Gyrodyne Company Of America Inc. has a market cap of $51.6 million; its shares were traded at around $40 with and P/S ratio of 10.68. 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 $1,186,816 and $820,241 for the three months ended March 31, 2010 and 2009, respectively, an increase of $366,575 or 45%. The increase is primarily comprised of $300,083 attributable to the acquisition of the Fairfax Medical Center on March 31, 2009 and an increase in net new and renewed lease rates of approximately $66,493. Approximately $60,000 is from one tenant in Flowerfield who is occupying space that was vacant during the quarter ended March 31, 2009.
General and Administrative expenses for the three months ended March 31, 2010 and 2009 were $534,433 and $628,413, respectively, a decrease of $93,980 or 15%. The major contributing factors to the decrease in general and administrative expenses were a decrease in legal and consulting fees of approximately $78,000, a decrease in corporate governance and director fees of approximately $45,000, and a decrease in the pension expense of approximately $14,000 offset by an increase of approximately $45,000 for compensation and benefits.
Depreciation for the three months ended March 31, 2010 and 2009 were $196,850 and $113,900, respectively, an increase of $82,950 or 73%. Approximately $70,346 of the increase is the result of the acquisition of the Fairfax Medical Center. The remaining increase of $12,604 is from renovations in the remaining developed property portfolio.
Net cash used in operating activities was $93,236 and $144,655 during the three months ended March 31, 2010 and 2009, respectively. The cash used in operating activities in the current period was primarily related to a reduction in accounts payable of $174,201 offset by an increase in deferred rent of $85,763. The cash used in operating activities in the prior period was primarily related to a pension plan contribution of $100,000, and prepaid expenses and other assets of $32,598.
Net cash provided by (used in) investing activities was $54,405 and $(7,063,507) during the three months ended March 31, 2010 and 2009, respectively. Cash provided by investing activities in the current 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. 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 $621,980, partially offset by the sale of marketable securities of $6,805,800 and principal payments received on the investment in marketable securities of $29,748. Additionally during the three months ended March 31, 2009, $200,000 was invested in a one year interest bearing time deposit and $54,109 was incurred in land development costs.
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.
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