Disposition Activities:

Port Jefferson Professional Park

. During 2016, the Company sold five buildings (approximately 4,000 square feet each) in the Port Jefferson Professional Park as follows:

Port Jefferson Medical Park Location	Closing Date	Gross Sales Proceeds
6 Medical Drive	January 2016	$	850,000
8 Medical Drive	June 2016		820,000
4 Medical Drive	July 2016		900,000
3 Medical Drive	August 2016		876,000
2 Medical Drive	September 2016		800,000
Total		$	4,246,000

The Company has four remaining buildings within the same medical park which are currently being actively marketed for sale.

Fairfax Medical Center

On February 4, 2016 the Company’s wholly-owned subsidiary Virginia Healthcare Center, LLC, a Virginia limited liability company (“VHC”) entered into a Purchase and Sale Agreement (the “Agreement”) to sell the Fairfax Medical Center, subsequently amended, for a sales price of $14,315,000 to JAG Associates, L.L.C., a Virginia limited liability company (“JAG”). The material terms of the Agreement provided for: (i) an initial earnest money deposit in the amount of $250,000 payable by JAG to the escrow agent within five business days following the Effective Date that were applied to the purchase price at closing; (ii) an evaluation period that expired on April 11, 2016, during which time JAG had the right to terminate the Agreement by written notice to the Company, for any reason or no reason, prior to the expiration of the evaluation period, in which case JAG had the right to receive a refund of its initial $250,000 earnest money deposit; (iii) if the Agreement was not terminated on or prior to April 11, 2016, JAG was obligated to deliver an additional earnest money deposit to the escrow agent in the amount of $250,000, which together with the initial earnest money deposit were applied toward the purchase price at closing; (iv) unless JAG terminated the Agreement on or prior to April 11, 2016, the closing would occur on or before May 4, 2016. The Agreement also contained a master lease (2 year term for approximately 4,700 square feet) to VHC for approximately $210,000, payments due quarterly if certain vacancies were not re-tenanted. Prior to the sale, the Company marketed, and following the sale, JAG continues to actively market the space, the success of which will directly reduce the master lease obligation. The Agreement also contained additional customary covenants, conditions, representations and warranties. On April 25, 2016, in response to the purchaser’s due diligence results, VHC and JAG amended the Agreement as follows:

Reduced the purchase price from $14,315,000 to $14,015,000 to address certain property conditions to JAG’s satisfaction.

Amended the master lease obligation which among other things effectively reduced VHC’s obligation on rentable square feet from 4,700 square feet to 3,852 square feet which translates to a reduction in VHC’s liability from approximately $210,000 to approximately $155,000. Consistent with the original master lease, VHC will continue to get credit toward the master lease obligation for leases to new tenants and expansions of existing tenants. If the financial obligation under the master lease becomes satisfied through leases to one or more third party tenants, the master lease will terminate and VHC will have no further obligation to pay rent thereunder. JAG has a continuing obligation during the lease term to make commercially reasonable efforts to lease all or a portion of the leased premises at current market rates, as a priority over leasing occupied space in the property. In connection with the execution of the master lease, Gyrodyne agreed to guarantee full performance of the master lease by VHC, including the payment of all rentals but limited to two years of base rent.

On May 4th, 2016, VHC closed on the sale of the Fairfax Medical Center. Based on the aforementioned terms, VHC has a master lease obligation (guaranteed by the Company) on approximately 3,852 square feet for approximately $155,000 over the next two years with payments due quarterly less any new leases or expansions signed by the buyer, which obligations will terminate if the financial obligation is satisfied through leases to one or more third party tenants. Based on the leasing activity since the closing date, the Company estimates the obligation on the master lease has been reduced to $50,593 (net of the August sub lease payment of $16,878).

The Comparison of the Gross sales proceeds to the fair value reported prior to entering the Purchase and Sale Agreement:

Sale Price	Fair Value reported prior to entering the Purchase and Sale Agreement	Fair Value reported in excess of Proceeds excluding the Master Lease Obligation
$ 14,015,000	$ 14,000,000	$ 15,000