Gyrodyne Company Of America Inc. has a market cap of $92.9 million; its shares were traded at around $72 with and P/S ratio of 16.7.
Highlight of Business Operations:Rental revenues are comprised solely of rental income and amounted to $1,260,180 and $1,186,816 for the three months ended March 31, 2011 and 2010, respectively, an increase of $73,364 or 6%. The Fairfax Medical Center and Port Jefferson Professional Park experienced a net increase in occupancy rate combined with contractual escalations comprising approximately $24,000 and $15,000 respectively, of the increase. The Flowerfield industrial park increased its rental income by approximately $10,000 which was attributable to the collection of a settlement payment from a previously evicted tenant. Additionally, the Company received an early termination fee of approximately $22,000 which represents a one year early termination option on a 49 square foot rooftop cellular equipment lease in Fairfax Virginia. The tenant was in the second year of a 10 year lease and the early termination option is in exchange for the payment of 12 months rent which was invoiced and collected. The remaining increases are due to the additional Cortlandt Manor property purchased in 2010 and the net impact of contractual escalations and renewals.
Rental expenses for the three months ended March 31, 2011 and 2010 were $625,449 and $586,305, respectively, an increase of $39,144 or 7%. Approximately $14,000 of the increase are management fee related expenses which are rebilled to our tenants in accordance with their respective leases and are included in tenant reimbursements on the Statement of Operations. Additionally, the Company s success in signing new leases resulted in an increase in lease commission amortization expense of approximately $18,000.
General and administrative expenses for the three months ended March 31, 2011 and 2010 were $455,551 and $534,433, respectively, a decrease of $78,882 or 15%. The major contributing factor to the decrease in general and administrative expenses was a decrease in pension expense of approximately $68,000, the savings of which was mainly attributable to the significant increase in value of Gyrodyne stock held by the pension plan.
Interest expense net for the three months ended March 31, 2011 and 2010 was $305,583 and $261,239, respectively, an increase of $44,344 or 17%. The increase was mainly attributable to the new $4,000,000 term loan facility which replaced a revolving line of credit from the prior year which was unused as of March 31, 2010.
Net cash used in operating activities was $225,748 and $93,236 during the three months ended March 31, 2011 and 2010, respectively. The underlying drivers that impact working capital and therefore cash flows 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 $135,017 and the reduction in accounts payable of $202,062 offset by a decrease in rent receivable of $92,211. The cash used in operating activities in the prior period was primarily related to the net loss adjusted for depreciation of $27,814, a decrease in accounts payable of $174,201 offset by an increase in deferred rent of $85,763.
Net cash (used in) provided by investing activities was $(191,987) and $54,405 during the three months ended March 31, 2011 and 2010, respectively. Cash used in investing activities in the current period was primarily due to property taxes on our undeveloped land and tenant improvements most of which was contracted for in 2010. Cash provided by investing activities in the prior period was primarily from the receipt of $203,000 resulting from the liquidation of a one year interest bearing time deposit offset by investments in property, plant and equipment of $124,081 and land development costs of $24,514.
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