GSD Cortlandt in 1989 Crompond Road and 1987 Crompond Road in Cortlandt Manor, New York, and the interests of Buttonwood in 206 Buttonwood Avenue and certain vacant land off of Buttonwood Road in Cortlandt Manor, New York.

On February 1, 2024, an agreement was signed with one vendor who had previously agreed to defer 50% of payment until the closing of the first property lot sale that is the subject of either the Flowerfield or Cortlandt Manor subdivision.

The agreement called for a $200,000 payment on outstanding invoices plus an interest payment on such invoices, interest to accrue monthly on the outstanding balance, agreement to pay all future invoices in full, and conversion of the remaining outstanding balance of $477,829 (balance due after the $200,000 payment) to a loan payable within 15 days of the sale of one of the Company’s properties.

The loan accrued interest at 0.75% per month through 2024 and will accrue interest at 1.0% per month starting January 2025.

Environmental Matters

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For the year ended December 31, 2023, rental income from the Company’s three largest tenants represented approximately 25%, 21% and 9%, respectively, of total rental income.

The three largest tenants by revenue as of December 31, 2022, 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.

The three largest tenants by revenue as of December 31, 2023, consist of a medical tenant in the Cortlandt Manor Medical Center, a New York State Agency located in the industrial park, and an athletics facility in the industrial park.

Fiscal Year 2024 Transaction Summary

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Leasing Activity.

During 2023, the Company signed one new lease comprising 994 square feet and annual/total base rent of approximately $11,000, excluding tenant reimbursements.

There were three terminations comprising 1,500 square feet and approximately $99,000 in annual revenue, excluding tenant reimbursements.

During 2024, the Company signed two new leases comprising 6,289 square feet, annual base rent of approximately $88,600, excluding tenant reimbursements and total commitments of approximately $318,000.

There were eight terminations comprising 12,420 square feet and approximately $77,000 in annual revenue, excluding tenant reimbursements.

A total of 11 lease renewals were signed during 2024 comprising approximately 14,000 square feet, $239,000 in annual revenue and $477,000 in total commitments.

Additionally, there were four expansions comprising 2,334 square feet, annual revenues of approximately $40,000 and total commitments of approximately $185,000.

The Company agreed to approximately $16,000 in lease incentives/concessions in the form of a rent abatement.

Additionally, there was one expansion comprising 1,129 square feet, annual revenues/total commitments of approximately $11,300.

The Company agreed to approximately $128,000 in lease incentives/concessions in the form of a rent abatement (in exchange for a tenant funded buildout of equivalent value).

Commissions paid during the year ended 2024 were approximately $30,500.

Board of Directors.

On July 28, 2023, Philip F.

Palmedo, a director of the Company and its predecessor Gyrodyne Company of America, Inc.

since 1996, retired from the Board.

Also on July 28, 2023, the Board appointed Jan H.

Loeb to the Board to fill the vacancy created by Mr.

Palmedo’s resignation, and to serve in the class of directors up for election at the 2023 Annual Meeting.

Loeb was appointed to the Board pursuant to the terms of a cooperation agreement dated July 26, 2023 among Leap Tide Capital Management LLC, Jan Loeb and the Company.

At the Company’s Annual Meeting held on October 12, 2023, Mr.

Loeb was elected by the shareholders to serve a three-year term.

Retention Bonus Plan.

As a result of feedback we received from shareholders during our shareholder listening tours in 2022 and 2023, the Company evaluated various possible changes to the Retention Bonus Plan (the “Plan”) to better align the interests of the Plan participants with those of the shareholders.

Effective September 5, 2023, the Board of Directors approved Amendment No.

5 (“Amendment No.

5”) to the Plan.

Amendment No.

5 is intended to create better alignment of interests between Plan participants and all shareholders.

The primary features of Amendment No.

5 are as follows:

$1,137,108 forfeited by retired directors returned to the Company :

Prior to Amendment No.

5, the Plan provided that Bonus Plan benefits forfeited by retired director participants would be re-allocated among the remaining director participants pro rata.

Nevertheless, under Amendment No.

5, such forfeited Bonus Plan benefits in the estimated amount of $1,137,108 have been removed from the pool and returned to the Company.

Waiver of Plan benefits by directors :

Director participants agreed to waive all Plan benefits in exchange for 91,628 shares issuable under the Stock Plan (defined and described below), which received shareholder approval on October 12, 2023.

All benefits so waived by the director participants were deemed void and not reallocated to any other participants in the Plan.

Bonus rate on property sale proceeds was modified for employees to 4.12% on up to $50,985,000 of net proceeds (net of commissions) and 6.72% for incremental net sales above $50,985,000.

Delayed vesting :

An employee participant will only vest in Plan benefits triggered by property sales if he or she remains continuously employed through both the date of closing and the date of the Board’s irrevocable determination of a shareholder distribution;

if employment terminates by death, disability or voluntary termination following substantial reduction in compensation (assuming no “cause” grounds for involuntary termination), however, the employee participant remains entitled to benefits only with respect to any property sales occurring within three years and yielding an internal rate of return of at least 4% (IRR ceases to apply to periods beginning after the property is under contract)

Benefits generally not payable until shareholders paid :

Benefits are not payable until liquidating cash distributions are paid to shareholders, except that employee participants will receive early payments if the cumulative amounts credited to the bonus pool bookkeeping account for employee participants equals or exceeds $500,000.

Early sale incentive :

If any property is sold on or before June 30, 2024, the bonus pool for employee participants will be funded with an additional 1% of net sale price.

Removal of price floor :

The price floor hurdle for the sale of properties was removed for all participants to eliminate the perception of any perverse incentive to avoid particular property sales that may not exceed the floor but which otherwise may be in the best interests of shareholders.

The bonus pool is distributable in the following proportions to the named participants in the bonus plan for so long as they are directors or employees of the Company:

Bonus Pool Percentage

Board Members/Employees

Prior to Amend.

Amendment No.

Board Members(a)

Board Discretionary Amount

Chief Executive Officer

Chief Operations Officer

Officer Discretionary Amount (c)

Other Employees

15% (18.75%) for the Chairman and 10% (12.5%) for each of the other three remaining participant directors.

Jan Loeb (appointed to the Board on July 28, 2023) is not a participant in the Plan.

Amount forfeited upon departure of two directors, which would have been reallocated to the remaining directors pursuant to the Plan.

The officer discretionary amount will be allocated to the officers within the discretion of the Board.

Restricted Stock Award Plan.

The Gyrodyne, LLC Restricted Stock Award Plan (the “Stock Plan”) was approved by the Board on September 5, 2023 and by the shareholders of the Company on October 12, 2023 and became effective on October 12, 2023.

Under the Stock Plan, the Company issued to the former director participants in the Retention Bonus Plan (the “Bonus Plan”), in exchange for the waiver and forfeiture of their Bonus Plan benefits, an aggregate of 91,628 Gyrodyne shares, subject to vesting, effective November 14, 2023.

The primary features of the Stock Plan are as follows:

The purpose of the adoption of the Stock Plan was to incentivize the former director participants in the Bonus Plan to exchange their interests in the Bonus Plan for shares in the Company issuable under the Stock Plan, which would allow for compensation plan separation between directors and employees and better alignment of interests between director participants and shareholders.

Directors of the Company who were participants in the Bonus Plan were eligible to receive grants under the Stock Plan.

The eligible directors were Paul Lamb, Ronald Macklin, Nader Salour and Richard Smith.

All such individuals agreed to exchange their Bonus Plan benefits for shares under the Stock Plan, subject to shareholder approval of the Stock Plan.

Jan Loeb was not a participant in the Bonus Plan and was not eligible to participate in the Stock Plan.

Maximum Shares:

The total number of shares that were authorized for issuance under the Stock Plan at the effective time was 91,628 shares, or approximately 5.8% of the common shares outstanding at the effective time of the Stock Plan after giving effect to the issuance of the Stock Plan shares.

All 91,628 Stock Plan shares were issued effective November 14, 2023 to Stock Plan participants.

There are no remaining shares issuable in the Stock Plan.

Administration:

Pursuant to the terms of the Stock Plan, the Stock Plan is administered and interpreted by a committee consisting of either (i) the Board, or (ii) the President and at least two other directors appointed by the Board.

The committee has full power and authority to administer and interpret the Stock Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Stock Plan and for the conduct of its business as it deems necessary or advisable, to waive requirements relating to formalities or other matters that do not modify the substance of rights of participants or constitute a material amendment of the Stock Plan, to correct any defect or supply any omission of the Stock Plan or any grant document and to reconcile any inconsistencies in the Stock Plan or any grant document.

Restricted Stock:

Incentives under the Stock Plan consisted of grants of restricted stock.

No shares issued under the Stock Plan, or any interest therein, are transferrable by a participant, whether voluntarily or involuntarily, unless and until a liquidating distribution is made to the shareholders, except by will or by the laws of descent or distribution, and may not be subject to any voluntary or involuntary pledge, assignment, alienation, attachment, or similar encumbrance or transfer.

All shares issued in connection with a grant are subject to the terms, conditions, and restrictions set forth in the Company’s articles of organization, amended and restated limited liability company agreement, or other governing documents of the Company, as amended.

Vesting of shares issued under the Stock Plan occurs (i) in equal one-third tranches on each of the first three anniversaries of the grant date, and (ii) at such time as a liquidating distribution is made to the shareholders of the Company, subject to acceleration upon a liquidating distribution.

Unvested Stock Plan shares will be forfeited by a participant if such participant is no longer serving on the Board at or prior to such time that liquidating distributions are paid to the shareholders other than as a result of death, disability or failure to be reelected.

The Board may amend, suspend or terminate the Stock Plan at any time, in its discretion, except that shareholder approval is required for any amendment that increases the number of shares available for grant, accelerates vesting or results in a material increase in benefits or a change in eligibility requirements.

The shares under the Stock Plan were distributed as follows in lieu of the director portion of the Bonus Plan of $2,702,285:

Shares of Restricted Stock

Ronald Macklin

Richard Smith

Deferred Compensation Plan

On December 6, 2019, the Company’s Board of Directors (the “Board”) approved the Gyrodyne, LLC Nonqualified Deferred Compensation Plan (the “DCP”) 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).

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.

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.

With the exception of Jan Loeb, appointed to the Board in July 2023, each of the Directors elected (under the DCP) to defer 100% of their director fees for 2020, 2021, 2022, 2023 and 2024.

Subsequent Business Events

Rights Offering .

The Company filed a registration statement on Form S-1 with the Securities and Exchange Commission (the “Commission”) on December 29, 2023 with respect to a proposed rights offering (the “Rights Offering”) for the Company to distribute to holders of Gyrodyne’s common shares on the record date of January 29, 2024 one non-transferable subscription right for each five shares held.

The Company completed a rights offering (the “Rights Offering”) on March 7, 2024 pursuant to which we generated net proceeds of approximately $4,400,000.

In connection with the Rights Offering, the Company filed a registration statement on Form S-1 with the Securities and Exchange Commission (the “Commission”) on December 29, 2023 to distribute to holders of Gyrodyne’s common shares on the record date of January 29, 2024 one non-transferable subscription right for each five shares held.

Each whole subscription right gave the shareholders the opportunity to purchase two of the Company’s common shares for $8.00 per share, or 625,000 shares in the aggregate.

2 unchanged sentences

The Commission declared the registration statement effective on February 2, 2024 and the Company commenced the Rights Offering on February 6, 2024.

The Rights Offering closed on March 7, 2024 and the Company announced on March 11, 2024 that it received subscriptions for approximately 1,031,640 shares, greatly exceeding the maximum shares offered of 625,000.

The Company announced on March 11, 2024 that it received subscriptions for approximately 1,031,640 shares, greatly exceeding the maximum shares offered of 625,000.

Shareholders were allocated 100% of their basic subscriptions.

2 unchanged sentences

The Company expects to use the net proceeds received from the Rights Offering to complete the pursuit of entitlements on the Company’s Flowerfield and Cortlandt Manor properties, for litigation fees and expenses in the Article 78 proceeding, for property purchase agreement negotiation and enforcement, for necessary capital improvements in the Company’s real estate portfolio, and for general working capital.

Inclusive of the issuance of shares and net proceeds from the Rights Offering, the December 31, 2023 estimated net assets in liquidation would be $35,463,133 or $16.12 per share based on 2,199,308 shares outstanding (current shares outstanding of 1,574,308 plus the Rights Offering shares of 625,000).

Broker agreement.

On January 5, 2024, Gyrodyne retained JLL Capital Markets to conduct a national marketing campaign to sell our Flowerfield and Cortlandt Manor properties with all approved entitlements with the goal of generating maximum net asset value for Gyrodyne’s shareholders.

Loan payable.

1 unchanged sentence

The agreement called for a $200,000 payment on outstanding invoices, an interest payment, agreement to pay all future invoices in full and the remaining outstanding balance of $477,829 was converted to a loan payable within 15 days of the sale of one of the Company’s properties.

The loan will accrue interest at 0.75% per month through 2024 and 1.0% per month starting January 2025.

The loan accrued interest at 0.75% per month through 2024 and will accrue interest at 1.0% per month starting January 2025.

Deferred Compensation Plan

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).

All DCP benefits will be paid in a single lump sum cash payment on December 15, 2031, as amended, 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.

With the exception of Jan Loeb, appointed to the Board in July 2023, each of the Directors elected (under the DCP) to defer 100% of their director fees for 2020, 2021, 2022, 2023, 2024 and 2025.

Subsequent Business Events

Leasing Activity .

Subsequent to December 31, 2023, the Company signed three lease extensions comprising approximately 1,700 square feet, $25,000 in annual revenue and $49,000 in total lease commitments.

There were three terminations comprising approximately 4,000 square feet and $32,000 in annual revenue.

As of December 31, 2023 and 2022 we had 4 employees.

Subsequent to December 31, 2024, the Company signed two lease extensions comprising approximately 1,100 square feet and $16,000 in annual revenue and total lease commitments.

Additionally, the Company signed two expansions comprising approximately 1,250 square feet, $19,000 in annual revenue and $70,000 in total lease commitments.

There were no terminations.

As of December 31, 2024 and 2023 we had four employees which was reduced to three effective February 28, 2025.

Industry Segments

We operate in one segment;

the ownership and management of industrial and medical office buildings.

The Company manages this strategy on an aggregated, single segment basis for purposes of assessing performance and making decisions (inclusive of capital allocation, leasing, entitlements and sales).

Therefore, the Company has only one reporting segment.

As reported in footnote two the Company is on a liquidation basis of accounting.

The detailed information regularly provided to the chief operating decision maker (“CODM”), President and CEO, is reported in footnote four in detail supporting the estimated liquidation and operating costs net of estimated receipts.

This information allows the CODM to manage and forecast any impact the operations have on the estimated real estate value and in the aggregate allows the CODM to calculate estimated distributions.

The net assets as of December 31, 2024 ($30,596,313) and December 31, 2023 ($30,721,034) results in estimated distributions of approximately $13.91 and $19.51 per common share, respectively, based on 2,199,308 and 1,574,308 shares outstanding, respectively.

Available Information

16 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