Gyrodyne, LLC — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter filing. Gyrodyne manages and is liquidating a portfolio of medical-office and industrial real estate in New York, pursuing entitlements before selling its remaining properties and distributing proceeds.
Financial position and operating metrics
The company reports on the liquidation basis of accounting. Its statements therefore emphasize estimated net assets and changes in net assets rather than conventional income-statement and cash-flow statements; the filing does not provide a clear conventional net income or profit margin figure.
| Metric | 2022 | 2021 |
|---|---|---|
| Rent and tenant reimbursements | $3.075 million | $2.656 million |
| Property operating costs | $1.812 million | $1.629 million |
| Net operating income (company-reported operating metric) | $1.263 million | $1.028 million |
| Cash and cash equivalents at year-end | $4.083 million | $5.671 million |
| Real estate held for sale, estimated net realizable value | $53.670 million | $42.545 million |
| Mortgage loans payable | $9.760 million | $10.029 million |
| Total liabilities | $27.521 million | $25.256 million |
| Net assets in liquidation | $30.367 million | $23.028 million |
| Estimated net assets per share | $20.48 | $15.53 |
Net assets increased $7.340 million, or $4.95 per share, primarily because of a $11.144 million increase in estimated real estate value, partly offset by higher estimated liquidation costs, selling costs, retention bonuses and legal expenses. Property occupancy rose to 85% from 81%. At year-end, annual base rent was approximately $2.614 million; Flowerfield was 83% occupied and Cortlandt Manor 92% occupied.
Management reported 2022 operating cash receipts of $3.075 million and property operating costs of $1.812 million. Other disclosed cash uses included $2.683 million of corporate expenditures, including interest expense; $315,500 of entitlement costs; $129,511 of other capital expenditures; and $268,439 of loan principal payments. Cash flows from rental operations, net of specified property-related costs, are estimated at $2.18 million through the projected liquidation period.
Changes, outlook and material matters
- Liquidation estimate: Management estimates net assets available for distribution of $30.37 million, or $20.48 per share, using December 31, 2022 estimates. Its liquidation forecast includes $53.67 million in gross real estate proceeds and $14.76 million of estimated liquidation and operating costs net of receipts. These are estimates, not promised distributions.
- Disposition timeline: The company aims to complete approvals and property sales by year-end 2024. It anticipated Flowerfield final subdivision approval in the second half of 2023 and Cortlandt Manor subdivision and site-plan approvals by mid-2024, but says timing depends on outside parties and approvals. The Town of Cortlandt adopted the medical-oriented district designation in March 2023, after the reporting date.
- Flowerfield litigation: A 2022 Article 78 proceeding seeks to annul environmental and preliminary subdivision determinations. Gyrodyne and the Town of Smithtown are defending the approvals; litigation and appeals could delay sales. Final subdivision approval also remained pending.
- Liquidity and debt: Year-end debt totaled $9.76 million, comprising two Flowerfield loans at 3.85% fixed interest and a Cortlandt mortgage at 3.75% through its initial term. The company said available cash and credit were expected to fund its plan, but was considering supplemental financing. The loans were reported covenant-compliant at year-end.
- Subsequent bank event: Signature Bank, lender on the Cortlandt mortgage, was closed in March 2023. The company reported approximately $61,000 in deposits and $97,000 in a tax escrow account there, and expected access to the funds following federal assurances; there were no undrawn amounts under the mortgage.
- Additional risks and contingencies: A 2015 settlement requires arm’s-length property sales at or above 2014 appraised values. Tenant concentration, lease expirations, inflation, higher interest rates, recession risk, environmental issues, community opposition and entitlement delays could affect proceeds or timing. Three largest tenants represented approximately 23%, 21% and 9% of 2022 rental income. The company also recorded a $5.69 million estimated retention-bonus liability; no plan payments were made in 2022 or 2021.
- Valuation and audit: Real estate estimates rely significantly on management assumptions and Level 3 inputs. The auditor issued an unqualified opinion and identified liquidation value of real estate as a critical audit matter. Management reported that the material weakness identified in 2021 had been remediated by year-end 2022.
Investor verification priorities
- Review the appraisals, valuation assumptions and sensitivity of the $53.67 million real estate estimate to rents, capitalization rates and sale timing.
- Track the Article 78 proceeding, Flowerfield final subdivision steps, Cortlandt approvals and any executed sale agreements or closing conditions.
- Assess whether actual selling, legal, entitlement, retention-bonus and other liquidation costs remain within the $14.76 million estimate.
- Confirm liquidity, financing availability and debt terms, including the status of the Signature Bank mortgage and deposits.
- Monitor occupancy, major-tenant exposure and lease expirations, particularly the 2025–2026 maturities that account for a substantial share of scheduled rent.