Item 2. Properties.

General

The following table presents certain additional information about our wholly owned and consolidated investments in real estate properties as of December 31, 2019:2021:

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

Item 3. 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, we are 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 itsour results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, we have not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.

Item 4. Mine Safety Disclosure.

None

None

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

There currently is no established public trading market for our shares of common stock. Therefore, there is a risk that a stockholder may not be able to sell their shares of common stock at a time or price acceptable to them. Unless and until our shares of common stock are listed on a national securities exchange, it is not expected that a public market for them will develop.

Estimated Net Asset Value (“NAV”) and NAV per Share of Common Stock (“NAV per Share”)

On November 7, 2019,11, 2021, pursuant to the Policy for Estimation of Common Stock Value (the “Estimated Valuation Policy”), the board of directors of Lightstone Value Plus Real Estate Investment TrustREIT V, Inc. (the “Company,” “we,” “us,” or “our”) determined and approved our estimated NAV of approximately $204.7$260.1 million and resulting estimated NAV per Share of $9.10$12.91 both as of September 30, 2019.2021. Our estimated NAV and resulting NAV per Share are based upon the estimated fair values of our assets and liabilities as of September 30, 20192021 and are effective as of November 7, 2019.11, 2021.

The estimated valueNAV of our shares was calculated as of a particular point in time. The valueestimated NAV of our shares will fluctuate over time in response to developments related to individual assets in the portfolio and the management of those assets and in response to the real estate and finance markets. There is no assurance of the extent to which the current estimated valuation should be relied upon for any purpose after its effective date regardless that it may be published on any statement issued by us or otherwise.

Process and Methodology

Our business is managed by an external advisor and we have no employees. Commencing on February 10, 2017, we engaged LSG-BH II Advisor LLC and LSG Development Advisor LLC (collectively, the(the “Advisor”), which are affiliatesis an affiliate of The Lightstone Group LLC (“Lightstone”), to provide advisory services to us. Lightstone is majority owned by the chairman of our board of directors, David Lichtenstein. and we have no employees. Our Advisor, along with any necessary material assistance or confirmation of a third-party valuation expert or service, is responsible for calculating our estimated NAV and resulting NAV per Share, which we currently expect will be done on at least an annual basis unless and until our shares of common stock are approved for listing on a national securities exchange. Our board of directors will review and approve each estimate of NAV and resulting NAV per Share.

Our estimated NAV and resulting NAV per Share as of September 30, 20192021 were calculated with both the assistance of our Advisor and Capright Property Advisors, LLC (“Capright”), an independent third-party valuation firm engaged to assist with the valuation of our assets and liabilities. Our Advisor recommended and our board of directors established the estimated NAV per Share based upon the analyses and reports provided by our Advisor and Capright. The process of estimating the value of our assets and liabilities is performed in accordance with our Estimated Valuation Policy and the provisions of the Investment Program Association Practice Guideline 2013-01, “Valuation of Publicly Registered Non-Listed REITs.” We believe our valuations were developed in a manner reasonably designed to ensure their reliability.

In arriving at an estimated NAV and resulting NAV per Share, our board of directors reviewed and considered the valuation analyses prepared by our Advisor and Capright. Our Advisor presented a report to the board of directors with an estimated NAV and resulting NAV per Share. Capright provided our board of directors an opinion that the resulting “as-is” market value for the Company’s properties, as calculated by our Advisor, and the other assets and liabilities as valued by our Advisor, along with the corresponding NAV valuation methodologies and assumptions used by our Advisor to arrive at a recommended NAV per Share of $9.10$12.91 as of September 30, 20192021 were appropriate and reasonable. Our board of directors conferred with our Advisor and a representative from Capright regarding the methodologies and assumptions used to reach their respective conclusions. Our board of directors, which is responsible for determining our estimated per share value, considered all information provided in light of its own familiarity with our assets and liabilities and unanimously approved a NAV per Share of $9.10$12.91 as of September 30, 2019.2021.

The engagement of Capright with respect to our estimated NAV and resulting NAV per Share as of September 30, 20192021 was approved by our board of directors, including all of our independent directors. Capright has extensive experience in conducting asset valuations, including valuations of commercial real estate, debt, properties and real estate-related investments.

Capright’s opinion was subject to various limitations. In forming its opinion, Capright relied on certain information provided by our Advisor and third parties without independent verification. Our Advisor provided Capright with certain information regarding lease terms and the physical condition and capital expenditure requirements of each property. Capright did not perform engineering or structural studies or environmental studies of any of the properties, nor did they perform an independent appraisal of the other assets and liabilities included in our estimated NAV and resulting NAV per Share.

In forming their conclusion as to the “as-is” value of the real estate investments held by us as of September 30, 2019,2021, Capright’s opinion was subject to various limitations. In connection with their engagement, Capright completed appraisals of all eightseven of our eight consolidated properties. An appraisal was not deemed necessary for the BayVue Apartments as it was recently acquired and its value was determined by our Advisor based on its contractual purchase price. With respect to the seven appraisals performed by Capright, the scope of their work included:

In addition to their appraisals of our eight consolidated properties, Capright also evaluated the following information to arrive at their opinion of our other assets and liabilities:

Capright has acted as a valuation advisor to us in connection with this assignment. The compensation paid to Capright in connection with this assignment was not contingent upon the successful completion of any transaction or conclusion reached by Capright. Capright may be engaged to provide financial advisory services to us, our Advisor, or other Lightstone-sponsored investment programs or their affiliates in the future.

The following is a summary of the valuation methodologies used for each type of asset:

Investments in real estate.We have generally focused on acquiring commercial real estate properties in differentvarious asset classes, some of which have required development, redevelopment, and/or repositioning.classes. Accordingly, Capright and our Advisor utilized a variety of valuation methodologies, each asdeemed appropriate for the asset type under consideration to assign an estimated value to each asset.

Our Advisor estimated theThe value of our investments in real estate were estimated utilizing multiple valuation methods, as appropriate for each asset, including an income approach using discounted cash flow analysis and a sales comparable analysis. The key assumptions used in the discounted cash flow approach were specific to each property type, market location, and quality of each property and were based on similar investors’ return expectations and market assessments. The key assumptions are reflected in the table included under “Allocation of Estimated NAV per Share” below. In calculating values for our assets, our Advisor usedboth balance sheet and estimates of cash flow estimates as of September 30, 2019.2021 were used.

In forming its opinion, Capright prepared appraisals on allseven of our eight of ourconsolidated investment properties in connection with the valuation. An appraisal was not deemed necessary for one of our investment properties, BayVue Apartments, as it was recently acquired and its value was determined by our Advisor based on its contractual purchase price. The appraisals estimated values by using discounted cash flow, comparable sales, or a weighting of these approaches in determining each property’s value. The appraisals employed a range of terminal capitalization rates, discount rates, growth rates, and other variables that fell within ranges that Capright and our Advisor believed would be used by similar investors to value the properties we own. The assumptions used in developing these estimates were specific to each property (including holding periods) and were determined based upon a number of factors including the market in which the property is located, the specific location of the property within the market, property and market vacancy, tenant demand for space, and investor demand and return requirements.

While we and our Advisor believe that the approaches used by appraisers in valuing our real estate assets, including an income approach using discounted cash flow analysis and sales comparable analysis, isare standard in the real estate industry, the estimated values for our investments in real estate may or may not represent current market values or fair values determined in accordance with generally accepted accounting principles in the United States (“GAAP”). Real estate is currently carried at its amortized cost basis in our financial statements, subject to any adjustments applicable under GAAP.

Cash and cash equivalents.The estimated value of our cash and cash equivalents approximate their carrying value due to their short term maturities.

Marketable securities, available for sale. The estimated values of our marketable securities are based on Level 2 inputs. Level 2 inputs are inputs 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. All of our marketable securities measured using Level 2 inputs were valued based on a market approach using readily available quoted market prices for similar assets.

Restricted cash.The estimated value of our restricted cash approximate their carrying value due to their short term maturities.

Note receivable, net.The estimated value of our note receivable, net approximates its carrying value as of September 30, 20192021 based on current market rates for similar instruments.

Notes payable.Values for ourWe have notes payable, which consist of mortgage loans, that bear interest at both variable and fixed rates. The estimated values of our variable-rate mortgage loans were deemed to approximate their carrying values because their interest rates move in conjunction with changes to market interest rates. The estimated values of our fixed-rate notes payable were estimated by the Advisor and reviewed by Capright using a discounted cash flow analysis, which used inputs based on the remaining loan terms and estimated current market interest rates for mortgage loans with similar characteristics, including remaining loan term and loan-to-value ratios. The current market interest rates for our fixed-rate notes payable were generally determined based on market rates for available comparable debt. The estimated current market interest rates for our fixed-rate mortgage loans ranged from 4.2%2.8% to 4.5%3.8%.

Other assets and liabilities, net.Our other assets and liabilities, net consist of prepaid expenses and other assets, accounts payable and accrued and other liabilities, payables to related parties, and accrued property tax. For a majority of our other assets and liabilities, the carrying values as of September 30, 20192021 were considered equal to fair value by our Advisor due to their cost-based characteristics or short maturities. Certain other items, primarily straight-line rent receivable, intangibles and deferred costs, have been eliminated for the purpose of the valuation because those items are already considered in our valuation of the respective investments in real estate operating properties or financial instruments (i.e., notes payable).

Noncontrolling interests.In those situations where our consolidated operating properties are held in joint venture structures in which other equity holders have an ownership interest, our Advisor has valued those noncontrolling interests based on the terms of the respective joint venture agreement applied assuming a liquidation of the joint venture as of the date of valuation. The resulting allocation of value to noncontrolling interests is a deduction to the estimated NAV.

Common stock outstanding.In deriving an estimated NAV per Share, the total estimated NAV was divided by 22.5approximately 20.1 million, the total number of common shares outstanding as of September 30, 2019,2021, on a fully diluted basis, which includes financial instruments that can be converted into a known or determinable number of common shares. As of the valuation date, none of our financial instruments that could be converted into common shares are currently convertible into a known or determinable number of common shares. The determination of the number of common shares outstanding used in the estimated NAV per Share is the same as used in GAAP computations for per share amounts.

Our estimated NAV per Share was calculated by aggregating the value of our assets, subtracting the value of both our liabilities and noncontrolling interests, and dividing the net amount by the fully-diluted shares of common stock outstanding, all as of September 30, 2019.2021.

Allocation of Estimated NAV per Share

The table below sets forth the calculation of our estimated NAV per Share as of September 30, 2019,2021, as well as the calculation of our prior estimated NAV per Share as of September 30, 2018.2020. The estimated NAV per Share of $9.10$12.91 as of September 30, 2019,2021, reflects an increase of $0.63,$3.49, or 7.4%37.0%, from the estimated NAV per Share of $8.47$9.42 as of September 30, 2018.2020.

Notes:

Notes:

The following are ranges of the key assumptions used in the discounted cash flow models to estimate the value of our six multifamily properties. The discounted cash flow analysesanalysis for our student housing asset as well as our office asset are eachis for only one property, and therefore, a range of values is not applicable.

The

As of September 30, 2021, the aggregate estimated values of our investments in real estate aswas $494.1 million and the aggregate carrying value of September 30, 2019 reflectour investments in real estate was $320.6 million, which equates to an aggregateoverall increase in value of 25.9% compared to their original contractual purchase price or an aggregate increase of 19.4% compared to their original contractual purchase price plus capital expenditures after acquisition.54.1%.

While we believe that our assumptions utilized are reasonable, a change in these assumptions would affect the calculation of the value of our real estate assets. The table below presents the estimated increase or decrease to our estimated NAV per Share resulting from a 25 basis point increase and decrease in the discount rates and capitalization rates for seven of the eight consolidated properties we currently own. The table is presented to provide a hypothetical illustration of possible results if only one change in assumptions was made, with all other factors remaining constant. Further, each of these assumptions could change by more or less than 25 basis points or not at all.

Historical Estimated NAV per Share

The historical reported estimated NAV per Share of our common stock as approved by our board of directors for the preceding year is set forth below:

Limitations and Risks

As with any valuation methodology, the methodology used to determine our estimated NAV and resulting NAV per Share is based upon a number of estimates and assumptions that may prove later not to be accurate or complete. Further, different participants with different property-specific and general real estate and capital market assumptions, estimates, judgments and standards could derive a different estimated NAV per Share, which could be significantly different from the estimated NAV per Share approved by our board of directors. The estimated NAV per Share approved by our board of directors does not represents the fair value of our assets and liabilities in accordance with GAAP, and such estimated NAV per Share is not a representation, warranty or guarantee that:

The Internal Revenue Service and the Department of Labor do not provide any guidance on the methodology an issuer must use to determine its estimated NAV per share. FINRA guidance provides that NAV valuations be derived from a methodology that conforms to standard industry practice.

As with any valuation methodology, our methodology is based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive different estimated NAVs and resulting NAVs per share, and these differences could be significant. The estimated NAV per Share is not audited and does not represent the fair value of our assets less our liabilities in accordance GAAP, nor do they represent an actual liquidation value of our assets and liabilities or the amount shares of our common stock would trade at on a national securities exchange. Our estimated NAV per Share is based on the estimated value of our assets less the estimated value of our liabilities and other non-controlling interests divided by the number of our diluted shares of common stock outstanding, all as of the date indicated. Our estimated NAV per Share does not reflect a discount for the fact we are externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values. Our estimated NAV per Share does not take into account estimated disposition costs or fees or penalties, if any, that may apply upon the prepayment of certain of our debt obligations or the impact of restrictions on the assumption of certain debt. Our estimated NAV per Share will fluctuate over time as a result of, among other things, future acquisitions or dispositions of assets, developments related to individual assets and the management of those assets and changes in the real estate and capital markets. Different parties using different assumptions and estimates could derive different NAVs and resulting estimated NAVs per share, and these differences could be significant. Markets for real estate and real estate-related investments can fluctuate and values are expected to change in the future. Our Estimated Valuation Policy requires us to update our estimated NAV per Share value on an annual basis. Our board of directors will review and approve each estimate of NAV and resulting estimated NAV per Share.

The following factors may cause a stockholder not to ultimately realize distributions per share of common stock equal to the estimated NAV per Share upon liquidation:

Holders

As of March 15, 2020,2022, we had 22.220.1 million shares of common stock outstanding held by 10,6529,971 stockholders.

Distributions

Distributions

We made an election to qualify as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2008. U.S. federal tax law requires a REIT distribute at least 90% of its annual REIT taxable income (which does not equal net income, as calculated in accordance with generally accepted accounting principles, or GAAP) determined without regard to the deduction for dividends paid and excluding any net capital gain. In order to continue to qualify for REIT status, we may be required to make distributions in excess of cash available. Distributions are authorized at the discretion of our board of directors based on their analysis of our performance over the previous periods and expectations of performance for future periods. Such analyses may include actual and anticipated operating cash flow, capital expenditure needs, general financial and market conditions, proceeds from asset sales and other factors that our board of directors deem relevant. Our board of directors’ decisions will be substantially influenced by their obligation to ensure that we maintain our federal tax status as a REIT. We cannot provide assurance that we will pay distributions at any particular level, or at all.

Prior to 2012, our board of directors declared distributions on a regular quarterly basis based on daily record dates, portions of which were paid on a monthly basis. During the first quarter of 2012, our board of directors determined to cease regular monthly distributions in favor of payment of periodic special distributions.

During 2014 and 2015, our board of directors declared a total of $77.1 million, or $3.00 per share of common stock, in special cash distributions, all of which were paid to stockholders during 2014, 2015, and 2016. These special cash distributions were paid with a portion of proceeds from asset sales. No special cashfurther distributions have been declared or paid since 2016.

Recent Sales of Unregistered Securities

During the year ended December 31, 2019,2021 and 2020, we did not sell any equity securities that were not registered under the Securities Act of 1933.

Securities Authorized for Issuance under Equity Compensation Plans

None.

Tender Offers

2020 Tender Offer

We commenced a tender offer on June 16, 2020, pursuant to which we offered to acquire up to 300,000 shares of our common stock at a purchase price of $2.25 per share, or approximately $0.7 million in the aggregate (the “2020 Tender Offer”).

The 2020 Tender Offer terminated on July 24, 2020, and a total of 26,637 shares were validly tendered and not withdrawn pursuant to the 2020 Tender Offer as of such date. In accordance with the terms of the 2020 Tender Offer, we subsequently repurchased all of the tendered shares for approximately $0.1 million in August 2020.

None.

2019 Tender Offer

We commenced a tender offer on December 17, 2019, pursuant to which we offered to acquire up to 2.0 million shares of our common stock at a purchase price of $7.75 per share, or $15.5 million in the aggregate (the “Tender“2019 Tender Offer”).

The 2019 Tender Offer terminated on February 28, 2020, and a total of 2,183,888 shares of our common stock were validly tendered and not withdrawn pursuant to the 2019 Tender Offer as of such date, an amount that exceeded the maximum number of shares of our common stock that we offered to purchase pursuant to the 2019 Tender Offer. In accordance with the terms of the 2019 Tender Offer, we will purchasesubsequently repurchased a total of 2,000,000approximately 2.0 million shares for approximately $15.6 million in April 2020.

Because the amount of our common stock validly tendered andrepurchase requests exceeded the maximum number of shares we had offered to repurchase, we repurchased shares on a pro-rata basis, subject to “odd lot” priority as described in the 2019 Tender Offer. Excluding the stockholders eligible for “odd lot” priority that were not withdrawn at a price of $7.75 per share for an aggregate purchase price of $15.5 million. We will repurchasebe subject to proration, approximately 91.58% of the number of shares of our common stock tendered by each remaining stockholder who participated in the Offer.2019 Tender Offer were repurchased by us. 

Share Redemption Program and Redemption Price

Our board of directors has adopted a share redemption program (the “SRP”) that permits stockholders to sell their shares back to us, subject to the significant conditions and limitations of the SRP. Our board of directors can amend the provisions of our SRP at any time without the approval of our stockholders.

During both the years ended December 31, 2019 and 2018, we redeemed 1.2 million shares of our common stock at average prices per share of $7.94 and $7.10, respectively.

The terms on which we redeemed shares prior to July 1, 2018 differed between redemptions upon a stockholder’s death, “qualifying disability” (as defined in the SRP) or confinement to a long-term care facility (collectively, Exceptional Redemptions) and all other redemptions or Ordinary Redemptions.

Prior to July 1, 2018, the per share redemption price for Ordinary Redemptions and Exceptional Redemptions was equal to the lesser of 80% and 90%, respectively, of (i) the then current estimated NAV per Share and (ii) the average price per share the investor paid for all of his shares (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to our common stock) less the Special Distributions (as defined in the SRP).

On August 9, 2017, our board of directors adopted a Fourth Amended and Restated Share Redemption Program (the “Fourth Amended SRP”) which became effective July 1, 2018. The material changes made to the SRP were as follows. We no longer process redemptions upon death, “qualifying disability,” or confinement to a long-term care facility on terms different than those on which we process all other redemptions. The price at which we redeem shares submitted for redemption will be a percentage of the estimated NAV per Share as of the Effective Date (as defined in the Fourth Amended SRP), as follows:

Pursuant to the terms of the Fourth Amended SRP, any shares approved for redemption are redeemed on a periodic basis as determined from time to time by our board of directors, and no less frequently than annually.  We will not redeem, during any twelve-month period, more than 5% of the weighted average number of shares outstanding during the twelve-month period immediately prior to the date of redemption.  In addition, the cash available for redemptions is limited to no more than $10.0 million in any twelve-month period.  Any redemption requests are honored pro rata among all requests received based on funds available and are not honored on a first come, first served basis.

On December 28, 2018, our board of directors adopted a Fifth Amended and Restated Share Redemption Program (the “Fifth Amended SRP”) which became effective on January 31, 2019. The only material change to the SRP was to change the measurement period for the limitations on the number and dollar amount of shares that may be accepted for redemption from a rolling 12 month-period to a calendar year.

In accordance with our Fifth Amended SRP, the per share redemption price automatically adjusted to $8.64 effective November 7, 2019 as a result of the determination and approval by our board of directors of the updated estimated NAV per Share.

In connection with its approval of the Tender Offer, on December 13, 2019, our board of directors approved the suspension of the SRP. Pursuant to the terms of the SRP, while the SRP is suspended, the Companywe will not accept any requests for redemption and any such requests and all pending requests will not be honored or retained, but will be returned to the requestor.

Effective March 25, 2021, our board of directors reopened the SRP solely for redemptions submitted in connection with a stockholder’s death and at that date set the price for all such purchases to $9.42, which was 100% of the NAV per Share as of September 30, 2020. Deaths that occurred subsequent to January 1, 2020 were eligible for consideration, however, 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 an annual basis, we will not redeem in excess of 0.5% of the number of shares outstanding as of the end of the preceding year. Death redemption requests are expected to be processed on a quarterly basis and may be subject to pro ration if death redemption requests exceed the annual limitation.

Our board of directors will continue to consider the liquidity available to stockholders going forward, balanced with other long-term interests of the stockholders and the Company.us. It is possible that in the future additional liquidity will be made available by the Companyus through the SRP, issuer tender offers or other methods, though we can make no assurances as to whether that will happen, or the timing or terms of any such liquidity.

In accordance with the SRP, the per share redemption price automatically adjusted to $12.91 effective November 11, 2021 as a result of the determination and approval by our board of directors of the updated estimated NAV per Share.

During the year ended December 31, 2021 we redeemed 65,029 shares of common stock, pursuant to the SRP at an average price per share of $9.42 per share.

Item 7. 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 and the notes thereto.

Executive Overview

We were formed primarily to acquire and operate commercial real estate and real estate-related assets on an opportunistic and value-add basis. In particular, we have focused generally on acquiring commercial properties with significant possibilities for capital appreciation, such as those requiring development, redevelopment or repositioning, those located in markets and submarkets with high growth potential, and those available from sellers who were distressed or faced time-sensitive deadlines. In addition, our opportunistic and value-add investment strategy has included investments in real estate-related assets that present opportunities for higher current income. Since inception, we have acquired a wide variety of commercial properties, including office, industrial, retail, hospitality, and multifamily. We have purchased existing, income-producing properties and newly constructed properties. We have also invested in mortgage and mezzanine loans. We have made our investments in or in respect of real estate assets located in the United States and other countries based on our view of existing market conditions. As of December 31, 2019,2021, our investments included multifamilymulti-family apartment complexes and student housing communities and an office building, which we subsequently sold on January 15, 2020.a note receivable. All of our current investments are located in the United States. We currently intend to hold our various real properties until such time as our board of directors determines 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.

Current Environment

Our operating results 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, 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, and recession.

With respectCOVID-19 Pandemic

The World Health Organization declared COVID-19 a global pandemic on March 11, 2020 and since that time many of the previously imposed restrictions and other measures which were instituted in response have been subsequently reduced or lifted. However, the continuing COVID-19 pandemic remains highly unpredictable and dynamic and its ultimate duration and extent continue to contagious diseases,be dependent on various developments, such as the emergence of variants to the virus that may cause additional strains of COVID-19, the ongoing administration and ultimate effectiveness of vaccines, including booster shots, and the eventual timeline to achieve a sufficient level of herd immunity among the general population. Accordingly, the ongoing COVID-19 pandemic may have negative effects on the health of the U.S. economy for the foreseeable future. 

As of December 31, 2021, our consolidated portfolio of properties consisted of eight wholly owned multi-family apartment complexes. Our multi-family properties have not been significantly impacted by the COVID-19 pandemic and their occupancy levels, rental rates and rental collection have remained stable. Additionally, our note receivable is collateralized by a condominium development project located in New Yok City (the “Condominium Project”), which has been subject to similar restrictions and risks. To date, both the Condominium Project and our note receivable have not been significantly impacted by the COVID-19 pandemic.

We continue to closely monitor the overall extent as to which our business may be affected by the current outbreak of the Coronavirusongoing COVID-19 pandemic which will largely depend on both current and future developments, including its duration, spread and treatment, and related travel advisories and restrictions, all of which are highly uncertain and cannot be reasonably predicted.

If our properties and real estate-related investments are negatively impacted in future periods for an extended period because our(i) tenants are unable to pay their rent, (ii) leasing demand falls causing declines in occupancy levels and/or rental rates, and (iii) our borrower is unable to pay scheduled debt service on the outstanding note receivable; our business and financial results could be materially and adversely impacted. While we believe there are certain cost reduction strategies we can implement, there can be no assurance that they would fully mitigate the adverse impact of any lost revenue.

These and other market and economic challenges could materially affect (i) the value and performance of our investments, (ii) our ability to pay future distributions, if any, (iii) the availability or terms of financings, (iv) our ability to make scheduled principal and interest payments, and (v) our ability to refinance any outstanding debt when contractually due.

We are not currently aware of any other material trends or uncertainties, favorable or unfavorable, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from our operations, other than those referred to above or throughout this Form 10-K. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US 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.

Liquidity and Capital Resources

We had cash and cash equivalents of $15.6$24.4 million, and marketable securities, available for sale of $5.5$3.6 million and restricted cash of $20.9 million as of December 31, 2019.2021. Our principal demands for funds going forward willare expected to be for the payment of (a) operating expenses, including capital expenditures, and (b) interest and principalscheduled debt service on our outstanding indebtedness, (c)indebtedness. We also may, at our discretion, use funds for (a) tender offers and/or redemptions of our shares of our common stock, (d)(b) distributions, if any, to our shareholders, (e) the remaining funding of the 500 West 22^nd Avenue Mezzanine Loan and (f)(c) selective acquisitions and/or real estate-related investments. Generally, we expect to meet our cash needs with our cash and cash equivalents on hand andalong with our cash flow from operations.operations, the release of certain funds held in restricted cash, the remaining availability on certain of our mortgage loans and the repayment of our outstanding note receivable. However, to the extent that our cash on hand and cash flow from operationsthese sources are not sufficient to cover our cash needs, we may also use proceeds from additional borrowings and/or selective asset sales to fund such needs.

We have borrowed money to acquire properties and make other investments. Under our charter, the maximum amount of our indebtedness is limited to 300% of our “net assets” (as defined by our charter) as of the date of any borrowing; however, we may exceed that limit if approved by a majority of our independent directors. In addition to our charter limitation, our board of directors has adopted a policy to generally limit our aggregate borrowings to approximately 75% of the aggregate value of our assets unless substantial justification exists that borrowing a greater amount is in our best interests. Our policy limitation, however, does not apply to individual real estate assets.

AcquisitionsAcquisition and Investments ActivityDisposition Activities

Valley Ranch ApartmentsYear Ended December 31, 2021

Disposition of the Lakes of Margate

On February 14, 2019,March 17, 2021, we completed the disposition of a 280-unit multifamily property located in Margate, Florida (the “Lakes of Margate”) for a contractual sales price of $50.8 million to an unrelated third party (the “Lakes of Margate Buyer”). At closing, the Lakes of Margate Buyer paid $15.1 million and assumed the existing mortgage loan secured by the Lakes of Margate with an outstanding principal balance of $35.7 million (see “Debt Financings – Lakes of Margate Loan”). Additionally, on March 17, 2021, we paid approximately $1.1 million for the 7.5% membership interest held in the Lakes of Margate by a minority owner and as a result, at the time of the completion of the sale of the Lakes of Margate it was wholly owned by us. In connection with the disposition of the Lakes of Margate, we recognized a gain on the sale of investment property of $27.8 million during the first quarter of 2021.

Acquisition of the BayVue Apartments

On July 7, 2021, we completed the acquisition of a 384-unit368-unit multifamily property located in Ann Arbor, MichiganTampa, Florida (the “Valley Ranch“BayVue Apartments”) from an unrelated third party, for an aggregatea contractual purchase price of approximately $70.3$59.5 million, excluding closing and other related transaction costs. The acquisition was funded with $44.3 million of initial proceeds from a mortgage financing (see “Debt Financings – BayVue Apartments Mortgage”) and $15.2 million of cash on hand, including escrowed funds released by a qualified intermediary. In connection with the acquisition, ourwe paid the Advisor received an aggregate of approximately $1.3$1.0 million in acquisition fees and acquisition expense reimbursements.

Acquisition of the Citadel Apartments

On October 6, 2021, we acquired a 293-unit multifamily property located in Houston, Texas (the “Citadel Apartments”), from an unrelated third party, for a contractual purchase price of $66.0 million, excluding closing and other acquisition related costs. The acquisition was funded with $38.0 million of initial proceeds from mortgage financings (see “Debt Financings – Citadel Apartments Mortgages”) and $28.0 million of cash on hand. In connection with the acquisition, we paid the Advisor an aggregate of $1.2 million in acquisition fees and acquisition expense reimbursements.

Disposition of the Valley RanchRiver Club Properties

On December 22, 2021, we completed the disposition of the River Club Apartments we simultaneously entered intoand the Townhomes at River Club, two student housing complexes with a seven-year $43.4total of 1,134 beds (collectively, the “River Club Properties”) located in Athens, Georgia, for a contractual sales price of $77.3 million non-recourse mortgage loan (the “Valley Ranch Mortgage”) scheduled to mature on March 1, 2026. The Valley Ranch Mortgage bears interest at 4.16% and requires monthly interest-only payments through its stated maturity. The Valley Ranch Mortgage is collateralized by the Valley Ranch Apartments.

500 West 22^nd Street Mezzanine Loan

On February 28, 2019, we, as the lender, and an unrelated third party (the “500 West 22^nd Street Mezzanine Loan Borrower),party. In connection with the transaction, we repaid in full the existing outstanding mortgage indebtedness of $30.4 million secured by the River Club Properties. Additionally, on December 20, 2021, we paid approximately $10.2 million for the 15.0% membership interest held in the River Club Properties by a minority owner and as a result, at the borrower, entered into a promissory note (the “500 West 22nd Street Mezzanine Loan”) pursuant to which we would fund up to $12.0 million of mezzanine financing. On the same date, we initially funded $8.0 milliontime of the 500 West 22nd Street Mezzanine Loan. Subsequently throughcompletion of the sale of the River Club Properties it was wholly owned by us. In connection with the disposition of the River Club Properties, we recognized a gain on the sale of investment property of $55.0 million during the fourth quarter of 2021.

Acquisition of Noncontrolling Interest in Parkside

On December 31, 2019,30, 2021, we funded an additional $3.4acquired the noncontrolling member’s 10.0% ownership interest in Parkside for $3.6 million and as a result, the outstanding principal balancenow own 100% of the 500 West 22nd Street Mezzanine Loan was $11.4 million with $0.6 million unfunded as of December 31, 2019. The 500 West 22^nd Street Mezzanine Loan is classified in Note Receivable on our consolidated balance sheet as of December 31, 2019. See Note 7 – “Note Receivable” of the Notes to Consolidated Financial Statements for additional information.Parkside.

Year Ended December 31, 2020

Axis at Westmont

Acquisition of Autumn Breeze Apartments

On November 27, 2018,March 17, 2020, we completed the acquisition of a 400-unit280-unit multifamily property located in Westmont, IllinoisNoblesville, Indiana (the “Axis at Westmont”“Autumn Breeze Apartments”) from an unrelated third party for an aggregatea contractual purchase price of approximately $59.3$43.0 million, excluding closing and other related transaction costs.

The acquisition was initially funded with cash on hand and we subsequently obtained mortgage financing (see “Debt Financings. – Autumn Breeze Apartments Loan”). In connection with the acquisition, we assumed approximately $37.6paid the Advisor $0.8 million in acquisition fees and acquisition expense reimbursements.

Disposition of existing mortgage debt (the “Axis at Westmont Mortgage”) and paid approximately $21.7 million of cash and our Advisor received an acquisition fee of approximately $1.0 million.

Dispositions Activity and Properties Held for Sale

Gardens Medical Pavilion

On January 15, 2020, we and our noncontrolling member completed the disposition of the Gardens Medical Pavilion located in Palm Beach Gardens, Florida for an aggregatea contractual sales price of $24.3 million. Approximatelymillion to an unrelated third-party. In connection with the transaction, we repaid in full the existing mortgage indebtedness of $12.6 million and $1.8 million of the proceeds were used towardsdistributed to the repaymentnoncontrolling member. In connection with the disposition of the Gardens Medical Mortgage (weighted average interest rate of 3.84% as of December 31, 2019). As of December 31, 2019, the Gardens Medical Pavilion, met the criteria to be classified as held for sale and therefore, its associated assets and liabilities are classified as held for sale in the consolidated balance sheet as of December 31, 2019.

Lakes of Margate

During the fourth quarter of 2019, the Lakes of Margate met the criteria to be classified as held for sale and therefore, its associated assets and liabilities, which are expected to be sold within twelve months, are classified as held for sale in the consolidated balance sheet as of December 31, 2019.

22 Exchange

On December 28, 2018, we and the 10.0% noncontrolling member relinquished our ownership of 22 Exchange, a student housing complex with a retail component, located in Akron, Ohio, through a deed-in-lieu of foreclosure transaction with the lender. Upon relinquishment of the property, we were relieved of approximately $22.6 million of mortgage obligations, including accrued and unpaid interest associated with the mortgage loan and other liabilities. In connection with the extinguishment of the mortgage debt obligation, we recognized a $2.8 million gain on extinguishmentthe sale of debtinvestment property of $5.5 million during the year ended December 31, 2018, representing the difference between the carrying valuefirst quarter of the mortgage debt, accrued interest payable and other obligations extinguished (an aggregate of $22.6 million) over the carrying value of the property and other assets transferred (an aggregate of $19.8 million) less an additional $0.1 million of expenses incurred in connection with the disposition.2020.

Additionally, see Note 10 and Note 15 of the Notes to Consolidated Financial Statements for further information related to subsequent events during the period from January 1, 2020 through the date of this filing.

Debt Financings

From time to time, we have obtained mortgage, bridge, or mezzanine loans for acquisitions and investments, as well as property development.development, redevelopment and renovations. In the future, we may obtain financingnew financings for property developmentsuch activities or to refinance our existing real estate assets, depending on multiple factors.

As of December 31, 2019, ourOur aggregate notes payable balance was $183.8$277.5 million, net of deferred financing fees of $3.0$4.8 million, and had a weighted average interest rate of 4.14%. As3.79% as of December 31, 2018, we had a2021. Excluding the Lakes of Margate Loan (which was included in liabilities held for sale on the consolidated balance sheet as of December 31, 2020 and subsequently assumed by the Lakes of Margate Buyer on March 17, 2021), our aggregate notes payable balance of $139.0was $213.0 million, net of deferred financing fees of $2.4$3.4 million, withand had a weighted average interest rate of 4.28%.3.71% as of December 31, 2020.

Debt TransactionsYear Ended December 31, 2021

BayVue Apartments Mortgage

On June 13, 2019,July 7, 2021, we entered into a seven-year $28.8 million non-recourse mortgage loan facility for up to $52.2 million (the "Flats“BayVue Apartments Mortgage”) scheduled to initially mature on July 9, 2024, with two, one-year extension options, subject to the satisfaction of certain conditions. At closing $44.3 million was initially funded under the BayVue Apartments Mortgage. The BayVue Apartments Mortgage requires monthly interest-only payments through its maturity date and bears interest at Fishers Mortgage"London Interbank Offered Rate (“LIBOR”)+3.10% subject to a 3.10% floor. The BayVue Apartments Mortgage is collateralized by the BayVue Apartments. In connection with the BayVue Apartments Mortgage, we paid the Advisor $0.3 million in debt financing fees. As of December 31, 2021, the outstanding principal balance and remaining availability under the BayVue Apartments Mortgage was $44.4 million and $7.8 million, respectively. The remaining availability may be drawn for certain capital improvements to the property pursuant to the terms of the loan agreement

Flats at Fisher Supplemental Mortgage

On August 16, 2021, we entered into a non-recourse subordinated mortgage loan for $9.2 million (the “Flats at Fisher Supplemental Mortgage”) scheduled to mature on July 1, 2026. The Flats at FishersFisher Supplemental Mortgage requires monthly payments of interest and principal of $43,083 through its maturity date and bears interest at 3.78%3.85%. The Flats at Fisher Supplemental Mortgage is collateralized with a subordinated mortgage interest in the Flats at Fisher. In connection with the Flats at Fisher Supplemental Mortgage, we paid the Advisor $0.1 million in debt financing fees.

Arbors Harbor Town Supplemental Mortgage

On September 30, 2021, we entered into a non-recourse subordinated mortgage loan for $5.9 million (the “Arbors Harbor Town Supplemental Mortgage”) scheduled to mature on January 1, 2026. The Arbors Harbor Town Supplemental Mortgage requires monthly payments of interest and principal of $26,379 through its maturity date and bears interest at 3.52%. The Arbors Harbor Town Supplemental Mortgage is collateralized with a subordinated mortgage interest in the Arbors Harbor Town. In connection with the Arbors Harbor Town Supplemental Mortgage, we paid the Advisor $0.1 million in debt financing fees.

Citadel Apartments Mortgages

On October 6, 2021, we entered into a non-recourse mortgage loan facility for up to $39.2 million (the “Citadel Apartments Senior Mortgage”). At closing, $30.4 million of proceeds were initially advanced under the Citadel Apartments Senior Mortgage. The Citadel Apartments Senior Mortgage requires monthly interest-only payments through its maturity date and bears interest at LIBOR+1.50% subject to a 1.60% floor. Simultaneously, on October 6, 2021, we also entered into a non-recourse mortgage loan facility for $9.8 million (the “Citadel Apartments Junior Mortgage” and together with the Citadel Apartments Senior Mortgage, the “Citadel Apartments Mortgages”). At closing, $7.6 million of proceeds were initially advanced under the Citadel Apartments Junior Mortgage. The Citadel Apartments Junior Mortgage requires monthly interest-only payments through its maturity date and bears interest at LIBOR+8.75%, subject to a 8.85% floor.

The Citadel Apartments Mortgages initially mature on October 11, 2024, with two one-year extension options, subject to the satisfaction of certain conditions, and are collateralized by the Citadel Apartments while the Citadel Apartments Junior Mortgage is subordinate to the Citadel Apartments Senior Mortgage. In connection with the acquisition of the Citadel Apartments, an aggregate $38.0 million was initially funded under the Citadel Apartments Mortgages and we paid the balance of the purchase price of $28.0 million with cash. In connection with the Citadel Apartments Mortgages, we paid the Advisor an aggregate of $0.5 million in debt financing fees. As of December 31, 2021, the aggregate outstanding principal balance and remaining availability under the Citadel Apartment Mortgages were $38.0 million and $11.0 million, respectively. All of the remaining availability of $11.0 million under the Citadel Apartment Mortgages was subsequently advanced to us in January 2022.

Year Ended December 31, 2020

Autumn Breeze Apartments Loan

On March 31, 2020, we entered into a 10-year $29.9 million non-recourse mortgage loan (the “Autumn Breeze Apartments Loan”) scheduled to mature on April 1, 2030. The Autumn Breeze Apartments Loan bears interest at 3.39% and requires monthly interest-only payments through June 30, 2023 and monthly principal and interest payments of approximately $0.1 million thereafter, through its stated maturity. The Autumn Breeze Apartments Loan is collateralized by the Autumn Breeze Apartments. In connection with the Autumn Breeze Apartments Loan, we paid the Advisor $0.3 million in debt financing fees.

Lakes of Margate Loan

On June 26, 2020, we and the noncontrolling member entered into a 10-year, $35.7 million non-recourse mortgage loan (the “Lakes of Margate Loan”) scheduled to mature on July 1, 2030. The Lakes of Margate Loan bears interest at LIBOR+2.98% and requires monthly interest-only payments through the first twofour years of the term and thereafter, monthly payments of principal and interest based upon a 30-year amortization. The Flats at Fishers Mortgage is collateralized by the Flats at Fishers.

On December 31, 2019, we repaid in full our $13.4 million non-recourse mortgage loan (the “LakesLakes of Margate Mortgage”)Loan is collateralized by the Lakes of Margate.

On May 1, 2018, we entered into a seven-year non-recourse mortgage loan (the “River Club Mortgage”) in the amount of $30.4 million. The River Club Mortgage bears interest at Libor plus 1.78% and requires monthly interest-only payments during the first five years and interest and principal payments pursuant to a 30-year amortization schedule for the remaining two years through its stated maturity In connection with the entire unpaid balance due upon maturity. The River Club Mortgage is cross-collateralized byLakes of Margate Loan, we paid the River Club and the Townhomes at River Club. At closing,Advisor $0.4 million in debt financing fees. Additionally, approximately $23.4$1.4 million of the financing proceeds fromwere distributed to the River Club Mortgage were used to repay in fullnoncontrolling member. On March 15, 2021, the then existing non-recourse mortgage loan.

On June 1, 2018, we entered into a seven-year non-recourse mortgage loan (the “Parkside Mortgage”) inLakes of Margate Loan was assumed by the amountLakes of $18.0 million. The Parkside Mortgage bears interest at 4.45% and requires monthly interest and principal payments pursuant to a 30-year amortization schedule through its stated maturity with the entire unpaid balance due upon maturity. The Parkside Mortgage is collateralized by Parkside. At closing, approximately $9.6 million of the proceeds from the Parkside Mortgage were used to repay in full the then existing non-recourse mortgage loan.

On June 28, 2018, we entered into a three-year non-recourse mortgage loan (the “Gardens Medical Mortgage”) in the amount of $13.0 million. The Gardens Medical Mortgage bore interest at Libor plus 1.90% and required monthly interest and principal payments through its stated maturity. As discussed above,Margate Buyer in connection with the saledisposition of the Gardens Medical Center on January 15, 2020, we repaid in fullproperty.

LIBOR

The Citadel Apartments Mortgages and the Garden Medical Mortgage. The Gardens MedicalBayVue Apartments Mortgage are indexed to LIBOR. In late 2021, it was collateralizedannounced LIBOR interest rates will cease publication altogether by June 30, 2023. We have and intend continue to incorporate relatively standardized replacement rate provisions into our LIBOR-indexed debt documents, including a spread adjustment mechanism designed to equate to the current LIBOR “all in” rate. There is significant uncertainty with respect to the implementation of the phase out and what alternative indexes will be adopted which will ultimately be determined by the Gardens Medical Pavilion.

On November 27, 2018, we assumed the Axis at Westmont Mortgage. The Axis at Westmont Mortgage is collateralized by the Axis at Westmont, bears interest at a fixed annual rate of 4.39% and requires monthly interest only payments until March 1, 2021, at which time monthly principal and interest payments of $0.2 million are required. Any unpaid principal and interest is due on the maturity date, February 1, 2026. We have the right to prepay the entire outstanding amount of the loan provided that if prepayment is made prior to November 1, 2025, a prepayment premium is required. The fair value of the Axis at Westmont Mortgage approximated its outstanding balance as of the date of assumption.

On December 28, 2018, we entered into a seven-year non-recourse mortgage loan (the “Arbors Harbor Town Mortgage”) in the amount of $29.0 million. The Arbors Harbor Town Mortgage bears interest at 4.53% and requires monthly interest payments through its stated maturity with the entire unpaid balance due upon maturity. The Arbors Harbor Town Mortgage is collateralized by the Arbors Harbor Town. At closing, approximately $23.7 million of the proceeds from the Arbors Harbor Town Mortgage were used to repay in full the then existing non-recourse mortgage loan and an additional $1.9 million of the proceeds were used to acquire the 6.0% membership interest in the property previously held by a minority owner, andmarket as a result, we now own 100.0% of this property.

As discussed above, on December 28, 2018, wewhole. It therefore remains uncertain how such changes will be implemented and the 10.0% noncontrolling memberrelinquished our ownership of22 Exchangethrough a deed-in-lieu of foreclosure transaction witheffects such changes would have on us and the lender. Upon relinquishment of the property,we wererelieved of approximately $22.6 million of mortgage obligations, including accrued and unpaid interest associated with the mortgageloan and other liabilities.financial markets generally.

Debt Compliance

Our loan agreements stipulate that we comply with certain reporting and financial covenants.  These covenants include, among other things, maintaining minimum debt service coverage ratios, loan to value ratios, and liquidity.  We are currently in compliance with all of our debt covenants.

Contractual Obligations

One of our principal short-term and long-term liquidity requirements includes the repayment of maturing debt. The following table provides information with respect to the contractual maturities and scheduled principal repaymentsdebt service payments of our indebtedness as of December 31, 20192021 (dollars in thousands):

Results of Operations

As of December 31, 2019,2021, we had eight wholly owned real estate investments (four wholly owned properties and four properties consolidated through investments in joint ventures)(multi-family apartment complexes) and one real estate-related investment (mezzanine loan). During 2019,

On July 7, 2021 we acquired one property (Valley Ranch Apartments)the BayVue Apartments and on February 14, 2019October 6, 2021 we acquired the Citadel Apartments (collectively, the “2021 Acquisitions”) and entered into a mezzanine loan (500 West 22nd Street Mezzanine Loan) on February 28, 2019. Additionally, in January 2019,March 17, 2020, we received proceeds of approximately $10.9 million related to our equity method investment in Prospect Park.acquired the Autumn Breeze Apartments (the “2020 Acquisition” and together with the 2021 Acquisitions, the “Acquisitions”).

As of December 31, 2018, we had eight real estate investments, seven of which were consolidated (three wholly owned properties and four properties consolidated through investments in joint ventures) and one real estate investment which we account for under the equity method. During 2018,On March 17, 2021 we disposed of one property (22 Exchange)the Lakes of Margate and on December 28, 201822, 2021 we disposed of the River Club Properties (collectively, the “2021 Dispositions”) and acquired one property (Axis at Westmont) on November 27, 2018. March 15, 2020 we disposed of the Gardens Medical Pavilion (the “2020 Disposition” and together with the 2021 Dispositions, the “Dispositions”).

The disposition of 22 ExchangeDispositions did not qualify to be reported as discontinued operations since itthey did not represent a strategic shift that had a major effect on our operations and financial results. Accordingly, the operating results of 22 Exchangethe Dispositions are reflected in our results from continuing operations for all periods presented through its datetheir dates of disposition.

Year ended December 31, 20192021 as compared to the year ended December 31, 20182020

Our results of operations for the year ended December 31, 20192021 compared to the same period in 20182020 reflect our acquisition and disposition activities during such periods. Properties which were owned by us during the entire periods presented are referred to as our “Same Store” properties.

The following table provides summary information about our results of operations for the years ended December 31, 20192021 and 20182020 (dollars in thousands):

_____________

The following table reflects total rental revenues and total property operating expenses for the years ended December 31, 20192021 and 20182020 for our (i) Same Store properties, (ii) acquisitions and (iii) dispositions (dollars in thousands):

The tables below reflect occupancy and effective monthly rental rates for our Same Store properties: