| Summary of Significant Accounting Policies | 2. Summary
of Significant Accounting Policies Principles
of Consolidation and Basis of Presentation The
consolidated financial statements include the accounts of Lightstone REIT I and its Operating Partnership and its subsidiaries (over
which Lightstone REIT I exercises financial and operating control). All inter-company balances and transactions have been eliminated
in consolidation. In addition, interests in entities acquired are evaluated based on applicable accounting principles generally accepted
in the United States of America (“GAAP”), and if deemed to be variable interest entities (“VIE”) in which the
Company is the primary beneficiary are also consolidated. If the interest in the entity is determined not to be a VIE, then the entity
is evaluated for consolidation based on legal form, economic substance, and the extent to which the Company has control, substantive
participating rights or both under the respective ownership agreement. For entities in which the Company has less than a controlling
interest but have significant influence, the Company accounts for the investment using the equity method of accounting. There
are judgments and estimates involved in determining if an entity in which the Company has made an investment is a VIE and, if so, whether
the Company is the primary beneficiary. The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage
of equity being risked compared to the total equity of the entity. Determining expected future losses involves assumptions of various
possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate
to determine the net present value of those future losses. A change in the judgments, assumptions, and estimates outlined above could
result in consolidating an entity that should not be consolidated or accounting for an investment using the equity method that should
in fact be consolidated, the effects of which could be material to our financial statements. The
accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited Consolidated
Financial Statements of the Company and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2022. 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 REIT I, Inc. and its Subsidiaries have
been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of
Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. GAAP
requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period. The
most significant assumptions and estimates relate to the valuation of real estate and real-estate related investments, marketable securities,
notes receivable, depreciable lives, and revenue recognition. Application of these assumptions requires the exercise of judgment as to
future uncertainties and, as a result, actual results could differ from these estimates. The
consolidated balance sheet as of December 31, 2022 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. Income
Taxes The
Company has elected to be taxed as a REIT commencing with the taxable year ended December 31, 2005. If the Company qualifies as
a REIT, it 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 it annually distribute to its stockholders at least 90% of its REIT taxable income (which does not equal net income,
as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain.
If the Company fails to remain qualified for taxation as a REIT in any subsequent year and does not qualify for certain statutory relief
provisions, its income for that year will be taxed at the regular corporate rate, and it may be precluded from qualifying for treatment
as a REIT for the four-year period following its failure to qualify as a REIT. Such an event could materially adversely affect the Company’s
net income and net cash available for distribution to stockholders. Additionally, even if the Company continues to qualify as a REIT,
it may still be subject to some U.S. federal, state and local taxes on our income and property and to U.S. federal income taxes and excise
taxes on its undistributed income, if any. To
qualify or maintain our qualification as a REIT, the Company engages in certain activities through wholly-owned taxable REIT subsidiaries
(“TRS”). As such, it is subject to U.S. federal and state income and franchise taxes from these activities. Revenues The
following table represents the total hotel revenues from hotel operations on a disaggregated basis:
Schedule of revenues on a disaggregated
For the
2023
Hotel revenues
Room revenue $ 2,995
Food, beverage and other revenue 4,549
Total revenues $ 7,544 Land
Parcel Sale The
Company completed the disposition of a parcel of land, which was part of its St. Augustine Land Holdings, to an unrelated third party
for a contractual sales price of $ 1.5 1.1 Recently
Adopted Accounting Standards In
June 2016, the issued an , "Financial Instruments-Credit Losses-Measurement of Credit Losses on Financial Instruments,"
which changes how entities measure credit losses for most financial assets and certain other instruments that are 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 trade receivables, 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 new standard, as of January 1, 2023, and it did not have a material impact on the
consolidated financial statements. Adverse
Developments Affecting the Financial Services Industry and Concentration of Risk As
of March 31, 2023 and December 31, 2022, the Company had cash deposited in certain financial institutions in excess of federally
insured levels. The Company regularly monitors the financial stability of these financial institutions and believes that it is not exposed
to any significant credit risk in cash and cash equivalents. 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. Current
Environment 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. Reclassifications Certain
prior period amounts have been reclassified to conform to the current period’s presentation. Supplemental
Cash Flow Information
Summary of supplemental cash flow information
For the
2023 2022
Cash paid for interest $ 6,678 $ 2,806
Distributions declared but not paid $ 3,820 $ 3,873
Capital expenditures for investment property in accounts payable, accrued expenses and other liabilities $ 1,190 $ 3,289
Amortization of deferred financing costs included in development projects $ 139 $ 669
Holding gain/loss on marketable securities $ 151 $ 47
Value of shares issued from distribution reinvestment program $ 83 $ 84 |
