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PART II

ItemITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.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 aan active public market for them will develop.

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

On November 11, 2021,9, 2023, pursuant to the Policy for Estimation of Common Stock Value (the “Estimated Valuation Policy”), the boardBoard of directors of Lightstone Value Plus REIT V, Inc. (the “Company,” “we,” “us,” or “our”)Directors determined and approved our estimated NAV of approximately $260.1$304.8 million and resulting estimated NAV per Share of $12.91$15.46 both as of September 30, 2021.2023. Our estimated NAV and resulting NAV per Share are based upon the estimated fair values of our assets and liabilities as of September 30, 20212023 and are effective as of November 11, 2021.9, 2023.

TheOur estimated NAV of our sharesper Share was calculated as of a particular point in time. TheAccordingly, our estimated NAV of our sharesper Share 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 changes in the real estate and financefinancial 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 externally managed by LSG Developmentthe Advisor, LLC (the “Advisor”), which is an affiliate of The Lightstone Group LLC (“Lightstone”)which provides advisory services to us 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 boardBoard of directorsDirectors 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, 20212023 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 boardBoard of directorsDirectors 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 boardBoard of directorsDirectors reviewed and considered the valuation analyses prepared by our Advisor and Capright. Our Advisor presented a report to the boardBoard of directorsDirectors with an estimated NAV and resulting NAV per Share. Capright provided our boardBoard of directorsDirectors an opinion that the resulting “as-is” market value for the Company’s investment properties, as calculated by our Advisor, and the otherits remaining 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 $12.91$15.46 as of September 30, 20212023 were appropriate and reasonable. Our boardBoard of directorsDirectors conferred with our Advisor and a representative from Capright regarding the methodologies and assumptions used to reach their respective conclusions. Our boardBoard of directors,Directors, which is responsible for determining our estimated per share value, considered all information provided in light of itstheir own familiarity with our assets and liabilities and unanimously approved a NAV per Share of $12.91$15.46 as of September 30, 2021.2023.

The engagement of Capright with respect to our estimated NAV and resulting NAV per Share as of September 30, 20212023 was approved by our boardBoard of directors,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.of our investment properties. Capright did not perform engineering or structural studies or environmental studies of any of the properties, nor did they perform an independent appraisal of theour 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 investmentsinvestment properties held by us as of September 30, 2021,2023, Capright’s opinion was subject to various limitations. In connection with their engagement, Capright completed appraisals of seven of our eight consolidatedof our wholly owned multifamily properties. An appraisalOur other multifamily property, the Flats at Fishers was not deemed necessary for the BayVue Apartments as it was recently acquired and its value was determined bysold on November 1, 2023. Accordingly, our Advisor based onand Capright deemed it appropriate for its estimated fair value of $69.8 million as of September 30, 2023 to equal its contractual purchase price.sales price less closing and other related transaction costs. With respect to the seven appraisals performed by Capright, the scope of their work included:

In addition to their appraisals of seven of our consolidatedeight wholly owned multifamily properties, Capright also evaluated the following information to arrive at their opinion of Flats at Fishers and 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:asset and liability:

Investments in real estate.Investment property, net. We have generally focused on acquiring commercial real estate properties in various asset classes. Accordingly, Capright and our Advisor utilized a variety of valuation methodologies, each deemed appropriate for the asset type under consideration to assign an estimated value to each asset.

The valuevalues of our investments in real estateinvestment properties were generally 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 flowincome approach wereare 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, both balance sheet and estimates of future cash flowflows as of September 30, 20212023 were used. With respect to the Flats at Fishers, which was sold on November 1, 2023, our Advisor and Capright deemed it appropriate for its estimated fair value of $69.8 million as of September 30, 2023 to equal its contractual sales price less closing and other related transaction costs.

In forming its opinion, Capright prepared appraisals on our other seven of our eight consolidated investmentwholly owned multifamily 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,flows, 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 appraisersCapright in valuing our real estate assets,investment properties, including an income approach using a discounted cash flowflows analysis and a comparable sales comparable analysis, are standard in the real estate industry, the estimated fair values for our investments in real estateinvestment properties 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 currentlyGAAP. Our investment properties are carried at itstheir amortized cost basis, in our financial statements, subject to any adjustments applicable under GAAP.GAAP, in our consolidated financial statements.

Cash and cash equivalents. TheAs of September 30, 2023, the aggregate estimated fair value of our cash and cash equivalents were deemed to approximate their aggregate carrying value our consolidated balance sheet due to their short term maturities.

Marketable securities, available for sale. TheAs of September 30, 2023, the aggregate estimated valuesfair value of our marketable securities arewere equal to their aggregate carrying value on our consolidated balance sheet, all of which were valued 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. TheAs of September 30, 2023, the estimated fair value of our restricted cash was deemed to approximate theirits carrying value on our consolidated balance sheet due to theirits short term maturities.maturity.

Note receivable, net.The As of September 30, 2023, the estimated fair value of our note receivable, net approximateswas deemed to approximate its carrying value as of September 30, 2021on our consolidated balance sheet based on current market rates for similar instruments.

Notes payable.payable, net. We haveAs of September 30, 2023, we had notes payable, which consist of mortgage loans, that bear interest at both variable and fixed rates. The estimated fair 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 fair values of our fixed-rate notes payablemortgage loans were estimated by theour Advisor and reviewed by Capright using a discounted cash flow analysis, which used inputs based on the remaining loan terms and estimated market interest rates for mortgage loans with similar characteristics, including remaining loan term and loan-to-value ratios. The estimated market interest rates for our fixed-rate notes payable were generally determined based on market rates for available comparable debt. The estimated market interest rates for our fixed-rate mortgage loans ranged from 2.8%5.46% to 3.8%.5.88% as of September 30, 2023.

Accrued Distributions Payable. On September 29, 2023, our Board of Directors declared a special distribution of $0.11 per common share payable to shareholders of record on September 30, 2023 (the “2023 Special Distribution”). The 2023 Special Distribution, which totaled $2.2 million, was subsequently paid on or about October 16, 2023. As of September 30, 2023, the estimated fair value of our accrued distribution payable was deemed to approximate its carrying value on our consolidated balance sheet due to its short term maturity.

Other assets and liabilities, net. Our other assets and liabilities, net consist of prepaid expenses and other assets, and accounts payable, and accrued expenses and other liabilities, payables to related parties, and accrued property tax.liabilities. For a majority of our other assets and liabilities, the carrying values as of September 30, 20212023 were considered equaldeemed to approximate their fair values by our Advisor because they are already carried at their fair value by our Advisorin the consolidated balance sheet or due to their cost-based characteristics or short term maturities. Certain of our other items,assets and liabilities, primarily straight-line rent receivable, lease-related intangibles and deferred costs, have been eliminated for the purpose of the valuation because thosethese items arewere already considered in ourthe valuation of the respective investments in real estate operatinginvestment properties or financial instruments (i.e.(e.g., notes payable)receivable, notes payable, etc.).

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 anour estimated NAV per Share, the total estimated NAV was divided by approximately 20.1 million, the total number ofour fully diluted common shares outstanding as of September 30, 2021, on a fully diluted basis, which includes financial instruments that can be converted into a known or determinable number of common shares.2023. As of the valuation date, we had 19.7 million common shares outstanding and none of our financial instruments that couldmay be converted into common shares are currentlywere convertible into a known or determinable number of common shares. The determination of the number of common shares outstanding used in calculating the estimated NAV per Share is the same as used in our GAAP computations for per share amounts.amounts in our consolidated financial statements.

Our estimated NAV per Share was calculated by aggregating the valueestimated fair values of our assets, subtracting the valueestimated fair values of both our liabilities, and noncontrolling interests, and dividing the resulting estimated net amountasset value by theour fully-diluted shares of common stock outstanding, all as of September 30, 2021.2023.

Allocation of Estimated NAV per Share

The table below sets forth the calculation of our estimated NAV per Share as of September 30, 2021,2023, as well as the calculation of our prior estimated NAV per Share as of September 30, 2020.2022. The estimated NAV per Share of $12.91$15.46 as of September 30, 2021, reflects2023, represents an increase of $3.49,$0.71 per share, or 37.0%4.8%, from the estimated NAV per Share of $9.42$14.75 as of September 30, 2020.2022.

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 analysis for our student housing asset is for only one property, and therefore, a range of values is not applicable.

As of September 30, 2021,2023, the aggregate estimated valuesfair value of our investments in real estateinvestment properties was $494.1$529.1 million and the aggregate carrying value of our investments in real estateinvestment properties was $320.6 million, which equates to an overall increase in$353.8 million.

As previously discussed, the Flats of Fishers was sold on November 1, 2023 and our Advisor and Capright deemed it appropriate for its estimated fair value of 54.1%.

$69.8 million as of September 30, 2023 to equal its contractual sales price less closing and other related transaction costs. While we believe that ourCapright’s assumptions utilized for estimating the fair values for our remaining seven wholly owned multifamily properties are reasonable, a changeany changes in these assumptions would affect the calculationcalculations of the valueestimated fair values of our real estate assets.investment properties. The table below presents the estimated increase or decrease to our estimated NAV per Share as of September 30, 2023 resulting from a 25 basis point increase and decrease in the discount rates and capitalization rates for the remaining seven of the eight consolidated properties we currently own.our wholly owned multifamily properties. 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 NAVOffering Share Price and Special Distributions per Share

The historical reported estimated NAV per Share ofIn connection with our initial and follow-on public offerings (collectively, the “Offerings”), we previously offered our common stockshares for sale under the primary portion of the Offerings at a price per share of $10.00, subject to certain volume discounts. The primary portions of the Offerings commenced on January 21, 2008 and subsequently terminated effective March 15, 2012.

Through the date of this filing, the Company has declared and paid certain special distributions on its common shares aggregating $3.61 per share as approved by our board of directors for the preceding year is set forth below:follows:

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 boardBoard of directors.Directors. The estimated NAV per Share approved by our boardBoard of directorsDirectors 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 with 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 boardBoard of directorsDirectors 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, 2022,2024, we had 20.119.4 million shares of common stock outstanding held by 9,9719,879 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 boardBoard of directorsDirectors 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 boardBoard of directorsDirectors determined to cease regular distributions.

During 2014 and 2015, our boardBoard of directorsDirectors 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 further distributions have beenwere declared or paid since 2016.from 2016 through 2022.

On September 29, 2023, our Board of Directors declared a special distribution of $0.11 per common share payable to shareholders of record on September 30, 2023 (the “2023 Special Distribution”). The 2023 Special Distribution, which totaled $2.2 million, was subsequently paid on or about October 16, 2023. The 2023 Special Distribution was funded from a portion of the net proceeds generated from asset sales.

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.

Recent Sales of Unregistered Securities

During the yearyears ended December 31, 20212023 and 2020,2022, 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.

SRP

2019 Tender Offer

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

The 2019 Tender Offer terminated on February 28, 2020, and a total of 2,183,888 shares 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 we offered to purchase pursuant to the 2019 Tender Offer. In accordance with the terms of the 2019 Tender Offer, we subsequently repurchased a total of approximately 2.0 million shares for approximately $15.6 million in April 2020.

Because the amount of repurchase 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 be subject to proration, approximately 91.58% of the number of shares tendered by each remaining stockholder who participated in the 2019 Tender Offer were repurchased by us. 

Share Redemption Program and Redemption Price

Our board of directorsDirectors 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.program. Our boardBoard of directorsDirectors can amend the provisions of ourthe SRP at any time without the approval of stockholders.

On November 10, 2022, our stockholders.

On December 13, 2019, our boardBoard of directors approvedDirectors adopted a Seventh Amended and Restated Share Redemption Program (the “Amended SRP”), which became effective on January 1, 2023. Under the suspensionterms of the SRP. Amended SRP, any stockholder may request redemption of their shares, subject to the significant conditions and limitations of the program. Additionally, under the terms of the Amended SRP, we will redeem shares at 85% of the most recently published NAV per Share in effect as of the date the request for redemption is approved.

Pursuant to the terms of the Amended SRP, while the SRP is suspended, we will not accept any requestsshares approved for redemption and any such requests and all pending requests will notare redeemed on a periodic basis as determined by our Board of Directors, generally expected to be honored or retained, but will be returned toat the requestor.

Effective March 25, 2021, our boardend 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,each quarterly period. However, we will not redeem, in excess of 0.5%during any calendar year, more than 5% of the number of shares outstanding ason last day of the endprevious calendar year (the “5% Limitation”). Our Board of Directors will set the cash available for redemption of shares not less often than annually (the “Funding Limitation” and, together with the 5% Limitation, the “Redemption Limitations”). Or Board of Directors has set the amount of cash available for redemption of shares for both of the preceding year. Death redemption requests are expectedyears ended December 31, 2024 and 2023 at $8.0 million, which is generally to be processedallocated $2.0 million for each quarterly period. We may change the amount of the Redemption Limitations upon 10 business days’ notice to our stockholders and will provide notice of any change to the Redemption Limitations by including such information in (a) a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC or (b) a separate mailing to our stockholders.

Redemption requests will be honored pro rata among all requests received subject to the Redemption Limitations and will not be honored on a quarterly basisfirst come, first served basis.

Our Board of Directors reserves the right in its sole discretion at any time and may befrom time to time, subject to pro ration if deathany notice requirements described in our SRP, to (1) reject any request for redemption requests exceedof shares, (2) change the annual limitation.purchase price for redemption of shares, (3) limit the funds to be used for redemption of shares under the SRP or otherwise change the Redemption Limitations, or (4) amend, suspend (in whole or in part) or terminate the SRP.

Our boardBoard of directorsDirectors will continue to consider the liquidity available to stockholders going forward, balanced with other long-term interests of the stockholders and us. It is possible that in the future additional liquidity will be made available by us 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, 20212023 we redeemed 65,029489,912 shares of common stock, pursuant to the SRP at an average price per share of $9.42$12.55 per share.

During the year ended December 31, 2022 we redeemed 83,876 shares of common stock, pursuant to the SRP at an average price of $12.91 per share.

ItemITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

TheYou should read the following discussion and analysis should be read in conjunctiontogether with the accompanyingour consolidated financial statements and notes thereto included in this Annual Report. The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the notes thereto.forward-looking statements. Please see “Special Note Regarding Forward-Looking Statements” before Item 1 of this Annual Report for a description of these risks and uncertainties. Dollar amounts are presented in thousands, except per share data and where indicated in millions.

Executive Overview

Lightstone REIT V (which may also be referred to as the “Company,” “we,” “us,” or “our”), was organized as a Maryland corporation on January 9, 2007 and has elected to be taxed, and currently qualifies, as a REIT for U.S. federal income tax purposes.

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, multifamily and multifamily.student housing. 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 StatesU.S. and other countries based on our view of existing market conditions.

Substantially all of our business is conducted through the Operating Partnership, a limited partnership organized in Delaware. As of December 31, 2021,2023, our investments included multi-family apartment complexeswholly-owned subsidiary, BHO II, Inc., a Delaware corporation, owned a 0.1% partnership interest in the Operating Partnership as its sole general partner. As of December 31, 2023, our wholly-owned subsidiary, BHO Business Trust II, a Maryland business trust, was the sole limited partner of the Operating Partnership and a note receivable. owned the remaining 99.9% interest in the Operating Partnership.

All of our current investments are located in the United States.U.S. We currently intend to hold our various real properties until such time as our boardBoard of directorsDirectors 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. We currently have one operating segment. As of December 31, 2023, we had eight wholly owned multifamily properties containing an aggregate of 2,520 apartment units and one real estate-related investment, which is a senior mortgage loan (note receivable).

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

Investment Policies

We have and expect to continue to invest in commercial properties, such as office, industrial, retail, hospitality, multifamily, and student housing, and other real estate-related investments such as mortgage loans and mezzanine loans. Our investments may be in existing income-producing properties and newly-constructed properties that are initially identified as opportunistic and value-add investments with significant possibilities for capital appreciation due to their property-specific characteristics or their market characteristics.

We have and expect to continue to generally make our real estate investments in fee title or a long-term leasehold estate through the Operating Partnership or indirectly through special purpose limited liability companies or through investments in joint ventures, partnerships, co-tenancies, or other co-ownership arrangements with the developers of the properties or other persons.

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.

COVID-19 Pandemic

The World Health Organization declared COVID-19 a global pandemicOur overall performance depends in part on March 11, 2020worldwide economic and since that time many of the previously imposed restrictionsgeopolitical 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 measures which were institutedchanges in responseeconomic conditions, may adversely affect our results of operations and financial performance.

We are not currently aware of any other material trends or uncertainties, favorable or unfavorable, that may be reasonably anticipated to have been subsequently reduceda material impact on either capital resources or lifted. However, the continuing COVID-19 pandemic remains highly unpredictablerevenues or income to be derived from our operations, other than those referred to above or throughout this Annual Report. The preparation of financial statements in conformity with GAAP requires our management to make estimates and dynamicassumptions that affect the reported amounts of assets and its ultimate durationliabilities, the disclosure of contingent assets and extentliabilities and the reported amounts of revenues and expenses during a reporting period.

Tax Status and Income Taxes

We elected to qualify and be taxed as a REIT commencing with the taxable year ended December 31, 2008. As a REIT, we generally will not be subject to U.S. federal income tax on our net taxable income that we distribute currently to our stockholders. To maintain our REIT qualification under the Code, we must meet a number of organizational and operational requirements, including a requirement that we annually distribute to our stockholders at least 90% of our 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 we fail to remain qualified for taxation as a REIT in any subsequent year and do not qualify for certain statutory relief provisions, our income for that year will be taxed at the regular corporate rate, and we may be precluded from qualifying for treatment as a REIT for the four-year period following our failure to qualify as a REIT. Such an event could materially adversely affect our net income and net cash available for distribution to our stockholders. Additionally, even if we continue to qualify as a REIT for U.S. federal income tax purposes, we may still be dependentsubject to some U.S. federal, state and local taxes on various developments,our income and property and to U.S. federal income taxes and excise taxes on our undistributed income, if any.

To maintain our qualification as a REIT, we may engage in certain activities through a TRS. As such, aswe may be subject to U.S. federal and state income and franchise taxes from these activities.

Our income tax expense and benefits are included in other income, net on our consolidated statements of operations. During the emergenceyear ended December 31, 2023, we recorded income tax expense of variants to$0.8 million primarily consisting of state income tax. During the virus that may cause additional strainsyear ended December 31, 2022, we recorded an income tax benefit of COVID-19,$0.9 million, which includes an $0.8 million partial refund of previously paid foreign income tax which was received in the ongoing administration and ultimate effectivenessfirst quarter 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. 2022.

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 pandemic2023 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 ongoing COVID-19 pandemic which will largely depend on both current and future developments, all of which are highly2022, we had no material uncertain and cannot be reasonably predicted. income tax positions.

If our properties and real estate-related investments are negatively impacted in future periods for an extended period because (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.

Liquidity and Capital Resources

WeAs of December 31, 2023, we had cash and cash equivalents of $24.4$47.1 million, marketable securities, available for sale of $3.6$3.7 million and restricted cash of $20.9 million as of December 31, 2021. $19.4 million.

Our principal demands for funds going forward are expected to be for the payment of (a) operating expenses, including capital expenditures, and (b) scheduled debt service on our outstanding indebtedness.indebtedness, including any required replacement interest rate cap contracts. We also may, at our discretion, use funds for (a) tender offers and/or redemptions of shares of our common stock, (b) distributions, if any, to our shareholders, and (c) selective acquisitions and/or real estate-related investments. Generally, we expect to meet our cash needs with our cash and cash equivalents and marketable securities on hand along with our cash flow from 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 these 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.

Our non-recourse mortgage loan facility (the “BayVue Apartments Mortgage”), which had an outstanding principal balance of $47.2 million as of December 31, 2023, is currently scheduled to mature on July 9, 2024, but has two one-year extension options, subject to the satisfaction of certain conditions. We currently intend to exercise the first extension option to extend the maturity date of the BayVue Apartments Mortgage to July 9, 2025, as discussed in Note 8 of the Notes to Consolidated Financial Statements.

Our non-recourse mortgage loan facilities (the “Citadel Apartments Mortgages”), which had aggregate outstanding principal balances of $49.0 million as of December 31, 2023, are currently scheduled to mature on October 11, 2024, but have two one-year extension options, subject to the satisfaction of certain conditions. We currently intend to exercise the first extension option to extend the maturity date of the Citadel Apartments Mortgages to October 11, 2025, as discussed in Note 8 of the Notes to Consolidated Financial Statements.

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 boardBoard of directorsDirectors has adopted a policy to generally limit our aggregate borrowings to 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.

Concentration of Credit Risk

As of December 31, 2023 and 2022, we had cash deposited in certain financial institutions in excess of 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 in cash and cash equivalents or restricted cash.

Recent Acquisition and Disposition Activities

Year Ended December 31, 2021

DispositionAcquisition of the Lakes of MargateCamellia Apartments

On March 17, 2021,December 19, 2023, we completed the disposition ofacquired a 280-unit210-unit multifamily property located in Margate,St. Augustine, 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 368-unit multifamily property located in Tampa, Florida (the “BayVue Apartments”) from an unrelated third party, for a contractual purchase price of $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, we paid the Advisor an aggregate of $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“Camellia World Apartments”), from an unrelated third party, for a contractual purchase price of $66.0$53.3 million, excluding closing and other acquisition related costs. The acquisition was funded with $38.0$33.9 million of initial proceeds from a mortgage financingsfinancing (see “Debt Financings – CitadelCamellia Apartments Mortgages”Mortgage”) and $28.0$19.4 million of cash on hand. funds that had been temporarily placed in escrow with a qualified intermediary in connection with the Company’s disposition of a 306-unit multifamily property located in Fishers, Indiana (the “Flats at Fishers”).

In connection with the acquisition, we paid the Advisor received an aggregate of $1.2approximately $1.1 million in acquisition fees, and acquisition expense reimbursements.reimbursements and debt financing fees.

Disposition of the River Club PropertiesFlats at Fishers

On December 22, 2021,November 1, 2023, we completed the disposition of the River Club Apartments and the TownhomesFlats at River Club, two student housing complexes with a total of 1,134 beds (collectively, the “River Club Properties”) located in Athens, Georgia,Fishers for a contractual sales price of $77.3 million to an unrelated third 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 time of the completion of the sale of the River Club Properties it was wholly owned by us.$71.0 million. In connection with the disposition of the River Club Properties, we recognizedFlats at Fishers, its non-recourse mortgage loan (the “Flats at Fishers Mortgage”) of $27.7 million was defeased at a gain on the salecost of investment property of $55.0 million during the fourth quarter of 2021.

Acquisition of Noncontrolling Interest in Parkside

On December 30, 2021, we acquired the noncontrolling member’s 10.0% ownership interest in Parkside for $3.6$27.1 million and as a result, now own 100%its non-recourse subordinated mortgage loan (the “Flats at Fisher Supplemental Mortgage”) of Parkside.

Year Ended December 31, 2020

Acquisition$8.9 million was repaid in full. Our net proceeds from the disposition of Autumn Breeze Apartments

On March 17, 2020, we completed the acquisitionFlats at Fishers were $33.8 million, after the aforementioned defeasance of a 280-unit multifamily property located in Noblesville, Indiana (the “Autumn Breeze Apartments”) from an unrelated third party for a contractual purchase pricethe Flats at Fishers Mortgage and the repayment of $43.0 million, excludingthe Flats at Fisher Supplemental Mortgage, pro rations, and closing and other related transaction costs. The acquisition was initially fundednet proceeds were placed in an escrow with cash on handa qualified intermediary to potentially facilitate a Section 1031 exchange transaction pursuant to the requirements of the Code and we subsequently obtained mortgage financing (see “Debt Financings. – Autumn Breeze Apartments Loan”). Inas described above, $19.4 million of these funds were used in connection with the acquisition, we paid the Advisor $0.8 million in acquisition fees and acquisition expense reimbursements.

Disposition of 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 a contractual sales price of $24.3 million 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 distributed to the noncontrolling member.Camellia Apartments. In connection with the disposition of the Gardens Medical Pavilion,Flats at Fishers, we recognized a gain on the sale of investment property of $5.5$41.1 million during the firstfourth quarter of 2020.2023.

Debt Financings

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

Our aggregate notes payable balance was $277.5$287.0 million, net of deferred financing fees of $4.8$2.8 million, and had a weighted average interest rate of 3.79%5.02% as of December 31, 2021. 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), our2023. Our aggregate notes payable balance was $213.0$290.3 million, net of deferred financing fees of $3.4 million, and had a weighted average interest rate of 3.71%4.33% as of December 31, 2020.2022.       

Year Ended December 31, 2021

BayVueCamellia Apartments Mortgage

On July 7, 2021,December 19, 2023, we entered into a $33.9 million non-recourse mortgage loan facility for up to $52.2 million (the “BayVue“Camellia Apartments Mortgage”) scheduled to initially maturewhich matures 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 BayVueJanuary 1, 2030. The Camellia Apartments Mortgage. The BayVue Apartments Mortgage bears interest at 6.05% and requires monthly interest-only payments through its maturity date, and bears interest at London Interbank Offered Rate (“LIBOR”)+3.10% subject to a 3.10% floor.which time the principal is due in full. The BayVue ApartmentsCamellia Mortgage is collateralized by the BayVueCamellia 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 Fisher Supplemental Mortgage requires monthly payments of interest and principal of $43,083 through its maturity date and bears interest at 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 up to $9.8 million (the “Citadel Apartments Junior Mortgage” and together with the Citadel Apartments Senior Mortgage, the “Citadel Apartments Mortgages”). At closing, $7.6 millionThe Citadel Apartments Mortgages provided for a replacement benchmark rate in connection with the phase-out of proceeds were initially advanced underLIBOR and effective on July 15, 2023, the Citadel Apartments Senior Mortgage’s interest rate converted from LIBOR plus 1.50%, with a floor of 1.60%, to SOFR plus 1.61%, with a floor of 1.71%, and the Citadel Apartments Junior Mortgage. The Citadel Apartments Junior Mortgage requires monthly interest-only payments through its maturity date and bearsMortgage’s interest at LIBOR+rate converted from LIBOR plus 8.75%, subjectwith a floor of 8.85%, to SOFR plus 8.86%, with a 8.85% floor.floor of 8.96%.

The Citadel Apartments Mortgages, which initially mature on October 11, 2024, withhave two one-year extension options, subject to the satisfaction of certain conditions, and are both collateralized by the Citadel Apartments whileApartments. However, the Citadel Apartments Junior Mortgage is subordinate to the Citadel Apartments Senior Mortgage. In connection withAlthough the acquisitionCitadel Apartments Mortgages are currently scheduled to mature on October 11, 2024, we currently intend to exercise the first of its two one-year extension options to extend the maturity of the Citadel Apartments an aggregate $38.0 million was initially funded underMortgages to October 11, 2025.

Pursuant to the terms of the Citadel Apartments Mortgages, and we paidare required to enter into one or more interest rate cap contracts in the balanceaggregate notional amount of $49.0 million for as long as the purchase price of $28.0 million with cash.Citadel Apartments Mortgages remain outstanding. In connection with the Citadel Apartments Mortgages, we paidpreviously entered into an interest rate cap contract with a notional amount of $49.0 million pursuant to which the AdvisorLIBOR and the replacement SOFR rates were capped at 2.00% through October 11, 2023. On September 11, 2023, we entered into a replacement interest rate cap contract with an aggregateunrelated financial institution at a cost of $0.5$0.9 million. The new interest rate cap contract has an effective date of October 11, 2023, a notional amount of $49.0 million, matures on April 11, 2024 and effectively caps SOFR at 2.00%. We currently intend to purchase another interest rate cap contract at substantially similar terms upon the expiration of the interest rate cap contract on April 11, 2024 pursuant to the terms of the Citadel Apartment Mortgages.

BayVue Apartments Mortgage

On July 7, 2021, we entered into a non-recourse mortgage loan facility for up to $52.2 million (the “BayVue Apartments Mortgage”), which initially matures on July 9, 2024 and has two one-year extension options, subject to the satisfaction of certain conditions. The BayVue Apartments Mortgage provided for a replacement benchmark rate in debt financing fees.connection with the phase-out of LIBOR and effective on July 15, 2023, the interest rate converted from LIBOR plus 3.00%, with a floor of 3.10%, to SOFR plus 3.11%, with a floor of 3.21%. As of December 31, 2021,2023, the aggregate outstanding principal balance and remaining availability under the Citadel Apartment Mortgages were $38.0BayVue Apartments Mortgage was $47.2 million and $11.0$5.0 million, respectively. All of theThe remaining availability of $11.0 million undermay be drawn for certain capital improvements to the Citadel Apartment Mortgages was subsequently advancedproperty pursuant to us in January 2022.

Year Ended December 31, 2020

Autumn Breezethe loan agreement. Although the BayVue 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 LoanMortgage 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”)currently scheduled to mature on July 1, 2030. The Lakes of Margate Loan bears interest at LIBOR+2.98% and requires monthly interest-only payments through9, 2024, we currently intend to exercise the first four yearsof its two one-year extension options to extend the maturity of the term and thereafter, monthly paymentsBayVue Apartments Mortgage to July 9, 2025.

Pursuant to the terms of principal andthe BayVue Apartments Mortgage, we are required to enter into one or more interest based upon a 30-year amortization. The Lakesrate cap contracts in the aggregate notional amount of Margate Loan is collateralized by$52.2 million for as long as the Lakes of Margate.BayVue Apartments Mortgage remains outstanding. In connection with the Lakes of Margate Loan, we paid the Advisor $0.4 million in debt financing fees. Additionally, approximately $1.4 million of the financing proceeds were distributed to the noncontrolling member. On March 15, 2021, the Lakes of Margate Loan was assumed by the Lakes of Margate Buyer in connection with the disposition of the property.

LIBOR

The Citadel Apartments Mortgages and the BayVue Apartments Mortgage, are indexedwe previously entered into an interest rate cap contract with a notional amount of $52.2 million pursuant to LIBOR. In late 2021, itwhich the LIBOR rate was announced LIBORcapped at 2.50% through July 15, 2023. On July 17, 2023, we entered into a replacement interest rates will cease publication altogether by June 30, 2023.rate cap contract with an unrelated financial institution at a cost of $1.4 million. The new interest rate cap contract, which had an effective date of July 15, 2023, has a notional amount of $52.2 million, matures on July 15, 2024 and effectively caps SOFR at 2.50%. We have andcurrently intend continue to incorporate relatively standardized replacementpurchase another interest rate provisions into our LIBOR-indexed debt documents, including a spread adjustment mechanism designed to equatecap contract at substantially similar terms upon the expiration of the interest rate cap contract on July 15, 2024 pursuant to the current LIBOR “all in” rate. There is significant uncertainty with respect to the implementationterms of the phase out and what alternative indexes will be adopted which will ultimately be determined by the market as a whole. It therefore remains uncertain how such changes will be implemented and the effects such changes would have on us and the financial markets generally.BayVue Apartment Mortgage.

Contractual Obligations

One of our principal short-term and long-term liquidity requirements includes the refinancing or repayment of maturing debt. The following table provides information with respect to the contractual maturities and scheduled debt service payments of our indebtedness as of December 31, 2021 (dollars in thousands):2023:

Results of Operations

As of December 31, 2021,2023, we had eight wholly owned real estate investments (multi-familymultifamily properties containing an aggregate of 2,520 apartment complexes)units and one real estate-related investment, (mezzanine loan)which is a senior mortgage loan (note receivable).

On July 7, 2021 we acquired the BayVue Apartments and on October 6, 2021 we acquired the Citadel Apartments (collectively, the “2021 Acquisitions”) and on March 17, 2020, we acquired the Autumn Breeze Apartments (the “2020 Acquisition” and together with the 2021 Acquisitions, the “Acquisitions”).

On March 17, 2021November 1, 2023 we disposed of the Lakes of MargateFlats at Fishers and on December 22, 202119, 2023 we disposedacquired the Camellia Apartments.

The Disposition of the River Club Properties (collectively, the “2021 Dispositions”) and on March 15, 2020 we disposed of the Gardens Medical Pavilion (the “2020 Disposition” and together with the 2021 Dispositions, the “Dispositions”).

The DispositionsFlats at Fishers did not qualify to be reported as discontinued operations since theyit did not represent a strategic shift that had a major effect on our operations and financial results. Accordingly, the operating results of the DispositionsFlats at Fishers are reflected in our results from continuing operations for all periods presented through their datesits date of disposition.

Year ended December 31, 20212023 as compared to the year ended December 31, 20202022

Our results of operations for the year ended December 31, 20212023 compared to the same period in 20202022 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, 20212023 and 2020 (dollars in thousands):2022:

The following table reflects total rental revenues and total property operating expenses for the years ended December 31, 20212023 and 20202022 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:eight multifamily properties we wholly owned as of December 31, 2023:

Revenues.Revenues Rental revenues for the year ended December 31, 20212023 were $43.1$49.6 million, an increase of $3.1$2.6 million, compared to $40.0$47.0 million for the same period 2020.in 2022. Excluding the effect of our acquisition and disposition activities during the periods, our rental revenues increased by $1.9$3.1 million for our Same Store propertiesproperties. This increase was primarily as a result of higher average monthly rent per unit.unit at substantially all of our Same Store properties during the 2023 period.

Property Operating Expenses. ExpensesProperty operating expenses for the year ended December 31, 20212023 were $14.5$16.0 million, an increase of $1.5$0.7 million, compared to $13.0$15.3 million for the same period in 2020.2022. Excluding the effect of our acquisition and disposition activities during the periods, our property operating expenses increased by $0.6$0.7 million for our Same Store propertiesduring the 2023 period primarily as a result ofdue to higher utilities and repair and maintenanceinsurance costs.

Real Estate Taxes. Real estate taxes were unchanged at $6.8 million for both of the years ended December 31, 2023 and 2022.

General and Administrative Expenses General and administrative expenses for the year ended December 31, 20212023 were $5.9$7.7 million, ana slight increase of $0.4$0.1 million, compared to $5.5$7.6 million for the same period in 2020.2022.

Depreciation and Amortization Depreciation and amortization expense for the year ended December 31, 2023 was $13.4 million, a decrease of $4.2 million, compared to $17.5 million for the same period in 2022. Excluding the effect of our acquisition and disposition activities our real estate taxes increased by $0.3 million for our Same Store properties.

General and Administrative Expenses. General and administrative expenses for the years ended December 31, 2021 and 2020 were $7.0 million and $6.5 million, respectively. The increase is principally attributable to higher asset management fees during the 2021 period resulting fromperiods, our acquisition and investment activities. General and administrative expenses primarily consist of audit fees, legal fees, board of directors’ fees, and other administrative expenses, including certain costs paid to our advisor.

Depreciation and Amortization. Depreciation and amortization for the years ended December 31, 2021 and 2020 were $14.9 million and $12.2 million, respectively. Excluding the effect of our acquisition and disposition activities, depreciation and amortization for our Same Store properties was flat.expenses decreased primarily as a result of $4.1 million of decreased amortization expense resulting from in-place lease intangibles becoming fully amortized during 2022.

Interest Expense, Net.Net Interest expense, net for the year ended December 31, 20212023 was $10.6$14.2 million, an increase of $1.0$0.5 million, compared to $9.6$13.7 million for the same period in 2020. Excluding2022. Interest expense is attributable to the effect ofmortgage financings associated with our acquisitionmultifamily properties and disposition activities,reflects higher market interest expense decreased slightly by $0.1 million forrates on our Same Store properties. 

Interest Income. Interest income forvariable rate indebtedness during the year2023 period as well as changes in the weighted average principal outstanding during the periods. Additionally, during the years ended December 31, 2021 was $2.02023 and 2022, we earned $2.9 million a slight increase of $0.1and $0.4 million, comparedrespectively, from our interest rate cap contracts which is recorded in interest expense, net.

Mark to $1.9 million forMarket Adjustment on Derivative Financial Instruments During the same period in 2020. Our interest income is primarily attributable to interest earned on our note receivable.

Gain on Sale of Investment Property. Our gain on the sale of investment property for the yearyears ended December 31, 20212023 and 2022, we recorded a negative mark to market adjustment of $82.8$2.9 million consists of a gain on the sale of Lakes of Margate of $27.8 million recognized during the first quarter of 2021 and a gain onpositive mark to market adjustment of $1.8 million, respectively. These mark to market adjustments represent the sale ofchange in the River Club Properties of $55.0 million recognized during the fourth quarter of 2021. Our gain on the sale of investment property for the year ended December 31, 2020 was attributable to a gain on the sale of the Gardens Medical Pavilion of $5.5 million recognized during the first quarter of 2020. 

Gain on Sale of Unconsolidated Joint Venture. During the second quarter of 2021 we recognized a gain of $1.5 million in connection with our receipt of the final settlementfair values of our prior participation in the residual interests of Prospect Park. See Note 8 of the Notes to Consolidated Financial Statements for additional information.interest rate cap contracts during such periods.

Summary of Cash Flows

Operating activities

The net cash provided by operating activities of $10.2$5.6 million for the year ended December 31, 20212023 consisted primarily of our net income of $77.5$32.9 million plus depreciation and amortization of $13.4 million, the negative mark to market adjustments on derivative financial instruments of $2.9 million and amortization of deferred financing costs aggregating $15.8of $1.3 million less the gain on the disposition of the Flats at Fishers of $41.1 million and the net change in operating assets and liabilities of $2.3 million offset by the aggregate gains on the sale of investment property of $82.8 million, the gain on the disposition of unconsolidated joint venture from the settlement of our participation in the residual interests of Prospect Park of $1.5 million and non-cash interest income of $1.2$3.8 million.

Investing activities

The net cash used inprovided by investing activities of $58.2$9.0 million for the year ended December 31, 20212023 consisted primarily of the following:

Financing activities

The net cash provided byused in financing activities of $61.8$12.8 million for the year ended December 31, 20212023 consisted primarily of the following:

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”("NAREIT"), an industry trade group, has published a standardized measure of performance known as funds from operations (“FFO”("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”"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”"IPA"), an industry trade group, published a standardized measure of performance known as modified funds from operations (“MFFO”("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 and are no longer incurring a significant amount of acquisition fees or other related costs, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. MFFO is not equivalent to our net income or loss as determined under GAAP.

We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the “Practice Guideline”"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 deferred 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. Certain of the above adjustments are also made to reconcile net income (loss) to net cash provided by (used in) operating activities, such as for the amortization of a premium and accretion of a discount on debt and securities investments, amortization of fees, any unrealized gains (losses) on derivatives, securities or other investments, as well as other adjustments.

MFFO excludes non-recurring impairment of real estate-related investments. We assess the credit quality of our investments and adequacy of reserves on a quarterly basis, or more frequently as necessary. Significant judgment is required in this analysis. We consider the estimated net recoverable value of a loan as well as other factors, including but not limited to the fair value of any collateral, the amount and the status of any senior debt, the prospects for the borrower and the competitive situation of the region where the borrower does business.

We believe that, because MFFO excludes costs that we consider more reflective of acquisition activities and 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.

Our calculations of FFO and MFFO are presented below (dollars and shares in thousands, except per share amounts):