UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2020

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-52610

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland

20-1237795

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

1985 Cedar Bridge Avenue, Suite 1
Lakewood, New Jersey		08701
(Address of Principal Executive Offices)		(Zip Code)

(732) 367-0129

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of thethe Exchange Act.

Large accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer þ		Smaller reporting company þ
		Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No þ

As of ~~August 3,~~November 6, 2020, there were approximately 22.3 million outstanding shares of common stock of Lightstone Value Plus Real Estate Investment Trust, Inc., including shares issued pursuant to the dividend reinvestment plan.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

INDEX

			Page
PART I		FINANCIAL INFORMATION

Item 1.		Financial Statements (unaudited)

		Consolidated Balance Sheets as of ~~June~~September 30, 2020 and December 31, 2019		3

		Consolidated Statements of Operations for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2020 and 2019		4

		Consolidated Statements of Comprehensive Income for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2020 and 2019		5

		Consolidated Statements of Stockholders’ Equity for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2020 and 2019		6

		Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2020 and 2019		7

		Notes to Consolidated Financial Statements		8

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		24

Item 4.		Controls and Procedures		40

~~PART II~~	~~OTHER INFORMATION~~
PART II		OTHER INFORMATION

Item 1.		Legal Proceedings		4140

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		41

Item 3.		Defaults Upon Senior Securities		41

Item 4.		Mine Safety Disclosures		41

Item 5.		Other Information		41

Item 6.		Exhibits		41

PART I. FINANCIAL INFORMATION, CONTINUED:

ITEM 1. FINANCIAL STATEMENTS, CONTINUED:

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except per share data)

	As of			As of			As of			As of
	June 30, 2020			December 31, 2019			September 30, 2020			December 31, 2019
Assets	(unaudited)						(unaudited)
Investment property:
Land and improvements	$	30,143		$	30,664		$	30,143		$	30,664
Building and improvements		101,589			101,827			101,489			101,827
Furniture and fixtures		2,425			2,404			2,432			2,404
Construction in progress		166,887			152,896			176,943			152,896
Gross investment property		301,044			287,791			311,007			287,791
Less accumulated depreciation		(31,334	)		(29,685	)		(32,140	)		(29,685	)
Net investment property		269,710			258,106			278,867			258,106
Investments in related parties		15,684			35,738			15,636			35,738
Cash and cash equivalents		72,503			77,569			57,506			77,569
Marketable securities and other investments		37,409			54,738			36,774			54,738
Restricted cash		2,377			2,231			2,599			2,231
Notes receivable, net		63,585			55,723			101,991			55,723
Prepaid expenses and other assets		2,568			2,075			2,118			2,075

Total Assets	$	463,836		$	486,180		$	495,491		$	486,180

Liabilities and Stockholders' Equity
Mortgages payable, net	$	165,428		$	164,705		$	191,085		$	164,705
Accounts payable, accrued expenses and other liabilities		5,097			4,380			8,586			4,380
Due to related parties		211			244			240			244
Tenant allowances and deposits payable		571			594			516			594
Distributions payable		3,912			3,960			3,904			3,960
Deferred rental income		422			524			367			524

Total Liabilities		175,641			174,407			204,698			174,407

Commitments and contingencies

Stockholders' equity:
Company's Stockholders Equity:
Preferred shares, $0.01 par value, 10.0 million shares authorized, none issued and outstanding		-			-
Preferred shares, $0.01 par value, 10.0 million shares authorized,none issued and outstanding								-			-
Common stock, $0.01 par value; 60.0 million shares authorized, 22.3 million and 22.6 million shares issued and outstanding, respectively		223			226			223			226
Additional paid-in-capital		169,784			172,749			169,567			172,749
Accumulated other comprehensive (loss)/income		(1,042	)		408			(426	)		408
Accumulated surplus		88,586			109,559			84,908			109,559

Total Company's stockholders' equity		257,551			282,942			254,272			282,942
		-			-
Noncontrolling interests		30,644			28,831			36,521			28,831

Total Stockholders' Equity		288,195			311,773			290,793			311,773

Total Liabilities and Stockholders' Equity	$	463,836		$	486,180		$	495,491		$	486,180

The accompanying notes are an integral part of these consolidated financial statements.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

(Unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
		2020			2019			2020			2019		2020			2019			2020			2019
Revenues:
Rental income	$	2,872		$	3,662		$	6,042		$	7,263		$	2,460		$	3,681		$	8,502		$	10,944
Tenant recovery income		88			234			185			667			86			283			271			950

Total revenues		2,960			3,896			6,227			7,930			2,546			3,964			8,773			11,894

Expenses:
Property operating expenses		896			1,102			1,960			2,263			996			1,260			2,956			3,523
Real estate taxes		113			451			229			735			95			289			324			1,024
General and administrative costs		987			760			1,734			1,589			608			692			2,342			2,281
Depreciation and amortization		976			1,302			1,968			2,581			939			1,241			2,907			3,822

Total operating expenses		2,972			3,615			5,891			7,168			2,638			3,482			8,529			10,650

Operating (loss)/income		(12	)		281			336			762			(92	)		482			244			1,244

Other income, net		30			157			52			113
Other income/(expense), net														31			(2	)		83			111
Interest and dividend income		2,881			3,833			5,781			7,735			3,650			4,310			9,431			12,045

Interest expense		(649	)		(288	)		(1,299	)		(687	)		(798	)		(441	)		(2,097	)		(1,128	)

Gain on disposition of real estate		1,562			-			1,562			-			-			1,013			1,562			1,013
Unrealized gain/(loss) on marketable equity securities		2,687			(4,782	)		(18,611	)		(1,665	)
Unrealized loss on marketable equity securities														(1,472	)		(582	)		(20,083	)		(2,247	)
Loss on sale and redemption of marketable securities		(230	)		(314	)		(230	)		(625	)		-			(94	)		(230	)		(719	)

Net income/(loss) from continuing operations		6,269			(1,113	)		(12,409	)		5,633			1,319			4,686			(11,090	)		10,319

Net income from discontinued operations		-			-			-			13,481			-			-			-			13,481

Net income/(loss)		6,269			(1,113	)		(12,409	)		19,114			1,319			4,686			(11,090	)		23,800

Less: net income attributable to noncontrolling interests		(458	)		(305	)		(741	)		(1,159	)

Less: income attributable to noncontrolling interests														(1,094	)		(809	)		(1,835	)		(1,968	)
Net income/(loss) attributable to Company's common shares	$	5,811		$	(1,418	)	$	(13,150	)	$	17,955		$	225		$	3,877		$	(12,925	)	$	21,832

Basic and diluted net income/(loss) per Company's common share:
Continuing operations	$	0.26		$	(0.07	)	$	(0.59	)	$	0.18		$	0.01		$	0.17		$	(0.58	)	$	0.36
Discontinued operations		-			-			-			0.58			-			-			-			0.58

Net income/(loss) per Company’s common share, basic and diluted	$	0.26		$	(0.07	)	$	(0.59	)	$	0.76		$	0.01		$	0.17		$	(0.58	)	$	0.94

Weighted average number of common shares outstanding, basic and diluted		22,333			23,174			22,376			23,324			22,304			22,859			22,351			23,168

The accompanying notes are an integral part of these consolidated financial statements.

PART I. FINANCIAL INFORMATION, CONTINUED:

ITEM 1. FINANCIAL STATEMENTS, CONTINUED:

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2020			2019			2020			2019			2020			2019			2020			2019
Net income/(loss)	$	6,269		$	(1,113	)	$	(12,409	)	$	19,114		$	1,319		$	4,686		$	(11,090	)	$	23,800

Other comprehensive income/(loss)
Holding gain/(loss) on available for sale debt securities		787			141			(1,480	)		1,501			627			210			(853	)		1,711
Reclassification adjustment for loss included in net i ncome/(loss)		-			314			-			625
Reclassification adjustment for loss included in net income/(loss)														-			94			-			719

Other comprehensive income/(loss)		787			455			(1,480	)		2,126			627			304			(853	)		2,430

Comprehensive income/(loss)		7,056			(658	)		(13,889	)		21,240			1,946			4,990			(11,943	)		26,230

Less: Comprehensive income attributable to noncontrolling interests		(477	)		(314	)		(711	)		(1,203	)		(1,105	)		(816	)		(1,816	)		(2,019	)

Comprehensive income/(loss) attributable to Company's common shares	$	6,579		$	(972	)	$	(14,600	)	$	20,037		$	841		$	4,174		$	(13,759	)	$	24,211

The accompanying notes are an integral part of these consolidated financial statements.

PART I. FINANCIAL INFORMATION, CONTINUED:

ITEM 1. FINANCIAL STATEMENTS, CONTINUED:

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands)

(Unaudited)

Accumulated
Additional Other Total
Common Paid-In Comprehensive Accumulated Noncontrolling Stockholders'
Shares Amount Capital Loss Surplus Interests Equity
BALANCE, March 31, 2019 23,407 $ 235 $ 181,196 $ (615 ) $ 116,659 $ 20,852 $ 318,327
Net loss - - - - (1,418 ) 305 (1,113 )
Other comprehensive income - - - 446 - 9 455
Distributions declared (a) - - - - (4,026 ) - (4,026 )
Distributions paid to noncontrolling interests - - - - - (880 ) (880 )
Contributions received from noncontrolling interests - - - - - 5,562 5,562
Redemption, cancellation and tender of shares (361 ) (4 ) (3,711 ) (3,715 )
Shares issued from distribution reinvestment program 6 - 74 - - - 74
BALANCE, June 30, 2019 23,052 $ 231 $ 177,559 $ (169 ) $ 111,215 $ 25,848 $ 314,684
Common Accumulated
Additional Other Total
Paid-In Comprehensive Accumulated Noncontrolling Stockholders'
Shares Amount Capital Income/(loss) Surplus Interests Equity
BALANCE, June 30, 2019 23,052 $ 231 $ 177,559 $ (169 ) $ 111,215 $ 25,848 $ 314,684
Net income - - - - 3,877 809 4,686
Other comprehensive income - - - 297 - 7 304
Distributions declared (a) - - - - (3,990 ) - (3,990 )
Distributions paid to noncontrolling interests - - - - - (785 ) (785 )
Contributions received from noncontrolling interests - - - - - 21,170 21,170
Redemption, cancellation and tender of shares (266 ) (3 ) (2,879 ) - - - (2,882 )
Shares issued from distribution reinvestment program 7 - 74 - - - 74
BALANCE, September 30, 2019 22,793 $ 228 $ 174,754 $ 128 $ 111,102 $ 47,049 $ 333,261

(a) Distributions per share were $0.175.

~~(a) Distributions per share were $0.175.~~
Accumulated Common Accumulated
Additional Other Total Additional Other Total
Common Paid-In Comprehensive Accumulated Noncontrolling Stockholders' Paid-In Comprehensive Accumulated Noncontrolling Stockholders'
Shares Amount Capital Loss Surplus Interests Equity Shares Amount Capital Income/(loss) Surplus Interests Equity
BALANCE, December 31, 2018 23,708 $ 237 $ 184,469 $ (2,251 ) $ 101,382 $ 14,404 $ 298,241 23,708 $ 237 $ 184,469 $ (2,251 ) $ 101,382 $ 14,404 $ 298,241
Net income - - - - 17,955 1,159 19,114 - - - - 21,832 1,968 23,800
Other comprehensive income - - - 2,082 - 44 2,126 - - - 2,379 - 51 2,430
Distributions declared (a) - - - - (8,122 ) - (8,122 ) - - - - (12,112 ) - (12,112 )
Distributions paid to noncontrolling interests - - - - - (1,711 ) (1,711 ) - - - - - (2,496 ) (2,496 )
Contributions received from noncontrolling interests - - - - - 11,952 11,952 - - - - - 33,122 33,122
Redemption, cancellation and tender of shares (667 ) (7 ) (7,036 ) (7,043 ) (933 ) (9 ) (9,915 ) - - - (9,924 )
Shares issued from distribution reinvestment program 11 1 126 - - - 127 18 - 200 - - - 200
BALANCE, June 30, 2019 23,052 $ 231 $ 177,559 $ (169 ) $ 111,215 $ 25,848 $ 314,684
BALANCE, September 30, 2019 22,793 $ 228 $ 174,754 $ 128 $ 111,102 $ 47,049 $ 333,261

(a) Distributions per share were $0.525.

(a~~) Distributions per share were $0.350.~~
Common Accumulated
Additional Other Total
Paid-In Comprehensive Accumulated Noncontrolling Stockholders'
Share Amount Capital Loss Surplus Interests Equity
BALANCE, June 30, 2020 22,335 $ 223 $ 169,784 $ (1,042 ) $ 88,586 $ 30,644 $ 288,195
Net income - - - - 225 1,094 1,319
Other comprehensive income - - - 616 - 11 627
Distributions declared (a) - - - - (3,903 ) - (3,903 )
Distributions paid to noncontrolling interests - - - - - (13,664 ) (13,664 )
Contributions received from noncontrolling interests - - - - - 18,436 18,436
Tender of common stock (55 ) - (301 ) - (301 )
Shares issued from distribution reinvestment program 7 - 84 - - - 84
BALANCE, September 30, 2020 22,287 $ 223 $ 169,567 $ (426 ) $ 84,908 $ 36,521 $ 290,793

(a) Distributions per share were $0.175.

Accumulated
Additional Other Total
Common Paid-In Comprehensive Accumulated Noncontrolling Stockholders'
Shares Amount Capital Loss Surplus Interests Equity
BALANCE, March 31, 2020 22,327 $ 223 $ 169,701 $ (1,810 ) $ 86,687 $ 31,919 $ 286,720
Net income - - - - 5,811 458 6,269
Other comprehensive income - - - 768 - 19 787
Distributions declared (a) - - - - (3,912 ) - (3,912 )
Distributions paid to noncontrolling interests - - - - - (1,752 ) (1,752 )
Shares issued from distribution reinvestment program 8 - 83 - - - 83
BALANCE, June 30, 2020 22,335 $ 223 $ 169,784 $ (1,042 ) $ 88,586 $ 30,644 $ 288,195
~~(a) Distributions per share were $0.175.~~
Accumulated
Additional Other Total
Common Paid-In Comprehensive Accumulated Noncontrolling Stockholders'
Shares Amount Capital Loss Surplus Interests Equity
BALANCE, December 31, 2019 22,608 $ 226 $ 172,749 $ 408 $ 109,559 $ 28,831 311,773
Net loss - - - - (13,150 ) 741 (12,409 )
Other comprehensive loss - - - (1,450 ) - (30 ) (1,480 )
Distributions declared (a) - - - - (7,823 ) - (7,823 )
Distributions paid to noncontrolling interests - - - - - (2,388 ) (2,388 )
Contributions received from noncontrolling interests - - - - - 3,490 3,490
Redemption and cancellation of shares (288 ) (3 ) (3,128 ) - - - (3,131 )
Shares issued from distribution reinvestment program 15 - 163 - - - 163
BALANCE, June 30, 2020 22,335 $ 223 $ 169,784 $ (1,042 ) $ 88,586 $ 30,644 $ 288,195
~~(a) Distributions per share were $0.350.~~
Common Accumulated
Additional Other Total
Paid-In Comprehensive Accumulated Noncontrolling Stockholders'
Shares Amount Capital Income/(Loss) Surplus Interests Equity
BALANCE, December 31, 2019 22,608 $ 226 $ 172,749 $ 408 $ 109,559 $ 28,831 311,773
Net loss - - - - (12,925 ) 1,835 (11,090 )
Other comprehensive loss - - - (834 ) - (19 ) (853 )
Distributions declared (a) - - - - (11,726 ) - (11,726 )
Distributions paid to noncontrolling interests - - - - - (16,052 ) (16,052 )
Contributions received from noncontrolling interests - - - - - 21,926 21,926
Redemption, cancellation and tender of shares (343 ) (3 ) (3,429 ) - - - (3,432 )
Shares issued from distribution reinvestment program 22 - 247 - - - 247
BALANCE, September 30, 2020 22,287 $ 223 $ 169,567 $ (426 ) $ 84,908 $ 36,521 $ 290,793

(a) Distributions per share were $0.525.

The accompanying notes are an integral part of these consolidated financial statements.

PART I. FINANCIAL INFORMATION, CONTINUED:
ITEM 1. FINANCIAL STATEMENTS, CONTINUED:

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
For the Six Months Ended
June 30, For the Nine Months Ended
September 30,
2020 2019 2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)/income $ (12,409 ) $ 19,114 $ (11,090 ) $ 23,800
Less net income – discontinued operations - 13,481 - 13,481
Net (loss)/income – continuing operations (12,409 ) 5,633 (11,090 ) 10,319
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation and amortization 1,968 2,581 2,907 3,822
Mark to market adjustment on derivative financial instruments - 135 - 162
Gain on disposition of real estate (1,562 ) - (1,562 ) (1,013 )
Unrealized loss on marketable equity securities 18,611 1,665 20,083 2,247
Loss on sale and redemption of marketable securities 230 625 230 719
Amortization of deferred financing costs 288 652 453 1,330
Bad debt expense 397 210
Noncash interest income (2,190 ) (747 ) (3,701 ) (1,770 )
Bad debt expense 445 191
Other non-cash adjustments 14 160 14 188
Changes in assets and liabilities:
increase in prepaid expenses and other assets (1,001 ) (321 )
(Decrease)/increase in tenant allowances and deposits payable (23 ) 92
Increase in accounts payable, accrued expenses and other liabilities 355 380
Increase in prepaid expenses and other assets (528 ) (223 )
Decrease in tenant allowances and deposits payable (78 ) (24 )
Increase/(decrease) in accounts payable, accrued expenses and other liabilities 2,758 (127 )
Decrease in due to related parties (33 ) (161 ) (4 ) (95 )
Decrease in deferred rental income (102 ) (42 ) (157 ) (139 )

Net cash provided by operating activities – continuing operations 4,591 10,843 9,722 15,606
Net cash used in operating activities – discontinued operations - (55 ) - (55 )
Net cash provided by operating activities 4,591 10,788 9,722 15,551

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment property (12,860 ) (78,879 ) (21,654 ) (85,130 )
Purchase of marketable securities (7,253 ) (6,450 ) (7,460 ) (10,526 )
Proceeds from sale of marketable securities 4,260 54,429 4,260 61,376
Proceeds from disposition of real estate 2,082 -
Proceeds from sale of investment property 2,082 19,502
Investment in joint venture (119 ) (57 ) (123 ) (89 )
Proceeds from joint venture 159 109 211 140
Funding of notes receivable (6,172 ) (22,999 ) (43,068 ) (65,363 )
Proceeds from repayment of notes receivable 500 - 500 -
Proceeds from investments in related parties 20,000 27,000 20,000 27,000
Investments in related parties - (2,267 ) - (2,266 )

Net cash provided by/(used in) investing activities – continuing operations 597 (29,114 )
Net cash used in investing activities – continuing operations (45,252 ) (55,356 )
Net cash used in investing activities – discontinued operations - (239 ) - (239 )
Net cash provided by/(used in) investing activities 597 (29,353 )
Net cash used in investing activities (45,252 ) (55,595 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage financing 339 36,109 26,390 36,685
Mortgage principal payments (623 ) (808 ) (935 ) (14,974 )
Payment of loan fees and expenses (87 ) (2,453 ) (526 ) (2,453 )
Redemption and cancellation of common shares (3,131 ) (7,043 )
Redemption, cancellation and tender of common shares (3,432 ) (9,924 )
Contributions received from noncontrolling interests 3,490 11,952 21,926 33,122
Distributions paid to noncontrolling interests (2,388 ) (1,711 ) (16,052 ) (2,496 )
Distributions paid to Company's common stockholders (7,708 ) (8,104 ) (11,536 ) (12,056 )

Net cash (used in)/provided by financing activities (10,108 ) 27,942
Net cash provided by financing activities 15,835 27,904

Net change in cash, cash equivalents and restricted cash (4,920 ) 9,377 (19,695 ) (12,140 )
Cash, cash equivalents and restricted cash, beginning of year 79,800 36,582 79,800 36,582
Cash, cash equivalents and restricted cash, end of period $ 74,880 $ 45,959 $ 60,105 $ 24,442

See Note 2 for supplemental cash flow information.

The following is a summary of the Company’s cash, cash equivalents, and restricted cash total as presented in our statements of cash flows for the periods presented:
Cash and cash equivalents $ 72,503 $ 43,558 $ 57,506 $ 22,834
Restricted cash 2,377 2,401 2,599 1,608
Total cash, cash equivalents and restricted cash $ 74,880 $ 45,959 $ 60,105 $ 24,442

The accompanying notes are an integral part of these consolidated financial statements.

7
LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
1. Business and Organization

Lightstone Value Plus Real Estate Investment Trust, Inc., a Maryland corporation (“Lightstone REIT”), formed on June 8, 2004, which has elected to be taxed and qualify as a real estate investment trust for U.S. federal income tax purposes (“REIT”). The Lightstone REIT was formed primarily for the purpose of engaging in the business of investing in and owning commercial and residential real estate properties located throughout the United States.

The Lightstone REIT is structured as an umbrella partnership real estate investment trust, or UPREIT, and substantially all of the Company’s current and future business is and will be conducted through Lightstone Value Plus REIT, L.P. (the “Operating Partnership”), a Delaware limited partnership formed on July 12, 2004. As of ~~June~~September 30, 2020, the Company held a 98% general partnership interest in the Company’s Operating Partnership’s common units (“Common Units”).

The Lightstone REIT and the Operating Partnership and its subsidiaries are collectively referred to as the ‘‘Company’’ and the use of ‘‘we,’’ ‘‘our,’’ ‘‘us’’ or similar pronouns refers to the Lightstone REIT, its Operating Partnership or the Company as required by the context in which such pronoun is used.

Through its Operating Partnership, the Company owns, operates and develops commercial, residential, and hospitality properties and make real estate-related investments, principally in the United States. The Company’s real estate investments are held alone or jointly with other parties. The Company also originates or acquires mortgage loans secured by real estate. Although most of its investments are of these types, the Company may invest in whatever types of real estate or real estate-related investments that it believes is in its best interests. Because of the composition of the Company’s real estate and real estate investments, the Company evaluates all of its real estate investments as one operating segment.

As of ~~June~~September 30, 2020, the Company has ownership interests in (i) two consolidated operating properties, (ii) three consolidated development properties and (iii) seven unconsolidated operating properties. With respect to its consolidated operating properties, the Company wholly owns the St. Augustine Outlet Center, a retail outlet shopping center located in St. Augustine, Florida which contains approximately 0.3 million square feet of gross leasable area, and has a majority ownership interest of approximately 59.2% in Gantry Park Landing, a multi-family residential property located in Long Island City, New York which contains 199 apartment units. With respect to its consolidated development properties, the Company wholly owns three projects consisting of the Lower East Side Moxy Hotel, the Exterior Street Project and the Santa Clara Data Center, all of which were under development as of ~~June~~September 30, 2020. The Company also holds a 2.5% ownership interest in seven hotel properties through a joint venture (the “Joint Venture”). The Joint Venture is between the Company and the operating partnership of Lightstone Value Plus Real Estate Investment Trust II, Inc. (“Lightstone II”), a REIT also sponsored by the Company’s Sponsor, which has a 97.5% ownership interest in the Joint Venture. Furthermore, the Company has other real estate-related investments, including several agreements with various related party entities that provide for it to make preferred contributions pursuant to certain instruments (the “Preferred Investments”) and nonrecourse loans made to unaffiliated third-party borrowers.

The Company’s advisor is Lightstone Value Plus REIT, LLC (the “Advisor”), which is majority owned by David Lichtenstein. On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units. The Company’s Advisor also owns 20,000 shares of the Company’s common stock (“Common Shares”) which were issued on July 6, 2004 for $200, or $10.00 per share. Mr. Lichtenstein also is the majority owner of the equity interests of The Lightstone Group, LLC. The Lightstone Group, LLC served as the sponsor (the ‘‘Sponsor’’) during the Company’s initial public offering (the “Offering”), which terminated on October 10, 2008. The Company’s Advisor, together with its board of directors (the “Board of Directors”), is primarily responsible for making investment decisions on the Company’s behalf and managing its day-to-day operations. Through his ownership and control of The Lightstone Group, LLC, Mr. Lichtenstein is the indirect owner and manager of Lightstone SLP, LLC, a Delaware limited liability company, which owns an aggregate of $30.0 million of special general partner interests (“SLP Units”) in the Operating Partnership which were purchased, at a cost of $100,000 per unit, in connection with the Company’s Offering. Mr. Lichtenstein also acts as the Company’s Chairman and Chief Executive Officer. As a result, he exerts influence over but does not control the Lightstone REIT or the Operating Partnership.

The Company does not have any employees. The Advisor receives compensation and fees for services related to the investment and management of the Company’s assets.

The Company’s Advisor has affiliates which manage and develop certain of its properties. However, the Company also contracts with other unaffiliated third-party property managers.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

The Company’s Common Shares are not currently listed on a national securities exchange. The Company may seek to list its stock for trading on a national securities exchange only if a majority of independent directors believe listing would be in the best interest of its stockholders. The Company does not intend to list its shares at this time. The Company does not anticipate that there would be any market for its shares of common stock until they are listed for trading.

Tender Offer

The Company commenced a tender offer on June 15, 2020, pursuant to which it offered to acquire up to 225,000 Common Shares at a purchase price of $5.00 per share, or approximately $1.1 million in the aggregate (the “Tender Offer”). Pursuant to the terms of the Tender Offer, which expired on July 24, 2020, the Company repurchased approximately 0.1 million Common Shares for an aggregate of approximately $0.3 million in August 2020.

Related Parties

The Advisor and its affiliates, and Lightstone SLP, LLC are related parties of the Company. Certain of these entities are entitled to compensation for services related to the investment, management and disposition of the Company’s assets. The compensation is based on the cost of acquired properties/investments and the annual revenue earned from such properties/investments, and other such fees and expense reimbursements as outlined in each of the respective agreements.

Discontinued Operations

During the first quarter of 2019, a portfolio comprised of the Company’s 10 industrial properties located in Louisiana (seven properties located in New Orleans and three properties located in Baton Rouge, and collectively, the “Louisiana Assets”) met the criteria to be classified as discontinued operations in the consolidated statements of operations for all periods presented, through their date of disposition. The disposition of the Louisiana Assets, which represented all of the Company’s remaining industrial properties, represented a strategic shift that had a major effect on the Company’s operations and financial results and therefore, upon their disposition, the operating results of the Louisiana Assets were classified as discontinued operations in the Company’s consolidated statements of operations for all periods presented through their date of disposition (See Note 8).

Gain on Disposition of Real Estate

On April 6, 2020, the Company completed the disposition of a parcel of land adjacent to the St. Augustine Outlet Center for a contractual sales price of $2.1 million and recognized a gain on the disposition of real estate of approximately $1.6 million during the second quarter of 2020.

Noncontrolling Interests

Partners of Operating Partnership

On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units in the Operating Partnership. The Advisor has the right to convert the Common Units into cash or, at the option of the Company, an equal number of shares of Common Shares.

In connection with the Offering, Lightstone SLP, LLC, an affiliate of the Advisor, purchased an aggregate of $30.0 million of SLP Units. As the majority owner of the SLP Units, Mr. Lichtenstein is the beneficial owner of a 99% interest in such SLP Units and thus receives an indirect benefit from any distributions made in respect thereof. These SLP Units may be entitled to a portion of any regular and liquidation distributions that the Company makes to its stockholders, but only after the Company’s stockholders have received a stated preferred return.

In addition, an aggregate 497,209 Common Units were issued to other unrelated parties during the years ended December 31, 2008 and 2009 and remain outstanding as of ~~June~~September 30, 2020.

Other Noncontrolling Interests in Consolidated Subsidiaries

Other noncontrolling interests in consolidated subsidiaries include ownership interests in (i) Pro-DFJV Holdings LLC (“PRO”) held by the Company’s Sponsor, (ii) 50-01 2nd St. Associates LLC (the “2nd Street Joint Venture”), held by the Company’s Sponsor and other affiliates and (iii) various joint ventures held by affiliates of the Sponsor that have originated promissory notes to unaffiliated third parties. PRO’s holdings principally consist of Marco OP Units and Marco II OP Units. The 2nd Street Joint Venture owns Gantry Park Landing.


LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of the Lightstone REIT and its Operating Partnership and its subsidiaries (over which the Company exercises financial and operating control). All inter-company balances and transactions have been eliminated in consolidation. In addition, interests in entities acquired are evaluated based on applicable accounting principles generally accepted in the United States of America (“GAAP”), and if deemed to be variable interest entities (“VIE”) in which the Company is the primary beneficiary are also consolidated. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation based on legal form, economic substance, and the extent to which the Company has control, substantive participating rights or both under the respective ownership agreement. For entities in which the Company has less than a controlling interest but have significant influence, the Company accounts for the investment using the equity method of accounting.

There are judgments and estimates involved in determining if an entity in which the Company has made an investment is a VIE and, if so, whether the Company is the primary beneficiary. The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage of equity being risked compared to the total equity of the entity. Determining expected future losses involves assumptions of various possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate to determine the net present value of those future losses. A change in the judgments, assumptions, and estimates outlined above could result in consolidating an entity that should not be consolidated or accounting for an investment using the equity method that should in fact be consolidated, the effects of which could be material to our financial statements.

The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited Consolidated Financial Statements of the Company and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. 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, Inc. and its Subsidiaries have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period. The most significant assumptions and estimates relate to the valuation of real estate and real-estate related investments, marketable securities, notes receivable, depreciable lives, and revenue recognition. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.

The consolidated balance sheet as of December 31, 2019 included herein has been derived from the consolidated balance sheet included in the Company'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.

COVID-19 Pandemic

~~During the second quarter of~~On March 11, 2020, the World Health Organization declared COVID-19 ~~pandemic continued to evolve on both~~ a global ~~and national level. With respect~~pandemic leading many countries, including the United States, particularly at the individual state level, to ~~the Unites States, many states have begun a phased approach as to the reopening of businesses and venues which have been subject to~~impose various restrictions and other measures, including, but not limited to, mandatory closures, quarantines, limitations on travel, “shelter in place” rules and certain other ~~measures. While certain~~measures in an effort to reduce its duration and spread. The COVID-19 pandemic has continued to evolve and while most states have ~~begun to reduce~~initiated a phased approach allowing for reductions and/or ~~lift~~lifting of restrictions, the situation remains ~~both dynamic~~highly unpredictable and ~~unpredictable.~~dynamic.

As a result of previous restrictions, the Company ~~was required to temporarily close~~closed its St. Augustine Outlet Center onfrom March 20, ~~2020. However, it was subsequently able to reopen the St. Augustine Outlet Center on~~2020 through May 7, ~~2020 and it is currently operating with both reduced capacity levels and operating hours in accordance with the State of Florida’s guidelines.~~2020. Primarily because of the impact of the COVID-19 pandemic on the operating performance of the St. Augustine Outlet Center’s tenancy, especially during the closure period, the Company has provided forbearance of certain rent payments to various ~~tenants,~~tenants. Additionally, the Company has seen some deterioration in both the occupancy and rental rates for Gantry Park Landing, which is located on Long Island, New York, as the luxury rental market in the greater New York City metropolitan area has been negatively impacted by the COVID-19 pandemic. However, none of these items have ~~not had a material impact on~~yet materially impacted the Company’s results from operations or its financial condition.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

To-date, the COVID-19 pandemic has not had any significant impact on ~~Gantry Park Landing or on~~ the Company’s three development ~~projects because only limited construction activities have thus far commenced.~~projects. Furthermore, the Company’s other real estate-related investments (both its ~~Preferred Investments~~ preferred investments in related parties and nonrecourse loans made to unaffiliated third-party borrowers) also relate to various development projects which are at different stages in their respective development process. These investments, which are subject to similar restrictions and other measures, have also not yet been significantly impacted by the COVID-19 pandemic.
While the Company’s business has not yet seen any ~~significant~~material impact from the COVID-19 ~~pandemic.~~
~~The~~pandemic, the extent to which ~~the Company’s business~~it may be affected ~~by the current COVID-19 pandemic will largely depend on both current and~~in future ~~developments, including its duration, spread and treatment, and related travel advisories and restrictions, all of which are~~periods remains highly uncertain and cannot be reasonably predicted.

If the Company’s operating properties, development projects and real estate-related investments are negatively impacted for an extended period because (i) occupancy levels and rental rates further decline, (ii) tenants are unable to pay their rent, ~~(ii)~~(iii) borrowers are unable to pay scheduled debt service on notes receivable, ~~(iii)~~(iv) development activities are delayed and/or ~~(iv)~~(v) various related party entities are unable to pay monthly preferred distributions on the Company’s ~~Preferred Investments~~,preferred investments in related parties, 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 Relief

Due to the business disruptions 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 has elected to apply such relief and will avail itself of the election to avoid performing a lease by lease analysis. The Lease Modification Q&A had no material impact on the Company’s consolidated financial statements as of and for the three and ~~six~~nine months ended ~~June~~September 30, 2020, however, its future impact to the Company is dependent upon the extent of lease concessions, if any, granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by the Company at the time of entering into such concessions.

New Accounting Pronouncements

In June 2016, the FASB issued an accounting standards update which replaces the Company 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, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

Supplemental Cash Flow Information

Supplemental cash flow information for the periods indicated is as follows:

For the Six Months Ended June 30, For the Nine Months Ended
September 30,
2020 2019 2020 2019
Cash paid for interest $ 4,310 $ 3,619 $ 6,524 $ 5,621
Distributions declared but not paid $ 3,912 $ 4,027 $ 3,904 $ 3,992
Investment property acquired but not paid $ 1,447 $ 307 $ 2,532 $ 300
Assets transferred in connection with assignment transaction $ - $ 37,299 $ - $ 37,299
Liabilities extinguished in connection with assignment transaction $ - $ 50,914 $ - $ 50,914
Amortization of deferred financing costs included in construction in progress $ 806 $ - $ 997 $ -
Holding loss/gain on marketable securities $ 1,480 $ 2,126 $ 853 $ 2,430
Value of shares issued from distribution reinvestment program $ 163 $ 127 $ 247 $ 200

Reclassifications

Certain prior period amounts may have been reclassified to conform to the current year presentation.

3. Development Projects

Lower East Side Moxy Hotel

On December 3, 2018, the Company, through a subsidiary of the Operating Partnership, acquired adjacent three parcels of land located at 147-151 Bowery, New York, New York (collectively, the “Bowery Land”) from 151 Emmut Properties LLC and 145-149 Bowery LLC, both unaffiliated third parties, for aggregate consideration of approximately $56.5 million, excluding closing and other acquisition related costs. Additionally, on December 6, 2018, the Company, though a subsidiary of the Operating Partnership, acquired certain air rights located at 329 Broome Street, New York, New York (the “Air Rights”) from B.R.P. Realty Corp., an unaffiliated third party, for approximately $2.4 million, excluding closing and other acquisition related costs. The Company ~~intends to use~~is using the Bowery Land and Air Rights for the development and construction of a 296-room Marriott Moxy hotel (the “Lower East Side Moxy Hotel”). In connection with the acquisition of the Bowery Land and the Air Rights, the Advisor earned an acquisition fee equal to 2.75% of the aggregate gross contractual purchase price, which was approximately $1.6 million. The Lower East Side Moxy Hotel is currently under development.

Exterior Street Project

On February 27, 2019, the Company, through subsidiaries of the Operating Partnership, acquired two adjacent parcels of land located at 355 and 399 Exterior Street, New York, New York (collectively, the “Exterior Street Land”), from Borden Realty Corp and 399 Exterior Street Associates LLC, unaffiliated third parties, for an aggregate purchase price of approximately $59.0 million, excluding closing and other acquisition related costs. The Company ~~intends to use~~is using the Exterior Street Land for the development and construction of a multi-family residential property (the “Exterior Street Project”). The Exterior Street Project is currently under development.

On March 29, 2019, the Company entered into a $35.0 million loan (the “Exterior Street Loan”) which ~~bears~~initially bore interest at 4.50% and ~~was initially scheduled to mature~~matured on April 9, 2020. However, because the Company has already exercised the ~~first~~second of two six-month extension options, the current maturity date is now April 9, 2021 and upon the exercise of the second extension option on October 9, ~~2020.~~2020, the interest rate became Libor plus 2.25%. The Exterior Street Loan requires monthly interest payments through its maturity date and is collateralized by the Exterior Street Project. In connection with the acquisition of the Exterior Street Land, the Advisor earned an acquisition fee equal to 2.75% of the gross aggregate contractual purchase price, which was approximately $1.6 million.

Santa Clara Data Center

On January 10, 2019, the Company, through subsidiaries of the Operating Partnership, acquired a parcel of land located at 2175 Martin Avenue, Santa Clara, California (the “Martin Avenue Land”) from The Chioini Living Trust, an unaffiliated third party, for approximately $10.6 million, excluding closing and other acquisition related costs. The Company intends to use the Martin Avenue Land for the development and construction of a data center (the “Santa Clara Data Center”). In connection with the acquisition of the Martin Avenue Land, the Advisor earned an acquisition fee equal to 2.75% of the gross contractual purchase price, which was approximately $0.2 million. The Santa Clara Data Center is currently under development.

~~The following is a summary of the amounts~~ ~~incurred and capitalized to construction in progress as of the dates indicated and the amounts of interest capitalized to construction in progress for the periods indicated:~~

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

Amounts Capitalized
to Construction in Progress Capitalized Interest Capitalized Interest
As of As of �� Three Months Ended June 30, Six Months Ended June 30,
Development Projects June 30,
2020 December 31,
2019 2020 2019 2020 2019
Lower East Side Moxy Hotel $ 83,505 $ 73,776 $ 1,060 $ 1,090 $ 2,107 $ 2,168
Exterior Street Project 70,056 66,084 680 1,178 1,788 1,469
Santa Clara Data Center 13,317 13,027 92 134 192 240
Total Developments Projects $ 166,878 $ 152,887 $ 1,832 $ 2,402 $ 4,087 $ 3,877
The following is a summary of the amounts incurred and capitalized to construction in progress as of the dates indicated and the amounts of interest capitalized to construction in progress for the periods indicated:

Amounts Capitalized to Construction in
Progress Capitalized Interest Capitalized Interest
As of As of Three Months Ended September 30, Nine Months Ended September 30,
Development Projects September 30, 2020 December 31, 2019 2020 2019 2020 2019
Lower East Side Moxy Hotel $ 91,365 $ 73,776 $ 1,146 $ 991 $ 3,253 $ 3,159
Exterior Street Project 72,089 66,084 722 1,083 2,510 2,552
Santa Clara Data Center 13,478 13,027 103 96 295 336
Total Developments Projects $ 176,932 $ 152,887 $ 1,971 $ 2,170 $ 6,058 $ 6,047
4. Marketable Securities, Fair Value Measurements and Notes Payable

Marketable Securities:

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

As of June 30, 2020 As of September 30, 2020
Adjusted Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value Adjusted Cost Gross Unrealized
Gains Gross Unrealized
Losses Fair Value
Marketable Securities:
Equity securities:
Equity Securities, primarily REITs $ 8,591 $           - $ (1,392 ) $ 7,199 $ 8,798 $ 104 $ (2,194 ) $ 6,708
Marco OP Units and Marco II OP Units 19,227 - (4,919 ) 14,308 19,227 - (5,693 ) 13,534
27,818 - (6,311 ) 21,507 28,025 104 (7,887 ) 20,242
Debt securities:
Corporate Bonds 16,964 - (1,062 ) 15,902 16,964 147 (579 ) 16,532

Total $ 44,782 $ - $ (7,373 ) $ 37,409 $ 44,989 $ 251 $ (8,466 ) $ 36,774

As of December 31, 2019 As of December 31, 2019
Adjusted Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value Adjusted Cost Gross Unrealized
Gains Gross Unrealized
Losses Fair Value
Marketable Securities:
Equity securities:
Equity Securities, primarily REITs $ 6,799 $ 375 $ (17 ) $ 7,157 $ 6,799 $ 375 $ (17 ) $ 7,157
Marco OP Units and Marco II OP Units 19,227 11,942 - 31,169 19,227 11,942 - 31,169
26,026 12,317 (17 ) 38,326 26,026 12,317 (17 ) 38,326
Debt securities:
Corporate Bonds 15,993 442 (23 ) 16,412 15,993 442 (23 ) 16,412

Total $ 42,019 $ 12,759 $ (40 ) $ 54,738 $ 42,019 $ 12,759 $ (40 ) $ 54,738

As of both ~~June~~September 30, 2020 and December 31, 2019, the Company held an aggregate of 209,243 Marco OP Units and Marco II OP Units, of which 89,695 were owned by PRO. The Marco OP Units and the Marco II OP Units are exchangeable for a similar number of common operating partnership units (“Simon OP Units”) of Simon Property Group, L.P., (“Simon OP”), the operating partnership of Simon Property Group, Inc. (“Simon”), a public REIT that is an owner and operator of shopping malls and outlet centers. Subject to the various conditions, the Company may elect to exchange the Marco OP Units and/or the Marco II OP Units to Simon OP Units which must be immediately delivered to Simon in exchange for cash or similar number of shares of Simon’s common stock (“Simon Stock”). Accordingly, the Marco OP Units and Marco II OP Units are valued based on the closing price of Simon Stock, which was ~~$68.38~~$64.68 per share and $148.96 per share as of ~~June~~September 30, 2020 and December 31, 2019, respectively.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

As of December 31, 2019, the Company’s marketable equity securities had an aggregate unrealized holding gain of approximately $12.3 million, which was principally attributable to its Marco OP Units and Marco II OP Units. During ~~the first half of~~ 2020, financial markets experienced significant volatility in response to the current COVID-19 pandemic, including significant changes in market interest rates and market prices of certain equity ~~securities~~securities. Primarily because of this volatility, the Company incurred an unrealized ~~loss~~losses of approximately ~~$21.3~~$1.5 million and ~~an unrealized gain of approximately $2.7~~$20.1 million, ~~on its marketable equity securities during the first and second quarters of 2020,~~ respectively, ~~which resulted in a net unrealized loss of approximately $18.6 million~~ for the ~~six~~three and nine months ended ~~June~~September 30, 2020. ~~The~~These unrealized ~~gains and~~ losses incurred on the Company’s marketable equity securities are included in its consolidated statements of operations. As a result, the Company’s marketable equity securities had an aggregate net unrealized loss of approximately ~~$6.3~~$7.8 million, of which approximately ~~$4.9~~$5.7 million was attributable to its Marco OP Units and Marco II OP Units, as of ~~June~~September 30, 2020.

As of December 31, 2019, the Company’s marketable debt securities had an aggregate unrealized holding gain of approximately $0.4 million. During the ~~first~~three and ~~second quarters of~~nine months ended September 30, 2020, the ~~Company’s~~Company experienced a holding gain of approximately $0.6 million and a holding loss of approximately ~~$2.3~~$0.9 million, ~~and a holding gain of approximately $0.8 million~~respectively, on its available for sale marketable debt ~~securities, respectively, which resulted in a net~~securities. This holding gain and loss ~~of approximately $1.5 million for~~on the ~~six months ended June 30, 2020. These holding gains and losses~~Company’s marketable debt securities are included in ~~the Company’s~~its consolidated statements of comprehensive income. As a result, the Company’s marketable debt securities had an aggregate net unrealized loss of approximately ~~$1.1~~$0.4 million as of ~~June~~September 30, 2020.

The Company considers the declines in market value of its investments in marketable debt securities to be temporary in nature as the unrealized losses as of ~~June~~September 30, 2020 were caused primarily by financial market volatility associated with the current COVID-19 pandemic which resulted in significant volatility in market interest rates and market prices of certain debt securities. When evaluating its investments in marketable debt securities 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 marketable debt security before recovery of its amortized cost basis. During the ~~six~~three and nine months ended ~~June~~September 30, 2020 and 2019, the Company did not recognize any impairment charges on its investments in marketable debt securities. As of ~~June~~September 30, 2020, the Company does not consider any of its investments in marketable debt securities to be other-than-temporarily impaired.

The Company may sell certain of its investments in marketable debt securities prior to their stated maturities for strategic purposes, in anticipation of credit deterioration, or for duration management.

Fair Value Measurements

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

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

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

Marketable securities measured at fair value on a recurring basis as of the dates indicated are as follows:

Fair Value Measurement Using Fair Value Measurement Using
As of June 30, 2020 Level 1 Level 2 Level 3 Total
As of September 30, 2020 Level 1 Level 2 Level 3 Total

Marketable Securities:
Equity Securities, primarily REITs $ 7,199 $ - $ - $ 7,199 $ 6,708 $ - $ - $ 6,708
Marco OP and OP II Units - 14,308 - 14,308 - 13,534 - 13,534
Corporate Bonds - 15,902 - 15,902 - 16,532 - 16,532
Total $ 7,199 $ 30,210 $ - $ 37,409 $ 6,708 $ 30,066 $ - $ 36,774

Fair Value Measurement Using
As of December 31, 2019 Level 1 Level 2 Level 3 Total

Marketable Securities:
Equity Securities, primarily REITs $ 7,157 $ - $ - $ 7,157
Marco OP and OP II Units - 31,169 - 31,169
Corporate Bonds - 16,412 - 16,412
Total $ 7,157 $ 47,581 $ - $ 54,738

The fair values of the Company’s investments in Corporate Bonds are measured using readily available quoted prices for similar assets. Additionally, as noted above, the Company’s Marco OP and Marco OP II Units are ultimately exchangeable for cash or similar number of shares of Simon Stock, therefore the Company uses the quoted market price of Simon Stock to measure the fair value of the Company’s Marco OP and Marco OP II Units.

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:

As of
June 30, 2020 As of September 30, 2020
Due in 1 year $ 1,800 $ 1,888
Due in 1 year through 5 years 4,096 4,272
Due in 5 years through 10 years - -
Due after 10 years 10,006 10,372
Total $ 15,902 $ 16,532

The Company did not have any other significant financial assets or liabilities, which would require revised valuations that are recognized at fair value.

Notes Payable

Margin Loan

The Company has access to a margin loan (the “Margin Loan”) from a financial institution that holds custody of certain of the Company’s marketable securities. The Margin Loan, which is due on demand, bears interest at Libor plus 0.85% ~~(1.01%~~(1.00% as of ~~June~~September 30, 2020) and is collateralized by the marketable securities in the Company’s account. The amounts available to the Company under the Margin Loan are at the discretion of the financial institution and not limited to the amount of collateral in its account. There were no amounts outstanding under this Margin Loan as of ~~June~~September 30, 2020 and December 31, 2019.

Line of Credit

The Company has a non-revolving credit facility (the “Line of Credit”) that provides for borrowings up to a maximum of $20.0 million, subject to a 55% loan-to-value ratio based on the fair value of the underlying collateral, matures on June 19, 2021 and bears interest at Libor plus 1.35% ~~(1.51%~~(1.50% as of ~~June~~September 30, 2020). The Line of Credit is collateralized by an aggregate of 209,243 of Marco OP Units and Marco II OP Units and is guaranteed by PRO. As of ~~June~~September 30, 2020, the amount of borrowings available to be drawn under the Line of Credit was approximately ~~$7.9~~$7.4 million. No amounts were outstanding under the Line of Credit as of ~~June~~September 30, 2020 and December 31, 2019.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

5. Notes Receivable

Beginning in 2019, the Company has formed certain joint ventures (collectively, the “NR Joint Ventures”) between wholly-owned subsidiaries of the Operating Partnership (collectively, the “NR Subsidiaries”) and affiliates of the Sponsor (the “NR Affiliates”) which have originated nonrecourse loans (collectively, the “Joint Venture Promissory Notes”) to unaffiliated third-party borrowers (collectively, the “Joint Venture Borrowers”).

The NR Subsidiaries and NR Affiliates have varying ownership interests in the NR Joint Ventures and certain other wholly-owned subsidiaries of the Operating Partnership serve as the manager and are the sole decision-maker for each of the NR Joint Ventures.

The Company has determined that the NR Joint Ventures are VIEs and the NR Subsidiaries are the primary beneficiaries. Since the NR Subsidiaries are the primary beneficiaries, beginning on the applicable date of formation, the Company has consolidated the operating results and financial condition of the NR Joint Ventures and accounted for the respective ownership interests of the NR Affiliates as noncontrolling interests.

The Joint Venture Promissory Notes provide for monthly interest at a prescribed variable rate, subject to a floor. In connection with funding of the Joint Venture Promissory Notes, the NR Joint Ventures have received origination fees (1.00% - 1.50%) based on the principal amount of the loan and retained a portion of the loan proceeds to establish a reserve for interest and other items (the “Loan Reserves”). The Joint Venture Promissory Notes are recorded in notes receivable, net on the consolidated balance sheets.

The Joint Venture Promissory Notes generally have an initial term of one or two years and may provide for additional extension options subject to satisfaction of certain prescribed conditions, including the funding of an additional Loan Reserves and payment of an extension fee. The Joint Venture Promissory Notes are collateralized by either the membership interests of the Joint Venture Borrowers in the borrowing entity or the underlying real property being developed by the Joint Venture Borrower.

The origination fees received are presented in the consolidated balance sheets as a direct deduction from the carrying value of the Joint Venture Promissory Notes and are amortized into interest income, using a straight-line method that approximates the effective interest method, over the initial term of the Joint Venture Promissory Notes. The Loan Reserves are presented in the consolidated balance sheets as a direct deduction from the carrying value of the Joint Venture Promissory Notes and are applied against the monthly interest due over the term.

During ~~the six~~nine months ended ~~June~~September 30, 2020, the NR Subsidiaries and the NR Affiliates made aggregate contributions to the NR Joint Ventures of approximately ~~$3.5~~$21.9 million and ~~$3.5~~$21.9 million, respectively, principally to fund their respective shares of the Joint Venture Promissory Notes that were originated. During the ~~six~~nine months ended ~~June~~September 30, 2019, the NR Subsidiaries and the NR Affiliates made aggregate contributions to the NR Joint Ventures of approximately ~~$11.7~~$31.5 million and ~~$12.0~~$32.5 million, respectively, principally to fund their respective shares of the Joint Venture Promissory Notes that were originated. Additionally, during the ~~six~~nine months ended ~~June~~September 30, 2020, the NR Joint Ventures made aggregate distributions of approximately ~~$1.1~~$14.2 million to both the NR Subsidiaries and NR Affiliates, based on their respective membership ~~interests..~~interests. During the ~~six~~nine months ended ~~June~~September 30, 2019, the NR Joint Ventures made aggregate distributions of approximately $0.5 million to both the NR Subsidiaries and NR Affiliates, based on their respective membership interests.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

The following tables summarize the Notes Receivable as of the dates indicated:

As of June 30, 2020
Company's Loan Current Contractual Unamortized Company's Ownership Percentage Loan Commitment Amount Origination Fee Origination
Date Maturity
Date Contractual
Interest
Rate As of September 30, 2020
Ownership Commitment Origination Origination Maturity Interest Outstanding Loan Origination Carrying Unfunded Outstanding
Principal Reserves Unamortized
Origination Fee Carrying Value Unfunded
Commitment
Joint Venture/Lender Percentage Amount Fee Date Date Rate Principal Reserves Fee Value Commitment
LSC 162nd Capital I LLC 45.45 % $ 4,234 1.50 % February 5, 2019 November 11,2020 Libor plus 7.50%
(Floor of 11%) $ 4,076 $ (185 ) $ (41 ) $ 3,850 $ - 45.45 % $ 4,234 1.50 % February 5, 2019 November 11,2020 Libor plus 7.50%
(Floor of 11%) $ 4,076 $ (71 ) $ (10 ) $ 3,995 $ -

LSC 162nd Capital II LLC 45.45 % 9,166 1.50 % February 5, 2019 November 11,2020 Libor plus 7.50%
(Floor of 11%) 8,824 (401 ) (88 ) 8,335 - 45.45 % 9,166 1.50 % February 5, 2019 November 11,2020 Libor plus 7.50%
(Floor of 11%) 8,824 (153 ) (22 ) 8,649 -

LSC 1543 7th LLC 50 % 20,000 1.00 % August 27, 2019 August 26, 2020 Libor plus 5.15%
(Floor of 7.65%) 20,000 - (31 ) 19,969 - 50 % 20,000 1.00 % August 27, 2019 February 26, 2021 Libor plus 5.40%
(Floor of 7.90%) 20,000 - (83 ) 19,917 -

LSC 1650 Lincoln LLC 50 % 24,000 1.00 % August 27, 2019 August 26, 2020 Libor plus 5.15%
(Floor of 7.65%) 24,000 - (37 ) 23,963 - 50 % 24,000 1.00 % August 27, 2019 February 26, 2021 Libor plus 5.40%
(Floor of 7.90%) 24,000 - (100 ) 23,900 -

LSC 11640 Mayfield LLC 50 % 18,000 1.00 % March 4, 2020 March 1, 2022 Libor plus 10.50%
(Floor of 12.50%) 10,750 (3,056 ) (226 ) 7,468 7,250 50 % 18,000 1.50 % March 4, 2020 March 1, 2022 Libor plus 10.50%
(Floor of 12.50%) 10,750 (2,712 ) (192 ) 7,846 7,250

LSC 87 Newkirk LLC 50 % 42,700 1.25 % July 2, 2020 December 1, 2021 Libor plus 6.00%
(Floor of 7.00%) 42,700 (4,570 ) (446 ) 37,684 -

Total $ 67,650 $ (3,642 ) $ (423 ) $ 63,585 $ 7,250 $ 110,350 $ (7,506 ) $ (853 ) $ 101,991 $ 7,250

Company's
Ownership
Percentage

Loan
Commitment
Amount

Origination
Fee

Origination
Date

Current
Maturity
Date

Contractual
Interest
Rate
As of December 31, 2019

Outstanding Principal

Loan
Reserves

Unamortized Origination Fee

Carrying
Value

Joint Venture/Lender
LSC 162nd Capital I LLC 45.45 % $ 4,234 1.50 % February 5, 2019 March 1,2020 Libor plus 7.50% (Floor of 10%) $ 4,234 $ (82 ) $ (6 ) $ 4,146

LSC 162nd Capital II LLC 45.45 % 9,166 1.50 % February 5, 2019 March 1,2020 Libor plus 7.50% (Floor of 10%) 9,166 (178 ) (14 ) 8,974

LSC 47-16 Greenpoint LLC 50 % 13,000 1.00 % April 5, 2019 April 4, 2020 Libor plus 5.75% (Floor of 8.25%) - - - -

LSC 1543 7th LLC 50 % 20,000 1.00 % August 27, 2019 August 26, 2020 Libor plus 5.15% (Floor of 7.65%) 20,000 (504 ) (131 ) 19,365

LSC 1650 Lincoln LLC 50 % 24,000 1.00 % August 27, 2019 August 26, 2020 Libor plus 5.15% (Floor of 7.65%) 24,000 (605 ) (157 ) 23,238

Total $ 57,400 $ (1,369 ) $ (308 ) $ 55,723

As of June 30, 2020
Company's Loan Current Contractual Unamortized
Ownership Commitment Origination Origination Maturity Interest Outstanding Loan Origination Carrying
Joint Venture/Lender Percentage Amount Fee Date Date Rate Principal Reserves Fee Value
LSC 162nd Capital I LLC 45.45 % $ 4,234 1.50 % February 5, 2019 March 1,2020 Libor plus 7.50%
(Floor of 10%) $ 4,234 $ (82 ) $ (6 ) $ 4,146

LSC 162nd Capital II LLC 45.45 % 9,166 1.50 % February 5, 2019 March 1,2020 Libor plus 7.50%
(Floor of 10%) 9,166 (178 ) (14 ) 8,974

LSC 47-16 Greenpoint LLC 50 % 13,000 1.00 % April 5, 2019 April 4, 2020 Libor plus 5.75%
(Floor of 8.25%) - - - -

LSC 1543 7th LLC 50 % 20,000 1.00 % August 27, 2019 August 26, 2020 Libor plus 5.15%
(Floor of 7.65%) 20,000 (504 ) (131 ) 19,365

LSC 1650 Lincoln LLC 50 % 24,000 1.00 % August 27, 2019 August 26, 2020 Libor plus 5.15%
(Floor of 7.65%) 24,000 (605 ) (157 ) 23,238

  Total $ 57,400 $ (1,369 ) $ (308 ) $ 55,723
The following summarizes the interest earned (included in interest and dividend income on the consolidated statements of operations) for each of the Joint Venture Promissory Notes during the periods indicated:
For the Three Months Ended
June 30, For the Six Months Ended
June 30,
Joint Venture/Lender 2020 2019 2020 2019
LSC 162nd Capital I LLC $ 249 $ 123 $ 363 $ 197

LSC 162nd Capital II LLC 540 266 785 427

LSC 47-16 Greenpoint LLC - 290 - 290

LSC 1543 7th LLC 436 - 873 -

LSC 1650 Lincoln LLC 524 - 1,048 -

LSC 11640 Mayfield LLC 373 - 488 -

  Total $ 2,122 $ 679 $ 3,557 $ 914

For the Three Months Ended
September 30, For the Nine Months Ended
September 30,
Joint Venture/Lender 2020 2019 2020 2019
LSC 162nd Capital I LLC $ 145 $ 118 $ 508 $ 321
LSC 162nd Capital II LLC 314 269 1,099 695
LSC 47-16 Greenpoint LLC - 313 - 597
LSC 1543 7th LLC 444 168 1,317 168
LSC 1650 Lincoln LLC 532 201 1,580 202
LSC 11640 Mayfield LLC 377 - 866 -
LSC 87 Newkirk LLC 812 - 812 -

Total $ 2,624 $ 1,069 $ 6,182 $ 1,983

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
6. Mortgages Payable, Net

Mortgages payable, net consists of the following:

Property/Investment Interest Rate Weighted Average Interest Rate as of June 30, 2020 Maturity Date Amount Due at Maturity As of
June 30, 2020 As of
December 31, 2019 Interest Rate Weighted Average
Interest Rate as of
September 30, 2020 Maturity Date Amount Due at
Maturity As of
September 30, 2020 As of
December 31, 2019
Gantry Park Landing 4.48% 4.48 % November 2024 $ 65,317 $ 71,505 $ 72,128 4.48% 4.48 % November 2024 $ 65,317 $ 71,193 $ 72,128

Lower East Side Moxy Hotel LIBOR + 4.25% 6.62 % December 2020 35,168 35,168 34,828 LIBOR + 4.25% (floor of 6.63%) 6.63 % December 2020 35,168 35,168 34,828

Exterior Street Project 4.50% 4.50 % October 2020 35,000 35,000 35,000 4.50% 4.50 % April 2021 35,000 35,000 35,000

Santa Monica Notes Receivable LIBOR + 3.75% 5.50 % August 2020 25,000 25,000 25,000 LIBOR + 3.75% (floor of 5.50%) 5.50 % February 2021 25,000 25,000 25,000
87 Newkirk Note Receivable LIBOR + 3.80% (floor of 4.80%) 4.80 % January 2022 26,051 26,051 -
Total mortgages payable 5.09 % $ 160,485 166,673 166,956 5.05 % $ 186,536 192,412 166,956

Less: Deferred financing costs (1,245 ) (2,251 ) (1,327 ) (2,251 )

Total mortgages payable, net $ 165,428 $ 164,705 $ 191,085 $ 164,705

~~Libor~~LIBOR as of ~~June~~September 30, 2020 and December 31, 2019 was ~~0.16%~~0.15% and 1.76%, respectively. The Company’s loans are secured by the indicated real estate and are non-recourse to the Company, unless otherwise indicated.

On July 22, 2020, the Company, through LSC 87 Newkirk LLC (the “87 Newkirk Joint Venture”), entered into a $27.5 million loan (the “87 Newkirk Loan”) which bears interest at LIBOR+3.80%, subject to a 4.80% floor, and is scheduled to initially mature on January 1, 2022 but may be further extended through the exercise of two, six-month extension options, which the 87 Newkirk Joint Venture may exercise by providing the lender with advance written notice. The 87 Newkirk Loan requires monthly interest payments through its maturity date and is collateralized by a nonrecourse loan originated by the 87 Newkirk Joint Venture. Through September 30, 2020, the Company received proceeds of $26.1 million under the 87 Newkirk Loan. As a result, the 87 Newkirk Loan had an outstanding balance and remaining availability of $26.1 million and $1.4 million, respectively, as of September 30, 2020.
On November 12, 2019, the Company, through LSC 1543 7th LLC and LSC 1650 Lincoln LLC (collectively, the “Santa Monica Joint Ventures”), entered into a $25.0 million loan ~~(the” Santa~~(the “Santa Monica Loan”) which bears interest at LIBOR+3.75%, subject to a 5.50% floor, and iswas initially scheduled to ~~initially~~ mature on August 12, 2020 but ~~may be further extended through the exercise of~~had two six-month extension ~~options, which~~options. However, because the Company has exercised the first extension option, the current maturity date is now February 12, 2021. The Santa Monica Joint Ventures may exercise the remaining extension option by providing the lender with advance written notice. The Santa Monica Loan requires monthly interest payments through its maturity date and is cross-collateralized by two nonrecourse loans originated by the Santa Monica Joint Ventures.

On March 29, 2019, the Company entered into the $35.0 million Exterior Street Loan which ~~bears~~initially bore interest at 4.50% and was scheduled to ~~initially~~ mature on April 9, ~~2020.~~2020, but had two six-month extension options. However, because the Company has ~~already~~now exercised ~~the first of two six-month~~both extension options, the current maturity date is now April 9, 2021 and upon the exercise of the second extension option on October 9, ~~2020.~~2020, the interest rate became Libor plus 2.25%. The Exterior Street Loan requires monthly interest payments through its maturity date and is collateralized by the Exterior Street Project.

On December 3, 2018, the Company entered into a mortgage loan collateralized by the Lower East Side Moxy Hotel (the “Bowery Mortgage”) for up to $35.6 million. The Bowery Mortgage has a term of two years, bears interest at LIBOR+4.25%, subject to a 6.63% floor, and requires monthly interest-only payments through its stated maturity with the entire unpaid balance due upon maturity. Through ~~June~~September 30, 2020, the Company received aggregate proceeds of $35.2 million under the Bowery Mortgage. As a result, the Bowery Mortgage had an outstanding balance and remaining availability of $35.2 million and $0.4 million, respectively, as of ~~June~~September 30, 2020.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

The following table shows the contractually scheduled principal maturities of the Company’s mortgage debt during the next five years and thereafter as of ~~June~~September 30, 2020:

2020 2021 2022 2023 2024 Thereafter Total 2020 2021 2022 2023 2024 Thereafter Total
Principal maturities $ 95,805 $ 1,328 $ 1,389 $ 1,454 $ 66,697 $      - $ 166,673 $ 35,493 $ 61,328 $ 27,440 $ 1,454 $ 66,697 $ - $ 192,412

Less: Deferred financing costs (1,245) (1,327 )

Total principal maturities, net $ 165,428 $ 191,085

Certain of the Company’s debt agreements require the maintenance of certain ratios, including debt service coverage. As of ~~June~~September 30, 2020, the Company was in compliance with all of its financial debt covenants. Additionally, certain of our mortgages payable also contain clauses providing for prepayment penalties.

~~LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES~~
~~Notes to Consolidated Financial Statements~~
~~(Dollar amounts in thousands, except per share/unit data and where indicated in millions)~~
Debt Maturities

The Exterior Street Loan (outstanding principal balance of $35.0 million as of ~~June~~September 30, 2020) ~~initially matured~~is scheduled to mature on April 9, ~~2020. However, because the Company has already exercised the first of two six-month extension options, the current maturity date is now October 9, 2020.~~2021. The Company intends to ~~exercise the second extension option or~~ refinance the Exterior Street Loan on or before the ~~current~~its maturity date.

The Santa Monica Loan (outstanding principal balance of $25.0 million as of ~~June~~September 30, 2020) ~~initially matures~~is scheduled to mature on ~~August~~February 12, ~~2020 but has two, six-month extension options, which the Company can exercise by providing the lender with advance notice.~~2021. The Company currently intends to exercise the second extension ~~options~~option or refinance the Santa Monica Loan on or before its ~~applicable stated~~current maturity date.

The Bowery Mortgage (outstanding principal balance of $35.2 million as of ~~June~~September 30, 2020) matures on December 3, 2020. The Company currently ~~intends~~expects to ~~refinance~~obtain an extension for the Bowery Mortgage ~~on or before its maturity date.~~until such time as it can obtain construction financing.

However, if the Company is unable to extend or refinance any of its maturing indebtedness at favorable terms, it will look to repay the then outstanding balance with available cash and/or proceeds from selective asset sales. The Company has no additional significant maturities of mortgage debt over the next 12 months.

7. Leases

The Company’s retail property (St. Augustine Outlet Center) and multi-family residential property (Gantry Park Landing) are both leased to tenants under operating leases. Substantially all of our multi-family residential property leases have initial terms of 12 months or less. Our retail space leases expire between the remainder of 2020 and 2026.

The Company, as a lessor, retains substantially all of the risks and benefits of ownership of the investment properties and continues to account for its leases as operating leases. The Company accrues fixed lease income on a ~~straight-line~~straight-line basis over the terms of the leases. Some of the Company’s tenants are also required to pay overage rents based on sales over a stated base amount during the lease year. The Company recognizes this variable lease consideration only when each tenant’s sales exceed the applicable sales threshold. The Company amortizes any tenant inducements as a reduction of revenue utilizing the straight-line method over the term of the related lease.

The Company structures its leases to allow it to recover a portion of its property operating expenses from its tenants. A portion of The Company’s leases require the tenant to reimburse it for a portion of its operating expenses, including common area maintenance (“CAM”), real estate taxes and insurance. Such property operating expenses typically include utility, insurance and other administrative expenses. For some of the Company’s leases it receives a fixed payment from the tenant for the CAM component which is recognized as revenue on a straight-line basis over the term of the lease. When not reimbursed by the fixed CAM component, CAM expense reimbursements are based on the tenant’s proportionate share of the allocable operating expenses for the property. The Company accrues reimbursements from tenants for recoverable portions of all of these expenses as variable lease consideration in the period the applicable expenditures are incurred. The Company recognizes differences between estimated recoveries and the final billed amounts in the subsequent year. These differences were not material in any period presented.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
As of ~~June~~September 30, 2020, the approximate fixed future minimum rent payments, excluding variable lease consideration, from the Company’s retail ~~property,~~property, due to us under non-cancelable leases are as follows:

2020 2020 2021 2022 2023 2024 Thereafter Total 2020 2021 2022 2023 2024 Thereafter Total
$ 913 $ 1,406 $ 1,165 $ 1,114 $ 457 $ 230 $ 5,285 423 $ 1,455 $ 1,170 $ 1,114 $ 457 $ 229 $ 4,848

Pursuant to the lease agreements, tenants of the property may be required to reimburse the Company for some or the entire portion of the particular tenant's pro rata share of the real estate taxes and operating expenses of the property. Such amounts are not included in the future minimum lease payments above, but are included in tenant recovery income on the accompanying consolidated statements of operations. Lease income of approximately $0.1 million and ~~$0.2~~$0.3 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, and, lease income of approximately ~~$0.4~~$0.1 million and ~~$0.7~~$0.8 million for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively, related to variable lease payments was included in tenant recovery income on the accompanying consolidated statements of operations.

The Company has excluded its multi-family residential property’s leases from this table as substantially all of its multi-family residential property’s leases have initial terms of 12 months of less.

~~LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES~~
~~Notes to Consolidated Financial Statements~~
~~(Dollar amounts in thousands, except per share/unit data and where indicated in millions)~~
8. Dispositions

Disposition - Continuing Operations

The following disposition did not represent a strategic shift that had a major effect on the Company’s operations and financial results and therefore did not qualify to be reported as discontinued operations and its operating results are reflected in the Company’s results from continuing operations in the consolidated statements of operations for all periods presented through the date of disposition:

DePaul Plaza

On September 20, 2019, the Company disposed of a retail center located in Bridgeton, Missouri (“DePaul Plaza”), to an unrelated third party for aggregate consideration of approximately $19.8 million, excluding closing and other related costs. In connection with the disposition, the Company recorded a gain on the disposition of real estate of approximately $1.0 million during the third quarter of 2019.

Disposition – Discontinued Operations

The following dispositions qualified to be reported as discontinued operations and their operating results are classified as discontinued operations in the consolidated statements of operations for all periods presented through their respective dates of disposition:

Disposition Transactions related to Gulf Coast Industrial Portfolio

The Company had an outstanding non-recourse mortgage loan (the “Gulf Coast Industrial Portfolio Mortgage Loan”) which was originated in February 2007 and subsequently transferred during the third quarter of 2012 to a special servicer that discontinued scheduled debt service payments and notified the Company that the loan was in default and due on demand. The Gulf Coast Industrial Portfolio Mortgage Loan was initially cross-collateralized by a portfolio of 14 industrial properties (collectively, the “Gulf Coast Industrial Portfolio”) including the Louisiana Assets and four properties located in San Antonio, Texas (the “San Antonio Assets”).

Foreclosure of San Antonio Assets

On June 5, 2018, the special servicer completed a partial foreclosure of the Gulf Coast Industrial Portfolio pursuant to which it foreclosed on the San Antonio Assets. The San Antonio Assets were sold in a foreclosure sale by the special servicer for an aggregate amount of approximately $20.7 million.

Assignment of Ownership in Louisiana Assets to Lender

On February 12, 2019, the Company and the lender of the Gulf Coast Industrial Portfolio Mortgage entered into an assignment agreement (the “Assignment Agreement”) pursuant to which the Company assigned its membership interests in the Louisiana Assets to the lender with an effective date of February 7, 2019. Under the terms of the Assignment Agreement, the lender assumed the significant risks and rewards of ownership and took legal title and physical possession of the Louisiana Assets and assumed all the other assets and related liabilities, including the Gulf Coast Industrial Mortgage and its accrued and unpaid interest, and released the Company of any claims against the liabilities assumed.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
As a result of the Assignment Agreement, the Company has fully satisfied all of its obligations with respect to the Gulf Coast Industrial Portfolio Mortgage and all amounts accrued but not paid for interest (including default interest) and no amounts are due to the lender. Additionally, the Company has no continuing involvement with the Louisiana Assets.

The aggregate carrying value of the assets transferred and the liabilities extinguished in connection with the Company’s assignment of its ownership interests in the Louisiana Assets to the lender was approximately $37.0 million and $49.6 million, respectively.

Since the Company’s performance obligations were met upon the assignment of its ownership interests in the Louisiana Assets to the lender and the Company has no continuing involvement with the Louisiana Assets, an aggregate gain on debt extinguishment of approximately $13.6 million was recognized during the first quarter of 2019.

~~LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES~~
~~Notes to Consolidated Financial Statements~~
~~(Dollar amounts in thousands, except per share/unit data and where indicated in millions)~~
The disposition of the Louisiana Assets, which comprised all of the Company’s remaining industrial properties, represented a strategic shift that had a major effect on the Company’s operations and financial results. As a result, the operating results of the Louisiana Assets have been classified as discontinued operations in the Company’s consolidated statements of operations for all periods presented through their date of disposition.

The following summary presents the operating results of the Louisiana Assets included in discontinued operations in the Consolidated Statements of Operations for the periods indicated.

For the Three Months Ended June 30, 2019 For the Six Months Ended June 30, 2019
For the Three
Months Ended
September 30, 2019 For the Nine
Months Ended
September 30, 2019
Revenues $ - $ 409 $ - $ 409

Operating expenses - 317                 -         317
Operating income - 92 - 92

Interest expense and other, net - (226 ) - (226 )
Gain on debt extinguishment - 13,615 - 13,615
Net income from discontinued operations $ - $ 13,481 $ - $ 13,481

Cash flows generated from discontinued operations are presented separately on the Company’s consolidated statements of cash flows.

9. Net Earnings Per Share

Basic net earnings per share is calculated by dividing net income/(loss) attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the applicable period. Diluted net income/(loss) per share includes the potentially dilutive effect, if any, which would occur if our outstanding options to purchase our common stock were exercised. For all periods presented, dilutive net income/(loss) per share is equivalent to basic net income/(loss) per share.

10. Related Party Transactions

The Company has agreements with the Advisor and Lightstone Value Plus REIT Management LLC (the “Property Manager”) to pay certain fees in exchange for services performed by these entities and other affiliated entities. The Company’s ability to secure financing and subsequent real estate operations are dependent upon its Advisor, Property Manager and their affiliates to perform such services as provided in these agreements.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
The Company, pursuant to the related party arrangements, has recorded the following amounts for the periods indicated:

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Acquisition fees (capitalized and are reflected in the carrying value of the investment) $ - $ - $ - $ 1,823
Asset management fees (general and administrative costs) 215 301 430 638
Property management fees (property operating expenses) 103 76 213 155
Development fees and leasing commissions* - 93 - 167
Total $ 318 $ 470 $ 643 $ 2,783
*   Generally, capitalized and amortized over the estimated useful life of the associated asset.
Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Acquisition fees (capitalized and are reflected in the carrying value of the investment) $      - $      - $         - $ 1,823
Asset management fees (general and administrative costs) 245 303 675 941
Property management fees (property operating expenses) 93 67 306 222
Development fees and leasing commissions* - - - 167
Total $ 338 $ 370 $ 981 $ 3,153
*   Generally, capitalized and amortized over the estimated useful life of the associated asset.

In connection with the Company’s Offering, Lightstone SLP, LLC purchased an aggregate of $30.0 million of SLP Units which are included in noncontrolling interests in the consolidated balance sheets. These SLP Units, the purchase price of which will be repaid only after stockholders receive a stated preferred return and their net investment, entitle Lightstone SLP, LLC to a portion of any regular distributions made by the Operating Partnership.

During both the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, distributions of $0.5 million and ~~$1.0~~$1.6 million, respectively, were declared and paid on the SLP units.

21
~~LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES~~
~~Notes to Consolidated Financial Statements~~
~~(Dollar amounts in thousands, except per share/unit data and where indicated in millions)~~
Preferred Investments

The Company has Preferred Investments that entitle it to certain prescribed monthly preferred distributions. The Preferred Investments had an aggregate balance of $14.5 million and $34.5 million as of ~~June~~September 30, 2020 and December 31, 2019, respectively, and are classified as held-to-maturity securities, recorded at cost and included in investments in related parties on the consolidated balance sheets. The fair value of these investments approximated their carrying values based on market rates for similar instruments.

During the ~~six~~nine months ended ~~June~~September 30, 2020, the Company redeemed $11.0 million of the 40 East End Avenue Preferred Investment and the entire remaining Miami Moxy Preferred Investment of $9.0 million.

The Preferred Investments are summarized as follows:

Preferred
Investment Balance Investment Income ⁽¹⁾ Preferred Investment Balance Investment Income ⁽¹⁾
As of As of Three Months Ended
June 30, Six Months Ended
June 30, As of As of Three Months Ended
September 30, Nine Months Ended
September 30,
Preferred Investments Dividend
Rate
June 30,
2020

December 31,
2019
2020 2019 2020 2019 Dividend
Rate September 30,
2020 December 31,
2019 2020 2019 2020 2019
40 East End Avenue 12 % $ 6,000 $ 17,000 $ 182 $ 910 $ 518 $ 1,810 12 % $ 6,000 $ 17,000 $ 184 $ 920 $ 702 $ 2,730
30-02 39^th Avenue 12 % - - - - - 140 12 % - - - - - 140
East 11th Street 12 % 8,500 8,500 258 807 519 1,907 12 % 8,500 8,500 261 797 779 2,705
Miami Moxy 12 % - 9,000 - 558 45 1,090 12 % - 9,000 - 615 45 1,705
Total $ 14,500 $ 34,500 $ 440 $ 2,275 $ 1,082 $ 4,947 $ 14,500 $ 34,500 $ 445 $ 2,332 $ 1,526 $ 7,280

Note:
(1) Included in interest and dividend income on the consolidated statements of operations.

The Joint Venture

The Company has a 2.5% membership interest in the Joint Venture, which holds ownership interests in seven hotels as of both ~~June~~September 30, 2020 and December 31, 2019, the carrying value of its investment was $1.1 million and $1.2 million, respectively, which is included in investment in related parties on the consolidated balance sheets.

11. Financial Instruments

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted escrows, tenants’ accounts receivable, and accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments. The carrying amounts of the notes receivable approximate their fair values because the interest rates are variable and reflective of market rates.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)
The estimated fair value (in millions) of the Company’s mortgage debt is summarized as follows:

As of June 30, 2020 As of December 31, 2019
Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value
Mortgages payable $ 166.7 $ 170.8 $ 167.0 $ 167.9
As of September 30, 2020 As of December 31, 2019
Carrying
Amount Estimated Fair
Value Carrying
Amount Estimated Fair
Value
Mortgages payable $ 192.4 $ 197.3 $ 167.0 $ 167.9
The fair value of the mortgages payable was determined by discounting the future contractual interest and principal payments by estimated current market interest rates.

12. Commitments and Contingencies

Legal Proceedings

From time to time in the ordinary course of business, the Company may become subject to legal proceedings, claims or disputes.

As of the date hereof, the Company is not a party to any material pending legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on its results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss.

22
~~LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES~~
~~Notes to Consolidated Financial Statements~~
~~(Dollar amounts in thousands, except per share/unit data and where indicated in millions)~~
13. Subsequent Events

Distribution Payment

On ~~July~~October 15, 2020, the distribution for the three-month period ending ~~June~~September 30, 2020 of $3.9 million was paid in full using a combination of cash and approximately 7,000 shares of the Company’s common stock issued pursuant to the Company’s distribution reinvestment program (the “DRIP”), at a discounted price of $11.23 per share, equal to 95% of the Company’s most recently published estimated net asset value per share of $11.82 as of September 30, 2019.

Distribution Declaration

On ~~August~~November 6, 2020, the Company’s Board of Directors authorized and the Company declared a distribution of $0.175 per share for the quarterly period ending ~~September 30,~~December 31, 2020. The quarterly distribution is the pro rata equivalent of an annual distribution of $0.70 per share, or an annualized rate of 7.0% assuming a purchase price of $10.00 per share. The distribution will be paid on or about the 15th day of the month following the quarter-end to stockholders of record at the close of business on the last day of the quarter-end. The stockholders have an option to elect the receipt of shares under the Company’s DRIP.

Additionally, on ~~August~~November 6, 2020, the Board of Directors declared a quarterly distribution for the quarterly period ending ~~September 30,~~December 31, 2020 on the SLP Units at an annualized rate of 7.0%. Any future distributions on the SLP Units will always be subordinated until stockholders receive a stated preferred return.

Future distributions 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 and may differ from the amount of the distribution determined for this period. The Board of Directors will consider various factors in its determination, including but not limited to, the sources and availability of capital, current rental revenues, operating and interest expenses and our ability to refinance near-term debt. In addition, the Company currently intends to continue to comply with REIT distribution requirements. The Company cannot assure that regular distributions will continue to be made or that it will maintain any particular level of distributions that it has established or may establish.

23
PART I. FINANCIAL INFORMATION, CONTINUED:
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Lightstone Value Plus Real Estate Investment Trust, Inc. and Subsidiaries and the notes thereto. As used herein, the terms “we,” “our” and “us” refer to Lightstone Value Plus Real Estate Investment Trust, Inc., a Maryland corporation, and, as required by context, Lightstone Value Plus REIT, L.P. and its wholly owned subsidiaries, which we collectively refer to as “the Operating Partnership.” Dollar amounts are presented in thousands, except per share data and where indicated in millions.

As discussed in Notes 1 and 8 of the Notes to Consolidated Financial Statements, the results of operations presented below exclude certain properties due to their classification as discontinued operations.

Forward-Looking Statements

Certain information included in this Quarterly Report on Form 10-Q contains, and other materials filed or to be filed by us with the Securities and Exchange Commission, or the SEC, contain or will contain, forward-looking statements. All statements, other than statements of historical facts, including, among others, statements regarding our possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives, are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of Lightstone Value Plus Real Estate Investment Trust, Inc. and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that actual results may differ materially from those contemplated by such forward-looking statements.

Such statements are based on assumptions and expectations which may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial and otherwise, may differ from the results discussed in the forward-looking statements.

Risks and other factors that might cause differences, some of which could be material, include, but are not limited to, economic and market conditions, competition, tenant or joint venture partner(s) bankruptcies, changes in governmental, tax, real estate and zoning laws and regulations, failure to increase tenant occupancy and operating income, rejection of leases by tenants in bankruptcy, financing and development risks, construction and lease-up delays, cost overruns, the level and volatility of interest rates, the rate of revenue increases versus expense increases, the financial stability of various tenants and industries, the failure of the Company (defined herein) to make additional investments in real estate properties, the failure to upgrade our tenant mix, restrictions in current financing arrangements, the failure to fully recover tenant obligations for common area maintenance (“CAM”), insurance, taxes and other property expenses, the failure of the Company to continue to qualify as a real estate investment trust (“REIT”), the failure to refinance debt at favorable terms and conditions, an increase in impairment charges, loss of key personnel, failure to achieve earnings/funds from operations targets or estimates, conflicts of interest with the Advisor, Sponsor and their affiliates, failure of joint venture relationships, significant costs related to environmental issues and uncertainties regarding the impact of the current COVID-19 pandemic, and restrictions intended to prevent its spread on our business and the economy generally, as well as other risks listed from time to time in this Form 10-Q, our Form 10-K and in the Company’s other reports filed with the SEC.

We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made, and 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 over time unless required by law.

Overview

Lightstone Value Plus Real Estate Investment Trust, Inc. (the “Lightstone REIT”), (together with the Operating Partnership (as defined below), the “Company”, also referred to as “we”, “our” or “us” herein) has and expects to continue to acquire and operate or develop in the future, commercial, residential and hospitality properties and/or make real estate-related investments, principally in the United States. Our acquisitions and investments are, principally conducted through the Operating Partnership, and may include both portfolios and individual properties.

As of ~~June~~September 30, 2020, we have ownership interests in (i) two consolidated operating properties, (ii) three consolidated development properties and (iii) seven unconsolidated operating properties. With respect to our consolidated operating properties, we wholly own the St. Augustine Outlet Center, a retail outlet shopping center located in St. Augustine, Florida which contains approximately 0.3 million square feet of gross leasable area, and have a majority ownership interest of approximately 59.2% in Gantry Park Landing, a multi-family residential property located in Long Island City, New York which contains 199 apartment units. With respect to our consolidated development properties, we wholly own three projects consisting of the Lower East Side Moxy Hotel, the Exterior Street Project and the Santa Clara Data Center, all of which were under development as of ~~June~~September 30, 2020. We also hold a 2.5% ownership interest in seven hotel properties through a joint venture (the “Joint Venture”). The Joint Venture is between us and the operating partnership of Lightstone Value Plus Real Estate Investment Trust II, Inc. (“Lightstone II”), a real estate investment trust (“REIT”) also sponsored by our Sponsor, which has a 97.5% ownership interest in the Joint Venture. Furthermore, we have other real estate-related investments, including several agreements with various related party entities that provide for us to make preferred contributions pursuant to certain instruments (the “Preferred Investments”) and nonrecourse promissory notes made to unaffiliated third-parties. Our real estate investments have been and are expected to continue to be held by the Company alone or jointly with other parties.

We do not have employees. We entered into an advisory agreement pursuant to which the Advisor supervises and manages our day-to-day operations and selects our real estate and real estate related investments, subject to oversight by our Board of Directors. We pay the Advisor fees for services related to the investment and management of our assets, and we will reimburse the Advisor for certain expenses incurred on our behalf.

To maintain our qualification as a REIT, we engage in certain activities such as providing real estate-related services through taxable REIT subsidiaries (“TRSs”). As such, we may still be subject to U.S. federal and state income and franchise taxes from these activities.

Acquisitions and Investment Strategy

We have, to date, acquired and/or developed residential, commercial and hospitality properties principally, all of which are located in the United States and also made other real estate-related investments. Our acquisitions have included both portfolios and individual properties. Our current operating properties consist of one retail property (the St. Augustine Outlet Center) and one multi-family residential property (Gantry Park Landing). We have also acquired various parcels of land and air rights related to the development and construction of real estate properties. Additionally, we have made Preferred Investments and originated nonrecourse loans to unaffiliated third-party borrowers.

Investments in real estate are generally made through the purchase of all or part of a fee simple ownership, or all or part of a leasehold interest. We may also purchase limited partnership interests, limited liability company interests and other equity securities. We may also enter into joint ventures with related parties for the acquisition, development or improvement of properties as well as general partnerships, co-tenancies and other participations with real estate developers, owners and others for the purpose of developing, owning and operating real properties. We will not enter into a joint venture to make an investment that we would not be permitted to make on our own. Not more than 10% of our total assets will be invested in unimproved real property. For purposes of this paragraph, “unimproved real properties” does not include properties acquired for the purpose of producing rental or other operating income, properties under construction and properties for which development or construction is planned within one year.

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

~~During the second quarter of~~On March 11, 2020, the World Health Organization declared COVID-19 ~~pandemic continued to evolve on both~~ a global ~~and national level. With respect~~pandemic leading many countries, including the United States, particularly at the individual state level, to ~~the Unites States, many states have begun a phased approach as to the reopening of businesses and venues which have been subject to~~impose various restrictions and other measures, including, but not limited to, mandatory closures, quarantines, limitations on travel, “shelter in place” rules and certain other ~~measures. While certain~~measures in an effort to reduce its duration and spread. The COVID-19 pandemic has continued to evolve and while most states have ~~begun to reduce~~initiated a phased approach allowing for reductions and/or ~~lift~~lifting of restrictions, the situation remains ~~both dynamic~~highly unpredictable and ~~unpredictable.~~dynamic.

As a result of previous restrictions, we ~~were required to temporarily close~~closed our St. Augustine Outlet Center onfrom March 20, ~~2020. However, we were subsequently able to reopen the St. Augustine Outlet Center on~~2020 through May 7, ~~2020 and it is currently operating with both reduced capacity levels and operating hours in accordance with the State of Florida’s guidelines.~~2020. Primarily because of the impact of the COVID-19 pandemic on the operating performance of the St. Augustine Outlet Center’s tenancy, especially during the closure period, we have provided forbearance of certain rent payments to various ~~tenants,~~tenants. Additionally, we have seen some deterioration in both the occupancy and rental rates for Gantry Park Landing, which is located on Long Island, New York, as the luxury rental market in the greater New York City metropolitan area has been negatively impacted by the COVID-19 pandemic. However, none of these items have ~~not had a material impact on~~yet materially impacted our results from operations or our financial condition.

To-date, the COVID-19 pandemic has not had any significant impact on ~~Gantry Park Landing or on~~ our three development ~~projects because only limited construction activities have thus far commenced.~~projects. Furthermore, our other real estate-related investments (both our ~~Preferred Investments~~preferred investments in related parties and nonrecourse loans made to unaffiliated third-party borrowers) also relate to various development projects which are at different stages in their respective development process. These investments, which are subject to similar restrictions and other measures, have also not yet ~~seen any significant impact from~~been significantly impacted by the COVID-19 pandemic.

~~The~~While our business has not yet seen any material impact from the COVID-19 pandemic, the extent to which ~~our business~~it may be affected ~~by the current COVID-19 pandemic will largely depend on both current and~~in future ~~developments, including its duration, spread and treatment, and related travel advisories and restrictions, all of which are~~periods remains highly uncertain and cannot be reasonably predicted.

If our operating properties, development projects and real estate-related investments are negatively impacted for an extended period because (i) occupancy levels and rental rates further decline, (ii) tenants are unable to pay their rent, ~~(ii)~~(iii) borrowers are unable to pay scheduled debt service on notes receivable, ~~(iii)~~(iv) development activities are delayed and/or ~~(iv)~~(v) various related party entities are unable to pay monthly preferred distributions on our ~~Preferred Investments,~~preferred investments in related parties, our business and financial results could be materially and adversely impacted. While we have 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.

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

We are not currently aware of any other material trends or uncertainties, favorable or unfavorable, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from our operations, other than those referred to above or throughout this Form 10-Q. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period.

Wholly Owned and Consolidated Real Estate Properties:

Location Year Built (Range of years built) Date Acquired Gross Leasable Area ("GLA") in Square Feet/Leaseable Units Percentage Occupied as of June 30, 2020 Annualized Revenues based on rents at
June 30, 2020 Annualized Revenues per square foot/unit at June 30, 2020 Location Year Built (Range of
years built) Date Acquired Gross Leasable Area ("GLA")
in Square Feet/Leaseable Units Percentage Occupied as
of September 30, 2020 Annualized Revenues based
on rents at
September 30, 2020 Annualized Revenues per
square foot/unit at
September 30, 2020
St. Augustine Outlet Center (Retail Outlet Shopping Center ⁽¹⁾ St. Augustine, Florida 1998 March 2006 328,120 GLA 78.2% $2.1 million $ 8.13 sqft St. Augustine, Florida 1998 March 2006 328,120 GLA 74.8 % $2.0 million $ 8.02 sqft
Gantry Park Landing (Multi-Family Apartment Building) Long Island City, New York 2013 August 2013 199 units 96.5% $9.0 million $ 46,729 unit Long Island City, New York 2013 August 2013 199 units 86.9 % $8.1 million $ 46,793 unit

Annualized revenue is defined as the minimum monthly payments due as of ~~June~~September 30, 2020 annualized, excluding periodic contractual fixed increases and rents calculated based on a percentage of tenants’ sales. The annualized base rent disclosed in the table above includes all concessions, abatements and reimbursements of rent to tenants as ~~June~~September 30, 2020.

Development Projects

Lower East Side Moxy Hotel

On December 3, 2018, we acquired three adjacent parcels of land located at 147-151 Bowery, New York, New York on which we are developing and constructing a 296-room Marriott Moxy hotel (the “Lower East Side Moxy Hotel”).

Exterior Street ~~Project~~Pro ject

On February 27, 2019, we, acquired two adjacent parcels of land located at 355 and 399 Exterior Street, New York, New York, on which we are developing and constructing a multi-family residential property (the “Exterior Street Project”).

Santa Clara Data Center

On January 10, 2019, we acquired a parcel of land located at 2175 Martin Avenue, Santa Clara, CA, on which we are developing and constructing a data center (the “Santa Clara Data Center”).

The following is a summary of the amounts incurred and capitalized to construction in progress for our development projects as of ~~June~~September 30, 2020:

Development Projects
Lower East Side Moxy Hotel $ 83,505 $ 91,365
Exterior Street Project 70,056 72,089
Santa Clara Data Center 13,317 13,478
Total Developments Projects $ 166,878 $ 176,932

Results of Operations

Dispositions - Continuing Operations

The following disposition did not represent a strategic shift that had a major effect on our operations and financial results and therefore did not qualify to be reported as discontinued operations and its operating results are reflected in our results from continuing operations in the consolidated statements of operations for all periods presented through the date of disposition:

DePaul Plaza

On September 20, 2019, we disposed of a retail center located in Bridgeton, Missouri (“DePaul Plaza”), to an unrelated third party for aggregate consideration of approximately $19.8 million, excluding closing and other related costs. In connection with the disposition, we recorded a gain on the disposition of real estate of approximately $1.0 million during the third quarter of 2019.

Dispositions - Discontinued Operations

The following dispositions qualified to be reported as discontinued operations and their operating results are classified as discontinued operations in the consolidated statements of operations for all periods presented through their respective dates of disposition:

Disposition Transactions related to Gulf Coast Industrial Portfolio

We had an outstanding non-recourse mortgage loan (the “Gulf Coast Industrial Portfolio Mortgage Loan”) which was originated in February 2007 and subsequently transferred during the third quarter of 2012 to a special servicer that discontinued scheduled debt service payments and notified us that the loan was in default and due on demand. The Gulf Coast Industrial Portfolio Mortgage Loan was initially cross-collateralized by a portfolio of 14 industrial properties (collectively, the “Gulf Coast Industrial Portfolio”) including 10 properties located in Louisiana (seven properties located in New Orleans and three properties located in Baton Rouge, and collectively, the “Louisiana Assets”) and four properties located in San Antonio, Texas (the “San Antonio Assets”).

Foreclosure of San Antonio Assets

On June 5, 2018, the special servicer completed a partial foreclosure of the Gulf Coast Industrial Portfolio pursuant to which it foreclosed on the San Antonio Assets. The San Antonio Assets were sold in a foreclosure sale by the special servicer for an aggregate amount of approximately $20.7 million.

Assignment of Ownership in Louisiana Assets to Lender

On February 12, 2019, we and the lender of the Gulf Coast Industrial Portfolio Mortgage entered into an assignment agreement (the “Assignment Agreement”) pursuant to which we assigned our membership interests in the Louisiana Assets to the lender with an effective date of February 7, 2019. Under the terms of the Assignment Agreement, the lender assumed the significant risks and rewards of ownership and took legal title and physical possession of the Louisiana Assets and assumed all the other assets and related liabilities, including the Gulf Coast Industrial Mortgage and its accrued and unpaid interest, and released us of any claims against the liabilities assumed.

As a result of the Assignment Agreement, we have fully satisfied all of our obligations with respect to the Gulf Coast Industrial Portfolio Mortgage and all amounts accrued but not paid for interest (including default interest) and no amounts are due to the lender. Additionally, we have no continuing involvement with the Louisiana Assets.

The aggregate carrying value of the assets transferred and the liabilities extinguished in connection with our assignment of our ownership interests in the Louisiana Assets to the lender was approximately $37.0 million and $49.6 million, respectively.

Since our performance obligations were met upon the assignment of our ownership interests in the Louisiana Assets to the lender and we have no continuing involvement with the Louisiana Assets, an aggregate gain on debt extinguishment of approximately $13.6 million was recognized during the first quarter of 2019.

The disposition of the Louisiana Assets, which comprised all of our remaining industrial properties, represented a strategic shift that had a major effect on our operations and financial results.

As a result, the operating results of the Louisiana Assets have been classified as discontinued operations in our consolidated statements of operations for all periods presented through their date of disposition.

For the Three Months Ended ~~June~~September 30, 2020 vs. ~~June~~September 30, 2019

Consolidated – Continuing Operations

Revenues

Our revenues are comprised of rental income and tenant recovery income. Total revenues decreased by approximately ~~$0.9~~$1.5 million to ~~$3.0~~$2.5 million for the three months ended ~~June~~September 30, 2020 compared to ~~$3.9~~$4.0 million for the same period in 2019. Excluding the effect of the disposition of DePaul Plaza, revenues decreased by ~~$0.3~~$0.8 million primarily attributable to reduced occupancy at both our St. Augustine Outlet Center and Gantry Park Landing during the 2020 period resulting from the COVID-19 pandemic.

Property operating expenses

Property operating expenses decreased by approximately $0.2 million to $0.9 million for the three months ended June 30, 2020 compared to $1.1 million for the same period in 2019. Excluding the effect of the disposition of DePaul Plaza, property operating expenses decreased slightly by $0.1 million.
~~Real estate taxes~~
~~Real estate taxes~~ decreased by approximately $0.3 million to $0.1 million for the three months ended June 30, 2020 compared to $0.4 million for the same period in 2019. Excluding the effect of the disposition of DePaul Plaza, real estate taxes decreased slightly by $0.1 million.
~~General and administrative expenses~~
~~General and administrative expenses increased by~~ ~~approximately $0.2 million to $1.0 million for the three months ended June 30, 2020 compared to $0.8 million for the same period in 2019.~~
28
~~Depreciation and amortization~~
~~Depreciation and amortization~~ decreased by approximately $0.3 million to $1.0 million for the three months ended ~~June~~September 30, 2020 compared to $1.3 million for the same period in 2019. Excluding the effect of the disposition of DePaul Plaza, property operating expenses decreased by $0.1 million.
Real estate taxes
Real estate taxes decreased by approximately $0.2 million to $0.1 million for the three months ended September 30, 2020 compared to $0.3 million for the same period in 2019. Excluding the effect of the disposition of DePaul Plaza, real estate taxes were flat.
General and administrative expenses
General and administrative expenses decreased slightly by approximately $0.1 million to $0.6 million for the three months ended September 30, 2020 compared to $0.7 million for the same period in 2019.
Depreciation and amortization
Depreciation and amortization decreased by approximately $0.3 million to $0.9 million for the three months ended September 30, 2020 compared to $1.2 million for the same period in 2019. Excluding the effect of the disposition of DePaul Plaza, depreciation and amortization ~~was relatively flat.~~decreased by $0.1 million.

Interest and dividend income

Interest and dividend income decreased by approximately ~~$0.9~~$0.6 million to ~~$2.9~~$3.7 million for the three months ended ~~June~~September 30, 2020 compared to ~~$3.8~~$4.3 million for the same period in 2019. The decrease primarily reflects lower investment income of ~~$1.8~~$1.9 million from our Preferred Investments and a decrease in dividend and interest income from our investments in marketable securities of ~~$0.5~~$0.3 million, partially offset by an increase in interest income earned on our notes receivable of ~~$1.4~~$1.6 million.

Interest expense

Interest expense, including amortization of deferred financing costs, increased by approximately ~~$0.3~~$0.4 million to ~~$0.6~~$0.8 million for the three months ended ~~June~~September 30, 2020 compared to ~~$0.3~~$0.4 million for the same period in 2019. This increase reflects higher interest expense resulting from an increase in the amount of debt outstanding during the 2020 period. During the three months ended ~~June~~September 30, 2020 and 2019, ~~$1.8~~$2.0 million and ~~$2.4~~$2.2 million, respectively, of interest was capitalized to construction in progress for our development projects.
~~Gain on disposition of real estate~~
On April 6, 2020, we completed the disposition of a parcel of land adjacent to the St. Augustine Outlet Center for a contractual sales price of $2.1 million and recognized a gain on the disposition of real estate of approximately $1.6 million during the second quarter of 2020.

Unrealized gain/loss on marketable equity securities

During the three months ended ~~June~~September 30, 2020 and 2019, we recorded an unrealized ~~gain~~losses on marketable equity securities of ~~$2.7~~$1.5 million and ~~during the three months ended June 30, 2019, we recorded an unrealized loss on marketable equity securities of $4.8~~$0.6 million, respectively, which represented the change in the fair value of our marketable equity securities during those periods.

Noncontrolling interests

The net earnings allocated to noncontrolling interests relates to (i) parties of the Company that hold units in the Operating Partnership, (ii) the interest in PRO-DFJV Holdings LLC (“PRO”) held by our Sponsor, (iii) the ownership interests in 50-01 2nd St. Associates LLC (the “2nd Street Joint Venture”) held by our Sponsor and other affiliates and (iv) the ownership interest in various joint ventures held by affiliates of our Sponsor that have originated nonrecourse loans to unaffiliated third-party borrowers.

For the ~~Six~~Nine Months Ended ~~June~~September 30, 2020 vs. ~~June~~September 30, 2019

Consolidated – Continuing Operations

Revenues

Our revenues are comprised of rental income and tenant recovery income. Total revenues decreased by approximately ~~$1.7~~$3.1 million to ~~$6.2~~$8.8 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$7.9~~$11.9 million for the same period in 2019. Excluding the effect of the disposition of DePaul Plaza, revenues decreased by ~~$0.3~~$1.1 million primarily attributable to reduced occupancy at our St. Augustine Outlet Center during the 2020 period resulting from the COVID-19 pandemic.

Property operating expenses

Property operating expenses decreased by approximately ~~$0.3~~$0.5 million to ~~$2.0~~$3.0 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$2.3~~$3.5 million for the same period in 2019. Excluding the effect of the disposition of DePaul Plaza, property operating expenses ~~were relatively flat.~~decreased slightly by $0.1 million.

Real estate taxes

Real estate taxes decreased by approximately ~~$0.5~~$0.7 million to ~~$0.2~~$0.3 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$0.7~~$1.0 million for the same period in 2019. Excluding the effect of the disposition of DePaul Plaza, real estate taxes decreased ~~slightly~~ by ~~$0.1~~$0.2 million.


General and administrative expenses

General and administrative expenses ~~increased slightly by~~ ~~approximately $0.1 million to $1.7~~were $2.3 million for both the ~~six~~nine months ended ~~June~~September 30, 2020 ~~compared to $1.6 million for the same period in~~and 2019.

Depreciation and amortization

Depreciation and amortization decreased by approximately ~~$0.6~~$0.9 million to ~~$2.0~~$2.9 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$2.6~~$3.8 million for the same period in 2019. Excluding the effect of the disposition of DePaul Plaza, depreciation and amortization decreased ~~slightly~~ by ~~$0.1~~$0.2 million.

Interest and dividend income

Interest and dividend income decreased by approximately ~~$1.9~~$2.6 million to ~~$5.8~~$9.4 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$7.7~~$12.0 million for the same period in 2019. The decrease primarily reflects lower investment income of ~~$3.9~~$5.8 million from our Preferred Investments and a decrease in dividend and interest income from our investments in marketable securities of ~~$0.6~~$1.0 million, partially offset by an increase in interest income earned on our notes receivable of ~~$2.6~~$4.2 million.

Interest expense

Interest expense, including amortization of deferred financing costs, increased by approximately ~~$0.6~~$1.0 million to ~~$1.3~~$2.1 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$0.7~~$1.1 million for the same period in 2019. This increase reflects higher interest expense resulting from an increase in the amount of debt outstanding during the 2020 period. During the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, ~~$4.1~~$6.1 million and ~~$3.9~~$6.0 million, respectively, of interest was capitalized to construction in progress for our development projects.

Gain on disposition of real estate

On April 6, 2020, we completed the disposition of a parcel of land adjacent to the St. Augustine Outlet Center for a contractual sales price of $2.1 million and recognized a gain on the disposition of real estate of approximately $1.6 million during the second quarter of 2020.

Unrealized loss on marketable equity securities

During the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, we recorded unrealized losses on marketable equity securities of ~~$18.6~~$20.1 million and ~~$1.7~~$2.2 million, respectively, which represented the change in the fair value of our marketable equity securities during those periods.

Noncontrolling interests

The net earnings allocated to noncontrolling interests relates to (i) parties of the Company that hold units in the Operating Partnership, (ii) the interest in PRO-DFJV Holdings LLC (“PRO”) held by our Sponsor, (iii) the ownership interests in 50-01 2nd St. Associates LLC (the “2nd Street Joint Venture”) held by our Sponsor and other affiliates and (iv) the ownership interest in various joint ventures held by affiliates of our Sponsor that have originated nonrecourse loans to unaffiliated third-party borrowers.

Financial Condition, Liquidity and Capital Resources

Overview:

Rental income, interest and dividend income and borrowings are our principal source of funds to pay operating expenses, scheduled debt service, routine capital expenditures and distributions.

We expect to meet our short-term liquidity requirements, including the costs of our expected non-recurring capital expenditures, including development activities, and scheduled debt service generally through working capital, redemptions of our Preferred Investments, repayments of our outstanding notes receivable, the remaining availability on the Bowery Mortgage ($0.4 million as of ~~June~~September 30, 2020) and 87 Newkirk Loan ($1.4 million as of September 30, 2020) and/or new borrowings and refinancing of existing debt. ~~To-date we have only performed limited construction activities on our development projects and we~~We ultimately expect to obtain construction financing ~~for~~to fund a substantial portion of ~~their~~our development projects’ future development costs. However, there can be no assurance we will be successful in obtaining construction financing at favorable terms, if at all. As of ~~June~~September 30, 2020, we had approximately ~~$72.5~~$57.5 million of cash and cash equivalents on hand and ~~$37.4~~$36.8 million of marketable securities, available for sale. We believe that these cash resources will be sufficient to satisfy our cash requirements for the foreseeable future, and we do not anticipate a need to raise funds from other than these sources within the next twelve months.

Our borrowings consist of single-property mortgages as well as mortgages cross-collateralized by a pool of properties. We typically have obtained level payment financing, meaning that the amount of debt service payable would be substantially the same each year. As such, most of the mortgages on our properties provide for a so-called “balloon” payment and are at a fixed interest rate.

Additionally, in order to leverage our investments in marketable securities and seek a higher rate of return, we have access to borrowings under a margin loan and line of credit collateralized by the securities held with the financial institution that provided the margin loan and line of credit as well as a portion of our Marco OP Units. These loans are due on demand and any outstanding balance must be paid upon the liquidation of securities.

Our charter provides that the aggregate amount of borrowing, both secured and unsecured, may not exceed 300% of net assets in the absence of a satisfactory showing that a higher level is appropriate, the approval of our Board of Directors and disclosure to stockholders. Net assets means our total assets, other than intangibles, at cost before deducting depreciation or other non-cash reserves less our total liabilities, calculated at least quarterly on a basis consistently applied. Any excess in borrowing over such 300% of net assets level must be approved by a majority of our independent directors and disclosed to our stockholders in our next quarterly report to stockholders, along with justification for such excess. As of ~~June~~September 30, 2020, our total borrowings of ~~$166.7~~$192.4 million represented ~~52%~~59% of net assets.

Any future properties that we may acquire or investments we may make may be funded through a combination of borrowings, proceeds generated from the sale and redemption of our marketable securities, available for sale, proceeds received from the selective disposition of our properties and proceeds received from the redemption of our Preferred Investments. These borrowings may consist of single-property mortgages as well as mortgages cross-collateralized by a pool of properties. Such mortgages may be put in place either at the time we acquire a property or subsequent to our purchasing a property for cash. In addition, we may acquire properties that are subject to existing indebtedness where we choose to assume the existing mortgages. Generally, though not exclusively, we intend to seek to encumber our properties with debt, which will be on a non-recourse basis. This means that a lender’s rights on default will generally be limited to foreclosing on the property. However, we may, at our discretion, secure recourse financing or provide a guarantee to lenders if we believe this may result in more favorable terms. When we give a guaranty for a property owning entity, we will be responsible to the lender for the satisfaction of the indebtedness if it is not paid by the property owning entity.

We may also obtain lines of credit to be used to acquire properties or real estate-related assets. These lines of credit will be at prevailing market terms and will be repaid from proceeds from the sale or refinancing of properties, working capital or permanent financing. Our Sponsor or its affiliates may guarantee the lines of credit although they will not be obligated to do so.

In addition to meeting working capital needs and making distributions, if any, to our stockholders and non-controlling interests, our capital resources are used to make certain payments to our Advisor and its affiliates, including payments related to asset acquisition fees, development fees and leasing commissions, asset management fees, the reimbursement of acquisition related expenses to our Advisor and property management fees. We also reimburse our Advisor and its affiliates for actual expenses it incurs for administrative and other services provided to us.

The following table represents the fees incurred associated with the payments to our Advisor and its affiliates for the periods indicated:

Three Months Ended
June 30, Six Months Ended
June 30, Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019 2020 2019 2020 2019
Acquisition fees (capitalized and are reflected in the carrying value of the investment) $ - $ - $ - $ 1,823 $ - $ - $ - $ 1,823
Asset management fees (general and administrative costs) 215 301 430 638 245 303 675 941
Property management fees (property operating expenses) 103 76 213 155 93 67 306 222
Development fees and leasing commissions* - 93 - 167 - - - 167
Total $ 318 $ 470 $ 643 $ 2,783 $ 338 $ 370 $ 981 $ 3,153
* Generally, capitalized and amortized over the estimated useful life of the associated asset.

Additionally, we may be required to make distributions on the special general partner interests (“SLP Units”) in the Operating Partnership held by Lightstone SLP, LLC, an affiliate of the Advisor. In connection with the Company’s initial public offering, Lightstone SLP, LLC purchased an aggregate of $30.0 million of SLP Units. These SLP Units, the purchase price of which will be repaid only after stockholders receive a stated preferred return and their net investment, entitle Lightstone SLP, LLC to a portion of any regular distributions made by the Operating Partnership.

During both the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, distributions of $0.5 million and ~~$1.0~~$1.6 million, respectively, were declared and paid on the SLP units.

Summary of Cash Flows

The following summary discussion of our cash flows is based on the consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below:

For the Six Months Ended
June 30,
2020 2019 For the Nine Months Ended
September 30,
2020 2019
Net cash flows provided by operating activities $ 4,591 $ 10,788 $ 9,722 $ 15,551
Net cash flows provided by/(used in) investing activities 597 (29,353 )
Net cash flows (used in)/provided by financing activities (10,108 ) 27,942
Net cash flows used in investing activities (45,252 ) (55,595 )
Net cash flows provided by financing activities 15,835 27,904
Net change in cash, cash equivalents and restricted cash (4,920 ) 9,377 (19,695 ) (12,140 )

Cash, cash equivalents and restricted cash, beginning of year 79,800 36,582 79,800 36,582
Cash, cash equivalents and restricted cash, end of the period $ 74,880 $ 45,959 $ 60,105 24,442

Our principal sources of cash flow are derived from the operation of our rental properties, interest and dividend income on our marketable securities and real estate-related investments, as well as loan proceeds and proceeds from redemptions of Preferred Investments. We intend that our properties and real estate-related investments will provide a relatively consistent stream of cash flow that provides us with resources to fund operating expenses, debt service and quarterly distributions if authorized by our board of directors.

Our principal demands for liquidity are (i) our property operating expenses, (ii) real estate taxes, (iii) insurance costs, (iv) leasing costs and related tenant improvements, (v) capital expenditures, (vi) acquisition and development activities, ~~including our investments in related parties,~~ (vi) funding of notes receivable, (viii) scheduled debt service and (ix) distributions to our stockholders and noncontrolling interests. The principal sources of funding for our operations are operating cash flows and proceeds from (i) the sale and redemption of marketable securities, (ii) the selective disposition of properties or interests in properties, (iii) redemptions of our Preferred Investments, (iv) the issuance of equity and debt securities and (v) the placement of mortgage loans or other indebtedness.

Operating activities

The net cash provided by operating activities of ~~$4.6~~$9.7 million for the ~~six~~nine months ended ~~June~~September 30, 2020 consists of the following:

· cash inflows of approximately ~~$5.4~~$7.7 million from our net loss after adjustment for non-cash items; and

· cash ~~outflows~~inflows of approximately ~~$0.8~~$2.0 million associated with the net changes in operating assets and liabilities.

Investing activities

The net cash ~~provided by~~used in investing activities of ~~$0.6~~$45.3 million for the ~~six~~nine months ended ~~June~~September 30, 2020 consists primarily of the following:

· purchases of investment property of approximately ~~$12.9~~$21.7 million;

· net funding of notes receivable of ~~$5.7~~$42.6 million;

· proceeds from the sale of investment property of $2.1 million;

· proceeds from Preferred Investments of $20.0 million; and

· net purchases of marketable securities of ~~$3.0~~$3.2 million.

Financing activities

The net cash ~~used in~~provided by financing activities of approximately ~~$10.1~~$15.8 million for the ~~six~~nine months ended ~~June~~September 30, 2020 is primarily related to the following:

· contributions received from noncontrolling interests of ~~$3.5~~$21.9 million;

· ~~aggregate~~ net proceeds from mortgages payable of $25.9 million;
· debt principal payments ~~on mortgages and fees and expenses~~ of ~~$0.4~~$0.9 million;

· redemptions and cancellation of common stock of ~~$3.1~~$3.4 million;

· distributions to our noncontrolling interests of ~~$2.4~~$16.1 million; and

· distributions to our common shareholders of ~~$7.7~~$11.5 million.

Development Activities

Lower East Side Moxy Hotel

On December 3, 2018, we, through a subsidiary of the Operating Partnership, acquired three adjacent parcels of land located at 147-151 Bowery, New York, New York (collectively, the “Bowery Land”) from 151 Emmut Properties LLC and 145-149 Bowery LLC, both unaffiliated third parties, for aggregate consideration of approximately $56.5 million, excluding closing and other acquisition related costs. Additionally, on December 6, 2018, we, though a subsidiary of the Operating Partnership, acquired certain air rights located at 329 Broome Street, New York, New York (the “Air Rights”) from B.R.P. Realty Corp., an unaffiliated third party, for approximately $2.4 million, excluding closing and other acquisition related costs. We ~~intend to use~~are using the Bowery Land and Air Rights in connection with the development and construction of a 296-room Marriott Moxy hotel (the “Lower East Side Moxy Hotel”). The Lower East Side Moxy Hotel is currently under development.

On December 3, 2018, we entered into a mortgage loan collateralized by the Lower East Side Moxy Hotel (the “Bowery Mortgage”) for approximately $35.6 million. The Bowery Mortgage has a term of two years, bears interest at LIBOR+4.25%, subject to a 6.63% floor, and requires monthly interest-only payments through its stated maturity with the entire unpaid balance due upon maturity. Through ~~June~~September 30, 2020, we received aggregate proceeds of $35.2 million under the Bowery Mortgage. As a result, the Bowery Mortgage had an outstanding balance and remaining availability of $35.2 million and $0.4 million, respectively, as of ~~June~~September 30, 2020.

Exterior Street Project

On February 27, 2019, we, through subsidiaries of the Operating Partnership, acquired two adjacent parcels of land located at 355 and 399 Exterior Street, New York, New York (collectively, the “Exterior Street Land”), from Borden Realty Corp and 399 Exterior Street Associates LLC, unaffiliated third parties, for an aggregate purchase price of approximately $59.0 million, excluding closing and other acquisition related costs. We ~~intend\ to use~~are using the Exterior Street Land for the development and construction of a multi-family residential property (the “Exterior Street Project”). The Exterior Street Project is currently under development.

On March 29, 2019, we entered into a $35.0 million loan (the “Exterior Street Loan”) which ~~bears~~initially bore interest ~~and~~at 4.50% and was ~~initially~~ scheduled to mature on April 9, 2020. However, because we have already exercised the ~~first~~second of two six-month extension options, the current maturity date is now April 9, 2021and upon the exercise of the second extension option on October 9, ~~2020.~~2020, the interest rate became Libor plus 2.25%. The Exterior Street Loan requires monthly interest payments through its maturity date and is collateralized by the Exterior Street Project.

Santa Clara Data Center

On January 10, 2019, we, through subsidiaries of the Operating Partnership, acquired a parcel of land located at 2175 Martin Avenue, Santa Clara, California (the “Martin Avenue Land”) from The Chioini Living Trust, an unaffiliated third party, for approximately $10.6 million, excluding closing and other acquisition related costs. We intend to use the Martin Avenue Land for the development and construction of a data center (the “Santa Clara Data Center”). The Santa Clara Data Center is currently under development.

The following is a summary of the amounts incurred and capitalized to construction in progress for our development projects as of ~~June~~September 30, 2020:

Development Projects
Lower East Side Moxy Hotel $ 83,505
Exterior Street Project 70,056
Santa Clara Data Center 13,317
Total Devlopments Projects $ 166,878
During the second quarter of 2020, the COVID-19 pandemic continued to evolve on both a global and national level. The states where we have development projects (New York and California), have begun a phased approach as to the reopening of businesses and venues which have been subject to various restrictions and other measures, including mandatory closures, quarantines, limitations on travel, “shelter in place” rules and other measures, however, the situation remains both dynamic and unpredictable.
Development Projects
Lower East Side Moxy Hotel $ 91,365
Exterior Street Project 72,089
Santa Clara Data Center 13,478
Total Developments Projects $ 176,932

To-date the COVID-19 pandemic has not had any significant impact on our three development ~~projects because only limited construction activities have thusfar commenced~~.projects. We intend to obtain construction financing on our development projects to fund a substantial portion of their future development costs. However, the COVID-19 pandemic may (i) affect our ability to obtain construction financing, and/or (ii) cause delays or increase costs associated with building materials or construction services necessary for construction, which could adversely impact our ability to either ultimately commence and/or complete construction as planned, on budget or at all for our development projects.

We currently believe our capital resources are sufficient to fund our expected development activities related to the Lower East Side Moxy Hotel, the Exterior Street Project and the Santa Clara Data Center for the next 12 months. However, we ultimately expect to finance a substantial portion of our development costs through construction loans. Due to the uncertainty in capital and financial markets in the United States because of the current COVID-19 pandemic, there can be no assurance we will be successful in obtaining construction financing at favorable terms, if at all.

Preferred Investments

We have Preferred Investments that entitle us to monthly preferred distributions. The Preferred Investments had an aggregate balance of $14.5 million and $34.5 million as of ~~June~~September 30, 2020 and December 31, 2019, respectively, and are classified as held-to-maturity securities, recorded at cost and included in investments in related parties on the consolidated balance sheets. The fair value of these investments approximated their carrying values based on market rates for similar instruments.

During the ~~six~~nine months ended ~~June~~September 30, 2020, we (i) redeemed $11.0 million of the 40 East End Avenue Preferred Investment and the entire remaining Miami Moxy Preferred Investment of $9.0 million.

The Preferred Investments are summarized as follows:

Preferred
Investment Balance Investment Income ⁽¹⁾ Preferred Investment Balance Investment Income ⁽¹⁾
As of As of Three Months Ended
June 30, Six Months Ended
June 30, As of As of
Three Months Ended
September 30,

Nine Months Ended
September 30,

Preferred Investments Dividend
Rate June 30,
2020 December 31,
2019 2020 2019 2020 2019 Dividend
Rate September 30,
2020 December 31,
2019 2020 2019 2020 2019
40 East End Avenue 12 % $ 6,000 $ 17,000 $ 182 $ 910 $ 518 $ 1,810 12 % $ 6,000 $ 17,000 $ 184 $ 920 $ 702 $ 2,730
30-02 39^th Avenue 12 % - - - - - 140 12 % - - - - - 140
East 11th Street 12 % 8,500 8,500 258 807 519 1,907 12 % 8,500 8,500 261 797 779 2,705
Miami Moxy 12 % - 9,000 - 558 45 1,090 12 % - 9,000 - 615 45 1,705
Total Preferred Investments $ 14,500 $ 34,500 $ 440 $ 2,275 $ 1,082 $ 4,947
Total $ 14,500 $ 34,500 $ 445 $ 2,332 $ 1,526 $ 7,280

Note:
(1) – Included in interest and dividend income on the statements of operations.

Notes Receivable

Beginning in 2019, we formed certain joint ventures (collectively, the “NR Joint Ventures”) between wholly-owned subsidiaries of the Operating Partnership (collectively, the “NR Subsidiaries”) and affiliates of the Sponsor (the “NR Affiliates”) which have originated nonrecourse loans (collectively, the “Joint Venture Promissory Notes”) to unaffiliated third-party borrowers (collectively, the “Joint Venture Borrowers”).

We determined that the NR Joint Ventures are VIEs and the NR Subsidiaries are the primary beneficiaries. Since the NR Subsidiaries are the primary beneficiaries, beginning on the applicable date of formation, we consolidated the operating results and financial condition of the NR Joint Ventures and accounted for the respective ownership interests of the NR Affiliates as noncontrolling interests.

The Joint Venture Promissory Notes provide for monthly interest at a prescribed variable rate, subject to a floor. In connection with funding of the Joint Venture Promissory Notes, the NR Joint Ventures have received origination fees (1.00% - 1.50%) based on the principal amount of the loan and retained a portion of the loan proceeds to establish a reserve for interest and other items (the “Loan Reserves”). The Joint Venture Promissory Notes are recorded in notes receivable, net on the consolidated balance sheets.

The Joint Venture Promissory Notes generally have an initial term of one or two years and may provide for additional one-year extension options subject to satisfaction of certain prescribed conditions, including the funding of an additional reserve for interest and payment of an extension fee. The Joint Venture Promissory Notes are collateralized by either the membership interests of the Joint Venture Borrowers in the borrowing entity or the underlying real property being developed by the Joint Venture Borrower.

The Joint Venture Promissory Notes are recorded in notes receivable, net on the consolidated balance sheets. The origination fees received are presented in the consolidated balance sheets as a direct deduction from the carrying value of the Joint Venture Promissory Notes and are amortized into interest income, using a straight-line method that approximates the effective interest method, over the initial term of the Joint Venture Promissory Notes. The Loan Reserves are presented in the consolidated balance sheets as a direct deduction from the carrying value of the Joint Venture Promissory Notes and are applied against the monthly interest due over the initial term.

The Notes Receivable are summarized as follows:
As of June 30, 2020
Company's Loan Current Contractual Unamortized As of September 30, 2020
Ownership Commitment Origination Origination Maturity Interest Outstanding Loan Origination Carrying Unfunded
Company'
Ownership

Loan
Commitment
Origination Origination Maturity
Contractual
Interest
Outstanding Unamortized Origination Carrying Unfunded
Joint Venture/Lender Percentage Amount Fee Date Date Rate Principal Reserves Fee Value Commitment Percentage Amount Fee Date Date Rate Principal Reserves Fee Value Commitment
LSC 162nd Capital I LLC 45.45 % $ 4,234 1.50 % February 5, 2019 November 11,2020 Libor plus 7.50%
(Floor of 11%) $ 4,076 $ (185 ) $ (41 ) $ 3,850 $ -
LSC 162nd Capital I LLC (1) 45.45 % $ 4,234 1.50 % February 5, 2019 November 11, 2020 Libor plus 7.50%
(Floor of 11%) $ 4,076 $ (71 ) $ (10 ) $ 3,995 $ -

LSC 162nd Capital II LLC 45.45 % 9,166 1.50 % February 5, 2019 November 11,2020 Libor plus 7.50%
(Floor of 11%) 8,824 (401 ) (88 ) 8,335 -
LSC 162nd Capital II LLC (1) 45.45 % 9,166 1.50 % February 5, 2019 November 11,2020 Libor plus 7.50%
(Floor of 11%) 8,824 (153 ) (22 ) 8,649 -

LSC 1543 7th LLC 50 % 20,000 1.00 % August 27, 2019 August 26, 2020 Libor plus 5.15%
(Floor of 7.65%) 20,000 - (31 ) 19,969 - 50 % 20,000 1.00 % August 27, 2019 February 26, 2021 Libor plus 5.40%
(Floor of 7.90%) 20,000 - (83 ) 19,917 -

LSC 1650 Lincoln LLC 50 % 24,000 1.00 % August 27, 2019 August 26, 2020 Libor plus 5.15%
(Floor of 7.65%) 24,000 - (37 ) 23,963 - 50 % 24,000 1.00 % August 27, 2019 February 26, 2021 Libor plus 5.40%
(Floor of 7.90%) 24,000 - (100 ) 23,900 -

LSC 11640 Mayfield LLC 50 % 18,000 1.00 % March 4, 2020 March 1, 2022 Libor plus 10.50%
(Floor of 12.50%) 10,750 (3,056 ) (226 ) 7,468 7,250 50 % 18,000 1.50 % March 4, 2020 March 1, 2022 Libor plus 10.50%
(Floor of 12.50%) 10,750 (2,712 ) (192 ) 7,846 7,250

LSC 87 Newkirk LLC 50 % 42,700 1.25 % July 2, 2020 December 1, 2021 Libor plus 6.00%
(Floor of 7.00%) 42,700 (4,570 ) (446 ) 37,684 -

Total $ 67,650 $ (3,642 ) $ (423 ) $ 63,585 $ 7,250 $ 110,350 $ (7,506 ) $ (853 ) $ 101,991 $ 7,250

The following summarizes the interest earned (included in interest and dividend income on the consolidated statements of operations) for each of the Joint Venture Promissory Notes during the periods indicated:

For the Three Months Ended
June 30, For the Six Months Ended
June 30,
For the Three Months Ended
September 30,

For the Nine Months Ended
September 30,

Joint Venture/Lender 2020 2019 2020 2019 2020 2019 2020 2019
LSC 162nd Capital I LLC $ 249 $ 123 $ 363 $ 197 $ 145 $ 118 $ 508 $ 321

LSC 162nd Capital II LLC 540 266 785 427 314 269 1,099 695

LSC 47-16 Greenpoint LLC - 290 - 290 - 313 - 597

LSC 1543 7th LLC 436 - 873 - 444 168 1,317 168

LSC 1650 Lincoln LLC 524 - 1,048 - 532 201 1,580 202

LSC 11640 Mayfield LLC 373 - 488 - 377 - 866 -

LSC 87 Newkirk LLC 812 - 812 -

Total $ 2,122 $ 679 $ 3,557 $ 914 $ 2,624 $ 1,069 $ 6,182 $ 1,983

Distribution Reinvestment Program (“DRIP”)

Our DRIP provides our shareholders with an opportunity to purchase additional shares of our common stock at a discount by reinvesting distributions. Under our distribution reinvestment program, a shareholder may acquire, from time to time, additional shares of our common stock by reinvesting cash distributions payable by us to such shareholder, without incurring any brokerage commission, fees or service charges.

Our Registration Statement on Form S-3D was filed and became effective as amended and restated, under the Securities Act of 1933 on October 25, 2018.

Pursuant to the DRIP, our stockholders who elect to participate may invest all or a portion of the cash distributions that we pay them on shares of our common stock in additional shares of our common stock without paying any fees or commissions. The purchase price for shares under the DRIP will be equal to 95% of the Company’s current estimated per-share net asset value (the “Estimated Per-Share NAV”), as determined by the Company’s board of directors and reported by the Company from time to time. On December 10, 2019, our Board of Directors determined our Estimated Per-Share NAV of $11.82 as of September 30, 2019, which resulted in a purchase price for shares under the DRIP of $11.23 per share. As of ~~June~~September 30, 2020, we had approximately 10.0 million shares available for issuance under our DRIP.

Our Board of Directors reserves the right to terminate the DRIP for any reason without cause by providing written notice of termination of the DRIP to all participants.

Share Repurchase Program

Our share repurchase program may provide our stockholders with limited, interim liquidity by enabling them to sell their shares of common stock back to us, subject to restrictions. From our inception through December 31, 2019 we repurchased approximately 12.9 million shares of common stock. For the ~~six months ended June 30,~~period from January 1 through March 24, 2020, we repurchased 287,987 shares of common stock for $10.87 per share, pursuant to our share repurchase program.

On May 10, 2018, the Board of Directors amended the share repurchase program to set the price for all purchases under our share repurchase program equal to 92% of the Estimated Per-Share NAV and the number of shares repurchased during any calendar year to five (5.0%) of the weighted average number of shares outstanding during the previous year.

On March 25, 2020, the Board of Directors amended the share repurchase program to remove stockholder notice requirements and also approved the suspension of all redemptions effective immediately.

Tender Offer

We commenced a tender offer on June 15, 2020, pursuant to which we offered to acquire up to 225,000 of our shares of common stock (the “Common Shares”) at a purchase price of $5.00 per share, or approximately $1.1 million in the aggregate (the “Tender Offer”). Pursuant to the terms of the Tender Offer, which expired on July 24, 2020, we repurchased approximately 0.1 million Common Shares for an aggregate of approximately $0.3 million in August 2020.

Contractual Obligations

The following is a summary of our contractual obligations outstanding over the next five years and thereafter as of ~~June~~September 30, 2020.

Contractual Obligations 2020 2021 2022 2023 2024 Thereafter Total 2020 2021 2022 2023 2024 Thereafter Total
Mortgage Payable $ 95,805 $ 1,328 $ 1,389 $ 1,454 $ 66,697 $ - $ 166,673 $ 35,493 $ 61,328 $ 27,440 $ 1,454 $ 66,697 $                   - $ 192,412
Interest Payments ¹ 3,194 3,191 3,130 3,065 2,917 - 15,497 2,091 5,010 3,133 3,065 2,917 - 16,216

Total Contractual Obligations $ 98,999 $ 4,519 $ 4,519 $ 4,519 $ 69,614 $           - $ 182,170 $ 37,584 $ 66,338 $ 30,573 $ 4,519 $ 69,614 $ - $ 208,628

1) These amounts represent future interest payments related to mortgage payable obligations based on the fixed and variable interest rates specified in the associated debt agreement. All variable rate debt agreements are based on the one month LIBOR rate. For purposes of calculating future interest amounts on variable interest rate debt the one month LIBOR rate as of ~~June~~September 30, 2020 was used.

Notes Payable

Margin Loan

We have access to a margin loan (the “Margin Loan”) from a financial institution that holds custody of certain of our marketable securities. The Margin Loan, which is due on demand, bears interest at Libor plus 0.85% ~~(1.01%~~(1.00% as of ~~June~~September 30, 2020) and is collateralized by the marketable securities in our account. The amounts available to us under the Margin Loan are at the discretion of the financial institution and not limited to the amount of collateral in our account. There were no amounts outstanding under the Margin Loan as of ~~June~~September 30, 2020 and December 31, 2019.

Line of Credit

We have a non-revolving credit facility (the “Line of Credit”) that provides for borrowings up to a maximum of $20.0 million, subject to a 55% loan-to-value ratio based on the fair value of the underlying collateral, matures on June 19, 2021 and bears interest at Libor plus 1.35% ~~(1.51%~~(1.50% as of ~~June~~September 30, 2020). The Line of Credit is collateralized by 209,243 of Marco OP Units and Marco II OP Units and is guaranteed by PRO. As of ~~June~~September 30, 2020, the amount of borrowings available to be drawn under the Line of Credit was approximately ~~$7.9~~$7.4 million. No amounts were outstanding under the Line of Credit as of ~~June~~September 30, 2020 and December 31, 2019.

Financings
On July 22, 2020, we, through LSC 87 Newkirk LLC (the “87 Newkirk Joint Venture”), entered into a $27.5 million loan (the “87 Newkirk Loan”) which bears interest at LIBOR+3.80%, subject to a 4.80% floor, and initially scheduled to mature on January 1, 2022 but may be further extended through the exercise of two, six-month extension options, which the 87 Newkirk Joint Venture may exercise by providing the lender with advance written notice. The 87 Newkirk Loan requires monthly interest payments through its maturity date and is collateralized by a nonrecourse loan originated by the 87 Newkirk Joint Venture. Through September 30, 2020, we received proceeds of $26.1 million under the 87 Newkirk Loan. As a result, the 87 Newkirk Loan had an outstanding balance and remaining availability of $26.1 million and $1.4 million, respectively, as of September 30, 2020.
Debt Maturities

The Exterior Street Loan (outstanding principal balance of $35.0 million as of ~~June~~September 30, 2020) initially matured on April 9, 2020. However, because we have already exercised the ~~first~~second of two six-month extension options, the current maturity date is now ~~October~~April 9, ~~2020.~~2021. We currently intend to ~~exercise the second extension option or~~ refinance the Exterior Street Loan on or before ~~the current~~its maturity date.

On November 12, 2019, we, through LSC 1543 7th LLC and LSC 1650 Lincoln LLC (collectively, the “Santa Monica Joint Ventures”), entered into a $25.0 million loan (the” Santa Monica Loan”) which bears interest at LIBOR+3.75% ~~and is~~, subject to a 5.50% floor, that was initially scheduled to ~~initially~~ mature on August 12, 2020 but ~~may be further extended through the exercise of~~had two six-month extension ~~options, which~~options. However, because we have already exercised the first extension option, the current maturity date is now February 12, 2021. We currently intend to exercise the second extension option or refinance the Santa Monica Loan on or before the current maturity date. The Santa Monica Joint Ventures may exercise the extension option by providing the lender with advance written notice. The Santa Monica Loan requires monthly interest payments through its maturity date and is cross-collateralized by two nonrecourse loans originated by the Santa Monica Joint Ventures. ~~We currently intend to exercise the extension options or refinance the Santa Monica Loan on or before its applicable stated maturity date.~~

The Bowery Mortgage (outstanding principal balance of $35.2 million as of ~~June~~September 30, 2020) matures on December 3, 2020. We currently ~~intend~~expect to ~~refinance~~obtain an extension for the Bowery Mortgage ~~on or before its maturity date.~~until such time as we can obtain construction financing.

However, if we are unable to extend or refinance any of our maturing indebtedness at favorable terms, we will look to repay the then outstanding balance with available cash and/or proceeds from selective asset sales. We have no additional significant maturities of mortgage debt over the next 12 months.

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~~wh5ich implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative.

Because of these factors, the National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has published a standardized measure of performance known as funds from operations ("FFO"), which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT's operating performance. FFO is not equivalent to our net income or loss as determined under GAAP.

We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the "White Paper"). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Our FFO calculation complies with NAREIT's definition.

We believe that the use of FFO provides a more complete understanding of our performance to investors and to management and reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT's definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.

Because of these factors,, the Investment Program Association (the "IPA"), an industry trade group, published a standardized measure of performance known as modified funds from operations ("MFFO"), which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that both before and after we have deployed all of our offering proceeds 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") issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for acquisition and transaction-related fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition and transaction-related fees and expenses (which includes costs incurred in connection with strategic alternatives), amounts relating to straight line rent receivables and amortization of market lease and other intangibles, net (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), accretion of discounts and amortization of premiums on debt investments and borrowings, mark-to-market adjustments included in net income (including gains or losses incurred on assets held for sale), gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.

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

The below table illustrates the items deducted in the calculation of FFO and MFFO. Items are presented net of non-controlling interest portions where applicable.

For the Three Months Ended
June 30, For the Six Months Ended
June 30, For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019 2020 2019 2020 2019
Net income/(loss) $ 6,269 $ (1,113 ) $ (12,409 ) $ 19,114 $ 1,319 $ 4,686 $ (11,090 ) $ 23,800
FFO adjustments:
Depreciation and amortization:
Depreciation and amortization of real estate assets 976 1,302 1,968 2,581 939 1,241 2,907 3,822
Gain on disposal of investment property (1,562 ) (1,562 ) - (1,013 ) - (1,013 )
Discontinued operations
Depreciation and amortization of real estate assets - - - 121 - - - 121
Gain on disposal of investment property - - - (70 ) - - (1,562 ) (70 )

FFO 5,683 189 (12,003 ) 21,746 2,258 4,914 (9,745 ) 26,660
MFFO adjustments:
Other Adjustment
Acquisition and other transaction related costs expensed⁽¹⁾ - - - (22 ) - - - (22 )
Amortization of above or below market leases and liabilities⁽²⁾ - (35 ) - (70 ) - (35 ) - (105 )
Discontinued operations:
Gain on debt extinguishment - - - (13,615 ) - - - (13,615 )
Accretion of discounts and amortization of premiums on debt investments - - - - - - - -
Mark-to-market adjustments⁽³⁾ (2,687 ) 4,782 18,611 1,665 1,472 609 20,083 2,408
Non-recurring (losses)/gains from extinguishment/sale of debt, derivatives or securities holdings⁽⁴⁾ 230 314 230 625 - 94 230 719

MFFO 3,226 5,250 6,838 10,329 3,730 5,582 10,568 16,045
Straight-line rent⁽⁵⁾ 6 8 13 4 89 29 102 33
MFFO - IPA recommended format⁽⁶⁾ $ 3,232 $ 5,258 $ 6,851 $ 10,333 $ 3,819 $ 5,611 $ 10,670 $ 16,078

Net income/(loss) $ 6,269 $ (1,113 ) $ (12,409 ) $ 19,114 $ 1,319 $ 4,686 $ (11,090 ) $ 23,800
Less: income attributable to noncontrolling interests (458 ) (305 ) (741 ) (1,159 )
Less: (income)/loss attributable to noncontrolling interests (1,094 ) (809 ) (1,835 ) (1,968 )
Net income/(loss) applicable to Company's common shares $ 5,811 $ (1,418 ) $ (13,150 ) $ 17,955 $ 225 $ 3,877 $ (12,925 ) $ 21,832
Net income/(loss) per common share, basic and diluted $ 0.26 $ (0.07 ) $ (0.59 ) $ 0.76 $ 0.01 $ 0.17 $ (0.58 ) $ 0.94

FFO $ 5,683 $ 189 $ (12,003 ) $ 21,746 $ 2,258 $ 4,914 $ (9,745 ) $ 26,660
Less: FFO attributable to noncontrolling interests (988 ) (492 ) (314 ) (1,539 ) (544 ) (764 ) (857 ) (2,307 )
FFO attributable to Company's common shares $ 4,695 $ (303 ) $ (12,317 ) $ 20,207 $ 1,714 $ 4,150 $ (10,602 ) $ 24,353
FFO per common share, basic and diluted $ 0.21 $ (0.01 ) $ (0.55 ) $ 0.87 $ 0.08 $ 0.18 $ (0.47 ) $ 1.05

MFFO - IPA recommended format $ 3,232 $ 5,258 $ 6,851 $ 10,333 $ 3,819 $ 5,611 $ 10,670 $ 16,078

Less: MFFO attributable to noncontrolling interests (1,078 ) (798 ) (1,955 ) (1,375 ) (887 ) (1,026 ) (2,842 ) (2,402 )
MFFO attributable to Company's common shares $ 2,154 $ 4,460 $ 4,896 $ 8,958 $ 2,932 $ 4,585 $ 7,828 $ 13,676

Weighted average number of common shares outstanding, basic and diluted 22,333 23,174 22,376 23,324 22,304 22,859 22,351 23,168

Notes:
(1) The purchase of properties, and the corresponding expenses associated with that process, is a key operational feature of our business plan to generate operational income and cash flows in order to make distributions to investors. In evaluating investments in real estate, management differentiates the costs to acquire the investment from the operations derived from the investment. Such information would be comparable only for non-listed REITs that have completed their acquisition activity and have other similar operating characteristics. By excluding expensed acquisition costs, management believes MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. Acquisition fees and expenses include payments to our advisor or third parties. Acquisition fees and expenses under GAAP are considered operating expenses and as expenses included in the determination of net income and income from continuing operations, both of which are performance measures under GAAP. Such fees and expenses are paid in cash, and therefore such funds will not be available to distribute to investors. Such fees and expenses negatively impact our operating performance during the period in which properties are being acquired. Therefore, MFFO may not be an accurate indicator of our operating performance, especially during periods in which properties are being acquired. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to the property. Acquisition fees and expenses will not be paid or reimbursed, as applicable, to our advisor even if there are no further proceeds from the sale of shares in our offering, and therefore such fees and expenses would need to be paid from either additional debt, operational earnings or cash flows, net proceeds from the ~~sal~~sale of properties or from ancillary cash flows.

(2) Under GAAP, certain intangibles are accounted for at cost and reviewed at least annually for impairment, and certain intangibles are assumed to diminish predictably in value over time and amortized, similar to depreciation and amortization of other real estate related assets that are excluded from FFO. However, because real estate values and market lease rates historically rise or fall with market conditions, management believes that by excluding charges relating to amortization of these intangibles, MFFO provides useful supplemental information on the performance of the real estate.
(3) Management believes that adjusting for mark-to-market adjustments is appropriate because they are nonrecurring items that may not be reflective of ongoing operations and reflects unrealized impacts on value based only on then current market conditions, although they may be based upon current operational issues related to an individual property or industry or general market conditions. Mark-to-market adjustments are made for items such as ineffective derivative instruments, certain marketable equity securities and any other items that GAAP requires we make a mark-to-market adjustment for. The need to reflect mark-to-market adjustments is a continuous process and is analyzed on a quarterly and/or annual basis in accordance with GAAP.
(4) Management believes that adjusting for gains or losses related to extinguishment/sale of debt, derivatives or securities holdings is appropriate because they are items that may not be reflective of ongoing operations. By excluding these items, management believes that MFFO provides supplemental information related to sustainable operations that will be more comparable between other reporting periods.
(5) Under GAAP, rental receipts are allocated to periods using various methodologies. This may result in income recognition that is significantly different than underlying contract terms. By adjusting for these items (to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments, providing insight on the contractual cash flows of such lease terms and debt investments, and aligns results with management’s analysis of operating performance.

TheThe table below presents our cumulative distributions paid and cumulative FFO attributable to the Company’s common shares:

From inception
through From inception through
June 30, 2020 September 30, 2020
FFO attributable to Company’s common shares $ 223,724 $ 225,439
Distributions paid $ 239,884 $ 243,796

On ~~July~~October 15, 2020, the distribution for the three-month period ending ~~June~~September 30, 2020 of $3.9 million was paid in full using a combination of cash and approximately 7,000 shares of the Company’s common stock issued pursuant to the Company’s DRIP, at a discounted price of $11.23 per share, equal to 95% of the Company’s most recently published estimated net asset value per share of $11.82 as of September 30, 2019.

The amount of distributions paid to our stockholders in the future will be determined by our Board and is dependent on a number of factors, including funds available for payment of dividends, our financial condition, capital expenditure requirements and annual distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code.

New Accounting Pronouncements

See Note 2 to the Notes to Consolidated Financial Statements for further information of certain accounting standards that have been adopted during 2020, if any, and certain accounting standards that we have not yet been required to implement and may be applicable to our future operations.

ITEM 4. CONTROLS AND PROCEDURES.

As of the end of the period covered by this report, management, including our chief executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of the evaluation, our chief executive officer and principal financial officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required.

There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. There were no material weaknesses identified in the evaluation, and therefore, no corrective actions were taken.

PART II. OTHER INFORMATION:

ITEM 1. LEGAL PROCEEDINGS

From time to time in the ordinary course of business, we may become subject to legal proceedings, claims or disputes.

As of the date hereof, the Company is not a party to any material pending legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on its results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the period covered by this Form 10-Q, we did not sell any equity securities that were not registered under the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

Exhibit
Number
Description
31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.2* Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15 d-14(a) of the Securities Exchange Act, as amended.
32.1* Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551 this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
32.2* Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551 this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
101* XBRL (eXtensible Business Reporting Language). The following financial information from Lightstone Value Plus Real Estate Investment Trust, Inc. on Form 10-Q for the quarter ended ~~June~~September 30, 2020, filed with the SEC on ~~August 7,~~November 10, 2020, formatted in XBRL includes: (1) Consolidated Balance Sheets, (2) Consolidated Statements of Operations, (3) Consolidated Statements of Comprehensive Income, (4) Consolidated Statements of Stockholders’ Equity, (5) Consolidated Statements of Cash Flows and (6) the Notes to the Consolidated Financial Statement.

* ~~Filed herewith~~
*Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

LIGHTSTONE VALUE PLUS REAL ESTATE
INVESTMENT TRUST, INC.

Date:     ~~August 7,~~November 10, 2020 By:   /s/ David Lichtenstein
David Lichtenstein
Chairman and Chief Executive Officer (Principal Executive Officer)

Date:     ~~August 7,~~November 10, 2020 By:   /s/ Seth Molod
Seth Molod

Chief Financial Officer and Treasurer
(Duly Authorized Officer and Principal Financial and Accounting Officer)

42

										Accumulated
							Additional			Other									Total
	Common						Paid-In			Comprehensive			Accumulated			Noncontrolling			Stockholders'
	Shares			Amount			Capital			Loss			Surplus			Interests			Equity
BALANCE, March 31, 2019	23,407		$	235		$	181,196		$	(615	)	$	116,659		$	20,852		$	318,327
Net loss	-			-			-			-			(1,418	)		305			(1,113	)
Other comprehensive income	-			-			-			446			-			9			455
Distributions declared (a)	-			-			-			-			(4,026	)		-			(4,026	)
Distributions paid to noncontrolling interests	-			-			-			-			-			(880	)		(880	)
Contributions received from noncontrolling interests	-			-			-			-			-			5,562			5,562
Redemption, cancellation and tender of shares	(361	)		(4	)		(3,711	)											(3,715	)
Shares issued from distribution reinvestment program	6			-			74			-			-			-			74
BALANCE, June 30, 2019	23,052		$	231		$	177,559		$	(169	)	$	111,215		$	25,848		$	314,684

	For the Six Months Ended June 30,				For the Nine Months Ended September 30,
	2020		2019		2020		2019
Cash paid for interest	$	4,310	$	3,619	$	6,524	$	5,621
Distributions declared but not paid	$	3,912	$	4,027	$	3,904	$	3,992
Investment property acquired but not paid	$	1,447	$	307	$	2,532	$	300
Assets transferred in connection with assignment transaction	$	-	$	37,299	$	-	$	37,299
Liabilities extinguished in connection with assignment transaction	$	-	$	50,914	$	-	$	50,914
Amortization of deferred financing costs included in construction in progress	$	806	$	-	$	997	$	-
Holding loss/gain on marketable securities	$	1,480	$	2,126	$	853	$	2,430
Value of shares issued from distribution reinvestment program	$	163	$	127	$	247	$	200

	Amounts Capitalized to Construction in Progress					Capitalized Interest				Capitalized Interest
	As of		As of		��	Three Months Ended June 30,				Six Months Ended June 30,
Development Projects	June 30, 2020		December 31, 2019			2020		2019		2020		2019
Lower East Side Moxy Hotel	$	83,505	$	73,776		$	1,060	$	1,090	$	2,107	$	2,168
Exterior Street Project		70,056		66,084			680		1,178		1,788		1,469
Santa Clara Data Center		13,317		13,027			92		134		192		240
Total Developments Projects	$	166,878	$	152,887		$	1,832	$	2,402	$	4,087	$	3,877

	Amounts Capitalized to Construction in Progress				Capitalized Interest				Capitalized Interest
	As of		As of		Three Months Ended September 30,				Nine Months Ended September 30,
Development Projects	September 30, 2020		December 31, 2019		2020		2019		2020		2019
Lower East Side Moxy Hotel	$	91,365	$	73,776	$	1,146	$	991	$	3,253	$	3,159
Exterior Street Project		72,089		66,084		722		1,083		2,510		2,552
Santa Clara Data Center		13,478		13,027		103		96		295		336
Total Developments Projects	$	176,932	$	152,887	$	1,971	$	2,170	$	6,058	$	6,047

	As of June 30, 2020									As of September 30, 2020
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable Securities:
Equity securities:
Equity Securities, primarily REITs	$	8,591	$	-	$	(1,392	)	$	7,199	$	8,798	$	104	$	(2,194	)	$	6,708
Marco OP Units and Marco II OP Units		19,227		-		(4,919	)		14,308		19,227		-		(5,693	)		13,534
		27,818		-		(6,311	)		21,507		28,025		104		(7,887	)		20,242
Debt securities:
Corporate Bonds		16,964		-		(1,062	)		15,902		16,964		147		(579	)		16,532

Total	$	44,782	$	-	$	(7,373	)	$	37,409	$	44,989	$	251	$	(8,466	)	$	36,774

	As of December 31, 2019									As of December 31, 2019
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable Securities:
Equity securities:
Equity Securities, primarily REITs	$	6,799	$	375	$	(17	)	$	7,157	$	6,799	$	375	$	(17	)	$	7,157
Marco OP Units and Marco II OP Units		19,227		11,942		-			31,169		19,227		11,942		-			31,169
		26,026		12,317		(17	)		38,326		26,026		12,317		(17	)		38,326
Debt securities:
Corporate Bonds		15,993		442		(23	)		16,412		15,993		442		(23	)		16,412

Total	$	42,019	$	12,759	$	(40	)	$	54,738	$	42,019	$	12,759	$	(40	)	$	54,738

	•		Level 1 – Quoted prices in active markets for identical assets or liabilities.

	•		Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

	•		Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

	Fair Value Measurement Using								Fair Value Measurement Using
As of June 30, 2020	Level 1		Level 2		Level 3		Total
As of September 30, 2020									Level 1		Level 2		Level 3		Total

Marketable Securities:
Equity Securities, primarily REITs	$	7,199	$	-	$	-	$	7,199	$	6,708	$	-	$	-	$	6,708
Marco OP and OP II Units		-		14,308		-		14,308		-		13,534		-		13,534
Corporate Bonds		-		15,902		-		15,902		-		16,532		-		16,532
Total	$	7,199	$	30,210	$	-	$	37,409	$	6,708	$	30,066	$	-	$	36,774

	As of June 30, 2020		As of September 30, 2020
Due in 1 year	$	1,800	$	1,888
Due in 1 year through 5 years		4,096		4,272
Due in 5 years through 10 years		-		-
Due after 10 years		10,006		10,372
Total	$	15,902	$	16,532


														As of June 30, 2020
	Company's			Loan							Current		Contractual						Unamortized							Company's Ownership Percentage			Loan Commitment Amount			Origination Fee			Origination Date		Maturity Date		Contractual Interest Rate		As of September 30, 2020
	Ownership			Commitment		Origination			Origination		Maturity		Interest	Outstanding		Loan			Origination			Carrying		Unfunded										Outstanding Principal				Reserves			Unamortized Origination Fee			Carrying Value			Unfunded Commitment
Joint Venture/Lender	Percentage			Amount		Fee			Date		Date		Rate	Principal		Reserves			Fee			Value		Commitment														Reserves			Unamortized Origination Fee			Carrying Value			Unfunded Commitment
LSC 162nd Capital I LLC		45.45	%	$	4,234		1.50	%		February 5, 2019		November 11,2020	Libor plus 7.50% (Floor of 11%)	$	4,076	$	(185	)	$	(41	)	$	3,850	$	-			45.45			%			Outstanding Principal		$	4,234			1.50	%		February 5, 2019		November 11,2020		Libor plus 7.50% (Floor of 11%)		$	4,076		$	(71	)	$	(10	)	$	3,995	$	-

LSC 162nd Capital II LLC		45.45	%		9,166		1.50	%		February 5, 2019		November 11,2020	Libor plus 7.50% (Floor of 11%)		8,824		(401	)		(88	)		8,335		-		45.45	%		9,166			1.50	%	February 5, 2019		November 11,2020		Libor plus 7.50% (Floor of 11%)			8,824			(153	)		(22	)		8,649			-

LSC 1543 7th LLC		50	%		20,000		1.00	%		August 27, 2019		August 26, 2020	Libor plus 5.15% (Floor of 7.65%)		20,000		-			(31	)		19,969		-		50	%		20,000			1.00	%	August 27, 2019		February 26, 2021		Libor plus 5.40% (Floor of 7.90%)			20,000			-			(83	)		19,917			-

LSC 1650 Lincoln LLC		50	%		24,000		1.00	%		August 27, 2019		August 26, 2020	Libor plus 5.15% (Floor of 7.65%)		24,000		-			(37	)		23,963		-		50	%		24,000			1.00	%	August 27, 2019		February 26, 2021		Libor plus 5.40% (Floor of 7.90%)			24,000			-			(100	)		23,900			-

LSC 11640 Mayfield LLC		50	%		18,000		1.00	%		March 4, 2020		March 1, 2022	Libor plus 10.50% (Floor of 12.50%)		10,750		(3,056	)		(226	)		7,468		7,250		50	%		18,000			1.50	%	March 4, 2020		March 1, 2022		Libor plus 10.50% (Floor of 12.50%)			10,750			(2,712	)		(192	)		7,846			7,250

LSC 87 Newkirk LLC																											50	%		42,700			1.25	%	July 2, 2020		December 1, 2021		Libor plus 6.00% (Floor of 7.00%)			42,700			(4,570	)		(446	)		37,684			-

Total														$	67,650	$	(3,642	)	$	(423	)	$	63,585	$	7,250																$	110,350		$	(7,506	)	$	(853	)	$	101,991		$	7,250

	Company's Ownership Percentage			Loan Commitment Amount		Origination Fee			Origination Date	Current Maturity Date	Contractual Interest Rate	As of December 31, 2019
												Outstanding Principal		Loan Reserves			Unamortized Origination Fee			Carrying Value
Joint Venture/Lender												Outstanding Principal		Loan Reserves			Unamortized Origination Fee			Carrying Value
LSC 162nd Capital I LLC		45.45	%	$	4,234		1.50	%	February 5, 2019	March 1,2020	Libor plus 7.50% (Floor of 10%)	$	4,234	$	(82	)	$	(6	)	$	4,146

LSC 162nd Capital II LLC		45.45	%		9,166		1.50	%	February 5, 2019	March 1,2020	Libor plus 7.50% (Floor of 10%)		9,166		(178	)		(14	)		8,974

LSC 47-16 Greenpoint LLC		50	%		13,000		1.00	%	April 5, 2019	April 4, 2020	Libor plus 5.75% (Floor of 8.25%)		-		-			-			-

LSC 1543 7th LLC		50	%		20,000		1.00	%	August 27, 2019	August 26, 2020	Libor plus 5.15% (Floor of 7.65%)		20,000		(504	)		(131	)		19,365

LSC 1650 Lincoln LLC		50	%		24,000		1.00	%	August 27, 2019	August 26, 2020	Libor plus 5.15% (Floor of 7.65%)		24,000		(605	)		(157	)		23,238

Total												$	57,400	$	(1,369	)	$	(308	)	$	55,723

Property/Investment	Interest Rate	Weighted Average Interest Rate as of June 30, 2020			Maturity Date		Amount Due at Maturity		As of June 30, 2020			As of December 31, 2019			Interest Rate	Weighted Average Interest Rate as of September 30, 2020			Maturity Date	Amount Due at Maturity		As of September 30, 2020			As of December 31, 2019
Gantry Park Landing	4.48%		4.48	%		November 2024	$	65,317	$	71,505		$	72,128		4.48%		4.48	%	November 2024	$	65,317	$	71,193		$	72,128

Lower East Side Moxy Hotel	LIBOR + 4.25%		6.62	%		December 2020		35,168		35,168			34,828		LIBOR + 4.25% (floor of 6.63%)		6.63	%	December 2020		35,168		35,168			34,828

Exterior Street Project	4.50%		4.50	%		October 2020		35,000		35,000			35,000		4.50%		4.50	%	April 2021		35,000		35,000			35,000

Santa Monica Notes Receivable	LIBOR + 3.75%		5.50	%		August 2020		25,000		25,000			25,000		LIBOR + 3.75% (floor of 5.50%)		5.50	%	February 2021		25,000		25,000			25,000
87 Newkirk Note Receivable															LIBOR + 3.80% (floor of 4.80%)		4.80	%	January 2022		26,051		26,051			-
Total mortgages payable			5.09	%			$	160,485		166,673			166,956				5.05	%		$	186,536		192,412			166,956

Less: Deferred financing costs										(1,245	)		(2,251	)									(1,327	)		(2,251	)

Total mortgages payable, net									$	165,428		$	164,705									$	191,085		$	164,705

	2020		2021		2022		2023		2024		Thereafter		Total		2020		2021		2022		2023		2024		Thereafter		Total
Principal maturities	$	95,805	$	1,328	$	1,389	$	1,454	$	66,697	$	-	$	166,673	$	35,493	$	61,328	$	27,440	$	1,454	$	66,697	$	-	$	192,412

Less: Deferred financing costs														(1,245)														(1,327	)

Total principal maturities, net													$	165,428													$	191,085

	For the Three Months Ended June 30, 2019		For the Six Months Ended June 30, 2019
						For the Three Months Ended September 30, 2019		For the Nine Months Ended September 30, 2019
Revenues	$	-	$	409		$	-	$	409

Operating expenses		-		317			-		317
Operating income		-		92			-		92

Interest expense and other, net		-		(226	)		-		(226	)
Gain on debt extinguishment		-		13,615			-		13,615
Net income from discontinued operations	$	-	$	13,481		$	-	$	13,481

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Acquisition fees (capitalized and are reflected in the carrying value of the investment)	$	-	$	-	$	-	$	1,823
Asset management fees (general and administrative costs)		245		303		675		941
Property management fees (property operating expenses)		93		67		306		222
Development fees and leasing commissions*		-		-		-		167
Total	$	338	$	370	$	981	$	3,153
* Generally, capitalized and amortized over the estimated useful life of the associated asset.

				Preferred Investment Balance				Investment Income ⁽¹⁾											Preferred Investment Balance				Investment Income ⁽¹⁾
				As of		As of		Three Months Ended June 30,				Six Months Ended June 30,							As of		As of		Three Months Ended September 30,				Nine Months Ended September 30,
Preferred Investments	Dividend Rate			June 30, 2020		December 31, 2019		2020		2019		2020		2019		Dividend Rate			September 30, 2020		December 31, 2019		2020		2019		2020		2019
40 East End Avenue		12	%	$	6,000	$	17,000	$	182	$	910	$	518	$	1,810		12	%	$	6,000	$	17,000	$	184	$	920	$	702	$	2,730
30-02 39^th Avenue		12	%		-		-		-		-		-		140		12	%		-		-		-		-		-		140
East 11th Street		12	%		8,500		8,500		258		807		519		1,907		12	%		8,500		8,500		261		797		779		2,705
Miami Moxy		12	%		-		9,000		-		558		45		1,090		12	%		-		9,000		-		615		45		1,705
Total				$	14,500	$	34,500	$	440	$	2,275	$	1,082	$	4,947				$	14,500	$	34,500	$	445	$	2,332	$	1,526	$	7,280

		As of June 30, 2020				As of December 31, 2019
		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Mortgages payable	$	166.7	$	170.8	$	167.0	$	167.9

	As of September 30, 2020				As of December 31, 2019
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Mortgages payable	$	192.4	$	197.3	$	167.0	$	167.9

Contractual Obligations	2020		2021		2022		2023		2024		Thereafter		Total		2020		2021		2022		2023		2024		Thereafter		Total
Mortgage Payable	$	95,805	$	1,328	$	1,389	$	1,454	$	66,697	$	-	$	166,673	$	35,493	$	61,328	$	27,440	$	1,454	$	66,697	$	-	$	192,412
Interest Payments ¹		3,194		3,191		3,130		3,065		2,917		-		15,497		2,091		5,010		3,133		3,065		2,917		-		16,216

Total Contractual Obligations	$	98,999	$	4,519	$	4,519	$	4,519	$	69,614	$	-	$	182,170	$	37,584	$	66,338	$	30,573	$	4,519	$	69,614	$	-	$	208,628

	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2020			2019			2020			2019			2020			2019			2020			2019
Net income/(loss)	$	6,269		$	(1,113	)	$	(12,409	)	$	19,114		$	1,319		$	4,686		$	(11,090	)	$	23,800
FFO adjustments:
Depreciation and amortization:
Depreciation and amortization of real estate assets		976			1,302			1,968			2,581			939			1,241			2,907			3,822
Gain on disposal of investment property		(1,562	)					(1,562	)					-			(1,013	)		-			(1,013	)
Discontinued operations
Depreciation and amortization of real estate assets		-			-			-			121			-			-			-			121
Gain on disposal of investment property		-			-			-			(70	)		-			-			(1,562	)		(70	)

FFO		5,683			189			(12,003	)		21,746			2,258			4,914			(9,745	)		26,660
MFFO adjustments:
Other Adjustment
Acquisition and other transaction related costs expensed⁽¹⁾		-			-			-			(22	)		-			-			-			(22	)
Amortization of above or below market leases and liabilities⁽²⁾		-			(35	)		-			(70	)		-			(35	)		-			(105	)
Discontinued operations:
Gain on debt extinguishment		-			-			-			(13,615	)		-			-			-			(13,615	)
Accretion of discounts and amortization of premiums on debt investments		-			-			-			-			-			-			-			-
Mark-to-market adjustments⁽³⁾		(2,687	)		4,782			18,611			1,665			1,472			609			20,083			2,408
Non-recurring (losses)/gains from extinguishment/sale of debt, derivatives or securities holdings⁽⁴⁾		230			314			230			625			-			94			230			719

MFFO		3,226			5,250			6,838			10,329			3,730			5,582			10,568			16,045
Straight-line rent⁽⁵⁾		6			8			13			4			89			29			102			33
MFFO - IPA recommended format⁽⁶⁾	$	3,232		$	5,258		$	6,851		$	10,333		$	3,819		$	5,611		$	10,670		$	16,078


Net income/(loss)	$	6,269		$	(1,113	)	$	(12,409	)	$	19,114		$	1,319		$	4,686		$	(11,090	)	$	23,800
Less: income attributable to noncontrolling interests		(458	)		(305	)		(741	)		(1,159	)
Less: (income)/loss attributable to noncontrolling interests														(1,094	)		(809	)		(1,835	)		(1,968	)
Net income/(loss) applicable to Company's common shares	$	5,811		$	(1,418	)	$	(13,150	)	$	17,955		$	225		$	3,877		$	(12,925	)	$	21,832
Net income/(loss) per common share, basic and diluted	$	0.26		$	(0.07	)	$	(0.59	)	$	0.76		$	0.01		$	0.17		$	(0.58	)	$	0.94

FFO	$	5,683		$	189		$	(12,003	)	$	21,746		$	2,258		$	4,914		$	(9,745	)	$	26,660
Less: FFO attributable to noncontrolling interests		(988	)		(492	)		(314	)		(1,539	)		(544	)		(764	)		(857	)		(2,307	)
FFO attributable to Company's common shares	$	4,695		$	(303	)	$	(12,317	)	$	20,207		$	1,714		$	4,150		$	(10,602	)	$	24,353
FFO per common share, basic and diluted	$	0.21		$	(0.01	)	$	(0.55	)	$	0.87		$	0.08		$	0.18		$	(0.47	)	$	1.05

MFFO - IPA recommended format	$	3,232		$	5,258		$	6,851		$	10,333		$	3,819		$	5,611		$	10,670		$	16,078

Less: MFFO attributable to noncontrolling interests		(1,078	)		(798	)		(1,955	)		(1,375	)		(887	)		(1,026	)		(2,842	)		(2,402	)
MFFO attributable to Company's common shares	$	2,154		$	4,460		$	4,896		$	8,958		$	2,932		$	4,585		$	7,828		$	13,676

Weighted average number of common shares outstanding, basic and diluted		22,333			23,174			22,376			23,324			22,304			22,859			22,351			23,168

	From inception through		From inception through
	June 30, 2020		September 30, 2020
FFO attributable to Company’s common shares	$	223,724	$	225,439
Distributions paid	$	239,884	$	243,796

Exhibit Number		Description

31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15 d-14(a) of the Securities Exchange Act, as amended.

32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551 this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”

32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551 this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”

101*		XBRL (eXtensible Business Reporting Language). The following financial information from Lightstone Value Plus Real Estate Investment Trust, Inc. on Form 10-Q for the quarter ended ~~June~~September 30, 2020, filed with the SEC on ~~August 7,~~November 10, 2020, formatted in XBRL includes: (1) Consolidated Balance Sheets, (2) Consolidated Statements of Operations, (3) Consolidated Statements of Comprehensive Income, (4) Consolidated Statements of Stockholders’ Equity, (5) Consolidated Statements of Cash Flows and (6) the Notes to the Consolidated Financial Statement.

	LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC.

Date: ~~August 7,~~November 10, 2020	By:	/s/ David Lichtenstein
		David Lichtenstein
		Chairman and Chief Executive Officer (Principal Executive Officer)