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

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ~~Yes~~x No¨

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

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

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

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

As of ~~November 3, 2017,~~May 7, 2023, the Registrant had approximately ~~24.8~~19.0 million shares of common stock outstanding.

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

~~Behringer Harvard Opportunity~~Lightstone Value Plus REIT ~~II,~~V, Inc., which ~~changed its name to~~was formerly known as Lightstone Value Plus Real Estate Investment Trust V, Inc. ~~effective July 20, 2017~~before August 31, 2021 (which may be referred to as the “Company,” “we,” “us,” or “our”), was organized as a Maryland corporation on January 9, 2007 and has elected to be taxed, and currently qualifies, as a real estate investment trust (“REIT”) for federal income tax purposes.

~~We were~~The Company was formed primarily to acquire and operate commercial real estate and real estate-related assets on an opportunistic and value-add basis. In particular, ~~we have~~the Company has focused generally on acquiring commercial properties with significant possibilities for capital appreciation, such as those requiring development, redevelopment, or repositioning, those located in markets and submarkets with high growth potential, and those available from sellers who are distressed or face time-sensitive deadlines. ~~We have~~The Company has acquired a wide variety of commercial properties, including office, industrial, retail, hospitality, multifamily and ~~multifamily. We have~~student housing. The Company has purchased existing, income-producing properties, and newly-constructed properties. ~~We have~~The Company has also invested in other real estate-related investments such as mortgage and mezzanine loans. ~~We intend~~The Company intends to hold the various real properties in which ~~we have~~it has invested until such time as ~~our~~its board of directors determines that a sale or other disposition appears to be advantageous to achieve ~~our~~the Company’s investment objectives or until it appears that the objectives will not be met. The Company currently has one operating segment. As of ~~September 30, 2017, we~~March 31, 2023, the Company had ~~seven~~eight wholly owned real estate investments ~~six of which were consolidated through investments in joint ventures.~~(multifamily properties) and one real estate-related investment (note receivable).

Substantially all of ~~our~~the Company’s business is conducted through ~~Behringer Harvard Opportunity~~Lightstone REIT V OP II LP, a limited partnership organized in Delaware (the “Operating Partnership”). As of ~~September 30, 2017, our~~March 31, 2023, the Company’s wholly-owned subsidiary, BHO II, Inc., a Delaware corporation, owned a 0.1% partnership interest in the Operating Partnership as its sole general partner. As of ~~September 30, 2017, our~~March 31, 2023, the Company’s wholly-owned subsidiary, BHO Business Trust II, a Maryland business trust, was the sole limited partner of the Operating Partnership and owned the remaining 99.9% interest in the Operating Partnership.

~~Our~~The Company’s business ~~has been~~is externally managed by ~~an external advisor since the commencement of our initial public offering, and we have no employees. From January 4, 2008 through February 10, 2017,~~LSG Development Advisor LLC (the “Advisor”), an affiliate of Stratera Services, LLC, formerly known as “Behringer Harvard Holdings, LLC” (“Behringer”), acted as our external advisor (the “Behringer Advisor”). On February 10, 2017, we terminated our engagement of the Behringer Advisor and engaged affiliates of the Lightstone Group LLC (“Lightstone”)~~, LSG-BH II Advisor LLC and LSG Development Advisor LLC (collectively, the “Advisor”), to provide~~ which provides advisory services to ~~us. The external advisor~~the Company and the Company has no employees. Lightstone is majority owned by the chairman emeritus of the Company’s board of directors, David Lichtenstein. Pursuant to the terms of an advisory agreement and subject to the oversight of the Company’s board of directors, the Advisor is responsible for managing ~~our~~the Company’s day-to-day affairs and for services related to the management of ~~our~~the Company’s assets.

In connection with ~~our~~the Company’s initial capitalization, wethe Company issued ~~22.5 thousand~~22,500 shares of ~~our~~its common stock and ~~1.0 thousand~~1,000 shares of ~~our~~its convertible stock to ~~Behringer~~the Company’s previous advisor on January 19, 2007. ~~Behringer transferred its~~The 1,000 shares of convertible stock ~~to one of its affiliates on April 2, 2010. Behringer~~were transferred ~~its shares of convertible stock~~ to an affiliate of Lightstone on February 10, ~~2017.~~2017 and remain outstanding. As of ~~September 30, 2017, we~~March 31, 2023, the Company had ~~24.8~~20.0 million shares of common stock ~~outstanding and 1.0 thousand shares of convertible stock~~ outstanding.

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

~~Our~~Company’s common stock is not currently listed on a national securities exchange. The timing of a liquidity event for ~~our~~the Company’s stockholders will depend upon then prevailing market ~~conditions. We previously targeted~~conditions and the ~~commencement of a liquidity event within six years after the termination of our initial public offering, which occurred on July 3, 2011. On June 29, 2017, our~~Company’s board of ~~directors elected to extend the targeted timeline an additional six years until June 30, 2023 based on their~~directors’ assessment of ~~our~~the Company’s investment objectives and liquidity options for ~~our~~the Company’s stockholders. Currently, the Company’s board of directors has targeted June 30, 2028 for the commencement of a liquidity event. However, wethe Company can provide no assurances as to the actual timing of the commencement of a liquidity event for ~~our~~its stockholders or the ultimate liquidation of the Company. WeFurthermore, the Company will seek stockholder approval prior to liquidating ~~our~~its entire portfolio.

Lightstone Value Plus REIT V, Inc.
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data and where indicated in millions)

The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes as contained in the Company’s Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2016,~~2022, which was filed with the Securities and Exchange Commission (the “SEC”) on March ~~16, 2017.~~28, 2023. The unaudited interim consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair presentation of the results for the periods presented. The accompanying unaudited consolidated financial statements of Lightstone Value Plus ~~Real Estate Investment Trust~~REIT V, Inc. have been prepared in accordance with generally accepted accounting principles ~~generally accepted~~ in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 108-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

~~The consolidated balance sheet as of December 31, 2016 included herein has been derived from the consolidated balance sheet included in the Company's Annual Report on Form 10-K.~~

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

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant assumptions and estimates relate to the valuation of real estate, depreciable lives, and revenue recognition. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.

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

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

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

~~Accumulated depreciation and amortization related to our consolidated investments in real estate assets and intangibles were as follows:~~

We amortize the value of in-place leases, in-place tenant improvements, and in-place leasing commissions to expense over the initial term of the respective leases. In no event does the amortization period for intangible assets or liabilities exceed the remaining depreciable life of the building. Should a tenant terminate its lease, the unamortized portion of the acquired lease intangibles related to that tenant would be charged to expense.

~~We classify properties as held for sale when certain criteria are met in accordance with GAAP. At that time, we present the assets and obligations of the property held for sale separately in our~~ consolidated balance sheet and we cease recording depreciation and amortization expense related to that property. Properties held for sale are reported at the lower of their carrying amount or their estimated fair value, less estimated costs to sell. We did not have any real estate assets classified as held for sale as of ~~September 30, 2017 or~~ December 31, ~~2016.~~

As required by our lenders, restricted cash is held in escrow accounts for anticipated capital expenditures, real estate taxes, and other reserves for our consolidated properties. Capital reserves are typically utilized for non-operating expenses such as tenant improvements, leasing commissions, and major capital expenditures. Alternatively, a lender may require its own formula for an escrow of capital reserves. Restricted cash may also include certain funds temporarily placed in escrows with qualified intermediaries in order to facilitate potential like-kind exchange transactions in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended.

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

We early adopted the new Financial Accounting Standards Board (“FASB”) guidance on December 31, 2016, which changed the presentation of our statements of cash flows and related disclosures for all periods presented and accordingly, the following is a summary of our cash, cash equivalents, and restricted cash total as presented in our statements of cash flows for the nine months ended September 30, 2016:

For all of our real estate and real estate-related investments, we monitor events and changes in circumstances indicating that the carrying amounts of the real estate assets may not be recoverable. Examples of the types of events and circumstances that would cause management to assess our assets for potential impairment include, but are not limited to: a significant decrease in the market price of an asset; a significant adverse change in the manner in which the asset is being used; an accumulation of costs in excess of the acquisition basis plus construction of the property; major vacancies and the resulting loss of revenues; natural disasters; a change in the projected holding period; legitimate purchase offers; and changes in the global and local markets or economic conditions. To the extent that our portfolio is concentrated in limited geographic locations, downturns specifically related to such regions may result in tenants defaulting on their lease obligations at those properties within a short time period, which may result in asset impairments. When such events or changes in circumstances are present, we assess potential impairment by comparing estimated future undiscounted operating cash flows expected to be generated over the life of the asset and from its eventual disposition to the carrying amount of the asset. These projected cash flows are prepared internally by the Advisor and reflect in-place and projected leasing activity, market revenue and expense growth rates, market capitalization rates, discount rates, and changes in economic and other relevant conditions. The Company’s principal executive officer and principal financial officer review these projected cash flows to assure that the valuation is prepared using reasonable inputs and assumptions that are consistent with market data or with assumptions that would be used by a third-party market participant and assume the highest and best use of the investment. We consider trends, strategic decisions regarding future development plans, and other factors in our assessment of whether impairment conditions exist. In the event that the carrying amount exceeds the estimated future undiscounted operating cash flows, we recognize an impairment loss to adjust the carrying amount of the asset to estimated fair value. While we believe our estimates of future cash flows are reasonable, different assumptions regarding factors such as market rents, economic conditions, and occupancy rates could significantly affect these estimates.

In evaluating our investments for impairment, management may use appraisals and make estimates and assumptions, including, but not limited to, the projected date of disposition of the properties, the estimated future cash flows of the properties during our ownership, and the projected sales price of each of the properties. A future change in these estimates and assumptions could result in understating or overstating the carrying value of our investments, which could be material to our financial statements. In addition, we may incur impairment charges on assets classified as held for sale in the future if the carrying amount of the asset upon classification as held for sale exceeds the estimated fair value, less costs to sell.

We also evaluate our investments in unconsolidated joint ventures at each reporting date. If we believe there is an other than temporary decline in market value, we will record an impairment charge based on these evaluations. We assess potential impairment by comparing our portion of estimated future undiscounted operating cash flows expected to be generated by the joint venture over the life of the joint venture’s assets to the carrying amount of the joint venture. In the event that the carrying amount exceeds our portion of estimated future undiscounted operating cash flows, we recognize an impairment loss to adjust the carrying amount of the joint venture to its estimated fair value.

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

We believe the carrying value of our operating real estate assets and our investment in an unconsolidated joint venture is currently recoverable. There were no impairment charges for the nine months ended September 30, 2017 and 2016. However, if market conditions worsen unexpectedly or if changes in our strategy significantly affect any key assumptions used in our fair value calculations, we may need to take charges in future periods for impairments related to our existing investments. Any such non-cash charges would have an adverse effect on our consolidated financial position and results of operations.

We provide funding to third-party developers for the acquisition, development, and construction of real estate (“ADC Arrangement”). Under an ADC Arrangement, we may participate in the residual profits of the project through the sale or refinancing of the property. We evaluate this arrangement to determine if it2022 included herein has characteristics similar to a loan or if the characteristics are more similar to a joint venture or partnership such as participating in the risks and rewards of the project as an owner or an investment partner. When we determine that the characteristics are more similar to a jointly-owned investment or partnership, we account for the arrangement as an investment in an unconsolidated joint venture under the equity method of accounting or a direct investment (consolidated basis of accounting) instead of applying loan accounting. The ADC Arrangement is reassessed at each reporting period. See Note 8, Investment in Unconsolidated Joint Venture, for further discussion.

We recognize rental revenue generated from leases of our operating properties on a straight-line basis over the terms of the respective leases, including the effect of rent holidays, if any. Leases associated with our multifamily, student housing, and hotel assets are generally short-term in nature, and thus have no straight-line rent.

~~Hotel revenue is~~been derived from the operations of the Courtyard Kauai Coconut Beach Hotel and consists primarily of guest room, food and beverage, and other ancillary revenues such as laundry and parking. Hotel revenue is recognized as the services are rendered.

~~Accounts receivable primarily consist of receivables related to our~~ consolidated ~~properties of $1.9 million and $1.4 million as of September 30, 2017 and December 31, 2016, respectively, and~~balance sheet included straight-line rental revenue receivables of $0.4 million as of September 30, 2017 and December 31, 2016. The allowance for doubtful accounts was insignificant as of both September 30, 2017 and December 31, 2016.

~~Furniture, fixtures, and equipment are recorded at cost and are depreciated according to~~in the Company’s ~~capitalization policy, which uses the straight-line method over their estimated useful lives~~Annual Report on Form 10-K.

The unaudited consolidated statements of ~~five to seven years. Furniture, fixtures, and equipment associated with properties classified as held~~operations for ~~sale~~interim periods are not ~~depreciated. Maintenance~~necessarily indicative of results for the full year or any other period.

The Company had no potentially dilutive securities outstanding during the periods presented. Accordingly, basic and ~~repairs are charged to operations as incurred. Accumulated depreciation associated with our furniture, fixtures, and equipment was $5.0 million and $9.9 million as~~diluted earnings per share is calculated by dividing net income/(loss) by the weighted-average number of ~~September 30, 2017 and December 31, 2016, respectively.~~shares of common stock outstanding during the applicable period.

Deferred financing fees are recorded at cost, accounted for as a reduction to notes payable, and are amortized to interest expense using a straight-line method that approximates the effective interest method over the life of the related debt. Deferred financing fees, net were $0.5 million and $0.8 million as of September 30, 2017 and December 31, 2016, respectively.

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

~~We have~~The Company has elected to be taxed as a REIT ~~under Sections 856 through 860 of~~commencing with the ~~Internal Revenue Code of 1986, as amended (the “Code”), and have qualified as a REIT since the~~taxable year ended December 31, 2008. ~~To qualify~~If the Company qualifies as a REIT, weit generally will not be subject to U.S. federal income tax on its taxable income or capital gain that it distributes to its stockholders. To maintain its REIT qualification, the Company must meet a number of organizational and operational requirements, including a requirement that weit annually distribute to its stockholders at least 90% of ~~our~~its REIT taxable income (which does not equal net income, as calculated in accordance with GAAP), determined without regard to ~~our stockholders. As a REIT, we generally will not be subject~~the deduction for dividends paid and excluding any net capital gain. If the Company fails to ~~federal income tax at the corporate level. We are organized and operate in such a manner as to qualify~~remain qualified for taxation as a REIT ~~under~~in any subsequent year and does not qualify for certain statutory relief provisions, its income for that year will be taxed at the ~~Code~~regular corporate rate, and ~~intend~~it may be precluded from qualifying for treatment as a REIT for the four-year period following its failure to ~~continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to~~ qualify ~~or remain qualified~~ as a REIT. ~~Taxable income from non-REIT activities managed through a taxable REIT subsidiary (“TRS”) is subject to applicable federal, state, and local~~Such an event could materially adversely affect the Company’s net income and ~~margin taxes. We currently have no taxable income associated with a TRS. Our operating partnerships are flow-through entities and are not subject~~net cash available for distribution to ~~federal income taxes at the entity level.~~stockholders.

During 2015, wethe Company recorded an aggregate provision for income tax of ~~approximately $2.7~~$2.7 million representing estimated foreign income tax due as a result of the sale of two foreign investments, Alte Jakobstraße ~~(“AJS”)~~ and Holstenplatz. During the ~~third~~first quarter of ~~2016, we~~2022, the Company recorded an income tax benefit of ~~less than $0.1~~$0.8 million representing ~~the difference in the actual taxes due and the originally estimated taxes payable on the sale~~a partial refund of ~~Holstenplatz. During~~ the ~~third quarter of 2017, we recorded an aggregate income tax benefit of approximately $1.6 million consisting of (i) a refund of~~ foreign income tax ~~of approximately $0.8 million~~paid.

Lightstone Value Plus REIT V, Inc.
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data and ~~(ii) the reversal of our previously estimated taxes payable on these sales of $0.8 million.~~where indicated in millions)

We have reviewed our tax positions under GAAP guidance that clarify the relevant criteria and approach for the recognition and measurement of uncertain tax positions. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the financial statements if it is more likely than not that the tax position will be sustained upon examination. We believe it is more likely than not that the tax positions taken relative to our federal tax status as a REIT will be sustained in any tax examination.

~~For our international investments where~~In June 2016, the ~~functional currency is other than the U.S. dollar,~~Financial Accounting Standards Board issued an accounting standards update, “Financial Instruments-Credit Losses-Measurement of Credit Losses on Financial Instruments,” which changes how entities measure credit losses for most financial assets and ~~liabilities~~certain other instruments that are ~~translated using period-end exchange rates, while~~not measured at fair value through net income. The updated standard introduces an impairment model that is based on expected credit losses, rather than incurred losses, to estimate credit losses for financial instruments measured at amortized cost. For other receivables and held-to-maturity debt instruments, entities are required to use a new forward looking expected loss model that generally will result in an earlier recognition of allowances for losses. Financial instruments with similar risk characteristics may be grouped together when estimating expected credit losses. The update was effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted the ~~statement~~new standard, as of ~~operations amounts are translated using the average exchange rates for the respective period. Gains~~January 1, 2023, and ~~losses resulting from the change in exchange rates from period to period are reported separately as~~it did not have a ~~component of other comprehensive income (loss). Gains and losses resulting from foreign currency transactions are included in~~material impact on the consolidated ~~statements of operations and comprehensive income (loss).~~financial statements.

~~Upon~~Adverse Developments Affecting the substantial liquidation of our investment in a foreign entity, the cumulative translation adjustment (“CTA”) balance is required to be released into earnings. In accordance with Accounting Standards Update (“ASU”) 2013-05, upon disposal of the property, we recognize the CTA as an adjustment to the resulting gain or loss on sale.

~~The Euro was the functional currency for the operations of AJS~~Financial Services Industry and Holstenplatz, which were both sold in 2015. As a result of the sale of AJS and Holstenplatz, we no longer have foreign operations. However, we still maintain a Euro-denominated bank account that is comprised primarily of the remaining undistributed proceeds from the sale of these properties, which we translate into U.S. dollars at the current exchange rate at each reporting period. As of September 30, 2017, we maintained approximately $5.2 million in Euro-denominated accounts. For the three and nine months ended September 30, 2017, the foreign currency translation adjustment was a gain of $0.2 million and $0.5 million, respectively. For the three and nine months ended September 30, 2016, the foreign currency translation adjustment was a gain of less than $0.1 million.

As of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016, we~~2022, the Company had cash ~~and cash equivalents~~ deposited in certain financial institutions in excess of federally insured levels. ~~We have diversified our cash and cash equivalents among several banking institutions in an attempt to minimize exposure to any one of these entities. We~~The Company regularly ~~monitor~~monitors the financial stability of these financial institutions and ~~believe~~believes that ~~we are~~it is not exposed to any significant credit risk in cash and cash equivalents or restricted cash. However, in March and April 2023, certain U.S. government banking regulators took steps to intervene in the operations of certain financial institutions due to liquidity concerns, which caused general heightened uncertainties in financial markets. While these events have not had a material direct impact on the Company’s operations, if further liquidity and financial stability concerns arise with respect to banks and financial institutions, either nationally or in specific regions, the Company’s ability to access cash or enter into new financing arrangements may be threatened, which could have a material adverse effect on its business, financial condition and results of operations.

The Company’s 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, the Company’s 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, inflation and recession.

The Company’s overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on consumer behavior. Worsening economic conditions, increases in costs due to inflation, higher interest rates, certain labor and supply chain challenges, and developments related to the COVID-19 pandemic, and other changes in economic conditions, may adversely affect the Company’s results of operations and financial performance.

123.

Note Receivable

On February 28, 2019, the Company, as the lender, and an unrelated third party (the “Loan Borrower”), as the borrower, entered into a loan promissory note (the “Mezzanine Loan”), pursuant to which the Company funded an aggregate $12.0 million of mezzanine financing collateralized by the ownership interests of the Loan Borrower in a condominium project (the “Park House”) located at 500 West 22nd Street in the West Chelsea neighborhood of New York City.

The Mezzanine Loan bore interest at a rate of LIBOR plus 11.0% per annum with a floor of 13.493% (17.885% as of December 31, 2022) and had a maturity date of March 1, 2023. Additionally, the Mezzanine Loan provided for monthly interest-only payments at a rate of 8% with the additional interest above the 8% threshold added to the outstanding principal balance and due at maturity.

The Loan Borrower developed and constructed Park House, which contains ten residential units and ground floor retail space. The Park House was substantially completed in July 2022, and during the year ended December 31, 2022, the Loan Borrower repaid $10.6 million of the Mezzanine Loan with proceeds from the sale of condominium units. As of December 31, 2022, the remaining outstanding principal balance of the Mezzanine Loan was $3.8 million, including $2.4 million of additional interest due at maturity, which was classified as note receivable, net on the consolidated balance sheet.

During the first quarter of 2023, the Company and Loan Borrower refinanced the Mezzanine Loan resulting in a $5.0 million senior loan (the “Senior Loan”) secured by the Loan Borrower’s ownership interest in Park House, consisting of the remaining unsold condominium units and the ground floor retail space. The Senior Loan bears interest at a rate of SOFR plus 5.50% per annum with a floor of 10.0% (10.03% as of March 31, 2023) and has a term of twelve-months with one six-month extension option, subject to the satisfaction of certain conditions. As of March 31, 2023, the carrying amount of the Senior Loan was $4.6 million, consisting of outstanding principal of $5.0 million less interest reserves of $0.4 million, which is classified as notes receivable, net on the consolidated balance sheet.

Lightstone Value Plus ~~Real Estate Investment Trust~~REIT V, Inc.

~~(Formerly Behringer Harvard Opportunity REIT II, Inc.)~~

Notes to Consolidated Financial Statements ~~(Unaudited)~~

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

~~Geographic and Asset Type Concentration~~

Our investments may at times be concentrated in certain asset types that are subject to higher risk of foreclosure, or secured by assets concentrated in a limited number of geographic locations. For the nine months ended September 30, 2017, 42% and 16% of our total revenues were derived from our properties located in Hawaii and Florida, respectively. Additionally, 42%, 31%, and 21% of our total revenues for the nine months ended September 30, 2017 were from our hotel, multifamily, and student housing investments, respectively. To the extent that our portfolio is concentrated in limited geographic regions or types of assets, downturns relating generally to such region or type of asset may result in defaults on a number of our investments within a short time period, which may reduce our net income and the value of our common stock and accordingly limit our ability to fund our operations. The Courtyard Kauai Coconut Beach Hotel, our only hotel and sole property located in Hawaii, was sold on August 15, 2017. See Note 7 for additional information.

~~Noncontrolling Interest~~

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

~~Earnings per Share~~

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

~~New Accounting Pronouncements~~Financial Instruments

~~New Accounting Pronouncements to be Adopted~~

In May 2014, the FASB issued an update (“ASU 2014-09”) to ASC Topic 606, Revenue from Contracts with Customers. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. The new guidance will require companies to apply a five-step model in accounting for revenue arising from contracts with customers, as well as enhance disclosures regarding revenue recognition. Lease contracts will be excluded from this revenue recognition criteria; however, the sale of real estate will be required to follow the new model. ASU 2014-09 is effective for public companies for interim and annual reporting periods beginning after December 15, 2017. Either full retrospective adoption or modified retrospective adoption is permitted. The Company is continuing to evaluate the standard; however, we do not expect its adoption to have a significant impact on the consolidated financial statements, as substantially all revenues consist of rental income from leasing arrangements, which is specifically excluded from the standard.

During the quarter ended June 30, 2016, the FASB issued subsequent updates to ASU 2014-09. In April 2016, the FASB issued an update (“ASU 2016-10”) to ASC Topic 606, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing. In May 2016, the FASB issued an update (“ASU 2016-12”) to ASC Topic 606, Revenue from Contracts with Customers, Narrow-Scope Improvement and Practical Expedients. The amendments in these updates did not change the core principle of the guidance in Topic 606; rather, they added improvements to reduce the diversity in practice at initial application and the cost and complexity of applying Topic 606 both at transition and an ongoing basis. The areas affected include: assessing the collectability criteria; presentation of sales taxes and other similar taxes collected from customers; noncash consideration; contract modification and completed contracts at transition; and technical correction as it relates to retrospective application and disclosure. The new guidance is effective January 1, 2018 and allows full or modified retrospective application. We do not expect the adoption of ASU 2016-10 and ASU 2016-12 to have a material effect on our consolidated financial statements; however, we will continue to evaluate this assessment until the guidance becomes effective.

~~Lightstone Value Plus Real Estate Investment Trust V, Inc.~~

~~(Formerly Behringer Harvard Opportunity REIT II, Inc.)~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

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

In February 2016, the FASB issued an update (“ASU 2016-02”) to ASC Topic 842, Leases. ASU 2016-02 supersedes the existing lease accounting model, and modifies both lessee and lessor accounting. The new guidance will require lessees to recognize a liability to make lease payments and a right-of-use asset, initially measured at the present value of lease payments, for both operating and financing leases, with classification affecting the pattern of expense recognition in the statement of earnings. For leases with a term of 12 months or less, lessees will be permitted to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. Under this new pronouncement, lessor accounting will be largely unchanged from existing GAAP. The new standard will be effective January 1, 2019, with early adoption permitted. We are currently evaluating the impact this guidance will have on our consolidated financial statements when adopted.

In June 2016, the FASB issued an update (“ASU 2016-13”) to ASC Topic 326, Credit Losses. This amended guidance requires measurement and recognition of expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This is different from the current guidance as this will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets. Financial assets that are measured at amortized cost will be required to be presented at the net amount expected to be collected with an allowance for credit losses deducted from the amortized cost basis. Generally, the pronouncement requires a modified retrospective method of adoption. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact this guidance will have on our consolidated financial statements when adopted.

In January 2017, the FASB issued an update (“ASU 2017-01”) to ASC Topic 805, Business Combinations, Clarifying the Definition of a Business. The guidance clarifies the definition of a business and assists in the evaluation of whether a transaction will be accounted for as an acquisition of an asset or as a business combination. The guidance provides a test to determine when a set of assets and activities acquired is not a business. When substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. Under the updated guidance, an acquisition of a single property will likely be treated as an asset acquisition as opposed to a business combination and associated transaction costs will be capitalized rather than expensed as incurred. Additionally, assets acquired, liabilities assumed, and any noncontrolling interest will be measured at their relative fair values. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017, with early adoption permitted, including for interim or annual periods for which financial statements have not yet been issued. Upon adoption of this guidance, we anticipate future acquisitions of real estate assets, if any, will likely qualify as an asset acquisition. Therefore, any future transaction costs associated with an asset acquisition will be capitalized and accounted for in accordance with the guidance in ASU 2017-01.

~~Assets and Liabilities Measured at Fair Value~~

Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy) has been established.

~~Lightstone Value Plus Real Estate Investment Trust V, Inc.~~

~~(Formerly Behringer Harvard Opportunity REIT II, Inc.)~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

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

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability that are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

~~Recurring Fair Value Measurements~~

We may use interest rate swaps and caps to manage our interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, implied volatilities, and foreign currency exchange rates.

~~As of September 30, 2017, we have no derivative financial instruments.~~

~~Nonrecurring Fair Value Measurements~~

~~There were no impairment charges recorded during the nine months ended September 30, 2017 and 2016.~~

~~Financial Instruments not Reported at Fair Value~~

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

~~Lightstone Value Plus Real Estate Investment Trust V, Inc.~~

~~(Formerly Behringer Harvard Opportunity REIT II, Inc.)~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

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

As of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, management estimated that the carrying value of cash and cash equivalents, restricted cash, ~~accounts~~note receivable, prepaid expenses and other assets (exclusive of interest rate cap contracts - see Note 6) and accounts payable and accrued and other liabilities ~~payables/receivables from related parties, and distributions payable to noncontrolling interests~~ were at amounts that reasonably approximated their fair value based on their highly-liquid nature ~~and~~and/or short-term maturities.

The fair value of the notes payable is categorized as a Level 2 in the fair value hierarchy. The fair value was estimated using a discounted cash flow analysis valuation on the estimated borrowing rates currently available for loans with similar terms and maturities. The fair value of the notes payable was determined by discounting the future contractual interest and principal payments by a market rate. Disclosure about fair value of financial instruments is based on pertinent information available to management as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016.~~

2022. Carrying amounts of our notes payable and the related estimated fair value ~~as of September 30, 2017 and December 31, 2016 are~~is summarized as follows:

As of September 30, 2017 As of December 31, 2016
Carrying Amount Estimated Fair
Value Carrying Amount Estimated Fair
Value
Notes payable $ 103,392 $ 107,582 $ 143,119 $ 146,790
Schedule of notes payable and the related estimated fair value
As of
March 31,
2023 As of
December 31,
2022
Carrying
Amount Estimated
Fair Value Carrying
Amount Estimated
Fair Value
Notes payable $ 293,464 $ 291,521 $ 293,695 $ 288,222
7.5. Real Estate ~~and Real Estate-Related Investments~~Properties
~~As of September 30, 2017, we consolidated six real estate assets in our consolidated balance sheet.~~ The following table presents certain information about ~~our~~the Company’s wholly owned and consolidated ~~investments~~multifamily real estate properties as of ~~September 30, 2017:~~March 31, 2023:
~~Property Name~~
~~Description~~ ~~Location~~ ~~Date Acquired~~
~~Ownership~~
~~Interest~~
~~Gardens Medical Pavilion~~ ~~Medical office building~~ ~~Palm Beach Gardens, Florida~~ ~~October 20, 2010~~Schedule of real estate properties 82 %
~~River Club and the Townhomes at River Club~~Property Name ~~Student housing~~Location ~~Athens, Georgia~~ ~~April 25, 2011~~ 85 %Date Acquired
~~Lakes of Margate~~ ~~Multifamily~~ ~~Margate, Florida~~ ~~October 19, 2011~~ ~~92.5~~ %
Arbors Harbor Town ~~Multifamily~~ Memphis, Tennessee December 20, 2011 94 %
~~22 Exchange~~ ~~Student housing~~ ~~Akron, Ohio~~ ~~April 16, 2013~~ 90 %
~~Arcadian Sugar Land~~Parkside Apartments (“Parkside”) ~~Multifamily~~ Sugar Land, Texas August 8, 2013
Flats at Fishers Fishers, Indiana 90 %November 30, 2017
Axis at Westmont Westmont, Illinois November 27, 2018
Valley Ranch Apartments Ann Arbor, Michigan February 14, 2019
Autumn Breeze Apartments Noblesville, Indiana March 17, 2020
BayVue Apartments Tampa, Florida July 7, 2021
Citadel Apartments Houston, Texas October 6, 2021
8

~~Courtyard Kauai Coconut Beach Hotel~~
Lightstone Value Plus REIT V, Inc.
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data and where indicated in millions)
~~On June 19, 2017, we,~~
6. Marketable Securities, Derivative Financial Instruments and Fair Value Measurements
Marketable Securities
The following is a summary of the Company’s available for sale securities as of the dates indicated:
Schedule of available-for-sale securities reconciliation
As of March 31, 2023
Debt securities: Adjusted
Cost Gross Unrealized
Gains Gross Unrealized
Losses Fair
Value
Corporate and Government Bonds $ 3,752 $ 8 $ (199 ) $ 3,561
As of December 31, 2022
Debt securities: Adjusted
Cost Gross Unrealized
Gains Gross Unrealized
Losses Fair
Value
Corporate and Government Bonds $ 3,675 $ - $ (220 ) $ 3,455
The Company may be exposed to credit losses through ~~our indirect 80%-owned subsidiaries, Kauai Coconut Beach, LLC~~its available-for-sale debt securities. Unrealized losses or impairments resulting from the amortized cost basis of any available-for-sale debt security exceeding its fair value are evaluated for identification of credit and ~~Kauai Coconut Beach Operator, LLC, (collectively,~~non-credit related factors. Any difference between the ~~“Sellers”) entered into~~fair value of the debt security and the amortized cost basis not attributable to credit related factors are reported in other comprehensive income. A credit-related impairment is recognized as an ~~agreement (the “Courtyard Kauai Agreement”)~~allowance on the balance sheet with a corresponding adjustment to earnings. When evaluating the investments for impairment at each reporting period, the Company reviews factors such as the extent of the unrealized loss, current and future economic market conditions and the economic and financial condition of the issuer and any changes thereto. As of March 31, 2023, the Company has not recognized an allowance for expected credit losses related to available-for-sale debt securities as the Company has not identified any unrealized losses for these investments attributable to credit factors. The Company's unrealized loss on investments in corporate bonds was primarily caused by recent rising interest rates. The Company does not intend to sell the ~~Courtyard Kauai Coconut Beach Hotel,~~investment and it is not more likely than not that the Company will be required to sell the investment before recovery of its amortized cost basis.
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:
Summary of the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates
As of
March 31,
2023
Due in 1 year $ 504
Due in 1 year through 5 years 2,961
Due in 5 years through 10 years 96
Due after 10 years -
Total $ 3,561
Derivative Financial Instruments
The Company has entered into two interest rate cap contracts with unrelated financial institutions in order to reduce the effect of interest rate fluctuations or risk of certain real estate investment’s interest expense on its variable rate debt. The Company is exposed to credit risk in the event of non-performance by the counterparty to these financial instruments. Management believes the risk of loss due to non-performance to be minimal.
9
Lightstone Value Plus REIT V, Inc.
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data and where indicated in millions)
The Company is accounting for the interest rate cap contracts as economic hedges, marking these contracts to market, taking into account present interest rates compared to the contracted fixed rate over the life of the contract and recording the unrealized gain or loss on the interest rate cap contracts in the consolidated statements of operations.
For the three months ended March 31, 2023 and 2022, the Company recorded unrealized losses of $0.5 million and unrealized gains of $0.6 million, respectively, in the consolidated statements of operations representing the change in the fair value of these economic hedges during such periods.
The interest rate cap contracts have notional amounts of $52.2 million and $49.0 million, respectively, mature on July 15, 2023 and October 11, 2023, respectively, and effectively cap LIBOR at 2.50% and 2.00%, respectively. The aggregate fair value of the interest rate cap contracts was $1.3 million and $1.8 million as of March 31, 2023 and December 31, 2022, respectively, and is included in prepaid expenses and other assets on the consolidated balance sheets. During the three months ended March 31, 2023 the Company earned $0.6 million from the interest rate cap contracts which is recorded in interest expense, net on the consolidated statements of operations.
Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a ~~311-room hotel located~~liability (an exit price) in ~~Kapaa, Hawaii,~~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 ~~KHS, LLC,~~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.
The fair values of the Company’s investments in debt securities are measured using quoted prices for these investments; however, the markets for these assets are not active. The fair values of the Company’s interest rate cap contracts are measured using other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. As of March 31, 2023 and December 31, 2022, all of the Company’s debt securities and interest rate cap contracts were classified as Level 2 assets and there were no transfers between the level classifications during the three months ended March 31, 2023 and 2022.
10
Lightstone Value Plus REIT V, Inc.
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data and where indicated in millions)
7. Notes Payable
Notes payable consists of the following:
Schedule of information on notes payable
Property Interest Rate Weighted Average
Interest Rate for the
Three Months Ended
March 31,
2023 Maturity Date Amount Due
at Maturity As of
March 31,
2023 As of
December 31,
2022
Arbors Harbor Town 4.53% 4.53% January 1, 2026 $ 29,000 $ 29,000 $ 29,000
Arbors Harbor Town Supplemental 3.52% 3.52% January 1, 2026 5,379 5,704 5,732
Parkside Apartments 4.45% 4.45% June 1, 2025 15,782 16,556 16,644
Axis at Westmont 4.39% 4.39% February 1, 2026 34,343 36,317 36,483
Valley Ranch Apartments 4.16% 4.16% March 1, 2026 43,414 43,414 43,414
Flats at Fishers 3.78% 3.78% July 1, 2026 26,090 27,936 28,072
Flats at Fishers Supplemental 3.85% 3.85% July 1, 2026 8,366 8,944 8,987
Autumn Breeze Apartments 3.39% 3.39% April 1, 2030 25,518 29,920 29,920
BayVue Apartments LIBOR + 3.00%
(floor 3.10%) 7.67% July 9, 2024 46,673 46,673 46,443
Citadel Apartments Senior LIBOR + 1.50%
(floor 1.60%) 6.18% October 11, 2024 39,200 39,200 39,200
Citadel Apartments Junior LIBOR + 8.75%
(floor 8.85%) 13.53% October 11, 2024 9,800 9,800 9,800

Total notes payable 5.25% $ 283,565 293,464 293,695

Less: Deferred financing costs (3,060 ) (3,406 )

Total notes payable, net $ 290,404 $ 290,289
LIBOR as of March 31, 2023 and December 31, 2022 was 4.86% and 4.39%, respectively. The Company’s loans are secured by the indicated real estate and are non-recourse to the Company, unless otherwise indicated.
The following table provides information with respect to the contractual maturities and scheduled principal repayments of the Company’s indebtedness as of March 31, 2023.
Schedule of contractual obligations for principal payments
2023 2024 2025 2026 2027 Thereafter Total
Principal maturities $ 1,730 $ 98,134 $ 18,138 $ 147,729 $ 654 $ 27,079 $ 293,464

Less: deferred financing costs (3,060 )

Total notes payable, net $ 290,404
As of March 31, 2023, the Company was in compliance with all of its financial debt covenants.
11
Lightstone Value Plus REIT V, Inc.
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data and where indicated in millions)
Citadel Apartments
On October 6, 2021, the Company entered into a non-recourse mortgage loan facility for up to $39.2 million (the ~~“Buyer”~~“Citadel Apartments Senior Mortgage”) ~~an unaffiliated third party,~~. Simultaneously, on October 6, 2021, the Company also entered into a non-recourse mortgage loan facility for up to $9.8 million (the “Citadel Apartments Junior Mortgage” and together with the Citadel Apartments Senior Mortgage, the “Citadel Apartments Mortgages”). The Citadel Apartments Mortgages provide for a ~~contractual sales price~~replacement benchmark rate in connection with the phase-out of ~~$62.0 million.~~LIBOR, which is expected to be for periods after June 30, 2023.
~~On August 15, 2017, the Sellers completed the sale of the Courtyard Kauai Coconut Beach Hotel~~The Citadel Apartments Mortgages initially mature on October 11, 2024, with two one-year extension options, subject to the ~~Buyer for $62.0 million pursuant~~satisfaction of certain conditions, and are collateralized by the Citadel Apartments, while the Citadel Apartments Junior Mortgage is subordinate to the Citadel Apartments Senior Mortgage.
Pursuant to the terms of the ~~Courtyard Kauai Agreement.~~Citadel Apartments Mortgages, the Company is required to enter into one or more interest rate cap agreements in the notional amount of $49.0 million for as long as the Citadel Apartments Mortgages remain outstanding. In connection with the ~~transaction,~~Citadel Apartments Mortgages, the ~~Buyer assumed~~Company has entered into an interest rate cap agreement with a notional amount of $49.0 million pursuant to which the ~~existing~~LIBOR rate is capped at 2.00% through October 11, 2023.
BayVue Apartments
On July 7, 2021, the Company entered into a non-recourse mortgage loan facility for up to $52.2 million (the “BayVue Apartments Mortgage”) scheduled to initially mature on July 9, 2024, with two, one-year extension options, subject to the satisfaction of certain conditions. The BayVue Apartments Mortgage provides for a replacement benchmark rate in connection with the phase-out of LIBOR, which is expected to be for periods after June 30, 2023. As of March 31, 2023, the outstanding ~~mortgage indebtedness of $36.0~~principal balance and remaining availability under the BayVue Apartments Mortgage was $46.7 million ~~secured by~~and $5.5 million, respectively. The remaining availability may be drawn for certain capital improvements to the ~~Courtyard Kauai Coconut Beach Hotel. The net proceeds from~~property pursuant to the ~~disposition~~loan agreement.
Pursuant to the terms of the ~~Courtyard Kauai Coconut Beach Hotel were approximately $24.1~~BayVue Apartments Mortgage, the Company is required to enter into one or more interest rate cap agreements in the notional amount of $52.2 million ~~after~~for as long as the payment of closing costs, expenses, pro rations and other working capital adjustments and a payment of a payment of approximately $1.7 million to the minority owner of the Courtyard Kauai Coconut Beach Hotel.BayVue Apartments Mortgage remains outstanding. In connection with the ~~sale~~BayVue Apartments Mortgage, the Company has entered into an interest rate cap agreement with a notional amount of $52.2 million pursuant to which the ~~Courtyard Kauai Coconut Beach Hotel, we recognized a gain on sale of real estate of $20.9 million on our consolidated statements of operations during the third quarter of 2017.~~LIBOR rate is capped at 2.50% through July 15, 2023.
16
12

Lightstone Value Plus ~~Real Estate Investment Trust~~REIT V, Inc.
~~(Formerly Behringer Harvard Opportunity REIT II, Inc.)~~

Notes to Consolidated Financial Statements ~~(Unaudited)~~
(unaudited)
(Dollar ~~and share~~ amounts in thousands, except per ~~share/unit~~share data and where indicated in millions)
In connection with the sale of the Courtyard Kauai Coconut Beach Hotel, certain funds were placed in escrow with a qualified intermediary in order to facilitate potential like-kind exchange transactions in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended. The balance of the escrow account was approximately $27.0 million as of September 30, 2017 and is included in restricted cash on the consolidated balance sheet.
The disposition of the Courtyard Kauai Coconut Beach Hotel did not qualify to be reported as discontinued operations since the disposition did not represent a strategic shift that had a major effect on the Company’s operations and financial results. Accordingly, the operating results of the Courtyard Kauai Coconut Beach Hotel are reflected in the Company’s results from continuing operations for all periods presented through its respective date of disposition.
8. ~~Investment in Unconsolidated Joint Venture~~Stockholders’ Equity
~~We provided mezzanine financing totaling $15.3 million to an unaffiliated third-party entity~~Share Redemption Program
The Company’s board of directors has adopted a share redemption program (the ~~“Borrower”~~“SRP”) that ~~owns an apartment complex~~permits stockholders to sell their shares back to the Company, subject to the significant conditions and limitations of the program. The Company’s board of directors can amend the provisions of the SRP at any time without the approval of its stockholders.
Effective March 25, 2021, the Company’s Board of Directors reopened the SRP, which had been suspended since December 13, 2019, solely for redemptions submitted in ~~Denver, Colorado~~connection with a stockholder’s death and set the price for all such purchases to the Company’s current NAV per Share, as determined by its board of directors and reported by the Company from time to time.
On November 10, 2022, the Company’s board of directors adopted a Seventh Amended and Restated Share Redemption Program (the ~~“Huron”~~“Amended SRP”), which became effective on January 1, 2023. Under the terms of the Amended SRP, any stockholder may request redemption of their shares, subject to the significant conditions and limitations of the program. Redemption requests will no longer be limited to requests upon the death of a qualifying stockholder, as had been the case under the SRP through December 31, 2022. Additionally, under the terms of the Amended SRP, the Company will redeem shares at 85% of the NAV per Share as of the date the request for redemption is approved.
Pursuant to the terms of the Amended SRP, any shares approved for redemption are redeemed on a periodic basis as determined by the Company’s board of directors, generally expected to be at the end of each quarterly period. However, the Company will not redeem, during any calendar year, more than 5% of the number of shares outstanding on last day of the previous calendar year (the “5% Limitation”). The ~~Borrower also~~cash available for redemption of shares will be set by the Company’s board of directors not less often than annually (the “Funding Limitation” and, together with the 5% Limitation, the “Redemption Limitations”). The Company’s board of directors has ~~a senior construction loan with a third-party construction lender (the “Senior Lender”) in an aggregate original principal~~set the amount of ~~$40 million.~~cash available for redemption of shares for the year ended December 31, 2023 at $8.0 million, which is generally to be allocated $2.0 million for each quarterly period. The ~~senior construction loan is guaranteed by~~Company may change the ~~owners~~amount of the ~~developer. We also have a personal guaranty from the owners~~Redemption Limitations upon 10 business days’ notice to its stockholders and will provide notice of ~~the developer guaranteeing completion of the project and payment of cost overruns. Our mezzanine loan is secured by all of the membership interests of the Borrower and is subordinate~~any change to the ~~senior construction loan. Our advances~~Redemption Limitations by including such information in (a) a Current Report on Form 8-K or in its annual or quarterly reports, all publicly filed with the United States Securities and Exchange Commission or (b) a separate mailing to its stockholders.
Redemption requests will be honored pro rata among all requests received subject to the Redemption Limitations and will not be honored on a first come, first served basis.
The Company’s board of ~~$15.3 million initially had annual stated interest rates ranging~~directors reserves the right in its sole discretion at any time and from ~~10%~~time to ~~18%. We evaluated this ADC Arrangement and determined that~~time, subject to any notice requirements described in our SRP, to (1) reject any request for redemption of shares, (2) change the ~~characteristics are similar~~purchase price for redemption of shares, (3) limit the funds to ~~a jointly-owned investment or partnership. Accordingly, the investment is accounted~~be used for ~~as an unconsolidated joint venture~~redemption of shares under the ~~equity method of accounting instead of loan accounting since we will participate~~SRP or otherwise change the Redemption Limitations, or (4) amend, suspend (in whole or in part) or terminate the ~~residual interests through~~SRP.
For the ~~sale or refinancing of the property.~~
Both the senior loan and our mezzanine loan were in technical default at December 31, 2016 due to a delay in completion of the project. The project was subsequently completed in January 2017. On March 23, 2017, the Senior Lender executed a loan amendment extending the maturity date of the loan to March 24, 2018. The Senior Lender loan amendment also increased the interest rate 75 basis points to 30-day LIBOR plus 375 basis points and added provisions to require the maintenance of certain prescribed minimum occupancy and rental rates at future dates. On May 8, 2017, we amended the mezzanine loan agreement to mirror the maturity date of the senior loan and changed our interest rate to 11% for the entire balance of the loan. The amended mezzanine loan agreement was effective as of March 1, 2017. As of September 30, 2017, the outstanding principal balance under the mezzanine loan was $15.3 million. The Borrower funded all cost overruns.
We considered the impact of these events on our accounting treatment and determined the ADC Arrangement should still continue to be accounted for as an unconsolidated joint venture under the equity method of accounting. We will continue to monitor this situation and assess any impact these or future events might have on our ability to ultimately realize the carrying value of our investment. The ADC Arrangement is reassessed at each reporting period.
~~In connection with our investment in the Huron, we capitalized interest of $176 during the nine~~three months ended ~~September 30, 2016. There was no interest capitalized on our investment in~~March 31, 2023, the ~~Huron~~Company repurchased 10,161 shares of common stock, pursuant to its SRP at a weighted average price per share of $14.75 per share. For the three months ended March 31, 2022, the Company repurchased 24,419 shares of common stock, pursuant to its SRP at a weighted average price per share of $12.91 per share.
Distributions
The Company did not make any distributions to its stockholders during the three months ended ~~September 30, 2016 or during the 2017 periods. For the three~~March 31, 2023 and nine months ended September 30, 2017 and 2016, we recorded no equity in earnings (losses) of unconsolidated joint venture related to our investment in the Huron. The Company’s maximum exposure to losses associated with its unconsolidated joint venture is limited to its carrying value in this investment.2022.
~~The following table sets forth our ownership interest in the Huron:~~
Ownership Interest Carrying Amount
Property Name September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
The Huron N/A N/A $ 14,658 $ 14,658
17
13

Lightstone Value Plus ~~Real Estate Investment Trust~~REIT V, Inc.
~~(Formerly Behringer Harvard Opportunity REIT II, Inc.)~~

Notes to Consolidated Financial Statements ~~(Unaudited)~~
(unaudited)
(Dollar ~~and share~~ amounts in thousands, except per ~~share/unit~~share data and where indicated in millions)
~~Summarized balance sheet information for the unconsolidated joint venture as of September 30, 2017 and December 31, 2016, shown at 100%, is as follows:~~
September 30, 2017 December 31, 2016
Total assets $ 69,769 $ 72,272

Total debt, net $ 61,745 $ 56,638

Total equity $ 8,024 $ 11,957
~~Summarized statement of operations information for the unconsolidated joint venture for the periods indicated, shown at 100%, is as follows:~~
For the Three Months Ended
September 30, For the Nine Months Ended
September 30,
2017 2016 2017 2016
Total revenues $ 1,962 $ 197 $ 2,069 $ 251
Net loss (2,000 ) (1,346 ) (6,835 ) (2,354 )
9. ~~Variable Interest Entities~~Related Party Transactions
Effective January 1, 2016, we adopted the guidance in ASU 2015-02. As a result, the Operating Partnership (see Note 1) and each of our less than wholly-owned real estate partnerships (22 Exchange, LLC, Gardens Medical Pavilion, LLC, SL Parkside Apartments, LLC, and the ADC Arrangement associatedThe Company has agreements with the ~~Huron) have been deemed~~Advisor and its affiliates to have the characteristics of a VIE. However, we were not required to consolidate any previously unconsolidated entities or deconsolidate any previously consolidated entities as a result of the change in classification. Accordingly, there has been no change to the amounts reported in our consolidated balance sheetspay certain fees and ~~statements of cash flows or amounts recognized in our consolidated statements of operations.~~
~~Consolidated VIEs~~
The Company consolidates the Operating Partnership, 22 Exchange, LLC, Gardens Medical Pavilion, LLC through BH-AW-Florida MOB Venture, LLC, and SL Parkside Apartments, LLC, which are variable interest entities, or VIEs, for which we are the primary beneficiary. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A limited partnership, or legal entities such as an LLC, are considered a VIE when the majority of the limited partners unrelated to the general partner possess neither the right to remove the general partner without cause, norreimburse certain rights to participate in the decisions that most significantly affect the financial results of the partnership. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; and the similarity with and significance to our business activities and the business activities of the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.
~~Unconsolidated VIEs~~
Included in the Company’s joint venture investments as of September 30, 2017 is the ADC Arrangement associated with the Huron, which is accounted for as an unconsolidated joint venture and is a VIE. Refer to Note 8 for further details on the ADC Arrangement. This arrangement was established to provide mezzanine financing to an unaffiliated third party that owns the Huron, an apartment complex in Denver, Colorado. Based on our reevaluation under ASU 2015-02, we determined that we are not the primary beneficiary of this VIE based on the rights of the general partner. The arrangement does not allow for substantive kick-out rights over the general partner and we do not have the power to direct the activities of the Huron that most significantly affect the entity’s economic performance. Accordingly, we have determined it is appropriate, consistent with past accounting, that the Huron ADC Arrangement will continue to be accounted for under the equity method.
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~~Lightstone Value Plus Real Estate Investment Trust V, Inc.~~
~~(Formerly Behringer Harvard Opportunity REIT II, Inc.)~~
~~Notes to Consolidated Financial Statements (Unaudited)~~
~~(Dollar and share amounts in thousands, except per share/unit data and where indicated in millions)~~
~~10.~~ ~~Notes Payable~~
~~The following table sets forth information on our notes payable as of September 30, 2017 and December 31, 2016:~~
Amount Due Notes Payable as of
Description Interest Rate Maturity Date at Maturity September 30, 2017 December 31, 2016
Courtyard Kauai Coconut Beach Hotel Repaid in full on 5/8/2017 (See note below) $ - $ - $ 38,000
Gardens Medical Pavilion 4.90% 1/1/2018 12,480 12,587 12,899
River Club and the Townhomes at River Club 5.26% 5/1/2018 23,368 23,615 23,917
Lakes of Margate 5.49% and 5.92% 1/1/2020 13,384 14,042 14,243
Arbors Harbor Town 3.99% 1/1/2019 23,632 24,280 24,653
22 Exchange 3.93% 5/5/2023 16,875 19,051 19,307
Parkside⁽¹⁾ 5% 6/1/2018 9,560 9,817 10,100
Total debt $ 99,299 103,392 143,119
Deferred financing fees (490 ) (787 )
Total notes payable, net $ 102,902 $ 142,332
~~(1) Includes approximately $0.1 million of unamortized premium related to debt we assumed at acquisition.~~
As of September 30, 2017, our outstanding notes payable were $102.9 million, net of deferred financing fees of $0.5 million, and had a weighted-average interest rate of 5.0%. For loans in place as of September 30, 2017, we have guaranteed payment of certain recourse liabilities with respect to certain customary nonrecourse carveouts as set forth in the guaranties in favor of the unaffiliated lenders with respect to the 22 Exchange and Parkside notes payable.
We are subject to various customary financial covenants, including, maintaining minimum debt service coverage ratios, loan to value ratios and liquidity. We did not meet the debt service coverage requirements for our 22 Exchange loan as of March 31, 2017, June 30, 2017 and September 30, 2017. As a result, we expect the lender to begin sweeping the cash from operations; however, the loan is not in default.
As of September 30, 2017, the Company had debt of approximately $12.6 million associated with Gardens Medical Pavilion, approximately $23.6 million associated with River Club and Townhomes at River Club, and $9.8 million associated with Parkside maturing in the next twelve months.
If we do not dispose of Gardens Medical Pavilion, River Club and Townhomes at River Club or Parkside by their maturity dates, we expect to repay the outstanding balances with available cash or refinance all or a portion of the balances outstanding.
The following table summarizes our contractual obligations for principal payments, based on initial scheduled maturity dates and does not reflect the exercise of any extension options, as of September 30, 2017:
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~~Lightstone Value Plus Real Estate Investment Trust V, Inc.~~
~~(Formerly Behringer Harvard Opportunity REIT II, Inc.)~~
~~Notes to Consolidated Financial Statements (Unaudited)~~
~~(Dollar and share amounts in thousands, except per share/unit data and where indicated in millions)~~
Year Amount Due
October 1, 2017 - December 31, 2017 $ 550
2018 46,808
2019 24,308
2020 13,771
2021 404
Thereafter 17,441
Total contractual obligations for principal payments 103,282
Unamortized premium 110
Total notes payable 103,392
Less:  Deferred financing fees, net (490 )
Notes payable, net $ 102,902
~~Courtyard Kauai Coconut Beach Hotel Debt~~
Our debt secured by Courtyard Kauai Coconut Beach Hotel, with an outstanding balance of $38 million as of December 31, 2016, was scheduled to mature on May 9, 2017. On May 8, 2017, we, through our 80% ownership interest in a joint venture between our indirect wholly owned subsidiary and JMI Realty, LLC, an unaffiliated third party (the “Kauai Joint Venture��), entered into a new mortgage facility of up to $44 million (the “Courtyard Kauai Loan”) with TH Commercial Investment Corp. Initial borrowings of $36 million were advanced under the Courtyard Kauai Loan and those funds plus additional cash were used to repay the then outstanding balance under the previous loan with Wells Fargo Bank. The Courtyard Kauai Loan bore interest at 30-day LIBOR plus 4.7% and was scheduled to mature in three years with two one-year extensions available. We had also guaranteed payment of certain recourse liabilities with respect to certain customary nonrecourse carveouts as set forth in the guaranties in favor of the lender.
~~On August 15, 2017, the Courtyard Kauai Loan was assumed by the Buyer~~expenses in connection with ~~our sale of the Courtyard Kauai Coconut Beach Hotel.~~services performed and costs incurred by these entities and other related parties. The ~~outstanding balance as of the date of sale was $36.0 million. See Note 7 for additional information.~~
~~11.~~ ~~Leasing Activity~~
Future minimum base rental payments of our office property, Gardens Medical Pavilion, and the retail space at 22 Exchange due to us under non-cancelable leases in effect as of September 30, 2017 are as follows:
Year Amount Due
Remainder of 2017 $ 394
2018 1,362
2019 1,096
2020 995
2021 868
Thereafter 2,411
Total $ 7,126
The schedule above does not include rental payments due to us from our multifamily and student housing properties, as leases associated with these properties typically are for periods of one year or less.
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~~Lightstone Value Plus Real Estate Investment Trust V, Inc.~~
~~(Formerly Behringer Harvard Opportunity REIT II, Inc.)~~
~~Notes to Consolidated Financial Statements (Unaudited)~~
~~(Dollar and share amounts in thousands, except per share/unit data and where indicated in millions)~~
~~12.~~ ~~Derivative Instruments and Hedging Activities~~
We may be exposed to the risk associated with variability of interest rates that might impact our cash flows and the results of operations.  The hedging strategy of entering into interest rate caps and swaps, therefore,Company is ~~to eliminate or reduce, to the extent possible, the volatility of cash flows.~~
~~As of September 30, 2017, we did not have any derivative instruments and were not engage in any hedging activities.~~
~~Our derivative financial instruments had a nominal effect~~dependent on the ~~consolidated statements of operations for the three and nine months ended September 30, 2017 and 2016.~~
~~13.~~ ~~Distributions~~
Distributions are authorized at the discretion of our board of directors based on its analysis of our performance over the previous periods and expectations of performance for future periods. These analyses may include actual and anticipated operating cash flow, changes in market capitalization rates for investments suitable for our portfolio, capital expenditure needs, general financial and market conditions, proceeds from asset sales, and other factors that our board of directors deems relevant. Our board of director’s decisions will be substantially influenced by the obligation to ensure that we maintain our federal tax status as a REIT. We cannot provide assurance that we will pay distributions at any particular level, or at all.
~~14.~~ ~~Related Party Transactions~~
Advisor
Our external advisor and certain of its affiliates may receive fees and compensation in connection with the management and sale of our assets based on an advisory management agreement, as amended and restated.
From January 4, 2008 through February 10, 2017, we were party to successive advisory management agreements, each with a term of one year or less, with the Behringer Advisor. The most recently executed advisory management agreement was the Fifth Amended and Restated Advisory Management Agreement (the “Fifth Advisory Agreement”) entered into on July 25, 2016 and effective as of June 6, 2016. On February 10, 2017, we entered into a Termination of Advisory Management Agreement with the Behringer Advisor and (solely with respect to certain sections) Behringer (the “Advisory Termination Agreement”) pursuant to which the Fifth Advisory Agreement was terminated as of the close of business on February 10, 2017.
Concurrently with our entry into the Advisory Termination Agreement, we engaged the Advisor to provide us with advisory services pursuant to two separate advisory management agreements (collectively, the “Lightstone Advisory Agreement”). With the exception of the Administrative Services Fee, the fees earned by and expenses reimbursed to the Advisor pursuant to the Lightstone Advisory Agreement are identical to the fees earned by and expenses reimbursed to the Behringer Advisor pursuant to the Fifth Advisory Agreement. The following discussion describes the fees and expenses payable to our external advisor and its respective affiliates under both the Fifth Advisory Agreement and the Lightstone Advisory Agreement.
We pay our external advisor acquisition and advisory fees of 1.5% of the amount paid in respect of the purchase, development, construction, or improvement of each asset we acquire, including any debt attributable to those assets. In addition, we pay acquisition and advisory fees of 1.5% of the funds advanced in respect of a loan investment. We incurred no acquisition and advisory fees payable to our external advisor for the three and nine months ended September 30, 2017 and 2016 because we had no acquisitions during these periods.
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~~Lightstone Value Plus Real Estate Investment Trust V, Inc.~~
~~(Formerly Behringer Harvard Opportunity REIT II, Inc.)~~
~~Notes to Consolidated Financial Statements (Unaudited)~~
~~(Dollar and share amounts in thousands, except per share/unit data and where indicated in millions)~~
We also pay our external advisor an acquisition expense reimbursement in the amount of (i) 0.25% of the funds paid for purchasing an asset, including any debt attributable to the asset, plus 0.25% of the funds budgeted for development, construction, or improvement in the case of assets that we acquire and intend to develop, construct, or improve or (ii) 0.25% of the funds advanced in respect of a loan investment. We also pay third parties, or reimburse our external advisor or its affiliates, for any investment-related expenses due to third parties in the case of a completed investment, including, but not limited to, legal fees and expenses, travel and communication expenses, costs of appraisals, accounting fees and expenses, third-party brokerage or finder’s fees, title insurance, premium expenses, and other closing costs.
~~Our external advisor~~ and its affiliates are also responsible for paying all of the investment-related expenses that we or the external advisor or its affiliates incur that are due to third parties or related to the additional services provided by our external advisor as described above with respect to investments we do not make, other than certain non-refundable payments made in connection with any acquisition. For the three and nine months ended September 30, 2017 and 2016, we incurred no acquisition expense reimbursements.
We pay our external advisor a debt financing fee of 0.5% of the amount available under any loan or line of credit made available to us and pay directly all third-party costs associated with obtaining the debt financing. During the second quarter of 2017, we incurred a debt financing fee of $0.2 million related to the Courtyard Kauai Loan. We incurred no debt financing fees for the three and nine months ended September 30, 2016.
We pay our external advisor a development fee in an amount that is usual and customary for comparable services rendered to similar projects in the geographic market of the project if such affiliate provides the development services and if a majority of our independent directors determines that such development fee is fair and reasonable to us. We incurred no development fees for the three and nine months ended September 30, 2017 and 2016.
We pay our external advisor a monthly asset management fee of one-twelfth of 0.7% of the value of each asset. The value of our assets will be the value as determined in connection with the establishment and publication of an estimated value per share unless the asset was acquired after our publication of an estimated value per share (in which case the value of the asset will be the contractual purchase price of the asset). For the three and nine months ended September 30, 2017, we expensed $0.4 million and $1.4 million, respectively, of asset management fees payable to our external advisor compared to $0.5 million and $1.6 million for the same periods in 2016, respectively.
Our external advisor is responsible for paying all of the expenses it incurs associated with persons employed by the external advisor to the extent that they provide services to us for which our external advisor receives an acquisition, asset management, or debt financing fee, including wages and benefits of the applicable personnel. Instead of reimbursing our external advisor for specific expenses paid or incurred in connection with providing services to us, we pay our external advisor an administrative services fee (also referred to as an administrative services reimbursement under the Lightstone Advisory Agreement) based on a budget of expenses prepared by the external advisor. The administrative services fee is intended to reimburse for all costs associated with providing services to us. For the calendar year ending December 31, 2017, the administrative services fee is $1.325 million annually, pro-rated for the first six months of the year and $1.30 million annually, pro-rated for the second six months of the year. Under the Fifth Advisory Agreement, for the calendar year ended December 31, 2016, the administrative services fee was the lesser of (i) $1.325 million per calendar year, and (ii) the actual costs of providing administrative services to us under the Fifth Advisory Agreement, payable in four equal quarterly installments within 45 days of the end of each calendar quarter. In addition, under the advisory management agreements, we are to reimburse the external advisor for certain due diligence services provided in connection with asset acquisitions and dispositions and debt financings separately from the administrative services fee. For the three and nine months ended September 30, 2017, we incurred and expensed such costs for administrative services and due diligence services of approximately $0.5 million and $1.2 million, respectively, compared to approximately $0.9 million and $1.2 million for the same periods in 2016, respectively. These amounts include less than $0.1 million related to certain due diligence services provided during the respective periods.
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~~Lightstone Value Plus Real Estate Investment Trust V, Inc.~~
~~(Formerly Behringer Harvard Opportunity REIT II, Inc.)~~
~~Notes to Consolidated Financial Statements (Unaudited)~~
~~(Dollar and share amounts in thousands, except per share/unit data and where indicated in millions)~~
Notwithstanding the fees and cost reimbursements payable to our external advisor pursuant to our advisory management agreement, under our charter we may not reimburse the external advisor for any amount by which our operating expenses (including the asset management fee) at the end of the four preceding fiscal quarters exceeds the greater of: (i) 2% of our average invested assets, or (ii) 25% of our net income determined without reduction for any additions to reserves for depreciation, bad debts, or other similar non-cash reserves and excluding any gain from the sale of our assets for that period unless a majority of our independent directors determines that such excess expenses are justified based on unusual and non-recurring factors. For the four fiscal quarters ended September 30, 2017, our total operating expenses (including the asset management fee) exceeded the limit on total operating expenses; however, our independent directors determined the excess expenses were justified because of our transition to the new external advisor.
~~Property Manager~~
From January 4, 2008 through February 10, 2017, we were party to a property management and leasing agreement (as amended and restated, the “Behringer Property Management Agreement”) between us, our operating partnership, Behringer Harvard Opportunity Management Services, LLC, and Behringer Harvard Real Estate Services, LLC (collectively, the “Behringer Manager”). On February 10, 2017, we entered into a Termination of Property Management and Leasing Agreement with the Behringer Manager and (solely with respect to certain sections) Behringer (the “Property Management Termination Agreement”) pursuant to which the Behringer Property Management Agreement was terminated as of the close of business on February 10, 2017.
Concurrently with our entry into the Property Management Termination Agreement, we engaged LSG-BH II Property Manager LLC (the “Lightstone Manager”) pursuant to a property management and leasing agreement (the “Lightstone Property Management Agreement”). The fees earned by and expenses reimbursed to the Lightstone Manager pursuant to the Lightstone Property Management Agreement are identical to the fees earned by and expenses reimbursed to the Behringer Manager pursuant to the Behringer Property Management Agreement. The following discussion describes the fees and expenses payable to our affiliated property manager and its respective affiliates under both the Behringer Property Management Agreement (in effect from August 13, 2008 through February 10, 2017) and the Lightstone Property Management Agreement (in effect as of February 10, 2017).
We pay our property manager and affiliate of our external advisor, fees for the management, leasing, and construction supervision of our properties which is 4.0% of gross revenues of the properties managed by our property manager. We pay our property manager an oversight fee equal to 0.5% of the gross revenues of the property managed for any property for which we contract directly with a third-party property manager. In no event will our property manager or its affiliates receive both a property management fee and an oversight fee with respect to any particular property. In the event we own a property through a joint venture that does not pay our property manager directly for its services, we will pay our property manager a management fee or oversight fee, as applicable, based only on our economic interest in the property. For the three and nine months ended September 30, 2017, we incurred and expensed property management fees or oversight fees to the related-party property manager of less than $0.1 million and $0.1 million, respectively, compared to $0.1 million and $0.4 million in the same periods in 2016, respectively.
We pay our property manager a construction management fee in an amount not to exceed 5% of all hard construction costs incurred in connection with, but not limited to capital repairs and improvements, major building reconstruction and tenant improvements, if such affiliate supervises construction performed by or on behalf of us or our affiliates. We incurred no construction management fees for the three and nine months ended September 30, 2017 and 2016.
As of September 30, 2017 and December 31, 2016, we had a payable to our external advisor and its affiliates of $0.1 million and $0.4 million, respectively. These balances consist of accrued fees, including asset management fees, administrative service expenses, property management fees, and other miscellaneous costs payable to our external advisor and property manager.
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~~Lightstone Value Plus Real Estate Investment Trust V, Inc.~~
~~(Formerly Behringer Harvard Opportunity REIT II, Inc.)~~
~~Notes to Consolidated Financial Statements (Unaudited)~~
~~(Dollar and share amounts in thousands, except per share/unit data and where indicated in millions)~~
~~We are dependent on our external advisor and our property manager~~ for certain services that are essential to ~~us,~~it, including investment decisions, asset disposition decisions, property management and leasing services, financing services, and other general administrative responsibilities. In the event that these ~~companies were~~entities are unable to provide usthe Company with their respective services, wethe Company would be required to obtain such services from other sources.
The advisory agreement has a one-year term and is renewable annually upon the mutual consent of the Advisor and the Company’s independent directors.
The following table represents the fees incurred associated with the payments to the Company’s Advisor and its affiliates for the periods indicated:
Schedule of related party transactions
For the
Three Months Ended
March 31,
2023 2022
Acquisition fees and acquisition expense reimbursement⁽¹⁾ $ 21 $ -
Property management fees (property operating expenses) 135 117
Administrative services reimbursement (general and administrative costs) 376 347
Asset management fees (general and administrative costs) 906 868
Total $ 1,438 $ 1,332
(1) Capitalized to the corresponding asset and amortized over its estimated useful life.
~~15.~~10. ~~Subsequent Events~~Commitments and Contingencies
Legal Proceedings
~~Share Redemption Program~~
From time to time in the ordinary course of business, the Company may become subject to legal proceedings, claims or disputes.
On November 8, 2017, our board of directors approved redemptions for the third quarter of 2017 totaling 239 thousand shares with an aggregate redemption payment of approximately $1.2 million. See Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds” for a full description
As of the ~~price at~~date hereof, the Company is not a party to any material pending legal proceedings of which ~~we redeem shares under our share redemption program.~~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.
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14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and the notes thereto.
Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include discussion and analysis of the financial condition of Lightstone Value Plus REIT V, Inc. and our subsidiaries (which may be referred to herein as the ~~Company,~~“Company,” “we,” “us” or “our”), including our ability to make accretive real estate or real estate-related investments, rent space on favorable terms, to address our debt maturities and to fund our liquidity requirements, to sell our assets when we believe advantageous to achieve our investment objectives, our anticipated capital expenditures, the amount and timing of anticipated future cash distributions to our stockholders, the estimated net asset value per share ~~value~~ of our common stock (“NAV per Share”), and other matters. Words such as “may,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “could,” “should” and variations of these words and similar expressions are intended to identify forward-looking statements.
These forward-looking statements are not historical facts but reflect the intent, belief or current expectations of our management based on their knowledge and understanding of the business and industry, the economy and other future conditions. These statements are not guarantees of future performance, and we caution stockholders not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors ~~listed and described herein and under “Item 1A, Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2017 and the factors~~ described below:
● market and economic challenges experienced by the U.S. and global economies or real estate industry as a whole and the local economic conditions in the markets in which our investments are located. Additionally, our business and financial performance may be adversely affected by current and future economic and other conditions; such as inflation, recession, political upheaval or uncertainty, terrorism and acts of war, natural and man-made disasters, cybercrime, and outbreaks of contagious diseases;
● the availability of cash flow from operating activities for distributions, if required to maintain our status as a real estate investment trust, or REIT;
● conflicts of interest arising out of our relationships with our advisor and its affiliates;
● our ability to retain our executive officers and other key individuals who provide advisory and property management services to us;
● our level of debt and the terms and limitations imposed on us by our debt agreements;
● the availability of credit generally, and any failure to obtain debt financing at favorable terms or a failure to satisfy the conditions and requirements of that debt;
● our ability to make accretive investments;
● our ability to diversify our portfolio of assets;
● changes in market factors that could impact our rental rates and operating costs;
● our ability to secure leases at favorable rental rates;
~~market and economic challenges experienced by the U.S. and global economies or real estate industry as a whole and the local economic conditions in the markets in which our investments are located;~~
~~the availability of cash flow from operating activities for distributions, if any;~~
~~conflicts of interest arising out of our relationships with our advisor and its affiliates;~~
~~our ability to retain or replace our executive officers and other key individuals who provide advisory and property management services to us;~~
~~our level of debt and the terms and limitations imposed on us by our debt agreements;~~
~~the availability of credit generally, and any failure to obtain debt financing at favorable terms or a failure to satisfy the conditions and requirements of that debt;~~
~~our ability to make accretive investments in a diversified portfolio of assets;~~
future changes in market factors that could affect the ultimate performance of our development or redevelopment projects, including but not limited to construction costs, plan or design changes, schedule delays, availability of construction financing, performance of developers, contractors and consultants, and growth in rental rates and operating costs;
~~our ability to secure leases at favorable rental rates;~~
~~our ability to acquire and/or sell assets at a price and on a timeline consistent with our investment objectives;~~
~~impairment charges;~~
~~unfavorable changes in laws or regulations impacting our business, our assets, or our key relationships; and~~
~~factors that could affect our ability to qualify as a real estate investment trust.~~
● our ability to sell our assets at a price and on a timeline consistent with our investment objectives;
25
● impairment charges;
● unfavorable changes in laws or regulations impacting our business, our assets or our key relationships; and
● factors that could affect our ability to qualify as a real estate investment trust.
Forward-looking statements in this Quarterly Report on Form 10-Q reflect our management’s view only as of the date of this Report, and may ultimately prove to be incorrect. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results, except as required by applicable law. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 27A of the Securities Act and Section 21E of the Exchange Act.
Cautionary Note
The representations, warranties, and covenants made by us in any agreement filed as an exhibit to this Quarterly Report on Form 10-Q are made solely for the benefit of the parties to the agreement, including, in some cases, for the purpose of allocating risk among the parties to the agreement, and should not be deemed to be representations, warranties, or covenants to or with any other parties. Moreover, these representations, warranties, or covenants should not be relied upon as accurately describing or reflecting the current state of our affairs.
Executive Overview
We were formed primarily to acquire and operate commercial real estate and real estate-related assets on an opportunistic and value-add basis. In particular, we have focused generally on acquiring commercial properties with significant possibilities for capital appreciation, such as those requiring development, redevelopment or repositioning, those located in markets and submarkets with high growth potential, and those available from sellers who were distressed or faced time-sensitive deadlines. In addition, our opportunistic and value-add investment strategy has included investments in real estate-related assets that present opportunities for higher current income. Since inception, we have acquired a wide variety of commercial properties, including office, industrial, retail, hospitality, multifamily and ~~multifamily.~~student housing. We have purchased existing, income-producing properties and newly constructed properties. We have also invested in ~~other real estate-related investments such as~~ mortgage and mezzanine loans. We have made our investments in or in respect of real estate assets located in the United States and other countries based on our view of existing market conditions. ~~Currently, our investments include multifamily and student housing communities, an office building, and a mezzanine loan.~~ All of our current investments are located in the United States.
~~Our common stock is not~~ We currently listed on a national securities exchange. The timing of a liquidity event for our stockholders will depend upon then prevailing market conditions. We previously targeted the commencement of a liquidity event within six years after the termination of our initial public offering, which occurred on July 3, 2011. On June 29, 2017, our board of directors elected to extend the targeted timeline an additional six years until June 30, 2023 based on their assessment of our investment objectives and liquidity options for our stockholders. However, we can provide no assurances as to the actual timing of the commencement of a liquidity event for our stockholders or the ultimate liquidation of the Company. We will seek stockholder approval prior to liquidating our entire portfolio.
~~Liquidity and Capital Resources~~
We had unrestricted cash and cash equivalents of $53.2 million as of September 30, 2017. Our principal demands for funds going forward will be for the payment of (a) operating expenses, (b) interest and principal on our outstanding indebtedness, (c) share redemptions and (d) distributions, if any, authorized by our board of directors. Generally, we expect to meet cash needs for the payment of operating expenses, interest on our outstanding indebtedness and share redemptions with our cash flow from operations and to fund authorized distributions (if any) from available cash flow from operations and/or proceeds received from asset sales. To the extent that our cash flow from operations is not sufficient to cover our operating expenses, interest on our outstanding indebtedness, or share redemptions, we expect to use cash generated from borrowings and asset sales to fund such needs.
We intend to hold our various real properties until such time as our board of directors determines that a sale or other disposition appears to be advantageous to achieve our investment objectives or until it appears that the objectives will not be met.We currently have one operating segment. As of March 31, 2023, our investments included eight wholly owned real estate investments (multifamily properties) and one real estate-related investment (note receivable).
Adverse Developments Affecting the Financial Services Industry and Concentration of Credit Risk
As of March 31, 2023 and December 31, 2022, we had cash deposited in certain financial institutions in excess of federally insured levels. We regularly monitor the financial stability of these financial institutions and believe that we are not exposed to any significant credit risk in cash and cash equivalents or restricted cash. However, in March 2023, certain U.S. government banking regulators took steps to intervene in the operations of certain financial institutions due to liquidity concerns, which caused general heightened uncertainties in financial markets. While these events have not had a material direct impact on our operations, if further liquidity and financial stability concerns arise with respect to banks and financial institutions, either nationally or in specific regions, our ability to access cash or enter into new financing arrangements may be threatened, which could have a material adverse effect on our business, financial condition and results of operations.
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16

~~On January 5, 2016, we paid a special~~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, inflation and recession.
Our overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on consumer behavior. Worsening economic conditions, increases in costs due to inflation, higher interest rates, certain labor and supply chain challenges, and developments related to the COVID-19 pandemic, and other changes in economic conditions, may adversely affect our results of operations and financial performance.
Liquidity and Capital Resources
We had cash ~~distribution~~and cash equivalents of ~~$38.4~~$58.8 million, marketable securities, available for sale of $3.6 million and restricted cash of $4.5 million as of March 31, 2023. Our principal demands for funds going forward are expected to be for the payment of (a) operating expenses, including capital expenditures, and (b) scheduled debt service on our outstanding indebtedness, including any required interest rate cap agreements. We also may, at our discretion, use funds for (a) tender offers and/or ~~$1.50 per share~~redemptions of shares of our common stock, ~~which was funded~~(b) distributions, if any, to our shareholders, and (c) selective acquisitions and/or real estate-related investments. Generally, we expect to meet our cash needs with our cash and cash equivalents on hand along with our cash flow from ~~proceeds received from asset sales.~~
The debt secured by Courtyard Kauai Coconut Beach Hotel, with an outstanding balance of $38 million was scheduled to mature on May 9, 2017. On May 8, 2017, we, through our 80% ownership interest in a joint venture between our indirect wholly owned subsidiary and JMI Realty, LLC, an unaffiliated third party (the “Kauai Joint Venture”), entered into a new mortgage facility of up to $44 million (the “Courtyard Kauai Loan”) with TH Commercial Investment Corp. Initial borrowings of $36 million were advanced underoperations, the Courtyard Kauai Loan and those funds plus additional cash were used to repay the then outstanding balance under the previous loan with Wells Fargo Bank. The Courtyard Kauai Loan bore interest at 30-day LIBOR plus 4.7% and was scheduled to mature in three years with two one-year extensions available. We also had guaranteed paymentrelease of certain ~~recourse liabilities with respect~~funds held in restricted cash, the remaining availability on certain of our mortgage loans and the repayment of our outstanding note receivable. However, to ~~certain customary nonrecourse carveouts as set forth in~~ the ~~guaranties in favor of the lender.~~
~~On August 15, 2017, the Courtyard Kauai Loan was assumed by the buyer in connection with~~extent that these sources are not sufficient to cover our ~~sale of the Courtyard Kauai Coconut Beach Hotel. The outstanding balance as of~~cash needs for at least twelve months from the date of sale was $36.0 million. In connection with the sale of the Kauai Coconut Beach Hotel, certain funds were placed in escrow with a qualified intermediary in order to facilitate potential like-kind exchange transactions in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended. The balance of the escrow account was approximately $27.0 million as of September 30, 2017 and is included in restricted cash on the consolidated balance sheet. See Note 7 forfiling this report, we may also use proceeds from additional ~~information.~~
As of September 30, 2017, the Company had debt of approximately $12.6 million associated with Gardens Medical Pavilion, approximately $23.6 million associated with River Club and Townhomes at River Club, and $9.8 million associated with Parkside maturing in the next twelve months.
~~If we do not dispose of Gardens Medical Pavilion, River Club and Townhomes at River Club~~ borrowings and/or Parkside by their maturity dates, we expect to repay the outstanding balances with available cash or refinance all or a portion of the balances outstanding. In addition to our debt obligations, we consider other factors in evaluating our liquidity. For example, to the extent our portfolio is concentrated in certain geographic regions and types of assets, downturns relating generally to such regions and assets may result in tenants defaulting on their lease obligations at a number of our properties within a short time period. Such defaults could negatively affect our liquidity and adversely affect our abilityselective asset sales to fund our ongoing operations. For the nine months ended September 30, 2017, 42% and 16% of our total revenues were derived from our properties located in Hawaii and Florida, respectively. Additionally, 42%, 31% and 21% of our total revenues were from our hotel, multifamily and student housing investments, respectively.such needs.
We may, but are not required to, establish capital reserves from cash flow generated by operating properties and other investments, or net sales proceeds from the sale of our properties and other investments. Capital reserves are typically utilized for non-operating expenses such as tenant improvements, leasing commissions, and major capital expenditures. Alternatively, a lender may establish its own criteria for escrow of capital reserves.
We have borrowed money to acquire properties and make other investments. Under our charter, the maximum amount of our indebtedness is limited to 300% of our “net assets” (as defined by our charter) as of the date of any borrowing; however, we may exceed that limit if approved by a majority of our independent directors. In addition to our charter limitation, our board of directors has adopted a policy to generally limit our aggregate borrowings to ~~approximately~~ 75% of the aggregate value of our assets unless substantial justification exists that borrowing a greater amount is in our best interests. Our policy limitation, however, does not apply to individual real estate assets.
~~Commercial real estate debt markets may experience volatility and uncertainty as a result~~Results of ~~certain related factors, including the tightening~~Operations
We currently have one operating segment. As of underwriting standards by lenders and credit rating agencies, macro-economic issues related to fiscal, tax and regulatory policies, and global financial issues. Should the overall cost of borrowings increase, either by increases in the index rates or by increases in lender spreads,March 31, 2023, we will need to factor such increases into the economics of our developments and investments. This may result in our investment operations generating lower overall economic returns and a reduced level of cash flow, which could potentially impact our ability to make distributions to our stockholders. In addition, disruptions in the debt markets may reduce the amount of capital that is available to finance real estate, which in turn could: (i) lead to a decline in real estate values generally; (ii) slow real estate transaction activity; (iii) reduce the loan to value ratio upon which lenders are willing to extend debt; and (iv) result in difficulty in refinancing debt as it becomes due, all of which may reasonably be expected to have a material adverse impact on the value ofhad eight wholly owned real estate investments (multifamily properties) and ~~the revenues, income or cash flow from the operations of~~one real ~~properties and mortgage loans.~~estate-related investment (note receivable).
27
~~Debt Financings~~
From time to time, we have obtained mortgage, bridge, or mezzanine loans for acquisitions and investments, as well as property development. In the future, we may obtain financing for property development or refinance our existing real estate assets, depending on multiple factors.
As of September 30, 2017, our outstanding notes payable were $102.9 million, net of deferred financing fees of $0.5 million, and had a weighted average interest rate of 5.0%. As of December 31, 2016, the Company had notes payable of $142.3 million, net of deferred financing fees of $0.8 million, with a weighted average interest rate of 3.9%. For loans in place as of September 30, 2017, we have guaranteed payment of certain recourse liabilities with respect to certain customary nonrecourse carveouts as set forth in the guaranties in favor of the unaffiliated lenders with respect to the 22 Exchange and Parkside notes payable.
We are subject to various customary financial covenants, including, maintaining minimum debt service coverage ratios, loan to value ratios and liquidity. We did not meet the debt service coverage requirements for our 22 Exchange loan as of March 31, 2017, June 30, 2017 and September 30, 2017. As a result, we expect the lender to begin sweeping the cash from operations; however, the loan is not in default.
One of our principal short-term and long-term liquidity requirements includes the repayment of maturing debt. The following table provides information with respect to the contractual maturities and scheduled principal repayments of our indebtedness as of September 30, 2017. The table information is based on initial scheduled maturity dates and does not reflect the exercise of any extension options (dollars in thousands):
Remainder of
2017 2018 2019 2020 2021 Thereafter Total
Principal maturities⁽¹⁾ $ 550 $ 46,808 $ 24,308 $ 13,771 $ 404 $ 17,441 $ 103,282
Interest payments 1,219 3,306 1,581 786 704 967 8,563
Total $ 1,769 $ 50,114 $ 25,889 $ 14,557 $ 1,108 $ 18,408 $ 111,845
~~(1) Does not include approximately $0.1 million of unamortized premium related to debt we assumed on our acquisition of Parkside.~~
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~~Results of Operations~~
As of September 30, 2017, we had seven real estate investments, six of which were consolidated through investments in joint ventures. As of September 30, 2016, we had eight real estate investments, seven of which were consolidated, (one wholly owned and six properties consolidated through investments in joint ventures). We sold the Courtyard Kauai Coconut Beach Hotel on August 15, 2017 and Lakewood Flats on August 16, 2016.
Our results of operations for the respective periods presented reflect decreases in most categories principally resulting from our dispositions of Courtyard Kauai Coconut Beach Hotel in August 2017 (the “2017 Disposition”) and Lakewood Flats in August 2016 (the “2016 Disposition” and together with the 2017 Disposition, the “Dispositions”). Properties owned by us during the entire periods presented are referred to as our “Same Store” properties.
The disposition of the Courtyard Kauai Coconut Beach Hotel did not qualify to be reported as discontinued operations since the disposition did not represent a strategic shift that had a major effect on the Company’s operations and financial results. Accordingly, the operating results of the Courtyard Kauai Coconut Beach Hotel are reflected in the Company’s results from continuing operations for all periods presented through its respective date of disposition.
~~Three months ended September 30, 2017 as compared to the three months ended September 30, 2016.~~
~~The following table provides summary information about our results of operations for the three months ended September 30, 2017 and 2016 (dollars in thousands):~~
Three Months Ended September 30, Change Change due to Change due to
Description 2017 2016 Amount Percentage
Disposition⁽¹⁾ Same Store⁽²⁾
Rental revenues $ 6,122 $ 6,740 $ (618 ) $ (9 )% $ (843 ) $ 225
Hotel revenues 2,653 4,653 (2,000 ) (43.0 )% (2,000 ) -
Property operating expenses 2,697 2,635 62 2.4 % (202 ) 264
Hotel operating expenses 1,921 3,509 (1,588 ) (45.3 )% (1,588 ) -
Interest expense, net 1,601 1,561 40 2.6 % 60 (20 )
Real estate taxes 1,090 1,197 (107 ) (8.9 )% (241 ) 134
Property management fees 285 374 (89 ) (23.8 )% (80 ) (9 )
Asset management fees⁽³⁾ 426 554 (128 ) (23.1 )% (39 ) (89 )
General and administrative 863 705 158 22.4 % - 158
Depreciation and amortization 2,353 2,616 (263 ) (10.1 )% (355 ) 92
~~(1)~~ Represents the amount of decrease for the three months ended September 30, 2017 compared to the three months ended September 30, 2016 as a result of our dispositions of Courtyard Kauai Coconut Beach Hotel in August 2017 ~~andLakewood Flats in August 2016.~~
~~(2)~~ Represents the change for the three months ended September 30, 2017 compared to the three months ended September 30, 2016 for real estate and real estate-related investments owned by us during the entire periods presented, excluding any we have classified as held for sale. Same Store for the periods ended September 30, 2017 and 2016 includes the operating results of Gardens Medical Pavilion, River Club and the Townhomes at River Club, Lakes of Margate, Arbors Harbor Town, 22 Exchange and Parkside.
~~(3)~~ Asset management fees payable to the external advisor are an obligation of the Company, and as such, asset management fees associated with all investments owned during the period are classified in continuing operations. Therefore, the amounts above include asset management fees associated with any property owned during a particular period, including those related to our disposed properties.
29
The following table reflects total rental and hotel revenues and total property and hotel operating expenses for the three months ended September 30, 2017 and 2016 for: (i) our Same Store properties and (ii) the Dispositions (dollars in thousands):
Three Months Ended September 30,
Description 2017 2016 Change
Revenues:
Same store $ 6,122 $ 5,897 $ 225
Disposition 2,653 5,496 (2,843 )
Total revenues $ 8,775 $ 11,393 $ (2,618 )

Property and hotel operating expenses:
Same store $ 2,697 $ 2,433 $ 264
Disposition 1,921 3,711 (1,790 )
Total property and hotel operating expenses $ 4,618 $ 6,144 $ (1,526 )
The tables below reflect occupancy and effective monthly rental rates for our ~~Same Store~~ operating ~~properties:~~properties owned as of the dates indicated:
Occupancy (%) Effective Monthly Rent per
Square Foot/Unit/Bed ($)⁽¹⁾
As of September 30, As of September 30,
Property 2017 2016 2017 2016
Gardens Medical Pavilion 74 % 66 % $ 2.26 $ 2.08 per sq. ft.
River Club and the Townhomes at River Club 96 % 99 % 413.91 408.06 per bed
Lakes of Margate 89 % 95 % 1,283.22 1,256.74 per unit
Arbors Harbor Town 94 % 94 % 1,241.43 1,208.90 per unit
22 Exchange 80 % 90 % 571.49 499.45 per bed
Parkside 95 % 93 % 1,143.29 1,125.63 per unit
Occupancy Effective Monthly
Rent per Unit⁽¹⁾
As of
March 31, As of
March 31,
Property 2023 2022 2023 2022
Arbors Harbor Town 90 % 95 % $ 1,667 $ 1,519
Parkside 95 % 97 % $ 1,416 $ 1,307
Flats at Fishers 94 % 94 % $ 1,505 $ 1,391
Axis at Westmont 95 % 93 % $ 1,476 $ 1,325
Valley Ranch Apartments 96 % 94 % $ 1,700 $ 1,541
Autumn Breeze Apartments 95 % 94 % $ 1,385 $ 1,249
BayVue Apartments 95 % 95 % $ 1,492 $ 1,196
Citadel Apartments 94 % 94 % $ 1,681 $ 1,631

(1) Effective monthly rent is calculated as in-place contracted monthly rental revenue, including any premiums due for short-term or month-to-month leases, less any concessions or discounts.
17
~~Revenues.~~Three months ended March 31, 2023 as compared to the three months ended March 31, 2022. ~~Rental revenues~~
Our operating results for the three months ended September 30, 2017 were $6.1 million, a decrease of $0.6 million, compared to $6.7 million the same period in 2016. Excluding the effect of the 2016 Disposition, our rental revenues increased slightly by $0.2 million for our Same Store properties.
~~Hotel revenues for the three months ended September 30, 2017 were $2.7 million, a decrease of $2.0 million, compared to $4.7 million for the same period in 2016. The change in our hotel revenues was~~March 31, 2023 and 2022 are attributable to ~~the 2017 Disposition.~~
~~Property Operating Expenses.~~    ~~Property operating expenses for the three months ended September 30, 2017~~our eight wholly owned investment properties, all of which were ~~$2.7 million, an increase of $0.1 million, compared to $2.6 million for the same period in 2016. Excluding the effect of the 2016 Disposition, our property operating expenses increased~~owned by ~~$0.3 million for our Same Store properties.~~
~~Hotel Operating Expenses.~~ Hotel operating expenses for the three months ended September 30, 2017 were $1.9 million, a decrease of $1.6 million, compared to $3.5 million for the same period in 2016. The decrease in hotel operating expenses was due to the aforementioned disposition of the Courtyard Kauai Coconut Beach Hotel on August 15, 2017.
~~Interest Expense, net.~~ ~~Interest expense for the three months ended September 30, 2017 and 2016 was unchanged at $1.6 million.~~
~~Real Estate Taxes~~~~. Real estate taxes for the three months ended September 30, 2017 were $1.1 million, a slight decrease of $0.1 million, compared to $1.2 million for the same period in 2016.~~
30
~~Property Management Fees~~. Property management fees, which are based on revenues, were $0.3 million for the three months ended September 30, 2017 and $0.4 million for the three months ended September 30, 2016, and were comprised of property management fees paid to unaffiliated third parties and our property manager.
~~Asset Management Fees~~. Asset management fees for the three months ended September 30, 2017 and 2016 were $0.4 million and $0.6 million, respectively, and were comprised of asset management fees paid to our external advisor and third parties with respect to our investments. Asset management fees for the three months ended September 30, 2016 include fees related to the Dispositions of less than $0.1 million.
~~General and Administrative Expenses.~~ ~~General and administrative expenses, which increased slightly by $0.2 million~~us during the ~~three months ended September 30, 2017 compared to the same period in 2016, consists of audit fees, legal fees, board of directors’ fees, and other administrative expenses.~~
~~Depreciation and Amortization.~~ Depreciation and amortization decreased by $0.3 million during the three months ended September 30, 2017 compared to the same period in 2016. Excluding the effect of the Dispositions, our depreciation and amortization increased slightly by $0.1 million for our Same Store properties.
~~Gain on Sale of Real Estate.~~ On August 15, 2017, we sold the Courtyard Kauai Coconut Beach Hotel for a contractual sales price of approximately $62.0 million, resulting in a third quarter gain on sale of real estate of $20.9 million. Additionally, we recognized a $0.4 million gain on sale of real estate during the nine months ended September 30, 2017 related to escrow reimbursements received from the Lakewood Flats outstanding insurance claim. On August 16, 2016, we sold Lakewood Flats for a contract sales price of approximately $68.8 million, resulting in a gain on sale of real estate of $11.5 million and a deferred gain of approximately $1.2 million. The deferred gain represented the amount of monies held in escrow to be reimbursed upon completion of the property’s outstanding insurance claim. The remaining deferred gain escrow balance as of September 30, 2017 was approximately $0.6 million.
31
~~Nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.~~
entire periods presented. The following table provides summary information about our results of operations ~~for the nine months ended September 30, 2017 and 2016~~ (dollars in thousands):
Nine Months Ended September 30, Change Three Months Ended
Description 2017 2016 Amount Percentage Change due to
Disposition⁽¹⁾ Change due to
Same Store⁽²⁾
March 31, Increase/ Percentage
2023 2022 (Decrease) Change
Rental revenues $ 18,345 $ 21,590 $ (3,245 ) (15 )% $ (4,084 ) $ 839 $ 12,313 $ 11,206 $ 1,107 10.0 %
Hotel revenues 13,207 13,946 (739 ) (5.3 )% (739 ) -
Property operating expenses 6,758 7,128 (370 ) (5.2 )% (867 ) 497 3,900 3,247 653 20.0 %
Hotel operating expenses 9,167 10,219 (1,052 ) (10.3 )% (1,052 ) -
Interest expense, net 4,843 4,692 151 3.2 % 45 106
Real estate taxes 3,315 4,113 (798 ) (19.4 )% (997 ) 199 1,874 1,728 146 8.0 %
Property management fees 1,043 1,164 (121 ) (10.4 )% (144 ) 23
Asset management fees⁽³⁾ 1,445 1,773 (328 ) (18.5 )% (14 ) (314 )
General and administrative 2,624 2,246 378 16.8 % - 378 1,863 1,818 45 2.0 %
Depreciation and amortization 7,499 8,396 (897 ) (10.7 )% (950 ) 53 3,440 4,919 (1,479 ) (30.0 %)
Interest expense, net 3,598 3,114 484 16.0 %
~~(1)~~ ~~Represents the amount of decrease for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 as a result of our Dispositions.~~
~~(2)~~ Represents the change for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 for real estate and real estate-related investments owned by us during the entire periods presented, excluding any we have classified as held for sale. Same Store for the periods ended September 30, 2017 and 2016 includes the operating results of Gardens Medical Pavilion, River Club and the Townhomes at River Club, Lakes of Margate, Arbors Harbor Town, 22 Exchange and Parkside.
~~(3)~~ Asset management fees payable to the external advisor are an obligation of the Company, and as such, asset management fees associated with all investments owned during the period are classified in continuing operations. Therefore, the amounts above include asset management fees associated with any property owned during a particular period, including those related to our disposed properties.
32
The following table reflects total rental and hotel revenues and total property and hotel operating expenses for the nine months ended September 30, 2017 and 2016 for: (i) our Same Store properties and (ii) our Dispositions (dollars in thousands):
Nine Months Ended September 30,
Description 2017 2016 Change
Revenues:
Same store $ 18,345 $ 17,506 $ 839
Disposition 13,207 18,030 (4,823 )
Total revenues $ 31,552 $ 35,536 $ (3,984 )

Property and hotel operating expenses:
Same store $ 6,758 $ 6,261 $ 497
Disposition 9,167 11,086 (1,919 )
Total property and hotel operating expenses $ 15,925 $ 17,347 $ (1,422 )
~~The tables below reflect occupancy and effective monthly rental rates for our Same Store operating properties:~~
Occupancy (%) Effective Monthly Rent per
Square Foot/Unit/Bed ($)⁽¹⁾
As of September 30, As of September 30,
Property 2017 2016 2017 2016
Gardens Medical Pavilion 74 % 66 % $ 2.26 $ 2.08 per sq. ft.
River Club and the Townhomes at River Club 96 % 99 % 413.91 408.06 per bed
Lakes of Margate 89 % 95 % 1,283.22 1,256.74 per unit
Arbors Harbor Town 94 % 94 % 1,241.43 1,208.90 per unit
22 Exchange 80 % 90 % 571.49 499.45 per bed
Parkside 95 % 93 % 1,143.29 1,125.63 per unit
~~(1)~~ ~~Effective monthly rent is calculated as in-place contracted monthly rental revenue, including any premiums due for short-term or month-to-month leases, less any concessions or discounts.~~
~~Revenues.~~Revenues Rental revenues for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 were ~~$18.3~~$12.3 million, ~~a decrease~~an increase of ~~$3.3~~$1.1 million, compared to ~~$21.6~~$11.2 million for the same period in ~~2016. Excluding the effect of the Dispositions, our~~2022. Our rental revenues increased during the 2023 period as a result of higher average monthly rent per unit, partially offset by ~~$0.8 million for our Same Store properties.~~slightly lower overall portfolio occupancy.
~~Hotel revenues~~Property Operating Expenses Property operating expenses for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 were ~~$13.2~~$3.9 million, ~~a decrease~~an increase of $0.7 million, compared to ~~$13.9~~$3.2 million for the same period in ~~2016. The change in our hotel revenues was attributable to the 2017 Disposition.~~
~~Property Operating Expenses.~~ ~~Property~~2022. Our property operating expenses increased primarily as a result of higher utilities and insurance costs.
Real Estate Taxes Real estate taxes for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 were ~~$6.8~~$1.9 million, ~~a decrease~~an increase of ~~$0.3~~$0.2 million, compared to ~~$ 7.1~~$1.7 million for the same period in ~~2016. Excluding the effect of our 2016 Disposition, our property operating expenses increased by $0.5 million for our Same Store properties.~~2022.
.
~~Hotel Operating Expenses.~~General and Administrative Expenses ~~Hotel operating~~General and administrative expenses for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 were ~~$9.2~~$1.9 million, a ~~decrease~~slight increase of ~~$1.0~~$0.1 million, compared to ~~$10.2~~$1.8 million for the same period in ~~2016. The decrease in hotel operating expenses was due to the aforementioned disposition of the Courtyard Kauai Coconut Beach Hotel on August 15, 2017.~~2022.
~~Interest Expense, net.~~Depreciation and Amortization ~~Interest~~Depreciation and amortization expense for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 was ~~$4.8~~$3.4 million, ~~an increase~~a decrease of ~~$0.1~~$1.5 million, compared to ~~$4.7~~$4.9 million for the same period in ~~2016. Excluding the effect~~2022. Our depreciation and amortization expenses decreased $1.6 million as a result of ~~the Dispositions, our interest~~a decreased amortization expense ~~increased slightly by $0.1 million.~~resulting from in-place lease intangibles becoming fully amortized during 2022.
33
~~Real Estate Taxes~~Interest Expense, Net ~~. Real estate taxes~~Interest expense, net for the ~~nine~~three months ended ~~September 30, 2017 were $3.3~~March 31, 2023 was $3.6 million, ~~a decrease~~an increase of ~~$0.8~~$0.5 million, compared to ~~$4.1~~$3.1 million for the same period in ~~2016. Excluding~~2022. Interest expense is primarily attributable to financings associated with our multifamily properties and reflects both changes in market interest rates on our variable rate indebtedness and the ~~effect~~weighted average principal outstanding during the periods. Additionally, during the three months ended March 31, 2023, we earned $0.6 million from the interest rate cap contracts which is recorded in interest expense, net.
Mark to Market Adjustment on Derivative Financial Instruments During the three months ended March 31, 2023 and 2022, we recorded a negative mark to market adjustment of $0.5 million and a positive mark to market adjustment of $0.6 million, respectively. These mark to market adjustments represented the change in the fair value of our interest rate cap contracts during the applicable period.
Income Tax Benefit During 2015, we recorded an aggregate provision for income tax of $2.7 million representing estimated foreign income tax due as a result of the ~~Dispositions,~~sale of two foreign investments, Alte Jakobstraße and Holstenplatz. During the first quarter of 2022, we recorded an income tax benefit of $0.8 million representing a partial refund of the foreign income tax paid.
18
Related Party Transactions
Our business is externally managed by LSG Development Advisor LLC (the “Advisor”), an affiliate of the Lightstone Group LLC (“Lightstone”) which provides advisory services to us and we have no employees. Lightstone is majority owned by the chairman emeritus of our ~~real estate taxes slightly increased by $0.2 million~~board of directors, David Lichtenstein. Pursuant to the terms of an advisory agreement and subject to the oversight of our board of directors, the Advisor is responsible for managing our ~~Same Store properties.~~
~~Property Management Fees~~~~. Property management fees, which are based on revenues, were $1.0 million~~day-to-day affairs and for the nine months ended September 30, 2017 and $1.2 million, for the nine months ended September 30, 2016, and were comprised of property management fees paid to unaffiliated third parties and our property manager.
~~Asset Management Fees~~. Asset management fees for the nine months ended September 30, 2017 and 2016 were $1.4 million and $1.8 million, respectively, and were comprised of asset management fees paid to our external advisor and third parties with respect to our investments. Asset management fees for the nine months ended September 30, 2016 include feesservices related to the ~~Dispositions~~management of ~~less than $0.1 million.~~our assets.
~~General~~We have agreements with the Advisor and ~~Administrative Expenses.~~ ~~General and administrative expenses, which increased by $0.4 million during the nine months ended September 30, 2017 compared~~its affiliates to ~~the same period in 2016, consists of audit fees, legal fees, board of directors’~~pay certain fees and reimburse certain expenses in connection with services performed and costs incurred by these entities and other related parties. We are dependent on the Advisor and its affiliates for certain services that are essential to us, including investment decisions, asset disposition decisions, property management and leasing services, financing services, and other general administrative ~~expenses.~~responsibilities. In the event that these entities are unable to provide us with their respective services, we would be required to obtain such services from other sources.
~~Depreciation~~The advisory agreement has a one-year term and ~~Amortization.~~ ~~Depreciation~~is renewable annually upon the mutual consent of our Advisor and ~~amortization was $7.5 million, a decrease of $0.9 million, compared~~our independent directors.
The following table represents the fees incurred associated with the payments to ~~$8.4 million~~our Advisor and its affiliates for the ~~same period~~periods indicated (dollars in ~~2016. Excluding the effect of the Dispositions, our depreciation and amortization was relatively constant for our Same Store properties.~~thousands):
For the
Three Months Ended
March 31,
2023 2022
Acquisition fees and acquisition expense reimbursement⁽¹⁾ $ 21 $ -
Property management fees (property operating expenses) 135 117
Administrative services reimbursement (general and administrative costs) 376 347
Asset management fees (general and administrative costs) 906 868
Total $ 1,438 $ 1,332
~~Gain on Sale of Real Estate.~~ On August 15, 2017, we sold the Courtyard Kauai Coconut Beach Hotel for a contractual sales price of approximately $62.0 million, resulting in a third quarter gain on sale of real estate of $20.9 million. Additionally, we recognized a $0.7 million gain on sale of real estate during the nine months ended September 30, 2017 related to escrow reimbursements received from the Lakewood Flats outstanding insurance claim. On August 16, 2016, we sold Lakewood Flats for a contractual sales price of approximately $68.8 million, resulting in a third quarter gain on sale of real estate of approximately $11.5 million and a deferred gain of approximately $1.2 million. The deferred gain represented the amount of monies held in escrow to be reimbursed upon completion of the property’s outstanding insurance claim. The remaining deferred gain escrow balance as of September 30, 2017 was approximately $0.6 million.
34(1) Capitalized to the corresponding asset and amortized over its estimated useful life.

~~Net~~The net cash ~~flows~~ provided by operating activities of ~~$4.6~~$1.2 million for the ~~nine~~three months ended ~~September 30, 2017 consists~~March 31, 2023 consisted primarily of our net loss of $2.0 million less the ~~following:~~net change in operating assets and liabilities of $0.9 million plus the negative mark to market adjustments on derivative financial instruments of $0.5 million, depreciation and amortization of $3.4 million and amortization of deferred financing costs of $0.4 million.

The net cash ~~provided by~~used in investing activities of ~~$22.5~~$2.3 million for the ~~nine~~three months ended ~~September 30, 2017 consists~~March 31, 2023 consisted primarily of the following:

The net cash used in financing activities of ~~$12.9~~$0.4 million for the ~~nine~~three months ended ~~September 30, 2017 consists~~March 31, 2023 consisted primarily of the following:

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

Our aggregate notes payable balance was $290.4 million, net of deferred financing fees of $3.1 million, and had a weighted average interest rate of 5.25% as of March 31, 2023. Our aggregate notes payable balance was $290.3 million, net of deferred financing fees of $3.4 million, and had a weighted average interest rate of 4.33% as of December 31, 2022.

We have entered into two interest rate cap contracts with unrelated financial institutions in order to reduce the effect of interest rate fluctuations or risk of certain real estate investment’s interest expense on our variable rate debt. We are exposed to credit risk in the event of non-performance by the counterparty to these financial instruments. Management believes the risk of loss due to non-performance to be minimal.

We are accounting for the interest rate cap contracts as economic hedges, marking these contracts to market, taking into account present interest rates compared to the contracted fixed rate over the life of the contract and recording the unrealized gain or loss on the interest rate cap contracts in the consolidated statements of operations.

For the three months ended March 31, 2023 and 2022, we recorded unrealized losses of $0.5 million and unrealized gains of $0.6 million, respectively, in the consolidated statements of operations representing the change in the fair value of these economic hedges during such periods.

The interest rate cap contracts, which were entered into in connection with the BayVue Apartments Mortgages and Citadel Apartments Mortgage, have notional amounts of $52.2 million and $49.0 million, respectively, mature on July 15, 2023 and October 11, 2023, respectively, and effectively cap LIBOR at 2.50% and 2.00%, respectively. The aggregate fair value of the interest rate cap contracts was $1.3 million and $1.8 million as of March 31, 2023 and December 31, 2022, respectively, and is included in prepaid expenses and other assets on the consolidated balance sheets. Furthermore, pursuant to the terms of the Citadel Apartments Mortgages and Citadel Apartments Mortgage, we are required to enter into one or more additional interest rate cap agreements with the same notional amounts and at substantially similar strike rates for as long as these mortgage remain outstanding.

One of our principal short-term and long-term liquidity requirements includes the debt service payments on our outstanding notes payable. The following table provides information with respect to the contractual maturities and scheduled principal repayments of our indebtedness as of March 31, 2023 (dollars in thousands).

Maryland		20-8198863
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

				Page
PART I		FINANCIAL INFORMATION

Item 1.		Financial Statements (Unaudited)		1

		Consolidated Balance Sheets as of ~~September 30, 2017 (Unaudited)~~March 31, 2023 and December 31, ~~2016~~2022	3	1

		Consolidated Statements of Operations and Comprehensive Income ~~(Unaudited)~~ for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022	4	2

		Consolidated ~~Statement~~Statements of Stockholders’ Equity ~~(Unaudited)~~ for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2023 and 2022	5	3

		Consolidated Statements of Cash Flows ~~(Unaudited)~~ for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022	6	4

		Notes to Consolidated Financial Statements	7	5

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	25	15

~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~	38

Item 4.		Controls and Procedures	39	25

PART II		OTHER INFORMATION

Item 1.		Legal Proceedings	40	26

~~Item 1a.~~	~~Risk Factors~~	40

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	40	26

Item 3.		Defaults Upon Senior Securities	41	26

Item 4.		Mine Safety Disclosures	41	26

Item 5.		Other Information	41	26

Item 6.	~~Exhibits~~	41Exhibits		26

	September 30, 2017			December 31, 2016
	(Unaudited)
Assets
Real estate
Land and improvements, net	$	30,388		$	42,710
Building and improvements, net		102,849			132,359
Total real estate		133,237			175,069

Cash and cash equivalents		53,228			67,111
Restricted cash		34,679			6,101
Accounts receivable, net		1,935			1,415
Prepaid expenses and other assets		420			1,051
Investment in unconsolidated joint venture		14,658			14,658
Furniture, fixtures and equipment, net		1,259			3,148
Lease intangibles, net		285			352
Total Assets	$	239,701		$	268,905

Liabilities and Stockholders' Equity
Notes payable, net	$	102,902		$	142,332
Accounts payable		240			491
Payables to related parties		70			370
Acquired below-market leases, net		55			65
Distributions payable to noncontrolling interest		18			21
Income taxes payable		51			38
Deferred gain		558			1,247
Accrued property tax		2,338			1,385
Accrued and other liabilities		3,885			4,317
Total liabilities		110,117			150,266

Stockholders' Equity:
Preferred stock, $.0001 par value per share; 50,000,000 shares authorized, none issued and outstanding
Convertible stock, $.0001 par value per share; 1,000 shares authorized, issued and outstanding		-			-
Common stock, $.0001 par value per share; 350,000,000 shares authorized, 24,757,612 and 25,218,770 shares issued and outstanding, respectively		3			3
Additional paid-in-capital		225,505			227,891
Accumulated other comprehensive income (loss)		4			(495	)
Accumulated deficit		(100,954	)		(114,666	)
Total Company stockholders' equity		124,558			112,733
						��
Noncontrolling interest		5,026			5,906

Total Stockholder's Equity		129,584			118,639

Total Liabilities and Stockholders' Equity	$	239,701		$	268,905


	March 31, 2023			December 31, 2022
	(unaudited)
Assets

Investment property:
Land and improvements	$	84,609		$	84,439
Building and improvements		325,415			324,335
Furniture, fixtures and equipment		10,049			9,975
Gross investment property		420,073			418,749
Less accumulated depreciation		(62,715	)		(59,274	)
Net investment property		357,358			359,475

Cash and cash equivalents		58,805			59,625
Marketable securities, available for sale		3,561			3,455
Restricted cash		4,535			5,126
Note receivable, net		4,616			3,771
Prepaid expenses and other assets		3,223			3,256
Total Assets	$	432,098		$	434,708

Liabilities and Stockholders’ Equity

Notes payable, net	$	290,404		$	290,289
Accounts payable and accrued and other liabilities		7,897			8,515
Total liabilities		298,301			298,804

Commitments and Contingencies

Stockholders’ Equity:
Company’s stockholders’ equity:
Preferred stock, $.0001 par value per share; 50.0 million shares authorized, none issued and outstanding		-			-
Convertible stock, $.0001 par value per share; 1,000 shares authorized, issued and outstanding		-			-
Common stock, $.0001 par value per share; 350.0 million shares authorized, 20.0 million shares issued and outstanding		2			2
Additional paid-in-capital		169,846			169,996
Accumulated other comprehensive loss		(190	)		(220	)
Accumulated deficit		(35,861	)		(33,874	)
Total Stockholders’ Equity		133,797			135,904
Total Liabilities and Stockholders’ Equity	$	432,098		$	434,708


	For the Three Months Ended March 31,
	2023			2022
Rental revenues	$	12,313		$	11,206

Expenses
Property operating expenses		3,900			3,247
Real estate taxes		1,874			1,728
General and administrative		1,863			1,818
Depreciation and amortization		3,440			4,919
Total expenses		11,077			11,712

Interest expense, net		(3,598	)		(3,114	)
Interest income		639			509
Income tax benefit		-			776
Mark to market adjustment on derivative financial instruments		(526	)		618
Other income, net		262			338
Net loss		(1,987	)		(1,379	)

Weighted average shares outstanding:
Basic and diluted		20,036			20,110

Basic and diluted loss per share	$	(0.10	)	$	(0.07	)

Comprehensive loss:
Net loss	$	(1,987	)	$	(1,379	)
Other comprehensive income/(loss):
Holding gain/(loss) on marketable securities, available for sale		28			(123	)
Reclassification adjustment for loss/(gain) on sale of marketable securities included in net loss		2			(4	)
Total other comprehensive income/(loss)		30			(127	)
Comprehensive loss	$	(1,957	)	$	(1,506	)

Large accelerated filer¨	☐	Accelerated filer¨	☐
Non-accelerated filerx ~~(Do not check if a smaller reporting company)~~	☒	Smaller reporting company¨	☒
			Emerging growth company¨	☐

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016

Revenues
Rental revenues	$	6,122		$	6,740		$	18,345		$	21,590
Hotel revenues		2,653			4,653			13,207			13,946
Total revenues		8,775			11,393			31,552			35,536
Expenses
Property operating expenses		2,697			2,635			6,758			7,128
Hotel operating expenses		1,921			3,509			9,167			10,219
Interest expense, net		1,601			1,561			4,843			4,692
Real estate taxes		1,090			1,197			3,315			4,113
Property management fees		285			374			1,043			1,164
Asset management fees		426			554			1,445			1,773
General and administrative		863			705			2,624			2,246
Depreciation and amortization		2,353			2,616			7,499			8,396
Total expenses		11,236			13,151			36,694			39,731
Interest income, net		73			39			200			72
Loss on early extinguishment of debt		-			(500	)		-			(500	)
Other (expense) income		(3	)		52			-			263
Loss before gain on sale of real estate and income taxes		(2,391	)		(2,167	)		(4,942	)		(4,360	)
Gain on sale of real estate and other assets, net		21,336			11,462			21,619			11,462
Income tax benefit		1,592			29			1,592			29
Net income		20,537			9,324			18,269			7,131
Net (income) loss attributable to the noncontrolling interest		(4,430	)		59			(4,557	)		14
Net income attributable to the Company's shares	$	16,107		$	9,383		$	13,712		$	7,145
Weighted average shares outstanding:
Basic and diluted		24,899			25,391			25,031			25,470
Basic and diluted earnings per share	$	0.65		$	0.37		$	0.55		$	0.28
Comprehensive income:
Net income	$	20,537		$	9,324		$	18,269		$	7,131
Other comprehensive income:
Foreign currency translation gain		212			37			499			106
Total other comprehensive income		212			37			499			106
Comprehensive income:		20,749			9,361			18,768			7,237
Comprehensive (income) loss attributable to noncontrolling interest		(4,430	)		59			(4,557	)		14
Comprehensive income attributable to the Company's shares	$	16,319		$	9,420		$	14,211		$	7,251


	Convertible Stock				Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Capital			Loss			Deficit			Equity
BALANCE, December 31, 2021		1	$	-		20,128		$	2	$	171,079		$	13		$	(25,224	)	$	145,870

Net loss		-		-		-			-		-			-			(1,379	)		(1,379	)
Redemption and cancellation of common stock		-		-		(24	)		-		(315	)		-			-			(315	)
Other comprehensive loss:
Holding loss on marketable securities, available for sale		-		-		-			-		-			(123	)		-			(123	)
Reclassification adjustment for gain on sale of marketable securities included in net loss		-		-		-			-		-			(4	)		-			(4	)

BALANCE, March 31, 2022		1	$	-		20,104		$	2	$	170,764		$	(114	)	$	(26,603	)	$	144,049

	Convertible Stock				Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Capital			Loss			Deficit			Equity
BALANCE, December 31, 2022		1	$	-		20,044		$	2	$	169,996		$	(220	)	$	(33,874	)	$	135,904

Net loss		-		-		-			-		-			-			(1,987	)		(1,987	)
Redemption and cancellation of common stock		-		-		(10	)		-		(150	)		-			-			(150	)
Other comprehensive loss:
Holding gain on marketable securities, available for sale		-		-		-			-		-			28			-			28
Reclassification adjustment for loss on sale of marketable securities included in net loss		-		-		-			-		-			2			-			2

BALANCE, March 31, 2023		1	$	-		20,034		$	2	$	169,846		$	(190	)	$	(35,861	)	$	133,797

September 30, 2017	Buildings and Improvements			Land and Improvements			Lease Intangibles			Acquired Below- Market Leases

Cost	$	133,712		$	33,549		$	1,610		$	(137	)
Less: accumulated depreciation and amortization		(30,863	)		(3,161	)		(1,325	)		82
Net	$	102,849		$	30,388		$	285		$	(55	)

	September 30, 2016
Cash and cash equivalents	$	69,687
Restricted cash		6,994
Total cash, cash equivalents and restricted cash	$	76,681

	As of September 30, 2017				As of December 31, 2016
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Notes payable	$	103,392	$	107,582	$	143,119	$	146,790

Schedule of notes payable and the related estimated fair value
	As of March 31, 2023				As of December 31, 2022
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Notes payable	$	293,464	$	291,521	$	293,695	$	288,222

~~Property Name~~	~~Description~~		~~Location~~	~~Date Acquired~~	~~Ownership~~ ~~Interest~~
~~Gardens Medical Pavilion~~	~~Medical office building~~		~~Palm Beach Gardens, Florida~~	~~October 20, 2010~~Schedule of real estate properties		82	%
~~River Club and the Townhomes at River Club~~Property Name	~~Student housing~~Location		~~Athens, Georgia~~	~~April 25, 2011~~		85	%Date Acquired
~~Lakes of Margate~~	~~Multifamily~~		~~Margate, Florida~~	~~October 19, 2011~~		~~92.5~~	%
Arbors Harbor Town	~~Multifamily~~		Memphis, Tennessee	December 20, 2011		94	%
~~22 Exchange~~	~~Student housing~~		~~Akron, Ohio~~	~~April 16, 2013~~		90	%
~~Arcadian Sugar Land~~Parkside Apartments (“Parkside”)	~~Multifamily~~		Sugar Land, Texas	August 8, 2013
Flats at Fishers	Fishers, Indiana	90	%November 30, 2017
Axis at Westmont	Westmont, Illinois		November 27, 2018
Valley Ranch Apartments	Ann Arbor, Michigan		February 14, 2019
Autumn Breeze Apartments	Noblesville, Indiana		March 17, 2020
BayVue Apartments	Tampa, Florida		July 7, 2021
Citadel Apartments	Houston, Texas		October 6, 2021

Schedule of available-for-sale securities reconciliation
	As of March 31, 2023
*Debt securities:*	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate and Government Bonds	$	3,752	$	8	$	(199	)	$	3,561

	As of December 31, 2022
*Debt securities:*	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate and Government Bonds	$	3,675	$	-	$	(220	)	$	3,455

Summary of the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates
	As of March 31, 2023
Due in 1 year	$	504
Due in 1 year through 5 years		2,961
Due in 5 years through 10 years		96
Due after 10 years		-
Total	$	3,561

	●	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.

Schedule of information on notes payable
Property	Interest Rate	Weighted Average Interest Rate for the Three Months Ended March 31, 2023	Maturity Date	Amount Due at Maturity		As of March 31, 2023			As of December 31, 2022
Arbors Harbor Town	4.53%	4.53%	January 1, 2026	$	29,000	$	29,000		$	29,000
Arbors Harbor Town Supplemental	3.52%	3.52%	January 1, 2026		5,379		5,704			5,732
Parkside Apartments	4.45%	4.45%	June 1, 2025		15,782		16,556			16,644
Axis at Westmont	4.39%	4.39%	February 1, 2026		34,343		36,317			36,483
Valley Ranch Apartments	4.16%	4.16%	March 1, 2026		43,414		43,414			43,414
Flats at Fishers	3.78%	3.78%	July 1, 2026		26,090		27,936			28,072
Flats at Fishers Supplemental	3.85%	3.85%	July 1, 2026		8,366		8,944			8,987
Autumn Breeze Apartments	3.39%	3.39%	April 1, 2030		25,518		29,920			29,920
BayVue Apartments	LIBOR + 3.00% (floor 3.10%)	7.67%	July 9, 2024		46,673		46,673			46,443
Citadel Apartments Senior	LIBOR + 1.50% (floor 1.60%)	6.18%	October 11, 2024		39,200		39,200			39,200
Citadel Apartments Junior	LIBOR + 8.75% (floor 8.85%)	13.53%	October 11, 2024		9,800		9,800			9,800

Total notes payable		5.25%		$	283,565		293,464			293,695

Less: Deferred financing costs							(3,060	)		(3,406	)

Total notes payable, net						$	290,404		$	290,289

Schedule of contractual obligations for principal payments
	2023		2024		2025		2026		2027		Thereafter		Total
Principal maturities	$	1,730	$	98,134	$	18,138	$	147,729	$	654	$	27,079	$	293,464

Less: deferred financing costs														(3,060	)

Total notes payable, net													$	290,404

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Total revenues	$	1,962		$	197		$	2,069		$	251
Net loss		(2,000	)		(1,346	)		(6,835	)		(2,354	)

				Amount Due		Notes Payable as of
Description	Interest Rate		Maturity Date	at Maturity		September 30, 2017			December 31, 2016
Courtyard Kauai Coconut Beach Hotel		Repaid in full on 5/8/2017 (See note below)		$	-	$	-		$	38,000
Gardens Medical Pavilion		4.90%	1/1/2018		12,480		12,587			12,899
River Club and the Townhomes at River Club		5.26%	5/1/2018		23,368		23,615			23,917
Lakes of Margate		5.49% and 5.92%	1/1/2020		13,384		14,042			14,243
Arbors Harbor Town		3.99%	1/1/2019		23,632		24,280			24,653
22 Exchange		3.93%	5/5/2023		16,875		19,051			19,307
Parkside⁽¹⁾		5%	6/1/2018		9,560		9,817			10,100
Total debt				$	99,299		103,392			143,119
Deferred financing fees							(490	)		(787	)
Total notes payable, net						$	102,902		$	142,332

Year	Amount Due
October 1, 2017 - December 31, 2017	$	550
2018		46,808
2019		24,308
2020		13,771
2021		404
Thereafter		17,441
Total contractual obligations for principal payments		103,282
Unamortized premium		110
Total notes payable		103,392
Less: Deferred financing fees, net		(490	)
Notes payable, net	$	102,902

Year		Amount Due
	Remainder of 2017	$	394
	2018		1,362
	2019		1,096
	2020		995
	2021		868
	Thereafter		2,411
	Total	$	7,126

Schedule of related party transactions
	For the Three Months Ended March 31,
	2023		2022
Acquisition fees and acquisition expense reimbursement⁽¹⁾	$	21	$	-
Property management fees (property operating expenses)		135		117
Administrative services reimbursement (general and administrative costs)		376		347
Asset management fees (general and administrative costs)		906		868
Total	$	1,438	$	1,332

	●	market and economic challenges experienced by the U.S. and global economies or real estate industry as a whole and the local economic conditions in the markets in which our investments are located. Additionally, our business and financial performance may be adversely affected by current and future economic and other conditions; such as inflation, recession, political upheaval or uncertainty, terrorism and acts of war, natural and man-made disasters, cybercrime, and outbreaks of contagious diseases;

	●	the availability of cash flow from operating activities for distributions, if required to maintain our status as a real estate investment trust, or REIT;

	●	conflicts of interest arising out of our relationships with our advisor and its affiliates;

	●	our ability to retain our executive officers and other key individuals who provide advisory and property management services to us;

	●	our level of debt and the terms and limitations imposed on us by our debt agreements;

	●	the availability of credit generally, and any failure to obtain debt financing at favorable terms or a failure to satisfy the conditions and requirements of that debt;

	●	our ability to make accretive investments;

	●	our ability to diversify our portfolio of assets;

	●	changes in market factors that could impact our rental rates and operating costs;

	●	our ability to secure leases at favorable rental rates;

	●	our ability to sell our assets at a price and on a timeline consistent with our investment objectives;
	25
	●	impairment charges;

	●	unfavorable changes in laws or regulations impacting our business, our assets or our key relationships; and

	●	factors that could affect our ability to qualify as a real estate investment trust.

	Remainder of
	2017		2018		2019		2020		2021		Thereafter		Total
Principal maturities⁽¹⁾	$	550	$	46,808	$	24,308	$	13,771	$	404	$	17,441	$	103,282
Interest payments		1,219		3,306		1,581		786		704		967		8,563
Total	$	1,769	$	50,114	$	25,889	$	14,557	$	1,108	$	18,408	$	111,845

	Three Months Ended September 30,				Change						Change due to			Change due to
Description	2017		2016		Amount			Percentage			Disposition⁽¹⁾			Same Store⁽²⁾
Rental revenues	$	6,122	$	6,740	$	(618	)	$	(9	)%	$	(843	)	$	225
Hotel revenues		2,653		4,653		(2,000	)		(43.0	)%		(2,000	)		-
Property operating expenses		2,697		2,635		62			2.4	%		(202	)		264
Hotel operating expenses		1,921		3,509		(1,588	)		(45.3	)%		(1,588	)		-
Interest expense, net		1,601		1,561		40			2.6	%		60			(20	)
Real estate taxes		1,090		1,197		(107	)		(8.9	)%		(241	)		134
Property management fees		285		374		(89	)		(23.8	)%		(80	)		(9	)
Asset management fees⁽³⁾		426		554		(128	)		(23.1	)%		(39	)		(89	)
General and administrative		863		705		158			22.4	%		-			158
Depreciation and amortization		2,353		2,616		(263	)		(10.1	)%		(355	)		92

	Occupancy (%)						Effective Monthly Rent per Square Foot/Unit/Bed ($)⁽¹⁾
	As of September 30,						As of September 30,
Property	2017			2016			2017		2016
Gardens Medical Pavilion		74	%		66	%	$	2.26	$	2.08	per sq. ft.
River Club and the Townhomes at River Club		96	%		99	%		413.91		408.06	per bed
Lakes of Margate		89	%		95	%		1,283.22		1,256.74	per unit
Arbors Harbor Town		94	%		94	%		1,241.43		1,208.90	per unit
22 Exchange		80	%		90	%		571.49		499.45	per bed
Parkside		95	%		93	%		1,143.29		1,125.63	per unit

	Occupancy						Effective Monthly Rent per Unit⁽¹⁾
	As of March 31,						As of March 31,
Property	2023			2022			2023		2022
Arbors Harbor Town		90	%		95	%	$	1,667	$	1,519
Parkside		95	%		97	%	$	1,416	$	1,307
Flats at Fishers		94	%		94	%	$	1,505	$	1,391
Axis at Westmont		95	%		93	%	$	1,476	$	1,325
Valley Ranch Apartments		96	%		94	%	$	1,700	$	1,541
Autumn Breeze Apartments		95	%		94	%	$	1,385	$	1,249
BayVue Apartments		95	%		95	%	$	1,492	$	1,196
Citadel Apartments		94	%		94	%	$	1,681	$	1,631

	Nine Months Ended September 30,				Change												Three Months Ended
Description	2017		2016		Amount			Percentage			Change due to Disposition⁽¹⁾			Change due to Same Store⁽²⁾
																	March 31,				Increase/			Percentage
																	2023		2022		(Decrease)			Change
Rental revenues	$	18,345	$	21,590	$	(3,245	)		(15	)%	$	(4,084	)	$	839		$	12,313	$	11,206	$	1,107			10.0	%
Hotel revenues		13,207		13,946		(739	)		(5.3	)%		(739	)		-
Property operating expenses		6,758		7,128		(370	)		(5.2	)%		(867	)		497			3,900		3,247		653			20.0	%
Hotel operating expenses		9,167		10,219		(1,052	)		(10.3	)%		(1,052	)		-
Interest expense, net		4,843		4,692		151			3.2	%		45			106
Real estate taxes		3,315		4,113		(798	)		(19.4	)%		(997	)		199			1,874		1,728		146			8.0	%
Property management fees		1,043		1,164		(121	)		(10.4	)%		(144	)		23
Asset management fees⁽³⁾		1,445		1,773		(328	)		(18.5	)%		(14	)		(314	)
General and administrative		2,624		2,246		378			16.8	%		-			378			1,863		1,818		45			2.0	%
Depreciation and amortization		7,499		8,396		(897	)		(10.7	)%		(950	)		53			3,440		4,919		(1,479	)		(30.0	%)
Interest expense, net																		3,598		3,114		484			16.0	%

	Occupancy (%)						Effective Monthly Rent per Square Foot/Unit/Bed ($)⁽¹⁾
	As of September 30,						As of September 30,
Property	2017			2016			2017		2016
Gardens Medical Pavilion		74	%		66	%	$	2.26	$	2.08	per sq. ft.
River Club and the Townhomes at River Club		96	%		99	%		413.91		408.06	per bed
Lakes of Margate		89	%		95	%		1,283.22		1,256.74	per unit
Arbors Harbor Town		94	%		94	%		1,241.43		1,208.90	per unit
22 Exchange		80	%		90	%		571.49		499.45	per bed
Parkside		95	%		93	%		1,143.29		1,125.63	per unit

Contractual Obligations	2023		2024		2025		2026		2027		Thereafter		Total
Mortgage Payable	$	1,730	$	98,134	$	18,138	$	147,729	$	654	$	27,079	$	293,464
Interest Payments⁽¹⁾		11,861		13,497		7,609		2,698		943		2,111		38,719
Total Contractual Obligations	$	13,591	$	111,631	$	25,747	$	150,427	$	1,597	$	29,190	$	332,183

2017	Total Number of Shares Redeemed		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May Be Purchased Under the Plans or Programs
July		—	$	—		—
August		238,974				238,974		(1	)
September		—		—		—
		238,974	$	5.19		238,974