- 05/06/16 - GYRODYNE ANNOUNCES COMPLETION OF SALE OF FAIRFAX MEDICAL CENTER
- To view the full Press Release Click Here.
- 09/01/15 - GYRODYNE MERGER COMPLETED. GYRODYNE, LLC SHARES BEGIN TRADING ON NASDAQ
- To view the full Press Release Click Here.
Note: All information dated prior to September 1st refers to Gyrodyne Company of America, Inc.
THE GYRODYNE STORY
Gyrodyne, LLC became an active company on September 1, 2015 following the merger of Gyrodyne Company of America, Inc. and Gyrodyne Special Distribution LLC into and with Gyrodyne, LLC.
To appreciate Gyrodyne’s position today, we need to briefly look back to 1946 when Peter James Papadakos purchased the assets of the bankrupt Bendix Helicopter Company and leased space at the small Fitzmaurice (Air) Field in Massapequa, where development continued on the coaxial rotor helicopter. Fast forward to 1951 when operations were moved to St. James and a location called Flowerfield, not surprisingly used previously as a flower nursery. Manufacturing continued on the Company’s coaxial helicopters in an aggressive fashion, and by 1963, there were over 700 employees worldwide, many of whom supported the Drone Anti-Submarine Helicopter (DASH) Weapons System. However, the ensuing years witnessed a decline in government contracts for Gyrodyne and beginning in 1972, some of the former manufacturing space was converted into smaller rental units suitable for light industry. In 1999, the remaining assets of the drone program were sold with much of the continuing interest concentrated overseas. Despite the extremely active drone programs currently underway both militarily and in private industry, the last Gyrodyne designed drone had flown its final flight in 2006. For additional and very detailed and documented information on the Company’s history and manufacturing, visit the following website: www.gyrodynehelicopters.com
At the same time Gyrodyne was slowing its manufacturing operations, rental demand for its facilities was increasing. Prior to New York State’s condemnation action in the Fall of 2005, Gyrodyne had approximately 180,000 square feet of space available for lease. In November of 2005, New York State through the powers of eminent domain took 245 acres and the buildings located thereon, reducing our rentable space to 130,000 square feet. The State paid Gyrodyne $26 million for the property, which Gyrodyne treated as an advance payment as it pursued an action against the State for just compensation.
Shortly thereafter, and in order to minimize corporate-level taxes, Gyrodyne was converted into a real estate investment trust, or REIT, and in accordance with REIT provisions, we invested the initial $26 million of condemnation proceeds in income producing properties located in Port Jefferson, Cortlandt Manor & Fairfax, Virginia.
After extensive litigation and the appeals process, on July 3, 2012, Gyrodyne received $98,685,000 in additional damages, $67,341,716 in interest and $1,474,941 for costs, disbursements and expenses. On December 14, 2012, we paid a dividend of $56,786,652 or $38.30 per share.
Shortly after receiving monies from the State in July, we launched a strategic process with the help of Rothschild, Inc. and the law firm of Skadden, Arps, Slate, Meagher & Flom, LLP to maximize shareholder value through one or more cash distributions and/or through a potential sale, merger or other strategic combination. During that process and in early 2013, we requested and ultimately received from the Internal Revenue Service a private letter ruling which enabled Gyrodyne to distribute the full $98.7 million of additional damages to our shareholders while avoiding a corporate level federal income tax of $61.6 million. The private letter ruling was received in late August resulting in the Board’s press release of September 13, 2013, and the announcement of a special dividend. The First Special Dividend was paid on December 30, 2013 in the form of $68 million or $45.86 per share in cash with the balance of $30.7 million or $20.70 per share paid in uncertificated shares of a newly formed subsidiary, Gyrodyne Special Distribution, LLC (GSD) into which we transferred our real properties shortly before the distribution. While the strategic process did not result in an offer to buy the Company that the board considered acceptable, during 2012 and 2013, we were successful in distributing cash dividends of approximately $125 million to our shareholders.
In addition, on January 31, 2014, Gyrodyne issued the Second Special Dividend via interests in a global dividend note to our shareholders in the amount of $16,150,000 representing the major portion of Gyrodyne’s 2013 REIT income, the per share interest in the note amounting to $10.89. The note with interest @ 5% was payable semi-annually in cash, or by the issuance of additional PIK (payment in kind) notes. On June 16, 2014, we issued a PIK note in the amount or $302,813 and on December 15, 2014 another PIK Note in the amount of $403,750 in payment of accrued interest. A small cash payment was made on December 15th representing interest on the June 16th note. On December 31st, we issued a special supplemental dividend in the form of a PIK note in the amount of $682,032.80, which was intended to prevent the imposition of federal corporate income tax on the balance of the Company’s 2013 REIT taxable income. Lastly, on June 15, 2015, we issued another PIK Note in the amount of $403,750 representing interest due on the January 31, 2014 obligation and paid $33,294 in cash representing the semi-annual interest on the various PIK Notes.
To further enhance the value of the special dividends, the Board also approved a plan of merger which required the approval of shareholders holding at least two-thirds of our shares, and if completed in a timely manner (September 2015), would allow the special dividends to be treated as a return of capital to the extent of the shareholders’ tax basis and then taxed at the capital gains rate. During 2014, efforts to achieve that merger, first on August 14th, then August 27th each failed to achieve the requisite two-thirds affirmative vote although the proxies submitted were overwhelmingly (97%) in favor of the merger.
On June 17, 2015, we completed a Rights Offering wherein we issued 2,224,020 shares @ $2.75 per share and received the maximum $6,116,055 proceeds. The Rights Offering was conducted primarily to facilitate the vote of two-thirds of the outstanding shares needed to approve the merger whereby Gyrodyne Company of America, Inc. and GSD would be merged with and into Gyrodyne, LLC, a newly formed subsidiary, which will be the surviving company and will be publicly traded. The previously postponed special meetings was held on August 20th with June 29th set as the record date for shareholders entitled to receive notice and vote at the meeting. The final voting results indicate that more than 99% of the votes cast at the special meeting voted in favor of the transaction, representing more than 76% of all outstanding Gyrodyne shares. The merger will now facilitate the final step in the tax liquidation of Gyrodyne while simplifying the corporate structure and interrelationships of Gyrodyne and GSD, and restoring liquidity to GSD and the dividend notes.
As mentioned in some of the Company’s previously posted SEC filings, we are also attempting to sell our medical properties while analyzing the highest and best use for the development of the open Flowerfield acreage. Through the end of the third quarter ended September 30th, we had sold six buildings in the Port Jefferson Professional Park and the Fairfax Medical Center in Fairfax Virginia and issued cash dividends in the amount of $9.25 per share paid June 15th and $1.50 paid September 15th. Details can be found in the various SEC documents previously filed.