GYRO

Business Context and Reporting Period

Company: Gyrodyne, LLC (GYRO)

Reporting Period: Quarter ended March 31, 2025

Business Model: Gyrodyne is a limited liability company operating on a liquidation basis of accounting. Its strategy involves managing two remaining real estate properties (Flowerfield in Suffolk County and Cortlandt Manor in Westchester County, NY), pursuing entitlements to maximize development flexibility, and selling the assets to fund debt repayment and shareholder distributions. The company intends to dissolve upon the completion of asset dispositions.

Key Financial Metrics

Note: The company does not report traditional revenue or profit margins due to the liquidation basis of accounting. Instead, it reports changes in net assets based on remeasurements of assets and liabilities.

Material Changes vs. Prior Period

• Net Asset Increase: Net assets increased by $216,077 (0.7%) from the prior quarter.
• Drivers of Change: The increase was primarily driven by:
  • Approximately $181,000 in increased rental revenue.
  • Approximately $16,000 in savings on rental expenses.
  • Approximately $67,000 in savings on general and administrative fees.
  • Offset by approximately $50,000 in additional land development fees.
• Cash Position: Cash decreased slightly by $111,953, primarily due to operating expenditures and debt service.
• Liabilities: Total liabilities decreased by $576,695, largely due to a reduction in the estimated liquidation and operating costs liability.

Guidance, Outlook, and Risks

Outlook and Timeline

Management anticipates the liquidation process will culminate in 2026. The timeline is contingent on securing final regulatory approvals and resolving ongoing litigation.

• Flowerfield: Subdivision approval is expected in Q3 2025, pending the resolution of the Article 78 Proceeding.
• Cortlandt Manor: Subdivision approval is expected in mid-2026.
• Marketing: JLL Capital Markets is conducting a national marketing campaign to identify buyers for the properties.

Material Risks and Contingencies

• Article 78 Proceeding: A special proceeding was filed by the Village of Head of the Harbor to annul the preliminary subdivision approval for Flowerfield. While the Supreme Court dismissed the petition in October 2024, petitioners have appealed. The company remains confident in its defense but notes the appeal could delay sales.
• Entitlement Costs: The company estimates incurring an additional $1.21 million in land entitlement costs through 2026. There is no assurance these costs will result in property value increases exceeding the expenses.
• Macroeconomic Factors: Elevated interest rates and inflation continue to impact commercial real estate markets and the availability of capital for prospective buyers.
• 2015 Settlement Stipulation: The company is bound by a 2015 class action settlement requiring property sales to be at or above 2014 appraised values. As of March 31, 2025, the value of remaining properties exceeds these thresholds.

Investor Verification Checklist

• Liquidation Timeline: Verify if the 2026 target for asset sales and dissolution remains realistic given the ongoing Article 78 appeal.
• Entitlement ROI: Assess whether the projected $1.21 million in future entitlement costs is likely to generate sufficient value uplift to justify the expense.
• Debt Maturity: Review the maturity schedule of the $11.1 million in loans payable and the company's ability to refinance or extend terms prior to asset sales.
• Legal Status: Monitor the status of the Article 78 appeal and any new motions filed by petitioners that could delay the Flowerfield sale.
• Valuation Assumptions: Scrutinize the Level 3 inputs used to value the real estate assets, as actual sale prices may differ materially from the estimated net realizable value.