| Investments in Unconsolidated Affiliated Entities | 3. Investments in Unconsolidated Affiliated Entities The entities listed below are partially owned
by the Company. The Company accounts for these investments under the equity method of accounting as the Company exercises significant
influence, but does not exercise financial and operating control over these entities. A summary of the Company’s investments in
the unconsolidated affiliated entities is as follows:
Summary of investments in unconsolidated entities
As of
Entity Date of Ownership June 30, December 31,
Brownmill Various 48.58 % $ 4,924 $ 4,710
Hilton Garden Inn Joint Venture March 27, 2018 50 % 11,083 10,649
Total investments in unconsolidated affiliated real estate entities $ 16,007 $ 15,359 Brownmill Joint Venture During 2010 through 2012, the Company entered
into various contribution agreements with Lightstone Holdings LLC (‘‘LGH’’), a wholly-owned subsidiary of the
Sponsor, pursuant to which LGH contributed to the Company an aggregate 48.6 48 100,000 4.8 As of June 30, 2021, the Company owns a 48.6%
membership interest in the Brownmill Joint Venture, which is a non-managing interest. An affiliate of the Company’s Sponsor is the
majority owner and manager of the Brownmill Joint Venture. Profit and cash distributions are allocated in accordance with each investor’s
ownership percentage. The Company accounts for its investment in the Brownmill Joint Venture in accordance with the equity method of accounting.
During the six months ended June 30, 2021, the Company made contributions to the Brownmill Joint Venture aggregating $ 68 87 125 The Brownmill Joint Venture owns two retail properties
known as Browntown Shopping Center, located in Old Bridge, New Jersey, and Millburn Mall, located in Vauxhaull, New Jersey, which collectively,
are referred to as the “Brownmill Properties.” Brownmill Joint Venture Financial Information The Company’s carrying value of its interest
in the Brownmill Joint Venture differs from its share of member’s equity reported in the condensed balance sheet of the Brownmill
Joint Venture due to the Company’s basis of its investment in excess of the historical net book value of the Brownmill Joint Venture.
The Company’s additional basis allocated to depreciable assets is being recognized on a straight-line basis over the lives of the
appropriate assets. The
following table represents the condensed income statements for the Brownmill Joint Venture for the periods indicated:
Schedule
of condensed income statements
For
the Three Months Ended For
the Six Months Ended
2021 2020 2021 2020
Revenue $ 975 $ 895 $ 2,025 $ 1,820
Property
operating expenses 416 454 721 1,106
Depreciation
and amortization 191 167 367 332
Operating
income 368 274 937 382
Interest
expense and other, net (163 ) (150 ) (329 ) (319 )
Net
income $ 205 $ 124 $ 608 $ 63
Company’s share of net
income $ 99 $ 60 $ 295 $ 30
Additional
depreciation and amortization expense (1) (31 ) (31 ) (62 ) (62 )
Company’s
earnings from investment $ 68 $ 29 $ 233 $ (32 )
1) Additional
depreciation and amortization expense relates to the amortization of the difference between
the cost of the interest in Brownmill and the amount of the underlying equity in net
assets of Brownmill. T he
following table represents the condensed balance sheets for Brownmill:
Schedule
of condensed balance sheets As
of As
of
June
30, December
31,
Real
estate, at cost (net) $ 14,196 $ 14,234
Cash and
restricted cash 1,052 1,038
Other
assets 1,542 1,279
Total
assets $ 16,790 $ 16,551
Mortgage
payable $ 13,714 $ 13,834
Other liabilities 809 1,018
Members’
capital 2,267 1,699
Total
liabilities and members’ capital $ 16,790 $ 16,551 Hilton Garden Inn
Joint Venture On March 27, 2018, the Company and Lightstone
Value Plus Real Estate Investment Trust III, Inc. (“Lightstone REIT III”), a related party REIT also sponsored by the
Company’s Sponsor, acquired, through the Hilton Garden Inn Joint Venture, a 183-room, limited-service hotel located at 29-21 41 st 60.0 25.0 35.0 The Company paid $ 12.9 50.0 50.0 In light of the impact of the COVID-19 pandemic
on the operating results of the Hilton Garden Inn – Long Island City, the Hilton Garden Inn Joint Venture has entered into certain
amendments with respect to the Hilton Garden Inn Mortgage as discussed below. On June 2, 2020, the Hilton Garden Inn Mortgage
was amended to provide for (i) the deferral of the six monthly debt service payments aggregating $ 0.9 LIBOR + 2.15%, subject
to a 4.03% floor 1.2 Additionally, on April 7, 2021, the Hilton Garden
Inn Joint Venture and the lender further amended the terms of the Hilton Garden Inn Mortgage to provide for (i) the Hilton Garden
Inn Joint Venture to make a principal paydown of $ 1.7 0.7 Subsequent to the Company’s acquisition
of its 50.0% membership interest in the Hilton Garden Joint Venture through June 30, 2021, it has made an aggregate of $ 2.8 1.3 2.0 0.5 Hilton Garden Inn Joint Venture Financial Information The
following table represents the condensed income statements for the Hilton Garden Inn Joint Venture for the period indicated:
Schedule
of condensed income statements
For
the Three For
the Three For
the Six For
the Six
Revenues $ 1,764 $ 680 $ 3,183 $ 2,220
Property
operating expenses 1,037 616 1,909 1,961
General and
administrative costs 8 11 18 29
Depreciation
and amortization 621 615 1,256 1,245
Operating
income/(loss) 98 (562 ) - (1,015 )
Interest
expense (434 ) (460 ) (831 ) (917 )
Net
loss $ (336 ) $ (1,022 ) $ (831 ) $ (1,932 )
Company’s
share of net loss (50.00%) $ (168 ) $ (511 ) $ (416 ) $ (966 ) The
following table represents the condensed balance sheets for the Hilton Garden Inn Joint Venture:
Schedule
of condensed balance sheets
As
of As
of
June
30, December
31,
Investment
property, net $ 53,629 $ 54,826
Cash 1,661 885
Other
assets 1,185 1,211
Total
assets $ 56,475 $ 56,922
Mortgage
payable, net $ 33,462 $ 34,988
Other liabilities 1,418 1,207
Members’
capital 21,595 20,727
Total
liabilities and members’ capital $ 56,475 $ 56,922 |
