See Notes to Consolidated Financial Statements.

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (Unaudited)(unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

Lightstone Value Plus Real Estate Investment Trust V, Inc., which was previously named Behringer Harvard Opportunity REIT II, Inc., prior to July 20, 2017 (which may 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 real estate investment trust (“REIT”) for federal income tax purposes.

We wereThe Company was formed primarily to acquire and operate commercial real estate and real estate-related assets on an opportunistic and value-add basis. In particular, we havethe Company has 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 are distressed or face time-sensitive deadlines.  We haveThe Company has acquired a wide variety of commercial properties, including office, industrial, retail, hospitality, and multifamily.  We haveThe Company has purchased existing, income-producing properties, and newly-constructed properties. We haveThe Company has also invested in other real estate-related investments such as mortgage and mezzanine loans. We intendThe Company intends to hold the various real properties in which we haveit has invested until such time as ourits board of directors determines that a sale or other disposition appears to be advantageous to achieve ourthe Company’s investment objectives or until it appears that the objectives will not be met. WeThe Company currently havehas one operating segment. As of March 31, 2020, we2021, the Company had eightseven real estate investments (five wholly owned properties and threetwo properties consolidated through investments in joint ventures) and one real estate-related investment (mezzanine loan).

Substantially all of ourthe Company’s business is conducted through Lightstone REIT V OP LP, a limited partnership organized in Delaware (the “Operating Partnership”).  As of March 31, 2020, our2021, the Company’s wholly-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 March 31, 2020, our2021, the Company’s wholly-owned subsidiary, BHO Business Trust II, a Maryland business trust, was the sole limited partner of the Operating Partnership and owned the remaining 99.9% interest in the Operating PartnershipPartnership.

OurThe Company’s business is managed by an external advisor and we havethe Company has no employees. Effective February 10, 2017, wethe Company engaged affiliates of The Lightstone Group (“Lightstone”), LSG-BH II Advisor LLC and LSG Development Advisor LLC (collectively, the “Advisor”), to provide advisory services to us.the Company. Lightstone is majority owned by the chairman of ourthe Company’s board of directors, David Lichtenstein. SubjectPursuant to the terms of an advisory agreement and subject to the oversight of ourthe Company’s board of directors, our external advisorthe Advisor is responsible for managing ourthe Company’s day-to-day affairs and for services related to the management of ourthe Company’s assets.

Organization

In connection with ourthe Company’s initial capitalization, wethe Company issued 22,500 shares of ourits common stock and 1,000 shares of ourits convertible stock to ourthe Company’s previous advisor on January 19, 2007.  The 1,000 shares of convertible stock were transferred to an affiliate of Lightstone on February 10, 2017 and remain outstanding asoutstanding. As of March 31, 2020.2021, the Company had 20.2 million shares of common stock outstanding. 

OurThe Company’s common stock is not currently listed on a national securities exchange. The timing of a liquidity event for ourthe Company’s stockholders will depend upon then prevailing market conditions. OurOn January 9, 2020, the Company’s board of directors previouslyextended the targeted June 30, 2023 astimeline for the commencement ofCompany to commence a liquidity event however, on January 9, 2020, our board of directors elected to extend the targeted timeline until June 30, 2028 based on their assessment of ourthe Company’s investment objectives and liquidity options for ourthe Company’s stockholders. WeThe Company can provide no assurances as to the actual timing of the commencement of a liquidity event for ourits stockholders or the ultimate liquidation of the Company. WeThe Company will seek stockholder approval prior to liquidating ourits entire portfolio.

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

Noncontrolling Interests

Noncontrolling interests represents the noncontrolling ownership interest’s proportionate share of the equity in our consolidated real estate investments.  Income and losses are allocated to noncontrolling interest holders based generally on their ownership percentage.   If a property reaches a defined return threshold, then it will result in distributions to noncontrolling interests which is different from the standard pro-rata allocation percentage. In certain instances, our joint venture agreements provide for liquidating distributions based on achieving certain return metrics.

Acquisition of Noncontrolling Member’s Ownership Interest (Lakes of Margate)

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (Unaudited)

(Dollar amountsOn March 17, 2021, the Company acquired the noncontrolling member’s 7.5% ownership interest in thousands, except per share/unit datathe Lakes of Margate for $1.1 million and where indicated in millions)as a result, owned 100% of the Lakes of Margate, which was subsequently sold (see Note 3).

Interim Unaudited Financial Information

The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2020, which was filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2020.25, 2021.  The unaudited interim consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair presentation of the results for the periods presented. The accompanying unaudited consolidated financial statements of Lightstone Value Plus Real Estate Investment Trust V, Inc. have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 108-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

Principles of Consolidation and Basis of Presentation

Our consolidated financial statements include our accounts and the accounts of other subsidiaries over which we havethe Company has control. All inter-company transactions, balances, and profits have been eliminated in consolidation. In addition, interests in entities acquired are evaluated based on applicable GAAP, and entities deemed to be variable interest entities (“VIE”) in which we arethe Company is the primary beneficiary are also consolidated. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation based on legal form, economic substance, and the extent to which we havethe Company has control, substantive participating rights or both under the respective ownership agreement. For entities in which we havethe Company has less than a controlling interest or entities which we are not deemed to be the primary beneficiary, we accountit accounts for the investment using the equity method of accounting.

The consolidated balance sheet as of December 31, 20192020 included herein has been derived from the consolidated balance sheet included in the Company'sCompany’s Annual Report on Form 10-K.

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

Reclassifications Investment in Unconsolidated Joint Venture (Prospect Park)

On May 10, 2021 the Company received a payment of $1.5 million for the settlement of its prior participation in the residual interests of a mezzanine financing to an unaffiliated third-party entity that owned an apartment complex in Denver, Colorado. 

Certain prior periodLightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts may have been reclassified to conform to the current year presentation.in thousands, except per share/unit data and where indicated in millions)

Earnings per Share

The Company had no potentially dilutive securities outstanding during the periods presented. Accordingly, basic and diluted earnings per share is calculated by dividing net income/(loss) by the weighted-average number of shares of common stock outstanding during the applicable period.

Restricted cash

As required by the Company’s lenders, restricted cash is held in escrow accounts for anticipated capital expenditures, real estate taxes, and other reserves for certain of our consolidated properties. Capital reserves are typically utilized for non-operating expenses such as major capital expenditures. Alternatively, a lender may require its own formula for an escrow of capital reserves. As of March 31, 2021, restricted cash also included $14.1 million of the proceeds from the sale of Lakes of Margate. These funds have been temporarily placed in escrow with a qualified intermediary to potentially facilitate a like-kind exchange transaction in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended. See Note 3 for additional information.

COVID-19 Pandemic

TheOn March 11, 2020, the World Health Organization declared COVID-19 a global impact of the COVID-19 pandemic has been rapidly evolving and, as cases of the illness caused by the virus have continued to be identified in additional countries,leading many countries, including the United States, have reacted by instituting quarantinesparticularly at the individual state level, to subsequently impose various degrees of restrictions and restrictionsother measures, including, but not limited to, mandatory temporary closures, quarantine guidelines, limitations on travel. In addition, all the states where we operate propertiestravel, and have real-estate related investments have reacted to the COVID-19 pandemic by instituting quarantines, restrictions on travel, “shelter in place” rules in an effort to reduce its duration and the severity of its spread. Although the COVID-19 pandemic has continued to evolve, most of these previously imposed restrictions and other measures have now been reduced and/or lifted. However, the COVID-19 pandemic remains highly unpredictable and dynamic and its duration and extent is likely dependent on typesnumerous developments such as the regulatory approval, mass production, administration and ultimate effectiveness of business thatvaccines, as well as the timeline to achieve a level of sufficient herd immunity amongst the general population. Accordingly, the COVID-19 pandemic may continue to operate and/or restrictionshave negative effects on typesthe overall health of construction projects that may continue. Many states have recently announced guidelines to reduce certain of these restrictions.

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (Unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

the U.S. economy for the foreseeable future. The Company’s consolidated portfolio of properties currently consists of sevensix multi-family apartment complexes and one student housing complex. Despite past and current restrictions and mitigation strategies, the Company’s multi-family properties still have not yet seen any significant impact from the COVID-19 pandemic. However, theThe Company’s student housing complex, which consists of the River Club Apartments and the Townhomes at River Club, are located in Athens, Georgia and principally serve as “off-campus” lodging for students attending the University of Georgia which has transitioned to online instruction for the remainder of its Spring 2020 semester and its other course offerings throughout the summer.(“UGA”). Leases for the River Club Apartments and Townhomes at River Club generally have a term of one year running from August through July. Because of the COVID-19 pandemic, UGA previously transitioned to online instruction during its Spring 2020 semester before resuming to “on-campus” classes beginning with its Fall 2020 semester. The Company’s student housing complex is located “off-campus” and therefore, its tenants haveare not been forcedrequired to vacate.vacate even if UGA does not conduct “on-campus” classes. However, if the current COVID-19 pandemic and related mitigation strategies extend beyond the summer, the University of Georgia may decideUGA decides to continue offering onlyreturn to online instruction tofor its students in lieu of “on-campus” classes whichin future semesters, it could adversely impact leasing demand, occupancy levels and the operating results of the Company’s student housing complex forin future periods. Additionally, the Company’s note receivable relates tois collateralized by a condominium development project located in New Yok City (the “Condominium Project”), which is subject to similar restrictions and risks. To date, the Condominium Project and the Company’s note receivable have not been significantly impacted by the COVID-19 pandemic. 

TheWhile the Company’s business has not yet seen any material impact from the ongoing COVID-19 pandemic, the extent to which the Company’s businessit may be affected by the current COVID-19 pandemicin future periods 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 the Company’s 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) demand for its student housing complex declines, and (iii) its borrower is unable to pay scheduled debt service on the outstanding note receivable; the Company’s business and financial results could be materially and adversely impacted. While the Company has implemented various cost reduction strategies, including the deferral of certain non-critical capital expenditures, there can be no assurance that these cost savings will fully mitigate the potential adverse impact of any lost revenue and income.

COVID-19 Lease Modification Accounting ReliefLightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (unaudited)

Due to the business disruptions(Dollar amounts in thousands, except per share/unit data and challenges severely affecting the global economy caused by the COVID-19 pandemic, many lessors may be required to provide rent deferrals and other lease concessions to lessees. While the lease modification guidance addresses routine changes to lease terms resulting from negotiations between the lessee and the lessor, this guidance did not contemplate concessions being so rapidly executed to address the sudden liquidity constraints of some lessees arising from the COVID-19 pandemic and restrictions intended to prevent its spread.

In April 2020, the Financial Accounting Standards Board (“FASB”) staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing GAAP, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances.The Company is evaluating the impact of this policy election and has not yet concluded on whether it will apply the election.where indicated in millions)

New Accounting Pronouncements

In June 2016, the FASB issued new guidance which replaces the incurred loss impairment methodology currently in use with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.  The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.  The Company is currently in the process of evaluating the impact the adoption of this standard will have on the Company’s consolidated financial statements.

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

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (Unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)Lakes of Margate 

Autumn Breeze ApartmentsDuring the fourth quarter of 2020, Lakes of Margate met the criteria to be classified as held for sale and therefore, its associated assets and liabilities were classified as held for sale in the consolidated balance sheet as of December 31, 2020. 

On March 17, 2020,2021, the Company completed the acquisitiondisposition of a 280-unit multifamily property located in Noblesville, Indiana (the “Autumn Breeze Apartments”) fromthe Lakes of Margate to Lakes of Margate FL LLC, an unrelated third party (the “Lakes of Margate Buyer”), for aggregate consideration of $50.8 million. At closing, the Lakes of Margate Buyer paid $15.1 million and assumed the existing Lakes of Margate Loan with an aggregate purchase priceoutstanding principal balance of approximately $43.0$35.7 million excluding closing and other related$14.1 million of the proceeds were placed in escrow with a qualified intermediary to potentially facilitate a like-kind exchange transaction costs.in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended, and is included in restricted cash on the consolidated balance sheet as of March 31, 2021. In connection with the acquisition,disposition of the Lakes of Margate, the Company paidrecognized a gain on sale of investment property of $27.8 million during the Advisor an aggregatefirst quarter of approximately $0.8 million in acquisition fees and acquisition expense reimbursements.2021.

The Company determined this acquisition was an asset acquisitiondisposition of the Lakes of Margate did not qualify to be reported as discontinued operations since it did not represent a strategic shift that had a major effect on the Company’s operations and allocatedfinancial results. Accordingly, the total purchase price, including acquisition fees and expenses, tooperating results of the assets acquired based on their relative fair value. Approximately $7.2 million was allocated to land and improvements, $36.0 million was allocated to building and improvements, and $0.6 million was allocated to in-place lease intangibles.Lakes of Margate are reflected in our results from continuing operations for all periods presented through its date of disposition.

The capitalization rate forfollowing summary presents the acquisitionmajor components of the Autumn Breeze Apartments was approximately 4.86%. The Company calculates the capitalization rateLakes of Margate’s assets and liabilities held for a real property by dividing the net operating income (“NOI”)sale, of the property by the purchase price of the property, excluding costs. For purposes of this calculation, NOI was based upon the year ended February 29,as December 31, 2020. Additionally, NOI is all gross revenues from the property less all operating expenses, including property taxes and management fees but excluding depreciation.

500 West 22nd Street Mezzanine Loan

On February 28, 2019, the Company, as the lender, and an unrelated third party (the “500 West 22nd Street Mezzanine Loan Borrower”), as the borrower, entered into a loan promissory note (the “500 West 22nd Street Mezzanine Loan”) pursuant to which the Company would fund up to $12.0 million of mezzanine financing. On the same date, the Company initially funded $8.0 million of the 500 West 22nd Street Mezzanine Loan. Subsequently, through March 31,the first quarter of 2020, the Company funded an additional $4.0 million and as a result, the 500 West 22nd Street Mezzanine Loan has been fully funded.

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

The 500 West 22nd Street Mezzanine Loan is recorded in note receivable, net on the consolidated balance sheet. In connection with the fundings made for the 500 West 22nd Street Mezzanine Loan, ourthe Advisor has received an aggregate of approximately $0.2 million in acquisition fees from the Company. The acquisition fees are accounted for as an addition to the carrying value of the 500 West 22nd Street Mezzanine Loan and are being amortized as a reduction to interest income over the initial term of the 500 West 22nd Street Mezzanine Loan using a straight-line method that approximates the effective interest method.

The 500 West 22nd Street Mezzanine Loan is due August 31, 2021 and is collateralized by the ownership interests of the 500 West 22nd Street Mezzanine Loan Borrower. The 500 West 22nd Street Mezzanine Loan Borrower owns a parcel of land located at 500 West 22nd Street, New York, New York. York on which it is developing and constructing the Condominium Project. At the onset of the COVID-19 pandemic, the Borrower’s construction activities related to the Condominium Project were temporarily suspended due to restrictions on certain non-essential construction activities imposed by New York City. However, construction activities for the Condominium Project fully resumed in early May 2020 and its anticipated construction timeline has not been significantly impacted to date.

The 500 West 22nd Street Mezzanine Loan bears interest at a rate of LIBOR + 11.0% per annum with a floor of 13.493% (13.493% as of March 31, 2020)2021). The Company received an origination fee of 1.0% of the loan balance, or approximately $0.1 million, which is presented in the consolidated balance sheets as a direct deduction from the carrying value of the 500 West 22nd Street Mezzanine Loan and is being amortized to interest income, using a straight-line method that approximates the effective interest method, over the initial term of the 500 West 22nd Street Mezzanine Loan. The 500 West 22nd Street Mezzanine Loan may be extended two additional six-month periods by the 500 West 22nd Street Mezzanine Loan Borrower provided certain conditions are met, including the establishment of an additional reserve for interest and the payment of an extension fee equal to 0.25% of the outstanding loan balance.

In connection with the initial funding under the 500 West 22nd Street Mezzanine Loan, the Company retained approximately $2.1 million of the proceeds to establish a reserve for interest and other items, which is presented in the consolidated balance sheets as a direct deduction from the carrying value of the 500 West 22nd Street Mezzanine Loan and are being applied against the first 8.0% of monthly interest due during the initial term of the 500 West 22nd Street Mezzanine Loan. Through March 31, 2020,2021, approximately $0.9$2.0 million of the reserve has been recognized as interest income and the remaining balance of the reserve was approximately $1.2$0.1 million as of March 31, 2020.2021. The additional monthly interest due above the 8.0% threshold is added to the balance of the 500 West 22nd Street Mezzanine Loan and payable at maturity. As of March 31, 2020,2021, approximately $0.6$1.3 million of additional interest due is included in the balance of the 500 West 22nd Street Mezzanine Loan.

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (Unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

During both the three months ended March 31, 20202021 and 2019,2020, the Company recorded approximately $0.4 million and $0.1 million, respectively, of interest income related to the note receivable and asreceivable. As of March 31, 2020,2021, the outstanding principal balance of the 500 West 22nd Street Mezzanine Loan was approximately $12.0$13.4 million.

WeThe Company determined the following disclosure of estimated fair values using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop the related estimates of fair value. The use of different market assumptions or only estimation methodologies may have a material effect on the estimated fair value amounts.

As of March 31, 20202021 and December 31, 2019,2020,  management estimated that the carrying value of cash and cash equivalents, restricted cash, note receivable, prepaid expenses and other assets, advance from advisor, accounts payable and accrued and other liabilities accrued property tax and payables to related parties were at amounts that reasonably approximated their fair value based on their highly-liquid nature andand/or short-term maturities. The carrying amount of the note receivable approximates fair value because the interest rate is variable

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share/unit data and reflective of the market rate. where indicated in millions)

The fair value of the notes payable is categorized as a Level 2 in the fair value hierarchy. The fair value was estimated using a discounted cash flow analysis valuation on the estimated borrowing rates currently available for loans with similar terms and maturities. The fair value of the notes payable was determined by discounting the future contractual interest and principal payments by a market rate. Disclosure about fair value of financial instruments is based on pertinent information available to management as of March 31, 20202021 and December 31, 2019.2020. Carrying amounts of our notes payable and the related estimated fair value is summarized as follows:

Marketable Securities

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

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (Unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and the Company’s intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s amortized cost basis. As of March 31, 2020,2021, the Company did not recognize any impairment charges.

Fair Value Measurements

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

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

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

The fair values of the Company’s investments in debt securities are measured using quoted prices for these investments; however, the markets for these assets are not active. As of March 31, 2020,2021, all of the Company’s debt securities were classified as Level 2 assets and there were no transfers between the level classifications during the three months ended March 31, 2020.2021.

The following table summarizes the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates, accounted for as available-for-sale securities and classified by the contractual maturity date of the securities:

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (Unaudited)(unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

Gardens Medical Pavilion

On December 23, 2019, the Company and CPI/AHP Garden Medical Pavilion Mob Owner, L.L.C. (the “Gardens Medical Pavilion Buyer”), an unaffiliated third party, entered into a purchase and sale agreement (the “Gardens Medical Pavilion Agreement”) pursuant to which the Company would dispose of the Gardens Medical Pavilion to the Gardens Medical Pavilion Buyer for an aggregate contractual sales price of $24.3 million.

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.

On January 15, 2020, the Company completed the disposition of the Gardens Medical Pavilion for a contractual sales price of $24.3 million.  In connection with the disposition of the Gardens Medical Pavilion, the Company recognized a gain on the sale of investment property of approximately $5.5 million during the first quarter of 2020. Approximately $12.6 million of the proceeds were used towards the repayment in full of a mortgage loan secured by the Gardens Medical Pavilion.

Lakes of Margate

Beginning with the fourth quarter of 2019, Lakes of Margate 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 March 31, 2020 and December 31, 2019.

The following summary presents the major components of assets and liabilities held for sale, of as the date indicated. (amounts as of December 31, 2019 include Lakes of Margate and Gardens Medical Pavilion and amounts as of March 31, 2020 only include Lakes of Margate)

Notes payable, excluding debt classified as held for sale, consists of the following:

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (Unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

On March 31, 2020, the Company entered into a ten-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 March 31, 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, the Company paid the Advisor an aggregate of approximately $0.3 million in financing fees.

The Company’s loan agreements stipulate that it complies with certain reporting and financial covenants. The Company is currently in compliance with all of its debt covenants.

The following table provides information with respect to the contractual maturities and scheduled principal repayments of ourthe Company’s indebtedness as of March 31, 2020.2021.

Tender Offer

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

The Tender Offer terminated on February 28, 2020, and a total of 2,183,888 shares were validly tendered and not withdrawn pursuant to the Tender Offer as of such date, an amount that exceeded the maximum number of shares the Company offered to purchase pursuant to the Tender Offer. In accordance with the terms of the Tender Offer, the Company subsequently repurchased a total of 2.0 million shares at a price of $7.75 per share for an aggregate purchase price of $15.5 million in April 2020.

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (Unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

Because the amount of repurchase requests exceeded the maximum number of shares the Company had offered to repurchase, the Company repurchased shares on a pro-rata basis, subject to “odd lot” priority as described in the 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 Tender Offer were repurchased by the Company.

Share Redemption Program and Redemption Price

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

On August 9, 2017, the board of directors adopted a Fourth Amended and Restated Share Redemption Program (the “Fourth Amended SRP”) which became effective July 1, 2018. The Fourth Amended SRP established that the price at which the Company would redeem shares submitted for redemption will be a percentage of the estimated net asset value per share (“NAV per Share”) as of the Effective Date, as defined, as follows:

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

Pursuant to the terms of the Fourth Amended SRP, any shares approved for redemption are redeemed on a periodic basis as determined from time to time by the Company’s board of directors, and no less frequently than annually.  The Company 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, the Company’s 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 program 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 the Company’s 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 the Company’s board of directors of the updated estimated NAV per Share.

In connection with the approval of the Tender Offer onOn December 13, 2019, the Company’s board of directors approved the suspension of the SRP. Pursuant to the terms of the SRP, while the SRP is suspended, the Company will not accept any requests for redemption.

DistributionsEffective March 25, 2021, the Company’s Board of Directors reopened the SRP solely for redemptions submitted in connection with a stockholder’s death and set the price for all such purchases to $9.42, which is 100% of the NAV per Share as of September 30, 2020. Deaths that occurred subsequent to January 1, 2020 are eligible for consideration. Beginning January 1, 2022, requests for redemptions in connection with a stockholder’s death must be submitted and received by the Company within one year of the stockholder’s date of death for consideration. 

On an annual basis, the Company 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. 

The Company’s 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. It is possible that in the future additional liquidity will be made available by the Company through the SRP, issuer tender offers or other methods, though it can make no assurances as to whether that will happen, or the timing or terms of any such liquidity.

Distributions

The Company made an election to qualify as a REIT for federal income tax purposes commencing with its 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 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, wethe Company may be required to make distributions in excess of cash available. Distributions are authorized at the discretion of ourthe Company’s board of directors based on itstheir analysis of ourthe Company’s performance over the previous periods and expectations of performance for future periods.  TheseSuch analyses may include actual and anticipated operating cash flow, changes in market capitalization rates for investments suitable for ourthe Company’s portfolio, capital expenditure needs, general financial and market conditions, proceeds from asset sales, and other factors that ourthe Company’s board of directors deems relevant. Our

The Company’s board of director’s decisionsdirectors’ decision will be substantially influenced by thetheir obligation to ensure that we maintain ourthe Company maintains its federal tax status as a REIT.  WeThe Company cannot provide assurance that weit will pay distributions at any particular level, or at all.

The Company did not make any distributions to its stockholders during the three months ended March 31, 2021 and 2020.

The Company has agreements with the Advisor and its affiliates to pay certain fees in exchange for services performed by these entities and other related parties. On June 10, 2020, these agreements were extended an additional year through June 10, 2021.  The Company is dependent on the Advisor and property manager for certain services that are essential to it, including asset disposition decisions, property management and leasing services, and other general administrative responsibilities. In the event that these companies were unable to provide the Company with their respective services, the Company would be required to obtain such services from other sources.

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Notes to Consolidated Financial Statements (Unaudited)(unaudited)

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

The Company has agreements with the Advisor to pay certain fees, in exchange for services performed by the Advisor and/or its affiliated entities. Amounts the Company owes to the Advisor and its affiliated entities are principally for these fees, and are classified as payables to related parties on the consolidated balance sheets.

The following table represents the fees incurred associated with the payments to the Company’s Advisor for the periods indicated:

Advance from AdvisorLegal Proceedings

On March 16, 2020,From time to time in the Advisor provided an advanceordinary course of $25.0 million tobusiness, the Company of which $15.0 million was subsequently repaid on March 31, 2020. The outstanding balance bears interest at a fixed-rate of 5.00%. Approximately $0.1 million of interest was incurred on the advance during the three months ended March 31, 2020.  As of March 31, 2020, the outstanding advance balance plus accrued interest totaled approximately $10.1 million and is presented as Advance from Advisor on the consolidated balance sheet.may become subject to legal proceedings, claims or disputes.

TheAs of the date hereof, the Company currently expectsis not a party to repayany material pending legal proceedings of which the Advance from Advisor with proceeds from selective asset sales and/outcome is probable or financing transactions.

reasonably possible to have a material adverse effect on its results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss.

Item 2. 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.

Forward-Looking Statements

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

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

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

Cautionary Note

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

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 March 31, 2020,2021, our investments included multifamily and student housing communities and 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.

COVID-19 Pandemic

TheOn March 11, 2020, the World Health Organization declared COVID-19 a global impact of the COVID-19 pandemic has been rapidly evolving and, as cases of the illness caused by the virus have continued to be identified in additional countries,leading many countries, including the United States, have reacted by instituting quarantinesparticularly at the individual state level, to subsequently impose various degrees of restrictions and restrictionsother measures, including, but not limited to, mandatory temporary closures, quarantine guidelines, limitations on travel. In addition, all the states where we operate propertiestravel, and have real-estate related investments have reacted to the COVID-19 pandemic by instituting quarantines, restrictions on travel, “shelter in place” rules in an effort to reduce its duration and the severity of its spread. Although the COVID-19 pandemic has continued to evolve, most of these previously imposed restrictions and other measures have now been reduced and/or lifted. However, the COVID-19 pandemic remains highly unpredictable and dynamic and its duration and extent is likely dependent on typesnumerous developments such as the regulatory approval, mass production, administration and ultimate effectiveness of business thatvaccines, as well as the timeline to achieve a level of sufficient herd immunity amongst the general population. Accordingly, the COVID-19 pandemic may continue to operate and/or restrictionshave negative effects on typesthe overall health of construction projects that may continue. Many states have recently announced guidelines to reduce certain of these restrictions.the U.S. economy for the foreseeable future. 

Our consolidated portfolio of properties currently consists of sevensix multi-family apartment complexes and one student housing complex. Despite past and current restrictions and mitigation strategies, our multi-family properties still have not yet seen any significant impact from the COVID-19 pandemic. However, ourOur student housing complex, which consists of the River Club Apartments and the Townhomes at River Club, are located in Athens, Georgia and principally serve as “off-campus” lodging for students attending the University of Georgia which has transitioned to online instruction for the remainder of its Spring 2020 semester and its other course offerings throughout the summer.(“UGA”). Leases for the River Club Apartments and Townhomes at River Club generally have a term of one year running from August through July. Because of the COVID-19 pandemic, UGA previously transitioned to online instruction during its Spring 2020 semester and resumed “on-campus” classes beginning with its Fall 2020. Our student housing complex is located “off-campus” and therefore, its tenants haveare not been forcedrequired to vacate.vacate even if UGA does not conduct “on-campus” classes. However, if the current COVID-19 pandemic and related mitigation strategies extend beyond the summer, the University of Georgia may decideUGA decides to continue offering onlyreturn to online instruction tofor its students in lieu of “on-campus” classes whichin future semesters, it could adversely impact leasing demand, occupancy levels and the operating results of tourour student housing complex forin future periods. Additionally, our note receivable relates tois collateralized by a condominium development project located in New Yok City (the “Condominium Project”), which is subject to similar restrictions and risks. To date, the Condominium Project and our note receivable have not been significantly impacted by the COVID-19 pandemic.