UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission file number
(Exact Name of Registrant as Specified in Its Charter)
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Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant: (1) has filed
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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.
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| 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. ☐
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As of May 7, 2025, there were approximately
LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
INDEX
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 March 31, 2025 | As of December 31, 2024 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Investment property: | ||||||||
| Land and improvements | $ | $ | ||||||
| Building and improvements | ||||||||
| Furniture and fixtures | ||||||||
| Construction in progress | ||||||||
| Gross investment property | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Net investment property | ||||||||
| Development project | ||||||||
| Investment in related party joint venture | ||||||||
| Investment in unconsolidated affiliated entity | ||||||||
| Cash and cash equivalents | ||||||||
| Marketable securities | ||||||||
| Restricted cash | ||||||||
| Other assets | ||||||||
| Assets held for sale | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Mortgages payable, net | $ | $ | ||||||
| Accounts payable, accrued expenses and other liabilities | ||||||||
| Liabilities held for sale | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Company’s Stockholders’ Equity: | ||||||||
| Preferred shares, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in-capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | - | |||||
| Accumulated surplus | ||||||||
| Total Company’s stockholders’ equity | ||||||||
| - | - | |||||||
| Noncontrolling interests | ( | ) | ||||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
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 OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues: | ||||||||
| Rental revenues | $ | $ | ||||||
| Hotel revenues | ||||||||
| Total revenues | ||||||||
| Expenses: | ||||||||
| Property operating expenses | ||||||||
| Hotel operating expenses | ||||||||
| Real estate taxes | ||||||||
| General and administrative costs | ||||||||
| Depreciation and amortization | ||||||||
| Total expenses | ||||||||
| Interest and dividend income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Unrealized (loss)/gain on marketable equity securities | ( | ) | ||||||
| Loss from investment in unconsolidated affiliated real estate entity | ( | ) | ( | ) | ||||
| Other expense, net | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Less: net loss attributable to noncontrolling interests | ||||||||
| Net loss attributable to Company’s common shares | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted net loss per Company’s common share: | ||||||||
| Net loss per Company’s common share, basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding, basic and diluted | ||||||||
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 COMPREHENSIVE LOSS
(Amounts in thousands)
(Unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive loss | ||||||||
| Holding loss on available for sale debt securities | ( | ) | ||||||
| Other comprehensive loss | ( | ) | ||||||
| Comprehensive loss | ( | ) | ( | ) | ||||
| Less: comprehensive loss attributable to noncontrolling interests | ||||||||
| Comprehensive loss attributable to Company’s common shares | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
5
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 | Additional Paid-In | Accumulated | Noncontrolling | Total Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Surplus | Interests | Equity | |||||||||||||||||||
| BALANCE, December 31, 2023 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||
| Distributions paid to noncontrolling interests | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Contributions received from noncontrolling interests | - | - | - | - | ||||||||||||||||||||
| Redemption and cancellation of common shares | ( | ) | ( | ) | ( | ) | - | - | ( | ) | ||||||||||||||
| BALANCE, March 31, 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Common | Additional Paid-In | Accumulated
Other Comprehensive | Accumulated | Noncontrolling | Total Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Loss | Surplus | Interests | Equity | ||||||||||||||||||||||
| BALANCE, December 31, 2024 | $ | $ | $ | - | $ | $ | $ | |||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Other comprehensive loss | - | - | - | ( | ) | - | - | ( | ) | |||||||||||||||||||
| Distributions paid to noncontrolling interests | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Contributions received from noncontrolling interests | - | - | - | - | - | |||||||||||||||||||||||
| Redemption and cancellation of common shares | ( | ) | ( | ) | ( | ) | - | - | - | ( | ) | |||||||||||||||||
| BALANCE, March 31, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
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 Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Loss from investment in unconsolidated affiliated real estate entity | ||||||||
| Unrealized loss/(gain) on marketable equity securities | ( | ) | ||||||
| Amortization of deferred financing costs | ||||||||
| Other non-cash adjustments | ||||||||
| Changes in assets and liabilities: | ||||||||
| Decrease in other assets | ||||||||
| Decrease/(increase) in accounts payable, accrued expenses and other liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of investment property | ( | ) | ( | ) | ||||
| Purchase of marketable securities | ( | ) | ||||||
| Proceeds from sale of marketable securities | ||||||||
| Investment in related party joint venture | ( | ) | ( | ) | ||||
| Distributions from related party joint venture | ||||||||
| Investment in unconsolidated affiliated real estate entity | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from mortgage financing | ||||||||
| Mortgage principal payments | ( | ) | ( | ) | ||||
| Proceeds from notes payable | ||||||||
| Payment of loan fees and expenses | ( | ) | ( | ) | ||||
| Redemption and cancellation of common shares | ( | ) | ( | ) | ||||
| Contributions received from noncontrolling interests | ||||||||
| Distributions paid to noncontrolling interests | ( | ) | ( | ) | ||||
| Net cash (used in)/provided by financing activities | ( | ) | ||||||
| Change in cash, cash equivalents and restricted cash including those classified within assets held for sale | ( | ) | ||||||
| Less: decrease in cash, cash equivalents and restricted cash classified within assets held for sale | ||||||||
| Change in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash, cash equivalents and restricted cash, beginning of year | ||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | ||||||
| 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 | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
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)
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 March 31,
2025, Lightstone REIT I held a
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 March 31, 2025, the Company (i) has ownership interests in and consolidates two operating properties and two development projects and (ii) has ownership interests through two unconsolidated joint ventures in a portfolio of nine multifamily residential properties (the “Columbus Portfolio”) located in the Columbus, Ohio metropolitan area and a portfolio of five limited-service hotel properties (the “Hotel JV Portfolio”).
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
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
With respect to our unconsolidated
properties, the Company holds a
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 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 $
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 them would be in the best interest of its stockholders. However, 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 $
In connection with the
Offering, Lightstone SLP, LLC, an affiliate of the Advisor, purchased an aggregate of $
In addition, an aggregate
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”) through its liquidation on December 26, 2024, (ii) the 2nd Street Joint Venture and (iii) the Santa Monica Joint Venture. PRO’s holdings principally consisted of common units (“Simon OP Units”) of Simon Property Group, L.P., 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. The 2nd Street Joint Venture owns Gantry Park Landing and the Santa Monica Joint Venture owns the Santa Monica Project.
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)
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, ordinances and regulations, outbreaks of contagious diseases, cybercrime, technological advances and challenges, such as the use and impact of artificial intelligence and machine learning, loss of key relationships, inflation, tariffs 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, tariffs, 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.
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, 2024 (the “2024 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, 2024 included herein has been derived from the consolidated balance sheet included in the Company’s 2024 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.
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)
Marketable Securities
Marketable securities consist of equity securities and debt securities that are designated as available-for-sale.
Equity securities are recorded at fair value and unrealized holding gains and losses are recognized on the consolidated statements of operations.
The Company may be exposed to credit losses through its debt securities. Unrealized losses or impairments resulting from the amortized cost basis of any debt security exceeding its fair value are evaluated for identification of credit and non-credit related factors. Any difference between the fair value of the debt security and the amortized cost basis not attributable to credit related factors are reported in other comprehensive loss. A credit-related impairment is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings. When evaluating the investments for impairment at each reporting period, the Company reviews factors such as the extent of the unrealized loss, current and future economic market conditions and the economic and financial condition of the issuer and any changes thereto.
Realized gains or losses resulting from the sale of these securities are determined based on the specific identification of the securities sold.
Tax Status and 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, the Company must meet a number of organizational and operational requirements, including
a requirement that it annually distribute to its stockholders at least
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 benefits and expense are included in other expense, net on its consolidated statements of operations. During the three months ended
March 31, 2025, the Company recorded an income tax benefit of $
As of March 31, 2025
and December 31, 2024, the Company had
Revenues
The following table represents the total hotel revenues from the operations of the Lower East Side Moxy Hotel on a disaggregated basis:
| For the Three Months ended March 31, 2025 | For the Three Months ended March 31, 2024 | |||||||
| Hotel revenues | ||||||||
| Room revenue | $ | $ | ||||||
| Food, beverage and other revenue | ||||||||
| Total hotel revenues | $ | $ | ||||||
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)
Concentration of Risk
As of March 31, 2025 and December 31, 2024, 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.
Segment Disclosure
The Company’s operations are reported within one reportable segment and constitutes all of the consolidated entities which are reported in the consolidated financial statements. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM assesses entity-wide operating results and performance and decides how to allocate resources based on consolidated net income/(loss) which is reported on the consolidated statements of operations. Additionally, the measure of segment assets is reported on the consolidated balance sheets as total assets. The revenues, costs and expenses, and net income/(loss) for the reportable segment are the same as those presented on the consolidated statements of operations. Significant expense categories, including property and hotel operating expenses, general and administrative costs, depreciation and amortization and interest, are included on the Company’s consolidated statements of operations.
New Accounting Pronouncements
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 adoption of this standard will only impact disclosures and will have no material impact on the Company’s 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.
Supplemental Cash Flow Information
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid for interest | $ | $ | ||||||
3. Development Projects and Held for Sale
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 $
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 and Held for Sale
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 $
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 fourth quarter of 2024, the Company
entered into a purchase and sale agreement (the “Exterior Street Project Agreement”) with an unrelated third party pursuant
to which it expects to sell the Exterior Street Project, subject to certain conditions, at a contractual sales price of $
The following summary presents the major components of the Exterior Street Project’s assets and liabilities classified as held for sale:
| As of | As of | |||||||
| March 31, 2025 | December 31, 2024 | |||||||
| Development project | $ | $ | ||||||
| Other assets | ||||||||
| Total assets held for sale | $ | $ | ||||||
| Mortgages payable, net | $ | $ | ||||||
| Other liabilities | ||||||||
| Total liabilities held for sale | $ | $ | ||||||
Santa Monica Project
The Company has a
In March 2022, the Santa Monica Joint Venture
originated a promissory note in the initial amount of $
During the second quarter of 2023 the borrower experienced financial difficulties and discontinued making debt service payments on the promissory note, 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.
Impairment Charge
Subsequent to obtaining ownership of the Santa
Monica Project, the Santa Monica Joint Venture continued 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 it would no longer pursue the development of
the Santa Monica Project, but rather pursue various other strategies with respect to it, including a potential sale or the 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 this change in strategy, the Santa Monica Joint Venture determined its carrying value of the
Santa Monica Project was no longer fully recoverable and therefore, recorded a non-cash impairment charge of $
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)
On October 15, 2024 the Santa Monica Loan matured and it was not repaid, which constitutes an event of default and therefore, the loan became 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, pursuant to the terms of the loan agreement. See Note 6 for additional information.
As of both March 31, 2025
and December 31, 2024, the carrying value of the Santa Monica Project was $
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
On November 29, 2022, the Columbus Joint
Venture completed the purchase of the Columbus Properties. The acquisition was funded with $
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
$
Additionally, in connection with the purchase
of the Columbus Properties on November 29, 2022, the Columbus Joint Venture obtained an aggregate of $
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)
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
Columbus Joint Venture Financial Information
The following table represents the condensed statements of operations for the Columbus Joint Venture for the periods indicated:
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | $ | ||||||
| Property operating expenses | ||||||||
| General and administrative expense | ||||||||
| Depreciation and amortization | ||||||||
| Operating income | ||||||||
| Interest expense and other, net | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Company’s share of net loss (19.0%) | $ | ( | ) | $ | ( | ) | ||
| Additional depreciation and amortization expense (1) | ( | ) | ( | ) | ||||
| Company’s loss from investment | $ | ( | ) | $ | ( | ) | ||
| (1) |
The following table represents the condensed balance sheets for the Columbus Joint Venture:
| As of | As of | |||||||
| March 31, 2025 | December 31, 2024 | |||||||
| Investment property, net | $ | $ | ||||||
| Cash and restricted cash | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Mortgages and loans payable, net | $ | $ | ||||||
| Other liabilities | ||||||||
| Members’ equity | ||||||||
| Total liabilities and members’ equity | $ | $ | ||||||
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. 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:
| As of March 31, 2025 | ||||||||||||||||
| Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
| Marketable Securities: | ||||||||||||||||
| Equity securities: | ||||||||||||||||
| Common and Preferred Equity Securities | $ | $ | $ | ( | ) | $ | ||||||||||
| Simon OP Units | ||||||||||||||||
| ( | ) | |||||||||||||||
| Debt securities: | ||||||||||||||||
| Corporate Bonds | ( | ) | ||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | ||||||||||
| As of December 31, 2024 | ||||||||||||||||
| Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
| Marketable Securities: | ||||||||||||||||
| Equity securities: | ||||||||||||||||
| Common and Preferred Equity Securities | $ | $ | $ | ( | ) | $ | ||||||||||
| Simon OP Units | ||||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | ||||||||||
As of both March 31, 2025 and December 31, 2024,
the Company held
Derivative Financial Instruments
The Company enters into interest rate cap contracts in order to reduce the effect of interest rate fluctuations on certain of 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 both March 31, 2025
and December 31, 2024, the Company had two interest rate cap contracts with notional amounts of $
For the three months ended March 31,
2025 and 2024, the Company recorded negative mark to market adjustments of $
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.
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)
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, available for sale, and derivative financial instruments measured at fair value on a recurring basis as of the dates indicated are as follows:
| Fair Value Measurement Using | ||||||||||||||||
| As of March 31, 2025 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Marketable Securities: | ||||||||||||||||
| Common and Preferred Equity Securities | $ | $ | $ | $ | ||||||||||||
| Simon OP Units | ||||||||||||||||
| Corporate Bonds | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Derivative Financial Instruments: | ||||||||||||||||
| Interest Rate Cap Contracts | $ | $ | $ | $ | ||||||||||||
| Fair Value Measurement Using | ||||||||||||||||
| As of December 31, 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Marketable Securities: | ||||||||||||||||
| Common and Preferred Equity Securities | $ | $ | $ | $ | ||||||||||||
| Simon OP Units | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Derivative Financial Instruments: | ||||||||||||||||
| Interest Rate Cap Contracts | $ | $ | $ | $ | ||||||||||||
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 corporate bonds and preferred equity securities 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 Simon OP Units are 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 Simon OP units.
As of March 31, 2025, the Company has not recognized an allowance for expected credit losses related to debt securities as the Company has not identified any unrealized losses for these investments attributable to credit factors. The Company’s unrealized loss on investments in debt securities was primarily caused by changes in interest rates. The Company does not currently intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost basis.
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)
The following table summarizes the estimated fair value of our investments in debt securities with stated contractual maturity dates, accounted for as available-for-sale securities and classified by the contractual maturity date of the securities:
| As of | ||||
| March 31, 2025 | ||||
| Due in 1 year | $ | |||
| Due in 1 year through 5 years | ||||
| Due in 5 years through 10 years | ||||
| Due after 10 years | ||||
| Total | $ | |||
The Company did not have any other significant financial assets or liabilities, which would require revised valuations that are recognized at fair value.
Fair Value of Financial Instruments
The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, 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:
| As of March 31, 2025 | As of December 31, 2024 | |||||||||||||||
| Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | |||||||||||||
| Mortgages payable | $ | $ | $ | $ | ||||||||||||
| Mortgages payable, included in liabilities held for sale | $ | $ | $ | $ | ||||||||||||
The fair values of the outstanding principal of the mortgages payable were determined by discounting the future contractual interest and principal payments by estimated current market interest rates. The aggregate outstanding principal of two mortgage loans (the “Exterior Street Loans”) attributable to the Exterior Street Project are included in liabilities held for sale on the consolidated balance sheets as of March 31, 2025 and December 31, 2024 (see Note 6) and as of that date, their aggregate estimated fair value approximates their aggregate outstanding principal because they bear interest at a floating rate.
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
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 $
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)
6. Mortgages Payable, Net
Mortgages payable, net consists of the following:
| Interest Rate | Weighted Average Interest Rate for the Three Months Ended March 31, 2025 | Maturity Date | Amount Due at Maturity | As of March 31, 2025 | As of December 31, 2024 | ||||||||||||||||||
| Gantry Park Loan | $ | $ | $ | - | |||||||||||||||||||
| Gantry Park Mortgage Loan | - | ||||||||||||||||||||||
| Moxy Senior Loan | SOFR + (floor of | ||||||||||||||||||||||
| Moxy Junior Loan | SOFR + (floor of | ||||||||||||||||||||||
| Santa Monica Loan | |||||||||||||||||||||||
| Total mortgages payable | $ | ||||||||||||||||||||||
| Less: Deferred financing costs | ( | ) | ( | ) | |||||||||||||||||||
| Total mortgages payable, net | $ | $ | |||||||||||||||||||||
One-month SOFR
as of March 31, 2025 and December 31, 2024 was
Gantry Park Loans
On November 19, 2014, the 2nd Street
Joint Venture entered into a $
On January 28, 2025, the 2nd Street
Joint Venture entered into a $
Santa Monica Loan
On June 30, 2022, the Santa Monica Joint Venture
obtained the Santa Monica Loan, a non-recourse loan of up to $
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)
In connection with this extension, the Santa Monica
Joint Venture made an additional principal paydown of $
On October 15, 2024, the Santa Monica Loan matured and it was not repaid, which constitutes an 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, pursuant to the terms of the loan agreement.
Although the lender is currently not charging or being
paid interest at the stated default rate, the Santa Monica Joint Venture is accruing default interest expense pursuant to the
terms of the loan agreement. Default interest expense of $
Exterior Street Loans
On March 29, 2019, the
Company obtained a $
On November 22, 2022, the Company and the financial
institution entered into the first amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans
was adjusted to
The following table shows the contractually scheduled principal maturities of the Company’s mortgage debt during the next five years and thereafter as of March 31, 2025, excluding the Exterior Street Loans, which are included in liabilities held for sale on the consolidated balance sheet as of that date:
| 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | ||||||||||||||||||||||
| Principal maturities | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Less: Deferred financing costs | ( | ) | ||||||||||||||||||||||||||
| Total principal maturities, net | $ | |||||||||||||||||||||||||||
Certain of the Company’s debt agreements require the maintenance of certain ratios, including debt service coverage. As of March 31, 2025, the Company was in compliance with all of its financial debt covenants. Additionally, certain of our mortgages payable also contain clauses providing for prepayment penalties.
20
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 $
The Exterior Street Loans
(outstanding aggregate principal balance of $
The Company has no additional significant maturities of mortgage debt over the next 12 months.
7. 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
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, as amended from time to time (the “SRP”) by the Board of Directors, may provide its stockholders with limited, interim liquidity by enabling them to sell their Common Shares back to the Company, subject to various restrictions.
The Company’s SRP currently provides for redemption requests to be submitted in connection with either a stockholder’s death or hardship and the price for all such purchases has been set at our estimated net asset value per Common Share (“NAV per Share”) as of the date of actual redemption. The Company’s estimated NAV per Share is determined by the Board of Directors and reported by it from time to time. 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 to be eligible for consideration.
Additionally, the Board of
Directors has established that on an annual basis the Company will not redeem in excess of
For the three months ended March 31, 2025, the
Company repurchased
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.
21
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)
8. 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 March 31, 2025 and December 31, 2024, the Company owed the Advisor and
its affiliated entities $
The following table represents the fees incurred associated with the services provided by the Company’s Advisor and its affiliates:
| For the Three Months Ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Asset management fees (general and administrative costs) | $ | | $ | | ||||
| Property management fees (property operating expenses) | ||||||||
| Development fees and cost reimbursement (1) | ||||||||
| Total | $ | $ | ||||||
| (1) |
See Notes 3 and 4 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 $
No distributions were declared and paid on the SLP Units during the three months ended March 31, 2025.
9. Commitments and Contingencies
Legal Proceedings
From time to time in the ordinary course of business, Lightstone REIT I may become subject to legal proceedings, claims or disputes.
Various claims have been asserted against the 2nd Street Joint Venture, including rents at Gantry Park Landing that 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.
22
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, tariffs, 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, property management and property management oversight 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 our development projects; | |
| ● | 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. |
23
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.
General Description of Business and Structure
Lightstone Value Plus REIT I, Inc. (“Lightstone REIT I”), is a Maryland corporation 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 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 March 31, 2025, 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 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 March 31, 2025, we (i) have ownership interests in and consolidate two operating properties and two development projects and (ii) have ownership interests through two unconsolidated joint ventures in a portfolio of nine multifamily residential properties (the “Columbus Portfolio”) located in the Columbus, Ohio metropolitan area and a portfolio of five limited-service hotel properties (the “Hotel JV Portfolio”).
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-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 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.
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 and we hold a 2.5% joint venture ownership interest in LVP Holdco JV LLC (the “Hotel Joint Venture”), which owns the Hotel JV Portfolio. We account for our 19% joint venture ownership interest in the Columbus Joint Venture under the equity method of accounting and we account for 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. Our investment in the Hotel Joint Venture is classified as investment in related party joint venture on our consolidated balance sheet.
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Our 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. Our Advisor also owns 20,000 shares of our 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 our sponsor during our initial public offering (the “Offering”), which terminated on October 10, 2008. Our Advisor, pursuant to the terms of an advisory agreement, together with our board of directors (the “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 special general partner interests (“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.
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 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. 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 Common Shares are not currently listed on a national securities exchange. We may seek to list our Common Shares for trading on a national securities exchange only if a majority of our independent directors believe listing them would be in the best interest of our stockholders. However, we do not intend to list our Common Shares at this time. We do not anticipate that there would be any active market for our Common Shares until they are listed for trading.
Concentration of Credit Risk
As of March 31, 2025 and December 31, 2024, 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, ordinances and regulations, outbreaks of contagious diseases, cybercrime, technological advances and challenges, such as the use and impact of artificial intelligence and machine learning, loss of key relationships, inflation, tariffs 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, tariffs, 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 March 31, 2025, we (i) have ownership interests in and consolidate two operating properties (Lower East Side Moxy Hotel and Gantry Park Landing) and two development projects (Exterior Street Project and Santa Monica Project) and (ii) have ownership interests through two unconsolidated joint ventures (Columbus Joint Venture and Hotel Joint Venture) in the Columbus Portfolio, a portfolio consisting of nine multifamily residential properties, and the Hotel JV Portfolio, a portfolio consisting of five limited-service hotel properties.
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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 date indicated.
| Year
to Date | Percentage
Occupied for the Three Months Ended | RevPAR for the Three Months Ended | ADR
for the Three Months Ended | |||||||||||||||||||
| Location | Year Built | Available Rooms | March
31, 2025 | March
31, 2025 | March
31, 2025 | |||||||||||||||||
| Lower East Side Moxy Hotel | Bowery, New York | 2022 | 27,270 | 87 | % | $ | 178.56 | $ | 206.21 | |||||||||||||
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 an affiliate of the Sponsor, which is a related party. We consolidate the 2nd Street Venture and account for the other member’s ownership interest as a noncontrolling interest in our consolidated financial statements. The following table contains certain information for Gantry Park Landing as of the dates indicated.
| Location | Year Built | Leasable Units | Percentage Occupied as of March 31, 2025 | Annualized
Revenues based on Rents at March 31, 2025 | Annualized Revenues per unit at March 31, 2025 | |||||||||||||||||
| Gantry Park Landing | Queens, New York | 2013 | 199 | 96 | % | $10.4 million | $ | 54,371 | ||||||||||||||
Annualized revenue is defined as the minimum monthly payments due as of March 31, 2025 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. We acquired these three land parcels for the proposed development of 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 and Held for Sale
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 less estimated disposal costs.
During the fourth quarter of 2024, we entered into a purchase and sale agreement (the “Exterior Street Project Agreement”) with an unrelated third party pursuant to which we expect to sell the Exterior Street Project, subject to certain conditions, at a contractual sales price of $84.0 million. Pursuant to the terms of the Exterior Street Project Agreement, we received a deposit of $2.5 million during the fourth quarter of 2024. We currently expect to dispose of the Exterior Street Project during the second quarter of 2025, pursuant to the terms of the Exterior Street Project Agreement, however, there can be no assurance that the sale of the Exterior Street Project will be consummated. Additionally, the Exterior Street Project met the criteria to be classified as held for sale beginning in the fourth quarter of 2024 and therefore, its associated assets and liabilities are classified as held for sale in the consolidated balance sheets as of March 31, 2025 and December 31, 2024. As of both March 31, 2025 and December 31, 2024, the carrying value of the Exterior Street Project was $78.8 million, which is included in assets held for sale on the consolidated balance sheets.
Santa Monica Project
We have a 50% joint venture ownership interest in the Santa Monica Joint Venture, which is between us and an affiliate of the Sponsor, a related party. We consolidate the Santa Monica Joint Venture and account for the other member’s ownership interest as a noncontrolling interest in our consolidated financial statements.
In March 2022, the Santa Monica Joint Venture originated a promissory note in the initial amount of $49.0 million to an unrelated third-party borrower, which was collateralized by two development projects located in Santa Monica, California, including the Santa Monica Project, a proposed multifamily residential property on various land projects. During the first quarter of 2023, construction of the other development project was substantially completed and it was released from the underlying collateral pool in exchange of a principal paydown of $14.0 million on the promissory note reducing its outstanding balance to $35.0 million.
During the second quarter of 2023 the borrower experienced financial difficulties and discontinued making debt service payments on the promissory note, 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.
Impairment Charge
Subsequent to obtaining ownership of the Santa Monica Project, the Santa Monica Joint Venture continued 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 it would no longer pursue the development of the Santa Monica Project, but rather pursue various other strategies with respect to it, including a potential sale or the 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 this change in strategy, the Santa Monica Joint Venture determined its 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, which reduced the carrying value of the Santa Monica Project to its then estimated fair value of $19.0 million. 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.
On October 15, 2024 the Santa Monica Loan matured and it was not repaid, which constitutes an event of default and therefore, the loan became 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, pursuant to the terms of the loan agreement.
As of both March 31, 2025 and December 31, 2024, the carrying value of the Santa Monica Project was $19.0 million, which is included in development projects on the consolidated balance sheets.
See Notes 3 and 7 of the Notes to Consolidated Financial Statements for additional information.
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Unconsolidated Properties
Columbus Joint Venture
We hold a 19% joint venture ownership interest in the Columbus Joint Venture, which owns the Columbus Portfolio, 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 two affiliates of the Sponsor, which are related parties. The following table contains certain information for the Columbus Portfolio as of the date indicated.
| Percentage Occupied as of | Annualized Revenues based on Rents at | Annualized Revenue per unit at | ||||||||||||||||||||
| Location | Year Built | Leasable Units | March 31, 2025 | March 31, 2025 | March 31, 2025 | |||||||||||||||||
| 9 multifamily residential properties within the Columbus Joint Venture | Columbus, Ohio | 2004 | 2,564 | 93 | % | $45.10 million | $ | 18,813 | ||||||||||||||
Hotel Joint Venture
We hold a 2.5% joint venture ownership interest in the Hotel Joint Venture, which owns the Hotel JV Portfolio, 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 Hotel Joint Venture is between us and Lightstone Value Plus REIT II, Inc., a related party REIT also sponsored by the Sponsor. Our investment in the Hotel Joint Venture is classified as Investment in Related Party Joint Venture on the consolidated balance sheet.
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. |
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Results of Operations
For the Three Months Ended March 31, 2025 vs. March 31, 2024
Consolidated
Rental revenues
Our rental revenues are primarily comprised of rental income and tenant recovery income from Gantry Park Landing. Total rental revenues increased by $0.2 million to $2.8 million for the three months ended March 31, 2025 compared to $2.6 million for the same period in 2024. This increase reflects higher rental revenues for Gantry Park Landing primarily resulting from higher average monthly rent per unit during the 2025 period.
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 March 31, 2025 compared to same period in 2024, the Lower East Side Moxy Hotel experienced increases to its percentage of rooms occupied to 87% from 83%, RevPAR to $178.56 from $159.09 and ADR to $206.21 from $191.80.
Total hotel revenues were $9.5 million and $10.0 million for the three months ended March 31, 2025 and 2024, respectively. Room revenue increased by $0.5 million to $4.9 million for the three months ended March 31, 2025 from $4.4 million for the same period in 2024 and food, beverage and other revenue decreased by $0.9 million to $4.7 million for the three months ended March 31, 2025 from $5.6 million for the same period in 2024. The increase in room revenue 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. Property operating expenses increased by $0.2 million to $0.9 million for the three months ended March 31, 2025 compared to $0.7 million for the same period in 2024.
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 $7.9 million and $8.3 million for three months ended March 31, 2025 and 2024, respectively. Room expenses were $3.8 million and $3.5 million and food and beverage costs were $4.1 million and $4.8 million for the three months ended March 31, 2025 and 2024, respectively. The increase in room expenses of $0.3 million was primarily attributable to higher occupancy for the Lower East Side Hotel during the 2025 period. The decrease in food and beverage costs was attributable to the lower food, beverage and other revenue earned.
Real estate taxes
Real estate taxes increased slightly by $0.1 million to $0.8 million for the three months ended March 31, 2025 compared to $0.7 million for the same period in 2024.
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General and administrative costs
General and administrative costs increased slightly by $0.1 million to $1.1 million for the three months ended March 31, 2025 compared to $1.0 million for the same period in 2024.
Depreciation and amortization
Depreciation and amortization increased slightly by $0.1 million to $1.8 million for the three months ended March 31, 2025 compared to $1.7 million for the same period in 2024.
Interest and dividend income
Interest and dividend income increased by $0.2 million to $0.7 million for the three months ended March 31, 2025 compared to $0.5 million for the same period in 2024.
Interest expense
Interest expense, including amortization of deferred financing costs, increased slightly by $0.1 million to $6.6 million for the three months ended March 31, 2025 compared to $6.5 million for the same period in 2024. 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 three months ended March 31, 2025, the Santa Monica Joint Venture accrued default interest expense of $0.9 million.
Unrealized (loss)/gain on marketable equity securities
During the three months ended March 31, 2025, we recorded an unrealized loss on marketable equity securities of $1.2 million and during the three months ended March 31, 2024, we recorded an unrealized gain on marketable equity securities of $3.1 million.
Loss from investment in unconsolidated affiliated real estate entity
Our loss from investment in unconsolidated affiliated entity was $0.9 million during both of the three months ended March 31, 2025 and 2024, 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 through PRO’s liquidation on December 26, 2024, (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.
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Financial Condition, Liquidity and Capital Resources
Overview:
As of March 31, 2025, we had $26.7 million of cash on hand, $4.9 million of restricted cash and $38.9 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” 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 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 (including the aforementioned expected sale of our Exterior Street Project), joint venture arrangements, new borrowings and/or refinancing of existing debt.
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 March 31, 2025, taking into consideration the net assets and liabilities of the Exterior Street Project, which were classified as held for sale on the consolidated balance sheets, our total borrowings of $225.9 million represented 119% 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. See Note 8 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 and reimbursement associated with the payments to our Advisor and their affiliates:
| For the Three Months Ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Asset management fees (general and administrative costs) | $ | 489 | $ | 504 | ||||
| Property management fees (property operating expenses) | 78 | 77 | ||||||
| Development fees and cost reimbursement (1) | 50 | 11 | ||||||
| Total | $ | 617 | $ | 592 | ||||
| (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. |
As of March 31, 2025 and December 31, 2024, we owed the Advisor and its affiliated entities $3.7 million and $3.0 million, respectively, which is included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets.
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 months ended March 31, 2025 and 2024, no distributions 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 Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (2,174 | ) | $ | (2,161 | ) | ||
| Net cash used in investing activities | (262 | ) | (343 | ) | ||||
| Net cash (used in)/provided by financing activities | (1,886 | ) | 3,890 | |||||
| Change in cash, cash equivalents and restricted cash including those classified within assets held for sale | (4,322 | ) | 1,386 | |||||
| Less: decrease in cash, cash equivalents and restricted cash classified within assets held for sale | 741 | - | ||||||
| Change in cash, cash equivalents and restricted cash | (3,581 | ) | 1,386 | |||||
| Cash, cash equivalents and restricted cash, beginning of year | 35,119 | 18,360 | ||||||
| Cash, cash equivalents and restricted cash, end of the period | $ | 31,538 | $ | 19,746 | ||||
Operating activities
The net cash used in operating activities of $2.2 million for the three months ended March 31, 2025 consists of the following:
| ● | cash outflows of $3.5 million from our net loss after adjustment for non-cash items; and |
| ● | cash inflows of $1.3 million associated with the net changes in operating assets and liabilities. |
Investing activities
The net cash used in investing activities for the three months ended March 31, 2025 primarily related to the purchase of investment property of $0.3 million.
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Financing activities
The net cash used in financing activities of $1.9 million for the three months ended March 31, 2025 is related to the following:
| ● | debt principal payments of $65.3 million; |
| ● | proceeds from mortgage financing of $67.2 million; |
| ● | payment of loan fees and expenses of $1.4 million; |
| ● | redemptions and cancellation of common shares of $1.0 million |
| ● | distributions paid to noncontrolling interests of $1.6 million; and |
| ● | contributions received from noncontrolling interests of $0.1 million. |
Gantry Park Loans
On November 19, 2014, the 2nd Street Joint Venture entered into a $74.5 million non-recourse mortgage loan (the “Gantry Park Mortgage Loan”). The Gantry Park Mortgage Loan had a 10-year term with an initial maturity date of November 19, 2024, bore interest at 4.48%, and required monthly interest-only payments for the first three years and monthly principal and interest payments pursuant to a 30-year amortization schedule thereafter. The Gantry Park Mortgage Loan was collateralized by Gantry Park Landing. On November 19, 2024 the maturity date of the Gantry Park Mortgage Loan was extended to January 28, 2025.
On January 28, 2025, the 2nd Street Joint Venture entered into a $67.2 million non-recourse mortgage loan (the “Gantry Park Loan”) collateralized by Gantry Park Landing with a maturity date of February 7, 2030, which bears interest at a fixed rate of 6.30%, requires monthly principal and interest payments pursuant to a 30-year amortization schedule for the first three years and interest-only payments thereafter through its maturity. A substantial portion of the proceeds received at the closing of the Gantry Park Loan were used to repay in full the Gantry Park Mortgage Loan.
Santa Monica Loan
On June 30, 2022, the Santa Monica Joint Venture obtained the Santa Monica Loan, a non-recourse loan of up to $33.1 million which initially bore interest at SOFR + 3.5%. The Santa Monica Loan requires monthly interest-only payments with the outstanding principal balance due at its maturity date and was previously collateralized by a promissory note, 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 principal paydown on the promissory, of which $11.3 million was used to make a principal 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. 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.
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, pursuant to the terms of the loan agreement..
Although the lender is currently not charging or being paid interest at the stated default rate, the Santa Monica Joint Venture is accruing default interest expense pursuant to the terms of the loan agreement. Default interest expense of $0.9 million was accrued during the three months ended March 31, 2025 and $0.8 million was accrued during the year ended December 31, 2024. As a result, cumulative accrued default interest expense of $1.7 million and $0.8 million is included accounts payable, accrued expenses and other liabilities on the consolidated balance sheets as of March 31, 2025 and December 31, 2024, respectively. However, the Santa Monica Joint Venture does not expect to pay any of the accrued default interest expense because the Santa Monica Loan is non-recourse to it.
As of both March 31, 2025 and December 31, 2024, the outstanding principal balance of the Santa Monica Loan was $19.5 million.
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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”) which bore interest at LIBOR plus 2.50% through November 24, 2022. The Exterior Street Loan and the Exterior Street Supplemental Loan are collectively referred to as the Exterior Street Loans. 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 the third amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to SOFR plus 2.85% and their maturity date was further extended to November 24, 2024. On November 22, 2024, we and the financial institution entered into the fourth amendment to the Exterior Street Loans pursuant to which we made a principal payment of $2.0 million on the Exterior Street Loans, their interest rate was adjusted to SOFR plus 3.00% and their maturity date was further extended to August 22, 2025. As of both March 31, 2025 and December 31, 2024, the outstanding aggregate principal balance of the Exterior Street Loans was $40.0 million (included in liabilities held for sale).
Contractual Mortgage Obligations
The following is a summary of our contractual mortgage obligations outstanding over the next five years and thereafter as of March 31, 2025, excluding the Exterior Street Loans, which are included in liabilities held for sale on the consolidated balance sheet as of that date.
| Contractual Obligations | 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | |||||||||||||||||||||
| Principal Payments | $ | 20,001 | $ | 140,106 | $ | 811 | $ | 127 | $ | - | $ | 64,860 | $ | 225,905 | ||||||||||||||
| Interest Payments(1) | 13,191 | 17,467 | 4,177 | 4,153 | 4,140 | 703 | 43,831 | |||||||||||||||||||||
| Total Contractual Obligations | $ | 33,192 | $ | 157,573 | $ | 4,988 | $ | 4,280 | $ | 4,140 | $ | 65,563 | $ | 269,736 | ||||||||||||||
| 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 March 31, 2025 was used. |
Certain of our debt agreements require the maintenance of prescribed ratios, including debt service coverage. As of March 31, 2025, 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 March 31, 2025) 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, pursuant to the terms of the loan agreement.
The Exterior Street Loans (outstanding aggregate principal balance of $40.0 million as of March 31, 2025) are scheduled to mature on August 22, 2025. We currently expect to repay the aggregate outstanding balance with net proceeds from the expected sale of the Exterior Street Project on or before the scheduled maturity date.
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% (5.17% as of March 31, 2025) 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 both March 31, 2025 and December 31, 2024.
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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 40% loan-to-value ratio based on the fair value of the underlying collateral, which matures on November 30, 2026 and bears interest at SOFR plus 1.35% (5.67% as of March 31, 2025). The Line of Credit is collateralized by an aggregate of 200,247 of Marco OP Units. As of March 31, 2025, the amount of borrowings available to be drawn under the Line of Credit was $13.3 million. No amounts were outstanding under the Line of Credit as of both March 31, 2025 and December 31, 2024.
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 SRP may provide our stockholders with limited, interim liquidity by enabling them to sell their Common Shares back to us, subject to various restrictions.
Our SRP currently provides for redemption requests to be submitted in connection with either a stockholder’s death or hardship and the price for all such purchases has been set at our estimated NAV per Share as of the date of actual redemption. Our estimated NAV per Share is determined by our Board of Directors and reported by us from time to time. 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 to be eligible for consideration.
Additionally, our Board of Directors has established that on an annual basis we will not redeem in excess of 1.0% and 0.5% of the number of Common Shares outstanding as of the end of the preceding year for either death redemptions or hardship redemptions, respectively. Additionally, eligible redemption requests are generally expected to be processed on a quarterly basis and will be subject to proration if either type of redemption requests exceeds the annual limitations established by our Board of Directors. Furthermore, our Board of Directors may, at their sole discretion, amend or suspend the SRP at any time without any notice to stockholders.
For the three months ended March 31, 2025, the Company repurchased 80,929 Common Shares at a weighted average price per share of $11.73. For the three months ended March 31, 2024, the Company repurchased 81,895 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.
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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.
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 | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Net loss | $ | (8,116 | ) | $ | (4,186 | ) | ||
| FFO adjustments: | ||||||||
| Depreciation and amortization | 1,768 | 1,737 | ||||||
| Adjustments to equity earnings from unconsolidated affiliated entity | 635 | 587 | ||||||
| Income tax on redemptions of preferred investments in related parties | - | 745 | ||||||
| FFO | (5,713 | ) | (1,117 | ) | ||||
| MFFO adjustments: | ||||||||
| Noncash adjustments: | ||||||||
| Mark to market adjustments (1) | 1,240 | (3,079 | ) | |||||
| Loss on sale of marketable securities (2) | 58 | - | ||||||
| MFFO | (4,415 | ) | (4,196 | ) | ||||
| Straight-line rent (3) | 7 | 10 | ||||||
| MFFO - IPA recommended format | $ | (4,408 | ) | $ | (4,186 | ) | ||
| Net loss | $ | (8,116 | ) | $ | (4,186 | ) | ||
| Less: loss attributable to noncontrolling interests | 570 | 55 | ||||||
| Net loss applicable to Company’s common shares | $ | (7,546 | ) | $ | (4,131 | ) | ||
| Net loss per common share, basic and diluted | $ | (0.36 | ) | $ | (0.19 | ) | ||
| FFO | $ | (5,713 | ) | $ | (1,117 | ) | ||
| Less: FFO attributable to noncontrolling | ||||||||
| interests | 359 | (171 | ) | |||||
| FFO attributable to Company’s common shares | $ | (5,354 | ) | $ | (1,288 | ) | ||
| FFO per common share, basic and diluted | $ | (0.25 | ) | $ | (0.06 | ) | ||
| MFFO - IPA recommended format | $ | (4,408 | ) | $ | (4,186 | ) | ||
| Less: MFFO attributable to noncontrolling interests | 326 | 15 | ||||||
| MFFO attributable to Company’s common shares | $ | (4,082 | ) | $ | (4,171 | ) | ||
| Weighted average number of common shares outstanding, basic and diluted | 21,199 | 21,522 | ||||||
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 receipts are recognized on a straight-line basis through the expiration of the non-cancelable term of the lease. This may result in income recognition that is significantly different than underlying contract terms. By adjusting for these items, 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 | ||||
| March 31, 2025 | ||||
| FFO attributable to Company’s common shares | $ | 247,212 | ||
| 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.
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ITEM 6. EXHIBITS
| * | 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: May 14, 2025 | By: | /s/ David Lichtenstein |
| David Lichtenstein | ||
| Chairman and Chief Executive Officer (Principal Executive Officer) | ||
| Date: May 14, 2025 | By: | /s/ Seth Molod |
| Seth Molod | ||
| Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial and Accounting Officer) | ||
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