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

Notes to Consolidated Financial Statements (Unaudited)

(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

	As of December 31, 2020
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable Securities:
Equity securities:
Equity Securities, primarily REITs	$	9,386	$	2,054	$	(575	)	$	10,865
Marco OP Units and Marco II OP Units		19,227		0		(1,383	)		17,844
		28,613		2,054		(1,958	)		28,709
Debt securities:
Corporate Bonds		16,964		546		(148	)		17,362

Total	$	45,577	$	2,600	$	(2,106	)	$	46,071

~~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
Adjusted Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value
Marketable Securities:
Equity securities:
Equity Securities, primarily REITs $ 8,591 $ - $ (1,392 ) $ 7,199
Marco OP Units and Marco II OP Units 19,227 - (4,919 ) 14,308
27,818 - (6,311 ) 21,507
Debt securities:
Corporate Bonds 16,964 - (1,062 ) 15,902

Total $ 44,782 $ - $ (7,373 ) $ 37,409

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

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

As of both June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, 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~~$130.48 per share and ~~$148.96~~$85.28 per share as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, 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~~gains of ~~approximately $21.3~~ $5.1 million and $2.7 million, for the three months ended June 30, 2021 and 2020, respectively, and an unrealized gain of ~~approximately $2.7~~$14.1 million ~~on its marketable equity securities during~~for the ~~first~~six months ended June 30, 2021 and ~~second quarters of 2020, respectively, which resulted in a net~~an unrealized loss of ~~approximately $18.6~~$18.6 million for the six months ended June 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 million, of which approximately $4.9 million was attributable to its Marco OP Units and Marco II OP Units, as of June 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 and second quarters of 2020, the Company’s experienced a holding loss of approximately $2.3 million and a holding gain of approximately $0.8 million on its available for sale marketable debt securities, respectively, which resulted in a net holding loss of approximately $1.5 million for the six months ended June 30, 2020. These holding gains and losses are included in the Company’s consolidated statements of comprehensive income. As a result, the Company’s marketable debt securities had an aggregate net unrealized loss of approximately $1.1 million as of June 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 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.nature. 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 three and six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, the Company did not recognize any impairment charges on its investments in marketable debt securities. As of June 30, ~~2020,~~2021, 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 (Unaudited)

(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:

Schedule of Marketable securities measured at fair value on a recurring basis
	Fair Value Measurement Using
As of June 30, 2021	Level 1		Level 2		Level 3		Total

Marketable Securities:
Equity Securities, primarily REITs	$	14,843	$	0	$	0	$	14,843
Marco OP and OP II Units		0		27,302		0		27,302
Corporate Bonds		0		18,112		0		18,112
Total	$	14,843	$	45,414	$	0	$	60,257

	Fair Value Measurement Using								Fair Value Measurement Using
As of June 30, 2020	Level 1		Level 2		Level 3		Total
As of December 31, 2020									Level 1		Level 2		Level 3		Total

Marketable Securities:
Equity Securities, primarily REITs	$	7,199	$	-	$	-	$	7,199	$	10,865	$	0	$	0	$	10,865
Marco OP and OP II Units		-		14,308		-		14,308		0		17,844		0		17,844
Corporate Bonds		-		15,902		-		15,902		0		17,362		0		17,362
Total	$	7,199	$	30,210	$	-	$	37,409	$	10,865	$	35,206	$	0	$	46,071

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:

Schedule of contractual maturity
	As of June 30, 2020		June 30, 2021
Due in 1 year	$	1,800	$	2,007
Due in 1 year through 5 years		4,096		4,435
Due in 5 years through 10 years		-		0
Due after 10 years		10,006		11,670
Total	$	15,902	$	18,112

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~~LIBOR + 0.85% ~~(1.01%~~ (0.95% as of June 30, ~~2020)~~2021) 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 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

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

Notes to Consolidated Financial Statements (Unaudited)

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

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~~is scheduled to mature on ~~June 19,~~October 9, 2021 and bears interest at ~~Libor plus~~LIBOR + 1.35% ~~(1.51%~~ (1.45% as of June 30, ~~2020)~~2021). 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 30, ~~2020,~~2021, the amount of borrowings available to be drawn under the Line of Credit was approximately ~~$7.9~~$15.0 million. No amounts were outstanding under the Line of Credit as of both June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. The Company intends to seek to extend the Line of Credit on or before its scheduled maturity date.

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

6. Notes ~~to Consolidated Financial Statements~~Receivable

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

~~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%~~(1.00% - ~~1.50%~~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 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 months ended June 30, 2021 and 2020, both the NR Subsidiaries and the NR Affiliates made aggregate contributions to the NR Joint Ventures of ~~approximately $3.5~~$40 and $3.5 million, and $3.5 million, respectively, principally to fund their respective shares of the Joint Venture Promissory Notes that were originated. During the six months ended June 30, 2019, the NR Subsidiaries and the NR Affiliates made aggregate contributions to the NR Joint Ventures of approximately $11.7 million and $12.0 million, respectively, principally to fund their respective shares of the Joint Venture Promissory Notes that were originated.respectively. Additionally, during the six months ended June 30, 2021 and 2020, the NR Joint Ventures made aggregate distributions ~~of approximately $1.1 million~~ to both the NR Subsidiaries and NR Affiliates ~~based on their respective membership interests.. During the six months ended June 30, 2019, the NR Joint Ventures made aggregate distributions~~ of ~~approximately $0.5~~$7.9 million ~~to both the NR Subsidiaries~~ and ~~NR Affiliates,~~$1.1 million, respectively, based on their respective membership interests.

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

Notes to Consolidated Financial Statements (Unaudited)

(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:

Summary of Notes Receivable
												As of June 30, 2021
	Company’s			Loan							Contractual						Unamortized
	Ownership			Commitment		Origination			Origination	Maturity	Interest	Outstanding					Origination			Carrying		Unfunded
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	September 11, 2021	Libor plus 7.50% (Floor of 11%)	$	4,076	$	(113	)	$	(8	)	$	3,955	$	0

LSC 162nd Capital II LLC		45.45	%		9,166		1.50	%	February 5, 2019	September 11, 2021	Libor plus 7.50% (Floor of 11%)		8,824		(244	)		(18	)		8,562		0

LSC 1543 7th LLC		50	%		20,000		1.00	%	August 27, 2019	August 26, 2021	Libor plus 5.40% (Floor of 7.90%)		20,000		0			(33	)		19,967		0

LSC 1650 Lincoln LLC		50	%		24,000		1.00	%	August 27, 2019	August 26, 2021	Libor plus 5.40% (Floor of 7.90%)		24,000		0			(40	)		23,960		0

LSC 11640 Mayfield LLC		50	%		18,000		1.50	%	March 4, 2020	March 1, 2022	Libor plus 10.50% (Floor of 12.50%)		10,750		(1,694	)		(91	)		8,965		7,250

LSC 87 Newkirk LLC⁽¹⁾		50	%		42,700		1.25	%	July 2, 2020	December 1, 2021	Libor plus 6.00% (Floor of 7.00%)		0		0			0			0		0

Total												$	67,650	$	(2,051	)	$	(190	)	$	65,409	$	7,250

(1)

Repaid in full during April 2021

												As of December 31, 2020
	Company’s 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

LSC 162nd Capital I LLC		45.45	%	$	4,234		1.50	%	February 5, 2019	September 11, 2021	Libor plus 7.50% (Floor of 11%)	$	4,076	$	(338	)	$	(33	)	$	3,705	$	0

LSC 162nd Capital II LLC		45.45	%		9,166		1.50	%	February 5, 2019	September 11, 2021	Libor plus 7.50% (Floor of 11%)		8,824		(732	)		(71	)		8,021		0

LSC 1543 7th LLC		50	%		20,000		1.00	%	August 27, 2019	August 26, 2021	Libor plus 5.40% (Floor of 7.90%)		20,000		0			(33	)		19,967		0

LSC 1650 Lincoln LLC		50	%		24,000		1.00	%	August 27, 2019	August 26, 2021	Libor plus 5.40% (Floor of 7.90%)		24,000		0			(40	)		23,960		0

LSC 11640 Mayfield LLC		50	%		18,000		1.50	%	March 4, 2020	March 1, 2022	Libor plus 10.50% (Floor of 12.50%)		10,750		(2,369	)		(158	)		8,223		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		(1,597	)		(355	)		40,748		0

Total												$	110,350	$	(5,036	)	$	(690	)	$	104,624	$	7,250

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

Notes to Consolidated Financial Statements (Unaudited)

(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
Ownership Commitment Origination Origination Maturity Interest Outstanding Loan Origination Carrying Unfunded
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 $ -

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 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 -

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 -

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

Total $ 67,650 $ (3,642 ) $ (423 ) $ 63,585 $ 7,250

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:

Summarizes the interest earned for each of the Joint Venture Promissory Notes
	For the Three Months Ended June 30,				For the Six Months Ended June 30,				For the Three Months Ended June 30,				For the Six Months Ended June 30,
Joint Venture/Lender	2020		2019		2020		2019		2021		2020		2021		2020

LSC 162nd Capital I LLC	$	249	$	123	$	363	$	197	$	126	$	249	$	250	$	363

LSC 162nd Capital II LLC		540		266		785		427		272		540		541		785

LSC 47-16 Greenpoint LLC		-		290		-		290

LSC 1543 7th LLC		436		-		873		-		449		436		894		873

LSC 1650 Lincoln LLC		524		-		1,048		-		539		524		1,073		1,048

LSC 11640 Mayfield LLC		373		-		488		-		373		373		743		488

LSC 11640 Newkirk LLC										790		0		1,585		0

Total	$	2,122	$	679	$	3,557	$	914	$	2,549	$	2,122	$	5,086	$	3,557

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

Notes to Consolidated Financial Statements
(Unaudited)

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

~~Mortgages Payable, Net~~

7. Mortgages Payable, Net

Mortgages payable, net consists of the following:

Schedule of Mortgages Payable
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 June 30, 2021			Maturity Date	Amount Due at Maturity		As of June 30, 2021			As of December 31, 2020

Gantry Park Landing	4.48%		4.48	%		November 2024	$	65,317	$	71,505		$	72,128		4.48%		4.48	%	November 2024	$	65,317	$	70,207		$	70,868

Lower East Side Moxy Hotel															Repaid in full on June 3, 2021						-		-			35,168

Lower East Side Moxy Hotel	LIBOR + 4.25%		6.62	%		December 2020		35,168		35,168			34,828		LIBOR + 7.50% (floor of 8.00%)		8.00	%	June 2024		35,610		35,610			-

Exterior Street Project	4.50%		4.50	%		October 2020		35,000		35,000			35,000		LIBOR + 2.25%		2.37	%	April 2022		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	%	August 2021		25,000		25,000			25,000

87 Newkirk Note Receivable															Repaid in full on April 5, 2021						-		-			27,500

Total mortgages payable			5.09	%			$	160,485		166,673			166,956				4.94	%		$	160,927		165,817			193,536

Less: Deferred financing costs										(1,245	)		(2,251	)									(7,029	)		(1,151	)

Total mortgages payable, net									$	165,428		$	164,705									$	158,788		$	192,385

~~Libor~~

LIBOR as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 was ~~0.16%~~0.11% and ~~1.76~~0.14%, 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 the 87 Newkirk Joint Venture, entered into a $27.5 million loan (the “87 Newkirk Loan”) which bore interest at LIBOR + 3.80%, subject to a 4.80% floor, and was scheduled to initially mature on January 1, 2022. The 87 Newkirk Loan required monthly interest-only payments with the outstanding principal balance due in full at its maturity date and was collateralized by the 87 Newkirk Note Receivable. On April 5, 2021, the 87 Newkirk Joint Venture repaid the 87 Newkirk Loan in full using a portion of the proceeds it received from the repayment in full of the 87 Newkirk Note Receivable.

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~~$25.0 million loan ~~(the” Santa~~(the “Santa Monica Loan”) which bears interest at ~~LIBOR+~~LIBOR + 3.75%, subject to a 5.50% floor, and is currently scheduled to ~~initially~~ mature on August ~~12, 2020~~26, 2021, but ~~may be further extended through the exercise of two,~~has one remaining six-month extension ~~options, which the Santa Monica Joint Ventures may exercise by providing the lender with advance written notice.~~option, subject to satisfaction of certain conditions . The Santa Monica Loan requires monthly ~~interest~~interest-only payments ~~through~~with the outstanding principal balance due at its maturity date and is cross-collateralized by two nonrecourse loans originated by the Santa Monica Joint ~~Ventures.~~Ventures (see Note 6).

On March 29, 2019, the Company entered into the ~~$35.0~~ $35.0 million Exterior Street Loan which ~~bears~~initially bore interest at ~~4.50%~~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~~ exercised ~~the first of two six-month~~both extension options, the ~~current~~ maturity date ~~is now~~was extended to 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~~interest-only payments through its maturity date and is collateralized by the Exterior Street Project. During April 2021, the maturity date of the Exterior Street Loan was further extended to April 9, 2022.

On December 3, 2018, the Company entered into a mortgage loan which was collateralized by the Lower East Side Moxy Hotel (the ~~“Bowery~~“Lower East Side Moxy Mortgage”) for up to $35.6 million. The ~~Bowery~~Lower East Side Moxy Mortgage ~~has a~~had an initial term of two years, ~~bears~~bore interest at LIBOR+4.25%, subject to a 6.63% floor, and ~~requires~~required monthly interest-only payments through its stated maturity with the entire unpaid balance due upon maturity. ~~Through~~In November 2020 the maturity date of Lower East Side Moxy Mortgage was extended to March 3, 2021 and in March 2021 it was further extended until June 3, 2021, on which date it was then repaid in full as discussed below.

On June 3, 2021, the Company, through a wholly owned subsidiary, closed on a recourse construction loan facility (the “Moxy Senior Loan”) with MSD Partners, L.P. (“MSD”) providing for up to $90 million of funds for the development and construction of the Lower East Side Moxy Hotel. At closing, $35.6 million of proceeds were advanced under the Moxy Senior Loan and used to repay in full the Lower East Side Moxy Mortgage. The Moxy Senior Loan bears interest at LIBOR plus 7.50%, subject to an 8.00% floor, and initially matures on June 3, 2024, with two one-year extension options subject to the satisfaction of certain conditions. The Moxy Senior Loan is collateralized by the Lower East Side Moxy Hotel. As of June 30, ~~2020,~~2021, the outstanding principal balance of the Moxy Senior Loan was $35.6 million and the remaining availability under the facility was up to $54.4 million.

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

Notes to Consolidated Financial Statements (Unaudited)

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

Simultaneously on June 3, 2021, the Company, ~~received aggregate proceeds~~through the same wholly owned subsidiary, also entered into a mezzanine construction loan facility (the “Moxy Junior Loan” and together with the Moxy Senior Loan, the “Moxy Construction Loans”) with Lionheart Strategic Management LLC (“Lionheart”) providing for up to $40 million of ~~$35.2 million~~additional funds for the development and construction of the Lower East Side Moxy Hotel. No advances had been made 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,~~Moxy Junior Loan as of June 30, ~~2020.~~2021. The Moxy Junior Loan bears interest at LIBOR plus 13.50%, subject to a 14.00% floor, and initially matures on June 3, 2024, with two one-year extension options subject to the satisfaction of certain conditions. The Moxy Junior Loan is subordinate to the Moxy Senior loan but also collateralized by the Lower East Side Moxy Hotel. The Company has provided a principal guarantee of up to $7.0 million with respect to the Moxy Junior Loan.

Future draws to cover the costs associated with the development and construction of the Lower East Side Moxy Hotel will first be advanced under the Moxy Junior Loan until it has been fully funded and thereafter, funds will be advanced under the remaining availability of the Moxy Senior Loan.

In connection with the Moxy Construction Loans, the Company has provided certain completion and carry cost guarantees. The Company has also entered into an interest rate cap agreement pursuant to which the LIBOR rate will be capped at 3.00% on the Moxy Senior Loan through June 3, 2024 at a cost of $0.2 million. Furthermore, in connection with the Moxy Construction Loans, the Company paid $5.3 million of loan fees and expenses and accrued $1.1 million of loan exit fees which are due at the initial maturity date and are included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets as of June 30, 2021.

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 30, ~~2020:~~2021:

Scheduled of Contractually Principal Maturities During Next Five Years
	2020		2021		2022		2023		2024		Thereafter		Total		2021		2022		2023		2024		2025		Thereafter		Total
Principal maturities	$	95,805	$	1,328	$	1,389	$	1,454	$	66,697	$	-	$	166,673	$	25,667	$	36,389	$	1,454	$	102,307	$	0	$	0	$	165,817

Less: Deferred financing costs														(1,245)														(7,029	)

Total principal maturities, net													$	165,428													$	158,788

Certain of the Company’s debt agreements require the maintenance of certain ratios, including debt service coverage. As of June 30, ~~2020,~~2021, 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~~$35.0 million as of June 30, ~~2020) initially matured~~2021) 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.~~2022. 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~~ $25.0 million as of June 30, ~~2020) initially matures~~2021) is scheduled to mature on August ~~12, 2020 but has two, six-month extension options, which the Company can exercise by providing the lender with advance notice.~~26, 2021. The Company currently intends to exercise the remaining six-month extension ~~options or refinance~~option on 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 30, 2020) matures on December 3, 2020. The Company currently intends to refinance the Bowery Mortgage on or before its maturity date.~~

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.

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

Notes to Consolidated Financial Statements (Unaudited)

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

7.8.

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 ~~2020~~the remainder of 2021 and ~~2026.~~2025.

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 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.

As of June 30, ~~2020,~~2021, 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		2021		2022		2023		2024		Thereafter		Total
Schedule of Future Minimum Rental Payments														Schedule of Future Minimum Rental Payments
2021														2021	2022		2023		2024		2025		Thereafter		Total
$	913	$	1,406	$	1,165	$	1,114	$	457	$	230	$	5,285	739	$	605	$	524	$	338	$	118	$	0	$	2,324

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 million for the three and six months ended June 30, 2020, respectively, and, lease income of approximately $0.4 million and $0.7 million for the three and six months ended June 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.

8.9.

~~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.

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.

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

Revenues $ - $ 409

Operating expenses - 317
Operating income - 92

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

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

~~Net Earnings Per Share~~Equity

Share Repurchase Program

The Company’s share repurchase program (the “SRP”) may provide its stockholders with limited, interim liquidity by enabling them to sell their shares of common stock back to the Company, subject to restrictions.

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

Effective March 15, 2021 and May 14, 2021, the Board of Directors partially reopened the SRP to allow, subject to various conditions as set forth below, for redemptions submitted in connection with a stockholder’s death and hardship, respectively, and set the price for all such purchases to $11.18, which is 100% of the NAV per Share. Deaths that occurred subsequent to January 1, 2020 are eligible for consideration. Beginning January 1, 2022, requests for redemptions in connection with a stockholder’s death must be submitted and received by the Company within one year of the stockholder’s date of death for consideration.

On an annual basis, the Company will not redeem in excess of 0.5% of the number of shares outstanding as of the end of the preceding year for either death or hardship redemptions, respectively. Redemption requests are expected to be processed on a quarterly basis and may be subject to pro ration if either type of redemption requests exceed the annual limitation.

Net Earnings Per Share

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

10.

Related Party Transactions

The Company has various agreements, including an advisory agreement, 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. Amounts the Company owes to the Advisor and its affiliated entities are principally for asset management fees, and are classified as due to related parties on the consolidated balance sheets.

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

Notes to Consolidated Financial Statements (Unaudited)

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

The Company, 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

Amount recorded in pursuant to related party arrangement
	For the Three Months Ended				For the Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020

Asset management fees (general and administrative costs)	$	211	$	215	$	455	$	430
Property management fees (property operating expenses)		72		103		168		213
Development fees and cost reimbursement⁽¹⁾		1,603		308		1,913		696
Total	$	1,886	$	626	$	2,536	$	1,339

(1)

Development fees and development costs that the Company reimburses its Advisor for are capitalized and are included in the carrying value of the associated development project and classified as construction in progress on the consolidated balance sheets.

* Generally, capitalizedThe advisory agreement has a one-year term and ~~amortized over~~is renewable for an unlimited number of successive one-year periods upon the ~~estimated useful life~~mutual consent of the ~~associated asset.~~ Advisor and the Company’s independent directors. Payments to the Advisor or its affiliates may include asset acquisition fees and the reimbursement of acquisition-related expenses, development fees and the reimbursement of development-related costs, financing coordination fees, asset management fees or asset management participation, and construction management fees. The Company may also reimburse the Advisor and its affiliates for actual expenses it incurs for administrative and other services provided for it. Upon the liquidation of the Company’s assets, it may pay the Advisor or its affiliates a disposition commission.

In connection with the Company’s Offering, Lightstone SLP, LLC 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 months ended June 30, ~~2020~~2021 and ~~2019,~~2020, distributions of $0.5 million and $1.0 million, respectively, were declared and paid on the SLP units.

Preferred Investments

The Company has ~~Preferred Investments~~entered into agreements with various related party entities that provide for it to make preferred contributions pursuant to certain instruments (the “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 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.distributions (see below for additional information). The fair value of these investments approximated their carrying values based on market rates for similar instruments.

~~During the six months ended June 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:

Summary of the Preferred Investments
				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 June 30,		As of December 31,		Three Months Ended June 30,				Six Months Ended June 30,
Preferred Investments	Dividend Rate			June 30, 2020		December 31, 2019		2020		2019		2020		2019		Dividend Rate			2021		2020		2021		2020		2021		2020
40 East End Avenue		12	%	$	6,000	$	17,000	$	182	$	910	$	518	$	1,810		12	%	$	6,000	$	6,000	$	182	$	182	$	362	$	518
30-02 39^th Avenue		12	%		-		-		-		-		-		140
East 11th Street		12	%		8,500		8,500		258		807		519		1,907		12	%		8,500		8,500		258		258		513		519
Miami Moxy		12	%		-		9,000		-		558		45		1,090		12	%		0		0		0		0		0		45
Total				$	14,500	$	34,500	$	440	$	2,275	$	1,082	$	4,947				$	14,500	$	14,500	$	440	$	440	$	875	$	1,082

Note:

(1)

Included in interest and dividend income on the consolidated statements of operations.

The Joint Venture

The Company has a ~~2.5%~~2.5% membership interest in the Joint Venture, which holds ownership interests in seven ~~hotels as of both June 30, 2020 and December 31, 2019, the~~hotels. The carrying value of its investment was ~~$1.2~~$1.0 million and $1.1 million, as of June 30, 2021 and December 31, 2020, respectively, which is included in investment in related parties on the consolidated balance sheets.

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

Notes to Consolidated Financial Statements (Unaudited)

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

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.

The carrying amount and estimated fair value (in millions) of the Company’s mortgage debt is summarized as follows:

Schedule of mortgage debt
	As of June 30, 2021				As of December 31, 2020
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Mortgages payable	$	165.8	$	168.5	$	193.5	$	198.0

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

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.

13. Subsequent Events

~~13.~~

~~Subsequent Events~~

Distribution Payment

On July 15, ~~2020,~~2021, the distribution for the three-month period ending June 30, ~~2020~~2021 of ~~$3.9~~ $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”),~~DRIP, at a discounted price of ~~$11.23~~$10.62 per share, equal to ~~95%~~95% of the Company’s most recently published estimated net asset value per share of ~~$11.82~~$11.18 as of September 30, ~~2019.~~2020.

Distribution Declaration

On August ~~6, 2020,~~9, 2021, the Company’s Board of Directors authorized and the Company declared a distribution of ~~$0.175~~$0.175 per share for the quarterly period ending ~~September~~June 30, ~~2020.~~2021. The quarterly distribution is the pro rata equivalent of an annual distribution of ~~$0.70~~ $0.70 per share, or an annualized rate of 7.0% assuming a purchase price of ~~$10.00~~$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 ~~6, 2020,~~9, 2021, the Board of Directors declared a quarterly distribution for the quarterly period ending ~~September~~June 30, ~~2020~~2021 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 20

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 30, ~~2020,~~2021, we have ownership interests in (i) two consolidated operating properties, (ii) three consolidated development properties (including the Santa Clara Data Center, which is classified as held for sale) 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~~property containing 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~~containing 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 30, 2020.~~Center. We also hold a 2.5% ownership interest in seven hotel properties through a joint venture (the “Joint Venture”). which we account for using a measurement alternative under which the Joint Venture is measured at cost, adjusted for observable price changes and impairments, if any. 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~~preferred contributions that were made pursuant to 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~~preferred investments in related parties 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 2020, the~~The World Health Organization declared COVID-19 ~~pandemic continued to evolve on both~~ a global pandemic on March 11, 2020 and ~~national level. With respect to~~since that time many of the ~~Unites States, many states have begun a phased approach as to the reopening of businesses and venues which have been subject to various~~previously imposed restrictions and other measures ~~including mandatory closures, quarantines, limitations on travel, “shelter~~which were instituted in ~~place” rules~~response have been subsequently reduced or lifted. However, the COVID-19 pandemic remains highly unpredictable and ~~other measures. While certain states have begun to reduce and/or lift restrictions, the situation remains both~~ dynamic and ~~unpredictable.~~its duration and extent continue to be dependent on various developments, such as the emergence of variants to the virus that may cause additional strains of COVID-19, the administration and ultimate effectiveness of vaccines, and the eventual timeline to achieve a sufficient level of herd immunity among the general population. Accordingly, the COVID-19 pandemic may continue to have negative effects on the health of the U.S. economy for the foreseeable future.

As a result of ~~previous~~previously imposed 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 onpandemic, the ~~operating performance of the St. Augustine Outlet Center’s tenancy, especially~~property’s occupancy declined and also during ~~the closure period,~~2021 we ~~have~~ provided forbearance of certain rent payments to various ~~tenants,~~tenants. Additionally, we have seen deterioration in both the occupancy and rental rates for Gantry Park Landing, which ~~have not had a material impact~~is located on ~~our results from operations or financial condition.~~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.

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

If our 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~~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.

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, 2021

Annualized Revenues based on rents at

June 30, 2021

Annualized Revenues per square foot/unit at June 30, 2021

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

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

328,125

GLA

73.5

$1.9 million

7.68

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

85.9

$8.0 million

46,584

unit

Annualized revenue is defined as the minimum monthly payments due as of June 30, ~~2020~~2021 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 30, ~~2020.~~2021.

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

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”).

The following is a summary of the amounts incurred and capitalized to construction in progress for the Lower East Side Moxy Hotel and the Exterior Street Project as of June 30, 2021:

Development Project
Lower East Side Moxy Hotel	$	115,274
Exterior Street Project		83,916
Total	$	199,190

Held for Sale and Disposition of the Santa Clara Data Center

On January 10, 2019, we acquired a parcel of land located at 2175 Martin Avenue, Santa Clara, ~~CA, on which~~California (the “Martin Avenue Land”). Subsequently, we ~~are developing~~completed certain activities associated with the potential development and ~~constructing~~construction of a data center (the “Santa Clara Data Center”). on the Martin Avenue Land.

~~The following is a summary~~As of ~~the amounts~~ December 31, 2020, we incurred and capitalized to construction in progress ~~for~~aggregate costs of $13.4 million related to the Santa Clara Data Center, which were included in construction in progress on our ~~development projects~~consolidated balance sheet as of that date. Additionally, during the three and six months ended June 30, ~~2020:~~2020, $0.1 million and $0.2 million, respectively, of interest was capitalized to construction in progress for the Santa Clara Data Center. No interest was capitalized for the Santa Clara Data Center during the 2021 periods.

Development Projects
Lower East Side Moxy Hotel $ 83,505
Exterior Street Project 70,056
Santa Clara Data Center 13,317
Total Developments Projects $ 166,878

~~Results of Operations~~

~~Dispositions - Continuing Operations~~

~~The following disposition did not represent a strategic shift that had a major effect on our operations~~On May 28, 2021, we 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”~~Prime Data Centers, Corp. (the “Santa Clara Data Center Buyer”), to an ~~unrelated~~unaffiliated 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~~

~~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~~

~~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~~a purchase and sale agreement (the ~~“Assignment Agreement”~~“Santa Clara Data Center PSA”) pursuant to which we ~~assigned our membership interests~~would dispose of the Santa Clara Data Center, to the Santa Clara Data Center Buyer for a contractual sales price of $13.9 million.

During the second quarter of 2021, the Santa Clara Data Center met the criteria to be classified as held for sale and therefore, its associated assets of $13.4 million are classified as held for sale in the ~~Louisiana Assets~~consolidated balance sheet as of June 30, 2021.

Subsequently, on July 7, 2021, we completed the disposition of the Santa Clara Data Center pursuant 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~~Santa Clara Data Center PSA.

Results 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.Operations

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 30, ~~2020~~2021 vs. June 30, ~~2019~~2020

Consolidated ~~– Continuing Operations~~

Revenues

Our revenues are comprised of rental income and tenant recovery income. Total revenues decreased by ~~approximately $0.9~~ $0.5 million to ~~$3.0~~$2.5 million for the three months ended June 30, ~~2020~~2021 compared to ~~$3.9~~$3.0 million for the same period in ~~2019. Excluding the effect of the disposition of DePaul Plaza, revenues decreased by $0.3 million~~2020. This decrease was primarily attributable to reduced occupancy ~~at our~~ ~~St. Augustine Outlet Center~~and rental rates for Gantry Park Landing during the ~~2020~~2021 period resulting from the COVID-19 pandemic.

Property operating expenses

Property operating expenses ~~decreased by approximately $0.2 million to~~were $0.9 million for both 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.~~2021 and 2020.

Real estate taxes

Real estate taxes ~~decreased by approximately $0.3 million to~~were $0.1 million for both 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.~~2021 and 2020.

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.~~

~~Depreciation and amortization~~

~~Depreciation and amortization~~ decreased by approximately $0.3 million to $1.0 million for the three months ended June 30, 2020 compared to $1.3 million for the same period in 2019. Excluding the effect of the disposition of DePaul Plaza, depreciation and amortization was relatively flat.

~~Interest and dividend income~~

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

~~Interest expense~~

~~Interest expense, including amortization of deferred financing costs, increased by approximately $0.3~~$0.4 million to $0.6 million for the three months ended June 30, ~~2020~~2021 compared to ~~$0.3~~$1.0 million for the same period in ~~2019. This~~2020 principally due to a decrease in bad debt expense.

Depreciation and amortization

Depreciation and amortization increased by $0.2 million to $1.2 million for the three months ended June 30, 2021 compared to $1.0 million for the same period in 2020.

Interest and dividend income

Interest and dividend income increased by $0.7 million to $3.6 million for the three months ended June 30, 2021 compared to $2.9 million for the same period in 2020. The increase primarily reflects higher interest income earned on our notes receivable of $0.4 million and higher interest and dividend income earned on our available cash and investments in marketable securities of $0.3 million.

Interest expense

Interest expense, ~~resulting from an increase in~~including amortization of deferred financing costs, was $0.6 million for both the ~~amount of debt outstanding during the 2020 period.~~three months ended June 30, 2021 and 2020. During the three months ended June 30, 2021 and 2020, ~~and 2019, $1.8~~$1.1 million and ~~$2.4~~$1.2 million, respectively, of interest was capitalized to construction in progress for our development projects.

Gain on disposition of real estate

On May 25, 2021, we completed the disposition of a parcel of land adjacent to the St. Augustine Outlet Center for a contractual sales price of $6.8 million and recognized a gain on the disposition of real estate of approximately $3.6 million during the second quarter of 2021.

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~~gains on marketable equity securities

During the three months ended June 30, 2021, we recorded unrealized gains on marketable equity securities of $5.1 million and during the three months ended June 30, 2020, we recorded an unrealized ~~gain~~gains on marketable equity securities of $2.7 ~~million and during the three months ended June 30, 2019, we recorded an~~million. These unrealized ~~loss on marketable equity securities of $4.8 million which~~gains 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 Months Ended June 30, ~~2020~~2021 vs. June 30, ~~2019~~2020

Consolidated – Continuing Operations

Revenues

Our revenues are comprised of rental income and tenant recovery income. Total revenues decreased by approximately ~~$1.7~~$0.9 million to ~~$6.2~~$5.3 million for the six months ended June 30, ~~2020~~2021 compared to ~~$7.9~~$6.2 million for the same period in ~~2019. Excluding the effect of the disposition of DePaul Plaza, revenues decreased by $0.3 million~~2020. This decrease was primarily attributable to reduced occupancy ~~at our~~ ~~St. Augustine Outlet Center~~and rental rates for Gantry Park Landing during the ~~2020~~2021 period resulting from the COVID-19 pandemic.

Property operating expenses

Property operating expenses decreased slightly by approximately ~~$0.3~~$0.1 million to ~~$2.0~~$1.9 million for the six months ended June 30, ~~2020~~2021 compared to ~~$2.3~~$2.0 million for the same period in ~~2019. Excluding the effect of the disposition of DePaul Plaza, property operating expenses were relatively flat.~~2020.

Real estate taxes

Real estate taxes were $0.2 million for both the six months ended June 30, 2021 and 2020.

General and administrative expenses

General and administrative expenses decreased by ~~approximately~~ $0.5 million to ~~$0.2~~$1.2 million for the six months ended June 30, ~~2020~~2021 compared to ~~$0.7~~$1.7 million for the same period in ~~2019. Excluding the effect of the disposition of DePaul Plaza, real estate taxes decreased slightly~~2020 principally due to a decrease increase in bad debt expense.

Depreciation and amortization

Depreciation and amortization increased by ~~$0.1 million.~~

~~General and administrative expenses~~

~~General and administrative expenses increased slightly by~~ ~~approximately $0.1~~$0.3 million to ~~$1.7~~$2.3 million for the six months ended June 30, ~~2020~~2021 compared to ~~$1.6~~$2.0 million for the same period in ~~2019.~~2020.

Interest and dividend income

~~Depreciation~~

Interest and ~~amortization~~

~~Depreciation and amortization~~ ~~decreased~~dividend income increased by approximately ~~$0.6~~$1.4 million to ~~$2.0~~$7.2 million for the six months ended June 30, ~~2020~~2021 compared to ~~$2.6~~$5.8 million for the same period in ~~2019. Excluding the effect of the disposition of DePaul Plaza, depreciation and amortization decreased slightly by $0.1 million.~~

~~Interest and dividend income~~

~~Interest and dividend income~~ ~~decreased by approximately $1.9 million to $5.8 million for the six months ended June 30, 2020 compared to $7.7 million for the same period in 2019.~~2020. The ~~decrease~~increase primarily reflects ~~lower investment income of $3.9 million from our~~ ~~Preferred Investments~~ ~~and a decrease in dividend and interest income from our investments in marketable securities of $0.6 million partially offset by an increase in~~higher interest income earned on our notes receivable of ~~$2.6 million.~~$1.5 million, partially offset by lower investment income of $0.2 million from our Preferred Investments.

Interest expense

Interest expense, including amortization of deferred financing costs, increased slightly by ~~approximately $0.6~~$0.1 million to ~~$1.3~~$1.4 million for the six months ended June 30, ~~2020~~2021 compared to ~~$0.7~~$1.3 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.~~2020. During the six months ended June 30, 2021 and 2020, ~~and 2019, $4.1~~$1.9 million and ~~$3.9~~$2.8 million, respectively, of interest was capitalized to construction in progress for our development projects.

Gain on disposition of real estate

Unrealized ~~loss~~gains(losses) on marketable equity securities

During the six months ended June 30, 2021, we recorded unrealized gains on marketable equity securities of $14.1 million and during the six months ended June 30, 2020, ~~and 2019,~~ we recorded unrealized losses on marketable equity securities of $18.6 ~~million~~million. These unrealized gains and ~~$1.7 million, respectively, which~~losses represented the change in the fair value of our marketable equity securities during those periods.

Noncontrolling interests

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 30, 2020)~~selective asset dispositions and/or new borrowings and refinancing of existing debt. ~~To-date~~On June 3, 2021, we ~~have only performed limited~~closed on construction ~~activities on~~financings related to our Lower East Side Moxy Hotel development ~~projects~~project and we ultimately expect to obtain construction financing ~~for~~to also fund a substantial portion of ~~their~~Exterior Street development project’s future development costs. See “Development Activities” for additional information. However, there can be no assurance we will be successful in obtaining additional construction financing at favorable terms, if at all. As of June 30, ~~2020,~~2021, we had ~~approximately $72.5~~$24.4 million of cash ~~and cash equivalents~~ on hand, $1.8 million of restricted cash and ~~$37.4~~$60.3 million of marketable ~~securities, available for sale.~~securities. We believe that these cash resources along with construction financings 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~~12 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 30, ~~2020,~~2021, our total borrowings of ~~$166.7~~$165.8 million represented ~~52%~~49% 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~~.preferred investments in related parties. These borrowings may consist of single-property mortgages as well as mortgages cross-collateralized by a pool of properties. Such mortgages may be put in place either at the time we acquire a property or subsequent to our purchasing a property for cash. In addition, we may acquire properties that are subject to existing indebtedness where we choose to assume the existing mortgages. Generally, though not exclusively, we intend to seek to encumber our properties with debt, which will be on a non-recourse basis. This means that a lender’s rights on default will generally be limited to foreclosing on the property. However, we may, at our discretion, secure recourse financing or provide a guarantee to lenders if we believe this may result in more favorable terms. When we give a guaranty for a property owning entity, we will be responsible to the lender for the satisfaction of the indebtedness if it is not paid by the property owning entity.

We may also obtain lines of credit to be used to acquire properties or real estate-related assets. These lines of credit will be at prevailing market terms and will be repaid from proceeds from the sale or refinancing of properties, working capital or permanent financing. Our Sponsor or its affiliates may guarantee the lines of credit although they will not be obligated to do so. We expect that such properties may be purchased by our Sponsor’s affiliates on our behalf, in our name, in order to minimize the imposition of a transfer tax upon a transfer of such properties to us.

We have various agreements, including an advisory agreement, with the Advisor to pay certain fees in exchange for services performed by the Advisor and/or its affiliated entities. Additionally, our ability to secure financing and our real estate operations are dependent upon our Advisor and its affiliates to perform such services as provided in these agreements.

In addition to meeting working capital needs and ~~making~~ distributions, if any, to our stockholders, ~~and non-controlling interests,~~ our capital resources are used to make certain payments to our Advisor and ~~its affiliates,~~our Property Manager, 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. Additionally, the Operating Partnership may be required to make distributions to Lightstone SLP, LLC, an affiliate of the Advisor.

The advisory agreement has a one-year term and is renewable for an unlimited number of successive one-year periods upon the mutual consent of the Advisor and our independent directors.

The following table represents the fees incurred associated with the payments to be made to our Advisor and its affiliates 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

	For the Three Months Ended				For the Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020

Asset management fees (general and administrative costs)	$	211	$	215	$	455	$	430
Property management fees (property operating expenses)		72		103		168		213
Development fees and cost reimbursement⁽¹⁾		1,603		308		1,913		696
Total	$	1,886	$	626	$	2,536	$	1,339

(2)

Development fees and development costs that we reimburse our Advisor for are capitalized and are included in the carrying value of the associated development project and classified as construction in progress on the consolidated balance sheets.

* 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 months ended June 30, ~~2020~~2021 and ~~2019,~~2020, distributions of $0.5 million and $1.0 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,
	2021			2020

Net cash flows provided by operating activities	$	4,965		$	4,591
Net cash flows provided by investing activities		24,558			597
Net cash flows used in financing activities		(50,141	)		(10,108	)
Net change in cash, cash equivalents and restricted cash		(20,618	)		(4,920	)

Cash, cash equivalents and restricted cash, beginning of year		46,841			79,800
Cash, cash equivalents and restricted cash, end of the period	$	26,223		$	74,880

For the Six Months Ended
June 30,
2020 2019

Net cash flows provided by operating activities $ 4,591 $ 10,788
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 change in cash, cash equivalents and restricted cash (4,920 ) 9,377

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

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,. proceeds from selective asset dispositions and proceeds from the repayment of our outstanding notes receivable. 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)~~(vii) funding of notes receivable, (viii) scheduled debt service and ~~(ix)~~(viii) 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~~repayments of ~~properties or interests in properties,~~our outstanding notes receivable, (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~~$5.0 million for the six months ended June 30, ~~2020~~2021 consists of the following:

·●

cash inflows of approximately ~~$5.4~~$4.5 million from our net ~~loss~~income after adjustment for non-cash items; and

·●

cash ~~outflows~~inflows of approximately ~~$0.8~~$0.5 million associated with the net changes in operating assets and liabilities.

Investing activities

The net cash provided by investing activities of ~~$0.6~~$24.6 million for the six months ended June 30, ~~2020~~2021 consists primarily of the following:

·●

purchases of investment property of approximately ~~$12.9~~$24.5 million;

·●

~~net funding of~~proceeds from notes receivable of ~~$5.7~~$42.6 million; and

·●

proceeds from the sale of investment property of ~~$2.1 million;~~$6.5 million.

~~proceeds from~~ ~~Preferred Investments~~ ~~of $20.0 million; and~~

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

Financing activities

The net cash used in financing activities of approximately ~~$10.1~~$50.1 million for the six months ended June 30, ~~2020~~2021 is primarily related to the following:

·●

~~contributions received from noncontrolling interests~~debt principal payments of ~~$3.5~~$63.4 million;

·●

~~aggregate net payments on mortgages and~~proceeds from mortgage financing of $35.7 million;

●

payment of loan fees and expenses of ~~$0.4~~$5.6 million;

·●

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

distributions to our noncontrolling interests of ~~$2.4~~$9.2 million; and

·●

distributions to our common shareholders of $7.7 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~~Emmet 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 which was collateralized by the Lower East Side Moxy Hotel (the ~~“Bowery~~“Lower East Side Moxy Mortgage”) for approximately $35.6 million. The ~~Bowery~~Lower East Side Moxy Mortgage ~~has a~~had an initial term of two years, ~~bears~~bore interest at ~~LIBOR+~~LIBOR + 4.25%, subject to a 6.63% floor, and ~~requires~~required monthly interest-only payments through its stated maturity with the entire unpaid balance due upon maturity. ~~Through~~ In November 2020 the maturity date of Lower East Side Moxy Mortgage was extended to March 3, 2021 and in March 2021 it was further extended until June 3, 2021, on which date it was then repaid in full as discussed below.

On June 3, 2021, we, through a wholly owned subsidiary, closed on a recourse construction loan facility (the “Moxy Senior Loan”) with MSD Partners, L.P. (“MSD”) providing for up to $90 million of funds for the development and construction of the Lower East Side Moxy Hotel. At closing, $35.6 million of proceeds were advanced under the Moxy Senior Loan and used to repay in full the Lower East Side Moxy Mortgage. The Moxy Senior Loan bears interest at LIBOR plus 7.50%, subject to an 8.00% floor, and initially matures on June 3, 2024, with two one-year extension options subject to the satisfaction of certain conditions. The Moxy Senior Loan is collateralized by the Lower East Side Moxy Hotel. As of June 30, ~~2020, we received aggregate proceeds~~2021, the outstanding principal balance of ~~$35.2~~the Moxy Senior Loan was $35.6 million and the remaining availability under the ~~Bowery Mortgage. As~~facility was up to $54.4 million.

Simultaneously on June 3, 2021, we, through the same wholly owned subsidiary, also entered into a ~~result,~~mezzanine construction loan facility (the “Moxy Junior Loan” and together with the ~~Bowery Mortgage~~Moxy Senior Loan, the “Moxy Construction Loans”) with Lionheart Strategic Management LLC (“Lionheart”) providing for up to $40 million of additional funds for the development and construction of the Lower East Side Moxy Hotel. No advances had ~~an outstanding balance~~been made under the Moxy Junior Loan as of June 30, 2021. The Moxy Junior Loan bears interest at LIBOR plus 13.50%, subject to a 14.00% floor, and initially matures on June 3, 2024, with two one-year extension options subject to the satisfaction of certain conditions. The Moxy Junior Loan is subordinate to the Moxy Senior loan but also collateralized by the Lower East Side Moxy Hotel. We provided a principal guarantee of up to $7.0 million with respect to the Moxy Junior Loan.

In connection with the Moxy Construction Loans, we provided certain completion and carry cost guarantees. We also entered into an interest rate cap agreement pursuant to which the LIBOR rate will be capped at 3.00% on the Moxy Senior Loan through June 3, 2024 at a cost of $0.2 million. Furthermore, in connection with the Moxy Construction Loans, we paid $5.3 million of loan fees and ~~$0.4~~expenses and accrued $1.1 million ~~respectively,~~of loan exit fees which are due at the initial maturity date and are included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets as of June 30, ~~2020~~.2021.

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.~~2020, but had two six-month extensions. However, because we ~~have already~~ exercised ~~the first of two six-month~~both extension options, the ~~current~~ maturity date ~~is now~~was extended to April 9, 2021 and upon the exercise of the second extension option on October 9, ~~2020.~~2020, the interest rate became LIBOR + 2.25%. The Exterior Street Loan requires monthly ~~interest~~interest-only payments through its maturity date and is collateralized by the Exterior Street Project.

~~Santa Clara Data Center~~

~~On January 10, 2019, we, through subsidiaries~~ During April 2021, the maturity date 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 intendExterior Street Loan was further extended 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.~~April 9, 2022.

The following is a summary of the amounts incurred and capitalized to construction in progress for ~~our development projects~~the Lower East Side Moxy Hotel and the Exterior Street Project as of June 30, ~~2020:~~2021:

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

Development Project
Lower East Side Moxy Hotel	$	115,274
Exterior Street Project		83,916
Total	$	199,190

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.

To-date the COVID-19 pandemic has not had any significant impact on ~~our three development projects because only limited~~the Lower East Side Moxy Hotel or the Exterior Street Project. As discussed above, we have obtained construction ~~activities have thusfar commenced. We~~financing for the Lower East Side Moxy Hotel and also intend to obtain construction financing ~~on our development projects~~for the Exterior Street Project to fund a substantial portion of their ~~future~~ development and construction costs. However, the COVID-19 pandemic may (i) affect our ability to obtain additional 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 and construction costs related to the Exterior Street Project through construction ~~loans.~~financing. 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 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 months ended June 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 June 30,		As of December 31,		Three Months Ended June 30,				Six Months Ended June 30,
Preferred Investments	Dividend Rate			June 30, 2020		December 31, 2019		2020		2019		2020		2019		Dividend Rate			2021		2020		2021		2020		2021		2020
40 East End Avenue		12	%	$	6,000	$	17,000	$	182	$	910	$	518	$	1,810		12	%	$	6,000	$	6,000	$	182	$	182	$	362	$	518
30-02 39^th Avenue		12	%		-		-		-		-		-		140
East 11th Street		12	%		8,500		8,500		258		807		519		1,907		12	%		8,500		8,500		258		258		513		519
Miami Moxy		12	%		-		9,000		-		558		45		1,090		12	%		-		-		-		-		-		45
Total Preferred Investments				$	14,500	$	34,500	$	440	$	2,275	$	1,082	$	4,947
Total																			$	14,500	$	14,500	$	440	$	440	$	875	$	1,082

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 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:

	Company’s			Loan									Contractual	As of June 30, 2021
	Ownership			Commitment		Origination			Origination		Maturity		Interest	Outstanding					Unamortized					Unfunded
Joint Venture/Lender	Percentage			Amount		Fee			Date		Date		Rate	Principal		Reserves			Origination Fee			Carrying Value		Commitment

LSC 162nd Capital I LLC		45.45	%	$	4,234		1.50	%		February 5, 2019		September 11, 2021	Libor plus 7.50% (Floor of 11%)	$	4,076	$	(113	)	$	(8	)	$	3,955	$	-

LSC 162nd Capital II LLC		45.45	%		9,166		1.50	%		February 5, 2019		September 11, 2021	Libor plus 7.50% (Floor of 11%)		8,824		(244	)		(18	)		8,562		-

LSC 1543 7th LLC		50	%		20,000		1.00	%		August 27, 2019		August 26, 2021	Libor plus 5.40% (Floor of 7.90%)		20,000		-			(33	)		19,967		-

LSC 1650 Lincoln LLC		50	%		24,000		1.00	%		August 27, 2019		August 26, 2021	Libor plus 5.40% (Floor of 7.90%)		24,000		-			(40	)		23,960		-

LSC 11640 Mayfield LLC		50	%		18,000		1.50	%		March 4, 2020		March 1, 2022	Libor plus 10.50% (Floor of 12.50%)		10,750		(1,694	)		(91	)		8,965		7,250

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

Total														$	67,650	$	(2,051	)	$	(190	)	$	65,409	$	7,250

(1) Repaid in full during April 2021

	For the Three Months Ended June 30,				For the Six Months Ended June 30,				For the Three Months Ended June 30,				For the Six Months Ended June 30,
Joint Venture/Lender	2020		2019		2020		2019		2021		2020		2021		2020

LSC 162nd Capital I LLC	$	249	$	123	$	363	$	197	$	126	$	249	$	250	$	363

LSC 162nd Capital II LLC		540		266		785		427		272		540		541		785

LSC 47-16 Greenpoint LLC		-		290		-		290

LSC 1543 7th LLC		436		-		873		-		449		436		894		873

LSC 1650 Lincoln LLC		524		-		1,048		-		539		524		1,073		1,048

LSC 11640 Mayfield LLC		373		-		488		-		373		373		743		488

LSC 11640 Newkirk LLC										790		-		1,585		-

Total	$	2,122	$	679	$	3,557	$	914	$	2,549	$	2,122	$	5,086	$	3,557

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,~~3, 2020, our Board of Directors determined our Estimated Per-Share NAV of ~~$11.82~~$11.18 as of September 30, ~~2019,~~2020, which resulted in a purchase price for shares under the DRIP of ~~$11.23~~$10.62 per share. As of June 30, ~~2020,~~2021, we had approximately ~~10.0~~9.9 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 (the “SRP”) 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, 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.

Effective March 15, 2021 and May 14, 2021, the Board of Directors partially reopened the SRP to allow, subject to various conditions as set forth below, for redemptions submitted in connection with a stockholder’s death and hardship, respectively, and set the price for all such purchases to $11.18, which is 100% of the NAV per Share. Deaths that occurred subsequent to January 1, 2020 are eligible for consideration. Beginning January 1, 2022, requests for redemptions in connection with a stockholder’s death must be submitted and received by us within one year of the stockholder’s date of death for consideration.

On an annual basis, we will not redeem in excess of 0.5% of the number of shares outstanding as of the end of the preceding year for either death or hardship redemptions, respectively. Redemption requests are expected to be processed on a quarterly basis and may be subject to pro ration if either type of redemption requests exceed the annual limitation.

~~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 30, ~~2020.~~2021.

Contractual Obligations 2020 2021 2022 2023 2024 Thereafter Total
Mortgage Payable $ 95,805 $ 1,328 $ 1,389 $ 1,454 $ 66,697 $ - $ 166,673
Interest Payments ¹ 3,194 3,191 3,130 3,065 2,917 - 15,497

Total Contractual Obligations $ 98,999 $ 4,519 $ 4,519 $ 4,519 $ 69,614 $ - $ 182,170

Contractual Obligations	2021		2022		2023		2024		2025		Thereafter		Total
Mortgage Payable	$	25,667	$	36,389	$	1,454	$	102,307	$	-	$	-	$	165,817
Interest Payments¹		3,316		6,295		5,954		4,626		-		-		20,191

Total Contractual Obligations	$	28,983	$	42,684	$	7,408	$	106,933	$	-	$	-	$	186,008

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 30, ~~2020~~2021 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~~LIBOR + 0.85% ~~(1.01%~~(0.95% as of June 30, ~~2020)~~2021) 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 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

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~~is scheduled to mature on ~~June 19,~~October 9, 2021 and bears interest at ~~Libor plus~~LIBOR + 1.35% ~~(1.51%~~(1.45% as of June 30, ~~2020)~~2021). 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 30, ~~2020,~~2021, the amount of borrowings available to be drawn under the Line of Credit was approximately ~~$7.9~~$15.0 million. No amounts were outstanding under the Line of Credit as of both June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. We intend to seek to extend the Line of Credit on or before its scheduled maturity date.

Debt Maturities

The Exterior Street Loan (outstanding principal balance of $35.0 million as of June 30, ~~2020) initially matured~~2021) is scheduled to mature on April 9, ~~2020. However, because we have already exercised the first of two six-month extension options, the current maturity date is now October 9, 2020.~~2022. 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~~(the “Santa Monica Loan”) (outstanding principal balance of $25.0 million as of June 30, 2021) which bears interest at ~~LIBOR+~~LIBOR + 3.75%, subject to a 5.50% floor, and is currently scheduled to ~~initially~~ mature on August ~~12, 2020~~26, 2021, but ~~may be further extended through the exercise of two,~~has one remaining six-month extension ~~options, which the Santa Monica Joint Ventures may exercise by providing the lender with advance written notice.~~option, subject to satisfaction of certain conditions. The Santa Monica Loan requires monthly ~~interest~~interest-only payments ~~through~~with the outstanding principal balance due at its maturity date and is cross-collateralized by two nonrecourse loans originated by the Santa Monica Joint Ventures. We currently intend to exercise the remaining six-month extension ~~options or refinance~~option on 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 30, 2020) matures on December 3, 2020. We currently intend to refinance the Bowery Mortgage on or before its maturity date.~~

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

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

We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the ~~"White Paper"~~“White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Our FFO calculation complies with ~~NAREIT's~~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~~NAREIT’s definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.

Because of these factors,, the Investment Program Association (the ~~"IPA"~~“IPA”), an industry trade group, published a standardized measure of performance known as modified funds from operations ~~("MFFO"~~(“MFFO”), which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that both before and after we have deployed all of our offering proceeds and are no longer incurring a significant amount of acquisition fees or other related costs, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. MFFO is not equivalent to our net income or loss as determined under GAAP.

We define MFFO, a non-GAAP measure, consistent with the ~~IPA's~~IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the ~~"Practice Guideline"~~“Practice Guideline”) issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for acquisition and transaction-related fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition and transaction-related fees and expenses (which includes costs incurred in connection with strategic alternatives), amounts relating to 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						For the Six Months Ended
	2020			2019			2020			2019			June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Net income/(loss)	$	6,269		$	(1,113	)	$	(12,409	)	$	19,114		$	11,097		$	6,269		$	22,738		$	(12,409	)
FFO adjustments:
Depreciation and amortization:
Depreciation and amortization of real estate assets		976			1,302			1,968			2,581
Gain on disposal of investment property		(1,562	)					(1,562	)
Discontinued operations
Depreciation and amortization of real estate assets		-			-			-			121			1,163			976			2,281			1,968
Gain on disposal of investment property		-			-			-			(70	)		(3,589	)		(1,562	)		(3,589	)		(1,562	)

FFO		5,683			189			(12,003	)		21,746			8,671			5,683			21,430			(12,003	)
MFFO adjustments:
Other Adjustment
Acquisition and other transaction related costs expensed⁽¹⁾		-			-			-			(22	)		-			-			-			-

Amortization of above or below market leases and liabilities⁽²⁾		-			(35	)		-			(70	)		-			-			-			-
Discontinued operations:
Gain on debt extinguishment		-			-			-			(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			(5,080	)		(2,687	)		(14,077	)		18,611
Non-recurring (losses)/gains from extinguishment/sale of debt, derivatives or securities holdings⁽⁴⁾		230			314			230			625
Loss on debt extinguishment⁽⁴⁾														318			-			318			-
Loss on sale of marketable securities⁽⁴⁾														(6	)		230			16			230

MFFO		3,226			5,250			6,838			10,329			3,903			3,226			7,687			6,838
Straight-line rent⁽⁵⁾		6			8			13			4			24			6			(38	)		13
MFFO - IPA recommended format⁽⁶⁾	$	3,232		$	5,258		$	6,851		$	10,333
MFFO - IPA recommended format													$	3,927		$	3,232		$	7,649		$	6,851

Net income/(loss)	$	6,269		$	(1,113	)	$	(12,409	)	$	19,114		$	11,097		$	6,269		$	22,738		$	(12,409	)
Less: income attributable to noncontrolling interests		(458	)		(305	)		(741	)		(1,159	)		(1,344	)		(458	)		(2,750	)		(741	)
Net income/(loss) applicable to Company's common shares	$	5,811		$	(1,418	)	$	(13,150	)	$	17,955
Net income/(loss) applicable to Company’s common shares													$	9,753		$	5,811		$	19,988		$	(13,150	)
Net income/(loss) per common share, basic and diluted	$	0.26		$	(0.07	)	$	(0.59	)	$	0.76		$	0.44		$	0.26		$	0.90		$	(0.59	)

FFO	$	5,683		$	189		$	(12,003	)	$	21,746		$	8,671		$	5,683		$	21,430		$	(12,003	)
Less: FFO attributable to noncontrolling interests		(988	)		(492	)		(314	)		(1,539	)		(1,452	)		(988	)		(2,382	)		(314	)
FFO attributable to Company's common shares	$	4,695		$	(303	)	$	(12,317	)	$	20,207
FFO attributable to Company’s common shares													$	7,219		$	4,695		$	19,048		$	(12,317	)
FFO per common share, basic and diluted	$	0.21		$	(0.01	)	$	(0.55	)	$	0.87		$	0.32		$	0.21		$	0.85		$	(0.55	)

MFFO - IPA recommended format	$	3,232		$	5,258		$	6,851		$	10,333		$	3,927		$	3,232		$	7,649		$	6,851
Less: MFFO attributable to noncontrolling interests		(1,078	)		(798	)		(1,955	)		(1,375	)		(1,358	)		(1,078	)		(2,145	)		(1,955	)
MFFO attributable to Company's common shares	$	2,154		$	4,460		$	4,896		$	8,958
MFFO attributable to Company’s common shares													$	2,569		$	2,154		$	5,504		$	4,896

Weighted average number of common shares outstanding, basic and diluted		22,333			23,174			22,376			23,324			22,308			22,333			22,304			22,376

Notes:

~~(1)~~

(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)~~

(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, 2021
	June 30, 2020
FFO attributable to Company’s common shares	$	223,724	$	254,699
Distributions paid	$	239,884	$	255,511

On or about July 15, ~~2020,~~2021, the distribution for the three-month period ending June 30, ~~2020~~2021 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~~$10.62 per share, equal to 95% of the Company’s most recently published estimated net asset value per share of ~~$11.82~~$11.18 as of September 30, ~~2019.~~2020.

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,~~2021, 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*
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*
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*
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*
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 30, ~~2020,~~2021, filed with the SEC on August ~~7, 2020,~~11, 2021, 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

~~SIGNATURES~~

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, 2020~~11, 2021	By:	/s/ David Lichtenstein
		David Lichtenstein
		Chairman and Chief Executive Officer ~~(Principal~~ (Principal Executive Officer)

Date: August ~~7, 2020~~11, 2021

By:

/s/ Seth Molod

Seth Molod

Chief Financial Officer and Treasurer

(Duly Authorized Officer and Principal Financial and
Accounting Officer)

42 38

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

Large accelerated filer ¨☐		Accelerated filer ¨☐
Non-accelerated ~~filer~~ þFiler ☒		Smaller reporting company þ☒
		Emerging growth company¨☐

			Page
PART I	FINANCIAL INFORMATION		1

Item 1.	Financial Statements (unaudited)		1

	Consolidated Balance Sheets as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020	3	1

	Consolidated Statements of Operations for the Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020	4	2

	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020	5	3

	Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020	6	4

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020	7	5

	Notes to Consolidated Financial Statements	8	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24	21

Item 4.	Controls and Procedures	40	36

PART II	OTHER INFORMATION		37

Item 1.	Legal Proceedings	41	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41	37

Item 3.	Defaults Upon Senior Securities	41	37

Item 4.	Mine Safety Disclosures	41	37

Item 5.	Other Information	41	37

Item 6.	Exhibits	41	38


	As of			As of			As of June 30, 2021			As of December 31, 2020
	June 30, 2020			December 31, 2019			(unaudited)
Assets	(unaudited)
Investment property:
Land and improvements	$	30,143		$	30,664		$	27,301		$	30,143
Building and improvements		101,589			101,827			100,110			101,492
Furniture and fixtures		2,425			2,404			2,453			2,453
Construction in progress		166,887			152,896			199,203			186,196
Gross investment property		301,044			287,791			329,067			320,284
Less accumulated depreciation		(31,334	)		(29,685	)		(33,862	)		(33,038	)
Net investment property		269,710			258,106			295,205			287,246
Investments in related parties		15,684			35,738			15,500			15,590
Cash and cash equivalents		72,503			77,569			24,420			44,446
Marketable securities and other investments		37,409			54,738			60,257			46,071
Restricted cash		2,377			2,231			1,803			2,395
Notes receivable, net		63,585			55,723			65,409			104,624
Prepaid expenses and other assets		2,568			2,075			2,704			1,869

Assets held for sale								13,389			-
Total Assets	$	463,836		$	486,180		$	478,687		$	502,241

Liabilities and Stockholders' Equity
Liabilities and Stockholders’ Equity
Mortgages payable, net	$	165,428		$	164,705		$	158,788		$	192,385
Accounts payable, accrued expenses and other liabilities		5,097			4,380			12,814			8,641
Due to related parties		211			244			207			241
Tenant allowances and deposits payable		571			594			522			487
Distributions payable		3,912			3,960			3,908			3,905
Deferred rental income		422			524			216			399

Total Liabilities		175,641			174,407			176,455			206,058

Commitments and contingencies

Stockholders' equity:
Company's Stockholders Equity:
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
Stockholders’ equity:
Company’s Stockholders Equity:
Preferred shares, $0.01 par value, 10.0 million shares authorized, NaN issued and outstanding								-			-
Common stock, $0.01 par value; 60.0 million shares authorized, 22.3 million shares issued and outstanding.								223			223
Additional paid-in-capital		169,784			172,749			169,810			169,649
Accumulated other comprehensive (loss)/income		(1,042	)		408
Accumulated other comprehensive income								483			378
Accumulated surplus		88,586			109,559			101,813			89,639

Total Company's stockholders' equity		257,551			282,942
Total Company’s stockholders’ equity								272,329			259,889
		-			-			-			-
Noncontrolling interests		30,644			28,831			29,903			36,294
Total Stockholders’ Equity								302,232			296,183

Total Stockholders' Equity		288,195			311,773

Total Liabilities and Stockholders' Equity	$	463,836		$	486,180
Total Liabilities and Stockholders’ Equity							$	478,687		$	502,241


													For the Three Months Ended June 30,						For the Six Months Ended June 30,
	For the Three Months Ended June 30,						For the Six Months Ended June 30,						2021			2020			2021			2020
	2020			2019			2020			2019
Net income/(loss)	$	6,269		$	(1,113	)	$	(12,409	)	$	19,114		$	11,097		$	6,269		$	22,738		$	(12,409	)

Other comprehensive income/(loss)
Holding gain/(loss) on available for sale debt securities		787			141			(1,480	)		1,501			140			787			91			(1,480	)
Reclassification adjustment for loss included in net i ncome/(loss)		-			314			-			625
Reclassification adjustment for (gain)/loss included in net income/(loss)														(6	)		0			16			0

Other comprehensive income/(loss)		787			455			(1,480	)		2,126			134			787			107			(1,480	)

Comprehensive income/(loss)		7,056			(658	)		(13,889	)		21,240			11,231			7,056			22,845			(13,889	)

Less: Comprehensive income attributable to noncontrolling interests		(477	)		(314	)		(711	)		(1,203	)		(1,347	)		(477	)		(2,752	)		(711	)

Comprehensive income/(loss) attributable to Company's common shares	$	6,579		$	(972	)	$	(14,600	)	$	20,037
Comprehensive income/(loss) attributable to Company’s common shares													$	9,884		$	6,579		$	20,093		$	(14,600	)

										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				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total 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

		Common						Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total Stockholders’
		Shares			Amount			Capital			Income			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

Summary of supplemental cash flow information
					For the Six Months Ended June 30,
	For the Six Months Ended June 30,				2021		2020
	2020		2019
Cash paid for interest	$	4,310	$	3,619	$	4,581	$	4,310
Distributions declared but not paid	$	3,912	$	4,027	$	3,908	$	3,912
Investment property acquired but not paid	$	1,447	$	307	$	5,588	$	1,447
Assets transferred in connection with assignment transaction	$	-	$	37,299
Liabilities extinguished in connection with assignment transaction	$	-	$	50,914
Amortization of deferred financing costs included in construction in progress	$	806	$	-	$	297	$	806
Holding loss/gain on marketable securities	$	1,480	$	2,126	$	107	$	1,480
Value of shares issued from distribution reinvestment program	$	163	$	127	$	161	$	163

Schedule of development projects
	Amounts Capitalized to Construction in Progress				Capitalized Interest				Capitalized Interest
	As of June 30,		As of December 31,		Three Months Ended June 30,				Six Months Ended June 30,
Development Project	2021		2020		2021		2020		2021		2020
Lower East Side Moxy Hotel	$	115,274	$	98,608	$	1,232	$	1,060	$	2,346	$	2,107
Exterior Street Project		83,916		74,230		480		680		1,039		1,788
Total	$	199,190	$	172,838	$	1,712	$	1,740	$	3,385	$	3,895

Summary of available for sale securities and other investments
	As of June 30, 2021
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable Securities:
Equity securities:
Equity Securities, primarily REITs	$	8,745	$	6,264	$	(166	)	$	14,843
Marco OP Units and Marco II OP Units		19,227		8,075		0			27,302
		27,972		14,339		(166	)		42,145
Debt securities:
Corporate Bonds		17,606		578		(72	)		18,112

Total	$	45,578	$	14,917	$	(238	)	$	60,257

	As of June 30, 2020
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable Securities:
Equity securities:
Equity Securities, primarily REITs	$	8,591	$	-	$	(1,392	)	$	7,199
Marco OP Units and Marco II OP Units		19,227		-		(4,919	)		14,308
		27,818		-		(6,311	)		21,507
Debt securities:
Corporate Bonds		16,964		-		(1,062	)		15,902

Total	$	44,782	$	-	$	(7,373	)	$	37,409

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

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


														As of June 30, 2020
	Company's			Loan							Current		Contractual						Unamortized
	Ownership			Commitment		Origination			Origination		Maturity		Interest	Outstanding		Loan			Origination			Carrying		Unfunded
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	$	-

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 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		-

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		-

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

Total														$	67,650	$	(3,642	)	$	(423	)	$	63,585	$	7,250

	For the Three Months Ended June 30, 2019		For the Six Months Ended June 30, 2019

Revenues	$	-	$	409

Operating expenses		-		317
Operating income		-		92

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

	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

Development Projects
Lower East Side Moxy Hotel	$	83,505
Exterior Street Project		70,056
Santa Clara Data Center		13,317
Total Developments Projects	$	166,878