GYRODYNE CO AMERICA manages its real estate operation and is a passive investor as a limited partner in the Callery Judge Grove in Palm Beach County FL. Gyrodyne Company of America Inc. has a market cap of $48.4 million; its shares were traded at around $37.5 with and P/S ratio of 15.6.
Highlight of Business Operations:Rental income totaled $1,169,157 for the current three month reporting period compared to $763,324 for the same period last year. For the most part, this $ 405,833 increase is attributable to the acquisition of the Fairfax Medical Center on March 31, 2009 and the Cortlandt Medical Center which was acquired in June of 2008. For the six months ended June 30, 2009, the Company generated rental income totaling $2,027,867 compared to $1,424,191 for the same period last year. Here again, the $603,676 increase is attributable for the most part to the acquisition of the medical centers in Fairfax, Virginia and Cortlandt Manor, New York.
Expenses increased in the current reporting period, amounting to $1,538,005 for the three months ended June 30, 2009 compared to $964,010 during the same period last year; this $573,995 increase is attributable to a $153,986 increase in rental property expenses which totaled $430,514, and increases in general and administrative and depreciation expenses amounting to $314,176 and $105,833, respectively. Although there were reductions in rental expenses associated with the Company s other properties, the addition of the Fairfax and Cortlandt Medical Centers account for the overall increase in this category of expense. The three major contributing factors to the increase in general and administrative expenses which totaled $923,783 compared to $609,607 during the prior year, were condemnation litigation expenses, which totaled $234,298, increasing by $112,943; legal and consulting fees totaled $72,452 and increased by $58,125; and costs associated with the Company s pension plan increased by $68,517, amounting to $71,546. In addition, salaries and benefits increased by $38,144, fees for outside services increased by $23,851, and expenses associated with corporate governance increased by $21,669. For the most part, the increase in depreciation expense, which totaled $183,708, reflects the addition of the two medical centers in Fairfax, Virginia and Cortlandt Manor, New York.
For the six month period ended June 30, 2009, the expenses for the Company experienced similar increases and contributing factors. Expenses for the current six month period increased by $996,877, amounting to $2,839,093 compared to $1,842,216 during the same period last year. Rental property expenses, which amounted to $766,380, increased by $235,811 over the prior year and, as in the quarterly results, were mostly attributable to the addition of two new properties in Fairfax, Virginia, and Cortlandt Manor, New York. General and administrative expenses increased by $603,705, amounting to $1,775,105 compared to $1,171,400 during the prior year. The same contributing factors accounted for the majority of this increase for the six month period; legal and consulting fees amounted to $158,379 and increased by $118,601; condemnation litigation fees totaled $457,207 and increased by $248,787; and costs associated with the Company s pension plan amounted to $143,093, an increase of $137,034. In addition, salaries and benefits increased by $54,470, fees for outside services increased by $14,674 and corporate governance matters increased by $33,551. Again reflecting the acquisitions of the two new facilities in Virginia and New York, depreciation increased by $157,361, amounting to $297,608 for the current period.
As a result, the Company is reporting a loss before benefit for taxes of $605,152 for the three month reporting period, compared to a loss of $157,289 for the same period last year. The quarter ended June 30, 2008 reflected a benefit for income taxes of $2,800,000, resulting in net income totaling $2,642,711. For the six months ended June 30, 2009, the Company is reporting a loss before benefit for income taxes totaling $990,564 compared to a loss of $284,936 for the same period last year. Reflecting a benefit for income taxes of $4,127,000 for the six months ended June 30, 2009, the Company is reporting net income of $3,136,436, compared with $2,515,064, for the same period in the prior year.
Net cash used in operating activities was $952,386 and $839,970 during the six months ended June 30, 2009 and 2008, respectively. The cash used in operating activities in the current period was primarily related to a pension plan contribution of $200,000, increased land development costs of $79,007 and the prepayment of expenses and other assets of $191,031. The cash used in operating activities in the prior period was primarily related to increased payments to vendors of $393,210, the prepayment of expenses and other assets of $304,823 and increased land development costs of $144,283.
Net cash used in investing activities were $6,982,866 and $5,228,964 during the six months ended June 30, 2009 and 2008, respectively. Cash used in investing activities in the current period primarily consisted of the purchase of the Fairfax Medical Center (“FMC”), including deferred acquisition costs, of $13,022,966 partially offset by the sale of marketable securities of $6,805,800. The cash provided by investing activities in the prior period was essentially in connection with the purchase of the Cortlandt Medical Center (“CMC”) for $7,014,362 partially offset by principal repayments of marketable securities of $2,128,927.
Read the The complete ReportGYRO is in the portfolios of Michael Price of MFP Investors LLC, Bruce Berkowitz of Fairholme Capital Management.