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Gyrodyne Company of America Inc. Reports Operating Results (10-Q)

August 10, 2010 | About:
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10qk

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Gyrodyne Company of America Inc. (GYRO) filed Quarterly Report for the period ended 2010-06-30.

Gyrodyne Company Of America Inc. has a market cap of $102 million; its shares were traded at around $79.1 with and P/S ratio of 21.1. GYRO is in the portfolios of Michael Price of MFP Investors LLC.

Highlight of Business Operations:

Rental revenues are comprised solely of rental income and amounted to $1,214,537 and $1,102,952 for the three months ended June 30, 2010 and 2009, respectively, an increase of $111,585 or 10%. The increase is primarily comprised of net new and renewed lease rates. The Port Jefferson Medical Center, Cortlandt Manor Medical Center and Fairfax Medical Center reflect net new tenants and expansions over the comparable 2009 period, resulting in additional revenue of approximately $11,000, $10,000 and $13,000, respectively, and one new tenant in Flowerfield which generated an additional $42,000 in revenue. The remaining difference is mainly attributable to an increase in net renewed lease rates.

General and Administrative expenses for the three months ended June 30, 2010 and 2009 were $590,462 and $689,362, respectively, a decrease of $98,900 or 14%. The major contributing factors to the decrease in general and administrative expenses were a decrease in legal, and consulting fees of approximately $47,000, a decrease in corporate governance and director fees of approximately $36,000, a decrease in other outside services of $33,000 offset by an increase of approximately $13,000 in compensation and benefits.

General and Administrative expenses for the six months ended June 30, 2010 and 2009 were $1,125,271 and $1,317,775, respectively, a decrease of $192,504 or 15%. The major contributing factors to the decrease in general and administrative expenses were a decrease in legal and consulting fees of approximately $125,000, a decrease in other outside services of $39,000, a decrease in corporate governance and director fees of approximately $81,000, offset by an increase of approximately $43,000 in compensation and benefits.

Net cash used in operating activities was $240,491 and $873,379 during the six months ended June 30, 2010 and 2009, respectively. The underlying drivers that impact working capital and therefore cashflows from operations are the timing of collections of rents and related tenant reimbursements and the payment of operating and general and administrative expenses. The cash used in operating activities in the current period was primarily related to the net loss adjusted for depreciation of $413,888 and the reduction in accounts payable of $361,275 offset by an increase in accrued liabilities of $150,916. The cash used in operating activities in the prior period was primarily related to the net loss before income tax adjusted for depreciation of $314,770 and an increase in prepaid expenses and other assets of $191,031.

Net cash used in investing activities was $854,330 and $7,262,876 during the six months ended June 30, 2010 and 2009, respectively. Cash used in investing activities in the current period was primarily due to the purchase of the additional Cortlandt Manor property at a total cost including closing costs of $728,829 and costs associated with property, plant and equipment of $267,933. Additionally, during the six months ended June 30, 2010, $203,000 in proceeds was realized from the liquidation of a one year interest bearing time deposit and $60,568 was incurred in land development costs. Cash used in investing activities in the prior period primarily consisted of the purchase of the Fairfax Medical Center (“FMC”), including deferred acquisition costs, of $13,022,966 and costs associated with property, plant and equipment of $1,058,064, partially offset by the sale of marketable securities of $6,805,800 and principal payments received on the investment in marketable securities of $292,364. Additionally during the six months ended June 30, 2009, $201,003 was invested in a one year interest bearing time deposit and $79,007 was incurred in land development costs.

Net cash provided by financing activities was $1,477,380 and $7,697,267 during the six months ended June 30, 2010 and 2009, respectively. The cash provided by financing activities was primarily the result of the Company borrowing $1,750,000 under its revolving line of credit during the six months ended June 30, 2010. The Company did not repay any principal on the revolving line of credit. The Company does not have any interest only mortgages, with the exception of the revolving line of credit, and as a result, during the six months ended June 30, 2010 and 2009, the Company repaid $209,878 and $173,609, respectively, of principal on its total mortgage obligations. Additionally, the Company has incurred $62,742 in loan origination fees, of which approximately $40,000 is a deposit in pursuit of longer term financing. The net cash provided by financing activities in the prior period was primarily the proceeds from the mortgage to purchase the Fairfax Medical Center.

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