Gyrodyne Company of America Inc. (NASDAQ:GYRO) filed Quarterly Report for the period ended 2012-03-31.
Gyrodyne Co Am has a market cap of $152.7 million; its shares were traded at around $102.49 with and P/S ratio of 27.7.
Highlight of Business Operations:As of March 31, 2012, the average effective rental revenue per square foot adjusted for tenant improvements was $20.13 compared to $20.22 on December 31, 2011. The Company defines the effective revenue per square foot as the annual rate per square foot stated in the lease reduced by the average annual tenant improvement allowance provided for in such leases.
Leasing – During the three months ended March 31, 2012, the Company executed 13 lease renewals encompassing approximately 16,000 square feet, and approximately $261,000 in annual revenue. In addition, the Company entered into 1 new lease encompassing approximately 1,000 square feet and $30,000 in annual revenue. The increase in revenue from its new leases and contractual annual increases was offset by 6 lease terminations encompassing approximately 8,000 square feet and approximately $181,000 in annual revenue. The Company generated an increase in net deferred revenue of approximately $27,000.
The continued economic volatility for small businesses and medical practitioners have impacted property management firms, including the Company s ability to renew leases at comparable rates if at all, without providing either rent abatements or comparable other lease incentives. During 2011 and early 2012, medical office parks and industrial parks experienced degradation in both rental rates and occupancy. During the quarter, rental revenues were $1,187,267 and $1,195,290 for the three months ended March 31, 2012 and December 31, 2011, respectively, a quarter over quarter decrease of $8,023. Although the Company successfully mitigated the decreased revenues during the quarter-ending March 31, the Company continues to experience challenges to maintain both rental rates and occupancy.
Re-tenanting vacant space, renewing tenants, and transitioning tenants to longer term leases has resulted in total lease commitments as of March 31, 2012 and December 31, 2011 of $13,316,000 and $13,828,000, respectively, a decrease of $512,000. The decrease is largely due to the annual revenue from 1 new lease being significantly less than the revenue reduction stemming from 6 terminations. During the first quarter the Company did not offer significant tenant improvements to attract new tenants. However, if the challenges on reletting space continues, the Company may offer tenant improvements in exchange for signing long term lease commitments.
Rental revenues are comprised solely of rental income and amounted to $1,187,267 and $1,260,180 for the three months ended March 31, 2012 and 2011, respectively, a decrease of $72,913 or approximately 6%. The Flowerfield Industrial Park, Fairfax Medical Center, and Port Jefferson Professional Park all experienced a decrease in revenue; amounting to $22,810, $23,328, and $37,251, respectively. The Cortlandt Manor Medical Center experienced an increase of $10,476. The reduction in revenue at the Fairfax Medical Center was primarily related to one tenant exercising an early termination option during the first quarter of 2011. The option included a fee of $22,000 which was equivalent to one year s rent. The decrease at Flowerfield was attributable to one tenant who defaulted on its lease obligation and is in the process of being evicted. The Port Jefferson Medical Center s decrease was primarily related to one tenant who did not renew their lease in the fourth quarter of 2011. The increase in rent at the Cortlandt Medical Center was attributable to higher average occupancy for the first quarter of 2012 compared to the first quarter of 2011, supplemented by contractual annual rent escalations.
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