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

November 06, 2009 | About:
10qk

10qk

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Gyrodyne Company of America Inc. (GYRO) filed Quarterly Report for the period ended 2009-09-30.

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 $51.6 million; its shares were traded at around $40.055 with and P/S ratio of 16.7.

Highlight of Business Operations:

General and Administrative expenses for the three months ended September 30, 2009 and 2008 were $1,214,240 and $661,331, respectively, an increase of $552,909 or 84%. The three major contributing factors to the increase in general and administrative expenses were an increase of $422,182 in condemnation litigation expenses; an increase in real estate development and asset acquisition expenses of $41,773 and $57,495, respectively, and increased costs associated with the Company s pension plan of $68,517, offset by favorable decreases in other G&A expenses of $37,058.

General and Administrative expenses for the nine months ended September 30, 2009 and 2008 were $2,989,270 and $1,832,731, respectively, an increase of $1,156,539 or 63%. The major contributing factors to the increase in general and administrative expenses were an increase of $671,393 in condemnation litigation expenses, an increase in real estate development and asset acquisition expenses of $41,773 and $57,495, respectively, an increase in legal and consulting fees of $114,275 and costs associated with the Company s pension plan increased by $205,551 and an increase in other expenses of $66,052.

During the nine months ended September 30, 2009, we purchased the Fairfax Medical Center in Fairfax, Virginia, for $12.9 million. After this purchase, the Company has completed the reinvestment of the $26.3 million in condemnation proceeds. This purchase exceeded the tax deferred IRC 1033 remaining balance of $10.4 million, the balance of our condemnation proceeds. The re-investment resulted in a tax benefit of approximately $4.1 million. Furthermore, in mid-2008, we reinvested $7.0 million of condemnation proceeds in the purchase of the Cortlandt Medical Center in Cortlandt Manor, New York, resulting in a tax benefit of $2.8 million.

Net cash used in investing activities was $6,068,168 and $5,691,605 during the nine months ended September 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 and costs associated with property , plant and equipment of $1,504,469, partially offset by the sale of marketable securities of $8,163,813 and principal payments received on the investment in marketable securities of $295,454. 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 $2,269,762.

Financings: On March 31, 2009, the Company, through its wholly owned subsidiary Virginia Healthcare Center, LLC, acquired the Fairfax Medical Center in Fairfax, Virginia (the “Property”) from Fairfax Medical Center, LLC (the “Seller”). The Property consists of two office buildings which are situated on 3.5 acres with approximately 58,000 square feet of rentable space and an occupancy rate of approximately 84% when acquired. The purchase price was $12,891,000 or approximately $222 per square foot. There is no material relationship between the Company and the Seller. Of the $12,891,000 purchase price for the Property, the Company paid $4,891,000 in cash and received financing in the amount of $8,000,000 from Virginia Commerce Bank. In addition, $131,966 of costs associated with the acquisition was capitalized.

On June 2, 2008, the Company acquired the Cortlandt Medical Center (“CMC”) in Cortlandt Manor, New York. CMC consists of five buildings which are situated on 5.0 acres with approximately 30,000 square feet of rentable space and an occupancy rate of approximately 97% when acquired. The purchase price was $7,000,000 or approximately $234.81 per square foot. There is no material relationship between the Company and the seller. Of the $7,000,000 purchase price for CMC, the Company paid $1,750,000 in cash and received financing in the amount of $5,250,000 from M&T Bank. In addition, approximately $14,362 of costs associated with the acquisition was capitalized.

Read the The complete ReportGYRO is in the portfolios of Michael Price of MFP Investors LLC, Bruce Berkowitz of Fairholme Capital Management.

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