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)
|
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☑ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
As of May 7, 2024, there were approximately million outstanding shares of common stock of Lightstone Value Plus REIT I, Inc., including shares issued pursuant to the dividend reinvestment plan.
LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
INDEX
i
PART I. FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS:
LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data and where indicated in millions)
| As of March 31, 2024 |
As of December 31, 2023 |
|||||||
| (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 projects | ||||||||
| Investment in related party | ||||||||
| Investment in unconsolidated affiliated entity | ||||||||
| Cash and cash equivalents | ||||||||
| Marketable securities | ||||||||
| Restricted cash | ||||||||
| Other assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Mortgages payable, net | $ | $ | ||||||
| Notes payable, net | ||||||||
| Accounts payable, accrued expenses and other liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Company’s Stockholders’ Equity: | ||||||||
| Preferred shares, $ par value, million shares authorized, issued and outstanding | ||||||||
| Common stock, $ par value; million shares authorized, million and million shares issued and outstanding, respectively | ||||||||
| Additional paid-in-capital | ||||||||
| 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.
1
PART I. FINANCIAL INFORMATION, CONTINUED:
ITEM 1. FINANCIAL STATEMENTS, CONTINUED:
LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
|
For the Three Months Ended |
||||||||
| 2024 | 2023 | |||||||
| Revenues: | ||||||||
| Rental revenues | $ | $ | ||||||
| Hotel revenues | ||||||||
| Total revenues | ||||||||
| Expenses: | ||||||||
| Property operating expenses | ||||||||
| Hotel operating expenses | ||||||||
| Real estate taxes | ||||||||
| General and administrative costs | ||||||||
| Pre-opening costs | ||||||||
| Depreciation and amortization | ||||||||
| Total expenses | ||||||||
| Interest and dividend income | ||||||||
| Interest expense | ( |
) | ( |
) | ||||
| Gain on disposition of real estate | ||||||||
| Loss on sale of marketable securities | ( |
) | ||||||
| Unrealized gain/(loss) on marketable equity securities | ( |
) | ||||||
| Mark to market adjustments on derivative financial instruments | ( |
) | ( |
) | ||||
| Loss from investment in unconsolidated affiliated real estate entity | ( |
) | ( |
) | ||||
| Other expense, net | ( |
) | ( |
) | ||||
| Net loss | ( |
) | ( |
) | ||||
| Less: net loss/(income) 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.
2
PART I. FINANCIAL INFORMATION, CONTINUED:
ITEM 1. FINANCIAL STATEMENTS, CONTINUED:
LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in thousands)
(Unaudited)
| For the Three Months Ended March 31, |
||||||||
| 2024 | 2023 | |||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Other comprehensive income: | ||||||||
| Holding loss on available for sale debt securities | ( |
) | ||||||
| Reclassification adjustment for loss included in net loss | ||||||||
| Other comprehensive income: | ||||||||
| Comprehensive loss | ( |
) | ( |
) | ||||
| Less: Comprehensive loss/(income) attributable to noncontrolling interests | ( |
) | ||||||
| Comprehensive loss attributable to the Company’s common shares | $ | ( |
) | $ | ( |
) | ||
The accompanying notes are an integral part of these consolidated financial statements.
3
PART I. FINANCIAL INFORMATION, CONTINUED:
ITEM 1. FINANCIAL STATEMENTS, CONTINUED:
LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts in thousands)
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||||||
| Common | Paid-In | Comprehensive | Accumulated | Noncontrolling | Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Loss | Surplus | Interests | Equity | ||||||||||||||||||||||
| BALANCE, December 31, 2022 | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive income | - | ( |
) | |||||||||||||||||||||||||
| Distributions declared(a) | - | ( |
) | ( |
) | |||||||||||||||||||||||
| Distributions paid to noncontrolling interests | - | ( |
) | ( |
) | |||||||||||||||||||||||
| Redemption and cancellation of common shares | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Shares issued from distribution reinvestment program | ||||||||||||||||||||||||||||
| BALANCE, March 31, 2023 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| (a) |
| Additional | Total | |||||||||||||||||||||||
| Common | Paid-In | Accumulated | Noncontrolling | 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 | $ | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
PART I. FINANCIAL INFORMATION, CONTINUED:
ITEM 1. FINANCIAL STATEMENTS, CONTINUED:
LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
| For the Three Months Ended March 31, |
||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Gain on disposition of real estate | ( |
) | ||||||
| Loss from investment in unconsolidated affiliated real estate entity | ||||||||
| Mark to market adjustments on derivative financial instruments | ||||||||
| Unrealized (gain)/loss on marketable equity securities | ( |
) | ||||||
| Loss on sale of marketable securities | ||||||||
| Amortization of deferred financing costs | ||||||||
| Noncash interest income | ( |
) | ||||||
| Other non-cash adjustments | ( |
) | ( |
) | ||||
| Changes in assets and liabilities: | ||||||||
| Decrease in other assets | ||||||||
| Increase/(decrease) in accounts payable, accrued expenses and other liabilities | ( |
) | ||||||
| Cash used in operating activities | ( |
) | ( |
) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of development property and investment property | ( |
) | ( |
) | ||||
| Purchase of marketable securities | ( |
) | ||||||
| Proceeds from sale of marketable securities | ||||||||
| Proceeds from disposition of real estate | ||||||||
| Investment in joint venture | ( |
) | ( |
) | ||||
| Distributions from joint venture | ||||||||
| Proceeds from redemption of preferred investment in related party | ||||||||
| Funding of notes receivable | ( |
) | ||||||
| Release of reserves on notes receivable | ||||||||
| Proceeds from repayment of notes receivable | ||||||||
| Investment in unconsolidated affiliated real estate entity | ( |
) | ( |
) | ||||
| Cash (used in)/provided 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 | ( |
) | ( |
) | ||||
| Distributions paid to Company’s common stockholders | ( |
) | ||||||
| Cash provided by/(used in) financing activities | ( |
) | ||||||
| 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.
5
LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
| 1. | Business and Structure |
Lightstone Value Plus REIT I, Inc., is a Maryland corporation (“Lightstone REIT I”), formed on June 8, 2004, which has elected to be taxed and qualify as a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes. Lightstone REIT I was formed primarily for the purpose of engaging in the business of investing in and owning commercial and multifamily residential real estate properties and making other real estate-related investments located throughout the U.S.
Lightstone REIT I is structured as an umbrella partnership REIT, or UPREIT, and substantially all of its current and future business is and will be conducted through Lightstone Value Plus REIT, L.P. (the “Operating Partnership”), a Delaware limited partnership formed on July 12, 2004. As of March 31, 2024, Lightstone REIT I held a 98% general partnership interest in the Operating Partnership’s common units (“Common Units”).
Lightstone REIT I, together with the Operating Partnership and its subsidiaries are collectively referred to as the “Company” and the use of “we,” “our,” “us” or similar pronouns refers to Lightstone REIT I, its Operating Partnership or the Company as required by the context in which such pronoun is used.
Through its Operating Partnership, the Company owns, operates and develops commercial and multifamily residential properties and makes other real estate-related investments, principally in the U.S. The Company’s real estate investments are held by it alone or jointly with other parties. The Company also originates or acquires mortgage loans secured by real estate. Although most of its investments are of these types, the Company may invest in whatever types of real estate or real estate-related investments that it believes is in its best interests. Since its inception, the Company has owned and managed various commercial and multifamily residential properties located throughout the U.S. The Company evaluates all of its real estate investments as one operating segment. The Company currently intends to hold its real estate investments until such time as it determines that a sale or other disposition appears to be advantageous to achieve its objectives or until it appears that the objectives will not be met.
As of March 31, 2024, the Company (i) has ownership interests in and consolidates two operating properties, two development projects and certain land holdings and (ii) has ownership interests through two unconsolidated joint ventures in a portfolio of nine multifamily residential properties (the “Columbus Properties”) and a portfolio of five limited service hotel properties (the “Hotel JV Properties”).
With respect to its consolidated operating properties, the Company wholly owns a 303-room Marriott International, Inc. (“Marriott”) branded Moxy hotel (the “Lower East Side Moxy Hotel”), located in the Lower East Side neighborhood in the Manhattan borough of New York City, which it developed, constructed and opened on October 27, 2022 and has a
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, on which it expects, subject to certain conditions, to construct a proposed mixed-use multifamily residential and commercial retail project (the “Exterior Street Project”) and the Company has a 50% joint venture ownership interest in LSC 1543 7th LLC (the “Santa Monica Joint Venture”), a joint venture between the Company and a related party, which owns certain land parcels located in Santa Monica, California, on which a multifamily residential project (the “Santa Monica Project”) is proposed.
6
LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
The Company also wholly owns and consolidates various adjacent land parcels (the “St. Augustine Land Holdings”) located in St. Augustine, Florida.
With respect to our unconsolidated joint venture properties, the Company holds a 19% joint venture ownership interest in Columbus Portfolio Member LLC (the “Columbus Joint Venture”), which owns the Columbus Properties, a portfolio of nine multifamily residential properties located in the Columbus, Ohio metropolitan area, and it holds a
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 would be in the best interest of its stockholders. The Company does not intend to list its Common Shares at this time. The Company does not anticipate that there would be any active market for its Common Shares until they are listed for trading.
Related Parties
The Company’s Sponsor, Advisor and their affiliates, including Lightstone SLP, LLC, are related parties of the Company as well as other public REITs also sponsored and/or advised by these entities. Pursuant to the terms of various agreements, certain of these entities are entitled to compensation and reimbursement of costs incurred for services related to the investment, management and disposition of the Company’s assets. The compensation is generally based on the cost of acquired properties/investments and the annual revenue earned from such properties/investments, and other such fees and expense reimbursements as outlined in each of the respective agreements.
7
LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
Noncontrolling Interests
Partners of Operating Partnership
On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units in the Operating Partnership. The Advisor has the right to convert the Common Units into cash or, at the option of the Company, an equal number of shares of Common Shares.
In connection with the Offering, Lightstone SLP, LLC, an affiliate of the Advisor, purchased an aggregate of $
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”), (ii) the 2nd Street Joint Venture and (iii) the Santa Monica Joint Venture (see Note 3). PRO’s holdings principally consist of Marco OP Units and Marco II OP Units (see Note 6). The 2nd Street Joint Venture owns Gantry Park Landing and the Santa Monica Joint Venture owns the Santa Monica Project (see Notes 3 and 7).
| 2. | Summary of Significant Accounting Policies |
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Lightstone REIT I and its Operating Partnership and its subsidiaries (over which Lightstone REIT I exercises financial and operating control). All inter-company balances and transactions have been eliminated in consolidation. In addition, interests in entities acquired are evaluated based on applicable accounting principles generally accepted in the U.S. (“GAAP”), and if deemed to be variable interest entities (“VIE”) in which the Company is the primary beneficiary are also consolidated. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation based on legal form, economic substance, and the extent to which the Company has control, substantive participating rights or both under the respective ownership agreement. For entities in which the Company has less than a controlling interest but have significant influence, the Company accounts for the investment using the equity method of accounting.
There are judgments and estimates involved in determining if an entity in which the Company has made an investment is a VIE and, if so, whether the Company is the primary beneficiary. The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage of equity being risked compared to the total equity of the entity. Determining expected future losses involves assumptions of various possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate to determine the net present value of those future losses. A change in the judgments, assumptions, and estimates outlined above could result in consolidating an entity that should not be consolidated or accounting for an investment using the equity method that should in fact be consolidated, the effects of which could be material to our financial statements.
8
LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The unaudited interim consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair presentation of the results for the periods presented. The accompanying unaudited consolidated financial statements of Lightstone Value Plus REIT I, Inc. and its Subsidiaries have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.
GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period. The most significant assumptions and estimates relate to the valuation of real estate and real-estate related investments, marketable securities, notes receivable, depreciable lives, and revenue recognition. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.
The consolidated balance sheet as of December 31, 2023 included herein has been derived from the consolidated balance sheet included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The unaudited consolidated statements of operations for interim periods are not necessarily indicative of results for the full year or any other period.
Income Taxes
The Company elected to be taxed and qualify as a REIT, commencing with the taxable year ended December 31, 2005. If the Company remains qualified as a REIT, it generally will not be subject to U.S. federal income tax on its net taxable income that it distributes currently to its stockholders. To maintain its REIT qualification under the Internal Revenue Code of 1986, as amended, or the Code, the Company must meet a number of organizational and operational requirements, including a requirement that it annually distribute to its stockholders at least 90% of its REIT taxable income (which does not equal net income, as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. If the Company fails to remain qualified for taxation as a REIT in any subsequent year and does not qualify for certain statutory relief provisions, its income for that year will be taxed at regular corporate rates, and it may be precluded from qualifying for treatment as a REIT for the four-year period following its failure to qualify as a REIT. Such an event could materially adversely affect its net income and net cash available for distribution to its stockholders. Additionally, even if the Company continues to qualify as a REIT for U.S. federal income tax purposes, it may still be subject to some U.S. federal, state and local taxes on its income and property and to U.S. federal income taxes and excise taxes on its undistributed income, if any.
To maintain its qualification as a REIT, the Company engages in certain activities through a taxable REIT subsidiary (“TRS”), including when the Company acquires or develops and constructs a hotel it usually establishes a new TRS and enters into an operating lease agreement for the hotel. As such, the Company is subject to U.S. federal and state income and franchise taxes from these activities.
The Company’s income tax expense is included in other expense, net on its consolidated statements of operations. During the three months ended March 31, 2024, the Company recorded income tax expense of $
As of March 31, 2024 and December 31, 2023, the Company had
9
LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
Revenues
The following table represents the total hotel revenues from hotel operations on a disaggregated basis:
| For the Three Months ended March 31, 2024 |
For the Three Months ended March 31, 2023 |
|||||||
| Hotel revenues | ||||||||
| Room | $ | $ | ||||||
| Food, beverage and other | ||||||||
| Total hotel revenues | $ | $ | ||||||
Land Parcel Sale
During the first quarter of 2023, the Company completed the disposition of a parcel of land, which was part of its St. Augustine Land Holdings, to an unrelated third party for a contractual sales price of $
New Accounting Pronouncements
In November 2023, the FASB issued an accounting standards update which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within segment profit and loss, as well as the title and position of the CODM. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the guidance and the impact it may have on its consolidated financial statements.
In December 2023, the FASB issued an accounting standards update which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This update is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the guidance and the impact it may have on its consolidated financial statements.
The Company has reviewed and determined that other recently issued accounting pronouncements will not have a material impact on its financial position, results of operations and cash flows, or do not apply to its current operations.
Concentration of Risk
As of March 31, 2024 and December 31, 2023, the Company had cash deposited in certain financial institutions in excess of U.S. federally insured levels. The Company regularly monitors the financial stability of these financial institutions and believes that it is not exposed to any significant credit risk with respect to its cash and cash equivalents or restricted cash.
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)
Current Environment
The Company’s operating results and financial condition are substantially impacted by the overall health of local, U.S. national and global economies and may be influenced by market and other challenges. Additionally, the Company’s business and financial performance may be adversely affected by current and future economic and other conditions; including, but not limited to, availability or terms of financings, financial markets volatility and banking failures, political upheaval or uncertainty, natural and man-made disasters, terrorism and acts of war, unfavorable changes in laws and regulations, outbreaks of contagious diseases, cybercrime, loss of key relationships, inflation and recession.
The Company’s overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on consumer behavior. Worsening economic conditions, increases in costs due to inflation, higher interest rates, certain labor and supply chain challenges and other changes in economic conditions, may adversely affect the Company’s results of operations and financial performance.
Reclassifications
Certain prior period amounts may have been reclassified to conform to the current period’s presentation.
Supplemental Cash Flow Information
| For the Three Months Ended March 31, |
||||||||
| 2024 | 2023 | |||||||
| Cash paid for interest | $ | $ | ||||||
| Distributions declared but not paid | $ | $ | ||||||
| Capital expenditures for investment property in accounts payable, accrued expenses and other liabilities | $ | $ | ||||||
| Amortization of deferred financing costs included in development projects | $ | $ | ||||||
| Holding gain on marketable securities | $ | $ | ||||||
| Value of shares issued from distribution reinvestment program | $ | $ | ||||||
| 3. | Development Projects |
Exterior Street 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 three months ended March 31, 2023, interest of $
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)
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. There can be no assurances that the unfavorable circumstances will improve and the Company will resume active development activities and ultimately construct the Exterior Street Project. However, if the Company does resume active development activities for the Exterior Street Project, it will need to obtain construction financing and/or seek a joint venture arrangement. Current and future economic conditions as well as other uncertainties may (i) affect the Company’s ability to obtain construction financing, which could adversely impact its ability to ultimately commence and/or complete construction as planned, on budget or at all for the Exterior Street Project.
Including land and the acquisition costs discussed above, the Company has cumulatively incurred and capitalized $
Santa Monica Project
The Company has a
During the first quarter of 2023, the Santa Monica Joint Venture received a partial paydown of $14.0 million on the Santa Monica Note Receivable in exchange for the release of one of the development projects from the underlying collateral pool. As a result, the remaining outstanding balance of the Santa Monica Note Receivable of $35.0 million was secured solely by the Santa Monica Project.
Due to financial difficulties, during the second quarter of 2023 the Santa Monica Borrower discontinued making monthly interest payments on the Santa Monica Note Receivable, which subsequently matured on August 31, 2023. On December 29, 2023, ownership of the Santa Monica Project was transferred to the Santa Monica Joint Venture via a deed in lieu of foreclosure transaction. In connection with the transfer, the aggregate outstanding principal and accrued interest for the Santa Monica Note Receivable of $36.7 million, which represented the fair value of the Santa Monica Project and approximated the carrying value of the Santa Monica Note Receivable, was reclassified from notes receivable, net to development projects on the consolidated balance sheet.
As of both March 31, 2024 and December 31, 2023, the carrying value of the Santa Monica Project was $
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LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
| 4. | Investment in Unconsolidated Affiliated Real Estate Entity |
Columbus Joint Venture
On November 29, 2022, the Company, along with CRE Columbus Member (“Converge”), a majority owned subsidiary of Converge Holdings LLC, a reinsurance business owned by the Sponsor, and LEL Columbus Member LLC (the “BVI member”), a wholly owned subsidiary of Lightstone Enterprises Limited (“BVI”), a real estate investment company owned by the Sponsor, entered into a joint venture agreement to form the Columbus Joint Venture for the purpose of acquiring the Columbus Properties, a portfolio of nine multifamily residential properties consisting of 2,564 units located in the Columbus, Ohio metropolitan area for a contractual purchase price of $
On November 29, 2022, the
The Company has determined that the Columbus Joint Venture is a VIE but it is not the primary beneficiary. The Company accounts for its ownership interest in the Columbus Joint Venture in accordance with the equity method of accounting because it exerts significant influence over but does not control the Columbus Joint Venture. All capital contributions and distributions of earnings from the Columbus Joint Venture are made on a pro rata basis in proportion to each member’s equity interest percentage. Any distributions in excess of earnings from the Columbus Joint Venture are made to the members pursuant to the terms of the Columbus Joint Venture’s operating agreement.
In connection with the purchase of the Columbus Properties on November 29, 2022, the Columbus Joint Venture obtained senior mortgage loans from two different financial institutions. The first financial institution provided four separate senior mortgage loans, all to subsidiaries of the Columbus Joint Venture, aggregating $133.6 million. These four senior mortgage loans bear interest at SOFR + 2.19%, provide for interest-only payments for the first six years of their term and mature in December 2032. Each of these four senior mortgage loans is individually collateralized by one of the Columbus Properties (collectively, the “Columbus Portfolio I Properties”). The second financial institution provided five separate senior mortgage loans, all to subsidiaries of the Columbus Joint Venture, aggregating $167.2 million. These five senior mortgage loans bear interest at 4.85%, provide for interest-only payments for the first two years of their term and initially mature in December 2027, but may be further extended for an additional five years, subject to satisfaction of certain conditions. Each of these five senior mortgage loans is individually collateralized by one of the Columbus Properties (collectively, the “Columbus Portfolio II Properties”).
Additionally, in connection with the purchase of the Columbus Properties on November 29, 2022, the
Because the Columbus Preferred Investments have mandatory redemption dates, the Columbus Joint Venture treats them as financial liabilities and includes them in mortgages and loans payable on its condensed balance sheets. The Company’s Sponsor (the “Guarantor”) has fully guaranteed the nine senior mortgage loans and the Columbus Preferred Investments (the “Debt Guarantee”). Each of the members of the Columbus Joint Venture have agreed to reimburse the Guarantor for their pro rata share of any balance that becomes due under the Debt Guarantee, of which the Company’s share is up to 19%. The Company has determined that the fair value of the Debt Guarantee is immaterial.
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LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
Columbus Joint Venture Financial Information
The following table represents the condensed statements of operations for the Columbus Joint Venture:
| For the Three Months Ended March 31, 2024 |
For the Three Months Ended March 31, 2023 |
|||||||
| 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, 2024 |
December 31, 2023 |
|||||||
| 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 | $ | $ | ||||||
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LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
| 5. | Investment in Related Party |
Hotel Joint Venture
During 2015, the Company formed the Hotel Joint Venture with Lightstone REIT II, a related party REIT also sponsored by the Sponsor. The Company has a
The Company accounts for its
| 6. | Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable |
Marketable Securities
The following is a summary of the Company’s available for sale securities:
| As of March 31, 2024 | ||||||||||||||||
| Adjusted Cost | Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value | |||||||||||||
| Marketable Securities: | ||||||||||||||||
| Equity securities: | ||||||||||||||||
| Common and Preferred Equity Securities | $ | $ | $ | ( |
) | $ | ||||||||||
| Marco OP Units and Marco II OP Units | ||||||||||||||||
| $ | $ | $ | ( |
) | $ | |||||||||||
| As of December 31, 2023 | ||||||||||||||||
| Adjusted Cost | Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value | |||||||||||||
| Marketable Securities: | ||||||||||||||||
| Equity securities: | ||||||||||||||||
| Common and Preferred Equity Securities | $ | $ | $ | ( |
) | $ | ||||||||||
| Marco OP Units and Marco II OP Units | ||||||||||||||||
| Total | $ | $ | $ | ( |
) | $ | ||||||||||
As of both March 31, 2024 and December 31, 2023, the Company held an aggregate of
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LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
Derivative Financial Instruments
The Company enters into interest rate cap contracts in order to reduce the effect of interest rate fluctuations or risk of certain real estate investment’s interest expense on its variable rate debt. The Company is exposed to credit risk in the event of non-performance by the counterparty to these financial instruments. Management believes the risk of loss due to non-performance to be minimal.
The Company accounts for interest rate cap contracts as economic hedges, marking these contracts to market, taking into account present interest rates compared to the contracted fixed rate over the life of the contract and recording the unrealized gain or loss on the interest rate cap contracts on the consolidated statements of operations.
As of March 31, 2024 and December 31, 2023, the Company had two interest rate cap contracts with notional amounts of $
The aggregate fair value of the interest rate cap contracts was $
For the three months ended March 31, 2024 and 2023, 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.
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. |
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LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
Marketable securities 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, 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Marketable Securities: | ||||||||||||||||
| Common and Preferred Equity Securities | $ | $ | $ | $ | ||||||||||||
| Marco OP and OP II Units | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Derivative Financial Instruments: | ||||||||||||||||
| Interest Rate Cap Contracts | $ | $ | $ | $ | ||||||||||||
| Fair Value Measurement Using | ||||||||||||||||
| As of December 31, 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Marketable Securities: | ||||||||||||||||
| Common and Preferred Equity Securities | $ | $ | $ | $ | ||||||||||||
| Marco OP and OP II 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 preferred equity securities and corporate bonds are measured using readily available quoted prices for these securities; however, the markets for these securities are not active. Additionally, as noted and disclosed above, the Company’s Marco OP and OP II units are both ultimately exchangeable for cash or similar number of shares of Simon Stock, therefore the Company uses the quoted market price of Simon Stock to measure the fair value of the Company’s Marco OP and OP II units.
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 $
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LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
As of March 31, 2024, the amount of borrowings available to be drawn under the Line of Credit was $
The Company currently intends to seek to extend or refinance the Line of Credit on or before its scheduled maturity date.
| 7. | Mortgages Payable, Net |
Mortgages payable, net consists of the following:
| Interest Rate | Weighted Average Interest Rate for the Three Months Ended March 31, 2024 |
Maturity Date | Amount Due at Maturity |
As of March 31, 2024 |
As of December 31, 2023 |
|||||||||||||||
| Gantry Park Mortgage Loan | $ | $ | $ | |||||||||||||||||
| Moxy Senior Loan | (floor of 7.50%) |
|||||||||||||||||||
| Moxy Junior Loan | (floor of 12.25%) |
|||||||||||||||||||
| Exterior Street Loan | ||||||||||||||||||||
| Exterior Street Supplemental Loan | ||||||||||||||||||||
| Santa Monica Loan | ||||||||||||||||||||
| Total mortgages payable | $ | |||||||||||||||||||
| Less: Deferred financing costs | ( |
) | ( |
) | ||||||||||||||||
| Total mortgages payable, net | $ | $ | ||||||||||||||||||
One-month SOFR as of March 31, 2024 and December 31, 2023 was
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LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
Santa Monica Loan
On June 30, 2022, the Santa Monica Joint Venture obtained a loan of up to $
In connection with the transfer of ownership of the Santa Monica Project to the Santa Monica Joint Venture on December 29, 2023, the Santa Monica Loan was modified to substitute the Santa Monica Project as the underlying collateral and the maturity date was further extended to August 1, 2024. Subsequently in March 2024, the Santa Monica Loan was again modified pursuant to which the interest rate was changed to SOFR + 4.5%, subject to a floor of 7.5%, the maturity date was changed to August 31, 2024 and the interest reserve was replenished to cover the payments due through August 31, 2024.
See Note 3 for additional information.
Moxy Mortgage Loans
On November 29, 2023, the Company entered into a mortgage loan facility (the “Moxy Senior Loan”) with an unrelated third party providing for up to $ million. At closing, $ million of proceeds were advanced under the Moxy Senior Loan and the remaining availability of $ million could only be drawn to cover operating losses, subject to various conditions. The Moxy Senior Loan bears interest at , and initially matures on , with two one-year extension options subject to the satisfaction of certain conditions. As of
Simultaneously on November 29, 2023, the Company also entered into a mortgage loan facility (the “Moxy Junior Loan” and together with the Moxy Senior Loan, the “Moxy Mortgage Loans”) with an unrelated third party providing for up to $ million. At closing, $ million of proceeds were advanced under the Moxy Junior Loan and the remaining availability of $ million could only be drawn for operating losses, subject to various conditions. The Moxy Junior Loan bears interest at , and initially matures on , with two one-year extension options subject to the satisfaction of certain conditions. As of December 31, 2023, the outstanding principal balance of the Moxy Junior Loan was unchanged at $
The Moxy Mortgage Loans require monthly interest-only payments through their maturity dates and are collateralized by the Lower East Side Moxy Hotel, however, the Moxy Junior Loan is subordinate to the Moxy Senior Loan. Aggregate proceeds of $ million advanced at the closing of the Moxy Mortgage Loans were used to repay in full existing construction mortgage indebtedness, which was collateralized by the Lower East Side Moxy Hotel.
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LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
Pursuant to the terms of the Moxy Mortgage Loans, the Company is required to enter into two interest rate cap contracts with an aggregate notional amount of $141.3 million (equal to the total maximum amounts available under the Moxy Senior Loan and the Moxy Junior Loan) for as long as the Moxy Mortgage Loans remain outstanding. On November 29, 2023, the Company entered into two interest rate cap agreements with notional amounts of $
In connection with obtaining the Moxy Mortgage Loans, the Company provided certain interest and carry costs guarantees and paid $4.1 million of loan fees and expenses.
Exterior Street Loans
On March 29, 2019, the Company obtained a $
On November 22, 2022, the Company and the financial institution entered into an additional amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to
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, 2024:
| 2024 | 2025 | 2026 | 2027 | 2028 | 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, 2024, 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.
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LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
Mortgage Debt Maturities
The Santa Monica Loan (outstanding principal balance of $19.5 million as of March 31, 2024) is scheduled to mature on August 31, 2024. The Company currently intends to refinance the Santa Monica Loan on or before its scheduled maturity date.
The Gantry Park Mortgage Loan (outstanding aggregate principal balance of $
The Exterior Street Loans (outstanding aggregate principal balance of $
However, if the Company is unable to extend or refinance its maturing mortgage indebtedness at favorable terms, it will look to repay the then outstanding balance with available cash and/or proceeds from selective asset sales. The Company has no additional significant maturities of mortgage debt over the next 12 months.
| 8. | Equity |
Distributions on Common Shares
On November 10, 2023, the Board of Directors determined to suspend regular quarterly distributions. Until distributions on common shares are brought current to at least an annualized rate of
Future distributions, if any, declared will be at the discretion of the Board of Directors based on their analysis of the Company’s performance over the previous periods and expectations of performance for future periods. The Board of Directors will consider various factors in its determination, including but not limited to, the sources and availability of capital, operating and interest expenses, the Company’s ability to refinance near-term debt, as well as the IRS’s annual distribution requirement that REITs distribute no less than 90% of their taxable income. The Company cannot assure that any future distributions will be made or that it will maintain any particular level of distributions that it has previously established or may establish.
SRP
The Company’s share repurchase program (the “SRP”) may provide its stockholders with limited, interim liquidity by enabling them to sell their Common Shares back to the Company, subject to restrictions.
On March 25, 2020, the Board of Directors amended the SRP to remove stockholder notice requirements and also approved the suspension of all redemptions.
Effective March 18, 2021 and May 14, 2021, the Board of Directors partially reopened the SRP to allow, subject to various conditions as set forth below, for redemptions submitted in connection with a stockholder’s death and hardship, respectively, and set the price for all such purchases to the Company’s current estimated net asset value per share of common stock (“NAV per Share”), as determined by the Board of Directors and reported by the Company from time to time. Deaths that occurred subsequent to January 1, 2020 were eligible for consideration, subject to certain conditions. Beginning January 1, 2022, requests for redemptions in connection with a stockholder’s death must be submitted and received by the Company within one year of the stockholder’s date of death for consideration.
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VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
At the above noted dates, the Board of Directors established that on an annual basis, the Company would not redeem in excess of 1.0% and 0.5% of the number of shares outstanding as of the end of the preceding year for either death or hardship redemptions, respectively. Additionally, redemption requests generally would be processed on a quarterly basis and would be subject to proration if either type of redemption requests exceeded the annual limitation.
For the three months ended March 31, 2024, the Company repurchased Common Shares at a weighted average price per share of $. For the three months ended March 31, 2023, the Company repurchased Common Shares at a weighted average price per share of $.
Net Earnings Per Share
Basic net earnings per share is calculated by dividing net income attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the applicable period. Dilutive income per share includes the potentially dilutive effect, if any, which would occur if our outstanding options to purchase our common stock were exercised. For all periods presented dilutive net income per share is equivalent to basic net income per share.
| 9. | Related Party Transactions |
The Company has various agreements, including an advisory agreement, with the Advisor and its affiliates to pay certain fees in exchange for services performed by these entities and other related parties. The Company’s ability to secure financing and subsequent real estate operations are dependent upon its Advisor and its affiliates to perform such services as provided in these agreements.
During the first quarter of 2024, the Advisor agreed to allow the Company to temporarily defer the payment of asset management fees. As of March 31, 2024 and December 31, 2023, $
The Company, pursuant to the related party arrangements, has recorded the following amounts for the periods indicated:
| For the Three Months Ended |
||||||||
| March 31, 2024 |
March 31, 2023 |
|||||||
| Asset management fees (general and administrative costs) | $ | $ | ||||||
| Property management fees (property operating expenses) | ||||||||
| Development fees and cost reimbursement(1) | ||||||||
| Total | $ | $ | ||||||
| (1) |
See Notes 3, 4 and 5 for other related party transactions.
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LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
The advisory agreement has a one-year term and is renewable for an unlimited number of successive one-year periods upon the mutual consent of the Advisor and the Company’s independent directors. Payments to the Advisor or its affiliates may include asset acquisition fees and the reimbursement of acquisition-related expenses, development fees and the reimbursement of development-related costs, financing coordination fees, asset management fees or asset management participation, and construction management fees. The Company may also reimburse the Advisor and its affiliates for actual expenses it incurs for administrative and other services provided for it. Upon the liquidation of the Company’s assets, it may pay the Advisor or its affiliates a disposition commission.
In connection with the Company’s Offering, Lightstone SLP, LLC, an affiliate of the Company’s Sponsor, purchased SLP Units in the Operating Partnership for an aggregate of $
During the three months ended March 31, 2023, distributions of $
| 10. | Financial Instruments |
The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, other assets and accounts payable, accrued expenses and other liabilities approximate their fair values because of the short maturity of these instruments.
The carrying amount and estimated fair value of the Company’s mortgage debt is summarized as follows:
| As of March 31, 2024 |
As of December 31, 2023 |
|||||||||||||||
| Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | |||||||||||||
| Mortgages payable | $ | $ | $ | $ | ||||||||||||
The fair value of the mortgages payable was determined by discounting the future contractual interest and principal payments by estimated current market interest rates.
| 11. | Commitments and Contingencies |
Hotel Franchise Agreement
The Lower East Side Moxy Hotel operates pursuant to a 30-year franchise agreement (the “Hotel Franchise Agreement”) with Marriott International, Inc. (“Marriott”). The Hotel Franchise Agreement provides for the Company to pay franchise fees and marketing fund charges equal to certain prescribed percentages of gross room sales, as defined. Additionally, pursuant to the terms of the Hotel Franchise Agreement, the Company received a Key Money payment of $
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LIGHTSTONE
VALUE PLUS REIT I, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
Hotel Management Agreements
With respect to the Lower East Side Moxy Hotel, the Company has entered into a hotel management agreement, food and beverage operations management agreement and an asset management agreement (collectively, the “Hotel Management Agreements”) with various third-party management companies pursuant to which they provide oversight and management over the operation of the Lower East Side Moxy Hotel and its food and beverage venues and receive payment of certain prescribed management fees, generally based on a percentage of revenues and certain incentives for exceeding targeted earnings thresholds. The management fees are recorded as a component of hotel operating expenses on the consolidated statements of operations. The Hotel Management Agreements have initial terms ranging from 5 to 20 years.
Legal Proceedings
From time to time in the ordinary course of business, the Company may become subject to legal proceedings, claims or disputes.
As of the date hereof, 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.
24
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 in the markets in which our investments are located. Additionally, our business and financial performance may be adversely affected by current and future economic and other conditions; such as inflation, recession, political upheaval or uncertainty, terrorism and acts of war, natural and man-made disasters, cybercrime, and outbreaks of contagious diseases; | |
| ● | the availability of cash flow from operating activities for distributions, if required to maintain our status as a real estate investment trust(“REIT”); | |
| ● | conflicts of interest arising out of our relationships with our advisor and its affiliates; | |
| ● | our ability to retain our executive officers and other key individuals who provide advisory and property management services to us; | |
| ● | our level of debt and the terms and limitations imposed on us by our debt agreements; | |
| ● | 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; |
25
| ● | changes in market factors that could impact our rental rates and operating costs; | |
| ● | our ability to secure leases at favorable rental rates; | |
| ● | our ability to sell our assets at a price and on a timeline consistent with our investment objectives; | |
| ● | impairment charges; | |
| ● | unfavorable changes in laws or regulations impacting our business, our assets or our key relationships; and | |
| ● |
factors that could affect our ability to qualify as a REIT. |
Forward-looking statements in this Quarterly Report on Form 10-Q reflect our management’s view only as of the date of this Quarterly Report on Form 10-Q, and may ultimately prove to be incorrect. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results, except as required by applicable law. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 27A of the Securities Act and Section 21E of the Exchange Act.
Cautionary Note
The representations, warranties, and covenants made by us in any agreement filed as an exhibit to this Quarterly Report on Form 10-Q are made solely for the benefit of the parties to the agreement, including, in some cases, for the purpose of allocating risk among the parties to the agreement, and should not be deemed to be representations, warranties, or covenants to or with any other parties. Moreover, these representations, warranties, or covenants should not be relied upon as accurately describing or reflecting the current state of our affairs.
Business and Structure
Lightstone Value Plus REIT I, Inc., is a Maryland corporation (“Lightstone REIT I”), formed on June 8, 2004, which has elected to be taxed and qualify as a REIT for U.S. federal income tax purposes. Lightstone REIT I was formed primarily for the purpose of engaging in the business of investing in and owning commercial and multifamily residential real estate properties and making other real estate-related investments located throughout the U.S.
Lightstone REIT I is structured as an umbrella partnership REIT, or UPREIT, and substantially all of our current and future business is and will be conducted through Lightstone Value Plus REIT, L.P. (the “Operating Partnership”), a Delaware limited partnership formed on July 12, 2004. As of March 31, 2024, Lightstone REIT I held a 98% general partnership interest in the Operating Partnership’s common units (“Common Units”).
Lightstone REIT I, together with the Operating Partnership and its subsidiaries are collectively referred to as the “Company” and the use of “we,” “our,” “us” or similar pronouns refers to Lightstone REIT I, its Operating Partnership or the Company as required by the context in which such pronoun is used.
Through 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.
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As of March 31, 2024, we (i) have ownership interests in and consolidate two operating properties, two development projects and certain land holdings and (ii) have ownership interests through two unconsolidated joint ventures in the Columbus Properties, a portfolio of nine multifamily residential properties and the Hotel JV Properties, a portfolio of five limited service hotel properties.
With respect to our consolidated operating properties, 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 and have a 59.2% majority ownership interest in the 2nd Street Joint Venture, a joint venture between us and a related party, which developed, constructed and owns Gantry Park Landing, a 199-room luxury multifamily residential property, located in the Long Island City neighborhood in the Queens borough of New York City.
With respect to our consolidated development project, 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, on which we expect, subject to certain conditions, to construct the Exterior Street Project and we have a 50% joint venture ownership interest in 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 the Santa Monica Project, a multifamily residential project is proposed.
We also wholly own and consolidate the St. Augustine Land Holdings, which consist of certain adjacent land parcels located in St. Augustine, Florida.
With respect to our unconsolidated properties, 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 located in the Columbus Ohio metropolitan area, and we hold a 2.5% joint venture ownership interest in the Hotel Joint Venture, which owns the Hotel JV Properties, a portfolio of five limited service hotels. We account for our 19% joint venture ownership interest in the Columbus Joint Venture under the equity method of accounting and we account of our 2.5% joint venture ownership interest in the Hotel Joint Venture using a measurement alternative pursuant to which our investment is measured at cost, adjusted for observable price changes and impairments, if any. Both the Columbus Joint Venture and the Hotel Joint Venture are between us and related parties.
On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units. Our Advisor also owns 20,000 Common Shares which were issued on July 6, 2004 for $200, or $10.00 per share. Our Advisor, pursuant to the terms of an advisory agreement, together with our Board of Directors, is primarily responsible for making investment decisions on our behalf and managing our day-to-day operations. Through his ownership and control of the Sponsor, Mr. Lichtenstein is the indirect owner and manager of Lightstone SLP, LLC, a Delaware limited liability company, which owns an aggregate of $30.0 million of SLP Units in the Operating Partnership which were purchased, at a cost of $100,000 per unit, in connection with our Offering. Mr. Lichtenstein also acts as our Chairman and Chief Executive Officer. As a result, he exerts influence over but does not control Lightstone REIT I or the Operating Partnership.
We have no employees. We are dependent on the Advisor and certain affiliates of our Sponsor for performing a full range of services that are essential to us, including asset management, property management (excluding our hospitality property, which is managed by an unrelated third party property manager) and acquisition, disposition and financing activities, and other general administrative responsibilities; such as tax, accounting, legal information technology and investor relations. If the Advisor and certain affiliates of our Sponsor are unable to provide these services to us, we would be required to provide the services ourselves or obtain the services from other parties.
Our Sponsor, Advisor and their affiliates, including Lightstone SLP, LLC, are related parties of ours as well as other public REITs also sponsored and/or advised by these entities. Pursuant to the terms of various agreements, certain of these entities are entitled to compensation and reimbursement of costs incurred for services related to the investment, development, management and disposition of our assets. The compensation is generally based on the cost of acquired properties/investments and the annual revenue earned from such properties/investments, and other such fees and expense reimbursements as outlined in each of the respective agreements.
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Concentration of Credit Risk
As of March 31, 2024 and 2023, we had cash deposited in certain financial institutions in excess of U.S. federally insured levels. We regularly monitor the financial stability of these financial institutions and believe that we are not exposed to any significant credit risk with respect to our cash and cash equivalents or restricted cash.
Current Environment
Our operating results and financial condition are substantially impacted by the overall health of local, U.S. national and global economies and may be influenced by market and other challenges. Additionally, our business and financial performance may be adversely affected by current and future economic and other conditions; including, but not limited to, availability or terms of financings, financial markets volatility and banking failures, political upheaval or uncertainty, natural and man-made disasters, terrorism and acts of war, unfavorable changes in laws and regulations, outbreaks of contagious diseases, cybercrime, loss of key relationships, inflation and recession.
Our overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on consumer behavior. Worsening economic conditions, increases in costs due to inflation, higher interest rates, certain labor and supply chain challenges and other changes in economic conditions may adversely affect our results of operations and financial performance.
Wholly Owned and Consolidated Real Estate Properties:
As of March 31, 2024, we (i) have ownership interests in and consolidate two operating properties (Lower East Side Moxy Hotel and Gantry Park Landing), two development projects (Exterior Street Project and Santa Monica Project) and certain land holdings (St. Augustine Land Holdings) and (ii) have ownership interests through two unconsolidated joint ventures (Columbus Joint Venture and Hotel Joint Venture) in a portfolio of nine multifamily residential properties and a portfolio of five commercial hotel properties.
Consolidated Properties
Lower East Side Moxy Hotel
We wholly own the Lower East Side Moxy Hotel, a 303-room Marriott branded hotel located in the Lower East Side neighborhood in the Manhattan borough of New York City, which we developed, constructed and opened on October 27, 2022. The following table contains certain information for the Lower East Side Moxy Hotel for the dates indicated.
| Year to Date |
Percentage for the |
RevPAR for the three Months Ended |
ADR for the three Months Ended |
||||||||||||||||
| Location | Year Built | Available Rooms |
March 31, 2024 |
March 31, 2024 |
March 31, 2024 |
||||||||||||||
| Lower East Side Moxy Hotel | Bowery, New York | 2022 | 27,573 | 83% | $ | 159.09 | $ | 191.80 | |||||||||||
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Gantry Park Landing
We have a 59.2% majority ownership interest in the 2nd Street Joint Venture, which developed, constructed and owns Gantry Park Landing, a 199-unit luxury, multifamily residential property, located in the Long Island City neighborhood in the Queens borough of New York City. The 2nd Street Joint Venture is between us and a related party. The following table contains certain information for Gantry Park Landing for the dates indicated.
| Location | Year Built | Leasable Units | Percentage Occupied as of March 31, 2024 |
Annualized Revenues based on rents at March 31, 2024 |
Annualized Revenues per unit at March 31, 2024 |
||||||||||||||
| Gantry Park Landing | Queens, New York | 2013 | 199 | 97% | $ | 10.3 million | $ | 53,644 | |||||||||||
Annualized revenue is defined as the minimum monthly payments due as of March 31, 2024 annualized.
Development Projects
Exterior Street Project
We wholly own the Exterior Street Project, a proposed mixed-use multifamily residential and commercial retail project. In February 2019, we acquired two adjacent parcels of land located at 355 and 399 Exterior Street, located in the Mott Haven neighborhood in the Bronx borough of New York City, and subsequently acquired an additional adjacent wedge parcel in September 2021. On these three land parcels we plan, subject to certain conditions, to construct the Exterior Street Project. As of both March 31, 2024 and December 31, 2023, the carrying value of the Exterior Street Project was $95.6 million, which is included in development projects on the consolidated balance sheets.
Santa Monica Project
We have a 50% joint venture ownership interest in the Santa Monica Joint Venture, which owns the Santa Monica Project, a proposed multifamily residential project. The Santa Monica Joint Venture owns land parcels located in Santa Monica, California, which were acquired in December 2023 via a deed in lieu of foreclosure transaction. The Santa Monica Joint Venture, which we consolidate, is between us and a related party. As of both March 31, 2024 and December 31, 2023, the carrying value of the Santa Monica Project was $36.7 million, which is included in development projects on the consolidated balance sheets.
St. Augustine Land Holdings
We wholly own the St. Augustine Land Holdings, consisting of various adjacent land parcels located in St. Augustine, Florida on which we previously operated the St. Augustine Outlet Center, a commercial retail property, through July 15, 2022. The St. Augustine Outlet Center was substantially demolished during the third quarter of 2022 in order to prepare the site’s various land parcels for potential sale and/or lease. During the first quarter of 2023, we completed the disposition of a parcel of land, which was part of the St. Augustine Land Holdings, to an unrelated third party for a contractual sales price of $1.5 million and recognized a gain on disposition of real estate of $1.1 million during the first quarter of 2023. As of both March 31, 2024 and December 31, 2023, the aggregate carrying value of the St. Augustine Land Holdings was $4.6 million, which is included in land and land improvements on the consolidated balance sheets.
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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 Properties, a portfolio of nine multifamily residential properties consisting of 2,564 units located in the Columbus, Ohio metropolitan area. We account for our 19% joint venture ownership interest in the Columbus Joint Venture under the equity method of accounting. The Columbus Joint Venture is between us and related parties. The following table contains certain information for these properties for the dates indicated.
| Percentage Occupied as of |
Annualized Revenues based on rents at |
Annualized Revenue per unit at |
|||||||||||||||||
| Location | Year Built | Leasable Units | March 31, 2024 |
March 31, 2024 |
March 31, 2024 |
||||||||||||||
| 9 multifamily residential properties within the Columbus Joint Venture | Columbus, Ohio | 2004 | 2,564 | 88% | $ | 42.80 million | $ | 18,525 | |||||||||||
Hotel Joint Venture
We hold a 2.5% joint venture ownership interest in the Hotel Joint Venture, which owns the Hotel JV Properties, a portfolio of five limited service hotels. We account for our 2.5% joint venture ownership interest using a measurement alternative pursuant to which our investment is measured at cost, adjusted for observable price changes and impairments, if any.
The following information generally applies to our investments in our real estate properties:
| ● | we believe our real estate properties are adequately covered by insurance and suitable for their intended purpose; |
| ● | our real estate properties are located in markets where we are subject to competition in attracting and retaining tenants; and |
| ● | depreciation is provided on a straight-line basis over the estimated useful life of the applicable improvements. |
Results of Operations
For the Three Months Ended March 31, 2024 vs. March 31, 2023
Consolidated
Rental revenues
Our rental revenues are comprised of rental income and tenant recovery income. Total rental revenues increased by $0.2 million to $2.6 million for the three months ended March 31, 2024 compared to $2.4 million for the same period in 2023.
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Hotel revenues
Our hotel revenues are comprised of room revenue and food, beverage and other revenue.
Total hotel revenues were $10.0 million and $7.5 million for the three months ended March 31, 2024 and 2023, respectively. Room revenues were $4.4 million and $3.0 million and food, beverage and other revenues were $5.6 million and $4.5 million for the three months ended March 31, 2024 and 2023, respectively. The increase in room revenues was attributable to higher occupancy during the 2024 period.
Property operating expenses
Property operating expenses were $0.7 million for both of the three months ended March 31, 2024 and 2023.
Hotel operating expenses
Total hotel operating expenses were $8.3 million and $7.6 million for the three months ended March 31, 2024 and 2023, respectively. Room expenses were $3.5 million and $2.8 million and food and beverage costs were $4.8 million and $4.8 million for the three months ended March 31, 2024 and 2023, respectively. The increase in room expenses was attributable to higher occupancy during the 2024 period.
Real estate taxes
Real estate taxes increased by $0.6 million to $0.7 million for the three months ended March 31, 2024 compared to $0.1 million for the same period in 2023. The increase is primarily attributable to an increase in real estate taxes related to the Lower East Side Moxy Hotel.
General and administrative costs
General and administrative costs were $1.0 million for both of the three months ended March 31, 2024 and 2023.
Depreciation and amortization
Depreciation and amortization was $1.7 million for both of the three months ended March 31, 2024 and 2023.
Interest and dividend income
Interest and dividend income decreased by $1.8 million to $0.5 million for the three months ended March 31, 2024 compared to $2.3 million for the same period in 2023. The decrease primarily reflects a reduction of interest income of $1.7 million on our notes receivable and preferred investment, which were no longer outstanding during the three months ended March 31, 2024.
Interest expense
Interest expense, including amortization of deferred financing costs, increased by $1.2 million to $6.5 million for the three months ended March 31, 2024 compared to $5.2 million for the same period in 2023. Interest expense is primarily attributable to financings associated with our investments and reflects both changes in market interest rates on our variable rate indebtedness and the weighted average principal outstanding during the periods. Additionally, during the three months ended March 31, 2023, $1.5 million of interest was capitalized to development projects.
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Unrealized gain/(loss) on marketable equity securities
During the three months ended March 31, 2024, we recorded unrealized gains on marketable equity securities of $3.1 million and during the three months ended March 31, 2023, we recorded unrealized losses on marketable equity securities of $0.6 million.
Loss on sale of marketable securities
During the three months ended March 31, 2023, we recorded a loss on the sale of marketable securities of $0.4 million.
Mark to market adjustments on derivative financial instruments
During the three months ended March 31, 2024 and 2023, we recorded negative mark to market adjustments of $15 and $0.4 million, respectively.
Gain on disposition of real estate
During the three months ended March 31, 2023, we recognized a gain on the disposition of real estate of $1.1 million related to the sale of a parcel of land which was part of the St. Augustine Land Holdings.
Loss from investment in unconsolidated affiliated real estate entity
Our loss from investment in unconsolidated affiliated entity was $0.9 million and $1.2 million during the three months ended March 31, 2024 and 2023, respectively. Our loss from investment in unconsolidated affiliated entity is attributable to our unconsolidated 19% joint venture ownership interest in the Columbus Joint Venture.
Noncontrolling interests
The net earnings allocated to noncontrolling interests relates to (i) parties that hold units in the Operating Partnership, (ii) the interest in PRO-DFJV Holdings LLC (“PRO”) held by our Sponsor, (iii) the ownership interests in 50-01 2nd St. Associates LLC (the “2nd Street Joint Venture”) held by our Sponsor and other affiliates and (iv) the ownership interest in various joint ventures held by affiliates of our Sponsor that have originated nonrecourse loans to unaffiliated third-party borrowers.
Financial Condition, Liquidity and Capital Resources
Overview:
As of March 31, 2024, we had $11.8 million of cash on hand, $8.0 million of restricted cash and $38.3 million of marketable securities. We also have remaining availability, subject to certain conditions, on our mortgage debt collateralized by the Lower East Side Moxy Hotel. See “Moxy Mortgage Loans” for additional information. Additionally, we have the ability to make draws from a non-revolving line of credit (the “Line of Credit”), subject to certain conditions and a margin loan (the “Margin Loan”). See “Notes Payable – Line of Credit” and “Notes Payable” – Margin Loan” for additional information. We currently believe that these items along with revenues from our operating properties; and interest and dividend income earned on our cash and marketable securities; as well as proceeds received from the potential sales of our marketable securities will be sufficient to satisfy our expected cash requirements for at least twelve 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 (including certain of our development activities), contributions to our unconsolidated affiliated entity (Columbus Joint Venture), redemptions and cancellations of Common Shares, and distributions to our shareholders, if any, required to maintain our status as a REIT for the foreseeable future. However, we may also obtain additional funds through selective asset dispositions, joint venture arrangements, new borrowings and/or refinancing of existing debt.
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Our borrowings consist of single-property mortgages as well as mortgages cross-collateralized by a pool of properties. We typically have obtained level payment financing, meaning that the amount of debt service payable would be substantially the same each year. As such, most of the mortgages on our properties provide for so-called “balloon” payments.
Our charter provides that the aggregate amount of borrowing, both secured and unsecured, may not exceed 300% of net assets in the absence of a justification showing that a higher level is appropriate, the approval of the Board of Directors and disclosure to stockholders. Net assets means our total assets, other than intangibles, at cost before deducting depreciation or other non-cash reserves less our total liabilities, calculated at least quarterly on a basis consistently applied. Any excess in borrowing over such 300% of net assets level must be approved by a majority of our independent directors and disclosed to our stockholders in our next quarterly report to stockholders, along with justification for such excess. As of March 31, 2024, our total borrowings of $268.8 million represented 123% of net assets.
Any future properties that we may acquire or investments we may make may be funded through a combination of borrowings, proceeds generated from the sale and redemption of our marketable securities, available for sale, and proceeds received from the selective disposition of our properties. These borrowings may consist of single-property mortgages as well as mortgages cross-collateralized by a pool of properties. Such mortgages may be put in place either at the time we acquire a property or subsequent to our purchasing a property for cash. In addition, we may acquire properties that are subject to existing indebtedness where we choose to assume the existing mortgages. Generally, though not exclusively, we intend to seek to encumber our properties with debt, which will be on a non-recourse basis. This means that a lender’s rights on default will generally be limited to foreclosing on the property. However, we may, at our discretion, secure recourse financing or provide a guarantee to lenders if we believe this may result in more favorable terms. When we give a guaranty for a property owning entity, we will be responsible to the lender for the satisfaction of the indebtedness if it is not paid by the property owning entity.
We may also obtain lines of credit to be used to acquire properties or real estate-related assets. These lines of credit will be at prevailing market terms and will be repaid from proceeds from the sale or refinancing of properties, working capital or permanent financing. Our Sponsor or its affiliates may guarantee the lines of credit although they will not be obligated to do so. We expect that such properties may be purchased by our Sponsor’s affiliates on our behalf, in our name, in order to minimize the imposition of a transfer tax upon a transfer of such properties to us.
We have various agreements, including an advisory agreement, with the Advisor to pay certain fees in exchange for services performed by the Advisor and/or its affiliated entities. Additionally, our ability to secure financing and our real estate operations are dependent upon our Advisor and its affiliates to perform such services as provided in these agreements.
In addition to meeting working capital needs and making distributions to our stockholders, if any, required to maintain our status as a REIT, our capital resources are used to make certain payments to our Advisor and its affiliates, including payments for asset acquisition fees and the reimbursement of acquisition related expense, development fees, construction management fees, leasing commissions, asset management fees, and property management fees (except for our hotel, which is managed by unrelated third party property managers). We also reimburse our Advisor and its affiliates for actual expenses it incurs for certain administrative and other services provided to us. During the first quarter of 2024, the Advisor agreed to allow us to temporarily defer the payment of asset management fees. As of March 31, 2024 and December 31, 2023, $1.0 million and $0.5 million of asset management fees were owed to the advisor and included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets. (see Note 9 of Notes to Consolidated Financial Statements).
The advisory agreement has a one-year term and is renewable for an unlimited number of successive one-year periods upon the mutual consent of the Advisor and our independent directors.
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The following table represents the fees incurred associated with the payments to our Advisor and its affiliates:
| For the Three Months Ended |
||||||||
| March 31, 2024 |
March 31, 2023 |
|||||||
| Asset management fees (general and administrative costs) | $ | 504 | $ | 555 | ||||
| Property management fees (property operating expenses) | 77 | 72 | ||||||
| Development fees and cost reimbursement(1) | 11 | 406 | ||||||
| Total | $ | 592 | $ | 1,033 | ||||
| (1) | Development fees and the reimbursement of development-related costs that the Company pays to the Advisor and its affiliates were recorded as property operating expenses for the three months ended March 31, 2024 and were 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 for the three months ended March 31, 2023. |
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, 2023, distributions of $0.5 million 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, |
||||||||
| 2024 | 2023 | |||||||
| Cash flows used in operating activities | $ | (2,161 | ) | $ | (4,303 | ) | ||
| Cash flows (used in)/provided by investing activities | (343 | ) | 14,561 | |||||
| Cash flows provided by/(used in) financing activities | 3,890 | (13,375 | ) | |||||
| Change in cash, cash equivalents and restricted cash | 1,386 | (3,117 | ) | |||||
| Cash, cash equivalents and restricted cash, beginning of year | 18,360 | 22,583 | ||||||
| Cash, cash equivalents and restricted cash, end of the period | $ | 19,746 | $ | 19,466 | ||||
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Operating activities
The cash used in operating activities of $2.2 million for the three months ended March 31, 2024 consists of the following:
| ● | cash outflows of $3.9 million from our net loss after adjustment for non-cash items; and |
| ● | cash inflows of $1.7 million associated with the net changes in operating assets and liabilities. |
Investing activities
The cash used in investing activities of $0.3 million for the three months ended March 31, 2024 consists primarily of the purchase of investment property.
Financing activities
The cash provided by financing activities of $3.9 million for the three months ended March 31, 2024 is primarily related to the following:
| ● | debt principal payments of $0.4 million; | |
| ● | net proceeds from mortgage financing of $1.7 million; | |
| ● | net proceeds from notes payable financing of $3.0 million; | |
| ● | payment of loan fees and expenses of $0.1 million; | |
| ● | redemptions and cancellation of common shares of $1.0 million; and | |
| ● | contributions received from noncontrolling interests of $0.7 million. |
Santa Monica Project
We have a 50% joint venture ownership interest in the Santa Monica Joint Venture. The Santa Monica Joint Venture, which we consolidate, is between us and a related party. In March 2022, the Santa Monica Joint Venture originated a $49.0 million promissory note (the “Santa Monica Note Receivable”) to a borrower (the “Santa Monica Borrower”), which was collateralized by two development projects located in Santa Monica, California. The Santa Monica Note Receivable bore interest at SOFR + 7.00%, subject to a 7.15% floor.
During the first quarter of 2023, the Santa Monica Joint Venture received a partial paydown of $14.0 million on the Santa Monica Note Receivable in exchange for the release of one of the development projects from the underlying collateral pool. As a result, the remaining outstanding balance of the Santa Monica Note Receivable of $35.0 million was secured solely by the Santa Monica Project.
Due to financial difficulties, during the second quarter of 2023 the Santa Monica Borrower discontinued making monthly interest payments on the Santa Monica Note Receivable, which subsequently matured on August 31, 2023. On December 29, 2023, ownership of the Santa Monica Project was transferred to the Santa Monica Joint Venture via a deed in lieu of foreclosure transaction. In connection with the transfer, the aggregate outstanding principal and accrued interest for the Santa Monica Note Receivable of $36.7 million, which represented the fair value of the Santa Monica Project and approximated the carrying value of the Santa Monica Note Receivable, was reclassified from notes receivable, net to development projects on the consolidated balance sheet.
As of both March 31, 2024 and December 31, 2023, the carrying value of the Santa Monica Project was $36.7 million, which is included in development projects on the consolidated balance sheets.
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Santa Monica Loan
On June 30, 2022, the Santa Monica Joint Venture obtained a loan of up to $33.1 million (the “Santa Monica Loan”) which initially bore interest at SOFR + 3.50%. The Santa Monica Loan requires monthly interest-only payments with the outstanding principal balance due at its maturity date and was previously collateralized by the Santa Monica Note Receivable, which was issued by the Santa Monica Joint Venture. During the first quarter of 2023, the Santa Monica Joint Venture received a $14.0 million paydown on the Santa Monica Note Receivable, of which $11.3 million was used to make a paydown on the Santa Monica Loan, which reduced its outstanding balance to $21.5 million. The Santa Monica Loan was initially scheduled to mature on December 30, 2023, however, on September 5, 2023, the Santa Monica Joint Venture exercised an option to extend its maturity date to February 29, 2024. In connection with this extension, the Santa Monica Joint Venture made an additional principal paydown of $2.1 million, which reduced the outstanding balance of the Santa Monica Loan to $19.5 million. Additionally, the Santa Monica Joint Venture funded $0.9 million into a cash collateral reserve account to cover the interest payments through February 29, 2024.
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. As of March 31, 2024, the outstanding aggregate principal balance of the Santa Monica Loan was $19.5 million.
Exterior Street 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 the Advisor for $1.0 million in order to achieve certain zoning compliance. On these three land parcels we plan, subject to certain conditions, to construct the Exterior Street Project, a proposed mixed-use multifamily residential and commercial retail project.
During the three months ended March 31, 2023, interest of $1.5 million was capitalized to the Exterior Street Project.
During the second quarter of 2023, we decided to temporarily pause active development activities associated with the Exterior Street Project, due to prevailing unfavorable economic and local market conditions and regulations, and therefore, ceased capitalization of interest and other carrying costs. There can be no assurances that the unfavorable circumstances will improve and we will resume active development activities and ultimately construct the Exterior Street Project. However, if we do resume active development activities for the Exterior Street Project, we will need to obtain construction financing and/or seek a joint venture arrangement. Current and future economic conditions as well as other uncertainties may (i) affect our ability to obtain construction financing, which could adversely impact its ability to ultimately commence and/or complete construction as planned, on budget or at all for the Exterior Street Project.
Including the land acquisition costs discussed above, we have cumulatively incurred and capitalized $95.6 million, of costs related to the development of the Exterior Street Project as of both March 31, 2024 and December 31, 2023. The Exterior Street Project is included in development projects on the consolidated balance sheets.
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Exterior Street Loans
On March 29, 2019, we obtained a $35.0 million loan (the “Exterior Street Loan”) from a financial institution which, commencing on October 10, 2020, bore interest at LIBOR plus 2.25% through November 24, 2022. On December 21, 2021, the loan agreement was amended to provide an additional $7.0 million loan (the “Exterior Street Supplemental Loan” and collectively with the Exterior Street Loan, the “Exterior Street Loans”) which bore interest at LIBOR plus 2.50% through November 24, 2022. The Exterior Street Loans require monthly interest-only payments with the outstanding principal balances due in full at their maturity date. The Exterior Street Loans are collateralized by the Exterior Street Project.
On November 22, 2022, we and the financial institution entered into the second amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to SOFR plus 2.60% and their maturity dates were extended to November 24, 2023. On October 31, 2023, we and the financial institution entered into an additional amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to SOFR plus 2.85% (8.18% as of March 31, 2024) and their maturity date was further extended to November 24, 2024. As of March 31, 2024, the outstanding aggregate principal balance of the Exterior Street Loans was $42.0 million.
Moxy Mortgage Loans
On November 29, 2023, we entered into a mortgage loan facility (the “Moxy Senior Loan”) with an unrelated third party providing for up to $110.0 million. At closing, $106.1 million of proceeds were advanced under the Moxy Senior Loan and the remaining availability of $3.9 million could only be drawn to cover operating losses, subject to various conditions. The Moxy Senior Loan bears interest at SOFR plus 4.00%, subject to a 7.50% floor, and initially matures on December 1, 2026, with two one-year extension options subject to the satisfaction of certain conditions. As of December 31, 2023, the outstanding principal balance of the Moxy Senior Loan was unchanged at $106.1 million and during the first quarter of 2024 an additional $1.3 million was funded and as a result, the outstanding principal balance and remaining availability were $107.4 million and $2.6 million, respectively, as of March 31, 2024.
Simultaneously on November 29, 2023, we also entered into a mortgage loan facility (the “Moxy Junior Loan” and together with the Moxy Senior Loan, the “Moxy Mortgage Loans”) with an unrelated third party providing for up to $31.3 million. At closing, $30.2 million of proceeds were advanced under the Moxy Junior Loan and the remaining availability of $1.1 million could only be drawn for operating losses, subject to various conditions. The Moxy Junior Loan bears interest at SOFR plus 8.75%, subject to a 12.25% floor, and initially matures on December 1, 2026, with two one-year extension options subject to the satisfaction of certain conditions. As of December 31, 2023, the outstanding principal balance of the Moxy Junior Loan was unchanged at $30.2 million and during the first quarter of 2024 an additional $0.4 million was funded and as a result, the outstanding principal balance and remaining availability were $30.6 million and $0.7 million, respectively, as of March 31, 2024.
The Moxy Mortgage Loans require monthly interest-only payments through their maturity dates and are collateralized by the Lower East Side Moxy Hotel, however, the Moxy Junior Loan is subordinate to the Moxy Senior Loan. Aggregate proceeds of $130.0 million advanced at the closing of the Moxy Mortgage Loans were used to repay in full existing construction mortgage indebtedness, which was collateralized by the Lower East Side Moxy Hotel.
Pursuant to the terms of the Moxy Mortgage Loans, we are required to enter into two interest rate cap contracts with an aggregate notional amount of $141.3 million (equal to the total maximum amounts available under the Moxy Senior Loan and the Moxy Junior Loan) for as long as the Moxy Mortgage Loans remain outstanding. On November 29, 2023, we entered into two interest rate cap agreements with notional amounts of $110.0 million and $31.3 million ($141.3 million in the aggregate) pursuant to which the SOFR rate is capped at 5.50% through December 1, 2024 and June 1, 2025 for the Moxy Junior Loan and the Moxy Senior Loan, respectively, at an aggregate cost of $0.2 million.
In connection with obtaining the Moxy Mortgage Loans, we provided certain interest and carry costs guarantees and paid $4.1 million of loan fees and expenses.
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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, 2024.
| Contractual Mortgage Obligations | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | |||||||||||||||||||||
| Principal Payments | $ | 127,797 | $ | - | $ | 137,966 | $ | - | $ | - | $ | - | $ | 265,763 | ||||||||||||||
| Interest Payments1 | 16,276 | 14,521 | 14,521 | - | - | - | 45,318 | |||||||||||||||||||||
| Total Contractual Obligations | $ | 144,073 | $ | 14,521 | $ | 152,487 | $ | - | $ | - | $ | - | $ | 311,081 | ||||||||||||||
| 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, 2024 was used. |
Certain of our debt agreements require the maintenance of prescribed ratios, including debt service coverage. As of March 31, 2024, we were in compliance with all our financial covenants.
Mortgage Debt Maturities
The Santa Monica Loan (outstanding principal balance of $19.5 million as of March 31, 2024) is scheduled to mature on August 31, 2024. We currently intend to refinance the Santa Monica Loan on or before its scheduled maturity date.
The mortgage loan collateralized by Gantry Park Landing (the “Gantry Park Mortgage Loan”) (outstanding aggregate principal balance of $66.3 million as of March 31, 2024) is scheduled to mature on November 19, 2024. We currently intend to seek to extend or refinance the Gantry Park Mortgage Loan on or before its scheduled maturity date.
The Exterior Street Loans (outstanding aggregate principal balance of $42.0 million as of March 31, 2024) are scheduled to mature on November 24, 2024. We currently intend to seek to extend or refinance the Exterior Street Loans on or before their scheduled maturity date.
However, if we are unable to extend or refinance any of our maturing mortgage indebtedness at favorable terms, we will look to repay the then outstanding balance with available cash and/or proceeds from selective asset sales. We have no additional significant maturities of mortgage debt over the next 12 months.
Notes Payable
Margin Loan
We have access to the Margin Loan from a financial institution that holds custody of certain of our marketable securities. The Margin Loan, which is due on demand, bears interest at SOFR plus 0.85% (6.18% as of March 31, 2024) and is collateralized by the marketable securities in our account. The amounts available to us under the Margin Loan are at the discretion of the financial institution and not limited to the amount of collateral in our account. There were no amounts outstanding under the Margin Loan as of March 31, 2024 and December 31, 2023.
38
Line of Credit
We have a Line of Credit with a financial institution that provides for borrowings up to a maximum of $20.0 million, subject to a 55% loan-to-value ratio based on the fair value of the underlying collateral, which matures on November 30, 2024 and bears interest at SOFR plus 1.35% (6.68% as of March 31, 2024). The Line of Credit is collateralized by an aggregate of 187,019 of Marco OP Units and is guaranteed by PRO.
As of March 31, 2024, the amount of borrowings available to be drawn under the Line of Credit was $16.1 million of which the outstanding principal balance of the Line of Credit was $3.0 million which is presented, net of deferred financing fees of $7, on the consolidated balance sheets and is classified as notes payable, net. As of December 31, 2023, the amount of borrowings available to be drawn under the Line of Credit was $14.7 million and no amounts were outstanding.
We currently intend to seek to extend or refinance the Line of Credit on or before its scheduled maturity date.
Distributions
Common Shares
On November 10, 2023, the Board of Directors determined to suspend regular quarterly distributions.
Future distributions, if any, declared will be at the discretion of the Board of Directors based on their analysis of our performance over the previous periods and expectations of performance for future periods. The Board of Directors will consider various factors in its determination, including but not limited to, the sources and availability of capital, operating and interest expenses, our ability to refinance near-term debt, as well as the IRS’s annual distribution requirement that REITs distribute no less than 90% of their taxable income. We cannot assure that any future distributions will be made or that we will maintain any particular level of distributions that we have previously established or may establish.
SRP
Our share repurchase program (the “SRP”) may provide our stockholders with limited, interim liquidity by enabling them to sell their Common Shares back to us, subject to restrictions.
On March 25, 2020, the Board of Directors amended the SRP to remove stockholder notice requirements and also approved the suspension of all redemptions.
Effective March 15, 2021 and May 14, 2021, the Board of Directors partially reopened the SRP to allow, subject to various conditions as set forth below, for redemptions submitted in connection with a stockholder’s death and hardship, respectively, and set the price for all such purchases to our current estimated net asset value per share of common stock (“NAV per Share”), as determined by the Board of Directors and reported by us from time to time. Deaths that occurred subsequent to January 1, 2020 were eligible for consideration, subject to certain conditions. Beginning January 1, 2022, requests for redemptions in connection with a stockholder’s death must be submitted and received by us within one year of the stockholder’s date of death for consideration. On March 18, 2022, the Board of Directors approved an increase to the annual threshold for death redemptions from up to 0.5% to 1.0%.
At the above noted dates, the Board of Directors established that on an annual basis, we would not redeem in excess of 1.0% and 0.5% of the number of shares outstanding as of the end of the preceding year for either death or hardship redemptions, respectively. Additionally, redemption requests are expected to be processed on a quarterly basis and would be subject to pro ration if either type of redemption requests exceeded the annual limitation.
For the three months ended March 31, 2024, we repurchased 81,895 Common Shares at a weighted average price per share of $12.19. For the three months ended March 31, 2023, we repurchased 37,405 Common Shares at a weighted average price per share of $12.19.
39
Funds from Operations and Modified Funds from Operations
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings, improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative.
Because of these factors, the National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has published a standardized measure of performance known as funds from operations (“FFO”), which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT’s operating performance. FFO is not equivalent to our net income or loss as determined under GAAP.
We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Our FFO calculation complies with NAREIT’s definition.
We believe that the use of FFO provides a more complete understanding of our performance to investors and to management and reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT’s definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.
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.
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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, 2024 |
March 31, 2023 |
|||||||
| Net loss | $ | (4,186 | ) | $ | (5,522 | ) | ||
| FFO adjustments: | ||||||||
| Depreciation and amortization | 1,737 | 1,668 | ||||||
| Adjustments to equity earnings from unconsolidated affiliated entity | 587 | 926 | ||||||
| Income tax on redemptions of preferred investments in related parties | 745 | - | ||||||
| Gain on disposal of investment property | - | (1,121 | ) | |||||
| FFO | (1,117 | ) | (4,049 | ) | ||||
| MFFO adjustments: | ||||||||
| Noncash adjustments: | ||||||||
| Mark to market adjustments(1) | (3,079 | ) | 959 | |||||
| Loss on sale of marketable securities(2) | - | 359 | ||||||
| MFFO | (4,196 | ) | (2,731 | ) | ||||
| Straight-line rent(3) | 10 | 11 | ||||||
| MFFO - IPA recommended format | $ | (4,186 | ) | $ | (2,720 | ) | ||
| Net loss | $ | (4,186 | ) | $ | (5,522 | ) | ||
| Less: loss/(income) attributable to noncontrolling interests | 55 | (534 | ) | |||||
| Net loss applicable to Company’s common shares | $ | (4,131 | ) | $ | (6,056 | ) | ||
| Net loss per common share, basic and diluted | $ | (0.19 | ) | $ | (0.28 | ) | ||
| FFO | $ | (1,117 | ) | $ | (4,049 | ) | ||
| Less: FFO attributable to noncontrolling interests | (171 | ) | (668 | ) | ||||
| FFO attributable to Company’s common shares | $ | (1,288 | ) | $ | (4,717 | ) | ||
| FFO per common share, basic and diluted | $ | (0.06 | ) | $ | (0.22 | ) | ||
| MFFO - IPA recommended format | $ | (4,186 | ) | $ | (2,720 | ) | ||
| Less: MFFO attributable to noncontrolling interests | 15 | (751 | ) | |||||
| MFFO attributable to Company’s common shares | $ | (4,171 | ) | $ | (3,471 | ) | ||
| Weighted average number of common shares outstanding, basic and diluted | 21,522 | 21,818 | ||||||
Notes:
| (1) | Management believes that adjusting for mark-to-market adjustments is appropriate because they are nonrecurring items that may not be reflective of ongoing operations and reflects unrealized impacts on value based only on then current market conditions, although they may be based upon current operational issues related to an individual property or industry or general market conditions. Mark-to-market adjustments are made for items such as ineffective derivative instruments, certain marketable equity securities and any other items that GAAP requires we make a mark-to-market adjustment for. The need to reflect mark-to-market adjustments is a continuous process and is analyzed on a quarterly and/or annual basis in accordance with GAAP. |
| (2) | Management believes that adjusting for gains or losses related to extinguishment/sale of debt, derivatives or securities holdings is appropriate because they are items that may not be reflective of ongoing operations. By excluding these items, management believes that MFFO provides supplemental information related to sustainable operations that will be more comparable between other reporting periods. |
| (3) | Under GAAP, rental revenue is recognized on a straight-line basis. This may result in income recognition that is significantly different than underlying contract terms. By adjusting for these items (to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments, providing insight on the contractual cash flows of such lease terms and debt investments, and aligns results with management’s analysis of operating performance. |
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The table below presents our cumulative distributions paid and cumulative FFO attributable to our common shares:
| From inception through March 31, 2024 |
||||
| FFO attributable to Company’s common shares | $ | 251,597 | ||
| Distributions paid | $ | 292,086 | ||
ITEM 4. CONTROLS AND PROCEDURES.
As of the end of the period covered by this *Quarterly Report on Form 10-!, 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.
As of the date hereof, 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. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the period covered by this Quarterly Report on Form 10-Q, we did not sell any equity securities that were not registered under the Securities Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
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ITEM 6. EXHIBITS
| * | Filed herewith |
45
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 15, 2024 | By: | /s/ David Lichtenstein |
| David Lichtenstein | ||
| Chairman and Chief Executive Officer (Principal Executive Officer) | ||
| Date: May 15, 2024 | By: | /s/ Seth Molod |
| Seth Molod | ||
|
Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial and Accounting Officer) | ||
46
EXHIBIT 31.1
Certifications
I, David Lichtenstein, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Lightstone Value Plus REIT I, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ David Lichtenstein | |
| David Lichtenstein | |
| Chairman and Chief Executive Officer | |
| (Principal Executive Officer) |
Date: May 15, 2024
EXHIBIT 31.2
Certifications
I, Seth Molod, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Lightstone Value Plus REIT I, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ Seth Molod | |
| Seth Molod | |
| Chief Financial Officer and Treasurer | |
| (Principal Financial and Accounting Officer) |
Date: May 15, 2024
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
I, David Lichtenstein, the Chief Executive Officer and Chairman of the Board of Directors of Lightstone Value Plus REIT I, Inc. (the “Company”) certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) The Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2024 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C 78m); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ David Lichtenstein | |
| David Lichtenstein | |
| Chairman and Chief Executive Officer | |
| (Principal Executive Officer) |
Date: May 15, 2024
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
I, Seth Molod, the Chief Financial Officer, Treasurer and Principal Accounting Officer of Lightstone Value Plus REIT I, Inc. (the “Company”) certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) The Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2024 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C 78m); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ Seth Molod | |
| Seth Molod | |
| Chief Financial Officer and Treasurer | |
| (Principal Financial and Accounting Officer) |
Date: May 15, 2024
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares shares in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred shares, par value | $ 0.01 | $ 0.01 |
| Preferred shares, shares authorized | 10,000 | 10,000 |
| Preferred shares, shares issued | 0 | 0 |
| Preferred shares, shares outstanding | 0 | 0 |
| Common stock, par value | $ 0.01 | $ 0.01 |
| Common stock, shares authorized | 60,000 | 60,000 |
| Common stock, shares issued | 21,500 | 21,600 |
| Common stock, shares outstanding | 21,500 | 21,600 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Income Statement [Abstract] | ||
| Net loss | $ (4,186) | $ (5,522) |
| Other comprehensive income: | ||
| Holding loss on available for sale debt securities | (208) | |
| Reclassification adjustment for loss included in net loss | 359 | |
| Other comprehensive income: | 151 | |
| Comprehensive loss | (4,186) | (5,371) |
| Less: Comprehensive loss/(income) attributable to noncontrolling interests | 55 | (527) |
| Comprehensive loss attributable to the Company’s common shares | $ (4,131) | $ (5,898) |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net loss | $ (4,186) | $ (5,522) |
| Adjustments to reconcile net loss to cash used in operating activities: | ||
| Depreciation and amortization | 1,737 | 1,668 |
| Gain on disposition of real estate | (1,121) | |
| Loss from investment in unconsolidated affiliated real estate entity | 871 | 1,220 |
| Mark to market adjustments on derivative financial instruments | 15 | 408 |
| Unrealized (gain)/loss on marketable equity securities | (3,093) | 551 |
| Loss on sale of marketable securities | 359 | |
| Amortization of deferred financing costs | 772 | 736 |
| Noncash interest income | (737) | |
| Other non-cash adjustments | (13) | (5) |
| Changes in assets and liabilities: | ||
| Decrease in other assets | 902 | 164 |
| Increase/(decrease) in accounts payable, accrued expenses and other liabilities | 834 | (2,024) |
| Cash used in operating activities | (2,161) | (4,303) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of development property and investment property | (357) | (5,929) |
| Purchase of marketable securities | (982) | |
| Proceeds from sale of marketable securities | 3,797 | |
| Proceeds from disposition of real estate | 1,382 | |
| Investment in joint venture | (3) | (4) |
| Distributions from joint venture | 27 | 15 |
| Proceeds from redemption of preferred investment in related party | 2,292 | |
| Funding of notes receivable | (300) | |
| Release of reserves on notes receivable | 300 | |
| Proceeds from repayment of notes receivable | 14,000 | |
| Investment in unconsolidated affiliated real estate entity | (10) | (10) |
| Cash (used in)/provided investing activities | (343) | 14,561 |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Proceeds from mortgage financing | 1,656 | 4,668 |
| Mortgage principal payments | (376) | (11,618) |
| Proceeds from notes payable | 3,000 | |
| Payment of loan fees and expenses | (120) | (25) |
| Redemption and cancellation of common shares | (998) | (456) |
| Contributions received from noncontrolling interests | 745 | |
| Distributions paid to noncontrolling interests | (17) | (2,201) |
| Distributions paid to Company’s common stockholders | (3,743) | |
| Cash provided by/(used in) financing activities | 3,890 | (13,375) |
| Change in cash, cash equivalents and restricted cash | 1,386 | (3,117) |
| Cash, cash equivalents and restricted cash, beginning of year | 18,360 | 22,583 |
| Cash, cash equivalents and restricted cash, end of period | 19,746 | 19,466 |
| 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 | 11,787 | 15,118 |
| Restricted cash | 7,959 | 4,348 |
| Total cash, cash equivalents and restricted cash | $ 19,746 | $ 19,466 |
Business and Structure |
3 Months Ended | |||
|---|---|---|---|---|
Mar. 31, 2024 | ||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
| 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, 2024, Lightstone REIT I held a 98% general partnership interest in the Operating Partnership’s common units (“Common Units”).
Lightstone REIT I, together with the Operating Partnership and its subsidiaries are collectively referred to as the “Company” and the use of “we,” “our,” “us” or similar pronouns refers to Lightstone REIT I, its Operating Partnership or the Company as required by the context in which such pronoun is used.
Through its Operating Partnership, the Company owns, operates and develops commercial and multifamily residential properties and makes other real estate-related investments, principally in the U.S. The Company’s real estate investments are held by it alone or jointly with other parties. The Company also originates or acquires mortgage loans secured by real estate. Although most of its investments are of these types, the Company may invest in whatever types of real estate or real estate-related investments that it believes is in its best interests. Since its inception, the Company has owned and managed various commercial and multifamily residential properties located throughout the U.S. The Company evaluates all of its real estate investments as one operating segment. The Company currently intends to hold its real estate investments until such time as it determines that a sale or other disposition appears to be advantageous to achieve its objectives or until it appears that the objectives will not be met.
As of March 31, 2024, the Company (i) has ownership interests in and consolidates two operating properties, two development projects and certain land holdings and (ii) has ownership interests through two unconsolidated joint ventures in a portfolio of nine multifamily residential properties (the “Columbus Properties”) and a portfolio of five limited service hotel properties (the “Hotel JV Properties”).
With respect to its consolidated operating properties, the Company wholly owns a 303-room Marriott International, Inc. (“Marriott”) branded Moxy hotel (the “Lower East Side Moxy Hotel”), located in the Lower East Side neighborhood in the Manhattan borough of New York City, which it developed, constructed and opened on October 27, 2022 and has a 59.2% majority ownership interest in 50-01 2nd St. Associates LLC (the “2nd Street Joint Venture”), a joint venture between the Company and a related party, which developed, constructed and owns a 199-unit luxury, multifamily residential property (“Gantry Park Landing”), located in the Long Island City neighborhood in the Queens borough of New York City.
With respect to its consolidated development projects, the Company wholly owns three land parcels located at 355 & 399 Exterior Street in the Mott Haven neighborhood in the Bronx borough of New York City, on which it expects, subject to certain conditions, to construct a proposed mixed-use multifamily residential and commercial retail project (the “Exterior Street Project”) and the Company has a 50% joint venture ownership interest in LSC 1543 7th LLC (the “Santa Monica Joint Venture”), a joint venture between the Company and a related party, which owns certain land parcels located in Santa Monica, California, on which a multifamily residential project (the “Santa Monica Project”) is proposed. The Company also wholly owns and consolidates various adjacent land parcels (the “St. Augustine Land Holdings”) located in St. Augustine, Florida.
With respect to our unconsolidated joint venture properties, the Company holds a 19% joint venture ownership interest in Columbus Portfolio Member LLC (the “Columbus Joint Venture”), which owns the Columbus Properties, a portfolio of nine multifamily residential properties located in the Columbus, Ohio metropolitan area, and it holds a 2.5% joint venture ownership interest in LVP Holdco JV LLC (the “Hotel Joint Venture”), which owns the Hotel JV Properties, a portfolio of five limited service hotels. The Company accounts for its 19% joint venture ownership interest in the Columbus Joint Venture under the equity method of accounting and it accounts for its 2.5% joint venture ownership interest in the Hotel Joint Venture using a measurement alternative pursuant to which its investment is measured at cost, adjusted for observable price changes and impairments, if any. Both the Columbus Joint Venture and the Hotel Joint Venture are between the Company and related parties.
The Company’s advisor is Lightstone Value Plus REIT, LLC (the “Advisor”), which is majority owned by David Lichtenstein. On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units. The Company’s Advisor also owns shares of the Company’s common stock (“Common Shares”) which were issued on July 6, 2004 for $200, or $ per share. Mr. Lichtenstein also is the majority owner of the equity interests of The Lightstone Group, LLC (the “Sponsor”), which served as the Company’s sponsor during its initial public offering (the “Offering”), which terminated on October 10, 2008. The Company’s Advisor, pursuant to the terms of an advisory agreement, together with its board of directors (the “Board of Directors”), is primarily responsible for making investment decisions on the Company’s behalf and managing its day-to-day operations. Through his ownership and control of Sponsor, Mr. Lichtenstein is the indirect owner and manager of Lightstone SLP, LLC, a Delaware limited liability company, which owns an aggregate of $30.0 million of special general partner interests (“SLP Units”) in the Operating Partnership which were purchased, at a cost of $100,000 per unit, in connection with the Company’s Offering. Mr. Lichtenstein also acts as the Company’s Chairman and Chief Executive Officer. As a result, he exerts influence over but does not control Lightstone REIT I or the Operating Partnership.
The Company has no employees. The Company is dependent on the Advisor and certain affiliates of its Sponsor for performing a full range of services that are essential to it, including asset management, property management (excluding its hospitality property, which is managed by unrelated third party property managers) and acquisition, disposition and financing activities, and other general administrative responsibilities; such as tax, accounting, legal, information technology and investor relations services. If the Advisor and certain affiliates of the Company’s Sponsor are unable to provide these services to it, the Company would be required to provide the services itself or obtain the services from other parties.
The Company’s Common Shares are not currently listed on a national securities exchange. The Company may seek to list its Common Shares for trading on a national securities exchange only if a majority of independent directors believe listing would be in the best interest of its stockholders. The Company does not intend to list its Common Shares at this time. The Company does not anticipate that there would be any active market for its Common Shares until they are listed for trading.
Related Parties
The Company’s Sponsor, Advisor and their affiliates, including Lightstone SLP, LLC, are related parties of the Company as well as other public REITs also sponsored and/or advised by these entities. Pursuant to the terms of various agreements, certain of these entities are entitled to compensation and reimbursement of costs incurred for services related to the investment, management and disposition of the Company’s assets. The compensation is generally based on the cost of acquired properties/investments and the annual revenue earned from such properties/investments, and other such fees and expense reimbursements as outlined in each of the respective agreements.
Noncontrolling Interests
Partners of Operating Partnership
On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units in the Operating Partnership. The Advisor has the right to convert the Common Units into cash or, at the option of the Company, an equal number of shares of Common Shares.
In connection with the Offering, Lightstone SLP, LLC, an affiliate of the Advisor, purchased an aggregate of $30.0 million of SLP Units. As the majority owner of the SLP Units, Mr. Lichtenstein is the beneficial owner of a 99% interest in such SLP Units and thus receives an indirect benefit from any distributions made in respect thereof. These SLP Units may be entitled to a portion of any regular and liquidation distributions that the Company makes to its stockholders, but only after the Company’s stockholders have received a stated preferred return.
In addition, an aggregate 497,209 Common Units were issued to other unrelated parties during the years ended December 31, 2008 and 2009 and remain outstanding as of March 31, 2024.
Other Noncontrolling Interests in Consolidated Subsidiaries
Other noncontrolling interests in consolidated subsidiaries include the joint venture ownership interests held by either the Sponsor or its affiliates in (i) Pro-DFJV Holdings LLC (“PRO”), (ii) the 2nd Street Joint Venture and (iii) the Santa Monica Joint Venture (see Note 3). PRO’s holdings principally consist of Marco OP Units and Marco II OP Units (see Note 6). The 2nd Street Joint Venture owns Gantry Park Landing and the Santa Monica Joint Venture owns the Santa Monica Project (see Notes 3 and 7). |
Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies |
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Lightstone REIT I and its Operating Partnership and its subsidiaries (over which Lightstone REIT I exercises financial and operating control). All inter-company balances and transactions have been eliminated in consolidation. In addition, interests in entities acquired are evaluated based on applicable accounting principles generally accepted in the U.S. (“GAAP”), and if deemed to be variable interest entities (“VIE”) in which the Company is the primary beneficiary are also consolidated. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation based on legal form, economic substance, and the extent to which the Company has control, substantive participating rights or both under the respective ownership agreement. For entities in which the Company has less than a controlling interest but have significant influence, the Company accounts for the investment using the equity method of accounting.
There are judgments and estimates involved in determining if an entity in which the Company has made an investment is a VIE and, if so, whether the Company is the primary beneficiary. The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage of equity being risked compared to the total equity of the entity. Determining expected future losses involves assumptions of various possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate to determine the net present value of those future losses. A change in the judgments, assumptions, and estimates outlined above could result in consolidating an entity that should not be consolidated or accounting for an investment using the equity method that should in fact be consolidated, the effects of which could be material to our financial statements. The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The unaudited interim consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair presentation of the results for the periods presented. The accompanying unaudited consolidated financial statements of Lightstone Value Plus REIT I, Inc. and its Subsidiaries have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.
GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period. The most significant assumptions and estimates relate to the valuation of real estate and real-estate related investments, marketable securities, notes receivable, depreciable lives, and revenue recognition. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.
The consolidated balance sheet as of December 31, 2023 included herein has been derived from the consolidated balance sheet included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The unaudited consolidated statements of operations for interim periods are not necessarily indicative of results for the full year or any other period.
Income Taxes
The Company elected to be taxed and qualify as a REIT, commencing with the taxable year ended December 31, 2005. If the Company remains qualified as a REIT, it generally will not be subject to U.S. federal income tax on its net taxable income that it distributes currently to its stockholders. To maintain its REIT qualification under the Internal Revenue Code of 1986, as amended, or the Code, the Company must meet a number of organizational and operational requirements, including a requirement that it annually distribute to its stockholders at least 90% of its REIT taxable income (which does not equal net income, as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. If the Company fails to remain qualified for taxation as a REIT in any subsequent year and does not qualify for certain statutory relief provisions, its income for that year will be taxed at regular corporate rates, and it may be precluded from qualifying for treatment as a REIT for the four-year period following its failure to qualify as a REIT. Such an event could materially adversely affect its net income and net cash available for distribution to its stockholders. Additionally, even if the Company continues to qualify as a REIT for U.S. federal income tax purposes, it may still be subject to some U.S. federal, state and local taxes on its income and property and to U.S. federal income taxes and excise taxes on its undistributed income, if any.
To maintain its qualification as a REIT, the Company engages in certain activities through a taxable REIT subsidiary (“TRS”), including when the Company acquires or develops and constructs a hotel it usually establishes a new TRS and enters into an operating lease agreement for the hotel. As such, the Company is subject to U.S. federal and state income and franchise taxes from these activities.
The Company’s income tax expense is included in other expense, net on its consolidated statements of operations. During the three months ended March 31, 2024, the Company recorded income tax expense of $0.8 million. During the three months ended March 31, 2023, the Company recorded income tax expense of $28.
As of March 31, 2024 and December 31, 2023, the Company had no material uncertain income tax positions.
Revenues
The following table represents the total hotel revenues from hotel operations on a disaggregated basis:
Land Parcel Sale
During the first quarter of 2023, the Company completed the disposition of a parcel of land, which was part of its St. Augustine Land Holdings, to an unrelated third party for a contractual sales price of $1.5 million and recognized a gain on disposition of real estate of $1.1 million during the three months ended March 31, 2023.
New Accounting Pronouncements
In November 2023, the FASB issued an accounting standards update which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within segment profit and loss, as well as the title and position of the CODM. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the guidance and the impact it may have on its consolidated financial statements.
In December 2023, the FASB issued an accounting standards update which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This update is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the guidance and the impact it may have on its consolidated financial statements.
The Company has reviewed and determined that other recently issued accounting pronouncements will not have a material impact on its financial position, results of operations and cash flows, or do not apply to its current operations.
Concentration of Risk
As of March 31, 2024 and December 31, 2023, the Company had cash deposited in certain financial institutions in excess of U.S. federally insured levels. The Company regularly monitors the financial stability of these financial institutions and believes that it is not exposed to any significant credit risk with respect to its cash and cash equivalents or restricted cash.
Current Environment
The Company’s operating results and financial condition are substantially impacted by the overall health of local, U.S. national and global economies and may be influenced by market and other challenges. Additionally, the Company’s business and financial performance may be adversely affected by current and future economic and other conditions; including, but not limited to, availability or terms of financings, financial markets volatility and banking failures, political upheaval or uncertainty, natural and man-made disasters, terrorism and acts of war, unfavorable changes in laws and regulations, outbreaks of contagious diseases, cybercrime, loss of key relationships, inflation and recession.
The Company’s overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on consumer behavior. Worsening economic conditions, increases in costs due to inflation, higher interest rates, certain labor and supply chain challenges and other changes in economic conditions, may adversely affect the Company’s results of operations and financial performance.
Reclassifications
Certain prior period amounts may have been reclassified to conform to the current period’s presentation.
Supplemental Cash Flow Information
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Development Projects |
3 Months Ended | |||
|---|---|---|---|---|
Mar. 31, 2024 | ||||
| Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | ||||
| Development Projects |
Exterior Street Project
In February 2019, the Company, through subsidiaries of the Operating Partnership, acquired two adjacent parcels of land located at 355 and 399 Exterior Street in the Mott Haven neighborhood in the Bronx borough of New York City from unaffiliated third parties for an aggregate purchase price of $59.0 million, excluding closing and other acquisition related costs. In September 2021, the Company subsequently acquired an additional adjacent parcel of land at cost from an affiliate of its Advisor for $1.0 million in order to achieve certain zoning compliance. On these three land parcels the Company plans, subject to certain conditions, to construct the Exterior Street Project, a proposed mixed-use multifamily residential and commercial retail project.
During the three months ended March 31, 2023, interest of $1.5 million was capitalized to the Exterior Street Project. During the second quarter of 2023, the Company decided to temporarily pause active development activities associated with the Exterior Street Project, due to prevailing unfavorable economic and local market conditions and regulations, and therefore, ceased capitalization of interest and other carrying costs. There can be no assurances that the unfavorable circumstances will improve and the Company will resume active development activities and ultimately construct the Exterior Street Project. However, if the Company does resume active development activities for the Exterior Street Project, it will need to obtain construction financing and/or seek a joint venture arrangement. Current and future economic conditions as well as other uncertainties may (i) affect the Company’s ability to obtain construction financing, which could adversely impact its ability to ultimately commence and/or complete construction as planned, on budget or at all for the Exterior Street Project.
Including land and the acquisition costs discussed above, the Company has cumulatively incurred and capitalized $95.6 million of costs related to the development of the Exterior Street Project, which was its carrying value as of both March 31, 2024 and December 31, 2023. The Exterior Street Project is included in development projects on the consolidated balance sheets.
Santa Monica Project
The Company has a 50% joint venture ownership interest in the Santa Monica Joint Venture. The Santa Monica Joint Venture, which the Company consolidates, is between the Company and a related party. In March 2022, the Santa Monica Joint Venture originated a $49.0 million promissory note (the “Santa Monica Note Receivable”) to a borrower (the “Santa Monica Borrower”), which was collateralized by two development projects located in Santa Monica, California. The Santa Monica Note Receivable bore interest at SOFR + 7.00%, subject to a 7.15% floor.
During the first quarter of 2023, the Santa Monica Joint Venture received a partial paydown of $14.0 million on the Santa Monica Note Receivable in exchange for the release of one of the development projects from the underlying collateral pool. As a result, the remaining outstanding balance of the Santa Monica Note Receivable of $35.0 million was secured solely by the Santa Monica Project.
Due to financial difficulties, during the second quarter of 2023 the Santa Monica Borrower discontinued making monthly interest payments on the Santa Monica Note Receivable, which subsequently matured on August 31, 2023. On December 29, 2023, ownership of the Santa Monica Project was transferred to the Santa Monica Joint Venture via a deed in lieu of foreclosure transaction. In connection with the transfer, the aggregate outstanding principal and accrued interest for the Santa Monica Note Receivable of $36.7 million, which represented the fair value of the Santa Monica Project and approximated the carrying value of the Santa Monica Note Receivable, was reclassified from notes receivable, net to development projects on the consolidated balance sheet.
As of both March 31, 2024 and December 31, 2023, the carrying value of the Santa Monica Project was $36.7 million, which is included in development projects on the consolidated balance sheets. |
Investment in Unconsolidated Affiliated Real Estate Entity |
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| Investment in Unconsolidated Affiliated Real Estate Entity |
Columbus Joint Venture
On November 29, 2022, the Company, along with CRE Columbus Member (“Converge”), a majority owned subsidiary of Converge Holdings LLC, a reinsurance business owned by the Sponsor, and LEL Columbus Member LLC (the “BVI member”), a wholly owned subsidiary of Lightstone Enterprises Limited (“BVI”), a real estate investment company owned by the Sponsor, entered into a joint venture agreement to form the Columbus Joint Venture for the purpose of acquiring the Columbus Properties, a portfolio of nine multifamily residential properties consisting of 2,564 units located in the Columbus, Ohio metropolitan area for a contractual purchase price of $465.0 million. The Company has a 19% joint venture ownership interest in the Columbus Joint Venture. Converge and the BVI Member, which are both related parties, have joint venture ownership interests of 19% and 62%, respectively. Additionally, the manager of the Columbus Joint Venture is LEL Bronx Manager LLC, an entity wholly owned by BVI.
On November 29, 2022, the Columbus Joint Venture completed the purchase of the Columbus Properties. The acquisition was funded with $74.3 million of cash and $390.7 million of aggregate proceeds from preferred investments from unrelated third-parties and loans from two financial institutions. In connection with the acquisition and financings, the total cash paid, including closing costs, was $92.3 million and the Company paid $17.5 million representing its 19.0% pro rata share. In connection with the acquisition, the Company also paid the Advisor a separate acquisition fee of $2.4 million, equal to 2.75% of the Company’s pro-rata share of the contractual purchase price which is reflected in the carrying value of the Company’s investment in unconsolidated affiliated entity on the consolidated balance sheets.
The Company has determined that the Columbus Joint Venture is a VIE but it is not the primary beneficiary. The Company accounts for its ownership interest in the Columbus Joint Venture in accordance with the equity method of accounting because it exerts significant influence over but does not control the Columbus Joint Venture. All capital contributions and distributions of earnings from the Columbus Joint Venture are made on a pro rata basis in proportion to each member’s equity interest percentage. Any distributions in excess of earnings from the Columbus Joint Venture are made to the members pursuant to the terms of the Columbus Joint Venture’s operating agreement.
In connection with the purchase of the Columbus Properties on November 29, 2022, the Columbus Joint Venture obtained senior mortgage loans from two different financial institutions. The first financial institution provided four separate senior mortgage loans, all to subsidiaries of the Columbus Joint Venture, aggregating $133.6 million. These four senior mortgage loans bear interest at SOFR + 2.19%, provide for interest-only payments for the first six years of their term and mature in December 2032. Each of these four senior mortgage loans is individually collateralized by one of the Columbus Properties (collectively, the “Columbus Portfolio I Properties”). The second financial institution provided five separate senior mortgage loans, all to subsidiaries of the Columbus Joint Venture, aggregating $167.2 million. These five senior mortgage loans bear interest at 4.85%, provide for interest-only payments for the first two years of their term and initially mature in December 2027, but may be further extended for an additional five years, subject to satisfaction of certain conditions. Each of these five senior mortgage loans is individually collateralized by one of the Columbus Properties (collectively, the “Columbus Portfolio II Properties”).
Additionally, in connection with the purchase of the Columbus Properties on November 29, 2022, the Columbus Joint Venture obtained an aggregate of $90.0 million in financing through two preferred investments (the “Columbus Preferred Investments”) from unrelated third parties. The first preferred investment of $38.6 million is collateralized by the Columbus Portfolio I Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal and has a mandatory redemption date of December 1, 2032. The second preferred investment of $51.4 million is collateralized by the Columbus Portfolio II Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal, and has a mandatory redemption date of December 1, 2027. As of March 31, 2024, the aggregate unpaid interest included in the outstanding balance of the Columbus Preferred Investments was $8.6 million. Furthermore, the Columbus Preferred Investments are subordinate to the nine senior mortgage loans.
Because the Columbus Preferred Investments have mandatory redemption dates, the Columbus Joint Venture treats them as financial liabilities and includes them in mortgages and loans payable on its condensed balance sheets. The Company’s Sponsor (the “Guarantor”) has fully guaranteed the nine senior mortgage loans and the Columbus Preferred Investments (the “Debt Guarantee”). Each of the members of the Columbus Joint Venture have agreed to reimburse the Guarantor for their pro rata share of any balance that becomes due under the Debt Guarantee, of which the Company’s share is up to 19%. The Company has determined that the fair value of the Debt Guarantee is immaterial.
Columbus Joint Venture Financial Information
The following table represents the condensed statements of operations for the Columbus Joint Venture:
The following table represents the condensed balance sheets for the Columbus Joint Venture:
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Hotel Joint Venture
During 2015, the Company formed the Hotel Joint Venture with Lightstone REIT II, a related party REIT also sponsored by the Sponsor. The Company has a 2.5% membership interest in the Hotel Joint Venture and Lightstone REIT II holds the remaining 97.5% membership interest. The Hotel Joint Venture holds ownership interests in the Hotel JV Properties, a portfolio of five limited service hotels, as of both March 31, 2024 and December 31, 2023.
The Company accounts for its 2.5% membership interest in the Hotel Joint Venture using a measurement alternative pursuant to which its investment is measured at cost, adjusted for observable price changes and impairments, if any, and as of both March 31, 2024 and December 31, 2023, the carrying value of its investment was $0.5 million, which is classified as investment in related parties on the consolidated balance sheets. |
Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable |
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| 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 both March 31, 2024 and December 31, 2023, the Company held an aggregate of 209,243 Marco OP Units and Marco II OP Units, of which 89,695 were owned by PRO. The Marco OP Units and the Marco II OP Units are both exchangeable for a similar number of common operating partnership units (“Simon OP Units”) of Simon Property Group, L.P., (“Simon OP”), the operating partnership of Simon Property Group, Inc. (“Simon Inc.”), a public REIT that is an owner and operator of shopping malls and outlet centers. Subject to the various conditions, the Company may elect to exchange the Marco OP Units and/or the Marco II OP Units to Simon OP Units which must be immediately delivered to Simon Inc. in exchange for cash or similar number of shares of Simon Inc.’s common stock (“Simon Stock”). Accordingly, the Marco OP Units and Marco II OP Units are valued based on the closing price of Simon Stock, which was $1 per share and $ per share as of March 31, 2024 and 2023, respectively. Additionally, the closing price of Simon Stock was $ per share as of December 31, 2023.
Derivative Financial Instruments
The Company enters into interest rate cap contracts in order to reduce the effect of interest rate fluctuations or risk of certain real estate investment’s interest expense on its variable rate debt. The Company is exposed to credit risk in the event of non-performance by the counterparty to these financial instruments. Management believes the risk of loss due to non-performance to be minimal.
The Company accounts for interest rate cap contracts as economic hedges, marking these contracts to market, taking into account present interest rates compared to the contracted fixed rate over the life of the contract and recording the unrealized gain or loss on the interest rate cap contracts on the consolidated statements of operations.
As of March 31, 2024 and December 31, 2023, the Company had two interest rate cap contracts with notional amounts of $110.0 million and $31.3 million pursuant to which SOFR is capped at 5.50% through December 1, 2024 and June 1, 2025, respectively. See Note 7.
The aggregate fair value of the interest rate cap contracts was $48 and $62 as of March 31, 2024 and December 31, 2023, respectively, and is included in other assets on the consolidated balance sheets.
For the three months ended March 31, 2024 and 2023, the Company recorded negative mark to market adjustments of $15 and $0.4 million, respectively on the consolidated statements of operations, representing the change in the fair value of these economic hedges during such periods.
Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:
Marketable securities and derivative financial instruments measured at fair value on a recurring basis as of the dates indicated are as follows:
The fair values of the Company’s common equity securities are measured using readily quoted prices for these investments which are listed for trade on active markets. The fair values of the Company’s preferred equity securities and corporate bonds are measured using readily available quoted prices for these securities; however, the markets for these securities are not active. Additionally, as noted and disclosed above, the Company’s Marco OP and OP II units are both ultimately exchangeable for cash or similar number of shares of Simon Stock, therefore the Company uses the quoted market price of Simon Stock to measure the fair value of the Company’s Marco OP and OP II units.
Notes Payable
Margin Loan
The Company has access to a margin loan (the “Margin Loan”) from a financial institution that holds custody of certain of the Company’s marketable securities. The Margin Loan, which is due on demand, bears interest at SOFR plus 0.85% (6.18% as of March 31, 2024) and is collateralized by the marketable securities in the Company’s account. The amounts available to the Company under the Margin Loan are at the discretion of the financial institution and not limited to the amount of collateral in its account. There were no amounts outstanding under this Margin Loan as of March 31, 2024 and December 31, 2023.
Line of Credit
The Company has a non-revolving credit facility (the “Line of Credit”) with a financial institution that provides for borrowings up to a maximum of $20.0 million, subject to a 55% loan-to-value ratio based on the fair value of the underlying collateral, which matures on November 30, 2024 and bears interest at SOFR plus 1.35% (6.68% as of March 31, 2024). The Line of Credit is collateralized by an aggregate of 187,019 of Marco OP Units and is guaranteed by PRO. As of March 31, 2024, the amount of borrowings available to be drawn under the Line of Credit was $16.1 million of which the outstanding principal balance of the Line of Credit was $3.0 million which is presented, net of deferred financing fees of $7, on the consolidated balance sheets and is classified as notes payable, net. As of December 31, 2023, the amount of borrowings available to be drawn under the Line of Credit was $14.7 million and no amounts were outstanding.
The Company currently intends to seek to extend or refinance the Line of Credit on or before its scheduled maturity date. |
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Mortgages Payable, Net |
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| Mortgages Payable, Net |
Mortgages payable, net consists of the following:
One-month SOFR as of March 31, 2024 and December 31, 2023 was 5.33% and 5.35%, respectively. The Company’s loans are secured by the indicated real estate/investment and are non-recourse to the Company, unless otherwise indicated.
Santa Monica Loan
On June 30, 2022, the Santa Monica Joint Venture obtained a loan of up to $33.1 million (the “Santa Monica Loan”) which initially bore interest at SOFR + 3.50%. The Santa Monica Loan requires monthly interest-only payments with the outstanding principal balance due at its maturity date and was previously collateralized by the Santa Monica Note Receivable, which was issued by the Santa Monica Joint Venture. During the first quarter of 2023, the Santa Monica Joint Venture received a $14.0 million paydown on the Santa Monica Note Receivable, of which it used $11.3 million to make a paydown on the Santa Monica Loan, which reduced its outstanding balance to $21.5 million. The Santa Monica Loan was initially scheduled to mature on December 30, 2023, however, on September 5, 2023, the Santa Monica Joint Venture exercised an option to extend its maturity date to February 29, 2024. In connection with this extension, the Santa Monica Joint Venture made an additional principal paydown of $2.1 million, which reduced the outstanding balance of the Santa Monica Loan to $19.5 million. Additionally, the Santa Monica Joint Venture funded $0.9 million into a cash collateral reserve account to cover the interest payments through February 29, 2024.
In connection with the transfer of ownership of the Santa Monica Project to the Santa Monica Joint Venture on December 29, 2023, the Santa Monica Loan was modified to substitute the Santa Monica Project as the underlying collateral and the maturity date was further extended to August 1, 2024. Subsequently in March 2024, the Santa Monica Loan was again modified pursuant to which the interest rate was changed to SOFR + 4.5%, subject to a floor of 7.5%, the maturity date was changed to August 31, 2024 and the interest reserve was replenished to cover the payments due through August 31, 2024.
See Note 3 for additional information.
Moxy Mortgage Loans
On November 29, 2023, the Company entered into a mortgage loan facility (the “Moxy Senior Loan”) with an unrelated third party providing for up to $ million. At closing, $ million of proceeds were advanced under the Moxy Senior Loan and the remaining availability of $ million could only be drawn to cover operating losses, subject to various conditions. The Moxy Senior Loan bears interest at , and initially matures on , with two one-year extension options subject to the satisfaction of certain conditions. As of December 31, 2023, the outstanding principal balance of the Moxy Senior Loan was unchanged at $106.1 million and during the first quarter of 2024 an additional $ million was funded and as a result, the outstanding principal balance and remaining availability were $107.4 million and $2.6 million, respectively, as of March 31, 2024.
Simultaneously on November 29, 2023, the Company also entered into a mortgage loan facility (the “Moxy Junior Loan” and together with the Moxy Senior Loan, the “Moxy Mortgage Loans”) with an unrelated third party providing for up to $ million. At closing, $ million of proceeds were advanced under the Moxy Junior Loan and the remaining availability of $ million could only be drawn for operating losses, subject to various conditions. The Moxy Junior Loan bears interest at , and initially matures on , with two one-year extension options subject to the satisfaction of certain conditions. As of December 31, 2023, the outstanding principal balance of the Moxy Junior Loan was unchanged at $30.2 million and during the first quarter of 2024 an additional $ million was funded and as a result, the outstanding principal balance and remaining availability were $30.6 million and $0.7 million, respectively, as of March 31, 2024.
The Moxy Mortgage Loans require monthly interest-only payments through their maturity dates and are collateralized by the Lower East Side Moxy Hotel, however, the Moxy Junior Loan is subordinate to the Moxy Senior Loan. Aggregate proceeds of $ million advanced at the closing of the Moxy Mortgage Loans were used to repay in full existing construction mortgage indebtedness, which was collateralized by the Lower East Side Moxy Hotel. Pursuant to the terms of the Moxy Mortgage Loans, the Company is required to enter into two interest rate cap contracts with an aggregate notional amount of $141.3 million (equal to the total maximum amounts available under the Moxy Senior Loan and the Moxy Junior Loan) for as long as the Moxy Mortgage Loans remain outstanding. On November 29, 2023, the Company entered into two interest rate cap agreements with notional amounts of $110.0 million and $31.3 million ($141.3 million in the aggregate) pursuant to which the SOFR rate is capped at 5.50% through December 1, 2024 and June 1, 2025 for the Moxy Junior Loan and the Moxy Senior Loan, respectively, at an aggregate cost of $0.2 million.
In connection with obtaining the Moxy Mortgage Loans, the Company provided certain interest and carry costs guarantees and paid $4.1 million of loan fees and expenses.
Exterior Street Loans
On March 29, 2019, the Company obtained a $35.0 million loan (the “Exterior Street Loan”) from a financial institution which, commencing on October 10, 2020, bore interest at LIBOR plus 2.25% through November 24, 2022. On December 21, 2021, the loan agreement was amended to provide an additional $7.0 million loan (the “Exterior Street Supplemental Loan” and collectively with the Exterior Street Loan, the “Exterior Street Loans”) which bore interest at LIBOR plus 2.50% through November 24, 2022. The Exterior Street Loans require monthly interest-only payments with the outstanding principal balances due in full at their maturity date. The Exterior Street Loans are collateralized by the Exterior Street Project.
On November 22, 2022, the Company and the financial institution entered into an additional amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to SOFR plus 2.60% and their maturity dates were extended to November 24, 2023. On October 31, 2023, the Company and the financial institution entered into an additional amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to SOFR plus 2.85% (8.18% as of March 31, 2024) and their maturity dates were extended to November 24, 2024. As of March 31, 2024, the outstanding aggregate principal balance of the Exterior Street Loans was $42.0 million.
The following table shows the contractually scheduled principal maturities of the Company’s mortgage debt during the next five years and thereafter as of March 31, 2024:
Certain of the Company’s debt agreements require the maintenance of certain ratios, including debt service coverage. As of March 31, 2024, 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.
Mortgage Debt Maturities
The Santa Monica Loan (outstanding principal balance of $19.5 million as of March 31, 2024) is scheduled to mature on August 31, 2024. The Company currently intends to refinance the Santa Monica Loan on or before its scheduled maturity date.
The Gantry Park Mortgage Loan (outstanding aggregate principal balance of $66.3 million as of March 31, 2024) matures on November 19, 2024. The Company currently intends to seek to extend or refinance the Gantry Park Mortgage Loan on or before its scheduled maturity date.
The Exterior Street Loans (outstanding aggregate principal balance of $42.0 million as of March 31, 2024) mature on November 24, 2024. The Company currently intends to seek to extend or refinance the Exterior Street Loans on or before their scheduled maturity date.
However, if the Company is unable to extend or refinance its maturing mortgage indebtedness at favorable terms, it will look to repay the then outstanding balance with available cash and/or proceeds from selective asset sales. The Company has no additional significant maturities of mortgage debt over the next 12 months. |
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| Equity Method Investments and Joint Ventures [Abstract] | ||||
| Equity |
Distributions on Common Shares
On November 10, 2023, the Board of Directors determined to suspend regular quarterly distributions. Until distributions on common shares are brought current to at least an annualized rate of 7.0% assuming a purchase price of $ per share, no distributions will be declared on the SLP Units. Any future distributions on the SLP Units will always be subordinated until stockholders receive a stated preferred return.
Future distributions, if any, declared will be at the discretion of the Board of Directors based on their analysis of the Company’s performance over the previous periods and expectations of performance for future periods. The Board of Directors will consider various factors in its determination, including but not limited to, the sources and availability of capital, operating and interest expenses, the Company’s ability to refinance near-term debt, as well as the IRS’s annual distribution requirement that REITs distribute no less than 90% of their taxable income. The Company cannot assure that any future distributions will be made or that it will maintain any particular level of distributions that it has previously established or may establish.
SRP
The Company’s share repurchase program (the “SRP”) may provide its stockholders with limited, interim liquidity by enabling them to sell their Common Shares back to the Company, subject to restrictions.
On March 25, 2020, the Board of Directors amended the SRP to remove stockholder notice requirements and also approved the suspension of all redemptions.
Effective March 18, 2021 and May 14, 2021, the Board of Directors partially reopened the SRP to allow, subject to various conditions as set forth below, for redemptions submitted in connection with a stockholder’s death and hardship, respectively, and set the price for all such purchases to the Company’s current estimated net asset value per share of common stock (“NAV per Share”), as determined by the Board of Directors and reported by the Company from time to time. Deaths that occurred subsequent to January 1, 2020 were eligible for consideration, subject to certain conditions. Beginning January 1, 2022, requests for redemptions in connection with a stockholder’s death must be submitted and received by the Company within one year of the stockholder’s date of death for consideration. On March 18, 2022, the Board of Directors approved an increase to the annual threshold for death redemptions from up to 0.5% to 1.0%.
At the above noted dates, the Board of Directors established that on an annual basis, the Company would not redeem in excess of 1.0% and 0.5% of the number of shares outstanding as of the end of the preceding year for either death or hardship redemptions, respectively. Additionally, redemption requests generally would be processed on a quarterly basis and would be subject to proration if either type of redemption requests exceeded the annual limitation.
For the three months ended March 31, 2024, the Company repurchased Common Shares at a weighted average price per share of $. For the three months ended March 31, 2023, the Company repurchased Common Shares at a weighted average price per share of $.
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. |
Related Party Transactions |
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, 2024 and December 31, 2023, $1.0 million and $0.5 million, respectively, of asset management fees were owed to the advisor and included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets.
The Company, pursuant to the related party arrangements, has recorded the following amounts for the periods indicated:
See Notes 3, 4 and 5 for other related party transactions.
The advisory agreement has a one-year term and is renewable for an unlimited number of successive one-year periods upon the mutual consent of the Advisor and the Company’s independent directors. Payments to the Advisor or its affiliates may include asset acquisition fees and the reimbursement of acquisition-related expenses, development fees and the reimbursement of development-related costs, financing coordination fees, asset management fees or asset management participation, and construction management fees. The Company may also reimburse the Advisor and its affiliates for actual expenses it incurs for administrative and other services provided for it. Upon the liquidation of the Company’s assets, it may pay the Advisor or its affiliates a disposition commission.
In connection with the Company’s Offering, Lightstone SLP, LLC, an affiliate of the Company’s Sponsor, purchased SLP Units in the Operating Partnership for an aggregate of $30.0 million. These SLP Units, the purchase price of which will be repaid only after stockholders receive a stated preferred return and their net investment, may entitle Lightstone SLP, LLC to a portion of any regular distributions made by the Operating Partnership.
During the three months ended March 31, 2023, distributions of $0.5 million were declared and paid on the SLP units. |
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Financial Instruments |
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments |
The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, other assets and accounts payable, accrued expenses and other liabilities approximate their fair values because of the short maturity of these instruments.
The carrying amount and estimated fair value of the Company’s mortgage debt is summarized as follows:
The fair value of the mortgages payable was determined by discounting the future contractual interest and principal payments by estimated current market interest rates. |
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Commitments and Contingencies |
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Mar. 31, 2024 | ||||
| Commitments and Contingencies Disclosure [Abstract] | ||||
| Commitments and Contingencies |
Hotel Franchise Agreement
The Lower East Side Moxy Hotel operates pursuant to a 30-year franchise agreement (the “Hotel Franchise Agreement”) with Marriott International, Inc. (“Marriott”). The Hotel Franchise Agreement provides for the Company to pay franchise fees and marketing fund charges equal to certain prescribed percentages of gross room sales, as defined. Additionally, pursuant to the terms of the Hotel Franchise Agreement, the Company received a Key Money payment of $4.7 million from Marriott during the fourth quarter of 2022. The Key Money, which is included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets is being amortized as a reduction to franchise fees over the term of the Hotel Franchise Agreement. As of March 31, 2024 and December 31, 2023, the remaining unamortized balance of the Key Money was $4.5 million and $4.6 million, respectively. Pursuant to the terms of the Hotel Franchise Agreement, the Company may be obligated to return the unamortized portion of the Key Money back to Marriott upon the occurrence of certain events. The franchise fees and marketing fund charges are recorded as a component of hotel operating expenses in the consolidated statements of operations.
Hotel Management Agreements
With respect to the Lower East Side Moxy Hotel, the Company has entered into a hotel management agreement, food and beverage operations management agreement and an asset management agreement (collectively, the “Hotel Management Agreements”) with various third-party management companies pursuant to which they provide oversight and management over the operation of the Lower East Side Moxy Hotel and its food and beverage venues and receive payment of certain prescribed management fees, generally based on a percentage of revenues and certain incentives for exceeding targeted earnings thresholds. The management fees are recorded as a component of hotel operating expenses on the consolidated statements of operations. The Hotel Management Agreements have initial terms ranging from 5 to 20 years.
Legal Proceedings
From time to time in the ordinary course of business, the Company may become subject to legal proceedings, claims or disputes.
As of the date hereof, 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. |
Summary of Significant Accounting Policies (Policies) |
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Lightstone REIT I and its Operating Partnership and its subsidiaries (over which Lightstone REIT I exercises financial and operating control). All inter-company balances and transactions have been eliminated in consolidation. In addition, interests in entities acquired are evaluated based on applicable accounting principles generally accepted in the U.S. (“GAAP”), and if deemed to be variable interest entities (“VIE”) in which the Company is the primary beneficiary are also consolidated. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation based on legal form, economic substance, and the extent to which the Company has control, substantive participating rights or both under the respective ownership agreement. For entities in which the Company has less than a controlling interest but have significant influence, the Company accounts for the investment using the equity method of accounting.
There are judgments and estimates involved in determining if an entity in which the Company has made an investment is a VIE and, if so, whether the Company is the primary beneficiary. The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage of equity being risked compared to the total equity of the entity. Determining expected future losses involves assumptions of various possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate to determine the net present value of those future losses. A change in the judgments, assumptions, and estimates outlined above could result in consolidating an entity that should not be consolidated or accounting for an investment using the equity method that should in fact be consolidated, the effects of which could be material to our financial statements. The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The unaudited interim consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair presentation of the results for the periods presented. The accompanying unaudited consolidated financial statements of Lightstone Value Plus REIT I, Inc. and its Subsidiaries have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.
GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period. The most significant assumptions and estimates relate to the valuation of real estate and real-estate related investments, marketable securities, notes receivable, depreciable lives, and revenue recognition. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.
The consolidated balance sheet as of December 31, 2023 included herein has been derived from the consolidated balance sheet included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The unaudited consolidated statements of operations for interim periods are not necessarily indicative of results for the full year or any other period.
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| Income Taxes | Income Taxes
The Company elected to be taxed and qualify as a REIT, commencing with the taxable year ended December 31, 2005. If the Company remains qualified as a REIT, it generally will not be subject to U.S. federal income tax on its net taxable income that it distributes currently to its stockholders. To maintain its REIT qualification under the Internal Revenue Code of 1986, as amended, or the Code, the Company must meet a number of organizational and operational requirements, including a requirement that it annually distribute to its stockholders at least 90% of its REIT taxable income (which does not equal net income, as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. If the Company fails to remain qualified for taxation as a REIT in any subsequent year and does not qualify for certain statutory relief provisions, its income for that year will be taxed at regular corporate rates, and it may be precluded from qualifying for treatment as a REIT for the four-year period following its failure to qualify as a REIT. Such an event could materially adversely affect its net income and net cash available for distribution to its stockholders. Additionally, even if the Company continues to qualify as a REIT for U.S. federal income tax purposes, it may still be subject to some U.S. federal, state and local taxes on its income and property and to U.S. federal income taxes and excise taxes on its undistributed income, if any.
To maintain its qualification as a REIT, the Company engages in certain activities through a taxable REIT subsidiary (“TRS”), including when the Company acquires or develops and constructs a hotel it usually establishes a new TRS and enters into an operating lease agreement for the hotel. As such, the Company is subject to U.S. federal and state income and franchise taxes from these activities.
The Company’s income tax expense is included in other expense, net on its consolidated statements of operations. During the three months ended March 31, 2024, the Company recorded income tax expense of $0.8 million. During the three months ended March 31, 2023, the Company recorded income tax expense of $28.
As of March 31, 2024 and December 31, 2023, the Company had no material uncertain income tax positions.
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| Revenues | Revenues
The following table represents the total hotel revenues from hotel operations on a disaggregated basis:
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| Land Parcel Sale | Land Parcel Sale
During the first quarter of 2023, the Company completed the disposition of a parcel of land, which was part of its St. Augustine Land Holdings, to an unrelated third party for a contractual sales price of $1.5 million and recognized a gain on disposition of real estate of $1.1 million during the three months ended March 31, 2023.
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| New Accounting Pronouncements | New Accounting Pronouncements
In November 2023, the FASB issued an accounting standards update which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within segment profit and loss, as well as the title and position of the CODM. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the guidance and the impact it may have on its consolidated financial statements.
In December 2023, the FASB issued an accounting standards update which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This update is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the guidance and the impact it may have on its consolidated financial statements.
The Company has reviewed and determined that other recently issued accounting pronouncements will not have a material impact on its financial position, results of operations and cash flows, or do not apply to its current operations.
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| Concentration of Risk | Concentration of Risk
As of March 31, 2024 and December 31, 2023, the Company had cash deposited in certain financial institutions in excess of U.S. federally insured levels. The Company regularly monitors the financial stability of these financial institutions and believes that it is not exposed to any significant credit risk with respect to its cash and cash equivalents or restricted cash.
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| Current Environment | Current Environment
The Company’s operating results and financial condition are substantially impacted by the overall health of local, U.S. national and global economies and may be influenced by market and other challenges. Additionally, the Company’s business and financial performance may be adversely affected by current and future economic and other conditions; including, but not limited to, availability or terms of financings, financial markets volatility and banking failures, political upheaval or uncertainty, natural and man-made disasters, terrorism and acts of war, unfavorable changes in laws and regulations, outbreaks of contagious diseases, cybercrime, loss of key relationships, inflation and recession.
The Company’s overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on consumer behavior. Worsening economic conditions, increases in costs due to inflation, higher interest rates, certain labor and supply chain challenges and other changes in economic conditions, may adversely affect the Company’s results of operations and financial performance.
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| Reclassifications | Reclassifications
Certain prior period amounts may have been reclassified to conform to the current period’s presentation.
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| Supplemental Cash Flow Information | Supplemental Cash Flow Information
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Summary of Significant Accounting Policies (Tables) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of revenues on a disaggregated |
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| Summary of supplemental cash flow information |
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Investment in Unconsolidated Affiliated Real Estate Entity (Tables) |
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| Schedule of condensed statement of operations for the Columbus joint venture |
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Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable (Tables) |
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| Marketable Securities Derivative Financial Instruments Fair Value Measurements And Notes Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of available for sale securities and other investments |
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| Schedule of marketable securities measured at fair value on a recurring basis |
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Mortgages Payable, Net (Tables) |
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| Mortgages Payable Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of mortgages payable |
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| Scheduled of contractually principal maturities during next five years |
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Related Party Transactions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Amount recorded in pursuant to related party arrangement |
|
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Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of mortgage debt |
|
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Business and Structure (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||
|---|---|---|---|---|---|
Jul. 06, 2004 |
Mar. 31, 2024 |
Dec. 31, 2009 |
Dec. 31, 2008 |
Mar. 31, 2023 |
|
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||
| Cash contributed for units | $ 2 | ||||
| Partners units acquired | 200 | ||||
| Shares issued, price per share | $ 12.19 | $ 12.19 | |||
| Issuance of common units, shares | 497,209 | 497,209 | |||
| Lightstone Value Plus REIT [Member] | |||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||
| Number of common shares held | 20,000 | ||||
| Proceeds from issue of shares | $ 200 | ||||
| Shares issued, price per share | $ 10.00 | ||||
| Lightstone SLP LLC [Member] | |||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||
| Aggregate SLP units owned in operating partnership | $ 30,000 | ||||
| Purchase cost per SLP unit of operating partnership | $ 100,000 | ||||
| Aggregate SLP units purchased in operating partnership | $ 30,000 | ||||
| Beneficial ownership interest (as a percent) | 99.00% | ||||
| Lightstone Value Plus REIT [Member] | Wholly Owned Properties [Member] | Industrial Properties [Member] | |||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||
| General partner ownership interest | 59.20% | ||||
| Lightstone Value Plus REIT [Member] | Wholly Owned Properties [Member] | Seven Hotel Properties [Member] | |||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||
| General partner ownership interest | 2.50% | ||||
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Product Information [Line Items] | ||
| Revenues | $ 12,635 | $ 9,957 |
| Accrued loan | ||
| Product Information [Line Items] | ||
| Revenues | 4,387 | 2,995 |
| Food Beverage And Other Revenue [Member] | ||
| Product Information [Line Items] | ||
| Revenues | 5,632 | 4,549 |
| Hotel [Member] | ||
| Product Information [Line Items] | ||
| Revenues | $ 10,019 | $ 7,544 |
Summary of Significant Accounting Policies (Details 1) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Accounting Policies [Abstract] | ||
| Cash paid for interest | $ 5,652 | $ 6,678 |
| Distributions declared but not paid | 3,820 | |
| Capital expenditures for investment property in accounts payable, accrued expenses and other liabilities | 22 | 1,190 |
| Amortization of deferred financing costs included in development projects | 139 | |
| Holding gain on marketable securities | 151 | |
| Value of shares issued from distribution reinvestment program | $ 83 | |
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
| Accounting Policies [Abstract] | |||
| Income tax expense | $ 800 | $ 28 | |
| Uncertain income tax positions | 0 | $ 0 | |
| Sales Contract Price | 1,500 | ||
| Gain on disposition of real estate | $ 1,100 | ||
Development Projects (Details Narrative) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Feb. 28, 2019 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Dec. 31, 2023 |
|
| Business Acquisition [Line Items] | |||||
| Affiliate Costs | $ 1,000 | ||||
| Development projects | $ 132,370 | $ 132,370 | |||
| Exterior Street Project [Member] | |||||
| Business Acquisition [Line Items] | |||||
| Interest Costs Capitalized | $ 1,500 | ||||
| Construction in Progress, Gross | 95,600 | $ 95,600 | |||
| Santa Monica Project [Member] | |||||
| Business Acquisition [Line Items] | |||||
| Ownership interest | 50.00% | ||||
| Development projects | $ 36,700 | $ 36,700 | |||
| Borden Realty Corp And 399 Exterior Street Associates Llc [Member] | |||||
| Business Acquisition [Line Items] | |||||
| Business Combination, Consideration Transferred | $ 59,000 | ||||
Investment in Unconsolidated Affiliated Real Estate Entity (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
|---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Revenues | $ 12,635 | $ 9,957 | ||
| Property operating expenses | 694 | 688 | ||
| Depreciation and amortization | 1,737 | 1,668 | ||
| Net loss | (4,131) | (6,056) | ||
| Company’s loss from investment | (871) | (1,220) | ||
| Columbus Joint Venture [Member] | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Revenues | 10,617 | 10,511 | ||
| Property operating expenses | 5,001 | 4,892 | ||
| General and administrative expense | 105 | (45) | ||
| Depreciation and amortization | 3,012 | 4,746 | ||
| Operating income | 2,499 | 918 | ||
| Interest expense and other, net | (7,006) | (7,206) | ||
| Net loss | (4,507) | (6,288) | ||
| Company’s share of net loss (19.0%) | (856) | (1,195) | ||
| Additional depreciation and amortization expense | [1] | (15) | (25) | |
| Company’s loss from investment | $ (871) | $ (1,220) | ||
| ||||
Investment in Unconsolidated Affiliated Real Estate Entity (Details 1) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Investment property, net | $ 263,017 | $ 264,584 |
| Cash and restricted cash | 11,787 | 10,547 |
| Other assets | 4,405 | 5,211 |
| Total assets | 474,368 | 473,147 |
| Mortgages and loans payable, net | 261,638 | 259,698 |
| Total liabilities and members’ equity | 474,368 | 473,147 |
| Columbus Joint Venture [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Investment property, net | 448,375 | 449,813 |
| Cash and restricted cash | 23,896 | 25,640 |
| Other assets | 2,315 | 3,082 |
| Total assets | 474,586 | 478,535 |
| Mortgages and loans payable, net | 392,648 | 390,622 |
| Other liabilities | 9,647 | 11,149 |
| Members’ equity | 72,291 | 76,764 |
| Total liabilities and members’ equity | $ 474,586 | $ 478,535 |
Investment in Unconsolidated Affiliated Real Estate Entity (Details Narrative) $ in Thousands |
1 Months Ended |
|---|---|
|
Nov. 29, 2022
USD ($)
| |
| Columbus Joint Venture [Member] | |
| Defined Benefit Plan Disclosure [Line Items] | |
| Contractual purchase price | $ 465,000 |
| Investments in unconsolidated affiliated real estate entity description | Columbus Joint Venture completed the purchase of the Columbus Properties. The acquisition was funded with $74.3 million of cash and $390.7 million of aggregate proceeds from preferred investments from unrelated third-parties and loans from two financial institutions. In connection with the acquisition and financings, the total cash paid, including closing costs, was $92.3 million and the Company paid $17.5 million representing its 19.0% pro rata share. In connection with the acquisition, the Company also paid the Advisor a separate acquisition fee of $2.4 million, equal to 2.75% of the Company’s pro-rata share of the contractual purchase price which is reflected in the carrying value of the Company’s investment in unconsolidated affiliated entity on the consolidated balance sheets. |
| Preferred Investments description | Columbus Joint Venture obtained an aggregate of $90.0 million in financing through two preferred investments (the “Columbus Preferred Investments”) from unrelated third parties. The first preferred investment of $38.6 million is collateralized by the Columbus Portfolio I Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal and has a mandatory redemption date of December 1, 2032. The second preferred investment of $51.4 million is collateralized by the Columbus Portfolio II Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal, and has a mandatory redemption date of December 1, 2027. |
| Preferred investment balance | $ 8,600 |
| Converge [Member] | |
| Defined Benefit Plan Disclosure [Line Items] | |
| Ownership interest | 19.00% |
| B V I [Member] | |
| Defined Benefit Plan Disclosure [Line Items] | |
| Ownership interest | 62.00% |
Investment in Related Party (Details Narrative) - Joint Venture [Member] - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Investments [Line Items] | ||
| Equity method investment, ownership percentage | 2.50% | 2.50% |
| Investment | $ 500 | $ 500 |
Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
| Common and Preferred Equity Securities [Member] | ||
| Marketable Securities [Line Items] | ||
| Equity securities, adjusted cost | $ 5,598 | $ 5,598 |
| Equity securities, gross unrealized gains | 119 | |
| Equity securities, gross unrealized losses | (150) | (226) |
| Equity securities, fair value | 5,567 | 5,372 |
| Equity securities, gross unrealized losses | 150 | 226 |
| Marco Op Units And Op Two Units [Member] | ||
| Marketable Securities [Line Items] | ||
| Equity securities, adjusted cost | 19,227 | 19,227 |
| Equity securities, gross unrealized gains | 13,517 | 10,619 |
| Equity securities, gross unrealized losses | ||
| Equity securities, fair value | 32,744 | 29,846 |
| Equity securities, gross unrealized losses | ||
| Equity Securities [Member] | ||
| Marketable Securities [Line Items] | ||
| Equity securities, adjusted cost | 24,825 | 24,825 |
| Equity securities, gross unrealized gains | 13,636 | 10,619 |
| Equity securities, gross unrealized losses | (150) | (226) |
| Equity securities, fair value | 38,311 | 35,218 |
| Equity securities, gross unrealized losses | $ 150 | $ 226 |
Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable (Details 1) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | $ 38,311 | |
| Interest Rate Cap Contracts | 48 | $ 62 |
| Equity Securities [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | 5,567 | 5,372 |
| Marco Op Units And Op Two Units [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | 32,744 | 29,846 |
| Corporate Bond Securities [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | 35,218 | |
| Fair Value, Inputs, Level 1 [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | 1,517 | |
| Interest Rate Cap Contracts | ||
| Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | 1,517 | 1,383 |
| Fair Value, Inputs, Level 1 [Member] | Marco Op Units And Op Two Units [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | ||
| Fair Value, Inputs, Level 1 [Member] | Corporate Bond Securities [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | 1,383 | |
| Fair Value, Inputs, Level 2 [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | 36,794 | |
| Interest Rate Cap Contracts | 48 | 62 |
| Fair Value, Inputs, Level 2 [Member] | Equity Securities [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | 4,050 | 3,989 |
| Fair Value, Inputs, Level 2 [Member] | Marco Op Units And Op Two Units [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | 32,744 | 29,846 |
| Fair Value, Inputs, Level 2 [Member] | Corporate Bond Securities [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | 33,835 | |
| Fair Value, Inputs, Level 3 [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | ||
| Interest Rate Cap Contracts | ||
| Fair Value, Inputs, Level 3 [Member] | Equity Securities [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | ||
| Fair Value, Inputs, Level 3 [Member] | Marco Op Units And Op Two Units [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities | ||
| Fair Value, Inputs, Level 3 [Member] | Corporate Bond Securities [Member] | ||
| Platform Operator, Crypto Asset [Line Items] | ||
| Available-for-sale Securities |
Marketable Securities, Derivative Financial Instruments, Fair Value Measurements and Notes Payable (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
Nov. 10, 2023 |
|
| Marketable Securities [Line Items] | |||
| Share price | $ 10.00 | ||
| Notional amount | $ 110,000 | $ 31,300 | |
| Derivative interest rate | 5.50% | ||
| Fair value of interest rate cap | $ 48 | 62 | |
| Negative mark to market adjustment | $ 15,000 | 400 | |
| Non-revolving credit facility [Member] | |||
| Marketable Securities [Line Items] | |||
| Debt instrument, interest rate terms | SOFR plus 1.35% | ||
| Borrowing capacity | $ 20,000 | ||
| Derivative maturity date | Nov. 30, 2024 | ||
| Remaining capacity | $ 16,100 | $ 14,700 | |
| Margin Loan [Member] | |||
| Marketable Securities [Line Items] | |||
| Debt instrument, interest rate terms | SOFR plus 0.85% | ||
| Marco Op Units And Op Two Units [Member] | |||
| Marketable Securities [Line Items] | |||
| Equity securities securities held during period | 209,243 | 209,243 | |
| Share price | $ 56.49 | $ 111.97 | |
| Additional Share price | $ 142.64 | ||
| PRO [Member] | |||
| Marketable Securities [Line Items] | |||
| Equity securities securities held during period | 89,695 | 89,695 |
Mortgages Payable, Net (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
| Real Estate Properties [Line Items] | ||
| Weighted average interest rate | 8.59% | |
| Amount due at maturity | $ 264,759 | |
| Total mortgages payable | 265,763 | $ 264,483 |
| Less: Deferred financing costs | (4,125) | (4,785) |
| Total mortgages payable, net | $ 261,638 | 259,698 |
| Gantry Park Landing [Member] | ||
| Real Estate Properties [Line Items] | ||
| Debt instrument, interest rate terms | 4.48% | |
| Weighted average interest rate | 4.48% | |
| Maturity date | November 2024 | |
| Amount due at maturity | $ 65,317 | |
| Total mortgages payable | $ 66,321 | 66,697 |
| Lower East Side Moxy Hotel Senior [Member] | ||
| Real Estate Properties [Line Items] | ||
| Debt instrument, interest rate terms | SOFR + 4.00% (floor of 7.50%) | |
| Weighted average interest rate | 9.47% | |
| Maturity date | December 2026 | |
| Amount due at maturity | $ 107,397 | |
| Total mortgages payable | $ 107,397 | 106,108 |
| Lower East Side Moxy Hotel Junior [Member] | ||
| Real Estate Properties [Line Items] | ||
| Debt instrument, interest rate terms | SOFR + 8.75% (floor of 12.25%) | |
| Weighted average interest rate | 14.28% | |
| Maturity date | December 2026 | |
| Amount due at maturity | $ 30,569 | |
| Total mortgages payable | $ 30,569 | 30,202 |
| Exterior Street Project [Member] | ||
| Real Estate Properties [Line Items] | ||
| Debt instrument, interest rate terms | SOFR + 2.85% | |
| Weighted average interest rate | 8.35% | |
| Maturity date | November 2024 | |
| Amount due at maturity | $ 35,000 | |
| Total mortgages payable | $ 35,000 | 35,000 |
| Industrial Properties [Member] | ||
| Real Estate Properties [Line Items] | ||
| Debt instrument, interest rate terms | SOFR + 2.85% | |
| Weighted average interest rate | 8.29% | |
| Maturity date | November 2024 | |
| Amount due at maturity | $ 7,000 | |
| Total mortgages payable | $ 7,000 | 7,000 |
| LSC 1543 7th LLC [Member] | ||
| Real Estate Properties [Line Items] | ||
| Debt instrument, interest rate terms | SOFR + 4.50% | |
| Weighted average interest rate | 9.42% | |
| Maturity date | August 2024 | |
| Amount due at maturity | $ 19,476 | |
| Total mortgages payable | $ 19,476 | $ 19,476 |
Mortgages Payable, Net (Details 1) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Mortgages Payable Net | ||
| 2024 | $ 127,797 | |
| 2025 | ||
| 2026 | 137,966 | |
| 2027 | ||
| 2028 | ||
| Thereafter | ||
| Total | 265,763 | $ 264,483 |
| Less: Deferred financing costs | (4,125) | (4,785) |
| Mortgages payable, net | $ 261,638 | $ 259,698 |
Mortgages Payable, Net (Details Narrative) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
Nov. 29, 2023 |
Oct. 31, 2023 |
Nov. 22, 2022 |
Jun. 30, 2022 |
Dec. 21, 2021 |
Mar. 29, 2019 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
|
| Debt Instrument [Line Items] | |||||||||
| Interest rate | 5.33% | 5.35% | |||||||
| Outstanding principal balance | $ 265,763 | $ 264,483 | |||||||
| Santa Monica Loan [Member] | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Original Loan Amount | $ 33,100 | ||||||||
| Debt instrument, description of variable rate basis | SOFR + 3.50% | ||||||||
| Outstanding principal balance | $ 19,500 | ||||||||
| Debt instrument, maturity date | Dec. 31, 2023 | ||||||||
| Moxy Senior Loan [Member] | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Outstanding principal balance | 106,100 | $ 107,400 | |||||||
| Remaining availability | $ 2,600 | ||||||||
| At cost | $ 110,000 | ||||||||
| Moxy Senior Loan [Member] | Unrelated Third Party [Member] | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Original Loan Amount | $ 110,000 | ||||||||
| Debt instrument, description of variable rate basis | SOFR plus 4.00%, subject to a 7.50% floor | ||||||||
| Proceeds from advance from related party | $ 106,100 | $ 1,300 | |||||||
| Remaining availability | $ 3,900 | ||||||||
| Debt instrument, maturity date | Dec. 01, 2026 | ||||||||
| Moxy Junior Loan [Member] | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Outstanding principal balance | 30,600 | $ 30,200 | |||||||
| Remaining availability | 700 | ||||||||
| At cost | $ 31,300 | ||||||||
| Moxy Junior Loan [Member] | Unrelated Third Party [Member] | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Original Loan Amount | $ 31,300 | ||||||||
| Debt instrument, description of variable rate basis | SOFR plus 8.75%, subject to a 12.25% floor | ||||||||
| Outstanding principal balance | $ 1,100 | ||||||||
| Proceeds from advance from related party | $ 30,200 | 400 | |||||||
| Debt instrument, maturity date | Dec. 01, 2026 | ||||||||
| Moxy Permanent Mortgage Loans [Member] | |||||||||
| Debt Instrument [Line Items] | |||||||||
| At cost | $ 141,300 | ||||||||
| Loan fees | 200 | ||||||||
| Moxy Permanent Mortgage Loans [Member] | Unrelated Third Party [Member] | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Proceeds from advance from related party | $ 130,000 | ||||||||
| Exterior Street Loan [Member] | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Original Loan Amount | $ 7,000 | $ 35,000 | |||||||
| Debt instrument, description of variable rate basis | SOFR plus 2.85% | SOFR plus 2.60% | LIBOR plus 2.50% | LIBOR plus 2.25% | |||||
| Debt instrument, maturity date | Nov. 24, 2022 | Nov. 24, 2022 | |||||||
| Gantry Park Mortgage Loan [Member] | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Outstanding principal balance | 66,300 | ||||||||
| Exterior Street Loans [Member] | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Outstanding principal balance | $ 42,000 | ||||||||
Equity (Details Narrative) - $ / shares |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Nov. 10, 2023 |
|
| Equity Method Investments and Joint Ventures [Abstract] | |||
| Annualized Distribution Rate | 7.00% | ||
| Share price | $ 10.00 | ||
| Treasury Stock Acquired, Repurchase Authorization | On March 18, 2022, the Board of Directors approved an increase to the annual threshold for death redemptions from up to 0.5% to 1.0%. | ||
| Number of shares repurchased | 81,895 | 37,405 | |
| Weighted average price per share | $ 12.19 | $ 12.19 | |
Related Party Transactions (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
|---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|||
| Related Party Transactions [Abstract] | ||||
| Asset management fees (general and administrative costs) | $ 504 | $ 555 | ||
| Property management fees (property operating expenses) | 77 | 72 | ||
| Development fees and cost reimbursement | [1] | 11 | 406 | |
| Total | $ 592 | $ 1,033 | ||
| ||||
Related Party Transactions (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
| Related Party Transaction [Line Items] | |||
| Asset management fees payable | $ 1,000 | $ 500 | |
| Payments of dividends | 17 | $ 2,201 | |
| SLP Units [Member] | |||
| Related Party Transaction [Line Items] | |||
| Payments of dividends | 500 | ||
| Lightstone SLP LLC [Member] | |||
| Related Party Transaction [Line Items] | |||
| Aggregate amount | $ 30,000 | ||
Financial Instruments (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Fair Value Disclosures [Abstract] | ||
| Carrying Amount | $ 265,763 | $ 264,483 |
| Estimated Fair Value | $ 264,499 | $ 262,953 |
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Mar. 31, 2024 |
Dec. 31, 2023 |
|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
| Unamortized balance | $ 4,500 | $ 4,600 | |
| Preferred Stock Dividend Income | |||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
| Proceeds from related party | $ 4,700 |