Document And Entity Information
Document And Entity Information - shares shares in Millions | 9 Months Ended | |
Sep. 30, 2016 | Nov. 07, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST II INC | |
Entity Central Index Key | 1,436,975 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 18.4 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Investment property: | ||
Land and improvements | $ 44,126 | $ 43,907 |
Building and improvements | 174,105 | 170,136 |
Furniture and fixtures | 38,565 | 36,036 |
Construction in progress | 280 | 3,567 |
Gross investment property | 257,076 | 253,646 |
Less accumulated depreciation | (22,760) | (14,959) |
Net investment property | 234,316 | 238,687 |
Investment in unconsolidated affiliated entity | 6,048 | 6,021 |
Cash and cash equivalents | 44,927 | 37,381 |
Marketable securities, available for sale | 8,598 | 15,464 |
Restricted escrows and deposits | 3,183 | 7,243 |
Notes receivable from related party | 0 | 2,055 |
Prepaid expenses and other assets | 5,271 | 4,173 |
Total Assets | 302,343 | 311,024 |
Liabilities and Stockholders' Equity | ||
Accounts payable and other accrued expenses | 7,804 | 7,218 |
Margin loan | 4,006 | 7,577 |
Mortgages payable, net | 127,310 | 128,392 |
Due to related party | 410 | 403 |
Distributions payable | 3,254 | 3,279 |
Total liabilities | 142,784 | 146,869 |
Commitments and contingencies (Note 9) | ||
Company's stockholders' equity: | ||
Preferred shares, $0.01 par value, 10,000 shares authorized, none issued and outstanding | 0 | 0 |
Common stock, $0.01 par value; 100,000 shares authorized, 18,447 and 18,586 shares issued and outstanding in 2016 and 2015, respectively | 185 | 186 |
Additional paid-in-capital | 157,614 | 158,966 |
Accumulated other comprehensive loss | (1,596) | (2,464) |
Accumulated deficit | (16,769) | (12,529) |
Total Company stockholders' equity | 139,434 | 144,159 |
Noncontrolling interests | 20,125 | 19,996 |
Total Stockholders' Equity | 159,559 | 164,155 |
Total Liabilities and Stockholders' Equity | $ 302,343 | $ 311,024 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Preferred shares, par value | $ 0.01 | $ 0.01 |
Preferred shares, shares authorized | 10,000 | 10,000 |
Preferred shares, shares issued | 0 | 0 |
Preferred shares, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 18,447 | 18,586 |
Common stock, shares outstanding | 18,447 | 18,586 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Rental revenue | $ 22,195 | $ 19,687 | $ 63,435 | $ 52,808 |
Expenses: | ||||
Property operating expenses | 13,604 | 12,884 | 39,379 | 33,374 |
Real estate taxes | 784 | 688 | 2,395 | 1,903 |
General and administrative costs | 1,146 | 1,115 | 3,580 | 3,794 |
Depreciation and amortization | 2,658 | 2,421 | 7,819 | 6,315 |
Total operating expenses | 18,192 | 17,108 | 53,173 | 45,386 |
Operating income | 4,003 | 2,579 | 10,262 | 7,422 |
Interest and dividend income | 208 | 541 | 1,157 | 1,499 |
Loss on sale of marketable securities | 0 | 0 | (161) | 0 |
(Loss)/gain from investments in unconsolidated affiliated entities | (11) | (42) | 28 | (127) |
Interest expense | (1,961) | (1,738) | (5,837) | (3,746) |
Other income/(expense), net | 26 | (85) | 213 | 161 |
Net income | 2,265 | 1,255 | 5,662 | 5,209 |
Less: net income attributable to noncontrolling interests | (111) | (53) | (183) | (129) |
Net income applicable to Company's common shares | $ 2,154 | $ 1,202 | $ 5,479 | $ 5,080 |
Net income per Company's common share, basic and diluted | $ 0.12 | $ 0.06 | $ 0.30 | $ 0.27 |
Weighted average number of common shares outstanding, basic and diluted | 18,463 | 18,623 | 18,520 | 18,640 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net income | $ 2,265 | $ 1,255 | $ 5,662 | $ 5,209 |
Other comprehensive income/(loss): | ||||
Holding gain/(loss) on available for sale securities | 328 | (781) | 707 | (1,883) |
Reclassification adjustment for loss included in net income | 0 | 0 | 161 | 0 |
Other comprehensive income/(loss) | 328 | (781) | 868 | (1,883) |
Comprehensive income | 2,593 | 474 | 6,530 | 3,326 |
Less: Comprehensive income attributable to noncontrolling interests | (111) | (53) | (183) | (129) |
Comprehensive income attributable to the Company's common shares | $ 2,482 | $ 421 | $ 6,347 | $ 3,197 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] | Total Noncontrolling Interests [Member] |
Balance at Dec. 31, 2015 | $ 164,155 | $ 186 | $ 158,966 | $ (2,464) | $ (12,529) | $ 19,996 |
Balance (in shares) at Dec. 31, 2015 | 18,586 | |||||
Net income | 5,662 | $ 0 | 0 | 0 | 5,479 | 183 |
Other comprehensive income | 868 | 0 | 0 | 868 | 0 | 0 |
Distributions declared | (9,719) | 0 | 0 | 0 | (9,719) | 0 |
Contribution of noncontrolling interests | 9 | 0 | 0 | 0 | 0 | 9 |
Distributions to noncontrolling interests | (63) | (63) | ||||
Redemption and cancellation of shares | (1,353) | $ (1) | (1,352) | 0 | 0 | 0 |
Redemption and cancellation of shares (in shares) | (139) | |||||
Balance at Sep. 30, 2016 | $ 159,559 | $ 185 | $ 157,614 | $ (1,596) | $ (16,769) | $ 20,125 |
Balance (in shares) at Sep. 30, 2016 | 18,447 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 5,662 | $ 5,209 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 7,819 | 6,315 |
Amortization of deferred financing costs | 499 | 347 |
Loss on sale of marketable securities | 161 | 0 |
(Gain)/loss from investment in unconsolidated affiliated entity | (28) | 127 |
Other non-cash adjustments | 175 | 94 |
Changes in assets and liabilities, net of acquisitions: | ||
(Increase)/decrease in prepaid expenses and other assets | (1,269) | 436 |
Increase in accounts payable and other accrued expenses | 1,003 | 4,178 |
Increase/(decrease) in due to related party | 7 | (322) |
Net cash provided by operating activities | 14,029 | 16,384 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of investment property, net | (3,867) | (97,193) |
Proceeds from sale of marketable securities | 7,573 | 0 |
Purchase of noncontrolling interest in a subsidiary | 0 | (867) |
Purchase of restricted escrow | 0 | (1,895) |
Funding of notes receivable from related party | (24,200) | (20,200) |
Receipt of payments on notes receivable from related party | 26,255 | 8,238 |
Contributions to unconsolidated affiliated entity | 0 | (2,653) |
Release of restricted escrows, net | 4,060 | 899 |
Net cash provided by/(used in) investing activities | 9,821 | (113,671) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from mortgage financings | 0 | 74,230 |
Payments on mortgages payable | (1,582) | (688) |
Payment of loan fees and expenses | 0 | (1,681) |
(Payments)/proceeds on margin loan, net | (3,571) | 2,065 |
Proceeds from issuance of common stock | 0 | 80 |
Payment of commissions and offering costs | 0 | (116) |
Contribution of noncontrolling interests | 9 | 2,175 |
Redemption and cancellation of common shares | (1,353) | (589) |
Distributions to noncontrolling interests | (63) | (575) |
Distributions to common stockholders | (9,744) | (7,315) |
Net cash (used in)/provided by financing activities | (16,304) | 67,586 |
Net change in cash and cash equivalents | 7,546 | (29,701) |
Cash and cash equivalents, beginning of year | 37,381 | 67,502 |
Cash and cash equivalents, end of period | $ 44,927 | $ 37,801 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2016 | |
Organization [Abstract] | |
Organization | 1. Organization Lightstone Value Plus Real Estate Investment Trust II, Inc. (the “Lightstone REIT II”) is a Maryland corporation formed on April 28, 2008 The Lightstone REIT II is structured as an umbrella partnership REIT, or UPREIT, and substantially all of its current and future business is and will be conducted through Lightstone Value Plus REIT II LP (the “Operating Partnership”), a Delaware limited partnership formed on April 30, 2008, in which Lightstone REIT II as the general partner, held a 99 The Lightstone REIT II and the Operating Partnership and its subsidiaries are collectively referred to as the ‘‘Company’’ and the use of ‘‘we,’’ ‘‘our,’’ ‘‘us’’ or similar pronouns refers to the Lightstone REIT II, its Operating Partnership or the Company as required by the context in which such pronoun is used. The Company is managed by Lightstone Value Plus REIT II LLC (the “Advisor”), an affiliate of The Lightstone Group, Inc. under the terms and conditions of an advisory agreement. The Lightstone Group, Inc. previously served as the Company’s sponsor (the “Sponsor”) during its initial public offering and follow-on offering, which terminated on August 15, 2012 and September 27, 2014, respectively. Subject to the oversight of the Company’s board of directors (the “Board of Directors”), the Advisor has primary responsibility for making investment decisions and managing the Company’s day-to-day operations. Through his ownership and control of The Lightstone Group, Inc., Mr. Lichtenstein is the indirect owner of the Advisor and the indirect owner and manager of Lightstone SLP II LLC, which has subordinated profits interests in the Operating Partnership. Mr. Lichtenstein also acts as the Company’s Chairman and Chief Executive Officer. As a result, he exerts influence over but does not control Lightstone REIT II or the Operating Partnership. The Company’s shares of common stock are not currently listed on a national securities exchange. The Company may seek to list its shares of common stock for trading on a national securities exchange only if a majority of its independent directors believe listing would be in the best interest of its stockholders. The Company does not intend to list its shares at this time. The Company does not anticipate that there would be any market for its shares of common stock until they are listed for trading. In the event the Company does not obtain listing prior to August 15, 2022 Noncontrolling Interests The noncontrolling interests consist of (i) parties of the Company that hold units in the Operating Partnership, (ii) membership interests held by Lightstone Value Plus Real Estate Investment Trust, Inc., a REIT also sponsored by the Company’s Sponsor, in a joint venture, and (iii) the membership interests held by minority owners of certain of the Company’s hotels. Partners of Operating Partnership On May 20, 2008, the Advisor contributed $ 2 200 Lightstone SLP II LLC, which is wholly owned by the Company’s Sponsor, committed to purchase subordinated profits interests in the Operating Partnership (“Subordinated Profits Interests”) at a cost of $ 100,000 1.0 12.9 48.6 4.8 177.0 17.7 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies The consolidated financial statements include the accounts of Lightstone REIT II and its Operating Partnership and its subsidiaries (over which the Company exercises financial and operating control). As of September 30, 2016, the Lightstone REIT II had a 99 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, 2015. The unaudited interim financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair statement of the results for the periods presented. The accompanying unaudited consolidated financial statements of the Lightstone Value Plus Real Estate Investment Trust II, Inc. and its Subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 8-03 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. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). 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, 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 unaudited consolidated statements of operations for interim periods are not necessarily indicative of results for the full year or any other period. For the Nine Months Ended September 30, 2016 2015 Cash paid for interest $ 5,339 $ 2,979 Distributions declared $ 9,719 $ 9,060 Value of shares issued from distribution reinvestment program $ - $ 1,723 Debt assumed for acquisition $ - $ 32,841 Non controlling interest assumed for acquisition $ - $ 656 Unrealized gain/(loss) in available for sale securities $ 868 $ (1,883) Purchase of loan receivable $ - $ 547 Non-cash purchase of investment property $ 84 $ 536 Certain prior period amounts may have been reclassified to conform to the current year presentation. In August 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update which provides guidance on the classification of certain cash receipts and cash payments in the statement of cash flows, including those related to debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance, and distributions received from equity method investees. This guidance is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. The guidance must be adopted on a retrospective basis and must be applied to all periods presented, but may be applied prospectively if retrospective application would be impracticable. We are currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated statement of cash flows. In January 2016, the FASB issued an accounting standards update that generally requires companies to measure investments in equity securities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The new guidance must be applied using a modified-retrospective approach and is effective for periods beginning after December 15, 2017 and early adoption is not permitted. T In September 2015, the FASB issued an accounting standards update to simplify the accounting for adjustments made to provisional amounts during the measurement period of a business combination. The amendment requires the acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In May 2014, the FASB issued an accounting standards update that provides for a single five-step model to be applied to all revenue contracts with customers as well as requires additional financial statement disclosures that will enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company does not expect the adoption of this standard to have a material impact on its financial position, results of operations or cash flows. In April 2015, the FASB issued an accounting standards update to simplify the presentation of debt issuance costs. This update requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This new guidance was effective for the Company beginning January 1, 2016. The Company adopted this standard during the quarter ended March 31, 2016. As a result of adopting this standard on a retrospective basis, approximately $ 1.4 |
Marketable Securities, Margin L
Marketable Securities, Margin Loan and Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Marketable Securities, Margin Loan and Fair Value Measurements [Abstract] | |
Marketable Securities, Margin Loan and Fair Value Measurements | 3. Marketable Securities, Margin Loan and Fair Value Measurements Marketable Securities The following is a summary of the Company’s available for sale securities as of the dates indicated: As of September 30, 2016 Gross Unrealized Adjusted Cost Gross Unrealized Gains Losses Fair Value Equity Securities $ 10,194 $ - $ (1,596) $ 8,598 As of December 31, 2015 Gross Unrealized Adjusted Cost Gross Unrealized Gains Losses Fair Value Equity Securities $ 17,928 $ 63 $ (2,527) $ 15,464 The Company has access to a margin loan from a financial institution that holds custody of certain of the Company’s marketable securities. The margin loan is collateralized by the marketable securities in the Company’s account. The amounts available to the Company under the margin loan are at the discretion of the financial institution and not limited to the amount of collateral in its account. The margin loan bears interest at Libor plus 0.85 1.38 When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and the Company’s intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s amortized cost basis. As of September 30, 2016 and December 31, 2015, the Company did not recognize any impairment charges. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. 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. As of September 30, 2016 and December 31, 2015, all of the Company’s equity securities and were classified as Level 1 assets and there were no transfers between the level classifications during the nine months ended September 30, 2016. |
Notes Receivable from Related P
Notes Receivable from Related Party | 9 Months Ended |
Sep. 30, 2016 | |
Notes Receivable from Related Party [Abstract] | |
Notes Receivable from Related Party | 4. Notes Receivable from Related Party The Company had entered into various revolving promissory notes (collectively, the “Notes Receivable from Related Party”) with the operating partnership of Lightstone Value Plus Real Estate Investment Trust III, Inc. (“Lightstone III”), a REIT also sponsored by the Company’s Sponsor as discussed below. During the three and nine months ended September 30, 2016, the Company accrued interest income (included in interest and dividend income in the consolidated statements of operations) of $ 41 329 273 562 Des Moines Note Receivable On February 4, 2015, the Company entered into a revolving promissory note (the “Des Moines Note Receivable”) of up to $ 10.0 8.2 The Des Moines Note Receivable had a term of one year, bore interest at a floating rate of three-month Libor plus 6.0 100 Durham Note Receivable On May 15, 2015, the Company entered into a revolving promissory note (the “Durham Note Receivable”) of up to $ 13.0 12.0 The Durham Note Receivable had a term of one year, bore interest at a floating rate of three-month Libor plus 6.0 130 2.1 10.9 Lansing Note Receivable On May 2, 2016, the Company entered into a revolving promissory note (the “Lansing Note Receivable”) of up to $ 8.0 6.0 6.0 80 Green Bay Note Receivable On May 2, 2016, the Company entered into a revolving promissory note (the “Green Bay Note Receivable”) of up to $ 14.5 10.2 6.0 145 |
Mortgages payable, net
Mortgages payable, net | 9 Months Ended |
Sep. 30, 2016 | |
Mortgages payable [Abstract] | |
Mortgages payable | 5. Mortgages payable, net Weighted Average Interest Rate as of As of As of Interest September 30, Maturity Amount Due September 30, December 31, Description Rate 2016 Date at Maturity 2016 2015 Promissory Note, secured by four properties 4.94% 4.94 % August 2018 $ 21,754 $ 22,829 $ 23,236 Revolving Loan, secured by nine properties LIBOR + 4.95% 5.63 % January 2018 73,616 73,616 74,230 Courtyard - Parsippany LIBOR + 3.50% 3.95 % August 2018 7,126 7,478 7,612 Residence Inn - Baton Rouge 5.36% 5.36 % November 2018 3,480 3,660 3,720 Promissory Note, secured by three properties 4.94% 4.94 % August 2018 14,008 14,701 14,962 Courtyard - Baton Rouge 5.56% 5.56 % May 2017 5,873 5,959 6,064 Total mortgages payable 5.32 % $ 125,857 $ 128,243 $ 129,824 Less: Deferred financing costs (933) (1,432) Total mortgages payable, net $ 127,310 $ 128,392 Principal Maturities Remainder of 2016 2017 2018 2019 2020 Thereafter Total Principal maturities $ 337 $ 7,151 $ 120,755 $ - $ - $ - $ 128,243 Less: Deferred financing costs (933) Total principal maturiteis, net 127,310 Debt Compliance Pursuant to the Company’s debt agreements, approximately $ 3.2 2.2 Additionally, the Company’s mortgage loan (outstanding principal balance of $ 6.0 |
Equity
Equity | 9 Months Ended |
Sep. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
Equity | 6. Equity 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 attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the applicable period. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 7. Related Party Transactions The Company has agreements with the Advisor and Lightstone Value Plus REIT Management LLC (the “Property Manager”) to pay certain fees in exchange for services performed by these entities and other related party entities. The Company’s ability to secure financing and subsequent real estate operations are dependent upon its Advisor, Property Manager and their affiliates to perform such services as provided in these agreements. For the Three Months Ended September 30, For the Nine Months Ended September 30, 2016 2015 2016 2015 Development Fees $ - $ 48 $ 59 $ 50 Asset Management Fees 601 568 1,786 1,447 Total $ 601 $ 616 $ 1,845 $ 1,497 |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Financial Instruments [Abstract] | |
Financial Instruments | 8. Financial Instruments The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted escrows and deposits, prepaid expenses and other assets, accounts payable and accrued expenses, margin loan, due to/from related party, and distributions payable approximated their fair values because of the short maturity of these instruments. The estimated fair value of our mortgages payable is as follows: As of September 30, 2016 As of December 31, 2015 Carrying Estimated Fair Carrying Estimated Fair Amount Value Amount Value Mortgages payable $ 128,243 $ 128,931 $ 129,824 $ 130,255 The fair value of our mortgages payable was determined by discounting the future contractual interest and principal payments by market interest rates. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies Legal Proceedings From time to time in the ordinary course of business, the Company may become subject to legal proceedings, claims or disputes. On July 13, 2011, JF Capital Advisors, filed a lawsuit against The Lightstone Group, LLC, the Company, and Lightstone Value Plus Real Estate Investment Trust, Inc. in the Supreme Court of the State of New York seeking payment for services alleged to have been rendered, and to be rendered prospectively, under theories of unjust enrichment and breach of contract. The plaintiff had a limited business arrangement with The Lightstone Group, LLC; that arrangement has been terminated. We filed a motion to dismiss the action and, on January 31, 2012, the Supreme Court dismissed the complaint in its entirety, but granted the plaintiff leave to replead two limited causes of action. The plaintiff filed an amended complaint on May 18, 2012, bringing limited claims under theories of unjust enrichment and quantum meruit. On November 21, 2012, the court dismissed this second complaint in part, leaving only $ 164 Plaintiff has appealed to the Court of Appeals, which affirmed in part and denied in part, leaving a smaller number of claims available to the Plaintiff. Plaintiff has indicated that it intends to continue to pursue these claims in the trial court. While any proceeding or litigation has an element of uncertainty, management currently believes that the likelihood of an unfavorable outcome with respect to the aforementioned legal proceedings is remote. No provision for loss has been recorded in connection therewith. As of the date hereof, the Company is not a party to any material pending legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on its results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. Subsequent Events Distribution Payment On October 14, 2016, the distribution for the three-month period ending September 30, 2016 of $ 3.3 Distribution Declaration On November 14, 2016, the Board of Directors authorized and the Company declared a distribution for the three-month period ending December 31, 2016. The distribution will be calculated based on shareholders of record each day during this three-month period at a rate of $ 0.0019178 365 7.0 10.00 |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of Lightstone REIT II and its Operating Partnership and its subsidiaries (over which the Company exercises financial and operating control). As of September 30, 2016, the Lightstone REIT II had a 99 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, 2015. The unaudited interim financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair statement of the results for the periods presented. The accompanying unaudited consolidated financial statements of the Lightstone Value Plus Real Estate Investment Trust II, Inc. and its Subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 8-03 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. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). 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, 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 unaudited consolidated statements of operations for interim periods are not necessarily indicative of results for the full year or any other period. |
Supplemental disclosure of cash flow information | For the Nine Months Ended September 30, 2016 2015 Cash paid for interest $ 5,339 $ 2,979 Distributions declared $ 9,719 $ 9,060 Value of shares issued from distribution reinvestment program $ - $ 1,723 Debt assumed for acquisition $ - $ 32,841 Non controlling interest assumed for acquisition $ - $ 656 Unrealized gain/(loss) in available for sale securities $ 868 $ (1,883) Purchase of loan receivable $ - $ 547 Non-cash purchase of investment property $ 84 $ 536 |
Reclassifications | Reclassifications Certain prior period amounts may have been reclassified to conform to the current year presentation. |
New Accounting Pronouncements | In August 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update which provides guidance on the classification of certain cash receipts and cash payments in the statement of cash flows, including those related to debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance, and distributions received from equity method investees. This guidance is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. The guidance must be adopted on a retrospective basis and must be applied to all periods presented, but may be applied prospectively if retrospective application would be impracticable. We are currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated statement of cash flows. In January 2016, the FASB issued an accounting standards update that generally requires companies to measure investments in equity securities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The new guidance must be applied using a modified-retrospective approach and is effective for periods beginning after December 15, 2017 and early adoption is not permitted. T In September 2015, the FASB issued an accounting standards update to simplify the accounting for adjustments made to provisional amounts during the measurement period of a business combination. The amendment requires the acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In May 2014, the FASB issued an accounting standards update that provides for a single five-step model to be applied to all revenue contracts with customers as well as requires additional financial statement disclosures that will enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company does not expect the adoption of this standard to have a material impact on its financial position, results of operations or cash flows. In April 2015, the FASB issued an accounting standards update to simplify the presentation of debt issuance costs. This update requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This new guidance was effective for the Company beginning January 1, 2016. The Company adopted this standard during the quarter ended March 31, 2016. As a result of adopting this standard on a retrospective basis, approximately $ 1.4 |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Supplemental Cash Flow Information | For the Nine Months Ended September 30, 2016 2015 Cash paid for interest $ 5,339 $ 2,979 Distributions declared $ 9,719 $ 9,060 Value of shares issued from distribution reinvestment program $ - $ 1,723 Debt assumed for acquisition $ - $ 32,841 Non controlling interest assumed for acquisition $ - $ 656 Unrealized gain/(loss) in available for sale securities $ 868 $ (1,883) Purchase of loan receivable $ - $ 547 Non-cash purchase of investment property $ 84 $ 536 |
Marketable Securities, Margin20
Marketable Securities, Margin Loan and Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Marketable Securities, Margin Loan and Fair Value Measurements [Abstract] | |
Summary of Available for Sale Securities | The following is a summary of the Company’s available for sale securities as of the dates indicated: As of September 30, 2016 Gross Gross Unrealized Adjusted Cost Gains Losses Fair Value Equity Securities $ 10,194 $ - $ (1,596) $ 8,598 As of December 31, 2015 Gross Gross Unrealized Adjusted Cost Gains Losses Fair Value Equity Securities $ 17,928 $ 63 $ (2,527) $ 15,464 |
Mortgages payable, net (Tables)
Mortgages payable, net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Mortgages payable [Abstract] | |
Schedule of Mortgages Payable | Mortgages payable, net consisted of the following: Weighted Average Interest Rate as of As of As of Interest September 30, Maturity Amount Due September 30, December 31, Description Rate 2016 Date at Maturity 2016 2015 Promissory Note, secured by four properties 4.94% 4.94 % August 2018 $ 21,754 $ 22,829 $ 23,236 Revolving Loan, secured by nine properties LIBOR + 4.95% 5.63 % January 2018 73,616 73,616 74,230 Courtyard - Parsippany LIBOR + 3.50% 3.95 % August 2018 7,126 7,478 7,612 Residence Inn - Baton Rouge 5.36% 5.36 % November 2018 3,480 3,660 3,720 Promissory Note, secured by three properties 4.94% 4.94 % August 2018 14,008 14,701 14,962 Courtyard - Baton Rouge 5.56% 5.56 % May 2017 5,873 5,959 6,064 Total mortgages payable 5.32 % $ 125,857 $ 128,243 $ 129,824 Less: Deferred financing costs (933) (1,432) Total mortgages payable, net $ 127,310 $ 128,392 |
Schedule of Estimated Contractual Principal Maturities | The following table, based on the initial terms of the mortgages, sets forth their aggregate estimated contractual principal maturities, including balloon payments due at maturity, as of September 30, 2016: Remainder of 2016 2017 2018 2019 2020 Thereafter Total Principal maturities $ 337 $ 7,151 $ 120,755 $ - $ - $ - $ 128,243 Less: Deferred financing costs (933) Total principal maturiteis, net 127,310 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Fees to Related Parties | The following table represents the fees incurred associated with the payments to the Company’s Advisor and Property Manager for the periods indicated: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2016 2015 2016 2015 Development Fees $ - $ 48 $ 59 $ 50 Asset Management Fees 601 568 1,786 1,447 Total $ 601 $ 616 $ 1,845 $ 1,497 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Financial Instruments [Abstract] | |
Summary of Estimated Fair Value of Debt | The estimated fair value of our mortgages payable is as follows: As of September 30, 2016 As of December 31, 2015 Carrying Estimated Fair Carrying Estimated Fair Amount Value Amount Value Mortgages payable $ 128,243 $ 128,931 $ 129,824 $ 130,255 |
Organization (Details Textual)
Organization (Details Textual) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended |
May 20, 2008USD ($) | Sep. 30, 2016USD ($)$ / sharesshares | |
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Date of incorporation | Apr. 28, 2008 | |
Lightstone REIT, partnership formation date | Apr. 30, 2008 | |
General partner ownership interest | 99.00% | |
Advisor's contribution to operating partnership | $ 2 | |
Partnership units issued | 200 | |
Brownmill, LLC [Member] | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Sponsor's cash contribution | $ 12,900 | |
Ownership interest | 48.60% | |
Value of ownership interest | $ 4,800 | |
Subordinate profit interest units | shares | 177 | |
Aggregate value of subordinate profits | $ 17,700 | |
for each $1.0 million in subscriptions up to ten percent of its primary offering proceeds on a semi-annual basis [Member] | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Subordinate General Partner Unit Value | $ 1,000 | |
Subordinated general partner participation, per unit cost | $ / shares | $ 100,000 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Summary of Significant Accounting Policies [Line Items] | ||
Cash paid for interest | $ 5,339 | $ 2,979 |
Distributions declared | 9,719 | 9,060 |
Value of shares issued from distribution reinvestment program | 0 | 1,723 |
Debt assumed for acquisition | 0 | 32,841 |
Non controlling interest assumed for acquisition | 0 | 656 |
Unrealized gain/(loss) in available for sale securities | 868 | (1,883) |
Purchase of loan receivable | 0 | 547 |
Non-cash purchase of investment property | $ 84 | $ 536 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Line Items] | ||
Percentage general partnership interest in common units operating partnership | 99.00% | |
Total mortgages payable, net | $ 127,310 | $ 128,392 |
Reclassification [Member] | ||
Summary of Significant Accounting Policies [Line Items] | ||
Total mortgages payable, net | $ 1,400 |
Marketable Securities, Margin27
Marketable Securities, Margin Loan and Fair Value Measurements (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | $ 8,598 | $ 15,464 |
Equity Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 10,194 | 17,928 |
Gross Unrealized Gains | 0 | 63 |
Gross Unrealized Losses | (1,596) | (2,527) |
Fair Value | $ 8,598 | $ 15,464 |
Marketable Securities, Margin28
Marketable Securities, Margin Loan and Fair Value Measurements (Details Textual) - Margin Loan [Member] | 9 Months Ended |
Sep. 30, 2016 | |
Debt Instrument [Line Items] | |
Libor | 1.38% |
Interest rate, Libor plus | 0.85% |
Notes Receivable from Related29
Notes Receivable from Related Party (Details Textual) - USD ($) $ in Thousands | May 02, 2016 | May 15, 2015 | Feb. 04, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
Notes Receivable from Affiliate [Line Items] | ||||||||
Amount of note receivable funded to related party | $ 24,200 | $ 20,200 | ||||||
Outstanding principal balance | $ 0 | 0 | $ 2,055 | |||||
Interest Income, Related Party | $ 41 | $ 273 | $ 329 | $ 562 | ||||
Des moines Note Receivable [Member] | ||||||||
Notes Receivable from Affiliate [Line Items] | ||||||||
Debt instrument, borrowing period | 1 year | |||||||
Interest rate margin | 6.00% | |||||||
Origination fee | $ 100 | |||||||
Lightstone III [Member] | Des moines Note Receivable [Member] | ||||||||
Notes Receivable from Affiliate [Line Items] | ||||||||
Maximum borrowing capacity | $ 10,000 | |||||||
Amount of note receivable funded to related party | $ 8,200 | |||||||
Lightstone III [Member] | Green Bay Note Receivable [Member] | ||||||||
Notes Receivable from Affiliate [Line Items] | ||||||||
Maximum borrowing capacity | $ 14,500 | |||||||
Amount of note receivable funded to related party | $ 10,200 | |||||||
Debt instrument, borrowing period | 1 year | |||||||
Interest rate margin | 6.00% | |||||||
Origination fee | $ 145 | |||||||
Lightstone III [Member] | Lansing Note Receivable [Member] | ||||||||
Notes Receivable from Affiliate [Line Items] | ||||||||
Maximum borrowing capacity | 8,000 | |||||||
Amount of note receivable funded to related party | $ 6,000 | |||||||
Debt instrument, borrowing period | 1 year | |||||||
Interest rate margin | 6.00% | |||||||
Origination fee | $ 80 | |||||||
Revolving Promissory Note - Durham [Member] | Lightstone III [Member] | ||||||||
Notes Receivable from Affiliate [Line Items] | ||||||||
Maximum borrowing capacity | $ 13,000 | |||||||
Amount of note receivable funded to related party | $ 12,000 | |||||||
Debt instrument, borrowing period | 1 year | |||||||
Interest rate margin | 6.00% | |||||||
Origination fee | $ 130 | |||||||
Outstanding principal balance | 2,100 | |||||||
Remaining borrowing capacity available | $ 10,900 |
Mortgages payable, net (Details
Mortgages payable, net (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Weighted Average Interest Rate | 5.32% | |
Amount Due at Maturity | $ 125,857 | |
Total Mortgages Payable | 128,243 | $ 129,824 |
Less: Deferred financing costs | (933) | (1,432) |
Total mortgages payable, net | $ 127,310 | 128,392 |
Promissory Note, secured by four properties [Member] | ||
Debt Instrument [Line Items] | ||
Interest Rate | 4.94% | |
Weighted Average Interest Rate | 4.94% | |
Maturity Date | Aug. 31, 2018 | |
Amount Due at Maturity | $ 21,754 | |
Total mortgages payable, net | $ 22,829 | 23,236 |
Promissory Note, secured by three properties | ||
Debt Instrument [Line Items] | ||
Interest Rate | 4.94% | |
Weighted Average Interest Rate | 4.94% | |
Maturity Date | Aug. 31, 2018 | |
Amount Due at Maturity | $ 14,008 | |
Total mortgages payable, net | $ 14,701 | 14,962 |
Revolving Loan, secured by nine properties [Member] | ||
Debt Instrument [Line Items] | ||
Variable interest rate basis | LIBOR + 4.95 | |
Weighted Average Interest Rate | 5.63% | |
Maturity Date | Jan. 31, 2018 | |
Amount Due at Maturity | $ 73,616 | |
Total mortgages payable, net | $ 73,616 | 74,230 |
Courtyard-Parsippany [Member] | ||
Debt Instrument [Line Items] | ||
Variable interest rate basis | LIBOR + 3.50 | |
Weighted Average Interest Rate | 3.95% | |
Maturity Date | Aug. 31, 2018 | |
Amount Due at Maturity | $ 7,126 | |
Total mortgages payable, net | $ 7,478 | 7,612 |
Residence Inn - Baton Rouge [Member] | ||
Debt Instrument [Line Items] | ||
Variable interest rate basis | 5.36 | |
Weighted Average Interest Rate | 5.36% | |
Maturity Date | Nov. 30, 2018 | |
Amount Due at Maturity | $ 3,480 | |
Total mortgages payable, net | $ 3,660 | 3,720 |
Courtyard - Baton Rouge [Member] | ||
Debt Instrument [Line Items] | ||
Interest Rate | 5.56% | |
Weighted Average Interest Rate | 5.56% | |
Maturity Date | May 31, 2017 | |
Amount Due at Maturity | $ 5,873 | |
Total mortgages payable, net | $ 5,959 | $ 6,064 |
Mortgages payable, net (Detai31
Mortgages payable, net (Details 1) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Remainder of 2016 | $ 337 | |
2,017 | 7,151 | |
2,018 | 120,755 | |
2,019 | 0 | |
2,020 | 0 | |
Thereafter | 0 | |
Total | 128,243 | $ 129,824 |
Less: Deferred financing costs | (933) | (1,432) |
Total principal maturiteis, net | $ 127,310 | $ 128,392 |
Mortgages payable, net (Detai32
Mortgages payable, net (Details Textual) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Restricted escrows | $ 3,183 | $ 7,243 |
Secured Debt | 127,310 | 128,392 |
Promissory Note, secured by four properties [Member] | ||
Debt Instrument [Line Items] | ||
Restricted escrows | $ 3,200 | 2,200 |
Maturity Date | Aug. 31, 2018 | |
Secured Debt | $ 22,829 | 23,236 |
Courtyard Baton Rouge [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Date | May 31, 2017 | |
Secured Debt | $ 5,959 | $ 6,064 |
Related Party Transactions (Det
Related Party Transactions (Details) - Related Party [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Related Party Transaction [Line Items] | ||||
Development Fees | $ 0 | $ 48 | $ 59 | $ 50 |
Asset Management Fees | 601 | 568 | 1,786 | 1,447 |
Total | $ 601 | $ 616 | $ 1,845 | $ 1,497 |
Financial Instruments (Details)
Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Carrying Amount | $ 128,243 | $ 129,824 |
Mortgage payable [Member] | ||
Debt Instrument [Line Items] | ||
Carrying Amount | 128,243 | 129,824 |
Estimated Fair Value | $ 128,931 | $ 130,255 |
Commitments and Contingencies (
Commitments and Contingencies (Details Textual) $ in Thousands | 1 Months Ended | |
Jan. 31, 2012 | Nov. 21, 2012USD ($) | |
Commitments And Contingencies [Line Items] | ||
Number of claims filed | 2 | |
Potential damages | $ 164 |
Subsequent Events (Details Text
Subsequent Events (Details Textual) - Subsequent Event [Member] - USD ($) | Nov. 14, 2016 | Oct. 14, 2016 |
Subsequent Event [Line Items] | ||
Distribution payment | $ 3.3 | |
Distribution on per day basis | $ 0.0019178 | |
Number of days used to calculate daily amount of distribution | 365 days | |
Annualized rate of dividend | 7.00% | |
Share price | $ 10 |