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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2024

 

OR

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission file number 000-52610

 

LIGHTSTONE VALUE PLUS REIT I, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland   20-1237795

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 

1985 Cedar Bridge Avenue, Suite 1
Lakewood, New Jersey		   08701
(Address of Principal Executive Offices)   (Zip Code)

 

(732) 367-0129

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act: None.

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑   No ☐

 

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☑   No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☑ Smaller reporting company ☑
    Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐   No ☑

 

As of November 7, 2024, there were approximately 21.2 million outstanding shares of common stock of Lightstone Value Plus REIT I, Inc., including shares issued pursuant to the dividend reinvestment plan.

 

 

 

 

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES

 

INDEX

 

        Page
PART I   FINANCIAL INFORMATION    
         
Item 1.   Financial Statements (unaudited)   1
         
    Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023   1
         
    Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023   2
         
    Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2024 and 2023   3
         
    Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2024 and 2023   4
         
    Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023   5
         
    Notes to Consolidated Financial Statements   6
         
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations   26
         
Item 4.   Controls and Procedures   47
         
PART II   OTHER INFORMATION    
         
Item 1.   Legal Proceedings   48
         
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds   48
         
Item 3.   Defaults Upon Senior Securities   48
         
Item 4.   Mine Safety Disclosures   48
         
Item 5.   Other Information   48
         
Item 6.   Exhibits   48

 

i

 

 

PART I. FINANCIAL INFORMATION:

 

ITEM 1. FINANCIAL STATEMENTS:

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except per share data and where indicated in millions)

 

                 
    As of
September 30,
2024		     As of
December 31,
2023		  
    (unaudited)        
Assets                
                 
Investment property:                
Land and improvements   $ 93,293     $ 95,780  
Building and improvements     173,170       172,729  
Furniture and fixtures     17,614       17,300  
Construction in progress     248       1,427  
Gross investment property     284,325       287,236  
Less: accumulated depreciation     (27,869 )     (22,652 )
Net investment property     256,456       264,584  
                 
Development projects     97,800       132,370  
Investment in related party     447       490  
Investment in unconsolidated affiliated entity     14,207       16,914  
Cash and cash equivalents     27,020       10,547  
Marketable securities     41,041       35,218  
Restricted cash     7,100       7,813  
Other assets     4,399       5,211  
Total Assets   $ 448,470     $ 473,147  
                 
Liabilities and Stockholders’ Equity                
                 
Mortgages payable, net   $ 263,357     $ 259,698  
Notes payable, net     2,999       -  
Accounts payable, accrued expenses and other liabilities     15,569       15,048  
Total Liabilities     281,925       274,746  
                 
Commitments and contingencies                
                 
Stockholders’ equity:                
Company’s Stockholders’ Equity:                
Preferred shares, $0.01 par value, 10.0 million shares authorized, none issued and outstanding     -       -  
Common stock, $0.01 par value; 60.0 million shares authorized, 21.3 million and 21.6 million shares issued and outstanding, respectively     213       215  
Additional paid-in-capital     158,277       161,174  
Accumulated surplus     5,109       25,454  
Total Company’s stockholders’ equity     163,599       186,843  
                 
Noncontrolling interests     2,946       11,558  
Total Stockholders’ Equity     166,545       198,401  
                 
Total Liabilities and Stockholders’ Equity   $ 448,470     $ 473,147  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

1

 

 

PART I. FINANCIAL INFORMATION, CONTINUED:

 

ITEM 1. FINANCIAL STATEMENTS, CONTINUED:

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

(Unaudited)

 

                                 
   

For the

Three Months Ended
September 30,

     For the
Nine Months Ended
September 30,		  
    2024     2023     2024     2023  
Revenues:                                
Rental revenues   $ 2,593     $ 2,584     $ 7,916     $ 7,534  
Hotel revenues     13,084       13,259       37,444       33,746  
Total revenues     15,677       15,843       45,360       41,280  
                                 
Expenses:                                
Property operating expenses     846       792       2,306       2,259  
Hotel operating expenses     8,825       8,828       26,613       25,489  
Real estate taxes     839       635       2,217       851  
General and administrative costs     941       1,065       2,917       3,029  
Impairment charges     34,353       -       34,353       -  
Pre-opening costs     -       69     -       85  
Depreciation and amortization     1,755       1,860       5,260       5,211  
Total expenses     47,559       13,249       73,666       36,924  
                                 
Interest and dividend income     673       1,929       1,771       6,049  
Interest expense     (6,385 )     (7,012 )     (19,217 )     (19,173 )
Gain on disposition of real estate     2,749       -       13,601       1,121  
Loss on sale of marketable securities     -       (297 )     -       (656 )
Unrealized gain/(loss) on marketable equity securities     3,761       (1,322 )     5,824       (821 )
Mark to market adjustments on derivative financial instruments     (25 )     (680 )     (62 )     (1,050 )
Loss from investment in unconsolidated affiliated real estate entity     (945 )     (1,261 )     (2,718 )     (3,621 )
Other income/(expense), net     113       (2,404 )     (542 )     (2,376 )
Net loss     (31,941 )     (8,453 )     (29,649 )     (16,171 )
Less: net loss/(income) attributable to noncontrolling interests     9,353       (364 )     9,304       (1,439 )
Net loss attributable to Company’s common shares   $ (22,588 )   $ (8,817 )   $ (20,345 )   $ (17,610 )
                                 
Net loss per Company’s common share, basic and diluted   $ (1.06 )   $ (0.41 )   $ (0.95 )   $ (0.81 )
                                 
Weighted average number of common shares outstanding, basic and diluted     21,358       21,679       21,438       21,750  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

2

 

 

PART I. FINANCIAL INFORMATION, CONTINUED:

 

ITEM 1. FINANCIAL STATEMENTS, CONTINUED:

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)

(Unaudited)

 

                                 
    For the
Three Months Ended
September 30,		     For the
Nine Months Ended
September 30,		  
    2024      2023     2024     2023  
Net loss   $ (31,941 )   $ (8,453 )   $ (29,649 )   $ (16,171 )
                                 
Other comprehensive income:                                
Holding loss on available for sale debt securities     -       -       -       (208 )
Reclassification adjustment for loss included in net loss     -       -       -       359  
Other comprehensive income:     -       -       -       151  
                                 
Comprehensive loss     (31,941 )     (8,453 )     (29,649 )     (16,020 )
                                 
Less: Comprehensive loss/(income) attributable to noncontrolling interests     9,353       (364 )     9,304       (1,439 )
Comprehensive loss attributable to the Company’s common shares   $ (22,588 )   $ (8,817 )   $ (20,345 )   $ (17,459 )

 

The accompanying notes are an integral part of these consolidated financial statements.

 

3

 

 

PART I. FINANCIAL INFORMATION, CONTINUED:

 

ITEM 1. FINANCIAL STATEMENTS, CONTINUED:

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands)

(Unaudited)

 

                                                         
    Common Stock     Additional
Paid-In		     Accumulated
Other
Comprehensive		     Accumulated     Noncontrolling     Total
Stockholders’		  
    Shares     Amount     Capital     Loss     Surplus     Interests     Equity  
BALANCE, June 30, 2023     21,735     $ 217     $ 163,045     $ -     $ 33,631     $ 10,234     $ 207,127  
Net loss     -       -       -       -       (8,817 )     364       (8,453 )
Contributions received from noncontrolling interests     -       -       -       -       -       1,523       1,523  
Distributions paid to noncontrolling interests     -       -       -       -       -       (1,157 )     (1,157 )
Distributions declared (a)     -       -       -       -       (1,897 )     -       (1,897 )
Redemption and cancellation of common shares     (82 )     (1 )     (1,000 )     -       -       -       (1,001 )
Shares issued from distribution reinvestment program     7       -       85       -       -       -       85  
BALANCE, September 30, 2023     21,660     $ 216     $ 162,130     $ -     $ 22,917     $ 10,964     $ 196,227  

 

 

(a) Distributions per share were $0.0875.

 

                                                         
                      Accumulated                    
                Additional     Other             Total  
    Common Stock     Paid-In     Comprehensive     Accumulated     Noncontrolling     Stockholders’  
    Shares     Amount     Capital     Loss     Surplus     Interests     Equity  
BALANCE, December 31, 2022     21,840     $ 218     $ 164,331     $ (159 )   $ 50,051     $ 12,333     $ 226,774  
Net loss     -       -       -       -       (17,610 )     1,439       (16,171 )
Other comprehensive income     -       -       -       159       -       (8 )     151  
Contributions received from noncontrolling interests     -       -       -       -       -       1,523       1,523  
Distributions paid to noncontrolling interests     -       -       -       -       -       (4,323 )     (4,323 )
Distributions declared (a)     -       -       -       -       (9,524 )             (9,524 )
Redemption and cancellation of common shares     (201 )     (2 )     (2,453 )     -       -       -       (2,455 )
Shares issued from distribution reinvestment program     21       -       252       -       -       -       252  
BALANCE, September 30, 2023     21,660     $ 216     $ 162,130     $ -     $ 22,917     $ 10,964     $ 196,227  

 

 
(a) Distributions per share were $0.4375.

 

                                                 
    Common Stock     Additional
Paid-In		     Accumulated     Noncontrolling     Total
Stockholders’		  
    Shares     Amount     Capital     Surplus     Interests     Equity  
BALANCE, June 30, 2024     21,418     $ 213     $ 159,228    - $ 27,697     $ 12,317     $ 199,455  
Net loss     -       -       -    -   (22,588 )     (9,353 )     (31,941 )
Distributions paid to noncontrolling interests     -       -       -       -       (18 )     (18 )
Redemption and cancellation of common shares     (81 )     -       (951 )     -       -       (951 )
BALANCE, September 30, 2024     21,337     $ 213     $ 158,277    - $ 5,109     $ 2,946     $ 166,545  

 

                Additional             Total  
    Common Stock     Paid-In     Accumulated     Noncontrolling     Stockholders’  
    Shares     Amount     Capital     Surplus     Interests     Equity  
BALANCE, December 31, 2023     21,581     $ 215     $ 161,174    - $ 25,454     $ 11,558     $ 198,401  
Net loss     -       -       -    -   (20,345 )     (9,304 )     (29,649 )
Distributions paid to noncontrolling interests     -       -       -       -       (53 )     (53 )
Contributions received from noncontrolling interests     -       -       -       -       745       745  
Redemption and cancellation of common shares     (244 )     (2 )     (2,897 )     -       -       (2,899 )
BALANCE, September 30, 2024     21,337     $ 213     $ 158,277    - $ 5,109     $ 2,946     $ 166,545  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4

 

 

PART I. FINANCIAL INFORMATION, CONTINUED:

 

ITEM 1. FINANCIAL STATEMENTS, CONTINUED:

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

                 
    For the
Nine Months Ended
September 30,		  
    2024     2023  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (29,649 )   $ (16,171 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     5,260       5,211  
Gain on disposition of real estate     (13,601 )     (1,121 )
Impairment charges     34,353       -  
Loss from investment in unconsolidated affiliated real estate entity     2,718       3,621  
Mark to market adjustments on derivative financial instruments     62       1,050  
Unrealized (gain)/loss on marketable equity securities     (5,824 )     821  
Loss on sale of marketable securities     -       656  
Amortization of deferred financing costs     1,866       2,475  
Noncash interest income     -       (2,934 )
Other non-cash adjustments     14       30  
Changes in assets and liabilities:                
Decrease/(increase) in other assets     640       (1,698 )
Increase in accounts payable, accrued expenses and other liabilities     1,232       842  
Net cash used in operating activities     (2,929 )     (7,218 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Purchase of development property and investment property     (1,458 )     (8,516 )
Purchase of marketable securities     (187 )     (9,284 )
Proceeds from sale of marketable securities     187       14,828  
Proceeds from disposition of real estate     17,529       1,382  
Investment in joint venture     (9 )     (4 )
Distributions from joint venture     52       467  
Proceeds from redemption of preferred investment in related party     -       6,000  
Funding of notes receivable     -       (300 )
Release of reserves on notes receivable     -       300  
Proceeds from repayment of notes receivable     -       14,000  
Investment in unconsolidated affiliated real estate entity     (10 )     (247 )
Net cash provided by investing activities     16,104       18,626  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from mortgage financing     3,036       7,899  
Mortgage principal payments     (1,124 )     (14,468 )
Proceeds from notes payable     3,000       -  
Payment of loan fees and expenses     (120 )     (25 )
Redemption and cancellation of common shares     (2,899 )     (2,455 )
Contributions received from noncontrolling interests     745       1,523  
Distributions paid to noncontrolling interests     (53 )     (4,323 )
Distributions paid to Company’s common stockholders     -       (11,200 )
Net cash provided by/(used in) financing activities     2,585       (23,049 )
                 
Change in cash, cash equivalents and restricted cash     15,760       (11,641 )
Cash, cash equivalents and restricted cash, beginning of year     18,360       22,583  
Cash, cash equivalents and restricted cash, end of period   $ 34,120     $ 10,942  
                 
See Note 2 for supplemental cash flow information.                
                 
The following is a summary of the Company’s cash, cash equivalents, and restricted cash total as presented in our statements of cash flows for the periods presented:                
Cash and cash equivalents   $ 27,020     $ 8,548  
Restricted cash     7,100       2,394  
Total cash, cash equivalents and restricted cash   $ 34,120     $ 10,942  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

1. Business and Structure

 

Lightstone Value Plus REIT I, Inc., is a Maryland corporation (“Lightstone REIT I”), formed on June 8, 2004, which has elected to be taxed and qualify as a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes. Lightstone REIT I was formed primarily for the purpose of engaging in the business of investing in and owning commercial and multifamily residential real estate properties and making other real estate-related investments located throughout the U.S.

 

Lightstone REIT I is structured as an umbrella partnership REIT, or UPREIT, and substantially all of its current and future business is and will be conducted through Lightstone Value Plus REIT, L.P. (the “Operating Partnership”), a Delaware limited partnership formed on July 12, 2004. As of September 30, 2024, Lightstone REIT I held a 98% general partnership interest in the Operating Partnership’s common units (“Common Units”).

 

Lightstone REIT I, together with the Operating Partnership and its subsidiaries are collectively referred to as the “Company” and the use of “we,” “our,” “us” or similar pronouns refers to Lightstone REIT I, its Operating Partnership or the Company as required by the context in which such pronoun is used.

 

Through its Operating Partnership, the Company owns, operates and develops commercial and multifamily residential properties and makes other real estate-related investments, principally in the U.S. The Company’s real estate investments are held by it alone or jointly with other parties. The Company also originates or acquires mortgage loans secured by real estate. Although most of its investments are of these types, the Company may invest in whatever types of real estate or real estate-related investments that it believes is in its best interests. Since its inception, the Company has owned and managed various commercial and multifamily residential properties located throughout the U.S. The Company evaluates all of its real estate investments as one operating segment. The Company currently intends to hold its real estate investments until such time as it determines that a sale or other disposition appears to be advantageous to achieve its objectives or until it appears that the objectives will not be met.

 

As of September 30, 2024, the Company (i) has ownership interests in and consolidates two operating properties, two development projects and certain land holdings and (ii) has ownership interests through two unconsolidated joint ventures in a portfolio of nine multifamily residential properties (the “Columbus Properties”) and a portfolio of five limited service hotel properties (the “Hotel JV Properties”).

 

With respect to its consolidated operating properties, the Company wholly owns a 303-room Marriott International, Inc. (“Marriott”) branded Moxy hotel (the “Lower East Side Moxy Hotel”), located in the Lower East Side neighborhood in the Manhattan borough of New York City, which it developed, constructed and opened on October 27, 2022 and has a 59.2% majority ownership interest in 50-01 2nd St. Associates LLC (the “2nd Street Joint Venture”), a joint venture between the Company and a related party, which developed, constructed and owns a 199-unit luxury, multifamily residential property (“Gantry Park Landing”), located in the Long Island City neighborhood in the Queens borough of New York City.

 

With respect to its consolidated development projects, the Company wholly owns three land parcels located at 355 & 399 Exterior Street in the Mott Haven neighborhood in the Bronx borough of New York City, which it acquired for the development of a mixed-use multifamily residential and commercial retail project (the “Exterior Street Project”) and the Company has a 50% joint venture ownership interest in LSC 1543 7th LLC (the “Santa Monica Joint Venture”), a joint venture between the Company and a related party, which owns certain land parcels located in Santa Monica, California, on which a multifamily residential project (the “Santa Monica Project”) has been proposed (see Notes 3 and 7).

 

6

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

The Company also wholly owns and consolidates certain land parcels located in St. Augustine, Florida.

 

With respect to our unconsolidated joint venture properties, the Company holds a 19% joint venture ownership interest in Columbus Portfolio Member LLC (the “Columbus Joint Venture”), which owns the Columbus Properties, a portfolio of nine multifamily residential properties located in the Columbus, Ohio metropolitan area, and it holds a 2.5% joint venture ownership interest in LVP Holdco JV LLC (the “Hotel Joint Venture”), which owns the Hotel JV Properties, a portfolio of five limited service hotels. The Company accounts for its 19% joint venture ownership interest in the Columbus Joint Venture under the equity method of accounting and it accounts for its 2.5% joint venture ownership interest in the Hotel Joint Venture using a measurement alternative pursuant to which its investment is measured at cost, adjusted for observable price changes and impairments, if any. Both the Columbus Joint Venture and the Hotel Joint Venture are between the Company and related parties.

 

The Company’s advisor is Lightstone Value Plus REIT, LLC (the “Advisor”), which is majority owned by David Lichtenstein. On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units. The Company’s Advisor also owns 20,000 shares of the Company’s common stock (“Common Shares”) which were issued on July 6, 2004 for $200, or $10.00 per share. Mr. Lichtenstein also is the majority owner of the equity interests of The Lightstone Group, LLC (the “Sponsor”), which served as the Company’s sponsor during its initial public offering (the “Offering”), which terminated on October 10, 2008. The Company’s Advisor, pursuant to the terms of an advisory agreement, together with its board of directors (the “Board of Directors”), is primarily responsible for making investment decisions on the Company’s behalf and managing its day-to-day operations. Through his ownership and control of Sponsor, Mr. Lichtenstein is the indirect owner and manager of Lightstone SLP, LLC, a Delaware limited liability company, which owns an aggregate of $30.0 million of special general partner interests (“SLP Units”) in the Operating Partnership which were purchased, at a cost of $100,000 per unit, in connection with the Company’s Offering. Mr. Lichtenstein also acts as the Company’s Chairman and Chief Executive Officer. As a result, he exerts influence over but does not control Lightstone REIT I or the Operating Partnership.

 

The Company has no employees. The Company is dependent on the Advisor and certain affiliates of its Sponsor for performing a full range of services that are essential to it, including asset management, property management (excluding its hospitality property, which is managed by unrelated third party property managers) and acquisition, disposition and financing activities, and other general administrative responsibilities; such as tax, accounting, legal, information technology and investor relations services. If the Advisor and certain affiliates of the Company’s Sponsor are unable to provide these services to it, the Company would be required to provide the services itself or obtain the services from other parties.

 

The Company’s Common Shares are not currently listed on a national securities exchange. The Company may seek to list its Common Shares for trading on a national securities exchange only if a majority of independent directors believe listing would be in the best interest of its stockholders. The Company does not intend to list its Common Shares at this time. The Company does not anticipate that there would be any active market for its Common Shares until they are listed for trading.

 

Related Parties

 

The Company’s Sponsor, Advisor and their affiliates, including Lightstone SLP, LLC, are related parties of the Company as well as other public REITs also sponsored and/or advised by these entities. Pursuant to the terms of various agreements, certain of these entities are entitled to compensation and reimbursement of costs incurred for services related to the investment, management and disposition of the Company’s assets. The compensation is generally based on the cost of acquired properties/investments and the annual revenue earned from such properties/investments, and other such fees and expense reimbursements as outlined in each of the respective agreements.

 

7

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

Noncontrolling Interests

 

Partners of Operating Partnership

 

On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units in the Operating Partnership. The Advisor has the right to convert the Common Units into cash or, at the option of the Company, an equal number of shares of Common Shares.

 

In connection with the Offering, Lightstone SLP, LLC, an affiliate of the Advisor, purchased an aggregate of $30.0 million of SLP Units. As the majority owner of the SLP Units, Mr. Lichtenstein is the beneficial owner of a 99% interest in such SLP Units and thus receives an indirect benefit from any distributions made in respect thereof. These SLP Units may be entitled to a portion of any regular and liquidation distributions that the Company makes to its stockholders, but only after the Company’s stockholders have received a stated preferred return.

 

In addition, an aggregate 497,209 Common Units were issued to other unrelated parties during 2008 and 2009 and remain outstanding as of September 30, 2024.

 

Other Noncontrolling Interests in Consolidated Subsidiaries

 

Other noncontrolling interests in consolidated subsidiaries include the joint venture ownership interests held by either the Sponsor or its affiliates in (i) Pro-DFJV Holdings LLC (“PRO”), (ii) the 2nd Street Joint Venture and (iii) the Santa Monica Joint Venture (see Note 3). PRO’s holdings principally consist of Marco OP Units and Marco II OP Units (see Note 6). The 2nd Street Joint Venture owns Gantry Park Landing and the Santa Monica Joint Venture owns the Santa Monica Project (see Notes 3 and 7).

 

2. Summary of Significant Accounting Policies

 

Principles of Consolidation and Basis of Presentation

 

The consolidated financial statements include the accounts of Lightstone REIT I and its Operating Partnership and its subsidiaries (over which Lightstone REIT I exercises financial and operating control). All inter-company balances and transactions have been eliminated in consolidation. In addition, interests in entities acquired are evaluated based on applicable accounting principles generally accepted in the U.S. (“GAAP”), and if deemed to be variable interest entities (“VIE”) in which the Company is the primary beneficiary are also consolidated. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation based on legal form, economic substance, and the extent to which the Company has control, substantive participating rights or both under the respective ownership agreement. For entities in which the Company has less than a controlling interest but have significant influence, the Company accounts for the investment using the equity method of accounting.

 

There are judgments and estimates involved in determining if an entity in which the Company has made an investment is a VIE and, if so, whether the Company is the primary beneficiary. The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage of equity being risked compared to the total equity of the entity. Determining expected future losses involves assumptions of various possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate to determine the net present value of those future losses. A change in the judgments, assumptions, and estimates outlined above could result in consolidating an entity that should not be consolidated or accounting for an investment using the equity method that should in fact be consolidated, the effects of which could be material to our financial statements.

 

8

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Form 10-K”). The unaudited interim consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair presentation of the results for the periods presented. The accompanying unaudited consolidated financial statements of Lightstone Value Plus REIT I, Inc. and its Subsidiaries have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.

 

GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period. The most significant assumptions and estimates relate to the valuation of real estate and real-estate related investments, marketable securities, notes receivable, depreciable lives, and revenue recognition. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.

 

The consolidated balance sheet as of December 31, 2023 included herein has been derived from the consolidated balance sheet included in the Company’s 2023 Form 10-K.

 

The unaudited consolidated statements of operations for interim periods are not necessarily indicative of results for the full year or any other period.

 

Income Taxes

 

The Company elected to be taxed and qualify as a REIT, commencing with the taxable year ended December 31, 2005. If the Company remains qualified as a REIT, it generally will not be subject to U.S. federal income tax on its net taxable income that it distributes currently to its stockholders. To maintain its REIT qualification under the Internal Revenue Code of 1986, as amended, or the Code, the Company must meet a number of organizational and operational requirements, including a requirement that it annually distribute to its stockholders at least 90% of its REIT taxable income (which does not equal net income, as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. If the Company fails to remain qualified for taxation as a REIT in any subsequent year and does not qualify for certain statutory relief provisions, its income for that year will be taxed at regular corporate rates, and it may be precluded from qualifying for treatment as a REIT for the four-year period following its failure to qualify as a REIT. Such an event could materially adversely affect its net income and net cash available for distribution to its stockholders. Additionally, even if the Company continues to qualify as a REIT for U.S. federal income tax purposes, it may still be subject to some U.S. federal, state and local taxes on its income and property and to U.S. federal income taxes and excise taxes on its undistributed income, if any.

 

To maintain its qualification as a REIT, the Company engages in certain activities through a taxable REIT subsidiary (“TRS”), including when the Company acquires or develops and constructs a hotel it usually establishes a new TRS and enters into an operating lease agreement for the hotel. As such, the Company is subject to U.S. federal and state income and franchise taxes from these activities.

 

The Company’s income tax expense is included in other income/(expense), net on its consolidated statements of operations. No income tax expense was recorded during the three months ended September 30, 2024. During the nine months ended September 30, 2024, the Company recorded income tax expense of $0.9 million. During both the three and nine months ended September 30, 2023, the Company recorded income tax expense of $2.5 million, primarily consisting of federal and state income tax related to the redemptions of its preferred investments in related parties.

 

As of September 30, 2024 and December 31, 2023, the Company had no material uncertain income tax positions.

 

9

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

Revenues

 

The following table represents the total hotel revenues from the operations of the Lower East Side Moxy Hotel on a disaggregated basis:

 

Schedule of revenues on a disaggregated                            
    For the
Three Months Ended
September 30,		     For the
Nine Months Ended
September 30,		  
      2024       2023     2024     2023  
Revenues                                
Room   $ 7,650     $ 6,804     $ 19,826     $ 16,504  
Food, beverage and other     5,434       6,455       17,618       17,242  
Total revenues   $ 13,084     $ 13,259     $ 37,444     $ 33,746  

 

Land Parcels

 

The Company wholly owns certain land parcels located in St. Augustine, Florida.

 

During the first quarter of 2023, the Company completed the disposition of one of its land parcels located in St. Augustine, Florida to an unrelated third-party for a contractual sales price of $1.5 million and recognized a gain on disposition of real estate of $1.1 million. During the second quarter of 2024, the Company completed the disposition of two more of its land parcels located in St. Augustine, Florida, each to an unrelated third-party, for an aggregate contractual sales price of $14.8 million and recognized an aggregate gain on disposition of real estate of $10.9 million. During the third quarter of 2024, the Company completed the sale of certain municipal impact fee credits, which were attributable to the development of its former outlet center located in St. Augustine, Florida, which was substantially demolished during 2022, to an unrelated third-party for a contractual sales price of $2.7 million and recognized a gain on disposition of real estate of $2.7 million.

 

As of September 30, 2024 and December 31, 2023, the carrying value of the Company’s land parcels located in St. Augustine, Florida was $2.1 million and $6.0 million, respectively, which is included in land and land improvements on the consolidated balance sheets.

 

New Accounting Pronouncements

 

In November 2023, the FASB issued an accounting standards update which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within segment profit and loss, as well as the title and position of the CODM. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is evaluating the guidance and the impact it may have on its consolidated financial statements.

 

In December 2023, the FASB issued an accounting standards update which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This update is effective for annual periods beginning after December 15, 2024. The Company is evaluating the guidance and the impact it may have on its consolidated financial statements.

 

The Company has reviewed and determined that other recently issued accounting pronouncements will not have a material impact on its financial position, results of operations and cash flows, or do not apply to its current operations.

 

10

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

Concentration of Risk

 

As of September 30, 2024 and December 31, 2023, the Company had cash deposited in certain financial institutions in excess of U.S. federally insured levels. The Company regularly monitors the financial stability of these financial institutions and believes that it is not exposed to any significant credit risk with respect to its cash and cash equivalents or restricted cash.

 

Current Environment

 

The Company’s operating results and financial condition are substantially impacted by the overall health of local, U.S. national and global economies and may be influenced by market and other challenges. Additionally, the Company’s business and financial performance may be adversely affected by current and future economic and other conditions; including, but not limited to, availability or terms of financings, financial markets volatility and banking failures, political upheaval or uncertainty, natural and man-made disasters, terrorism and acts of war, unfavorable changes in laws and regulations, outbreaks of contagious diseases, cybercrime, loss of key relationships, inflation and recession.

 

The Company’s overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on consumer behavior. Worsening economic conditions, increases in costs due to inflation, higher interest rates, labor and supply chain challenges and other changes in economic conditions could adversely affect the Company’s future results from operations and its financial condition.

 

Reclassifications

 

Certain prior period amounts may have been reclassified to conform to the current period’s presentation.

 

Supplemental Cash Flow Information

 

Supplemental cash flow information for the periods indicated is as follows:

 

Summary of supplemental cash flow information                
    For the
Nine Months Ended
September 30,		  
    2024     2023  
Cash paid for interest   $ 17,175     $ 19,566  
Distributions declared but not paid   $ -     $ 1,897  
Capital expenditures for investment property in accounts payable, accrued expenses and other liabilities   $ 29     $ 1,251  
Value of shares issued from distribution reinvestment program   $ -     $ 252  

 

11

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

3. Development Projects

 

Exterior Street Project

 

The Company wholly owns the Exterior Street Project, a proposed mixed-use multifamily residential and commercial retail project. In February 2019, the Company, through subsidiaries of the Operating Partnership, acquired two adjacent parcels of land located at 355 and 399 Exterior Street in the Mott Haven neighborhood in the Bronx borough of New York City from unaffiliated third parties for an aggregate purchase price of $59.0 million, excluding closing and other acquisition related costs. In September 2021, the Company subsequently acquired an additional adjacent parcel of land at cost from an affiliate of its Advisor for $1.0 million in order to achieve certain zoning compliance. These three land parcels were acquired by the Company for the development of the Exterior Street Project.

 

During the nine months ended September 30, 2023, interest of $1.5 million was capitalized to the Exterior Street Project.

 

During the second quarter of 2023, the Company decided to temporarily pause active development activities associated with the Exterior Street Project, due to prevailing unfavorable economic and local market conditions and regulations, and therefore, ceased capitalization of interest and other carrying costs.

 

Impairment Charge

 

Because of continuing unfavorable economic and local market conditions, the Company determined during the third quarter of 2024 it would no longer pursue the development of the Exterior Street Project, but rather pursue other strategies with respect to it, including a sale. As a result of this change in strategy; the Company determined the carrying value of the Exterior Street Project was no longer fully recoverable and therefore, recorded a non-cash impairment charge of $16.6 million, (included in impairment charges on the Company’s consolidated statement of operations) during the third quarter of 2024 to reduce the carrying value of the Exterior Street Project to its estimated fair value of $78.8 million as of September 30, 2024. In estimating the fair value of the Exterior Street Project, the Company took into consideration a bona fide third-party offer obtained from an independent third-party broker.

 

As of September 30, 2024 and December 31, 2023, the carrying value of the Exterior Street Project was $78.8 million and $95.7 million, respectively, which is included in development projects on the consolidated balance sheets.

 

Santa Monica Project

 

The Company has a 50% joint venture ownership interest in the Santa Monica Joint Venture. The Santa Monica Joint Venture, which the Company consolidates, is between the Company and a related party. In March 2022, the Santa Monica Joint Venture originated a $49.0 million promissory note (the “Santa Monica Note Receivable”) to a borrower (the “Santa Monica Borrower”), which was collateralized by two development projects located in Santa Monica, California. The Santa Monica Note Receivable bore interest at SOFR + 7.00%, subject to a 7.15% floor.

 

12

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

During the first quarter of 2023, the Santa Monica Joint Venture received a partial paydown of $14.0 million on the Santa Monica Note Receivable in exchange for the release of one of the development projects, which had been completed, from the underlying collateral pool. As a result, the remaining outstanding balance of the Santa Monica Note Receivable of $35.0 million was secured solely by the Santa Monica Project, which consists of a proposed multifamily residential project on land located in Santa Monica, California.

 

Due to financial difficulties, during the second quarter of 2023 the Santa Monica Borrower discontinued making monthly interest payments on the Santa Monica Note Receivable, which subsequently matured on August 31, 2023. On December 29, 2023, ownership of the Santa Monica Project was transferred to the Santa Monica Joint Venture via a deed in lieu of foreclosure transaction. In connection with the transfer, the outstanding principal and accrued interest for the Santa Monica Note Receivable of $36.7 million, which represented the fair value of the Santa Monica Project and approximated the carrying value of the Santa Monica Note Receivable, was reclassified from notes receivable, net to development projects on the consolidated balance sheet.

 

Impairment Charge

 

Subsequent to obtaining ownership of the Santa Monica Project, the Santa Monica Joint Venture decided to continue certain pre-development activities, which had already been started by the former owner. However, during the third quarter of 2024, the Santa Monica Joint Venture decided to no longer pursue development of the Santa Monica Project, but rather pursue various other strategies with respect to it, including a sale or the potential transfer of ownership to the lender, which had provided a non-recourse mortgage loan (the “Santa Monica Loan”), collateralized by the Santa Monica Project As a result of the change in strategy, the Santa Monica Joint Venture determined the carrying value of the Santa Monica Project was no longer fully recoverable and therefore, recorded a non-cash impairment charge of $17.7 million (which is included in impairment charges on the Company’s consolidated statement of operations) during the third quarter of 2024 in order to reduce the carrying value of the Santa Monica Project to its estimated fair value of $19.0 million as of September 30, 2024. In estimating the fair value of the Santa Monica Project, the Santa Monica Joint Venture used the fair value provided by an independent, third-party commercial real estate advisory and services firm.

 

On October 15, 2024 the Santa Monica Loan matured and it was not repaid, which constitutes a maturity event of default and therefore, it is due on demand. On October 30, 2024, the lender issued a formal notice of default and on October 31, 2024, the Santa Monica Joint Venture notified the lender of its intent to transfer ownership of the underlying collateral, the Santa Monica Project, to the lender via a deed-in-lieu of foreclosure transaction. See Note 7 for additional information.

 

As of September 30, 2024 and December 31, 2023, the carrying value of the Santa Monica Project was $19.0 million and $36.7 million, respectively, which is included in development projects on the consolidated balance sheets.

 

13

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

4. Investment in Unconsolidated Affiliated Real Estate Entity

 

Columbus Joint Venture

 

On November 29, 2022, the Company, along with CRE Columbus Member (“Converge”), a majority owned subsidiary of Converge Holdings LLC, a reinsurance business owned by the Sponsor, and LEL Columbus Member LLC (the “BVI member”), a wholly owned subsidiary of Lightstone Enterprises Limited (“BVI”), a real estate investment company owned by the Sponsor, entered into a joint venture agreement to form the Columbus Joint Venture for the purpose of acquiring the Columbus Properties, a portfolio of nine multifamily residential properties consisting of 2,564 units located in the Columbus, Ohio metropolitan area for a contractual purchase price of $465.0 million. The Company has a 19% joint venture ownership interest in the Columbus Joint Venture. Converge and the BVI Member, which are both related parties, have joint venture ownership interests of 19% and 62%, respectively. Additionally, the manager of the Columbus Joint Venture is LEL Bronx Manager LLC, an entity wholly owned by BVI.

 

On November 29, 2022, the Columbus Joint Venture completed the purchase of the Columbus Properties. The acquisition was funded with $74.3 million of cash and $390.7 million of aggregate proceeds from preferred investments from unrelated third-parties and loans from two financial institutions. In connection with the acquisition and financings, the total cash paid, including closing costs, was $92.3 million and the Company paid $17.5 million representing its 19.0% pro rata share. In connection with the acquisition, the Company also paid the Advisor a separate acquisition fee of $2.4 million, equal to 2.75% of the Company’s pro-rata share of the contractual purchase price which is reflected in the carrying value of the Company’s investment in unconsolidated affiliated entity on the consolidated balance sheets.

 

The Company has determined that the Columbus Joint Venture is a VIE but it is not the primary beneficiary. The Company accounts for its ownership interest in the Columbus Joint Venture in accordance with the equity method of accounting because it exerts significant influence over but does not control the Columbus Joint Venture. All capital contributions and distributions of earnings from the Columbus Joint Venture are made on a pro rata basis in proportion to each member’s equity interest percentage. Any distributions in excess of earnings from the Columbus Joint Venture are made to the members pursuant to the terms of the Columbus Joint Venture’s operating agreement.

 

In connection with the purchase of the Columbus Properties on November 29, 2022, the Columbus Joint Venture obtained senior mortgage loans from two different financial institutions. The first financial institution provided four separate senior mortgage loans, all to subsidiaries of the Columbus Joint Venture, aggregating $133.6 million. These four senior mortgage loans bear interest at SOFR + 2.19%, provide for interest-only payments for the first six years of their term and mature in December 2032. Each of these four senior mortgage loans is individually collateralized by one of the Columbus Properties (collectively, the “Columbus Portfolio I Properties”). The second financial institution provided five separate senior mortgage loans, all to subsidiaries of the Columbus Joint Venture, aggregating $167.2 million. These five senior mortgage loans bear interest at 4.85%, provide for interest-only payments for the first two years of their term and initially mature in December 2027, but may be further extended for an additional five years, subject to satisfaction of certain conditions. Each of these five senior mortgage loans is individually collateralized by one of the Columbus Properties (collectively, the “Columbus Portfolio II Properties”).

 

Additionally, in connection with the purchase of the Columbus Properties on November 29, 2022, the Columbus Joint Venture obtained an aggregate of $90.0 million in financing through two preferred investments (the “Columbus Preferred Investments”) from unrelated third parties. The first preferred investment of $38.6 million is collateralized by the Columbus Portfolio I Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal and has a mandatory redemption date of December 1, 2032. The second preferred investment of $51.4 million is collateralized by the Columbus Portfolio II Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal, and has a mandatory redemption date of December 1, 2027. As of September 30, 2024, the aggregate unpaid interest included in the outstanding balance of the Columbus Preferred Investments was $10.7 million. Furthermore, the Columbus Preferred Investments are subordinate to the nine senior mortgage loans.

 

Because the Columbus Preferred Investments have mandatory redemption dates, the Columbus Joint Venture treats them as financial liabilities and includes them in mortgages and loans payable on its condensed balance sheets. The Company’s Sponsor (the “Guarantor”) has fully guaranteed the nine senior mortgage loans and the Columbus Preferred Investments (the “Debt Guarantee”). Each of the members of the Columbus Joint Venture have agreed to reimburse the Guarantor for their pro rata share of any balance that becomes due under the Debt Guarantee, of which the Company’s share is up to 19%. The Company has determined that the fair value of the Debt Guarantee is immaterial.

 

14

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

During the nine months ended September 30, 2024 and 2023, the Company made capital contributions of $10 and $13, respectively, to the Columbus Joint Venture.

 

Columbus Joint Venture Financial Information

 

The following table represents the condensed statements of operations for the Columbus Joint Venture:

 

 Schedule of condensed statement of operations for the columbus joint venture                                
    For the
Three Months Ended		     For the
Nine Months Ended		  
    September 30,
2024		     September 30,
2023		     September 30,
2024		     September 30,
2023		  
Revenues   $ 11,239     $ 10,778     $ 32,869     $ 31,785  
                                 
Property operating expenses     5,347       5,219       15,610       15,498  
General and administrative expense     94       84       273       168  
Depreciation and amortization     3,169       4,826       9,272       14,345  
Operating income     2,629       649       7,714       1,774  
                                 
Interest expense and other, net     (7,524 )     (7,152 )     (21,784 )     (20,438 )
Net loss   $ (4,895 )   $ (6,503 )   $ (14,070 )   $ (18,664 )
                                 
Company’s share of net loss (19.0%)   $ (930 )   $ (1,236 )   $ (2,674 )   $ (3,547 )
Additional depreciation and amortization expense(1)     (15 )     (25 )     (44 )     (74 )
Company’s loss from investment   $ (945 )   $ (1,261 )   $ (2,718 )   $ (3,621 )

 

 
(1) Additional depreciation and amortization expense relates to the amortization of the difference between the cost of the interest in the Columbus Joint Venture and the amount of the underlying equity in net assets of the Columbus Joint Venture.

 

The following table represents the condensed balance sheets for the Columbus Joint Venture:

 

Schedule of condensed balance sheet for the columbus joint venture                
    As of     As of  
    September 30,
2024		     December 31,
2023		  
Investment property, net   $ 448,142     $ 449,813  
Cash and restricted cash     18,510       25,640  
Other assets     1,041       3,082  
Total assets   $ 467,693     $ 478,535  
                 
Mortgages and loans payable, net   $ 395,223     $ 390,622  
Other liabilities     9,742       11,149  
Members’ equity     62,728       76,764  
Total liabilities and members’ equity   $ 467,693     $ 478,535  

 

15

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

5. Investment in Related Party

 

Hotel Joint Venture

 

During 2015, the Company formed the Hotel Joint Venture with Lightstone REIT II, a related party REIT also sponsored by the Sponsor. The Company has a 2.5% membership interest in the Hotel Joint Venture and Lightstone REIT II holds the remaining 97.5% membership interest. The Hotel Joint Venture holds ownership interests in the Hotel JV Properties, a portfolio of five limited/select-service hotels, as of both September 30, 2024 and December 31, 2023.

 

The Company accounts for its 2.5% membership interest in the Hotel Joint Venture using a measurement alternative pursuant to which its investment is measured at cost, adjusted for observable price changes and impairments, if any, and as of September 30, 2024 and December 31, 2023, the carrying value of its investment was $0.4 million and $0.5 million, respectively, which is classified as investment in related parties on the consolidated balance sheets.

 

6. Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable

 

Marketable Securities

 

The following is a summary of the Company’s available for sale securities:

 

Summary of available for sale securities and other investments                                
    As of September 30, 2024  
    Adjusted Cost     Gross
Unrealized Gains		     Gross
Unrealized Losses		     Fair Value  
Marketable Securities:                                
Equity securities:                                
Common and Preferred Equity Securities   $ 5,598     $ 240     $ (163 )   $ 5,675  
Marco OP Units and Marco II OP Units     19,227       16,139       -       35,366  
    $ 24,825     $ 16,379     $ (163 )   $ 41,041  

 

    As of December 31, 2023  
    Adjusted Cost     Gross
Unrealized Gains		     Gross
Unrealized Losses		     Fair Value  
Marketable Securities:                                
Equity securities:                                
Common and Preferred Equity Securities   $ 5,598     $ -     $ (226 )   $ 5,372  
Marco OP Units and Marco II OP Units     19,227       10,619       -       29,846  
Total   $ 24,825     $ 10,619     $ (226 )   $ 35,218  

 

As of both September 30, 2024 and December 31, 2023, the Company held an aggregate of 209,243 Marco OP Units and Marco II OP Units, of which 89,695 were owned by PRO. The Marco OP Units and the Marco II OP Units are both exchangeable for a similar number of common operating partnership units (“Simon OP Units”) of Simon Property Group, L.P., (“Simon OP”), the operating partnership of Simon Property Group, Inc. (“Simon Inc.”), a public REIT that is an owner and operator of shopping malls and outlet centers. Subject to the various conditions, the Company may elect to exchange the Marco OP Units and/or the Marco II OP Units to Simon OP Units which must be immediately delivered to Simon Inc. in exchange for cash or similar number of shares of Simon Inc.’s common stock (“Simon Stock”). Accordingly, the Marco OP Units and Marco II OP Units are valued based on the closing price of Simon Stock, which was $169.02 per share and $108.03 per share as of September 30, 2024 and 2023, respectively. Additionally, the closing price of Simon Stock was $142.64 per share as of December 31, 2023.

 

16

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

Derivative Financial Instruments

 

The Company enters into interest rate cap contracts in order to reduce the effect of interest rate fluctuations or risk of certain real estate investment’s interest expense on its variable rate debt. The Company is exposed to credit risk in the event of non-performance by the counterparty to these financial instruments. Management believes the risk of loss due to non-performance to be minimal.

 

The Company accounts for interest rate cap contracts as economic hedges, marking these contracts to market, taking into account present interest rates compared to the contracted fixed rate over the life of the contract and recording the unrealized gain or loss on the interest rate cap contracts on the consolidated statements of operations.

 

As of September 30, 2024 and December 31, 2023, the Company had two interest rate cap contracts with notional amounts of $110.0 million and $31.3 million pursuant to which SOFR is capped at 5.50% through December 1, 2024 and June 1, 2025, respectively. See Note 7.

 

Fair Value Measurements

 

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

 

The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

 

  ● Level 1 – Quoted prices in active markets for identical assets or liabilities.
     
  ● Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
     
  ● Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

Marketable securities and derivative financial instruments measured at fair value on a recurring basis as of the dates indicated are as follows:

 

Schedule of marketable securities measured at fair value on a recurring basis                                
    Fair Value Measurement Using        
As of September 30, 2024   Level 1     Level 2     Level 3     Total  
Marketable Securities:                                
Common and Preferred Equity Securities   $ 1,638     $ 4,037     $ -     $ 5,675  
Marco OP and OP II Units     -       35,366       -       35,366  
Total   $ 1,638     $ 39,403     $ -     $ 41,041  
                                 
Derivative Financial Instruments:                                
Interest Rate Cap Contracts   $ -     $ 1     $ -     $ 1  

 

17

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

    Fair Value Measurement Using        
As of December 31, 2023   Level 1     Level 2     Level 3     Total  
Marketable Securities:                                
Common and Preferred Equity Securities   $ 1,383     $ 3,989     $ -     $ 5,372  
Marco OP and OP II Units     -       29,846       -       29,846  
Total   $ 1,383     $ 33,835     $ -     $ 35,218  
                                 
Derivative Financial Instruments:                                
Interest Rate Cap Contracts   $ -     $ 62     $ -     $ 62  

 

The fair values of the Company’s common equity securities are measured using readily quoted prices for these investments which are listed for trade on active markets. The fair values of the Company’s preferred equity securities and corporate bonds are measured using readily available quoted prices for these securities; however, the markets for these securities are not active. Additionally, as noted and disclosed above, the Company’s Marco OP and OP II units are both ultimately exchangeable for cash or similar number of shares of Simon Stock, therefore the Company uses the quoted market price of Simon Stock to measure the fair value of the Company’s Marco OP and OP II units.

 

Nonrecurring Fair Value Measurements

 

Exterior Street Project

 

During the third quarter of 2024, the Company recorded a non-cash impairment charge of $16.6 million (which is included in impairment charges in the Company’s consolidated statement of operations) in order to reduce the carrying value of the Exterior Street Project to its estimated fair value of $78.8 million as of September 30, 2024. In estimating the estimated fair value of the Exterior Street Project, the Company took into consideration a bona fide third-party offer obtained by an independent third-party broker, which was considered a Level 2 under the fair value hierarchy described above. The carrying value of the Exterior Street Project is included in development projects on the consolidated balance sheets as of September 30, 2024. See Note 3.

 

Santa Monica Project

 

During the third quarter of 2024, the Santa Monica Joint Venture recorded a non-cash impairment charge of $17.7 million (which is included in impairment charges in the Company’s consolidated statement of operations) in order to reduce the carrying value of the Santa Monica Project to its estimated fair value of $19.0 million as of September 30, 2024. In estimating the fair value of the Santa Monica Project, the Santa Monica Joint Venture used the value provided by an independent, third-party commercial real estate advisory and services firm, which was considered a Level 2 under the fair value hierarchy described above. The carrying value of the Santa Monica Project is included in development projects on the consolidated balance sheets as of September 30, 2024. See Note 3.

 

The Company did not have any other significant financial assets or liabilities, which would require revised valuations that are recognized at fair value.

 

Notes Payable

 

Margin Loan

 

The Company has access to a margin loan (the “Margin Loan”) from a financial institution that holds custody of certain of the Company’s marketable securities. The Margin Loan, which is due on demand, bears interest at SOFR plus 0.85% (5.70% as of September 30, 2024) and is collateralized by the marketable securities in the Company’s account. The amounts available to the Company under the Margin Loan are at the discretion of the financial institution and not limited to the amount of collateral in its account. There were no amounts outstanding under this Margin Loan as of September 30, 2024 and December 31, 2023.

 

18

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

Line of Credit

 

The Company has a non-revolving credit facility (the “Line of Credit”) with a financial institution that provides for borrowings up to a maximum of $20.0 million, subject to a 55% loan-to-value ratio based on the fair value of the underlying collateral, which matures on November 30, 2024 and bears interest at SOFR plus 1.35% (6.20% as of September 30, 2024). The Line of Credit is collateralized by an aggregate of 187,019 of Marco OP Units and is guaranteed by PRO.

 

As of September 30, 2024, the amount of borrowings available to be drawn under the Line of Credit was $17.4 million of which the outstanding principal balance of the Line of Credit was $3.0 million which is presented, net of deferred financing fees of $1, on the consolidated balance sheets and is classified as notes payable, net. As of December 31, 2023, the amount of borrowings available to be drawn under the Line of Credit was $14.7 million and no amounts were outstanding.

 

The Company currently intends to seek to extend the Line of Credit on or before its scheduled maturity date. However, if the Company is unable to extend the Line of Credit, it will repay the outstanding balance in full with available cash on hand.

 

7. Mortgages Payable, Net

 

Mortgages payable, net consists of the following:

 

 Schedule of mortgages payable                                        
    Interest Rate     Weighted Average
Interest Rate
for the
Nine Months Ended
September 30,
2024		     Maturity Date   Amount
Due at
Maturity		     As of
September 30,
2024		     As of
December 31,
2023		  
Gantry Park Mortgage Loan   4.48%     4.48%     December 2024   $ 65,317     $ 65,573     $ 66,697  
                                         
Moxy Senior Loan   SOFR + 4.00%
(floor of 7.50%)		     9.12%     December 2026     108,471       108,471       106,108  
                                         
Moxy Junior Loan   SOFR + 8.75%
(floor of 12.25%)		     13.93%     December 2026     30,875       30,875       30,202  
                                         
Exterior Street Loan   SOFR + 2.85%     8.29%     November 2024     35,000       35,000       35,000  
                                         
Exterior Street Supplemental Loan   SOFR + 2.85%     8.27%     November 2024     7,000       7,000       7,000  
                                         
Santa Monica Loan   SOFR + 4.50%     9.85%     Due on Demand     19,476       19,476       19,476  
Total mortgages payable         8.46%         $ 266,139       266,395       264,483  
                                         
Less: Deferred financing costs                             (3,038 )     (4,785 )
                                         
Total mortgages payable, net                           $ 263,357     $ 259,698  

 

19

 

 

LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

One-month SOFR as of September 30, 2024 and December 31, 2023 was 4.85% and 5.35%, respectively. The Company’s loans are secured by the indicated real estate/investment and are non-recourse to the Company, unless otherwise indicated.

 

Santa Monica Loan

 

On June 30, 2022, the Santa Monica Joint Venture obtained the Santa Monica Loan, a loan of up to $33.1 million which initially bore interest at SOFR + 3.50%. The Santa Monica Loan requires monthly interest-only payments with the outstanding principal balance due at its maturity date and was previously collateralized by the Santa Monica Note Receivable, which was issued by the Santa Monica Joint Venture. During the first quarter of 2023, the Santa Monica Joint Venture received a $14.0 million paydown on the Santa Monica Note Receivable, of which it used $11.3 million to make a paydown on the Santa Monica Loan, which reduced its outstanding balance to $21.5 million. The Santa Monica Loan was initially scheduled to mature on December 30, 2023, however, on September 5, 2023, the Santa Monica Joint Venture exercised an option to extend its maturity date to February 29, 2024. In connection with this extension, the Santa Monica Joint Venture made an additional principal paydown of $2.1 million, which reduced the outstanding balance of the Santa Monica Loan to $19.5 million. Additionally, the Santa Monica Joint Venture funded $0.9 million into a cash collateral reserve account to cover the interest payments through February 29, 2024.

 

In connection with the transfer of ownership of the Santa Monica Project to the Santa Monica Joint Venture on December 29, 2023, the Santa Monica Loan was modified to substitute the Santa Monica Project as the underlying collateral and the maturity date was further extended to August 1, 2024. Subsequently in March 2024, the Santa Monica Loan was again modified pursuant to which the interest rate was changed to SOFR + 4.5%, subject to a floor of 7.5%, the maturity date was changed to August 31, 2024 and the interest reserve was replenished to cover the payments due through August 31, 2024. On September 5, 2024, the maturity date of the Santa Monica Loan was further extended to October 15, 2024. As of September 30, 2024, the outstanding principal balance of the Santa Monica Loan was $19.5 million.

 

On October 15, 2024, the Santa Monica Loan matured and it was not repaid, which constitutes a maturity event of default and therefore, it is due on demand. On October 30, 2024, the lender issued a formal notice of default and on October 31, 2024, the Santa Monica Joint Venture notified the lender of its intent to transfer ownership of the underlying collateral, the Santa Monica Project, to the lender via a deed-in-lieu of foreclosure transaction.

 

See Note 3 for additional information.

 

Moxy Mortgage Loans

 

On November 29, 2023, the Company entered into a mortgage loan facility (the “Moxy Senior Loan”) with an unrelated third party providing for up to $110.0 million. At closing, $106.1 million of proceeds were advanced under the Moxy Senior Loan and the remaining availability of $3.9 million could only be drawn to cover operating losses, subject to various conditions. The Moxy Senior Loan bears interest at SOFR plus 4.00%, subject to a 7.50% floor, and initially matures on December 1, 2026, with two one-year extension options subject to the satisfaction of certain conditions. As of September 30, 2024, the outstanding principal balance of the Moxy Senior Loan and remaining availability were $108.5 million and $1.5 million, respectively.

 

Simultaneously on November 29, 2023, the Company also entered into a mortgage loan facility (the “Moxy Junior Loan” and together with the Moxy Senior Loan, the “Moxy Mortgage Loans”) with an unrelated third party providing for up to $31.3 million. At closing, $30.2 million of proceeds were advanced under the Moxy Junior Loan and the remaining availability of $1.1 million could only be drawn for operating losses, subject to various conditions. The Moxy Junior Loan bears interest at SOFR plus 8.75%, subject to a 12.25% floor, and initially matures on December 1, 2026, with two one-year extension options subject to the satisfaction of certain conditions. As of September 30, 2024, the outstanding principal balance of the Moxy Junior Loan and remaining availability were $30.9 million and $0.4 million, respectively.

 

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LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

The Moxy Mortgage Loans require monthly interest-only payments through their maturity dates and are collateralized by the Lower East Side Moxy Hotel, however, the Moxy Junior Loan is subordinate to the Moxy Senior Loan. Aggregate proceeds of $130.0 million advanced at the closing of the Moxy Mortgage Loans were used to repay in full existing construction mortgage indebtedness, which was collateralized by the Lower East Side Moxy Hotel.

 

Pursuant to the terms of the Moxy Mortgage Loans, the Company is required to enter into two interest rate cap contracts with an aggregate notional amount of $141.3 million (equal to the total maximum amounts available under the Moxy Senior Loan and the Moxy Junior Loan) for as long as the Moxy Mortgage Loans remain outstanding. On November 29, 2023, the Company entered into two interest rate cap agreements with notional amounts of $110.0 million and $31.3 million ($141.3 million in the aggregate) pursuant to which the SOFR rate is capped at 5.50% through December 1, 2024 and June 1, 2025 for the Moxy Junior Loan and the Moxy Senior Loan, respectively, at an aggregate cost of $0.2 million.

 

In connection with obtaining the Moxy Mortgage Loans, the Company provided certain interest and carry costs guarantees and paid $4.1 million of loan fees and expenses.

 

Exterior Street Loans

 

On March 29, 2019, the Company obtained a $35.0 million loan (the “Exterior Street Loan”) from a financial institution which, commencing on October 10, 2020, bore interest at LIBOR plus 2.25% through November 24, 2022. On December 21, 2021, the loan agreement was amended to provide an additional $7.0 million loan (the “Exterior Street Supplemental Loan” and collectively with the Exterior Street Loan, the “Exterior Street Loans”) which bore interest at LIBOR plus 2.50% through November 24, 2022. The Exterior Street Loans require monthly interest-only payments with the outstanding principal balances due in full at their maturity date. The Exterior Street Loans are collateralized by the Exterior Street Project.

 

On November 22, 2022, the Company and the financial institution entered into an additional amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to SOFR plus 2.60% and their maturity dates were extended to November 24, 2023. On October 31, 2023, the Company and the financial institution entered into an additional amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to SOFR plus 2.85% (7.70% as of September 30, 2024) and their maturity dates were extended to November 24, 2024. As of September 30, 2024, the outstanding aggregate principal balance of the Exterior Street Loans was $42.0 million.

 

The following table shows the contractually scheduled principal maturities of the Company’s mortgage debt during the next five years and thereafter as of September 30, 2024:

 

Scheduled of contractually principal maturities during next five years                                                        
    2024     2025     2026     2027     2028     Thereafter     Total  
Principal maturities   $ 127,049     $ -     $ 139,346     $ -     $ -     $ -     $ 266,395  
Less: Deferred financing costs                                                     (3,038 )
Total principal maturities, net                                                   $ 263,357  

 

Certain of the Company’s debt agreements require the maintenance of certain ratios, including debt service coverage. As of September 30, 2024, the Company was in compliance with all of its financial debt covenants. Additionally, certain of the Company’s mortgages payable also contain clauses providing for prepayment penalties.

 

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LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

Mortgage Debt Maturities

 

The Santa Monica Loan (outstanding principal balance of $19.5 million as of September 30, 2024) matured on October 15, 2024 and was not repaid, which constitutes an event of default and therefore, it is due on demand. The Santa Monica Joint Venture currently intends to transfer ownership of the Santa Monica Project, the underlying collateral, to the lender via a deed-in-lieu of foreclosure transaction.

 

Additionally, the Company has certain other mortgage debt maturities within 12 months of the date of these consolidated financial statements as discussed below.

 

The mortgage loan collateralized by Gantry Park Landing (the “Gantry Park Mortgage Loan”) (outstanding principal balance of $65.6 million as of September 30, 2024) matures on December 1, 2024. The Company currently intends to seek to extend or refinance the Gantry Park Mortgage Loan on or before its scheduled maturity date.

 

The Exterior Street Loans (outstanding aggregate principal balance of $42.0 million as of September 30, 2024) mature on November 24, 2024. The Company currently intends to seek to extend the Exterior Street Loans on or before their scheduled maturity date.

 

However, if the Company is unable to extend or refinance these maturing mortgage loans at favorable terms, it will look to repay their then outstanding balances with available cash and/or proceeds from selective asset sales. The Company has no additional significant maturities of mortgage debt over the next 12 months.

 

8. Equity

 

Distributions on Common Shares

 

On November 10, 2023, the Board of Directors determined to suspend regular quarterly distributions. Until distributions on common shares are brought current to at least an annualized rate of 7.0% assuming a purchase price of $10.00 per share, no distributions may be declared on the SLP Units. Any future distributions on the SLP Units will always be subordinated until stockholders receive a stated preferred return.

 

Future distributions, if any, declared will be at the discretion of the Board of Directors based on their analysis of the Company’s performance over the previous periods and expectations of performance for future periods. The Board of Directors will consider various factors in its determination, including but not limited to, the sources and availability of capital, operating and interest expenses, the Company’s ability to refinance near-term debt, as well as the IRS’s annual distribution requirement that REITs distribute no less than 90% of their taxable income. The Company cannot assure that any future distributions will be made or that it will maintain any particular level of distributions that it has previously established or may establish.

 

SRP

 

The Company’s share repurchase program (the “SRP”) may provide its stockholders with limited, interim liquidity by enabling them to sell their Common Shares back to the Company, subject to restrictions.

 

On March 25, 2020, the Board of Directors amended the SRP to remove stockholder notice requirements and also approved the suspension of all redemptions.

 

Effective March 18, 2021 and May 14, 2021, the Board of Directors partially reopened the SRP to allow, subject to various conditions as set forth below, for redemptions submitted in connection with a stockholder’s death and hardship, respectively, and set the price for all such purchases to the Company’s current estimated net asset value per share of common stock (“NAV per Share”), as determined by the Board of Directors and reported by the Company from time to time. Deaths that occurred subsequent to January 1, 2020 were eligible for consideration, subject to certain conditions. Beginning January 1, 2022, requests for redemptions in connection with a stockholder’s death must be submitted and received by the Company within one year of the stockholder’s date of death for consideration. On March 18, 2022, the Board of Directors approved an increase to the annual threshold for death redemptions from up to 0.5% to 1.0%.

 

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LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

At the above noted dates, the Board of Directors established that on an annual basis, the Company would not redeem in excess of 1.0% and 0.5% of the number of shares outstanding as of the end of the preceding year for either death or hardship redemptions, respectively. Additionally, redemption requests generally would be processed on a quarterly basis and would be subject to proration if either type of redemption requests exceeded the annual limitation.

 

For the nine months ended September 30, 2024, the Company repurchased 243,754 Common Shares at a weighted average price per share of $11.88. For the nine months ended September 30, 2023, the Company repurchased 201,195 Common Shares at a weighted average price per share of $12.19.

 

Net Earnings Per Share

 

Basic net earnings per share is calculated by dividing net income attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the applicable period. Dilutive income per share includes the potentially dilutive effect, if any, which would occur if our outstanding options to purchase our common stock were exercised. For all periods presented dilutive net income per share is equivalent to basic net income per share.

 

9. Related Party Transactions

 

The Company has various agreements, including an advisory agreement, with the Advisor and its affiliates to pay certain fees in exchange for services performed by these entities and other related parties. The Company’s ability to secure financing and subsequent real estate operations are dependent upon its Advisor and its affiliates to perform such services as provided in these agreements.

 

During the first quarter of 2024, the Advisor agreed to allow the Company to temporarily defer the payment of asset management fees. As of September 30, 2024 and December 31, 2023, $2.0 million and $0.5 million, respectively, of asset management fees were owed to the advisor and included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets.

 

The following table represents the fees incurred associated with the services provided by the Company’s Advisor and its affiliates:

 

Summary of Amount recorded in pursuant to related party arrangement                                
    Three Months Ended
September 30,		     Nine Months Ended
September 30,		  
    2024     2023     2024     2023  
Asset management fees (general and administrative costs)   $ 498     $ 539     $ 1,508     $ 1,646  
Property management fees (property operating expenses)     75       76       230       224  
Development fees and cost reimbursement(1)     11       192       32       833  
Total   $ 584     $ 807     $ 1,770     $ 2,703  

 

 
(1) Development fees and the reimbursement of development-related costs that the Company pays to the Advisor and its affiliates are capitalized and are included in the carrying value of the associated development project which are classified as development projects on the consolidated balance sheets until construction is substantially completed. Once construction is substantially completed these amounts are recorded as property operating expenses.

 

See Notes 3, 4 and 5 for other related party transactions.

 

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LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

The advisory agreement has a one-year term and is renewable for an unlimited number of successive one-year periods upon the mutual consent of the Advisor and the Company’s independent directors. Payments to the Advisor or its affiliates may include asset acquisition fees and the reimbursement of acquisition-related expenses, development fees and the reimbursement of development-related costs, financing coordination fees, asset management fees or asset management participation, and construction management fees. The Company may also reimburse the Advisor and its affiliates for actual expenses it incurs for administrative and other services provided for it. Upon the liquidation of the Company’s assets, it may pay the Advisor or its affiliates a disposition commission.

 

In connection with the Company’s Offering, Lightstone SLP, LLC, an affiliate of the Company’s Sponsor, purchased SLP Units in the Operating Partnership for an aggregate of $30.0 million. These SLP Units, the purchase price of which will be repaid only after stockholders receive a stated preferred return and their net investment, may entitle Lightstone SLP, LLC to a portion of any regular distributions made by the Operating Partnership.

 

No distributions were declared and paid on the SLP Units during the three and nine months ended September 30, 2024. During the three and nine months ended September 30, 2023, distributions of $0.5 million and $1.0 million, respectively, were declared and paid on the SLP units.

 

10. Financial Instruments

 

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, other assets and accounts payable, accrued expenses and other liabilities approximate their fair values because of the short maturity of these instruments.

 

The carrying amount and estimated fair value of the Company’s mortgage debt is summarized as follows:

 

Schedule of mortgage debt                        
    As of
September 30,
2024		     As of
December 31,
2023		  
    Carrying Amount     Estimated Fair Value     Carrying Amount     Estimated Fair Value  
Mortgages payable   $ 266,395     $ 265,917     $ 264,483     $ 262,953  

 

The fair value of the mortgages payable was determined by discounting the future contractual interest and principal payments by estimated current market interest rates.

 

11. Commitments and Contingencies

 

Hotel Franchise Agreement

 

The Lower East Side Moxy Hotel operates pursuant to a 30-year franchise agreement (the “Hotel Franchise Agreement”) with Marriott International, Inc. (“Marriott”). The Hotel Franchise Agreement provides for the Company to pay franchise fees and marketing fund charges equal to certain prescribed percentages of gross room sales, as defined. Additionally, pursuant to the terms of the Hotel Franchise Agreement, the Company received a Key Money payment of $4.7 million from Marriott during the fourth quarter of 2022. The Key Money, which is included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets is being amortized as a reduction to franchise fees over the term of the Hotel Franchise Agreement. As of September 30, 2024 and December 31, 2023, the remaining unamortized balance of the Key Money was $4.4 million and $4.6 million, respectively. Pursuant to the terms of the Hotel Franchise Agreement, the Company may be obligated to return the unamortized portion of the Key Money back to Marriott upon the occurrence of certain events. The franchise fees and marketing fund charges are recorded as a component of hotel operating expenses in the consolidated statements of operations.

 

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LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

 

Hotel Management Agreements

 

With respect to the Lower East Side Moxy Hotel, the Company has entered into a hotel management agreement, food and beverage operations management agreement and an asset management agreement (collectively, the “Hotel Management Agreements”) with various third-party management companies pursuant to which they provide oversight and management over the operation of the Lower East Side Moxy Hotel and its food and beverage venues and receive payment of certain prescribed management fees, generally based on a percentage of revenues and certain incentives for exceeding targeted earnings thresholds. The management fees are recorded as a component of hotel operating expenses on the consolidated statements of operations. The Hotel Management Agreements have initial terms ranging from 5 to 20 years.

 

Legal Proceedings

 

From time to time in the ordinary course of business, the Company may become subject to legal proceedings, claims or disputes.

 

Various claims have been asserted against the 2nd Street Joint Venture, including that the rents at Gantry Park Landing have been in excess of the lawfully allowable amounts. While any dispute has an element of uncertainty, the 2nd Street Joint Venture currently believes that the likelihood of an unfavorable outcome with respect to these matters is remote and therefore, no provision for loss has been recorded in connection therewith.

 

Other than the aforementioned matter, the Company is not a party to any material pending legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on its results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss.

 

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PART I. FINANCIAL INFORMATION, CONTINUED:

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Lightstone Value Plus REIT I, Inc. and Subsidiaries and the notes thereto. As used herein, the terms “we,” “our” and “us” refer to Lightstone Value Plus REIT I, Inc., a Maryland corporation, and, as required by context, Lightstone Value Plus REIT, L.P. and its wholly owned subsidiaries, which we collectively refer to as “the Operating Partnership.” Dollar amounts are presented in thousands, except per share data, revenue per available room (“RevPAR”), average daily rate (“ADR”), annualized revenue per square foot and where indicated in millions.

 

Forward-Looking Statements

 

Certain statements in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include discussion and analysis of the financial condition of Lightstone Value Plus REIT I, Inc. and our subsidiaries (which may be referred to herein as the “Company,” “we,” “us” or “our”), including our ability to make accretive real estate or real estate-related investments, rent space on favorable terms, to address our debt maturities and to fund our liquidity requirements, to sell our assets when we believe advantageous to achieve our investment objectives, our anticipated capital expenditures, the amount and timing of anticipated future cash distributions to our stockholders, the estimated net asset value per share of our common stock (“NAV per Share”), and other matters. Words such as “may,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “could,” “should” and variations of these words and similar expressions are intended to identify forward-looking statements.

 

These forward-looking statements are not historical facts but reflect the intent, belief or current expectations of our management based on their knowledge and understanding of the business and industry, the economy and other future conditions. These statements are not guarantees of future performance, and we caution stockholders not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors described below:

 

  ● market and economic challenges experienced by the United States (“U.S.”) and global economies or real estate industry as a whole and the local economic conditions and regulatory matters in the markets in which our investments are located. Additionally, our business and financial performance may be adversely affected by current and future economic and other conditions; such as inflation, recession, political upheaval or uncertainty, terrorism and acts of war, natural and man-made disasters, cybercrime, and outbreaks of contagious diseases;
     
  ● the availability of cash flow from operating activities for distributions, if required to maintain our status as a real estate investment trust (“REIT”);
     
  ● conflicts of interest arising out of our relationships with our advisor and its affiliates;
     
  ● our ability to retain our executive officers and other key individuals who provide advisory and property management services to us;
     
  ● our level of debt and the terms and limitations imposed on us by our debt agreements;
     
  ● our ability to obtain construction financing, which could adversely impact our ability to ultimately commence and/or complete construction as planned, on budget or at all for development projects;

 

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  ● the availability of credit generally, and any failure to obtain debt financing at favorable terms or a failure to satisfy the conditions and requirements of that debt;

 

  ● our ability to make accretive investments;
     
  ● our ability to diversify our portfolio of assets;
     
  ● changes in market factors that could impact our rental rates and operating costs;
     
  ● our ability to secure leases at favorable rental rates;
     
  ● our ability to sell our assets at a price and on a timeline consistent with our investment objectives;
     
  ● impairment charges;
     
  ● unfavorable changes in laws or regulations impacting our business, our assets or our key relationships; and
     
  ●

factors that could affect our ability to qualify as a REIT.

 

Forward-looking statements in this Quarterly Report on Form 10-Q reflect our management’s view only as of the date of this Quarterly Report on Form 10-Q, and may ultimately prove to be incorrect. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results, except as required by applicable law. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 27A of the Securities Act and Section 21E of the Exchange Act.

 

Cautionary Note

 

The representations, warranties, and covenants made by us in any agreement filed as an exhibit to this Quarterly Report on Form 10-Q are made solely for the benefit of the parties to the agreement, including, in some cases, for the purpose of allocating risk among the parties to the agreement, and should not be deemed to be representations, warranties, or covenants to or with any other parties. Moreover, these representations, warranties, or covenants should not be relied upon as accurately describing or reflecting the current state of our affairs.

 

Business and Structure

 

Lightstone Value Plus REIT I, Inc., is a Maryland corporation (“Lightstone REIT I”), formed on June 8, 2004, which has elected to be taxed and qualify as a REIT for U.S. federal income tax purposes. Lightstone REIT I was formed primarily for the purpose of engaging in the business of investing in and owning commercial and multifamily residential real estate properties and making other real estate-related investments located throughout the U.S.

 

Lightstone REIT I is structured as an umbrella partnership REIT, or UPREIT, and substantially all of our current and future business is and will be conducted through Lightstone Value Plus REIT, L.P. (the “Operating Partnership”), a Delaware limited partnership formed on July 12, 2004. As of September 30, 2024, Lightstone REIT I held a 98% general partnership interest in the Operating Partnership’s common units (“Common Units”).

 

Lightstone REIT I, together with the Operating Partnership and its subsidiaries are collectively referred to as the “Company” and the use of “we,” “our,” “us” or similar pronouns refers to Lightstone REIT I, its Operating Partnership or the Company as required by the context in which such pronoun is used.

 

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Through our Operating Partnership, we own, operate and develop commercial and multifamily residential properties and make other real estate-related investments, principally in the U.S. Our real estate investments are held by us alone or jointly with other parties. We may also originate or acquire mortgage loans secured by real estate. Although most of our investments are of these types, we may invest in whatever types of real estate or real estate-related investments that we believe are in our best interests. Since our inception, we have owned and managed various commercial and multifamily residential properties located throughout the U.S. We evaluate all of our real estate investments as one operating segment. We currently intend to hold our real estate investments until such time as we determine that a sale or other disposition appears to be advantageous to achieve our investment objectives or until it appears that the objectives will not be met.

 

As of September 30, 2024, we (i) have ownership interests in and consolidate two operating properties, two development projects and certain land holdings and (ii) have ownership interests through two unconsolidated joint ventures in a portfolio of nine multifamily residential properties (the “Columbus Properties”) and a portfolio of five limited service hotel properties (the “Hotel JV Properties”).

 

With respect to our consolidated operating properties, we wholly own a 303-room Marriott branded hotel (the “Lower East Side Moxy Hotel”), located in the Lower East Side neighborhood in the Manhattan borough of New York City, which we developed, constructed and opened on October 27, 2022 and have a 59.2% majority ownership interest in 50-01 2nd Street Associates LLC (the “2nd Street Joint Venture”), a joint venture between us and a related party, which developed, constructed and owns a 199-room luxury multifamily residential property (“Gantry Park Landing”), located in the Long Island City neighborhood in the Queens borough of New York City.

 

With respect to our consolidated development projects, we wholly own three land parcels located at 355 & 399 Exterior Street in the Mott Haven neighborhood in the Bronx borough of New York City, which we acquired for the development of a mixed-use multifamily residential and commercial retail project (the “Exterior Street Project”) and we have a 50% joint venture ownership interest in LSC 1543 7th LLC (the “Santa Monica Joint Venture”), a joint venture between us and a related party, which owns certain land parcels located in Santa Monica, California on which a multifamily residential project (the “Santa Monica Project”) has been proposed.

 

We also wholly own and consolidate certain land parcels located in St. Augustine, Florida.

 

With respect to our unconsolidated properties, we hold a 19% joint venture ownership interest in Columbus Portfolio Member LLC (the “Columbus Joint Venture”), which owns the Columbus Portfolio, a portfolio of nine multifamily residential properties located in the Columbus Ohio metropolitan area, and we hold a 2.5% joint venture ownership interest in LVP Holdco JV LLV (the “Hotel Joint Venture”), which owns the Hotel JV Properties, a portfolio of five limited service hotels. We account for our 19% joint venture ownership interest in the Columbus Joint Venture under the equity method of accounting and we account of our 2.5% joint venture ownership interest in the Hotel Joint Venture using a measurement alternative pursuant to which our investment is measured at cost, adjusted for observable price changes and impairments, if any. Both the Columbus Joint Venture and the Hotel Joint Venture are between us and related parties.

 

On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units. Our Advisor also owns 20,000 Common Shares which were issued on July 6, 2004 for $200, or $10.00 per share. Our Advisor, pursuant to the terms of an advisory agreement, together with our Board of Directors, is primarily responsible for making investment decisions on our behalf and managing our day-to-day operations. Through his ownership and control of the Sponsor, Mr. Lichtenstein is the indirect owner and manager of Lightstone SLP, LLC, a Delaware limited liability company, which owns an aggregate of $30.0 million of SLP Units in the Operating Partnership which were purchased, at a cost of $100,000 per unit, in connection with our Offering. Mr. Lichtenstein also acts as our Chairman and Chief Executive Officer. As a result, he exerts influence over but does not control Lightstone REIT I or the Operating Partnership.

 

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We have no employees. We are dependent on the Advisor and certain affiliates of our Sponsor for performing a full range of services that are essential to us, including asset management, property management (excluding our hospitality property, which is managed by an unrelated third party property manager) and acquisition, disposition and financing activities, and other general administrative responsibilities; such as tax, accounting, legal information technology and investor relations. If the Advisor and certain affiliates of our Sponsor are unable to provide these services to us, we would be required to provide the services ourselves or obtain the services from other parties.

 

Our Sponsor, Advisor and their affiliates, including Lightstone SLP, LLC, are related parties of ours as well as other public REITs also sponsored and/or advised by these entities. Pursuant to the terms of various agreements, certain of these entities are entitled to compensation and reimbursement of costs incurred for services related to the investment, development, management and disposition of our assets. The compensation is generally based on the cost of acquired properties/investments and the annual revenue earned from such properties/investments, and other such fees and expense reimbursements as outlined in each of the respective agreements.

 

Concentration of Credit Risk

 

As of September 30, 2024 and 2023, we had cash deposited in certain financial institutions in excess of U.S. federally insured levels. We regularly monitor the financial stability of these financial institutions and believe that we are not exposed to any significant credit risk with respect to our cash and cash equivalents or restricted cash.

 

Current Environment

 

Our operating results and financial condition are substantially impacted by the overall health of local, U.S. national and global economies and may be influenced by market and other challenges. Additionally, our business and financial performance may be adversely affected by current and future economic and other conditions; including, but not limited to, availability or terms of financings, financial markets volatility and banking failures, political upheaval or uncertainty, natural and man-made disasters, terrorism and acts of war, unfavorable changes in laws and regulations, outbreaks of contagious diseases, cybercrime, loss of key relationships, inflation and recession.

 

Our overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on consumer behavior. Worsening economic conditions, increases in costs due to inflation, higher interest rates, labor and supply chain challenges and other changes in economic conditions could adversely affect our future results from operations and our financial condition.

 

Owned and Consolidated Real Estate Properties:

 

As of September 30, 2024, we (i) have ownership interests in and consolidate two operating properties (Lower East Side Moxy Hotel and Gantry Park Landing), two development projects (Exterior Street Project and Santa Monica Project) and certain land parcels located in St. Augustine, Florida and (ii) have ownership interests through two unconsolidated joint ventures (Columbus Joint Venture and Hotel Joint Venture) in a portfolio of nine multifamily residential properties and a portfolio of five limited service hotel properties.

 

Consolidated Properties

 

Lower East Side Moxy Hotel

 

We wholly own the Lower East Side Moxy Hotel, a 303-room Marriott branded hotel located in the Lower East Side neighborhood in the Manhattan borough of New York City, which we developed, constructed and opened on October 27, 2022. The following table contains certain information for the Lower East Side Moxy Hotel for the dates indicated.

 

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    Location   Year Built     Year to Date
Available Rooms		     Percentage Occupied
for the
nine Months Ended
September 30,
2024		     RevPAR for the
nine Months Ended
September 30,
2024		     ADR for the
nine Months Ended
September 30,
2024		  
Lower East Side Moxy Hotel   Bowery, New York   2022       83,022       91 %   $ 238.80     $ 263.66  

 

Gantry Park Landing

 

We have a 59.2% majority ownership interest in the 2nd Street Joint Venture, which developed, constructed and owns Gantry Park Landing, a 199-unit luxury, multifamily residential property, located in the Long Island City neighborhood in the Queens borough of New York City. The 2nd Street Joint Venture is between us and a related party. The following table contains certain information for Gantry Park Landing for the dates indicated.

 

    Location   Year Built     Leasable Units     Percentage Occupied
as of
September 30,
2024		     Annualized Revenues
based on rents at
September 30,
2024		     Annualized Revenues
per unit at
September 30,
2024		  
Gantry Park Landing   Queens, New York   2013       199       93 %   $ 10.0 million     $ 54,077  

 

Annualized revenue is defined as the minimum monthly payments due as of September 30, 2024 annualized.

 

Development Projects

 

Exterior Street Project

 

We wholly own the Exterior Street Project, a proposed mixed-use multifamily residential and commercial retail project. In February 2019, we, through subsidiaries of the Operating Partnership, acquired two adjacent parcels of land located at 355 and 399 Exterior Street in the Mott Haven neighborhood in the Bronx borough of New York City from unaffiliated third parties for an aggregate purchase price of $59.0 million, excluding closing and other acquisition related costs. In September 2021, we subsequently acquired an additional adjacent parcel of land at cost from an affiliate of our Advisor for $1.0 million in order to achieve certain zoning compliance. These three land parcels were acquired by us for the development of the Exterior Street Project.

 

During the nine months ended September 30, 2023, interest of $1.5 million was capitalized to the Exterior Street Project.

 

During the second quarter of 2023, we decided to temporarily pause active development activities associated with the Exterior Street Project, due to prevailing unfavorable economic and local market conditions and regulations, and therefore, ceased capitalization of interest and other carrying costs.

 

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Impairment Charge

 

Because of continuing unfavorable economic and local market conditions, we determined during the third quarter of 2024 we would no longer pursue the development of the Exterior Street Project, but rather pursue other strategies with respect to it, including a sale. As a result of this change in strategy; we determined the carrying value of the Exterior Street Project was no longer fully recoverable and therefore, recorded a non-cash impairment charge of $16.6 million, (included in impairment charges on our consolidated statement of operations) during the third quarter of 2024 in order to reduce the carrying value of the Exterior Street Project to its estimated fair value of $78.8 million as of September 30, 2024. In estimating the fair value of the Exterior Street Project, we took into consideration a bona fide third-party offer obtained by an independent third-party broker.

 

As of September 30, 2024 and December 31, 2023, the carrying value of the Exterior Street Project was $78.8 million and $95.7 million, respectively, which is included in development projects on the consolidated balance sheets.

 

Santa Monica Project

 

We have a 50% joint venture ownership interest in the Santa Monica Joint Venture. The Santa Monica Joint Venture, which we consolidate, is between us and a related party. In March 2022, the Santa Monica Joint Venture originated a $49.0 million promissory note (the “Santa Monica Note Receivable”) to a borrower (the “Santa Monica Borrower”), which was collateralized by two development projects located in Santa Monica, California. The Santa Monica Note Receivable bore interest at SOFR + 7.00%, subject to a 7.15% floor.

 

During the first quarter of 2023, the Santa Monica Joint Venture received a partial paydown of $14.0 million on the Santa Monica Note Receivable in exchange for the release of one of the development projects, which had been completed, from the underlying collateral pool. As a result, the remaining outstanding balance of the Santa Monica Note Receivable of $35.0 million was secured solely by the Santa Monica Project, which consists of a proposed multifamily residential project on land parcels located in Santa Monica, California.

 

Due to financial difficulties, during the second quarter of 2023 the Santa Monica Borrower discontinued making monthly interest payments on the Santa Monica Note Receivable, which subsequently matured on August 31, 2023. On December 29, 2023, ownership of the Santa Monica Project was transferred to the Santa Monica Joint Venture via a deed in lieu of foreclosure transaction. In connection with the transfer, the outstanding principal and accrued interest for the Santa Monica Note Receivable of $36.7 million, which represented the fair value of the Santa Monica Project and approximated the carrying value of the Santa Monica Note Receivable, was reclassified from notes receivable, net to development projects on the consolidated balance sheet.

 

Impairment Charge

 

Subsequent to obtaining ownership of the Santa Monica Project, the Santa Monica Joint Venture decided to continue certain pre-development activities, which had already been started by the former owner. However, during the third quarter of 2024, the Santa Monica Joint Venture decided to no longer pursue development of the Santa Monica Project, but rather pursue various other strategies with respect to it, including a sale or the potential transfer of ownership to the lender, which had provided a non-recourse mortgage loan (the “Santa Monica Loan”), collateralized by the Santa Monica Project As a result of the change in strategy, the Santa Monica Joint Venture determined the carrying value of the Santa Monica Project was no longer fully recoverable and therefore, recorded a non-cash impairment charge of $17.7 million (which is included in impairment charges on our consolidated statement of operations) during the third quarter of 2024 in order to reduce the carrying value of the Santa Monica Project to its estimated fair value of $19.0 million as of September 30, 2024. In estimating the fair value of the Santa Monica Project, the Santa Monica Joint Venture used the value provided by an independent, third-party commercial real estate advisory and services firm.

 

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On October 15, 2024 the Santa Monica Loan matured and it was not repaid, which constitutes a maturity event of default and therefore, it is due on demand. On October 30, 2024, the lender issued a formal notice of default and on October 31, 2024, the Santa Monica Joint Venture notified the lender of its intent to transfer ownership of the underlying collateral, the Santa Monica Project, to the lender via a deed-in-lieu of foreclosure transaction. See Note7 of the Notes to Consolidated Financial Statements for additional information.

 

As of September 30, 2024 and December 31, 2023, the carrying value of the Santa Monica Project was $19.0 million and $36.7 million, respectively, which is included in development projects on the consolidated balance sheets.

 

Land Parcels

 

We wholly own certain land parcels located in St. Augustine, Florida.

 

During the first quarter of 2023, we completed the disposition of one of our land parcels located in St. Augustine, Florida to an unrelated third-party for a contractual sales price of $1.5 million and recognized a gain on disposition of real estate of $1.1 million. During the second quarter of 2024, we completed the disposition of two more of our land parcels located in St. Augustine, Florida, each to an unrelated third-party, for an aggregate contractual sales price of $15.4 million and recognized an aggregate gain on disposition of real estate of $10.9 million. During the third quarter of 2024, we completed the sale of certain municipal impact fee credits, which were attributable to the development of our former outlet center located in St. Augustine, Florida, which was substantially demolished during 2022, to an unrelated third-party for a contractual sales price of $2.7 million and recognized a gain on disposition of real estate of $2.7 million.

 

As of September 30, 2024 and December 31, 2023, the aggregate carrying value of our land parcels located in St. Augustine, Florida was $2.1 million and $6.0 million, respectively, which is included in land and land improvements on the consolidated balance sheets.

 

Unconsolidated Properties

 

Columbus Joint Venture

 

We hold a 19% joint venture ownership interest in the Columbus Joint Venture, which owns the Columbus Properties, a portfolio of nine multifamily residential properties consisting of 2,564 units located in the Columbus, Ohio metropolitan area. We account for our 19% joint venture ownership interest in the Columbus Joint Venture under the equity method of accounting. The Columbus Joint Venture is between us and related parties. The following table contains certain information for these properties for the dates indicated.

 

    Location   Year Built     Leasable Units     Percentage Occupied
as of
September 30,
2024		     Annualized Revenues
based on rents at
September 30,
2024		     Annualized Revenue
per unit at
September 30,
2024		  
9 multifamily residential properties within the Columbus Joint Venture   Columbus, Ohio   2004       2,564       91 %   $ 44.0 million     $ 18,926  

 

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Hotel Joint Venture

 

We hold a 2.5% joint venture ownership interest in the Hotel Joint Venture, which owns the Hotel JV Properties, a portfolio of five limited service hotels. We account for our 2.5% joint venture ownership interest using a measurement alternative pursuant to which our investment is measured at cost, adjusted for observable price changes and impairments, if any.

 

The following information generally applies to our investments in our real estate properties:

 

● we believe our real estate properties are adequately covered by insurance and suitable for their intended purpose;

 

● our real estate properties are located in markets where we are subject to competition in attracting and retaining tenants; and

 

● depreciation is provided on a straight-line basis over the estimated useful life of the applicable improvements.

 

Results of Operations

 

For the Three Months Ended September 30, 2024 vs. September 30, 2023

 

Consolidated

 

Rental revenues

 

Our rental revenues are primarily comprised of rental income and tenant recovery income from Gantry Park Landing. Total rental revenues were $2.6 million for both the three months ended September 30, 2024 and 2023.

 

Hotel revenues

 

Our hotel revenues for the Lower East Side Moxy Hotel are comprised of room revenue and food, beverage and other revenue. During the three months ended September 30, 2024 compared to same period in 2023, the Lower East Side Moxy Hotel experienced increases to its percentage of rooms occupied to 95% from 86%, RevPAR to $274.42 from $244.09 and ADR to $289.07 from $284.95.

 

Total hotel revenues were $13.1 million and $13.3 million for the three months ended September 30, 2024 and 2023, respectively. Room revenues increased by $0.9 million to $7.7 million for the three months ended September 30, 2024 from $6.8 million for the same period in 2023 and food, beverage and other revenues decreased by $1.1 million to $5.4 million for the three months ended September 30, 2024 from $6.5 million for the same period in 2023. The increase in room revenues was attributable to the higher occupancy, RevPAR and ADR during the 2024 period.

 

Property operating expenses

 

Our property operating expenses are primarily comprised of expenses to operate Gantry Park Landing and certain holding costs related to our two development projects and our land parcels located in St. Augustine, Florida. Property operating expenses were $0.8 million for both the three months ended September 30, 2024 and 2023.

 

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Hotel operating expenses

 

Our total hotel operating expenses, consisting of room expenses and food and beverage costs, for the Moxy Lower East Side Hotel were $8.8 million for both the three months ended September 30, 2024 and 2023. Room expenses were $4.2 million and $3.7 million and food and beverage costs were $4.6 million and $5.1 million for the three months ended September 30, 2024 and 2023, respectively. The increase in room expenses of $0.5 million was primarily attributable to higher occupancy for the Lower East Side Hotel during the 2024 period.

 

Real estate taxes

 

Real estate taxes increased by $0.2 million to $0.8 million for the three months ended September 30, 2024 compared to $0.6 million for the same period in 2023. The increase reflects an increase in real estate taxes related to the Gantry Park Landing of $0.1 million and our two development projects of $0.1 million.

 

General and administrative costs

 

General and administrative costs decreased by $0.2 million to $0.9 million for the three months ended September 30, 2024 compared to $1.1 million for the same period in 2023.

 

Impairment charges

 

During the third quarter of 2024, we recorded aggregate non-cash impairment charges of $34.4 million to reduce the carrying values of our Exterior Street Project and our Santa Monica Project to their estimated fair values of $78.8 million and $19.0 million, respectively, as of September 30, 2024.

 

Depreciation and amortization

 

Depreciation and amortization decreased slightly by $0.1 million to $1.8 million for the three months ended September 30, 2024 compared to $1.9 million for the same period in 2023.

 

Interest and dividend income

 

Interest and dividend income decreased by $1.2 million to $0.7 million for the three months ended September 30, 2024 compared to $1.9 million for the same period in 2023. The decrease was primarily attributable to a reduction of interest income of $1.3 million on the Santa Monica Note Receivable, which was no longer outstanding effective December 29, 2023.

 

Interest expense

 

Interest expense, including amortization of deferred financing costs, decreased by $0.6 million to $6.4 million for the three months ended September 30, 2024 compared to $7.0 million for the same period in 2023. Interest expense is primarily attributable to financings associated with our investments and reflects both changes in market interest rates on our variable rate indebtedness and the weighted average principal outstanding during each of the periods.

 

Unrealized gain/(loss) on marketable equity securities

 

During the three months ended September 30, 2024, we recorded an unrealized gain on marketable equity securities of $3.8 million and during the three months ended September 30, 2023, we recorded an unrealized loss on marketable equity securities of $1.3 million.

 

Loss on sale of marketable securities

 

During the three months ended September 30, 2023, we recorded a loss on the sale of marketable securities of $0.3 million.

 

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Mark to market adjustments on derivative financial instruments

 

During the three months ended September 30, 2024 and 2023, we recorded negative mark to market adjustments of $25 and $0.7 million, respectively.

 

Gain on disposition of real estate

 

During the third quarter of 2024, we completed the sale of certain municipal impact fee credits, which were attributable to the development of our former outlet center located in St. Augustine, Florida, to an unrelated third-party for a contractual sales price of $2.7 million and recognized a gain on disposition of real estate of $2.7 million.

 

Loss from investment in unconsolidated affiliated real estate entity

 

Our loss from investment in unconsolidated affiliated entity was $0.9 million and $1.3 million during the three months ended September 30, 2024 and 2023, respectively. Our loss from investment in unconsolidated affiliated entity is attributable to our unconsolidated 19% joint venture ownership interest in the Columbus Joint Venture.

 

Noncontrolling interests

 

The net earnings allocated to noncontrolling interests relates to (i) parties that hold units in the Operating Partnership, (ii) the interest in PRO-DFJV Holdings LLC (“PRO”) held by our Sponsor (see Note 6 of Notes to the Consolidated Financial Statements), (iii) the ownership interests in the 2nd Street Joint Venture held by our Sponsor and other affiliates and (iv) the ownership interest in the Santa Monica Joint Venture held by an affiliate of our Sponsor.

 

For the Nine Months Ended September 30, 2024 vs. September 30, 2023

 

Consolidated

 

Rental revenues

 

Our rental revenues are primarily comprised of rental income and tenant recovery income for Gantry Park Landing. Total rental revenues increased by $0.4 million to $7.9 million for the nine months ended September 30, 2024 compared to $7.5 million for the same period in 2023.

 

Hotel revenues

 

Our hotel revenues are comprised of room revenue and food, beverage and other revenue for the Lower East Side Moxy Hotel. During the nine months ended September 30, 2024 compared to same period in 2023, the Lower East Side Moxy Hotel experienced increases to its percentage of rooms occupied to 91% from 76%, RevPAR to $238.80 from $199.52 and ADR to $263.66 from $262.92.

 

Total hotel revenues were $37.4 million and $33.7 million for the nine months ended September 30, 2024 and 2023, respectively. Room revenues increased by $3.3 million to $19.8 million for the nine months ended September 30, 2024 from $16.5 million for the same period in 2023 and food, beverage and other revenues increased by $0.4 million to $17.6 million for the nine months ended September 30, 2024 from $17.2 million for the same period in 2023. The increase in room revenues was attributable to the higher occupancy, RevPAR and ADR during the 2024 period.

 

Property operating expenses

 

Our property operating expenses are primarily comprised of expenses to operate Gantry Park Landing and certain holding costs related to our two development projects and our land parcels located in St. Augustine, Florida. Property operating expenses were $2.3 million for both of the nine months ended September 30, 2024 and 2023.

 

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Hotel operating expenses

 

Total hotel operating expenses, which consist of room expenses and food and beverage costs, for the Moxy Lower East Side Hotel were $26.6 million and $25.4 million for the nine months ended September 30, 2024 and 2023, respectively. Room expenses were $11.9 million and $10.4 million and food and beverage costs were $14.7 million and $15.1 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in room expenses of $1.6 million was attributable to the higher occupancy during the 2024 period.

 

Real estate taxes

 

Real estate taxes increased by $1.3 million to $2.2 million for the nine months ended September 30, 2024 compared to $0.9 million for the same period in 2023. The increase reflects higher real estate taxes related to the Lower East Side Moxy Hotel of $0.7 million, our two development projects of $0.2 million, and Gantry Park Landing of $0.4 million.

 

General and administrative costs

 

General and administrative costs decreased slightly by $0.1 million to $2.9 million for the nine months ended September 30, 2024 compared to $3.0 million for the same period in 2023.

 

Impairment charges

 

During the third quarter of 2024, we recorded aggregate non-cash impairment charges of $34.4 million to reduce the carrying values of our Exterior Street Project and Santa Monica Project to their estimated fair values of $78.8 million and $19.0 million, respectively, as of September 30, 2024.

 

Depreciation and amortization

 

Depreciation and amortization increased slightly by $0.1 million to $5.3 million for the nine months ended September 30, 2024 compared to $5.2 million for the same period in 2023.

 

Interest and dividend income

 

Interest and dividend income decreased by $4.2 million to $1.8 million for the nine months ended September 30, 2024 compared to $6.0 million for the same period in 2023. The decrease primarily reflects a reduction of interest income of $4.3 million on the Santa Monica Note Receivable, which was no longer outstanding effective December 29, 2023, and our preferred investment, which was fully redeemed during the second quarter of June 2023.

 

Interest expense

 

Interest expense, including amortization of deferred financing costs, was $19.2 million for both the nine months ended September 30, 2024 and 2023. Interest expense is primarily attributable to financings associated with our investments and reflects both changes in market interest rates on our variable rate indebtedness and the weighted average principal outstanding during each of the periods.

 

During the nine months ended September 30, 2023, interest of $1.5 million was capitalized to the Exterior Street Project.

 

Unrealized gain/(loss) on marketable equity securities

 

During the nine months ended September 30, 2024, we recorded an unrealized gain on marketable equity securities of $5.8 million and during the nine months ended September 30, 2023 we recorded an unrealized loss on marketable equity securities $0.8 million.

 

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Loss on sale of marketable securities

 

During the nine months ended September 30, 2023, we recorded a loss on the sale of marketable securities of $0.7 million.

 

Mark to market adjustments on derivative financial instruments

 

During the nine months ended September 30, 2024 and 2023, we recorded negative mark to market adjustments of $62 and $1.1 million, respectively.

 

Gain on disposition of real estate

 

During the nine months ended September 30, 2024, we recognized an aggregate gain on the disposition of real estate of $13.6 million consisting of (i) a third quarter of 2024 gain of $2.7 million from the sale of certain municipal impact fee credits, which were attributable to the development of our former outlet center located in St. Augustine, Florida and (ii) the second quarter of 2024 aggregate gain of $10.9 million from the sales of two of our land parcels located in St. Augustine, Florida.

 

During the first quarter of 2023, we recognized a gain on the disposition of real estate of $1.1 million related to the sale of one of our parcels of land located in St. Augustine, Florida.

 

Loss from investment in unconsolidated affiliated real estate entity

 

Our loss from investment in unconsolidated affiliated entity was $2.7 million and $3.6 million during the nine months ended September 30, 2024 and 2023, respectively. Our loss from investment in unconsolidated affiliated entity is attributable to our unconsolidated 19% joint venture ownership interest in the Columbus Joint Venture.

 

Noncontrolling interests

 

The net earnings allocated to noncontrolling interests relates to (i) parties that hold units in the Operating Partnership, (ii) the interest in PRO held by our Sponsor (see Note 6 of Notes to the Consolidated Financial Statements), (iii) the ownership interests in the 2nd Street Joint Venture held by our Sponsor and other affiliates and (iv) the ownership interest in the Santa Monica Joint Venture held by an affiliate of our Sponsor.

 

Financial Condition, Liquidity and Capital Resources

 

Overview:

 

As of September 30, 2024, we had $27.0 million of cash on hand, $7.1 million of restricted cash and $41.0 million of marketable securities. We also have remaining availability, subject to certain conditions, on our mortgage debt collateralized by the Lower East Side Moxy Hotel. See “Moxy Mortgage Loans” for additional information. Additionally, we have the ability to make draws from a non-revolving line of credit (the “Line of Credit”), subject to certain conditions, and a margin loan (the “Margin Loan”). See “Notes Payable – Line of Credit” and “Notes Payable” – Margin Loan” for additional information. We currently believe that these items along with revenues from our operating properties; and interest and dividend income earned on our cash and marketable securities; as well as proceeds received from the potential sales of our marketable securities and remaining land parcels located in St. Augustine, Florida will be sufficient to satisfy our expected cash requirements for at least 12 months from the date of filing this report, which primarily consist of our anticipated operating expenses, scheduled debt service (excluding balloon payments due at maturity), capital expenditures, contributions to our unconsolidated affiliated entity (Columbus Joint Venture), redemptions and cancellations of Common Shares, and distributions to our shareholders, if any, required to maintain our status as a REIT for the foreseeable future. However, we may also obtain additional funds through selective asset dispositions, joint venture arrangements, new borrowings and/or refinancing of existing debt.

 

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Our borrowings consist of single-property mortgages as well as mortgages cross-collateralized by a pool of properties. We typically have obtained level payment financing, meaning that the amount of debt service payable would be substantially the same each year. As such, most of the mortgages on our properties provide for so-called “balloon” payments.

 

Our charter provides that the aggregate amount of borrowing, both secured and unsecured, may not exceed 300% of net assets in the absence of a justification showing that a higher level is appropriate, the approval of the Board of Directors and disclosure to stockholders. Net assets means our total assets, other than intangibles, at cost before deducting depreciation or other non-cash reserves less our total liabilities, calculated at least quarterly on a basis consistently applied. Any excess in borrowing over such 300% of net assets level must be approved by a majority of our independent directors and disclosed to our stockholders in our next quarterly report to stockholders, along with justification for such excess. As of September 30, 2024, our total borrowings of $269.4 million represented 138% of net assets.

 

Any future properties that we may acquire or investments we may make may be funded through a combination of borrowings, proceeds generated from the sale and redemption of our marketable securities, available for sale, and proceeds received from the selective disposition of our properties. These borrowings may consist of single-property mortgages as well as mortgages cross-collateralized by a pool of properties. Such mortgages may be put in place either at the time we acquire a property or subsequent to our purchasing a property for cash. In addition, we may acquire properties that are subject to existing indebtedness where we choose to assume the existing mortgages. Generally, though not exclusively, we intend to seek to encumber our properties with debt, which will be on a non-recourse basis. This means that a lender’s rights on default will generally be limited to foreclosing on the property. However, we may, at our discretion, secure recourse financing or provide a guarantee to lenders if we believe this may result in more favorable terms. When we give a guaranty for a property owning entity, we will be responsible to the lender for the satisfaction of the indebtedness if it is not paid by the property owning entity.

 

We may also obtain lines of credit to be used to acquire properties or real estate-related assets. These lines of credit will be at prevailing market terms and will be repaid from proceeds from the sale or refinancing of properties, working capital or permanent financing. Our Sponsor or its affiliates may guarantee the lines of credit although they will not be obligated to do so. We expect that such properties may be purchased by our Sponsor’s affiliates on our behalf, in our name, in order to minimize the imposition of a transfer tax upon a transfer of such properties to us.

 

We have various agreements, including an advisory agreement, with the Advisor to pay certain fees in exchange for services performed by the Advisor and/or its affiliated entities. Additionally, our ability to secure financing and our real estate operations are dependent upon our Advisor and its affiliates to perform such services as provided in these agreements.

 

In addition to meeting working capital needs and making distributions to our stockholders, if any, required to maintain our status as a REIT, our capital resources are used to make certain payments to our Advisor and its affiliates, including payments for asset acquisition fees and the reimbursement of acquisition related expense, development fees, construction management fees, leasing commissions, asset management fees, and property management fees (except for our hotel, which is managed by unrelated third party property managers). We also reimburse our Advisor and its affiliates for actual expenses it incurs for certain administrative and other services provided to us. During the first quarter of 2024, the Advisor agreed to allow us to temporarily defer the payment of asset management fees. As of September 30, 2024 and December 31, 2023, $2.0 million and $0.5 million of asset management fees were owed to the advisor, which are included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets. See Note 9 of Notes to Consolidated Financial Statements.

 

The advisory agreement has a one-year term and is renewable for an unlimited number of successive one-year periods upon the mutual consent of the Advisor and our independent directors.

 

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The following table represents the fees incurred associated with the services provided by our Advisor and its affiliates:

 

    Three Months Ended
September 30,		     Nine Months Ended
September 30,		  
    2024     2023     2024     2023  
Asset management fees (general and administrative costs)   $ 498     $ 539     $ 1,508     $ 1,646  
Property management fees (property operating expenses)     75       76       230       224  
Development fees and cost reimbursement(1)     11       192       32       833  
Total   $ 584     $ 807     $ 1,770     $ 2,703  

 

 
(1) Development fees and the reimbursement of development-related costs that we pay to the Advisor and its affiliates are capitalized and are included in the carrying value of the associated development project which are classified as development projects on the consolidated balance sheets until construction is substantially completed. Once construction is substantially completed these amounts are recorded as property operating expenses.

 

Additionally, we may be required to make distributions on the SLP Units in the Operating Partnership held by Lightstone SLP, LLC, an affiliate of the Advisor, provided our stockholders have received a stated preferred return. In connection with our Offering, which terminated on October 10, 2008, Lightstone SLP, LLC purchased an aggregate of $30.0 million of SLP Units, at a cost of $100,000 per unit. These SLP Units, the purchase price of which will be repaid only after stockholders receive a stated preferred return and their net investment, may entitle Lightstone SLP, LLC to a portion of any regular distributions made by the Operating Partnership. However, any future distributions on the SLP Units will always be subordinated until stockholders receive a stated preferred return.

 

During the three and nine months ended September 30, 2024, no distributions were declared and paid on the SLP units. During the three and nine months ended September 30, 2023, distributions of $0.5 million and $1.0 million, respectively, were declared and paid on the SLP units.

 

Summary of Cash Flows

 

The following summary discussion of our cash flows is based on the consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below:

 

    For the
Nine Months Ended
September 30,		  
    2024     2023  
Net cash flows used in operating activities   $ (2,929 )   $ (7,218 )
Net cash flows provided by investing activities     16,104       18,626  
Net cash flows provided by/(used in) financing activities     2,585       (23,049 )
Change in cash, cash equivalents and restricted cash     15,760       (11,641 )
                 
Cash, cash equivalents and restricted cash, beginning of year     18,360       22,583  
Cash, cash equivalents and restricted cash, end of the period   $ 34,120     $ 10,942  

 

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Operating activities

 

The cash used in operating activities of $2.9 million for the nine months ended September 30, 2024 consists of the following:

 

● cash outflows of $4.8 million from our net loss after adjustment for non-cash items; and

 

● cash inflows of $1.9 million associated with the net changes in operating assets and liabilities.

 

Investing activities

 

The cash provided by investing activities of $16.1 million for the nine months ended September 30, 2024 is related to the following:

 

● the purchase of investment property of $1.5 million; and

 

● net proceeds from the sales of (i) two more of our parcels of land located in St. Augustine, Florida and (ii) certain municipal impact fee credits attributable to the development of our former outlet center located in St. Augustine, Florida of $17.5 million.

 

Financing activities

 

The cash provided by financing activities of $2.6 million for the nine months ended September 30, 2024 is related to the following:

 

● debt principal payments of $1.1 million;

 

● proceeds from mortgage financing of $3.0 million;

 

● proceeds from notes payable financing of $3.0 million;

 

● payment of loan fees and expenses of $0.1 million;

 

● redemptions and cancellation of common shares of $2.9 million; and

 

● contributions received from noncontrolling interests of $0.7 million.

 

Santa Monica Loan

 

On June 30, 2022, the Santa Monica Joint Venture obtained the Santa Monica Loan, a loan of up to $33.1 million which initially bore interest at SOFR + 3.50%. The Santa Monica Loan requires monthly interest-only payments with the outstanding principal balance due at its maturity date and was previously collateralized by the Santa Monica Note Receivable, which was issued by the Santa Monica Joint Venture. During the first quarter of 2023, the Santa Monica Joint Venture received a $14.0 million paydown on the Santa Monica Note Receivable, of which $11.3 million was used to make a paydown on the Santa Monica Loan, which reduced its outstanding balance to $21.5 million. The Santa Monica Loan was initially scheduled to mature on December 30, 2023, however, on September 5, 2023, the Santa Monica Joint Venture exercised an option to extend its maturity date to February 29, 2024. In connection with this extension, the Santa Monica Joint Venture made an additional principal paydown of $2.1 million, which reduced the outstanding balance of the Santa Monica Loan to $19.5 million. Additionally, the Santa Monica Joint Venture funded $0.9 million into a cash collateral reserve account to cover the interest payments through February 29, 2024.

 

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In connection with the transfer of ownership of the Santa Monica Project to the Santa Monica Joint Venture on December 29, 2023, the Santa Monica Loan was modified to substitute the Santa Monica Project as the underlying collateral. Subsequently, in March 2024, the Santa Monica Loan was again modified pursuant to which the interest rate was changed to SOFR + 4.5%, subject to a floor of 7.5%, the maturity date was changed to August 31, 2024 and the interest reserve was replenished to cover the payments due through August 31, 2024. On September 5, 2024, the Santa Monica Loan was further extended to October 15, 2024. As of September 30, 2024, the outstanding principal balance of the Santa Monica Loan was $19.5 million.

 

On October 15, 2024, the Santa Monica Loan matured and it was not repaid, which constitutes a maturity event of default and therefore, it is due on demand. On October 30, 2024, the lender issued a formal notice of default and on October 31, 2024, the Santa Monica Joint Venture notified the lender of its intent to transfer ownership of the underlying collateral, the Santa Monica Project, to the lender via a deed-in-lieu of foreclosure transaction.

 

Moxy Mortgage Loans

 

On November 29, 2023, we entered into a mortgage loan facility (the “Moxy Senior Loan”) with an unrelated third party providing for up to $110.0 million. At closing, $106.1 million of proceeds were advanced under the Moxy Senior Loan and the remaining availability of $3.9 million could only be drawn to cover operating losses, subject to various conditions. The Moxy Senior Loan bears interest at SOFR plus 4.00%, subject to a 7.50% floor, and initially matures on December 1, 2026, with two one-year extension options subject to the satisfaction of certain conditions. As of September 30, 2024, the outstanding principal balance of the Moxy Senior Loan and remaining availability were $108.5 million and $1.5 million.

 

Simultaneously on November 29, 2023, we also entered into a mortgage loan facility (the “Moxy Junior Loan” and together with the Moxy Senior Loan, the “Moxy Mortgage Loans”) with an unrelated third party providing for up to $31.3 million. At closing, $30.2 million of proceeds were advanced under the Moxy Junior Loan and the remaining availability of $1.1 million could only be drawn for operating losses, subject to various conditions. The Moxy Junior Loan bears interest at SOFR plus 8.75%, subject to a 12.25% floor, and initially matures on December 1, 2026, with two one-year extension options subject to the satisfaction of certain conditions. As of September 30, 2024, the outstanding principal balance of the Moxy Junior Loan and remaining availability were $30.9 million and $0.4 million, respectively.

 

The Moxy Mortgage Loans require monthly interest-only payments through their maturity dates and are collateralized by the Lower East Side Moxy Hotel, however, the Moxy Junior Loan is subordinate to the Moxy Senior Loan. Aggregate proceeds of $130.0 million advanced at the closing of the Moxy Mortgage Loans were used to repay in full existing construction mortgage indebtedness, which was collateralized by the Lower East Side Moxy Hotel.

 

Pursuant to the terms of the Moxy Mortgage Loans, we are required to enter into two interest rate cap contracts with an aggregate notional amount of $141.3 million (equal to the total maximum amounts available under the Moxy Senior Loan and the Moxy Junior Loan) for as long as the Moxy Mortgage Loans remain outstanding. On November 29, 2023, we entered into two interest rate cap agreements with notional amounts of $110.0 million and $31.3 million ($141.3 million in the aggregate) pursuant to which the SOFR rate is capped at 5.50% through December 1, 2024 and June 1, 2025 for the Moxy Junior Loan and the Moxy Senior Loan, respectively, at an aggregate cost of $0.2 million.

 

In connection with obtaining the Moxy Mortgage Loans, we provided certain interest and carry costs guarantees and paid $4.1 million of loan fees and expenses.

 

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Exterior Street Loans

 

On March 29, 2019, we obtained a $35.0 million loan (the “Exterior Street Loan”) from a financial institution which, commencing on October 10, 2020, bore interest at LIBOR plus 2.25% through November 24, 2022. On December 21, 2021, the loan agreement was amended to provide an additional $7.0 million loan (the “Exterior Street Supplemental Loan” and collectively with the Exterior Street Loan, the “Exterior Street Loans”) which bore interest at LIBOR plus 2.50% through November 24, 2022. The Exterior Street Loans require monthly interest-only payments with the outstanding principal balances due in full at their maturity date. The Exterior Street Loans are collateralized by the Exterior Street Project.

 

On November 22, 2022, we and the financial institution entered into the second amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to SOFR plus 2.60% and their maturity dates were extended to November 24, 2023. On October 31, 2023, we and the financial institution entered into an additional amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to SOFR plus 2.85% (7.70% as of September 30, 2024) and their maturity date was further extended to November 24, 2024. As of September 30, 2024, the outstanding aggregate principal balance of the Exterior Street Loans was $42.0 million.

 

Contractual Mortgage Obligations

 

The following is a summary of our contractual mortgage obligations outstanding over the next five years and thereafter as of September 30, 2024.

 

Contractual Mortgage Obligations   2024     2025     2026     2027     2028     Thereafter     Total  
Principal Payments   $ 127,049     $ -     $ 139,346     $ -     $ -     $ -     $ 266,395  
Interest Payments1     5,009       13,984       13,984       -       -       -       32,977  
Total Contractual Obligations   $ 132,058     $ 13,984     $ 153,330     $ -     $ -     $ -     $ 299,372  

 

 
1) These amounts represent future interest payments related to mortgage payable obligations based on the fixed and variable interest rates specified in the associated debt agreement. All variable rate debt agreements are based on the one-month SOFR rate. For purposes of calculating future interest amounts on variable interest rate debt the one-month SOFR rate, as applicable as of September 30, 2024 was used.

 

Certain of our debt agreements require the maintenance of prescribed ratios, including debt service coverage. As of September 30, 2024, we were in compliance with all our financial covenants. Additionally, certain of our mortgages payable also contain clauses providing for prepayment penalties.

 

Mortgage Debt Maturities

 

The Santa Monica Loan (outstanding principal balance of $19.5 million as of September 30, 2024) matured on October 14, 2024 and was not repaid, which constitutes an event of default and therefore, it is due on demand. The Santa Monica Joint Venture currently intends to transfer ownership of the underlying collateral, the Santa Monica Project, to the lender via a deed-in-lieu of foreclosure transaction.

 

Additionally, we have certain other mortgage debt that matures within 12 months of the date of these consolidated financial statements as discussed below.

 

The mortgage loan collateralized by Gantry Park Landing (the “Gantry Park Mortgage Loan”) (outstanding principal balance of $65.6 million as of September 30, 2024) is scheduled to mature on December 1, 2024. We currently intend to seek to extend or refinance the Gantry Park Mortgage Loan on or before its scheduled maturity date.

 

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The Exterior Street Loans (outstanding principal balance of $42.0 million as of September 30, 2024) are scheduled to mature on November 24, 2024. We currently intend to seek to extend the Exterior Street Loans on or before their scheduled maturity date.

 

However, if we are unable to extend or refinance these maturing mortgage loans at favorable terms, we will look to repay the then outstanding balance with available cash and/or proceeds from selective asset sales. We have no additional significant maturities of mortgage debt over the next 12 months.

 

Notes Payable

 

Margin Loan

 

We have access to the Margin Loan from a financial institution that holds custody of certain of our marketable securities. The Margin Loan, which is due on demand, bears interest at SOFR plus 0.85% (5.70% as of September 30, 2024) and is collateralized by the marketable securities in our account. The amounts available to us under the Margin Loan are at the discretion of the financial institution and not limited to the amount of collateral in our account. There were no amounts outstanding under the Margin Loan as of September 30, 2024 and December 31, 2023.

 

Line of Credit

 

We have a Line of Credit with a financial institution that provides for borrowings up to a maximum of $20.0 million, subject to a 55% loan-to-value ratio based on the fair value of the underlying collateral, which matures on November 30, 2024 and bears interest at SOFR plus 1.35% (6.20% as of September 30, 2024). The Line of Credit is collateralized by an aggregate of 187,019 of Marco OP Units and is guaranteed by PRO.

 

As of September 30, 2024, the amount of borrowings available to be drawn under the Line of Credit was $17.4 million of which the outstanding principal balance of the Line of Credit was $3.0 million which is presented, net of deferred financing fees of $1, on the consolidated balance sheets and is classified as notes payable, net. As of December 31, 2023, the amount of borrowings available to be drawn under the Line of Credit was $14.7 million and no amounts were outstanding.

 

We currently intend to seek to extend the Line of Credit on or before its scheduled maturity date. However, if we are unable to extend the Line of Credit, we will repay it in full with available cash on hand.

 

Distributions

 

Common Shares

 

On November 10, 2023, the Board of Directors determined to suspend regular quarterly distributions.

 

Future distributions, if any, declared will be at the discretion of the Board of Directors based on their analysis of our performance over the previous periods and expectations of performance for future periods. The Board of Directors will consider various factors in its determination, including but not limited to, the sources and availability of capital, operating and interest expenses, our ability to refinance near-term debt, as well as the IRS’s annual distribution requirement that REITs distribute no less than 90% of their taxable income. We cannot assure that any future distributions will be made or that we will maintain any particular level of distributions that we have previously established or may establish.

 

SRP

 

Our share repurchase program (the “SRP”) may provide our stockholders with limited, interim liquidity by enabling them to sell their Common Shares back to us, subject to restrictions.

 

On March 25, 2020, the Board of Directors amended the SRP to remove stockholder notice requirements and also approved the suspension of all redemptions.

 

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Effective March 15, 2021 and May 14, 2021, the Board of Directors partially reopened the SRP to allow, subject to various conditions as set forth below, for redemptions submitted in connection with a stockholder’s death and hardship, respectively, and set the price for all such purchases to our current estimated net asset value per share of common stock (“NAV per Share”), as determined by the Board of Directors and reported by us from time to time. Deaths that occurred subsequent to January 1, 2020 were eligible for consideration, subject to certain conditions. Beginning January 1, 2022, requests for redemptions in connection with a stockholder’s death must be submitted and received by us within one year of the stockholder’s date of death for consideration. On March 18, 2022, the Board of Directors approved an increase to the annual threshold for death redemptions from up to 0.5% to 1.0%.

 

At the above noted dates, the Board of Directors established that on an annual basis, we would not redeem in excess of 1.0% and 0.5% of the number of shares outstanding as of the end of the preceding year for either death or hardship redemptions, respectively. Additionally, redemption requests are expected to be processed on a quarterly basis and would be subject to pro ration if either type of redemption requests exceeded the annual limitation.

 

For the nine months ended September 30, 2024, we repurchased 243,754 Common Shares at a weighted average price per share of $11.88. For the nine months ended September 30, 2023, we repurchased 201,195 Common Shares at a weighted average price per share of $12.19.

 

Funds from Operations and Modified Funds from Operations

 

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings, improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative.

 

Because of these factors, the National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has published a standardized measure of performance known as funds from operations (“FFO”), which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT’s operating performance. FFO is not equivalent to our net income or loss as determined under GAAP.

 

We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Our FFO calculation complies with NAREIT’s definition.

 

We believe that the use of FFO provides a more complete understanding of our performance to investors and to management and reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

 

Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT’s definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.

 

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Because of these factors, the Investment Program Association (the “IPA”), an industry trade group, published a standardized measure of performance known as modified funds from operations (“MFFO”), which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that both before and after we have deployed all of our offering proceeds, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. MFFO is not equivalent to our net income or loss as determined under GAAP.

 

We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the “Practice Guideline”) issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for acquisition and transaction-related fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition and transaction-related fees and expenses (which includes costs incurred in connection with strategic alternatives), amounts relating to straight line rent receivables and amortization of market lease and other intangibles, net (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), accretion of discounts and amortization of premiums on debt investments and borrowings, mark-to-market adjustments included in net income (including gains or losses incurred on assets held for sale), gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.

 

We believe that, because MFFO excludes costs that we consider more reflective of other non-operating items, MFFO can provide, on a going-forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we are acquiring properties and once our portfolio is stabilized. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs.

 

Not all REITs, including publicly registered, non-listed REITs, calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs, including publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO and MFFO are not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as determined under GAAP as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance. FFO and MFFO should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and MFFO, and the adjustments to GAAP in calculating FFO and MFFO.

 

Neither the SEC, NAREIT, the IPA nor any other regulatory body or industry trade group has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, NAREIT, the IPA or another industry trade group may publish updates to the White Paper or the Practice Guidelines or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry, and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.

 

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The below table illustrates the items deducted in the calculation of FFO and MFFO. Items are presented net of non-controlling interest portions where applicable.

 

    For the
Three Months Ended
September 30,		     For the
Nine Months Ended
September 30,		  
    2024     2023     2024     2023  
Net loss   $ (31,941 )   $ (8,453 )   $ (29,649 )   $ (16,171 )
FFO adjustments:                                
Depreciation and amortization     1,755       1,860       5,260       5,211  
Adjustments to equity earnings from unconsolidated affiliated entity     617       942       1,806       2,800  
Income tax on redemptions of preferred investments in related parties     -       2,474       808       2,474  
Impairment charges     34,353       -       34,353       -  
Gain on disposal of investment property     (2,749 )     -       (13,601 )     (1,121 )
FFO     2,035       (3,177 )     (1,023 )     (6,807 )
MFFO adjustments:                                
Noncash adjustments:                                
Mark to market adjustments(1)     (3,736 )     2,002       (5,762 )     1,871  
Loss on sale of marketable securities(2)     -       297       -       656  
MFFO     (1,701 )     (878 )     (6,785 )     (4,280 )
Straight-line rent(3)     13       12       32       10  
MFFO - IPA recommended format   $ (1,688 )   $ (866 )   $ (6,753 )   $ (4,270 )
                                 
Net loss   $ (31,941 )   $ (8,453 )   $ (29,649 )   $ (16,171 )
Less: loss/(income) attributable to noncontrolling interests     9,353       (364 )     9,304       (1,439 )
Net loss applicable to Company’s common shares   $ (22,588 )   $ (8,817 )   $ (20,345 )   $ (17,610 )
Net loss per common share, basic and diluted   $ (1.06 )   $ (0.41 )   $ (0.95 )   $ (0.81 )
                                 
FFO   $ 2,035     $ (3,177 )   $ (1,023 )   $ (6,807 )
Less: FFO attributable to noncontrolling interests     8,422       (645 )     8,183       (2,134 )
FFO attributable to Company’s common shares   $ 10,457     $ (3,822 )   $ 7,160     $ (8,941 )
FFO per common share, basic and diluted   $ 0.49     $ (0.18 )   $ 0.33     $ (0.41 )
                                 
MFFO - IPA recommended format   $ (1,688 )   $ (866 )   $ (6,753 )   $ (4,270 )
Less: MFFO attributable to noncontrolling interests     (8 )     (767 )     (132 )     (2,278 )
MFFO attributable to Company’s common shares   $ (1,696 )   $ (1,633 )   $ (6,885 )   $ (6,548 )
                                 
Weighted average number of common shares outstanding, basic and diluted     21,358       21,679       21,438       21,750  

 

Notes:

 

(1) Management believes that adjusting for mark-to-market adjustments is appropriate because they are nonrecurring items that may not be reflective of ongoing operations and reflects unrealized impacts on value based only on then current market conditions, although they may be based upon current operational issues related to an individual property or industry or general market conditions. Mark-to-market adjustments are made for items such as ineffective derivative instruments, certain marketable equity securities and any other items that GAAP requires we make a mark-to-market adjustment for. The need to reflect mark-to-market adjustments is a continuous process and is analyzed on a quarterly and/or annual basis in accordance with GAAP.
(2) Management believes that adjusting for gains or losses related to extinguishment/sale of debt, derivatives or securities holdings is appropriate because they are items that may not be reflective of ongoing operations. By excluding these items, management believes that MFFO provides supplemental information related to sustainable operations that will be more comparable between other reporting periods.
(3) Under GAAP, rental revenue is recognized on a straight-line basis. This may result in income recognition that is significantly different than underlying contract terms. By adjusting for these items (to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments, providing insight on the contractual cash flows of such lease terms and debt investments, and aligns results with management’s analysis of operating performance.

 

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The table below presents our cumulative distributions paid and cumulative FFO attributable to our common shares:

 

    From inception through
September 30,
2024		  
FFO attributable to Company’s common shares   $ 260,045  
Distributions paid   $ 292,086  

 

ITEM 4. CONTROLS AND PROCEDURES.

 

As of the end of the period covered by this Quarterly Report on Form 10-Q, management, including our chief executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of the evaluation, our chief executive officer and principal financial officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required.

 

There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. There were no material weaknesses identified in the evaluation, and therefore, no corrective actions were taken.

 

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PART II. OTHER INFORMATION:

 

ITEM 1. LEGAL PROCEEDINGS

 

From time to time in the ordinary course of business, we may become subject to legal proceedings, claims or disputes.

 

Various claims have been asserted against the 2nd Street Joint Venture, including that the rents at Gantry Park Landing have been in excess of the lawfully allowable amounts. While any dispute has an element of uncertainty, the 2nd Street Joint Venture currently believes that the likelihood of an unfavorable outcome with respect to these matters is remote and therefore, no provision for loss has been recorded in connection therewith.

 

Other the aforementioned matter, the Company is not a party to any material pending legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on its results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the period covered by this Quarterly Report on Form 10-Q, we did not sell any equity securities that were not registered under the Securities Act of 1933.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

ITEM 6. EXHIBITS

 

Exhibit Number

  

Description
31.1*   Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.2*   Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15 d-14(a) of the Securities Exchange Act, as amended.
32.1*   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551 this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
32.2*   Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551 this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
101*   XBRL (eXtensible Business Reporting Language). The following financial information from Lightstone Value Plus REIT I, Inc. on Form 10-Q for the quarter ended September 30, 2024, filed with the SEC on November 14, 2024, formatted in XBRL includes: (1) Consolidated Balance Sheets, (2) Consolidated Statements of Operations, (3) Consolidated Statements of Comprehensive Income, (4) Consolidated Statements of Stockholders’ Equity, (5) Consolidated Statements of Cash Flows and (6) the Notes to the Consolidated Financial Statement.

 

 
* Filed herewith

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  LIGHTSTONE VALUE PLUS REIT I, INC.
   
Date: November 14, 2024 By: /s/ David Lichtenstein
    David Lichtenstein
   

Chairman and Chief Executive Officer

(Principal Executive Officer)

 

Date: November 14, 2024 By: /s/ Seth Molod
    Seth Molod
   

Chief Financial Officer and Treasurer

(Duly Authorized Officer and Principal Financial and Accounting Officer)

 

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EXHIBIT 31.1

 

Certifications

 

I, David Lichtenstein, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Lightstone Value Plus REIT I, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

/s/ David Lichtenstein  
David Lichtenstein
Chairman and Chief Executive Officer
(Principal Executive Officer)		  

 

Date: November 14, 2024

 

 

 

EXHIBIT 31.2

 

Certifications

 

I, Seth Molod, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Lightstone Value Plus REIT I, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

/s/ Seth Molod  

Seth Molod
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)

  

 

Date: November 14, 2024

 

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, David Lichtenstein, the Chief Executive Officer and Chairman of the Board of Directors of Lightstone Value Plus REIT I, Inc. (the “Company”) certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

 

(1) The Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2024 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C 78m); and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ David Lichtenstein  
David Lichtenstein  
Chairman and Chief Executive Officer  
(Principal Executive Officer)  

 

Date: November 14, 2024

 

 

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Seth Molod, the Chief Financial Officer, Treasurer and Principal Accounting Officer of Lightstone Value Plus REIT I, Inc. (the “Company”) certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

 

(1) The Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2024 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C 78m); and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Seth Molod  
Seth Molod  
Chief Financial Officer and Treasurer  
(Principal Financial and Accounting Officer)  

 

Date: November 14, 2024

 

 

v3.24.3
Cover - shares
 9 Months Ended
Sep. 30, 2024
Nov. 07, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 2024  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --12-31  
Entity File Number 000-52610  
Entity Registrant Name LIGHTSTONE VALUE PLUS REIT I, INC.  
Entity Central Index Key 0001296884  
Entity Tax Identification Number 20-1237795  
Entity Incorporation, State or Country Code MD  
Entity Address, Address Line One 1985 Cedar Bridge Avenue  
Entity Address, Address Line Two Suite 1  
Entity Address, City or Town Lakewood  
Entity Address, State or Province NJ  
Entity Address, Postal Zip Code 08701  
City Area Code 732  
Local Phone Number 367-0129  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   21,200,000
v3.24.3
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Investment property:    
Land and improvements $ 93,293 $ 95,780
Building and improvements 173,170 172,729
Furniture and fixtures 17,614 17,300
Construction in progress 248 1,427
Gross investment property 284,325 287,236
Less: accumulated depreciation (27,869) (22,652)
Net investment property 256,456 264,584
Development projects 97,800 132,370
Investment in related party 447 490
Investment in unconsolidated affiliated entity 14,207 16,914
Cash and cash equivalents 27,020 10,547
Marketable securities 41,041 35,218
Restricted cash 7,100 7,813
Other assets 4,399 5,211
Total Assets 448,470 473,147
Liabilities and Stockholders’ Equity    
Mortgages payable, net 263,357 259,698
Notes payable, net 2,999
Accounts payable, accrued expenses and other liabilities 15,569 15,048
Total Liabilities 281,925 274,746
Company’s Stockholders’ Equity:    
Preferred shares, $0.01 par value, 10.0 million shares authorized, none issued and outstanding
Common stock, $0.01 par value; 60.0 million shares authorized, 21.3 million and 21.6 million shares issued and outstanding, respectively 213 215
Additional paid-in-capital 158,277 161,174
Accumulated surplus 5,109 25,454
Total Company’s stockholders’ equity 163,599 186,843
Noncontrolling interests 2,946 11,558
Total Stockholders’ Equity 166,545 198,401
Total Liabilities and Stockholders’ Equity $ 448,470 $ 473,147
v3.24.3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares
shares in Thousands
Sep. 30, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Preferred shares, par value $ 0.01 $ 0.01
Preferred shares, shares authorized 10,000 10,000
Preferred shares, shares issued 0 0
Preferred shares, shares outstanding 0 0
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 60,000 60,000
Common stock, shares issued 21,300 21,600
Common stock, shares outstanding 21,300 21,600
v3.24.3
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Revenues:        
Total revenues $ 15,677 $ 15,843 $ 45,360 $ 41,280
Expenses:        
Property operating expenses 846 792 2,306 2,259
Hotel operating expenses 8,825 8,828 26,613 25,489
Real estate taxes 839 635 2,217 851
General and administrative costs 941 1,065 2,917 3,029
Impairment charges 34,353 34,353
Pre-opening costs 69 85
Depreciation and amortization 1,755 1,860 5,260 5,211
Total expenses 47,559 13,249 73,666 36,924
Interest and dividend income 673 1,929 1,771 6,049
Interest expense (6,385) (7,012) (19,217) (19,173)
Gain on disposition of real estate 2,749 13,601 1,121
Loss on sale of marketable securities (297) (656)
Unrealized gain/(loss) on marketable equity securities 3,761 (1,322) 5,824 (821)
Mark to market adjustments on derivative financial instruments (25) (680) (62) (1,050)
Loss from investment in unconsolidated affiliated real estate entity (945) (1,261) (2,718) (3,621)
Other income/(expense), net 113 (2,404) (542) (2,376)
Net loss (31,941) (8,453) (29,649) (16,171)
Less: net loss/(income) attributable to noncontrolling interests 9,353 (364) 9,304 (1,439)
Net loss attributable to Company’s common shares $ (22,588) $ (8,817) $ (20,345) $ (17,610)
Basic loss per share $ (1.06) $ (0.41) $ (0.95) $ (0.81)
Diluted loss per share $ (1.06) $ (0.41) $ (0.95) $ (0.81)
Weighted average shares outstanding, basic 21,358 21,679 21,438 21,750
Weighted average shares outstanding, diluted 21,358 21,679 21,438 21,750
Rental [Member]        
Revenues:        
Total revenues $ 2,593 $ 2,584 $ 7,916 $ 7,534
Hotel [Member]        
Revenues:        
Total revenues $ 13,084 $ 13,259 $ 37,444 $ 33,746
v3.24.3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Income Statement [Abstract]        
Net loss $ (31,941) $ (8,453) $ (29,649) $ (16,171)
Other comprehensive income:        
Holding loss on available for sale debt securities (208)
Reclassification adjustment for loss included in net loss 359
Other comprehensive income: 151
Comprehensive loss (31,941) (8,453) (29,649) (16,020)
Less: Comprehensive loss/(income) attributable to noncontrolling interests 9,353 (364) 9,304 (1,439)
Comprehensive loss attributable to the Company’s common shares $ (22,588) $ (8,817) $ (20,345) $ (17,459)
v3.24.3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
Common Stock [Member]
Additional Paid-in Capital [Member]
AOCI Attributable to Parent [Member]
Retained Earnings, Unappropriated [Member]
Noncontrolling Interest [Member]
Total
Beginning balance, value at Dec. 31, 2022 $ 218 $ 164,331 $ (159) $ 50,051 $ 12,333 $ 226,774
Beginning balance, shares at Dec. 31, 2022 21,840          
Net loss (17,610) 1,439 (16,171)
Other comprehensive income 159 (8) 151
Contributions received from noncontrolling interests 1,523 1,523
Distributions paid to noncontrolling interests (4,323) (4,323)
Distributions declared [1] (9,524)   (9,524)
Redemption and cancellation of common shares $ (2) (2,453) (2,455)
Redemption and cancellation of common shares, shares (201)          
Shares issued from distribution reinvestment program 252 252
Shares issued from distribution reinvestment program, shares 21          
Ending balance, value at Sep. 30, 2023 $ 216 162,130 22,917 10,964 196,227
Ending balance, shares at Sep. 30, 2023 21,660          
Beginning balance, value at Jun. 30, 2023 $ 217 163,045 33,631 10,234 207,127
Beginning balance, shares at Jun. 30, 2023 21,735          
Net loss (8,817) 364 (8,453)
Contributions received from noncontrolling interests 1,523 1,523
Distributions paid to noncontrolling interests (1,157) (1,157)
Distributions declared [2] (1,897) (1,897)
Redemption and cancellation of common shares $ (1) (1,000) (1,001)
Redemption and cancellation of common shares, shares (82)          
Shares issued from distribution reinvestment program 85 85
Shares issued from distribution reinvestment program, shares 7          
Ending balance, value at Sep. 30, 2023 $ 216 162,130 22,917 10,964 196,227
Ending balance, shares at Sep. 30, 2023 21,660          
Beginning balance, value at Dec. 31, 2023 $ 215 161,174 25,454 11,558 198,401
Beginning balance, shares at Dec. 31, 2023 21,581          
Net loss (20,345) (9,304) (29,649)
Contributions received from noncontrolling interests   745 745
Distributions paid to noncontrolling interests   (53) (53)
Redemption and cancellation of common shares $ (2) (2,897)   (2,899)
Redemption and cancellation of common shares, shares (244)          
Shares issued from distribution reinvestment program          
Ending balance, value at Sep. 30, 2024 $ 213 158,277 5,109 2,946 166,545
Ending balance, shares at Sep. 30, 2024 21,337          
Beginning balance, value at Jun. 30, 2024 $ 213 159,228 27,697 12,317 199,455
Beginning balance, shares at Jun. 30, 2024 21,418          
Net loss (22,588) (9,353) (31,941)
Distributions paid to noncontrolling interests   (18) (18)
Redemption and cancellation of common shares (951)   (951)
Redemption and cancellation of common shares, shares (81)          
Ending balance, value at Sep. 30, 2024 $ 213 $ 158,277 $ 5,109 $ 2,946 $ 166,545
Ending balance, shares at Sep. 30, 2024 21,337          
[1] Distributions per share were $0.4375.
[2] Distributions per share were $0.0875.
v3.24.3
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (29,649) $ (16,171)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 5,260 5,211
Gain on disposition of real estate (13,601) (1,121)
Impairment charges 34,353
Loss from investment in unconsolidated affiliated real estate entity 2,718 3,621
Mark to market adjustments on derivative financial instruments 62 1,050
Unrealized (gain)/loss on marketable equity securities (5,824) 821
Loss on sale of marketable securities 656
Amortization of deferred financing costs 1,866 2,475
Noncash interest income (2,934)
Other non-cash adjustments 14 30
Changes in assets and liabilities:    
Decrease/(increase) in other assets 640 (1,698)
Increase in accounts payable, accrued expenses and other liabilities 1,232 842
Net cash used in operating activities (2,929) (7,218)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchase of development property and investment property (1,458) (8,516)
Purchase of marketable securities (187) (9,284)
Proceeds from sale of marketable securities 187 14,828
Proceeds from disposition of real estate 17,529 1,382
Investment in joint venture (9) (4)
Distributions from joint venture 52 467
Proceeds from redemption of preferred investment in related party 6,000
Funding of notes receivable (300)
Release of reserves on notes receivable 300
Proceeds from repayment of notes receivable 14,000
Investment in unconsolidated affiliated real estate entity (10) (247)
Net cash provided by investing activities 16,104 18,626
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from mortgage financing 3,036 7,899
Mortgage principal payments (1,124) (14,468)
Proceeds from notes payable 3,000
Payment of loan fees and expenses (120) (25)
Redemption and cancellation of common shares (2,899) (2,455)
Contributions received from noncontrolling interests 745 1,523
Distributions paid to noncontrolling interests (53) (4,323)
Distributions paid to Company’s common stockholders (11,200)
Net cash provided by/(used in) financing activities 2,585 (23,049)
Change in cash, cash equivalents and restricted cash 15,760 (11,641)
Cash, cash equivalents and restricted cash, beginning of year 18,360 22,583
Cash, cash equivalents and restricted cash, end of period 34,120 10,942
The following is a summary of the Company’s cash, cash equivalents, and restricted cash total as presented in our statements of cash flows for the periods presented:    
Cash and cash equivalents 27,020 8,548
Restricted cash 7,100 2,394
Total cash, cash equivalents and restricted cash $ 34,120 $ 10,942
v3.24.3
Pay vs Performance Disclosure - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Pay vs Performance Disclosure [Table]        
Net Income (Loss) $ (22,588) $ (8,817) $ (20,345) $ (17,610)
v3.24.3
Insider Trading Arrangements
 9 Months Ended
Sep. 30, 2024
Insider Trading Arrangements [Line Items]  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.3
Business and Structure
 9 Months Ended
Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business and Structure

 

1. Business and Structure

 

Lightstone Value Plus REIT I, Inc., is a Maryland corporation (“Lightstone REIT I”), formed on June 8, 2004, which has elected to be taxed and qualify as a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes. Lightstone REIT I was formed primarily for the purpose of engaging in the business of investing in and owning commercial and multifamily residential real estate properties and making other real estate-related investments located throughout the U.S.

 

Lightstone REIT I is structured as an umbrella partnership REIT, or UPREIT, and substantially all of its current and future business is and will be conducted through Lightstone Value Plus REIT, L.P. (the “Operating Partnership”), a Delaware limited partnership formed on July 12, 2004. As of September 30, 2024, Lightstone REIT I held a 98% general partnership interest in the Operating Partnership’s common units (“Common Units”).

 

Lightstone REIT I, together with the Operating Partnership and its subsidiaries are collectively referred to as the “Company” and the use of “we,” “our,” “us” or similar pronouns refers to Lightstone REIT I, its Operating Partnership or the Company as required by the context in which such pronoun is used.

 

Through its Operating Partnership, the Company owns, operates and develops commercial and multifamily residential properties and makes other real estate-related investments, principally in the U.S. The Company’s real estate investments are held by it alone or jointly with other parties. The Company also originates or acquires mortgage loans secured by real estate. Although most of its investments are of these types, the Company may invest in whatever types of real estate or real estate-related investments that it believes is in its best interests. Since its inception, the Company has owned and managed various commercial and multifamily residential properties located throughout the U.S. The Company evaluates all of its real estate investments as one operating segment. The Company currently intends to hold its real estate investments until such time as it determines that a sale or other disposition appears to be advantageous to achieve its objectives or until it appears that the objectives will not be met.

 

As of September 30, 2024, the Company (i) has ownership interests in and consolidates two operating properties, two development projects and certain land holdings and (ii) has ownership interests through two unconsolidated joint ventures in a portfolio of nine multifamily residential properties (the “Columbus Properties”) and a portfolio of five limited service hotel properties (the “Hotel JV Properties”).

 

With respect to its consolidated operating properties, the Company wholly owns a 303-room Marriott International, Inc. (“Marriott”) branded Moxy hotel (the “Lower East Side Moxy Hotel”), located in the Lower East Side neighborhood in the Manhattan borough of New York City, which it developed, constructed and opened on October 27, 2022 and has a 59.2% majority ownership interest in 50-01 2nd St. Associates LLC (the “2nd Street Joint Venture”), a joint venture between the Company and a related party, which developed, constructed and owns a 199-unit luxury, multifamily residential property (“Gantry Park Landing”), located in the Long Island City neighborhood in the Queens borough of New York City.

 

With respect to its consolidated development projects, the Company wholly owns three land parcels located at 355 & 399 Exterior Street in the Mott Haven neighborhood in the Bronx borough of New York City, which it acquired for the development of a mixed-use multifamily residential and commercial retail project (the “Exterior Street Project”) and the Company has a 50% joint venture ownership interest in LSC 1543 7th LLC (the “Santa Monica Joint Venture”), a joint venture between the Company and a related party, which owns certain land parcels located in Santa Monica, California, on which a multifamily residential project (the “Santa Monica Project”) has been proposed (see Notes 3 and 7).

 

The Company also wholly owns and consolidates certain land parcels located in St. Augustine, Florida.

 

With respect to our unconsolidated joint venture properties, the Company holds a 19% joint venture ownership interest in Columbus Portfolio Member LLC (the “Columbus Joint Venture”), which owns the Columbus Properties, a portfolio of nine multifamily residential properties located in the Columbus, Ohio metropolitan area, and it holds a 2.5% joint venture ownership interest in LVP Holdco JV LLC (the “Hotel Joint Venture”), which owns the Hotel JV Properties, a portfolio of five limited service hotels. The Company accounts for its 19% joint venture ownership interest in the Columbus Joint Venture under the equity method of accounting and it accounts for its 2.5% joint venture ownership interest in the Hotel Joint Venture using a measurement alternative pursuant to which its investment is measured at cost, adjusted for observable price changes and impairments, if any. Both the Columbus Joint Venture and the Hotel Joint Venture are between the Company and related parties.

 

The Company’s advisor is Lightstone Value Plus REIT, LLC (the “Advisor”), which is majority owned by David Lichtenstein. On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units. The Company’s Advisor also owns 20,000 shares of the Company’s common stock (“Common Shares”) which were issued on July 6, 2004 for $200, or $10.00 per share. Mr. Lichtenstein also is the majority owner of the equity interests of The Lightstone Group, LLC (the “Sponsor”), which served as the Company’s sponsor during its initial public offering (the “Offering”), which terminated on October 10, 2008. The Company’s Advisor, pursuant to the terms of an advisory agreement, together with its board of directors (the “Board of Directors”), is primarily responsible for making investment decisions on the Company’s behalf and managing its day-to-day operations. Through his ownership and control of Sponsor, Mr. Lichtenstein is the indirect owner and manager of Lightstone SLP, LLC, a Delaware limited liability company, which owns an aggregate of $30.0 million of special general partner interests (“SLP Units”) in the Operating Partnership which were purchased, at a cost of $100,000 per unit, in connection with the Company’s Offering. Mr. Lichtenstein also acts as the Company’s Chairman and Chief Executive Officer. As a result, he exerts influence over but does not control Lightstone REIT I or the Operating Partnership.

 

The Company has no employees. The Company is dependent on the Advisor and certain affiliates of its Sponsor for performing a full range of services that are essential to it, including asset management, property management (excluding its hospitality property, which is managed by unrelated third party property managers) and acquisition, disposition and financing activities, and other general administrative responsibilities; such as tax, accounting, legal, information technology and investor relations services. If the Advisor and certain affiliates of the Company’s Sponsor are unable to provide these services to it, the Company would be required to provide the services itself or obtain the services from other parties.

 

The Company’s Common Shares are not currently listed on a national securities exchange. The Company may seek to list its Common Shares for trading on a national securities exchange only if a majority of independent directors believe listing would be in the best interest of its stockholders. The Company does not intend to list its Common Shares at this time. The Company does not anticipate that there would be any active market for its Common Shares until they are listed for trading.

 

Related Parties

 

The Company’s Sponsor, Advisor and their affiliates, including Lightstone SLP, LLC, are related parties of the Company as well as other public REITs also sponsored and/or advised by these entities. Pursuant to the terms of various agreements, certain of these entities are entitled to compensation and reimbursement of costs incurred for services related to the investment, management and disposition of the Company’s assets. The compensation is generally based on the cost of acquired properties/investments and the annual revenue earned from such properties/investments, and other such fees and expense reimbursements as outlined in each of the respective agreements.

 

Noncontrolling Interests

 

Partners of Operating Partnership

 

On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units in the Operating Partnership. The Advisor has the right to convert the Common Units into cash or, at the option of the Company, an equal number of shares of Common Shares.

 

In connection with the Offering, Lightstone SLP, LLC, an affiliate of the Advisor, purchased an aggregate of $30.0 million of SLP Units. As the majority owner of the SLP Units, Mr. Lichtenstein is the beneficial owner of a 99% interest in such SLP Units and thus receives an indirect benefit from any distributions made in respect thereof. These SLP Units may be entitled to a portion of any regular and liquidation distributions that the Company makes to its stockholders, but only after the Company’s stockholders have received a stated preferred return.

 

In addition, an aggregate 497,209 Common Units were issued to other unrelated parties during 2008 and 2009 and remain outstanding as of September 30, 2024.

 

Other Noncontrolling Interests in Consolidated Subsidiaries

 

Other noncontrolling interests in consolidated subsidiaries include the joint venture ownership interests held by either the Sponsor or its affiliates in (i) Pro-DFJV Holdings LLC (“PRO”), (ii) the 2nd Street Joint Venture and (iii) the Santa Monica Joint Venture (see Note 3). PRO’s holdings principally consist of Marco OP Units and Marco II OP Units (see Note 6). The 2nd Street Joint Venture owns Gantry Park Landing and the Santa Monica Joint Venture owns the Santa Monica Project (see Notes 3 and 7).
v3.24.3
Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

 

2. Summary of Significant Accounting Policies

 

Principles of Consolidation and Basis of Presentation

 

The consolidated financial statements include the accounts of Lightstone REIT I and its Operating Partnership and its subsidiaries (over which Lightstone REIT I exercises financial and operating control). All inter-company balances and transactions have been eliminated in consolidation. In addition, interests in entities acquired are evaluated based on applicable accounting principles generally accepted in the U.S. (“GAAP”), and if deemed to be variable interest entities (“VIE”) in which the Company is the primary beneficiary are also consolidated. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation based on legal form, economic substance, and the extent to which the Company has control, substantive participating rights or both under the respective ownership agreement. For entities in which the Company has less than a controlling interest but have significant influence, the Company accounts for the investment using the equity method of accounting.

 

There are judgments and estimates involved in determining if an entity in which the Company has made an investment is a VIE and, if so, whether the Company is the primary beneficiary. The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage of equity being risked compared to the total equity of the entity. Determining expected future losses involves assumptions of various possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate to determine the net present value of those future losses. A change in the judgments, assumptions, and estimates outlined above could result in consolidating an entity that should not be consolidated or accounting for an investment using the equity method that should in fact be consolidated, the effects of which could be material to our financial statements.

 

The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Form 10-K”). The unaudited interim consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair presentation of the results for the periods presented. The accompanying unaudited consolidated financial statements of Lightstone Value Plus REIT I, Inc. and its Subsidiaries have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.

 

GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period. The most significant assumptions and estimates relate to the valuation of real estate and real-estate related investments, marketable securities, notes receivable, depreciable lives, and revenue recognition. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.

 

The consolidated balance sheet as of December 31, 2023 included herein has been derived from the consolidated balance sheet included in the Company’s 2023 Form 10-K.

 

The unaudited consolidated statements of operations for interim periods are not necessarily indicative of results for the full year or any other period.

 

Income Taxes

 

The Company elected to be taxed and qualify as a REIT, commencing with the taxable year ended December 31, 2005. If the Company remains qualified as a REIT, it generally will not be subject to U.S. federal income tax on its net taxable income that it distributes currently to its stockholders. To maintain its REIT qualification under the Internal Revenue Code of 1986, as amended, or the Code, the Company must meet a number of organizational and operational requirements, including a requirement that it annually distribute to its stockholders at least 90% of its REIT taxable income (which does not equal net income, as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. If the Company fails to remain qualified for taxation as a REIT in any subsequent year and does not qualify for certain statutory relief provisions, its income for that year will be taxed at regular corporate rates, and it may be precluded from qualifying for treatment as a REIT for the four-year period following its failure to qualify as a REIT. Such an event could materially adversely affect its net income and net cash available for distribution to its stockholders. Additionally, even if the Company continues to qualify as a REIT for U.S. federal income tax purposes, it may still be subject to some U.S. federal, state and local taxes on its income and property and to U.S. federal income taxes and excise taxes on its undistributed income, if any.

 

To maintain its qualification as a REIT, the Company engages in certain activities through a taxable REIT subsidiary (“TRS”), including when the Company acquires or develops and constructs a hotel it usually establishes a new TRS and enters into an operating lease agreement for the hotel. As such, the Company is subject to U.S. federal and state income and franchise taxes from these activities.

 

The Company’s income tax expense is included in other income/(expense), net on its consolidated statements of operations. No income tax expense was recorded during the three months ended September 30, 2024. During the nine months ended September 30, 2024, the Company recorded income tax expense of $0.9 million. During both the three and nine months ended September 30, 2023, the Company recorded income tax expense of $2.5 million, primarily consisting of federal and state income tax related to the redemptions of its preferred investments in related parties.

 

As of September 30, 2024 and December 31, 2023, the Company had no material uncertain income tax positions.

 

Revenues

 

The following table represents the total hotel revenues from the operations of the Lower East Side Moxy Hotel on a disaggregated basis:

 

Schedule of revenues on a disaggregated                            
    For the
Three Months Ended
September 30,		     For the
Nine Months Ended
September 30,		  
      2024       2023     2024     2023  
Revenues                                
Room   $ 7,650     $ 6,804     $ 19,826     $ 16,504  
Food, beverage and other     5,434       6,455       17,618       17,242  
Total revenues   $ 13,084     $ 13,259     $ 37,444     $ 33,746  

 

Land Parcels

 

The Company wholly owns certain land parcels located in St. Augustine, Florida.

 

During the first quarter of 2023, the Company completed the disposition of one of its land parcels located in St. Augustine, Florida to an unrelated third-party for a contractual sales price of $1.5 million and recognized a gain on disposition of real estate of $1.1 million. During the second quarter of 2024, the Company completed the disposition of two more of its land parcels located in St. Augustine, Florida, each to an unrelated third-party, for an aggregate contractual sales price of $14.8 million and recognized an aggregate gain on disposition of real estate of $10.9 million. During the third quarter of 2024, the Company completed the sale of certain municipal impact fee credits, which were attributable to the development of its former outlet center located in St. Augustine, Florida, which was substantially demolished during 2022, to an unrelated third-party for a contractual sales price of $2.7 million and recognized a gain on disposition of real estate of $2.7 million.

 

As of September 30, 2024 and December 31, 2023, the carrying value of the Company’s land parcels located in St. Augustine, Florida was $2.1 million and $6.0 million, respectively, which is included in land and land improvements on the consolidated balance sheets.

 

New Accounting Pronouncements

 

In November 2023, the FASB issued an accounting standards update which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within segment profit and loss, as well as the title and position of the CODM. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is evaluating the guidance and the impact it may have on its consolidated financial statements.

 

In December 2023, the FASB issued an accounting standards update which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This update is effective for annual periods beginning after December 15, 2024. The Company is evaluating the guidance and the impact it may have on its consolidated financial statements.

 

The Company has reviewed and determined that other recently issued accounting pronouncements will not have a material impact on its financial position, results of operations and cash flows, or do not apply to its current operations.

 

Concentration of Risk

 

As of September 30, 2024 and December 31, 2023, the Company had cash deposited in certain financial institutions in excess of U.S. federally insured levels. The Company regularly monitors the financial stability of these financial institutions and believes that it is not exposed to any significant credit risk with respect to its cash and cash equivalents or restricted cash.

 

Current Environment

 

The Company’s operating results and financial condition are substantially impacted by the overall health of local, U.S. national and global economies and may be influenced by market and other challenges. Additionally, the Company’s business and financial performance may be adversely affected by current and future economic and other conditions; including, but not limited to, availability or terms of financings, financial markets volatility and banking failures, political upheaval or uncertainty, natural and man-made disasters, terrorism and acts of war, unfavorable changes in laws and regulations, outbreaks of contagious diseases, cybercrime, loss of key relationships, inflation and recession.

 

The Company’s overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on consumer behavior. Worsening economic conditions, increases in costs due to inflation, higher interest rates, labor and supply chain challenges and other changes in economic conditions could adversely affect the Company’s future results from operations and its financial condition.

 

Reclassifications

 

Certain prior period amounts may have been reclassified to conform to the current period’s presentation.

 

Supplemental Cash Flow Information

 

Supplemental cash flow information for the periods indicated is as follows:

 

Summary of supplemental cash flow information                
    For the
Nine Months Ended
September 30,		  
    2024     2023  
Cash paid for interest   $ 17,175     $ 19,566  
Distributions declared but not paid   $ -     $ 1,897  
Capital expenditures for investment property in accounts payable, accrued expenses and other liabilities   $ 29     $ 1,251  
Value of shares issued from distribution reinvestment program   $ -     $ 252  

 
v3.24.3
Development Projects
 9 Months Ended
Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Development Projects

 

3. Development Projects

 

Exterior Street Project

 

The Company wholly owns the Exterior Street Project, a proposed mixed-use multifamily residential and commercial retail project. In February 2019, the Company, through subsidiaries of the Operating Partnership, acquired two adjacent parcels of land located at 355 and 399 Exterior Street in the Mott Haven neighborhood in the Bronx borough of New York City from unaffiliated third parties for an aggregate purchase price of $59.0 million, excluding closing and other acquisition related costs. In September 2021, the Company subsequently acquired an additional adjacent parcel of land at cost from an affiliate of its Advisor for $1.0 million in order to achieve certain zoning compliance. These three land parcels were acquired by the Company for the development of the Exterior Street Project.

 

During the nine months ended September 30, 2023, interest of $1.5 million was capitalized to the Exterior Street Project.

 

During the second quarter of 2023, the Company decided to temporarily pause active development activities associated with the Exterior Street Project, due to prevailing unfavorable economic and local market conditions and regulations, and therefore, ceased capitalization of interest and other carrying costs.

 

Impairment Charge

 

Because of continuing unfavorable economic and local market conditions, the Company determined during the third quarter of 2024 it would no longer pursue the development of the Exterior Street Project, but rather pursue other strategies with respect to it, including a sale. As a result of this change in strategy; the Company determined the carrying value of the Exterior Street Project was no longer fully recoverable and therefore, recorded a non-cash impairment charge of $16.6 million, (included in impairment charges on the Company’s consolidated statement of operations) during the third quarter of 2024 to reduce the carrying value of the Exterior Street Project to its estimated fair value of $78.8 million as of September 30, 2024. In estimating the fair value of the Exterior Street Project, the Company took into consideration a bona fide third-party offer obtained from an independent third-party broker.

 

As of September 30, 2024 and December 31, 2023, the carrying value of the Exterior Street Project was $78.8 million and $95.7 million, respectively, which is included in development projects on the consolidated balance sheets.

 

Santa Monica Project

 

The Company has a 50% joint venture ownership interest in the Santa Monica Joint Venture. The Santa Monica Joint Venture, which the Company consolidates, is between the Company and a related party. In March 2022, the Santa Monica Joint Venture originated a $49.0 million promissory note (the “Santa Monica Note Receivable”) to a borrower (the “Santa Monica Borrower”), which was collateralized by two development projects located in Santa Monica, California. The Santa Monica Note Receivable bore interest at SOFR + 7.00%, subject to a 7.15% floor.

During the first quarter of 2023, the Santa Monica Joint Venture received a partial paydown of $14.0 million on the Santa Monica Note Receivable in exchange for the release of one of the development projects, which had been completed, from the underlying collateral pool. As a result, the remaining outstanding balance of the Santa Monica Note Receivable of $35.0 million was secured solely by the Santa Monica Project, which consists of a proposed multifamily residential project on land located in Santa Monica, California.

 

Due to financial difficulties, during the second quarter of 2023 the Santa Monica Borrower discontinued making monthly interest payments on the Santa Monica Note Receivable, which subsequently matured on August 31, 2023. On December 29, 2023, ownership of the Santa Monica Project was transferred to the Santa Monica Joint Venture via a deed in lieu of foreclosure transaction. In connection with the transfer, the outstanding principal and accrued interest for the Santa Monica Note Receivable of $36.7 million, which represented the fair value of the Santa Monica Project and approximated the carrying value of the Santa Monica Note Receivable, was reclassified from notes receivable, net to development projects on the consolidated balance sheet.

 

Impairment Charge

 

Subsequent to obtaining ownership of the Santa Monica Project, the Santa Monica Joint Venture decided to continue certain pre-development activities, which had already been started by the former owner. However, during the third quarter of 2024, the Santa Monica Joint Venture decided to no longer pursue development of the Santa Monica Project, but rather pursue various other strategies with respect to it, including a sale or the potential transfer of ownership to the lender, which had provided a non-recourse mortgage loan (the “Santa Monica Loan”), collateralized by the Santa Monica Project As a result of the change in strategy, the Santa Monica Joint Venture determined the carrying value of the Santa Monica Project was no longer fully recoverable and therefore, recorded a non-cash impairment charge of $17.7 million (which is included in impairment charges on the Company’s consolidated statement of operations) during the third quarter of 2024 in order to reduce the carrying value of the Santa Monica Project to its estimated fair value of $19.0 million as of September 30, 2024. In estimating the fair value of the Santa Monica Project, the Santa Monica Joint Venture used the fair value provided by an independent, third-party commercial real estate advisory and services firm.

 

On October 15, 2024 the Santa Monica Loan matured and it was not repaid, which constitutes a maturity event of default and therefore, it is due on demand. On October 30, 2024, the lender issued a formal notice of default and on October 31, 2024, the Santa Monica Joint Venture notified the lender of its intent to transfer ownership of the underlying collateral, the Santa Monica Project, to the lender via a deed-in-lieu of foreclosure transaction. See Note 7 for additional information.

 

As of September 30, 2024 and December 31, 2023, the carrying value of the Santa Monica Project was $19.0 million and $36.7 million, respectively, which is included in development projects on the consolidated balance sheets.
v3.24.3
Investment in Unconsolidated Affiliated Real Estate Entity
 9 Months Ended
Sep. 30, 2024
Investment In Unconsolidated Affiliated Real Estate Entity  
Investment in Unconsolidated Affiliated Real Estate Entity

 

4. Investment in Unconsolidated Affiliated Real Estate Entity

 

Columbus Joint Venture

 

On November 29, 2022, the Company, along with CRE Columbus Member (“Converge”), a majority owned subsidiary of Converge Holdings LLC, a reinsurance business owned by the Sponsor, and LEL Columbus Member LLC (the “BVI member”), a wholly owned subsidiary of Lightstone Enterprises Limited (“BVI”), a real estate investment company owned by the Sponsor, entered into a joint venture agreement to form the Columbus Joint Venture for the purpose of acquiring the Columbus Properties, a portfolio of nine multifamily residential properties consisting of 2,564 units located in the Columbus, Ohio metropolitan area for a contractual purchase price of $465.0 million. The Company has a 19% joint venture ownership interest in the Columbus Joint Venture. Converge and the BVI Member, which are both related parties, have joint venture ownership interests of 19% and 62%, respectively. Additionally, the manager of the Columbus Joint Venture is LEL Bronx Manager LLC, an entity wholly owned by BVI.

 

On November 29, 2022, the Columbus Joint Venture completed the purchase of the Columbus Properties. The acquisition was funded with $74.3 million of cash and $390.7 million of aggregate proceeds from preferred investments from unrelated third-parties and loans from two financial institutions. In connection with the acquisition and financings, the total cash paid, including closing costs, was $92.3 million and the Company paid $17.5 million representing its 19.0% pro rata share. In connection with the acquisition, the Company also paid the Advisor a separate acquisition fee of $2.4 million, equal to 2.75% of the Company’s pro-rata share of the contractual purchase price which is reflected in the carrying value of the Company’s investment in unconsolidated affiliated entity on the consolidated balance sheets.

 

The Company has determined that the Columbus Joint Venture is a VIE but it is not the primary beneficiary. The Company accounts for its ownership interest in the Columbus Joint Venture in accordance with the equity method of accounting because it exerts significant influence over but does not control the Columbus Joint Venture. All capital contributions and distributions of earnings from the Columbus Joint Venture are made on a pro rata basis in proportion to each member’s equity interest percentage. Any distributions in excess of earnings from the Columbus Joint Venture are made to the members pursuant to the terms of the Columbus Joint Venture’s operating agreement.

 

In connection with the purchase of the Columbus Properties on November 29, 2022, the Columbus Joint Venture obtained senior mortgage loans from two different financial institutions. The first financial institution provided four separate senior mortgage loans, all to subsidiaries of the Columbus Joint Venture, aggregating $133.6 million. These four senior mortgage loans bear interest at SOFR + 2.19%, provide for interest-only payments for the first six years of their term and mature in December 2032. Each of these four senior mortgage loans is individually collateralized by one of the Columbus Properties (collectively, the “Columbus Portfolio I Properties”). The second financial institution provided five separate senior mortgage loans, all to subsidiaries of the Columbus Joint Venture, aggregating $167.2 million. These five senior mortgage loans bear interest at 4.85%, provide for interest-only payments for the first two years of their term and initially mature in December 2027, but may be further extended for an additional five years, subject to satisfaction of certain conditions. Each of these five senior mortgage loans is individually collateralized by one of the Columbus Properties (collectively, the “Columbus Portfolio II Properties”).

 

Additionally, in connection with the purchase of the Columbus Properties on November 29, 2022, the Columbus Joint Venture obtained an aggregate of $90.0 million in financing through two preferred investments (the “Columbus Preferred Investments”) from unrelated third parties. The first preferred investment of $38.6 million is collateralized by the Columbus Portfolio I Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal and has a mandatory redemption date of December 1, 2032. The second preferred investment of $51.4 million is collateralized by the Columbus Portfolio II Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal, and has a mandatory redemption date of December 1, 2027. As of September 30, 2024, the aggregate unpaid interest included in the outstanding balance of the Columbus Preferred Investments was $10.7 million. Furthermore, the Columbus Preferred Investments are subordinate to the nine senior mortgage loans.

 

Because the Columbus Preferred Investments have mandatory redemption dates, the Columbus Joint Venture treats them as financial liabilities and includes them in mortgages and loans payable on its condensed balance sheets. The Company’s Sponsor (the “Guarantor”) has fully guaranteed the nine senior mortgage loans and the Columbus Preferred Investments (the “Debt Guarantee”). Each of the members of the Columbus Joint Venture have agreed to reimburse the Guarantor for their pro rata share of any balance that becomes due under the Debt Guarantee, of which the Company’s share is up to 19%. The Company has determined that the fair value of the Debt Guarantee is immaterial.

 

During the nine months ended September 30, 2024 and 2023, the Company made capital contributions of $10 and $13, respectively, to the Columbus Joint Venture.

 

Columbus Joint Venture Financial Information

 

The following table represents the condensed statements of operations for the Columbus Joint Venture:

 

 Schedule of condensed statement of operations for the columbus joint venture                                
    For the
Three Months Ended		     For the
Nine Months Ended		  
    September 30,
2024		     September 30,
2023		     September 30,
2024		     September 30,
2023		  
Revenues   $ 11,239     $ 10,778     $ 32,869     $ 31,785  
                                 
Property operating expenses     5,347       5,219       15,610       15,498  
General and administrative expense     94       84       273       168  
Depreciation and amortization     3,169       4,826       9,272       14,345  
Operating income     2,629       649       7,714       1,774  
                                 
Interest expense and other, net     (7,524 )     (7,152 )     (21,784 )     (20,438 )
Net loss   $ (4,895 )   $ (6,503 )   $ (14,070 )   $ (18,664 )
                                 
Company’s share of net loss (19.0%)   $ (930 )   $ (1,236 )   $ (2,674 )   $ (3,547 )
Additional depreciation and amortization expense(1)     (15 )     (25 )     (44 )     (74 )
Company’s loss from investment   $ (945 )   $ (1,261 )   $ (2,718 )   $ (3,621 )

 

 
(1) Additional depreciation and amortization expense relates to the amortization of the difference between the cost of the interest in the Columbus Joint Venture and the amount of the underlying equity in net assets of the Columbus Joint Venture.

 

The following table represents the condensed balance sheets for the Columbus Joint Venture:

 

Schedule of condensed balance sheet for the columbus joint venture                
    As of     As of  
    September 30,
2024		     December 31,
2023		  
Investment property, net   $ 448,142     $ 449,813  
Cash and restricted cash     18,510       25,640  
Other assets     1,041       3,082  
Total assets   $ 467,693     $ 478,535  
                 
Mortgages and loans payable, net   $ 395,223     $ 390,622  
Other liabilities     9,742       11,149  
Members’ equity     62,728       76,764  
Total liabilities and members’ equity   $ 467,693     $ 478,535  

 
v3.24.3
Investment in Related Party
 9 Months Ended
Sep. 30, 2024
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Abstract]  
Investment in Related Party

 

5. Investment in Related Party

 

Hotel Joint Venture

 

During 2015, the Company formed the Hotel Joint Venture with Lightstone REIT II, a related party REIT also sponsored by the Sponsor. The Company has a 2.5% membership interest in the Hotel Joint Venture and Lightstone REIT II holds the remaining 97.5% membership interest. The Hotel Joint Venture holds ownership interests in the Hotel JV Properties, a portfolio of five limited/select-service hotels, as of both September 30, 2024 and December 31, 2023.

 

The Company accounts for its 2.5% membership interest in the Hotel Joint Venture using a measurement alternative pursuant to which its investment is measured at cost, adjusted for observable price changes and impairments, if any, and as of September 30, 2024 and December 31, 2023, the carrying value of its investment was $0.4 million and $0.5 million, respectively, which is classified as investment in related parties on the consolidated balance sheets.
v3.24.3
Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable
 9 Months Ended
Sep. 30, 2024
Marketable Securities Derivative Financial Instruments Fair Value Measurements And Notes Payable  
Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable

 

6. Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable

 

Marketable Securities

 

The following is a summary of the Company’s available for sale securities:

 

Summary of available for sale securities and other investments                                
    As of September 30, 2024  
    Adjusted Cost     Gross
Unrealized Gains		     Gross
Unrealized Losses		     Fair Value  
Marketable Securities:                                
Equity securities:                                
Common and Preferred Equity Securities   $ 5,598     $ 240     $ (163 )   $ 5,675  
Marco OP Units and Marco II OP Units     19,227       16,139       -       35,366  
    $ 24,825     $ 16,379     $ (163 )   $ 41,041  

 

    As of December 31, 2023  
    Adjusted Cost     Gross
Unrealized Gains		     Gross
Unrealized Losses		     Fair Value  
Marketable Securities:                                
Equity securities:                                
Common and Preferred Equity Securities   $ 5,598     $ -     $ (226 )   $ 5,372  
Marco OP Units and Marco II OP Units     19,227       10,619       -       29,846  
Total   $ 24,825     $ 10,619     $ (226 )   $ 35,218  

 

As of both September 30, 2024 and December 31, 2023, the Company held an aggregate of 209,243 Marco OP Units and Marco II OP Units, of which 89,695 were owned by PRO. The Marco OP Units and the Marco II OP Units are both exchangeable for a similar number of common operating partnership units (“Simon OP Units”) of Simon Property Group, L.P., (“Simon OP”), the operating partnership of Simon Property Group, Inc. (“Simon Inc.”), a public REIT that is an owner and operator of shopping malls and outlet centers. Subject to the various conditions, the Company may elect to exchange the Marco OP Units and/or the Marco II OP Units to Simon OP Units which must be immediately delivered to Simon Inc. in exchange for cash or similar number of shares of Simon Inc.’s common stock (“Simon Stock”). Accordingly, the Marco OP Units and Marco II OP Units are valued based on the closing price of Simon Stock, which was $169.02 per share and $108.03 per share as of September 30, 2024 and 2023, respectively. Additionally, the closing price of Simon Stock was $142.64 per share as of December 31, 2023.

 

Derivative Financial Instruments

 

The Company enters into interest rate cap contracts in order to reduce the effect of interest rate fluctuations or risk of certain real estate investment’s interest expense on its variable rate debt. The Company is exposed to credit risk in the event of non-performance by the counterparty to these financial instruments. Management believes the risk of loss due to non-performance to be minimal.

 

The Company accounts for interest rate cap contracts as economic hedges, marking these contracts to market, taking into account present interest rates compared to the contracted fixed rate over the life of the contract and recording the unrealized gain or loss on the interest rate cap contracts on the consolidated statements of operations.

 

As of September 30, 2024 and December 31, 2023, the Company had two interest rate cap contracts with notional amounts of $110.0 million and $31.3 million pursuant to which SOFR is capped at 5.50% through December 1, 2024 and June 1, 2025, respectively. See Note 7.

 

Fair Value Measurements

 

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

 

The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

 

  ● Level 1 – Quoted prices in active markets for identical assets or liabilities.
     
  ● Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
     
  ● Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

Marketable securities and derivative financial instruments measured at fair value on a recurring basis as of the dates indicated are as follows:

 

Schedule of marketable securities measured at fair value on a recurring basis                                
    Fair Value Measurement Using        
As of September 30, 2024   Level 1     Level 2     Level 3     Total  
Marketable Securities:                                
Common and Preferred Equity Securities   $ 1,638     $ 4,037     $ -     $ 5,675  
Marco OP and OP II Units     -       35,366       -       35,366  
Total   $ 1,638     $ 39,403     $ -     $ 41,041  
                                 
Derivative Financial Instruments:                                
Interest Rate Cap Contracts   $ -     $ 1     $ -     $ 1  

 

    Fair Value Measurement Using        
As of December 31, 2023   Level 1     Level 2     Level 3     Total  
Marketable Securities:                                
Common and Preferred Equity Securities   $ 1,383     $ 3,989     $ -     $ 5,372  
Marco OP and OP II Units     -       29,846       -       29,846  
Total   $ 1,383     $ 33,835     $ -     $ 35,218  
                                 
Derivative Financial Instruments:                                
Interest Rate Cap Contracts   $ -     $ 62     $ -     $ 62  

 

The fair values of the Company’s common equity securities are measured using readily quoted prices for these investments which are listed for trade on active markets. The fair values of the Company’s preferred equity securities and corporate bonds are measured using readily available quoted prices for these securities; however, the markets for these securities are not active. Additionally, as noted and disclosed above, the Company’s Marco OP and OP II units are both ultimately exchangeable for cash or similar number of shares of Simon Stock, therefore the Company uses the quoted market price of Simon Stock to measure the fair value of the Company’s Marco OP and OP II units.

 

Nonrecurring Fair Value Measurements

 

Exterior Street Project

 

During the third quarter of 2024, the Company recorded a non-cash impairment charge of $16.6 million (which is included in impairment charges in the Company’s consolidated statement of operations) in order to reduce the carrying value of the Exterior Street Project to its estimated fair value of $78.8 million as of September 30, 2024. In estimating the estimated fair value of the Exterior Street Project, the Company took into consideration a bona fide third-party offer obtained by an independent third-party broker, which was considered a Level 2 under the fair value hierarchy described above. The carrying value of the Exterior Street Project is included in development projects on the consolidated balance sheets as of September 30, 2024. See Note 3.

 

Santa Monica Project

 

During the third quarter of 2024, the Santa Monica Joint Venture recorded a non-cash impairment charge of $17.7 million (which is included in impairment charges in the Company’s consolidated statement of operations) in order to reduce the carrying value of the Santa Monica Project to its estimated fair value of $19.0 million as of September 30, 2024. In estimating the fair value of the Santa Monica Project, the Santa Monica Joint Venture used the value provided by an independent, third-party commercial real estate advisory and services firm, which was considered a Level 2 under the fair value hierarchy described above. The carrying value of the Santa Monica Project is included in development projects on the consolidated balance sheets as of September 30, 2024. See Note 3.

 

The Company did not have any other significant financial assets or liabilities, which would require revised valuations that are recognized at fair value.

 

Notes Payable

 

Margin Loan

 

The Company has access to a margin loan (the “Margin Loan”) from a financial institution that holds custody of certain of the Company’s marketable securities. The Margin Loan, which is due on demand, bears interest at SOFR plus 0.85% (5.70% as of September 30, 2024) and is collateralized by the marketable securities in the Company’s account. The amounts available to the Company under the Margin Loan are at the discretion of the financial institution and not limited to the amount of collateral in its account. There were no amounts outstanding under this Margin Loan as of September 30, 2024 and December 31, 2023.

 

Line of Credit

 

The Company has a non-revolving credit facility (the “Line of Credit”) with a financial institution that provides for borrowings up to a maximum of $20.0 million, subject to a 55% loan-to-value ratio based on the fair value of the underlying collateral, which matures on November 30, 2024 and bears interest at SOFR plus 1.35% (6.20% as of September 30, 2024). The Line of Credit is collateralized by an aggregate of 187,019 of Marco OP Units and is guaranteed by PRO.

 

As of September 30, 2024, the amount of borrowings available to be drawn under the Line of Credit was $17.4 million of which the outstanding principal balance of the Line of Credit was $3.0 million which is presented, net of deferred financing fees of $1, on the consolidated balance sheets and is classified as notes payable, net. As of December 31, 2023, the amount of borrowings available to be drawn under the Line of Credit was $14.7 million and no amounts were outstanding.

 

The Company currently intends to seek to extend the Line of Credit on or before its scheduled maturity date. However, if the Company is unable to extend the Line of Credit, it will repay the outstanding balance in full with available cash on hand.
v3.24.3
Mortgages Payable, Net
 9 Months Ended
Sep. 30, 2024
Mortgages Payable Net  
Mortgages Payable, Net

 

7. Mortgages Payable, Net

 

Mortgages payable, net consists of the following:

 

 Schedule of mortgages payable                                        
    Interest Rate     Weighted Average
Interest Rate
for the
Nine Months Ended
September 30,
2024		     Maturity Date   Amount
Due at
Maturity		     As of
September 30,
2024		     As of
December 31,
2023		  
Gantry Park Mortgage Loan   4.48%     4.48%     December 2024   $ 65,317     $ 65,573     $ 66,697  
                                         
Moxy Senior Loan   SOFR + 4.00%
(floor of 7.50%)		     9.12%     December 2026     108,471       108,471       106,108  
                                         
Moxy Junior Loan   SOFR + 8.75%
(floor of 12.25%)		     13.93%     December 2026     30,875       30,875       30,202  
                                         
Exterior Street Loan   SOFR + 2.85%     8.29%     November 2024     35,000       35,000       35,000  
                                         
Exterior Street Supplemental Loan   SOFR + 2.85%     8.27%     November 2024     7,000       7,000       7,000  
                                         
Santa Monica Loan   SOFR + 4.50%     9.85%     Due on Demand     19,476       19,476       19,476  
Total mortgages payable         8.46%         $ 266,139       266,395       264,483  
                                         
Less: Deferred financing costs                             (3,038 )     (4,785 )
                                         
Total mortgages payable, net                           $ 263,357     $ 259,698  

 

 

One-month SOFR as of September 30, 2024 and December 31, 2023 was 4.85% and 5.35%, respectively. The Company’s loans are secured by the indicated real estate/investment and are non-recourse to the Company, unless otherwise indicated.

 

Santa Monica Loan

 

On June 30, 2022, the Santa Monica Joint Venture obtained the Santa Monica Loan, a loan of up to $33.1 million which initially bore interest at SOFR + 3.50%. The Santa Monica Loan requires monthly interest-only payments with the outstanding principal balance due at its maturity date and was previously collateralized by the Santa Monica Note Receivable, which was issued by the Santa Monica Joint Venture. During the first quarter of 2023, the Santa Monica Joint Venture received a $14.0 million paydown on the Santa Monica Note Receivable, of which it used $11.3 million to make a paydown on the Santa Monica Loan, which reduced its outstanding balance to $21.5 million. The Santa Monica Loan was initially scheduled to mature on December 30, 2023, however, on September 5, 2023, the Santa Monica Joint Venture exercised an option to extend its maturity date to February 29, 2024. In connection with this extension, the Santa Monica Joint Venture made an additional principal paydown of $2.1 million, which reduced the outstanding balance of the Santa Monica Loan to $19.5 million. Additionally, the Santa Monica Joint Venture funded $0.9 million into a cash collateral reserve account to cover the interest payments through February 29, 2024.

 

In connection with the transfer of ownership of the Santa Monica Project to the Santa Monica Joint Venture on December 29, 2023, the Santa Monica Loan was modified to substitute the Santa Monica Project as the underlying collateral and the maturity date was further extended to August 1, 2024. Subsequently in March 2024, the Santa Monica Loan was again modified pursuant to which the interest rate was changed to SOFR + 4.5%, subject to a floor of 7.5%, the maturity date was changed to August 31, 2024 and the interest reserve was replenished to cover the payments due through August 31, 2024. On September 5, 2024, the maturity date of the Santa Monica Loan was further extended to October 15, 2024. As of September 30, 2024, the outstanding principal balance of the Santa Monica Loan was $19.5 million.

 

On October 15, 2024, the Santa Monica Loan matured and it was not repaid, which constitutes a maturity event of default and therefore, it is due on demand. On October 30, 2024, the lender issued a formal notice of default and on October 31, 2024, the Santa Monica Joint Venture notified the lender of its intent to transfer ownership of the underlying collateral, the Santa Monica Project, to the lender via a deed-in-lieu of foreclosure transaction.

 

See Note 3 for additional information.

 

Moxy Mortgage Loans

 

On November 29, 2023, the Company entered into a mortgage loan facility (the “Moxy Senior Loan”) with an unrelated third party providing for up to $110.0 million. At closing, $106.1 million of proceeds were advanced under the Moxy Senior Loan and the remaining availability of $3.9 million could only be drawn to cover operating losses, subject to various conditions. The Moxy Senior Loan bears interest at SOFR plus 4.00%, subject to a 7.50% floor, and initially matures on December 1, 2026, with two one-year extension options subject to the satisfaction of certain conditions. As of September 30, 2024, the outstanding principal balance of the Moxy Senior Loan and remaining availability were $108.5 million and $1.5 million, respectively.

 

Simultaneously on November 29, 2023, the Company also entered into a mortgage loan facility (the “Moxy Junior Loan” and together with the Moxy Senior Loan, the “Moxy Mortgage Loans”) with an unrelated third party providing for up to $31.3 million. At closing, $30.2 million of proceeds were advanced under the Moxy Junior Loan and the remaining availability of $1.1 million could only be drawn for operating losses, subject to various conditions. The Moxy Junior Loan bears interest at SOFR plus 8.75%, subject to a 12.25% floor, and initially matures on December 1, 2026, with two one-year extension options subject to the satisfaction of certain conditions. As of September 30, 2024, the outstanding principal balance of the Moxy Junior Loan and remaining availability were $30.9 million and $0.4 million, respectively.

 

The Moxy Mortgage Loans require monthly interest-only payments through their maturity dates and are collateralized by the Lower East Side Moxy Hotel, however, the Moxy Junior Loan is subordinate to the Moxy Senior Loan. Aggregate proceeds of $130.0 million advanced at the closing of the Moxy Mortgage Loans were used to repay in full existing construction mortgage indebtedness, which was collateralized by the Lower East Side Moxy Hotel.

 

Pursuant to the terms of the Moxy Mortgage Loans, the Company is required to enter into two interest rate cap contracts with an aggregate notional amount of $141.3 million (equal to the total maximum amounts available under the Moxy Senior Loan and the Moxy Junior Loan) for as long as the Moxy Mortgage Loans remain outstanding. On November 29, 2023, the Company entered into two interest rate cap agreements with notional amounts of $110.0 million and $31.3 million ($141.3 million in the aggregate) pursuant to which the SOFR rate is capped at 5.50% through December 1, 2024 and June 1, 2025 for the Moxy Junior Loan and the Moxy Senior Loan, respectively, at an aggregate cost of $0.2 million.

 

In connection with obtaining the Moxy Mortgage Loans, the Company provided certain interest and carry costs guarantees and paid $4.1 million of loan fees and expenses.

 

Exterior Street Loans

 

On March 29, 2019, the Company obtained a $35.0 million loan (the “Exterior Street Loan”) from a financial institution which, commencing on October 10, 2020, bore interest at LIBOR plus 2.25% through November 24, 2022. On December 21, 2021, the loan agreement was amended to provide an additional $7.0 million loan (the “Exterior Street Supplemental Loan” and collectively with the Exterior Street Loan, the “Exterior Street Loans”) which bore interest at LIBOR plus 2.50% through November 24, 2022. The Exterior Street Loans require monthly interest-only payments with the outstanding principal balances due in full at their maturity date. The Exterior Street Loans are collateralized by the Exterior Street Project.

 

On November 22, 2022, the Company and the financial institution entered into an additional amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to SOFR plus 2.60% and their maturity dates were extended to November 24, 2023. On October 31, 2023, the Company and the financial institution entered into an additional amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to SOFR plus 2.85% (7.70% as of September 30, 2024) and their maturity dates were extended to November 24, 2024. As of September 30, 2024, the outstanding aggregate principal balance of the Exterior Street Loans was $42.0 million.

 

The following table shows the contractually scheduled principal maturities of the Company’s mortgage debt during the next five years and thereafter as of September 30, 2024:

 

Scheduled of contractually principal maturities during next five years                                                        
    2024     2025     2026     2027     2028     Thereafter     Total  
Principal maturities   $ 127,049     $ -     $ 139,346     $ -     $ -     $ -     $ 266,395  
Less: Deferred financing costs                                                     (3,038 )
Total principal maturities, net                                                   $ 263,357  

 

Certain of the Company’s debt agreements require the maintenance of certain ratios, including debt service coverage. As of September 30, 2024, the Company was in compliance with all of its financial debt covenants. Additionally, certain of the Company’s mortgages payable also contain clauses providing for prepayment penalties.

 

Mortgage Debt Maturities

 

The Santa Monica Loan (outstanding principal balance of $19.5 million as of September 30, 2024) matured on October 15, 2024 and was not repaid, which constitutes an event of default and therefore, it is due on demand. The Santa Monica Joint Venture currently intends to transfer ownership of the Santa Monica Project, the underlying collateral, to the lender via a deed-in-lieu of foreclosure transaction.

 

Additionally, the Company has certain other mortgage debt maturities within 12 months of the date of these consolidated financial statements as discussed below.

 

The mortgage loan collateralized by Gantry Park Landing (the “Gantry Park Mortgage Loan”) (outstanding principal balance of $65.6 million as of September 30, 2024) matures on December 1, 2024. The Company currently intends to seek to extend or refinance the Gantry Park Mortgage Loan on or before its scheduled maturity date.

 

The Exterior Street Loans (outstanding aggregate principal balance of $42.0 million as of September 30, 2024) mature on November 24, 2024. The Company currently intends to seek to extend the Exterior Street Loans on or before their scheduled maturity date.

 

However, if the Company is unable to extend or refinance these maturing mortgage loans at favorable terms, it will look to repay their then outstanding balances with available cash and/or proceeds from selective asset sales. The Company has no additional significant maturities of mortgage debt over the next 12 months.
v3.24.3
Equity
 9 Months Ended
Sep. 30, 2024
Equity Method Investments and Joint Ventures [Abstract]  
Equity

 

8. Equity

 

Distributions on Common Shares

 

On November 10, 2023, the Board of Directors determined to suspend regular quarterly distributions. Until distributions on common shares are brought current to at least an annualized rate of 7.0% assuming a purchase price of $10.00 per share, no distributions may be declared on the SLP Units. Any future distributions on the SLP Units will always be subordinated until stockholders receive a stated preferred return.

 

Future distributions, if any, declared will be at the discretion of the Board of Directors based on their analysis of the Company’s performance over the previous periods and expectations of performance for future periods. The Board of Directors will consider various factors in its determination, including but not limited to, the sources and availability of capital, operating and interest expenses, the Company’s ability to refinance near-term debt, as well as the IRS’s annual distribution requirement that REITs distribute no less than 90% of their taxable income. The Company cannot assure that any future distributions will be made or that it will maintain any particular level of distributions that it has previously established or may establish.

 

SRP

 

The Company’s share repurchase program (the “SRP”) may provide its stockholders with limited, interim liquidity by enabling them to sell their Common Shares back to the Company, subject to restrictions.

 

On March 25, 2020, the Board of Directors amended the SRP to remove stockholder notice requirements and also approved the suspension of all redemptions.

 

Effective March 18, 2021 and May 14, 2021, the Board of Directors partially reopened the SRP to allow, subject to various conditions as set forth below, for redemptions submitted in connection with a stockholder’s death and hardship, respectively, and set the price for all such purchases to the Company’s current estimated net asset value per share of common stock (“NAV per Share”), as determined by the Board of Directors and reported by the Company from time to time. Deaths that occurred subsequent to January 1, 2020 were eligible for consideration, subject to certain conditions. Beginning January 1, 2022, requests for redemptions in connection with a stockholder’s death must be submitted and received by the Company within one year of the stockholder’s date of death for consideration. On March 18, 2022, the Board of Directors approved an increase to the annual threshold for death redemptions from up to 0.5% to 1.0%.

 

At the above noted dates, the Board of Directors established that on an annual basis, the Company would not redeem in excess of 1.0% and 0.5% of the number of shares outstanding as of the end of the preceding year for either death or hardship redemptions, respectively. Additionally, redemption requests generally would be processed on a quarterly basis and would be subject to proration if either type of redemption requests exceeded the annual limitation.

 

For the nine months ended September 30, 2024, the Company repurchased 243,754 Common Shares at a weighted average price per share of $11.88. For the nine months ended September 30, 2023, the Company repurchased 201,195 Common Shares at a weighted average price per share of $12.19.

 

Net Earnings Per Share

 

Basic net earnings per share is calculated by dividing net income attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the applicable period. Dilutive income per share includes the potentially dilutive effect, if any, which would occur if our outstanding options to purchase our common stock were exercised. For all periods presented dilutive net income per share is equivalent to basic net income per share.
v3.24.3
Related Party Transactions
 9 Months Ended
Sep. 30, 2024
Related Party Transactions [Abstract]  
Related Party Transactions

 

9. Related Party Transactions

 

The Company has various agreements, including an advisory agreement, with the Advisor and its affiliates to pay certain fees in exchange for services performed by these entities and other related parties. The Company’s ability to secure financing and subsequent real estate operations are dependent upon its Advisor and its affiliates to perform such services as provided in these agreements.

 

During the first quarter of 2024, the Advisor agreed to allow the Company to temporarily defer the payment of asset management fees. As of September 30, 2024 and December 31, 2023, $2.0 million and $0.5 million, respectively, of asset management fees were owed to the advisor and included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets.

 

The following table represents the fees incurred associated with the services provided by the Company’s Advisor and its affiliates:

 

Summary of Amount recorded in pursuant to related party arrangement                                
    Three Months Ended
September 30,		     Nine Months Ended
September 30,		  
    2024     2023     2024     2023  
Asset management fees (general and administrative costs)   $ 498     $ 539     $ 1,508     $ 1,646  
Property management fees (property operating expenses)     75       76       230       224  
Development fees and cost reimbursement(1)     11       192       32       833  
Total   $ 584     $ 807     $ 1,770     $ 2,703  

 

 
(1) Development fees and the reimbursement of development-related costs that the Company pays to the Advisor and its affiliates are capitalized and are included in the carrying value of the associated development project which are classified as development projects on the consolidated balance sheets until construction is substantially completed. Once construction is substantially completed these amounts are recorded as property operating expenses.

 

See Notes 3, 4 and 5 for other related party transactions.

 

The advisory agreement has a one-year term and is renewable for an unlimited number of successive one-year periods upon the mutual consent of the Advisor and the Company’s independent directors. Payments to the Advisor or its affiliates may include asset acquisition fees and the reimbursement of acquisition-related expenses, development fees and the reimbursement of development-related costs, financing coordination fees, asset management fees or asset management participation, and construction management fees. The Company may also reimburse the Advisor and its affiliates for actual expenses it incurs for administrative and other services provided for it. Upon the liquidation of the Company’s assets, it may pay the Advisor or its affiliates a disposition commission.

 

In connection with the Company’s Offering, Lightstone SLP, LLC, an affiliate of the Company’s Sponsor, purchased SLP Units in the Operating Partnership for an aggregate of $30.0 million. These SLP Units, the purchase price of which will be repaid only after stockholders receive a stated preferred return and their net investment, may entitle Lightstone SLP, LLC to a portion of any regular distributions made by the Operating Partnership.

 

No distributions were declared and paid on the SLP Units during the three and nine months ended September 30, 2024. During the three and nine months ended September 30, 2023, distributions of $0.5 million and $1.0 million, respectively, were declared and paid on the SLP units.
v3.24.3
Financial Instruments
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Financial Instruments

 

10. Financial Instruments

 

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, other assets and accounts payable, accrued expenses and other liabilities approximate their fair values because of the short maturity of these instruments.

 

The carrying amount and estimated fair value of the Company’s mortgage debt is summarized as follows:

 

Schedule of mortgage debt                        
    As of
September 30,
2024		     As of
December 31,
2023		  
    Carrying Amount     Estimated Fair Value     Carrying Amount     Estimated Fair Value  
Mortgages payable   $ 266,395     $ 265,917     $ 264,483     $ 262,953  

 

The fair value of the mortgages payable was determined by discounting the future contractual interest and principal payments by estimated current market interest rates.
v3.24.3
Commitments and Contingencies
 9 Months Ended
Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

 

11. Commitments and Contingencies

 

Hotel Franchise Agreement

 

The Lower East Side Moxy Hotel operates pursuant to a 30-year franchise agreement (the “Hotel Franchise Agreement”) with Marriott International, Inc. (“Marriott”). The Hotel Franchise Agreement provides for the Company to pay franchise fees and marketing fund charges equal to certain prescribed percentages of gross room sales, as defined. Additionally, pursuant to the terms of the Hotel Franchise Agreement, the Company received a Key Money payment of $4.7 million from Marriott during the fourth quarter of 2022. The Key Money, which is included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets is being amortized as a reduction to franchise fees over the term of the Hotel Franchise Agreement. As of September 30, 2024 and December 31, 2023, the remaining unamortized balance of the Key Money was $4.4 million and $4.6 million, respectively. Pursuant to the terms of the Hotel Franchise Agreement, the Company may be obligated to return the unamortized portion of the Key Money back to Marriott upon the occurrence of certain events. The franchise fees and marketing fund charges are recorded as a component of hotel operating expenses in the consolidated statements of operations.

 

Hotel Management Agreements

 

With respect to the Lower East Side Moxy Hotel, the Company has entered into a hotel management agreement, food and beverage operations management agreement and an asset management agreement (collectively, the “Hotel Management Agreements”) with various third-party management companies pursuant to which they provide oversight and management over the operation of the Lower East Side Moxy Hotel and its food and beverage venues and receive payment of certain prescribed management fees, generally based on a percentage of revenues and certain incentives for exceeding targeted earnings thresholds. The management fees are recorded as a component of hotel operating expenses on the consolidated statements of operations. The Hotel Management Agreements have initial terms ranging from 5 to 20 years.

 

Legal Proceedings

 

From time to time in the ordinary course of business, the Company may become subject to legal proceedings, claims or disputes.

 

Various claims have been asserted against the 2nd Street Joint Venture, including that the rents at Gantry Park Landing have been in excess of the lawfully allowable amounts. While any dispute has an element of uncertainty, the 2nd Street Joint Venture currently believes that the likelihood of an unfavorable outcome with respect to these matters is remote and therefore, no provision for loss has been recorded in connection therewith.

 

Other than the aforementioned matter, the Company is not a party to any material pending legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on its results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss.
v3.24.3
Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Principles of Consolidation and Basis of Presentation

Principles of Consolidation and Basis of Presentation

 

The consolidated financial statements include the accounts of Lightstone REIT I and its Operating Partnership and its subsidiaries (over which Lightstone REIT I exercises financial and operating control). All inter-company balances and transactions have been eliminated in consolidation. In addition, interests in entities acquired are evaluated based on applicable accounting principles generally accepted in the U.S. (“GAAP”), and if deemed to be variable interest entities (“VIE”) in which the Company is the primary beneficiary are also consolidated. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation based on legal form, economic substance, and the extent to which the Company has control, substantive participating rights or both under the respective ownership agreement. For entities in which the Company has less than a controlling interest but have significant influence, the Company accounts for the investment using the equity method of accounting.

 

There are judgments and estimates involved in determining if an entity in which the Company has made an investment is a VIE and, if so, whether the Company is the primary beneficiary. The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage of equity being risked compared to the total equity of the entity. Determining expected future losses involves assumptions of various possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate to determine the net present value of those future losses. A change in the judgments, assumptions, and estimates outlined above could result in consolidating an entity that should not be consolidated or accounting for an investment using the equity method that should in fact be consolidated, the effects of which could be material to our financial statements.

 

The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Form 10-K”). The unaudited interim consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair presentation of the results for the periods presented. The accompanying unaudited consolidated financial statements of Lightstone Value Plus REIT I, Inc. and its Subsidiaries have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.

 

GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period. The most significant assumptions and estimates relate to the valuation of real estate and real-estate related investments, marketable securities, notes receivable, depreciable lives, and revenue recognition. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.

 

The consolidated balance sheet as of December 31, 2023 included herein has been derived from the consolidated balance sheet included in the Company’s 2023 Form 10-K.

 

The unaudited consolidated statements of operations for interim periods are not necessarily indicative of results for the full year or any other period.

 
Income Taxes

Income Taxes

 

The Company elected to be taxed and qualify as a REIT, commencing with the taxable year ended December 31, 2005. If the Company remains qualified as a REIT, it generally will not be subject to U.S. federal income tax on its net taxable income that it distributes currently to its stockholders. To maintain its REIT qualification under the Internal Revenue Code of 1986, as amended, or the Code, the Company must meet a number of organizational and operational requirements, including a requirement that it annually distribute to its stockholders at least 90% of its REIT taxable income (which does not equal net income, as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. If the Company fails to remain qualified for taxation as a REIT in any subsequent year and does not qualify for certain statutory relief provisions, its income for that year will be taxed at regular corporate rates, and it may be precluded from qualifying for treatment as a REIT for the four-year period following its failure to qualify as a REIT. Such an event could materially adversely affect its net income and net cash available for distribution to its stockholders. Additionally, even if the Company continues to qualify as a REIT for U.S. federal income tax purposes, it may still be subject to some U.S. federal, state and local taxes on its income and property and to U.S. federal income taxes and excise taxes on its undistributed income, if any.

 

To maintain its qualification as a REIT, the Company engages in certain activities through a taxable REIT subsidiary (“TRS”), including when the Company acquires or develops and constructs a hotel it usually establishes a new TRS and enters into an operating lease agreement for the hotel. As such, the Company is subject to U.S. federal and state income and franchise taxes from these activities.

 

The Company’s income tax expense is included in other income/(expense), net on its consolidated statements of operations. No income tax expense was recorded during the three months ended September 30, 2024. During the nine months ended September 30, 2024, the Company recorded income tax expense of $0.9 million. During both the three and nine months ended September 30, 2023, the Company recorded income tax expense of $2.5 million, primarily consisting of federal and state income tax related to the redemptions of its preferred investments in related parties.

 

As of September 30, 2024 and December 31, 2023, the Company had no material uncertain income tax positions.

 
Revenues

Revenues

 

The following table represents the total hotel revenues from the operations of the Lower East Side Moxy Hotel on a disaggregated basis:

 

Schedule of revenues on a disaggregated                            
    For the
Three Months Ended
September 30,		     For the
Nine Months Ended
September 30,		  
      2024       2023     2024     2023  
Revenues                                
Room   $ 7,650     $ 6,804     $ 19,826     $ 16,504  
Food, beverage and other     5,434       6,455       17,618       17,242  
Total revenues   $ 13,084     $ 13,259     $ 37,444     $ 33,746  

 
Land Parcels

Land Parcels

 

The Company wholly owns certain land parcels located in St. Augustine, Florida.

 

During the first quarter of 2023, the Company completed the disposition of one of its land parcels located in St. Augustine, Florida to an unrelated third-party for a contractual sales price of $1.5 million and recognized a gain on disposition of real estate of $1.1 million. During the second quarter of 2024, the Company completed the disposition of two more of its land parcels located in St. Augustine, Florida, each to an unrelated third-party, for an aggregate contractual sales price of $14.8 million and recognized an aggregate gain on disposition of real estate of $10.9 million. During the third quarter of 2024, the Company completed the sale of certain municipal impact fee credits, which were attributable to the development of its former outlet center located in St. Augustine, Florida, which was substantially demolished during 2022, to an unrelated third-party for a contractual sales price of $2.7 million and recognized a gain on disposition of real estate of $2.7 million.

 

As of September 30, 2024 and December 31, 2023, the carrying value of the Company’s land parcels located in St. Augustine, Florida was $2.1 million and $6.0 million, respectively, which is included in land and land improvements on the consolidated balance sheets.

 
New Accounting Pronouncements

New Accounting Pronouncements

 

In November 2023, the FASB issued an accounting standards update which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within segment profit and loss, as well as the title and position of the CODM. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is evaluating the guidance and the impact it may have on its consolidated financial statements.

 

In December 2023, the FASB issued an accounting standards update which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This update is effective for annual periods beginning after December 15, 2024. The Company is evaluating the guidance and the impact it may have on its consolidated financial statements.

 

The Company has reviewed and determined that other recently issued accounting pronouncements will not have a material impact on its financial position, results of operations and cash flows, or do not apply to its current operations.

 
Concentration of Risk

Concentration of Risk

 

As of September 30, 2024 and December 31, 2023, the Company had cash deposited in certain financial institutions in excess of U.S. federally insured levels. The Company regularly monitors the financial stability of these financial institutions and believes that it is not exposed to any significant credit risk with respect to its cash and cash equivalents or restricted cash.

 
Current Environment

Current Environment

 

The Company’s operating results and financial condition are substantially impacted by the overall health of local, U.S. national and global economies and may be influenced by market and other challenges. Additionally, the Company’s business and financial performance may be adversely affected by current and future economic and other conditions; including, but not limited to, availability or terms of financings, financial markets volatility and banking failures, political upheaval or uncertainty, natural and man-made disasters, terrorism and acts of war, unfavorable changes in laws and regulations, outbreaks of contagious diseases, cybercrime, loss of key relationships, inflation and recession.

 

The Company’s overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on consumer behavior. Worsening economic conditions, increases in costs due to inflation, higher interest rates, labor and supply chain challenges and other changes in economic conditions could adversely affect the Company’s future results from operations and its financial condition.

 
Reclassifications

Reclassifications

 

Certain prior period amounts may have been reclassified to conform to the current period’s presentation.

 
Supplemental Cash Flow Information

Supplemental Cash Flow Information

 

Supplemental cash flow information for the periods indicated is as follows:

 

Summary of supplemental cash flow information                
    For the
Nine Months Ended
September 30,		  
    2024     2023  
Cash paid for interest   $ 17,175     $ 19,566  
Distributions declared but not paid   $ -     $ 1,897  
Capital expenditures for investment property in accounts payable, accrued expenses and other liabilities   $ 29     $ 1,251  
Value of shares issued from distribution reinvestment program   $ -     $ 252  

 
v3.24.3
Summary of Significant Accounting Policies (Tables)
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Schedule of revenues on a disaggregated
Schedule of revenues on a disaggregated                            
    For the
Three Months Ended
September 30,		     For the
Nine Months Ended
September 30,		  
      2024       2023     2024     2023  
Revenues                                
Room   $ 7,650     $ 6,804     $ 19,826     $ 16,504  
Food, beverage and other     5,434       6,455       17,618       17,242  
Total revenues   $ 13,084     $ 13,259     $ 37,444     $ 33,746  
Summary of supplemental cash flow information
Summary of supplemental cash flow information                
    For the
Nine Months Ended
September 30,		  
    2024     2023  
Cash paid for interest   $ 17,175     $ 19,566  
Distributions declared but not paid   $ -     $ 1,897  
Capital expenditures for investment property in accounts payable, accrued expenses and other liabilities   $ 29     $ 1,251  
Value of shares issued from distribution reinvestment program   $ -     $ 252  
v3.24.3
Investment in Unconsolidated Affiliated Real Estate Entity (Tables)
 9 Months Ended
Sep. 30, 2024
Investment In Unconsolidated Affiliated Real Estate Entity  
Schedule of condensed statement of operations for the columbus joint venture
 Schedule of condensed statement of operations for the columbus joint venture                                
    For the
Three Months Ended		     For the
Nine Months Ended		  
    September 30,
2024		     September 30,
2023		     September 30,
2024		     September 30,
2023		  
Revenues   $ 11,239     $ 10,778     $ 32,869     $ 31,785  
                                 
Property operating expenses     5,347       5,219       15,610       15,498  
General and administrative expense     94       84       273       168  
Depreciation and amortization     3,169       4,826       9,272       14,345  
Operating income     2,629       649       7,714       1,774  
                                 
Interest expense and other, net     (7,524 )     (7,152 )     (21,784 )     (20,438 )
Net loss   $ (4,895 )   $ (6,503 )   $ (14,070 )   $ (18,664 )
                                 
Company’s share of net loss (19.0%)   $ (930 )   $ (1,236 )   $ (2,674 )   $ (3,547 )
Additional depreciation and amortization expense(1)     (15 )     (25 )     (44 )     (74 )
Company’s loss from investment   $ (945 )   $ (1,261 )   $ (2,718 )   $ (3,621 )

 

 
(1) Additional depreciation and amortization expense relates to the amortization of the difference between the cost of the interest in the Columbus Joint Venture and the amount of the underlying equity in net assets of the Columbus Joint Venture.
Schedule of condensed balance sheet for the columbus joint venture
Schedule of condensed balance sheet for the columbus joint venture                
    As of     As of  
    September 30,
2024		     December 31,
2023		  
Investment property, net   $ 448,142     $ 449,813  
Cash and restricted cash     18,510       25,640  
Other assets     1,041       3,082  
Total assets   $ 467,693     $ 478,535  
                 
Mortgages and loans payable, net   $ 395,223     $ 390,622  
Other liabilities     9,742       11,149  
Members’ equity     62,728       76,764  
Total liabilities and members’ equity   $ 467,693     $ 478,535  
v3.24.3
Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable (Tables)
 9 Months Ended
Sep. 30, 2024
Marketable Securities Derivative Financial Instruments Fair Value Measurements And Notes Payable  
Summary of available for sale securities and other investments
Summary of available for sale securities and other investments                                
    As of September 30, 2024  
    Adjusted Cost     Gross
Unrealized Gains		     Gross
Unrealized Losses		     Fair Value  
Marketable Securities:                                
Equity securities:                                
Common and Preferred Equity Securities   $ 5,598     $ 240     $ (163 )   $ 5,675  
Marco OP Units and Marco II OP Units     19,227       16,139       -       35,366  
    $ 24,825     $ 16,379     $ (163 )   $ 41,041  

 

    As of December 31, 2023  
    Adjusted Cost     Gross
Unrealized Gains		     Gross
Unrealized Losses		     Fair Value  
Marketable Securities:                                
Equity securities:                                
Common and Preferred Equity Securities   $ 5,598     $ -     $ (226 )   $ 5,372  
Marco OP Units and Marco II OP Units     19,227       10,619       -       29,846  
Total   $ 24,825     $ 10,619     $ (226 )   $ 35,218  
Schedule of marketable securities measured at fair value on a recurring basis
Schedule of marketable securities measured at fair value on a recurring basis                                
    Fair Value Measurement Using        
As of September 30, 2024   Level 1     Level 2     Level 3     Total  
Marketable Securities:                                
Common and Preferred Equity Securities   $ 1,638     $ 4,037     $ -     $ 5,675  
Marco OP and OP II Units     -       35,366       -       35,366  
Total   $ 1,638     $ 39,403     $ -     $ 41,041  
                                 
Derivative Financial Instruments:                                
Interest Rate Cap Contracts   $ -     $ 1     $ -     $ 1  

 

    Fair Value Measurement Using        
As of December 31, 2023   Level 1     Level 2     Level 3     Total  
Marketable Securities:                                
Common and Preferred Equity Securities   $ 1,383     $ 3,989     $ -     $ 5,372  
Marco OP and OP II Units     -       29,846       -       29,846  
Total   $ 1,383     $ 33,835     $ -     $ 35,218  
                                 
Derivative Financial Instruments:                                
Interest Rate Cap Contracts   $ -     $ 62     $ -     $ 62  
v3.24.3
Mortgages Payable, Net (Tables)
 9 Months Ended
Sep. 30, 2024
Mortgages Payable Net  
Schedule of mortgages payable
 Schedule of mortgages payable                                        
    Interest Rate     Weighted Average
Interest Rate
for the
Nine Months Ended
September 30,
2024		     Maturity Date   Amount
Due at
Maturity		     As of
September 30,
2024		     As of
December 31,
2023		  
Gantry Park Mortgage Loan   4.48%     4.48%     December 2024   $ 65,317     $ 65,573     $ 66,697  
                                         
Moxy Senior Loan   SOFR + 4.00%
(floor of 7.50%)		     9.12%     December 2026     108,471       108,471       106,108  
                                         
Moxy Junior Loan   SOFR + 8.75%
(floor of 12.25%)		     13.93%     December 2026     30,875       30,875       30,202  
                                         
Exterior Street Loan   SOFR + 2.85%     8.29%     November 2024     35,000       35,000       35,000  
                                         
Exterior Street Supplemental Loan   SOFR + 2.85%     8.27%     November 2024     7,000       7,000       7,000  
                                         
Santa Monica Loan   SOFR + 4.50%     9.85%     Due on Demand     19,476       19,476       19,476  
Total mortgages payable         8.46%         $ 266,139       266,395       264,483  
                                         
Less: Deferred financing costs                             (3,038 )     (4,785 )
                                         
Total mortgages payable, net                           $ 263,357     $ 259,698  
Scheduled of contractually principal maturities during next five years
Scheduled of contractually principal maturities during next five years                                                        
    2024     2025     2026     2027     2028     Thereafter     Total  
Principal maturities   $ 127,049     $ -     $ 139,346     $ -     $ -     $ -     $ 266,395  
Less: Deferred financing costs                                                     (3,038 )
Total principal maturities, net                                                   $ 263,357  
v3.24.3
Related Party Transactions (Tables)
 9 Months Ended
Sep. 30, 2024
Related Party Transactions [Abstract]  
Summary of Amount recorded in pursuant to related party arrangement
Summary of Amount recorded in pursuant to related party arrangement                                
    Three Months Ended
September 30,		     Nine Months Ended
September 30,		  
    2024     2023     2024     2023  
Asset management fees (general and administrative costs)   $ 498     $ 539     $ 1,508     $ 1,646  
Property management fees (property operating expenses)     75       76       230       224  
Development fees and cost reimbursement(1)     11       192       32       833  
Total   $ 584     $ 807     $ 1,770     $ 2,703  

 

 
(1) Development fees and the reimbursement of development-related costs that the Company pays to the Advisor and its affiliates are capitalized and are included in the carrying value of the associated development project which are classified as development projects on the consolidated balance sheets until construction is substantially completed. Once construction is substantially completed these amounts are recorded as property operating expenses.
v3.24.3
Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Schedule of mortgage debt
Schedule of mortgage debt                        
    As of
September 30,
2024		     As of
December 31,
2023		  
    Carrying Amount     Estimated Fair Value     Carrying Amount     Estimated Fair Value  
Mortgages payable   $ 266,395     $ 265,917     $ 264,483     $ 262,953  
v3.24.3
Business and Structure (Details Narrative) - USD ($)
$ / shares in Units, $ in Thousands
 9 Months Ended 12 Months Ended
Jul. 06, 2004
Sep. 30, 2024
Dec. 31, 2009
Dec. 31, 2008
Sep. 30, 2023
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]          
Cash contributed for units $ 2        
Partners units acquired 200        
Shares issued, price per share   $ 11.88     $ 12.19
Issuance of common units, shares     497,209 497,209  
Lightstone Value Plus REIT [Member]          
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]          
Number of common shares held 20,000        
Proceeds from issue of shares $ 200        
Shares issued, price per share $ 10.00        
Lightstone SLP LLC [Member]          
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]          
Aggregate SLP units owned in operating partnership   $ 30,000      
Purchase cost per SLP unit of operating partnership   $ 100,000      
Aggregate SLP units purchased in operating partnership   $ 30,000      
Beneficial ownership interest (as a percent)   99.00%      
Lightstone Value Plus REIT [Member] | Wholly Owned Properties [Member] | Industrial Properties [Member]          
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]          
General partner ownership interest   59.20%      
Lightstone Value Plus REIT [Member] | Wholly Owned Properties [Member] | Seven Hotel Properties [Member]          
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]          
General partner ownership interest   2.50%      
v3.24.3
Summary of Significant Accounting Policies (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Product Information [Line Items]        
Revenues $ 15,677 $ 15,843 $ 45,360 $ 41,280
Accrued loan        
Product Information [Line Items]        
Revenues 7,650 6,804 19,826 16,504
Food Beverage And Other Revenue [Member]        
Product Information [Line Items]        
Revenues 5,434 6,455 17,618 17,242
Hotel [Member]        
Product Information [Line Items]        
Revenues $ 13,084 $ 13,259 $ 37,444 $ 33,746
v3.24.3
Summary of Significant Accounting Policies (Details 1) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Accounting Policies [Abstract]      
Cash paid for interest   $ 17,175 $ 19,566
Distributions declared but not paid   1,897
Capital expenditures for investment property in accounts payable, accrued expenses and other liabilities   29 1,251
Value of shares issued from distribution reinvestment program $ 85 $ 252
v3.24.3
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Sep. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2024
Dec. 31, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                
Income tax expense $ 0   $ 2,500   $ 900 $ 2,500    
Uncertain income tax positions 0       0     $ 0
Sales Contract Price 2,700 $ 14,800   $ 1,500        
Gain on disposition of real estate 2,700 $ 10,900   $ 1,100        
St Augustine [Member] | Land and Land Improvements [Member]                
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                
Aggregate carrying value $ 2,100       $ 2,100   $ 6,000  
v3.24.3
Development Projects (Details Narrative) - USD ($)
$ in Thousands
 1 Months Ended 3 Months Ended 9 Months Ended
Sep. 30, 2021
Feb. 28, 2019
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Business Acquisition [Line Items]          
Affiliate Costs $ 1,000        
Development projects     $ 97,800   $ 132,370
Exterior Street Project [Member]          
Business Acquisition [Line Items]          
Interest Costs Capitalized       $ 1,500  
Non-cash impairment charge     16,600    
Fair value of impairment charges     78,800    
Construction in Progress, Gross     78,800   95,700
Santa Monica Project [Member]          
Business Acquisition [Line Items]          
Non-cash impairment charge     17,700    
Fair value of impairment charges     $ 19,000    
Ownership interest     50.00%    
Development projects     $ 19,000   $ 36,700
Borden Realty Corp And 399 Exterior Street Associates Llc [Member]          
Business Acquisition [Line Items]          
Business Combination, Consideration Transferred   $ 59,000      
v3.24.3
Investment in Unconsolidated Affiliated Real Estate Entity (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Defined Benefit Plan Disclosure [Line Items]        
Revenues $ 15,677 $ 15,843 $ 45,360 $ 41,280
Property operating expenses 846 792 2,306 2,259
Depreciation and amortization 1,755 1,860 5,260 5,211
Net loss (22,588) (8,817) (20,345) (17,610)
Company’s loss from investment (945) (1,261) (2,718) (3,621)
Columbus Joint Venture [Member]        
Defined Benefit Plan Disclosure [Line Items]        
Revenues 11,239 10,778 32,869 31,785
Property operating expenses 5,347 5,219 15,610 15,498
General and administrative expense 94 84 273 168
Depreciation and amortization 3,169 4,826 9,272 14,345
Operating income 2,629 649 7,714 1,774
Interest expense and other, net (7,524) (7,152) (21,784) (20,438)
Net loss (4,895) (6,503) (14,070) (18,664)
Company’s share of net loss (19.0%) (930) (1,236) (2,674) (3,547)
Additional depreciation and amortization expense [1] (15) (25) (44) (74)
Company’s loss from investment $ (945) $ (1,261) $ (2,718) $ (3,621)
[1] Additional depreciation and amortization expense relates to the amortization of the difference between the cost of the interest in the Columbus Joint Venture and the amount of the underlying equity in net assets of the Columbus Joint Venture.
v3.24.3
Investment in Unconsolidated Affiliated Real Estate Entity (Details 1) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Defined Benefit Plan Disclosure [Line Items]    
Investment property, net $ 256,456 $ 264,584
Cash and restricted cash 27,020 10,547
Other assets 4,399 5,211
Total assets 448,470 473,147
Mortgages and loans payable, net 263,357 259,698
Total liabilities and members’ equity 448,470 473,147
Columbus Joint Venture [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Investment property, net 448,142 449,813
Cash and restricted cash 18,510 25,640
Other assets 1,041 3,082
Total assets 467,693 478,535
Mortgages and loans payable, net 395,223 390,622
Other liabilities 9,742 11,149
Members’ equity 62,728 76,764
Total liabilities and members’ equity $ 467,693 $ 478,535
v3.24.3
Investment in Unconsolidated Affiliated Real Estate Entity (Details Narrative) - USD ($)
$ in Thousands
 1 Months Ended 9 Months Ended
Nov. 29, 2022
Sep. 30, 2024
Sep. 30, 2023
Defined Benefit Plan Disclosure [Line Items]      
Capital contributions   $ 10 $ 13
Columbus Joint Venture [Member]      
Defined Benefit Plan Disclosure [Line Items]      
Contractual purchase price $ 465,000    
Investments in unconsolidated affiliated real estate entity description Columbus Joint Venture completed the purchase of the Columbus Properties. The acquisition was funded with $74.3 million of cash and $390.7 million of aggregate proceeds from preferred investments from unrelated third-parties and loans from two financial institutions. In connection with the acquisition and financings, the total cash paid, including closing costs, was $92.3 million and the Company paid $17.5 million representing its 19.0% pro rata share. In connection with the acquisition, the Company also paid the Advisor a separate acquisition fee of $2.4 million, equal to 2.75% of the Company’s pro-rata share of the contractual purchase price which is reflected in the carrying value of the Company’s investment in unconsolidated affiliated entity on the consolidated balance sheets.    
Preferred Investments description Columbus Joint Venture obtained an aggregate of $90.0 million in financing through two preferred investments (the “Columbus Preferred Investments”) from unrelated third parties. The first preferred investment of $38.6 million is collateralized by the Columbus Portfolio I Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal and has a mandatory redemption date of December 1, 2032. The second preferred investment of $51.4 million is collateralized by the Columbus Portfolio II Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal, and has a mandatory redemption date of December 1, 2027.    
Preferred investment balance $ 10,700    
Converge [Member]      
Defined Benefit Plan Disclosure [Line Items]      
Ownership interest 19.00%    
B V I [Member]      
Defined Benefit Plan Disclosure [Line Items]      
Ownership interest 62.00%    
v3.24.3
Investment in Related Party (Details Narrative) - Joint Venture [Member] - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]    
Equity method investment, ownership percentage 2.50% 2.50%
Investment $ 400 $ 500
v3.24.3
Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable (Details) - USD ($)
$ in Thousands
 9 Months Ended 12 Months Ended
Sep. 30, 2024
Dec. 31, 2023
Common and Preferred Equity Securities [Member]    
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]    
Equity securities, adjusted cost $ 5,598 $ 5,598
Equity securities, gross unrealized gains 240
Equity securities, gross unrealized losses (163) (226)
Equity securities, fair value 5,675 5,372
Marco Op Units And Op Two Units [Member]    
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]    
Equity securities, adjusted cost 19,227 19,227
Equity securities, gross unrealized gains 16,139 10,619
Equity securities, gross unrealized losses
Equity securities, fair value 35,366 29,846
Equity Securities [Member]    
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]    
Equity securities, adjusted cost 24,825 24,825
Equity securities, gross unrealized gains 16,379 10,619
Equity securities, gross unrealized losses (163) (226)
Equity securities, fair value $ 41,041 $ 35,218
v3.24.3
Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable (Details 1) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Platform Operator, Crypto Asset [Line Items]    
Available-for-sale Securities $ 41,041 $ 35,218
Interest Rate Cap Contracts 1 62
Equity Securities [Member]    
Platform Operator, Crypto Asset [Line Items]    
Available-for-sale Securities 5,675 5,372
Marco Op Units And Op Two Units [Member]    
Platform Operator, Crypto Asset [Line Items]    
Available-for-sale Securities 35,366 29,846
Fair Value, Inputs, Level 1 [Member]    
Platform Operator, Crypto Asset [Line Items]    
Available-for-sale Securities 1,638 1,383
Interest Rate Cap Contracts
Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member]    
Platform Operator, Crypto Asset [Line Items]    
Available-for-sale Securities 1,638 1,383
Fair Value, Inputs, Level 1 [Member] | Marco Op Units And Op Two Units [Member]    
Platform Operator, Crypto Asset [Line Items]    
Available-for-sale Securities
Fair Value, Inputs, Level 2 [Member]    
Platform Operator, Crypto Asset [Line Items]    
Available-for-sale Securities 39,403 33,835
Interest Rate Cap Contracts 1 62
Fair Value, Inputs, Level 2 [Member] | Equity Securities [Member]    
Platform Operator, Crypto Asset [Line Items]    
Available-for-sale Securities 4,037 3,989
Fair Value, Inputs, Level 2 [Member] | Marco Op Units And Op Two Units [Member]    
Platform Operator, Crypto Asset [Line Items]    
Available-for-sale Securities 35,366 29,846
Fair Value, Inputs, Level 3 [Member]    
Platform Operator, Crypto Asset [Line Items]    
Available-for-sale Securities
Interest Rate Cap Contracts
Fair Value, Inputs, Level 3 [Member] | Equity Securities [Member]    
Platform Operator, Crypto Asset [Line Items]    
Available-for-sale Securities
Fair Value, Inputs, Level 3 [Member] | Marco Op Units And Op Two Units [Member]    
Platform Operator, Crypto Asset [Line Items]    
Available-for-sale Securities
v3.24.3
Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable (Details Narrative) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2024
Sep. 30, 2024
Dec. 31, 2023
Nov. 10, 2023
Sep. 30, 2023
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]          
Share price       $ 10.00  
Notional amount $ 110,000 $ 110,000 $ 31,300    
Derivative interest rate 5.50% 5.50%      
Non-revolving credit facility [Member]          
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]          
Debt instrument, interest rate terms   SOFR plus 1.35%      
Borrowing capacity $ 20,000 $ 20,000      
Derivative maturity date   Nov. 30, 2024      
Remaining capacity 17,400 $ 17,400 $ 14,700    
Margin Loan [Member]          
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]          
Debt instrument, interest rate terms   SOFR plus 0.85%      
Exterior Street Project [Member]          
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]          
Non-cash impairment charge 16,600        
Fair value of impairment charges 78,800        
Santa Monica Project [Member]          
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]          
Non-cash impairment charge 17,700        
Fair value of impairment charges $ 19,000        
Marco Op Units And Op Two Units [Member]          
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]          
Equity securities securities held during period   209,243 209,243    
Share price $ 169.02 $ 169.02     $ 108.03
Additional Share price     $ 142.64    
PRO [Member]          
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]          
Equity securities securities held during period   89,695 89,695    
v3.24.3
Mortgages Payable, Net (Details) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2024
Dec. 31, 2023
Real Estate Properties [Line Items]    
Weighted average interest rate 8.46%  
Amount due at maturity $ 266,139  
Total mortgages payable 266,395 $ 264,483
Less: Deferred financing costs (3,038) (4,785)
Total mortgages payable, net $ 263,357 259,698
Gantry Park Landing [Member]    
Real Estate Properties [Line Items]    
Debt instrument, interest rate terms 4.48%  
Weighted average interest rate 4.48%  
Maturity date December 2024  
Amount due at maturity $ 65,317  
Total mortgages payable $ 65,573 66,697
Lower East Side Moxy Hotel Senior [Member]    
Real Estate Properties [Line Items]    
Debt instrument, interest rate terms SOFR + 4.00% (floor of 7.50%)  
Weighted average interest rate 9.12%  
Maturity date December 2026  
Amount due at maturity $ 108,471  
Total mortgages payable $ 108,471 106,108
Lower East Side Moxy Hotel Junior [Member]    
Real Estate Properties [Line Items]    
Debt instrument, interest rate terms SOFR + 8.75% (floor of 12.25%)  
Weighted average interest rate 13.93%  
Maturity date December 2026  
Amount due at maturity $ 30,875  
Total mortgages payable $ 30,875 30,202
Exterior Street Project [Member]    
Real Estate Properties [Line Items]    
Debt instrument, interest rate terms SOFR + 2.85%  
Weighted average interest rate 8.29%  
Maturity date November 2024  
Amount due at maturity $ 35,000  
Total mortgages payable $ 35,000 35,000
Industrial Properties [Member]    
Real Estate Properties [Line Items]    
Debt instrument, interest rate terms SOFR + 2.85%  
Weighted average interest rate 8.27%  
Maturity date November 2024  
Amount due at maturity $ 7,000  
Total mortgages payable $ 7,000 7,000
LSC 1543 7th LLC [Member]    
Real Estate Properties [Line Items]    
Debt instrument, interest rate terms SOFR + 4.50%  
Weighted average interest rate 9.85%  
Maturity date Due on Demand  
Amount due at maturity $ 19,476  
Total mortgages payable $ 19,476 $ 19,476
v3.24.3
Mortgages Payable, Net (Details 1) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Mortgages Payable Net    
2024 $ 127,049  
2025  
2026 139,346  
2027  
2028  
Thereafter  
Total 266,395 $ 264,483
Less: Deferred financing costs (3,038) (4,785)
Mortgages payable, net $ 263,357 $ 259,698
v3.24.3
Mortgages Payable, Net (Details Narrative) - USD ($)
$ in Thousands
 1 Months Ended 9 Months Ended
Nov. 29, 2023
Oct. 31, 2023
Nov. 22, 2022
Jun. 30, 2022
Dec. 21, 2021
Mar. 29, 2019
Sep. 30, 2024
Dec. 31, 2023
Debt Instrument [Line Items]                
Interest rate             4.85% 5.35%
Outstanding principal balance             $ 266,395 $ 264,483
Santa Monica Loan [Member]                
Debt Instrument [Line Items]                
Original Loan Amount       $ 33,100        
Debt instrument, description of variable rate basis       SOFR + 3.50%        
Outstanding principal balance             19,500  
Moxy Senior Loan [Member]                
Debt Instrument [Line Items]                
Outstanding principal balance             108,500  
Remaining availability             1,500  
At cost $ 110,000              
Moxy Senior Loan [Member] | Unrelated Third Party [Member]                
Debt Instrument [Line Items]                
Original Loan Amount $ 110,000              
Debt instrument, description of variable rate basis SOFR plus 4.00%, subject to a 7.50% floor              
Proceeds from advance from related party $ 106,100              
Remaining availability $ 3,900              
Debt instrument, maturity date Dec. 01, 2026              
Moxy Junior Loan [Member]                
Debt Instrument [Line Items]                
Outstanding principal balance             30,900  
Remaining availability             400  
At cost $ 31,300              
Moxy Junior Loan [Member] | Unrelated Third Party [Member]                
Debt Instrument [Line Items]                
Original Loan Amount $ 31,300              
Debt instrument, description of variable rate basis SOFR plus 8.75%, subject to a 12.25% floor              
Outstanding principal balance $ 1,100              
Debt instrument, maturity date Dec. 01, 2026              
Moxy Permanent Mortgage Loans [Member]                
Debt Instrument [Line Items]                
At cost $ 141,300              
Loan fees 200              
Moxy Permanent Mortgage Loans [Member] | Unrelated Third Party [Member]                
Debt Instrument [Line Items]                
Proceeds from advance from related party $ 130,000              
Moxy Mortgage Loans [Member]                
Debt Instrument [Line Items]                
Loan fees             4,100  
Exterior Street Loan [Member]                
Debt Instrument [Line Items]                
Original Loan Amount         $ 7,000 $ 35,000    
Debt instrument, description of variable rate basis   SOFR plus 2.85% SOFR plus 2.60%   LIBOR plus 2.50% LIBOR plus 2.25%    
Debt instrument, maturity date         Nov. 24, 2022 Nov. 24, 2022    
Exterior Street Loans [Member]                
Debt Instrument [Line Items]                
Outstanding principal balance             42,000  
Gantry Park Mortgage Loan [Member]                
Debt Instrument [Line Items]                
Outstanding principal balance             $ 65,600  
v3.24.3
Equity (Details Narrative) - $ / shares
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Nov. 10, 2023
Equity Method Investments and Joint Ventures [Abstract]      
Annualized Distribution Rate     7.00%
Share price     $ 10.00
Treasury Stock Acquired, Repurchase Authorization On March 18, 2022, the Board of Directors approved an increase to the annual threshold for death redemptions from up to 0.5% to 1.0%.    
Number of shares repurchased 243,754 201,195  
Weighted average price per share $ 11.88 $ 12.19  
v3.24.3
Related Party Transactions (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Related Party Transactions [Abstract]        
Asset management fees (general and administrative costs) $ 498 $ 539 $ 1,508 $ 1,646
Property management fees (property operating expenses) 75 76 230 224
Development fees and cost reimbursement [1] 11 192 32 833
Total $ 584 $ 807 $ 1,770 $ 2,703
[1] Development fees and the reimbursement of development-related costs that the Company pays to the Advisor and its affiliates are capitalized and are included in the carrying value of the associated development project which are classified as development projects on the consolidated balance sheets until construction is substantially completed. Once construction is substantially completed these amounts are recorded as property operating expenses.
v3.24.3
Related Party Transactions (Details Narrative) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Related Party Transaction [Line Items]        
Asset management fees payable $ 2,000 $ 2,000   $ 500
Payments of dividends   53 $ 4,323  
SLP Units [Member]        
Related Party Transaction [Line Items]        
Payments of dividends 500 1,000    
Lightstone SLP LLC [Member]        
Related Party Transaction [Line Items]        
Aggregate amount $ 30,000 $ 30,000    
v3.24.3
Financial Instruments (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Fair Value Disclosures [Abstract]    
Carrying Amount $ 266,395 $ 264,483
Estimated Fair Value $ 265,917 $ 262,953
v3.24.3
Commitments and Contingencies (Details Narrative) - USD ($)
$ in Thousands
 3 Months Ended
Dec. 31, 2022
Sep. 30, 2024
Dec. 31, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]      
Unamortized balance   $ 4,400 $ 4,600
Preferred Stock Dividend Income      
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]      
Proceeds from related party $ 4,700    
Lightstone Value Plus RE... (GM) (USOTC:LHTV)
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Lightstone Value Plus RE... (GM) (USOTC:LHTV)
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