Document and Entity Information
Document and Entity Information - shares shares in Millions | 9 Months Ended | |
Sep. 30, 2020 | Nov. 10, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Lightstone Value Plus Real Estate Investment Trust III, Inc. | |
Entity Central Index Key | 0001563756 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 13.2 | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Small Business | true | |
No Trading Symbol Flag | true | |
Title of 12(b) Security | None |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Investment property: | ||
Land and improvements | $ 21,657,998 | $ 21,656,730 |
Building and improvements | 91,613,309 | 91,585,498 |
Furniture and fixtures | 16,153,406 | 15,946,892 |
Construction in progress | 48,275 | 160,000 |
Gross investment property | 129,472,988 | 129,349,120 |
Less accumulated depreciation | (21,321,232) | (17,551,394) |
Net investment property | 108,151,756 | 111,797,726 |
Investments in unconsolidated affiliated real estate entities | 11,115,909 | 25,929,408 |
Cash and cash equivalents | 28,107,489 | 6,102,573 |
Marketable securities, available for sale | 3,028,078 | 3,228,759 |
Restricted cash | 3,340,498 | 7,440,620 |
Accounts receivable and other assets | 1,980,559 | 1,585,759 |
Total Assets | 155,724,289 | 156,084,845 |
Liabilities and Stockholders' Equity | ||
Accounts payable and other accrued expenses | 3,146,304 | 2,826,937 |
Mortgages payable, net | 64,843,138 | 65,641,277 |
Notes payable | 1,450,230 | 0 |
Due to related parties | 296,756 | 451,337 |
Total liabilities | 69,736,428 | 68,919,551 |
Commitments and Contingencies | ||
Company's stockholders' equity: | ||
Preferred stock, $0.01 par value; 50.0 million shares authorized, none issued and outstanding | 0 | 0 |
Common stock, $0.01 par value; 200.0 million shares authorized, 13.2 million and 13.3 million shares issued and outstanding, respectively | 132,298 | 133,102 |
Additional paid-in-capital | 113,205,240 | 114,002,133 |
Accumulated other comprehensive loss | (357,173) | (78,676) |
Accumulated deficit | (39,084,620) | (38,983,377) |
Total Company stockholders' equity | 73,895,745 | 75,073,182 |
Noncontrolling interests | 12,092,116 | 12,092,112 |
Total Stockholders' Equity | 85,987,861 | 87,165,294 |
Total Liabilities and Stockholders' Equity | $ 155,724,289 | $ 156,084,845 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred Stock, par value per share | $ 0.01 | $ 0.01 |
Preferred Stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value per share | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 200,000,000 | 200,000,000 |
Common Stock, shares issued | 13,200,000 | 13,300,000 |
Common Stock, shares outstanding | 13,200,000 | 13,300,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenues | $ 3,472,785 | $ 9,551,687 | $ 11,099,699 | $ 25,512,858 |
Expenses: | ||||
Property operating expenses | 2,674,902 | 5,658,940 | 8,677,989 | 15,895,145 |
Real estate taxes | 395,298 | 403,449 | 1,149,656 | 1,216,465 |
General and administrative costs | 569,435 | 716,778 | 1,861,219 | 2,176,177 |
Depreciation and amortization | 1,273,187 | 1,510,221 | 3,818,047 | 4,405,768 |
Total operating expenses | 4,912,822 | 8,289,388 | 15,506,911 | 23,693,555 |
Operating (loss)/income | (1,440,037) | 1,262,299 | (4,407,212) | 1,819,303 |
Interest expense | (734,847) | (1,078,220) | (2,346,670) | (3,499,890) |
Loss from investments in unconsolidated affiliated real estate entities | (526,276) | (391,548) | (1,650,218) | (2,339,928) |
Gain on disposition of investment in unconsolidated affiliated real estate entity | 120,328 | 0 | 7,996,967 | 0 |
Other income, net | 118,234 | 51,380 | 305,898 | 108,996 |
Net loss | (2,462,598) | (156,089) | (101,235) | (3,911,519) |
Less: net loss/(income) attributable to noncontrolling interests | 34 | 0 | (8) | 50 |
Net loss applicable to Company's common shares | $ (2,462,564) | $ (156,089) | $ (101,243) | $ (3,911,469) |
Net loss per Company's common shares, basic and diluted | $ (0.19) | $ (0.01) | $ (0.01) | $ (0.29) |
Weighted average number of common shares outstanding, basic and diluted | 13,229,791 | 13,365,427 | 13,234,781 | 13,381,006 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net loss | $ (2,462,598) | $ (156,089) | $ (101,235) | $ (3,911,519) |
Other comprehensive income/(loss): | ||||
Holding gain/(loss) on marketable securities, available for sale | 78,618 | 1,053 | (278,501) | 214,245 |
Reclassification adjustment for loss included in net loss | 0 | 0 | 0 | 38,359 |
Other comprehensive income/(loss) | 78,618 | 1,053 | (278,501) | 252,604 |
Comprehensive loss | (2,383,980) | (155,036) | (379,736) | (3,658,915) |
Less: Comprehensive loss/(income) attributable to noncontrolling interests | 32 | 0 | (4) | 50 |
Comprehensive loss attributable to the Company's common shares | $ (2,383,948) | $ (155,036) | $ (379,740) | $ (3,658,865) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] | Total Noncontrolling Interests [Member] | Total |
BALANCE at Dec. 31, 2018 | $ 134,515 | $ 115,380,181 | $ (450,285) | $ (30,937,879) | $ 12,092,224 | $ 96,218,756 |
BALANCE (in shares) at Dec. 31, 2018 | 13,451,431 | |||||
Net loss | $ 0 | 0 | 0 | (3,911,469) | (50) | (3,911,519) |
Other comprehensive income | 0 | 0 | 252,601 | 0 | 3 | 252,604 |
Distributions declared (a) | 0 | 0 | 0 | (3,981,641) | 0 | (3,981,641) |
Distributions paid to noncontrolling interests | 0 | 0 | 0 | 0 | (70) | (70) |
Redemption and cancellation of shares | $ (910) | (887,391) | 0 | 0 | 0 | (888,301) |
Redemption and cancellation of shares (in shares) | (90,982) | |||||
BALANCE at Sep. 30, 2019 | $ 133,605 | 114,492,790 | (197,684) | (38,830,989) | 12,092,107 | 87,689,829 |
BALANCE (in shares) at Sep. 30, 2019 | 13,360,449 | |||||
BALANCE at Jun. 30, 2019 | $ 133,804 | 114,688,187 | (198,737) | (38,674,900) | 12,092,117 | 88,040,471 |
BALANCE (in shares) at Jun. 30, 2019 | 13,380,362 | |||||
Net loss | (156,089) | (156,089) | ||||
Other comprehensive income | 1,053 | 1,053 | ||||
Distributions paid to noncontrolling interests | $ 0 | 0 | 0 | 0 | (10) | (10) |
Redemption and cancellation of shares | $ (199) | (195,397) | 0 | 0 | 0 | (195,596) |
Redemption and cancellation of shares (in shares) | (19,913) | |||||
BALANCE at Sep. 30, 2019 | $ 133,605 | 114,492,790 | (197,684) | (38,830,989) | 12,092,107 | 87,689,829 |
BALANCE (in shares) at Sep. 30, 2019 | 13,360,449 | |||||
BALANCE at Dec. 31, 2019 | $ 133,102 | 114,002,133 | (78,676) | (38,983,377) | 12,092,112 | 87,165,294 |
BALANCE (in shares) at Dec. 31, 2019 | 13,310,227 | |||||
Net loss | $ 0 | 0 | 0 | (101,243) | 8 | (101,235) |
Other comprehensive income | 0 | 0 | (278,497) | 0 | (4) | (278,501) |
Redemption and cancellation of shares | $ (804) | (796,893) | 0 | 0 | 0 | (797,697) |
Redemption and cancellation of shares (in shares) | (80,436) | |||||
BALANCE at Sep. 30, 2020 | $ 132,298 | 113,205,240 | (357,173) | (39,084,620) | 12,092,116 | 85,987,861 |
BALANCE (in shares) at Sep. 30, 2020 | 13,229,791 | |||||
BALANCE at Jun. 30, 2020 | $ 132,298 | 113,205,240 | (435,789) | (36,622,056) | 12,092,148 | 88,371,841 |
BALANCE (in shares) at Jun. 30, 2020 | 13,229,791 | |||||
Net loss | $ 0 | 0 | 0 | (2,462,564) | (34) | (2,462,598) |
Other comprehensive income | 0 | 0 | 78,616 | 0 | 2 | 78,618 |
BALANCE at Sep. 30, 2020 | $ 132,298 | $ 113,205,240 | $ (357,173) | $ (39,084,620) | $ 12,092,116 | $ 85,987,861 |
BALANCE (in shares) at Sep. 30, 2020 | 13,229,791 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) | 9 Months Ended |
Sep. 30, 2019$ / shares | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |
Annual distribution (in dollars per share) | $ 0.30 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (101,235) | $ (3,911,519) |
Adjustments to reconcile net loss to net cash (used in)/provided by operating activities : | ||
Loss from investments in unconsolidated affiliated real estate entities | 1,650,218 | 2,339,928 |
Depreciation and amortization | 3,818,047 | 4,405,768 |
Amortization of deferred financing costs | 135,696 | 236,915 |
Gain on disposition of investment in unconsolidated affiliated entity | (7,996,967) | 0 |
Other non-cash adjustments | 22,028 | 83,690 |
Changes in assets and liabilities: | ||
Increase in accounts receivable and other assets | (466,702) | (140,622) |
Increase in accounts payable and other accrued expenses | 417,547 | 393,797 |
(Decrease)/increase in due to related parties | (154,581) | 1,063,924 |
Net cash (used in)/provided by operating activities | (2,675,949) | 4,471,881 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of investment property | (222,048) | (2,692,505) |
Purchase of marketable securities | (76,155) | (38,574) |
Proceeds from sale of marketable securities | 0 | 1,018,865 |
Investment in unconsolidated affiliated real estate entities | (873,325) | (246,692) |
Distribution from unconsolidated affiliated real estate entity | 44,000 | 726,584 |
Proceeds from disposition of unconsolidated affiliated real estate entity | 21,989,574 | 0 |
Net cash provided by/(used in) investing activities | 20,862,046 | (1,232,322) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payments on mortgages payable | (933,836) | (920,380) |
Proceeds received from notes payable | 1,450,230 | 0 |
Payment of loan fees and expenses | 0 | (330,619) |
Distributions to noncontrolling interests | 0 | (70) |
Distributions to common stockholders | 0 | (4,667,090) |
Redemption and cancellation of common shares | (797,697) | (888,301) |
Net cash used in financing activities | (281,303) | (6,806,460) |
Net change in cash, cash equivalents and restricted cash | 17,904,794 | (3,566,901) |
Cash, cash equivalents and restricted cash, beginning of year | 13,543,193 | 11,638,681 |
Cash, cash equivalents and restricted cash, end of period | 31,447,987 | 8,071,780 |
Supplemental cash flow information for the periods indicated is as follows: | ||
Cash paid for interest | 1,451,247 | 3,283,324 |
Investment property acquired but not paid | 0 | 570,900 |
Holding loss/gain on marketable securities, available for sale | 278,501 | 252,604 |
Assets classified as held for sale | 0 | 18,161,890 |
Liabilities classified as held for sale | 0 | 592,064 |
The following is a summary of the Company's cash, cash equivalents and restricted cash total as presented in our statements of cash flows for the periods presented: | ||
Cash and cash equivalents | 28,107,489 | 5,763,164 |
Restricted cash | 3,340,498 | 2,308,616 |
Total cash, cash equivalents and restricted cash | $ 31,447,987 | $ 8,071,780 |
Business and Organization
Business and Organization | 9 Months Ended |
Sep. 30, 2020 | |
Business and Organization | |
Business and Organization | 1. Business and Organization Lightstone Value Plus Real Estate Investment Trust III, Inc. (‘‘Lightstone REIT III’’), is a Maryland corporation, formed on October 5, 2012, which elected to qualify as a real estate investment trust (‘‘REIT’’) for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2015. The Lightstone REIT III is structured as an umbrella partnership REIT, or UPREIT, and substantially all of its current and future business will be conducted through Lightstone Value Plus REIT III LP, a Delaware limited partnership (the ‘‘Operating Partnership’’). As of September 30, 2020, Lightstone REIT III held an approximately 99% general partnership interest in the Operating Partnership’s common units. Lightstone REIT III 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 Lightstone REIT III, its Operating Partnership or the Company as required by the context in such pronoun used. The Company has and will continue to seek to acquire a diverse portfolio of real estate assets and real estate-related investments, including hotels, other commercial and/or residential properties, primarily located in the United States. All such properties may be acquired and operated by the Company alone or jointly with another party. The Company may also originate or acquire mortgage loans secured by real estate. Although the Company expects that most of its investments will be of these types, it may make other investments. In fact, it may invest in whatever types of real estate-related investments that it believes are in its best interests. The Company currently has one operating segment. As of September 30, 2020, the Company majority owned and consolidated the operating results and financial condition of eight limited service hotels containing a total of 872 rooms and an unconsolidated 50.0% membership interest in LVP LIC Hotel JV LLC (the “Hilton Garden Inn Joint Venture”). The Company accounts for its unconsolidated membership interest in the Hilton Garden Inn Joint Venture under the equity method of accounting. The Company’s advisor is Lightstone Value Plus REIT III LLC (the “Advisor”), which is majority owned by David Lichtenstein. On July 16, 2014, the Advisor contributed $2,000 to the Operating Partnership in exchange for 200 limited partner units in the Operating Partnership. The Advisor also owns 20,000 shares of our common stock (“Common Shares”) which were issued on December 24, 2012 for $200,000, or $10.00 per share. Mr. Lichtenstein also is a majority owner of the equity interests of the Lightstone Group, LLC. The Lightstone Group, LLC served as the Company’s sponsor (the ‘‘Sponsor’’) during its initial public offering (the “Offering”) which terminated on March 31, 2017. Mr. Lichtenstein owns 222,222 Common Shares which were issued on December 11, 2014 for $2.0 million, or $9.00 per share. Subject to the oversight of the Company’s board of directors (the “Board of Directors”), the Advisor has primary responsibility for making investment decisions on behalf of the Company and managing its day-to-day operations. Through his ownership and control of the Lightstone Group, LLC, Mr. Lichtenstein is the indirect owner and manager of Lightstone SLP III LLC, a Delaware limited liability company (the “Special Limited Partner”), which owns 242 subordinated participation interests (“Subordinated Participation Interests”) in the Operating Partnership which were acquired for $12.1 million in connection with the Offering. 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 III or the Operating Partnership. The Company does not have any employees. The Advisor receives compensation and fees for services related to the investment and management of the Company’s assets. The Company’s Advisor has certain affiliates which may manage the properties the Company acquires. However, the Company also contracts with other unaffiliated third-party property managers, principally for the management of its hospitality properties. The Company’s Common Shares are not currently listed on a national securities exchange. The Company may seek to list its Common Shares 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 Common Shares at this time. The Company does not anticipate that there would be any market for its Common Shares until they are listed for trading. In the event the Company does not begin the process of achieving a liquidity event prior to March 31, 2025, which is the eighth anniversary of the termination of its Offering, its charter requires either (a) an amendment to its charter to extend the deadline to begin the process of achieving a liquidity event, or (b) the holding of a stockholders meeting to vote on a proposal for an orderly liquidation of its portfolio. Noncontrolling Interests - Partners of the Operating Partnership Limited Partner On July 16, 2014, the Advisor contributed $2,000 to the Operating Partnership in exchange for 200 limited partner units in the Operating Partnership. The Advisor has the right to convert limited partner units into cash or, at the Company’s option, an equal number of its Common Shares. Special Limited Partner In connection with the Company’s Offering, which terminated on March 31, 2017, the Special Limited Partner purchased from the Operating Partnership an aggregate of approximately 242 Subordinated Participation Interests for consideration of $12.1 million. The Subordinated Participation Interests were each purchased for $50,000 in consideration and may be entitled to receive liquidation distributions upon the liquidation of Lightstone REIT III. As the majority owner of the Special Limited Partner, Mr. Lichtenstein is the beneficial owner of a 99% interest in such Subordinated Participation Interests and will thus receive an indirect benefit from any distributions made in respect thereof. These Subordinated Participation Interests entitle the Special Limited Partner to a portion of any regular and liquidation distributions that the Company makes to its stockholders, but only after its stockholders have received a stated preferred return. The Advisor and its affiliates and the Special Limited Partner are related parties of the Company. Certain of these entities are entitled to compensation for services related to the investment, management and disposition of our assets during the Company’s acquisition, operational and liquidation stages. The compensation levels during the acquisition and operational stages are based on the cost of acquired properties/investments and the annual revenue earned from such properties/investments, and other such fees and expense reimbursements as outlined in each of the respective agreements. See Note 8 – Related Party Transactions for additional information. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies 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, 2019. 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 III, 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 and depreciable lives. 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, 2019 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. To qualify or maintain our qualification as a REIT, we engage in certain activities through wholly-owned taxable REIT subsidiaries (“TRS”). As such, we are subject to U.S. federal and state income and franchise taxes from these activities. Revenue The following table represents the total revenues from hotel operations on a disaggregated basis: For the Three Months Ended For the Nine Months Ended September 30, September 30, Revenues 2020 2019 2020 2019 Room $ 3,363,015 $ 9,148,423 $ 10,692,786 $ 24,414,976 Food, beverage and other 109,770 403,264 406,913 1,097,882 Total revenues $ 3,472,785 $ 9,551,687 $ 11,099,699 $ 25,512,858 Restricted cash As required by the Company’s lenders, restricted cash is held in escrow accounts for anticipated capital expenditures, real estate taxes, debt service payments and other reserves for certain of the Company’s consolidated properties. Capital reserves are typically utilized for non-operating expenses such as major capital expenditures. Alternatively, a lender may require its own formula for an escrow of capital reserves. As of December 31, 2019, restricted cash also included approximately $5.2 million of the net proceeds from the October 2019 sale of the Company’s SpringHill Suites by Marriott hotel, located in Green Bay, Wisconsin. These funds were temporarily placed in escrow with a qualified intermediary to potentially facilitate a like-kind exchange transaction in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended. However, the Company decided not to pursue a like-kind exchange transaction and the funds were subsequently released in May 2020. Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Lightstone REIT III and the Operating Partnership and its subsidiaries (over which the Company exercises financial and operating control). As of September 30, 2020, Lightstone REIT III had an approximate 99% general partnership interest in the common units of the Operating Partnership. All inter-company accounts and transactions have been eliminated in consolidation. COVID-19 Pandemic Operations and Liquidity Update On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic leading many countries, including the United States, particularly at the individual state level, to impose various restrictions and other measures, including, but not limited to, mandatory closures, quarantines, limitations on travel, “shelter in place” rules and certain other measures in an effort to reduce its duration and spread. The COVID-19 pandemic has continued to evolve and while most states have initiated a phased approach allowing for reductions and/or lifting of restrictions, the situation remains highly unpredictable and dynamic. As a result of the COVID-19 pandemic, room demand for the Company's consolidated and unconsolidated hotels began to significantly decline in March 2020 and these trends have continued through the third quarter. The COVID-19 pandemic has had a significant negative impact on the Company's operations and financial results to date and the Company currently expects that the COVID-19 pandemic will continue to have a significant negative impact on its results of operations, financial position and cash flow for the remainder of 2020 and into 2021. The Company cannot estimate when room demand will recover for its hotels. In light of the impact of the COVID-19 pandemic on the operating results of its hotels, the Company has taken certain actions to preserve its liquidity, including the following: · The Company has implemented cost reduction strategies for all of its hotels, which has led to reductions in both operating expenses and planned capital expenditures. · On June 2, 2020, the Company and the lender agreed to certain changes to the terms of the Company's revolving credit facility (the "Revolving Credit Facility"), including (i) the deferral of monthly debt service for payments previously due from April 1, 2020 through September 30, 2020, which will now be due at maturity; (ii) subject to certain conditions, the interest rate spread was reduced by 100 bps to LIBOR + 2.15%, subject to a 3.00% floor, for the six-month period beginning September 1, 2020 through February 28, 2021; (iii) the Company deposited $0.8 million into a cash collateral account to be applied against the monthly debt service payments due from October 1, 2020 through March 1, 2021; and waiver of all financial covenants for periods before June 30, 2021 and the Company is currently in discussions with the lender to further extend the waiver of all financial covenants. However, there can be no assurances that it will be successful in such endeavors. See Note 5 for additional information. · In April 2020, the Company received an aggregate of $1.5 million from loans provided under the federal Paycheck Protection Program. See Note 6 for additional information. · On March 19, 2020, the Company’s board of directors approved the suspension of all redemptions under the Company’s shareholder redemption program. See Note 11 for additional information. · In May 2020, the Company had approximately $5.2 million of funds released to it from an escrow account. See Note 2 for additional information. Based on these actions, along with its cash and cash equivalents on hand, the Company believes that it will have sufficient liquidity to meet its obligations for at least twelve months from the date of issuance of these financial statements. New Accounting Pronouncements The Company has reviewed and determined that other recently issued accounting pronouncements will not have a material impact on its financial position, results of operations and cash flows, or do not apply to its current operations. |
Investments in Unconsolidated A
Investments in Unconsolidated Affiliated Real Estate Entities | 9 Months Ended |
Sep. 30, 2020 | |
Investments in Unconsolidated Affiliated Real Estate Entities | |
Investments in Unconsolidated Affiliated Real Estate Entities | 3. Investments in Unconsolidated Affiliated Real Estate Entities The entities listed below are or were 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 real estate entities is as follows: As of Entity Date Acquired Ownership % September 30, 2020 December 31, 2019 RP Maximus Cove, L.L.C. (the "Cove Joint Venture") January 31, 2017 22.50 % $ — $ 14,150,280 LVP LIC Hotel JV LLC (the "Hilton Garden Inn Joint Venture") March 27, 2018 50.00 % 11,115,909 11,779,128 Total investments in unconsolidated affiliated real estate entities $ 11,115,909 $ 25,929,408 The Cove Joint Venture On January 31, 2017, the Company, through its wholly owned subsidiary, REIT III COVE LLC along with LSG Cove LLC, an affiliate of the Sponsor and a related party, REIT IV COVE LLC, a wholly owned subsidiary of Lightstone Real Estate Income Trust, Inc. (“Lightstone IV”), a real estate investment trust also sponsored by the Sponsor and a related party and Maximus Cove Investor LLC (“Maximus”), an unrelated third party, completed the acquisition of all of RP Cove, L.L.C’s membership interest in RP Maximus Cove, L.L.C. (the “Cove Joint Venture”) for aggregate consideration of approximately $255.0 million (the “Cove Transaction”). The Cove Joint Venture owns and operates The Cove at Tiburon (“the Cove”), a 281-unit, luxury waterfront multifamily residential property located in Tiburon, California. Prior to entering into The Cove Transaction, Maximus previously owned a separate noncontrolling interest in the Cove Joint Venture. The Company paid approximately $20.0 million for a 22.5% membership interest in the Cove Joint Venture. The Company’s ownership interest in the Cove Joint Venture was a non-managing interest. The Company determined that the Cove Joint Venture was a variable interest entity but the Company was not the primary beneficiary. The Company accounted for its ownership interest in the Cove Joint Venture in accordance with the equity method of accounting because it exerted significant influence over but did not control the Cove Joint Venture. The Company commenced recording its allocated portion of profit/loss and cash distributions beginning as of January 31, 2017 with respect to its 22.5% membership interest in the Cove Joint Venture. Subsequent to the Company’s acquisition of its 22.5% membership interest in the Cove Joint Venture, it made an aggregate of $2.6 million of additional capital contributions and received aggregate distributions of $0.9 million. All of these additional capital contributions were made and distributions received in periods prior to 2020. On December 17, 2019, REIT III Cove LLC, REIT IV Cove LLC, LSG Cove LLC (collectively, the “Redeemers”), Maximus and the Cove Joint Venture entered into a redemption agreement (the “Redemption Agreement”), pursuant to which the Cove Joint Venture would redeem the membership interests of the Redeemers for an aggregate redemption price of approximately $87.6 million. On February 12, 2020, the Cove Joint Venture completed the redemption of the Redeemers’ membership interests in the Cove Joint Venture pursuant to the terms of the Redemption Agreement for an aggregate redemption price of approximately $87.6 million. In connection, with the redemption of its 22.5% membership interest in the Cove Joint Venture, the Company received proceeds of approximately $21.9 million which resulted in a gain on the disposition of investment in unconsolidated affiliated real estate entity of approximately $7.9 million during the first quarter of 2020, which is included on the consolidated statements of operations for the nine months ended September 30, 2020. As a result of the redemption of its 22.5% membership interest in the Cove Joint Venture on February 12, 2020, the Company no longer has an ownership interest in the Cove Joint Venture. During August 2020, the Company received $0.1 million of additional proceeds related to the redemption of its membership interest in the Cove Joint Venture and recognized a gain on the disposition of investment in unconsolidated affiliated real estate entity of $0.1 million during the third quarter of 2020. As a result, the Company has recognized an aggregate gain on the disposition of investment in unconsolidated affiliated real estate entity of approximately $8.0 million during the nine months ended September 30, 2020. The Cove Joint Venture Financial Information The Company’s carrying value of its interest in the Cove Joint Venture differed from its share of member’s equity reported in the condensed balance sheet of the Cove Joint Venture because the Company’s basis of its investment was in excess of the historical net book value of the Cove Joint Venture. The Company’s additional basis was allocated to depreciable assets was recognized on a straight-line basis over the lives of the appropriate assets. The following table represents the unaudited condensed income statements for the Cove Joint Venture: For the For the For the Period Three Months Nine Months January 1 through Ended Ended (amounts in thousands) February 12, 2020 September 30, 2019 September 30, 2019 Revenues $ 1,375 $ 4,227 $ 11,912 Property operating expenses 430 1,297 3,774 General and administrative costs 13 17 83 Depreciation and amortization 960 2,884 8,620 Operating loss/(income) (28) 29 (565) Loss on debt extinguishment — — (1,526) Interest expense and other, net (652) (2,019) (7,470) Net loss $ (680) $ (1,990) $ (9,561) Company's share of net loss (22.50%) $ (153) $ (448) $ (2,151) Adjustment to depreciation and amortization expense (1) (5) (10) (30) Company's loss from investment $ (158) $ (458) $ (2,181) The following table represents the unaudited condensed balance sheet for the Cove Joint Venture: As of (amounts in thousands) December 31, 2019 Real estate, at cost (net) $ 138,045 Cash and restricted cash 1,491 Other assets 1,141 Total assets $ 140,677 Mortgage payable, net $ 178,353 Other liabilities 1,339 Members' deficit (1) (39,015) Total liabilities and members' deficit $ 140,677 1) The adjustment to depreciation and amortization expense relates to the difference between the Company’s basis in the Cove Joint Venture and the amount of the underlying equity in net assets of the Cove Joint Venture. Hilton Garden Inn Joint Venture On March 27, 2018, the Company and its Sponsor’s other public program, Lightstone Value Plus Real Estate Investment Trust II, Inc. (“Lightstone REIT II”), acquired, through the Hilton Garden Inn Joint Venture, a 183-room, limited-service hotel located at 29-21 41 st Avenue , Long Island City, New York (the “Hilton Garden Inn - Long Island City”) from an unrelated third party, for aggregate consideration of approximately $60.0 million, which consisted of $25.0 million of cash and $35.0 million of proceeds from a mortgage loan from a financial institution (the "Hilton Garden Inn Mortgage"), excluding closing and other related transaction costs. The Company and Lightstone REIT II each have a 50.0% membership interest in the Hilton Garden Inn Joint Venture. The Company paid approximately $12.9 million for a 50.0% membership interest in the Hilton Garden Inn Joint Venture. The Company’s membership interest in the Hilton Garden Inn Joint Venture is a co-managing interest. The Company accounts for its membership interest in the Hilton Garden Inn Joint Venture in accordance with the equity method of accounting because it exerts significant influence over but does not control the Hilton Garden Inn Joint Venture. All capital contributions and distributions of earnings from the Hilton Garden Inn Joint Venture are made on a pro rata basis in proportion to each member’s equity interest percentage. Any distributions in excess of earnings from the Hilton Garden Inn Joint Venture are made to the members pursuant to the terms of the Hilton Garden Inn Joint Venture’s operating agreement. The Company commenced recording its allocated portion of profit/loss and cash distributions beginning as of March 27, 2018 with respect to its membership interest of 50.0% in the Hilton Garden Inn Joint Venture. On June 2, 2020, the Hilton Garden Inn Joint Venture and the lender agreed to certain changes to the terms of the Hilton Garden Inn Mortgage, including (i) the deferral of monthly debt service for payments previously due from April 1, 2020 through September 30, 2020, which are now due at maturity (March 27, 2023); (ii) subject to certain conditions, the interest rate spread was reduced by 100 bps to LIBOR + 2.15%, subject to a 4.03% floor, for the six-month period beginning September 1, 2020 through February 28, 2021; (iii) the Hilton Garden Inn Joint Venture deposited $1.2 million into a cash collateral account to be applied against the monthly debt service payments due from October 1, 2020 through March 1, 2021; and waiver of all financial covenants for periods before June 30, 2021. The Hilton Garden Inn Joint Venture is currently in discussions with the lender to further extend the waiver of all financial covenants. However, there can be no assurances that it will be successful in such endeavors. Subsequent to the Company’s acquisition of its 50.0% membership interest in the Hilton Garden Joint Venture through September 30, 2020, it has made an aggregate of $1.5 million of additional capital contributions (of which $0.9 million was made in 2020) and received aggregate distributions of $1.5 million (of which $44,000 was received in 2020). Hilton Garden Inn Joint Venture Financial Information The following table represents the condensed income statement for the Hilton Garden Inn Joint Venture for the period indicated: For the For the For the For the Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended (amounts in thousands) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Revenues $ 701 $ 3,016 $ 2,921 $ 8,110 Property operating expenses 674 1,750 2,635 5,020 General and administrative costs 4 1 33 (21) Depreciation and amortization 641 629 1,886 1,898 Operating (loss)/income (618) 636 (1,633) 1,213 Interest expense (435) (505) (1,352) (1,531) Net (loss)/income $ (1,053) $ 131 $ (2,985) $ (318) Company's share of net (loss)/income (50.00%) $ (527) $ 66 $ (1,493) $ (159) The following table represents the condensed balance sheet for the Hilton Garden Inn Joint Venture: As of As of (amounts in thousands) September 30, 2020 December 31, 2019 Investment property, net $ 55,457 $ 56,775 Cash 926 904 Other assets 1,743 894 Total assets $ 58,126 $ 58,573 Mortgage payable, net $ 35,239 $ 34,821 Other liabilities 1,255 794 Members' capital 21,632 22,958 Total liabilities and members' capital $ 58,126 $ 58,573 |
Marketable Securities and Fair
Marketable Securities and Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Marketable Securities and Fair Value Measurements | |
Marketable Securities and Fair Value Measurements | 4. Marketable Securities 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, 2020 Gross Gross Unrealized Unrealized Marketable Securities: Adjusted Cost Gains Losses Fair Value Equity securities: Mutual funds $ 464,805 $ 1,348 $ — $ 466,153 Debt securities: Corporate Bonds 2,919,108 — (357,183) 2,561,925 Total $ 3,383,913 $ 1,348 $ (357,183) $ 3,028,078 As of December 31, 2019 Gross Gross Unrealized Unrealized Marketable Securities: Adjusted Cost Gains Losses Fair Value Equity securities: Mutual funds $ 387,529 $ 805 $ — $ 388,334 Debt securities: Corporate Bonds 2,919,095 60,550 (139,220) 2,840,425 Total $ 3,306,624 $ 61,355 $ (139,220) $ 3,228,759 During 2020, financial markets experienced significant volatility in response to the current COVID-19 pandemic, including significant changes in market interest rates and market prices of certain equity securities. During the three and nine months ended September 30, 2020, the Company experienced a holding gain of approximately $0.1 million and a holding loss of approximately $0.3 million on its available for sale marketable debt securities, respectively. The holding gain and loss are included in the Company's consolidated statements of comprehensive income. As a result, the Company's marketable debt securities had an aggregate net unrealized loss of approximately $0.4 million as of September 30, 2020. The Company considers the declines in market value of its investments in debt securities to be temporary in nature as the unrealized losses were caused primarily by financial market volatility associated with the current COVID-19 pandemic resulting in significant reductions in market interest rates and market prices of certain debt securities. When evaluating its investments in debt securities for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and the Company’s intent to sell, or whether it is more likely than not it will be required to sell, the debt security before recovery of its amortized cost basis. During the nine months ended September 30, 2020 and 2019, the Company did not recognize any impairment charges on its investments in debt securities. As of September 30, 2020, the Company does not consider any of its investments in debt securities to be other-than-temporarily impaired. The Company may sell certain of its investments in marketable debt securities prior to their stated maturities for strategic purposes, in anticipation of credit deterioration, or for duration management. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value: · Level 1 – Quoted prices in active markets for identical assets or liabilities. · Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. As of September 30, 2020 and December 31, 2019, the Company’s equity securities were classified as Level 1 assets and the Company’s debt securities were classified as Level 2 assets. There were no transfers between the level classifications during the during the nine months ended September 30, 2020. The fair values of the Company’s investments in equity securities are measured using quoted prices in active markets for identical assets and debt securities are measured using readily available quoted prices for similar assets. 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: As of September 30, 2020 Due in 1 year $ — Due in 1 year through 5 years 2,155,050 Due in 5 year through 10 years — Due after 10 years 406,875 Total $ 2,561,925 The Company did not have any other significant financial assets or liabilities, which would require revised valuations that are recognized at fair value. |
Mortgages payable, net
Mortgages payable, net | 9 Months Ended |
Sep. 30, 2020 | |
Mortgages payable, net | |
Mortgage payable, net | 5. Mortgages payable, net Mortgages payable, net consists of the following: Weighted Average Interest Rate Interest as of Maturity Amount Due As of As of Description Rate September 30, 2020 Date at Maturity September 30, 2020 December 31, 2019 Revolving Credit Facility LIBOR + 2.15% (floor of 3.00%) 4.16 % July 2022 $ 38,414,814 $ 38,414,814 $ 38,988,014 Promissory Note, secured by two properties 4.73 % 4.73 % October 2021 26,127,572 26,635,069 26,995,705 Total mortgages payable 4.55 % $ 64,542,386 65,049,883 65,983,719 Less: Deferred financing costs (206,745) (342,442) Total mortgage payable, net $ 64,843,138 $ 65,641,277 Revolving Credit Facility The Company, through certain subsidiaries, has a non-recourse Revolving Credit Facility with a financial institution. The Revolving Credit Facility provides the Company with a line of credit of up to $60.0 million pursuant to which it may designate properties as collateral that allow borrowings up to a 65.0% loan-to-value ratio subject to also meeting certain financial covenants, including a prescribed minimum debt yield. The Revolving Credit Facility provides for monthly interest-only payments and the entire principal balance is due upon its expiration. The Revolving Credit Facility, which was entered into on July 13, 2016, had an initial maturity date of July 13, 2019, subject to two one-year options to extend at the sole discretion of the lender. The initial interest rate on the Revolving Credit Facility was LIBOR+ 4.95% until it was reduced to LIBOR+ 3.50% effective June 18, 2018. On July 11, 2019, the Company and the lender amended the Revolving Credit Facility to extend the initial maturity date for 60 days to provide additional time to finalize the terms of a long-term extension. In connection with this amendment, the interest rate on the Revolving Credit Facility was reduced from LIBOR+ 3.50% to LIBOR+ 3.15%, effective July 1, 2019 and the requirements under the minimum debt yield ratio were modified effective as of March 31, 2019. On August 22, 2019, the Company and the lender further amended the Revolving Credit Facility to extend the maturity date to July 13, 2022, subject to two, one-year options to extend at the sole discretion of the lender. In connection with this amendment, the Company made principal paydowns of approximately $0.6 million on both August 22, 2019 and December 31, 2019, respectively, and in certain circumstances would be required to make an additional principal paydown of approximately $0.6 million on April 1, 2020. On June 2, 2020, the Company and the lender agreed to certain changes to the terms of the Company’s revolving credit facility (the “Revolving Credit Facility "), including (i) the deferral of monthly debt service for payments previously due from April 1, 2020 through September 30, 2020, which are now due at maturity; (ii) subject to certain conditions, the interest rate spread was reduced by 100 bps to LIBOR + 2.15%, subject to a 3.00% floor, for the six-month period beginning September 1, 2020 through February 28, 2021; (iii) the Company deposited $0.8 million into a cash collateral account (which is classified as restricted cash on the consolidated balance sheets) to be applied against the monthly debt service payments due from October 1, 2020 through March 1, 2021; and waiver of all financial covenants for periods before June 30, 2021 and the Company is currently in discussions with the lender to further extend the waiver of all financial covenants. However, there can be no assurances that it will be successful in such endeavors. Additionally, a principal paydown of approximately $0.6 million, which was previously due on April 1, 2020 was bifurcated into two separate principal paydowns, each one approximately $0.3 million, which were made in June 2020 and September 2020. As of September 30 , 2020, the Revolving Credit Facility had an outstanding principal balance of approximately $38.4 million and six of the Company's hotel properties were pledged as collateral. Home2 Suites Promissory Note On October 5, 2016, the Company entered into a non-recourse promissory note (the “Home2 Suites Promissory Note”) for $28.4 million. The Promissory Note has a term of five years, bears interest at 4.73% and requires monthly interest and principal payments of $147,806 through its stated maturity with the then remaining unpaid balance of approximately $26.1 million due upon maturity. The Home2 Suites Promissory Note is cross-collateralized by two of the Company’s hotel properties (Home2 Suites – Tukwila and Home2 Suites – Salt Lake City). Although the Company is current with respect to the payment of debt service on its nonrecourse Home2 Suites Promissory Note, it did not meet the required minimum debt service coverage ratio for the third quarter of 2020 because of the impact of the COVID-19 pandemic on the operating performance of these two hotels. As a result, the lender may elect to retain any excess cash flow from these two hotels until such time as a prescribed minimum debt service coverage ratio is achieved for two successive quarters. If the lender elects to retain any excess cash flow from these two hotels, the Company does not believe it would have a material effect on its liquidity or financial condition. Principal Maturities The following table, based on the initial terms of the mortgage, sets forth their aggregate estimated contractual principal maturities, including balloon payments due at maturity, as of September 30, 2020: 2020 2021 2022 2023 2024 Thereafter Total Principal maturities $ 125,456 $ 26,509,613 $ 38,414,814 $ — $ — $ — $ 65,049,883 Less: Deferred financing costs (206,745) Total principal maturities, net $ 64,843,138 Pursuant to the Company’s debt agreements, approximately $3.3 million and $2.3 million of funds were held in restricted escrow accounts as of September 30, 2020 and December 31, 2019, respectively. Such escrows are subject to release in accordance with the applicable debt agreement for the payment of real estate taxes, debt service payments, insurance and capital improvements, as required. Certain of our debt agreements contain clauses providing for prepayment penalties. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2020 | |
Notes payable | |
Notes Payable | 6. Notes Payable During April 2020, the Company, through various subsidiaries (each such entity, a "Borrower"), received aggregate funding of $1.5 million through loans (the "PPP Loans") originated under the federal Paycheck Protection Program, which was established under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and is administered by the U.S. Small Business Administration. The PPP Loans each have a term of five years and provide for an interest rate of 1.00%. The payment of principal and interest on the PPP loan is deferred until the day that the forgiven amount is remitted to the lender (approximately five months after the forgiveness application is submitted to the lender, unless the Borrower appeals a denial of forgiveness) or ten months after the end of the Borrower's covered period, whichever is earlier. Pursuant to the terms of the CARES Act, the proceeds of the PPP Loans may be used for payroll costs, mortgage interest, rent or utility costs. The promissory note for each of the PPP Loans contains customary events of default relating to, among other things, payment defaults and breach of representations and warranties or of provisions of the relevant promissory note. Under the terms of the CARES Act, each Borrower can apply for and be granted forgiveness for all or a portion of the PPP Loans. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds in accordance with the terms of the CARES Act. Although the Company intends for each Borrower to apply for loan forgiveness, no assurance can be given that any Borrower will ultimately obtain forgiveness under any relevant PPP Loan, in whole or in part. As of September 30, 2020, the PPP Loans had an outstanding balance of $1.5 million and are classified as Notes Payable on the consolidated balance sheets. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings per Share | |
Earnings per Share | 7. Earnings per Share The Company had no potentially dilutive securities outstanding during the periods presented. Accordingly, basic and diluted earnings per share is calculated by dividing earnings 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, 2020 | |
Related Party Transactions | |
Related Party Transactions | 8. Related Party Transactions Due to related parties and other transactions The Company has agreements with the Advisor to pay certain fees in exchange for services performed by the Advisor and/or its affiliated entities. Additionally, the Company’s ability to secure financing and its real estate operations are dependent upon its Advisor and its affiliates to perform such services as provided in these agreements. Amounts the Company owes to the Advisor and its affiliated entities are principally for asset management fees, and are classified as due to related parties on the consolidated balance sheets. The following table represents the fees incurred associated with the payments to the Company’s Advisor for the periods indicated: For the For the Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Development fees (1) $ — $ — $ — $ 4,954 Disposition fees (general and administrative costs) — — 39,200 — Asset management fees (general and administrative costs) 300,292 460,009 955,706 1,370,791 Total $ 300,292 $ 460,009 $ 994,906 $ 1,375,745 (1) Generally, capitalized and amortized over the estimated useful life of the associated asset. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Financial Instruments | |
Financial Instruments | 9. Financial Instruments The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable and other assets, accounts payable and other accrued expenses and due to/from related parties 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, 2020 As of December 31, 2019 Estimated Estimated Carrying Fair Carrying Fair Amount Value Amount Value Mortgages payable $ 65,049,883 $ 64,864,326 $ 65,983,719 $ 65,974,411 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, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 10. 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. As of the date hereof, we are not a party to any material pending legal proceedings. |
Share Repurchase Program
Share Repurchase Program | 9 Months Ended |
Sep. 30, 2020 | |
Share Repurchase Program | |
Share Repurchase Program | 11. Share Repurchase Program The Company’s share repurchase program may provide its stockholders with limited, interim liquidity by enabling them to sell their shares of common stock back to the Company, subject to certain restrictions. From the Company’s date of inception through December 31, 2019 we repurchased 397,370 shares of common stock, pursuant to our share repurchase program. We repurchased the shares at an average price per share of $9.72 per share. For the period from January 1 through March 18, 2020, 80,436 shares of common stock were repurchased under our share repurchase program at an average price per share of $9.92 per share. On March 19, 2020, the Board of Directors amended the share repurchase program to remove stockholder notice requirements and also approved the suspension of all redemptions effective immediately. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Revenue | Revenue The following table represents the total revenues from hotel operations on a disaggregated basis: For the Three Months Ended For the Nine Months Ended September 30, September 30, Revenues 2020 2019 2020 2019 Room $ 3,363,015 $ 9,148,423 $ 10,692,786 $ 24,414,976 Food, beverage and other 109,770 403,264 406,913 1,097,882 Total revenues $ 3,472,785 $ 9,551,687 $ 11,099,699 $ 25,512,858 |
Restricted Cash | Restricted cash As required by the Company’s lenders, restricted cash is held in escrow accounts for anticipated capital expenditures, real estate taxes, debt service payments and other reserves for certain of the Company’s consolidated properties. Capital reserves are typically utilized for non-operating expenses such as major capital expenditures. Alternatively, a lender may require its own formula for an escrow of capital reserves. As of December 31, 2019, restricted cash also included approximately $5.2 million of the net proceeds from the October 2019 sale of the Company’s SpringHill Suites by Marriott hotel, located in Green Bay, Wisconsin. These funds were temporarily placed in escrow with a qualified intermediary to potentially facilitate a like-kind exchange transaction in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended. However, the Company decided not to pursue a like-kind exchange transaction and the funds were subsequently released in May 2020. |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Lightstone REIT III and the Operating Partnership and its subsidiaries (over which the Company exercises financial and operating control). As of September 30, 2020, Lightstone REIT III had an approximate 99% general partnership interest in the common units of the Operating Partnership. All inter-company accounts and transactions have been eliminated in consolidation. |
COVID-19 Pandemic Operations and Liquidity Update | COVID-19 Pandemic Operations and Liquidity Update On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic leading many countries, including the United States, particularly at the individual state level, to impose various restrictions and other measures, including, but not limited to, mandatory closures, quarantines, limitations on travel, “shelter in place” rules and certain other measures in an effort to reduce its duration and spread. The COVID-19 pandemic has continued to evolve and while most states have initiated a phased approach allowing for reductions and/or lifting of restrictions, the situation remains highly unpredictable and dynamic. As a result of the COVID-19 pandemic, room demand for the Company's consolidated and unconsolidated hotels began to significantly decline in March 2020 and these trends have continued through the third quarter. The COVID-19 pandemic has had a significant negative impact on the Company's operations and financial results to date and the Company currently expects that the COVID-19 pandemic will continue to have a significant negative impact on its results of operations, financial position and cash flow for the remainder of 2020 and into 2021. The Company cannot estimate when room demand will recover for its hotels. In light of the impact of the COVID-19 pandemic on the operating results of its hotels, the Company has taken certain actions to preserve its liquidity, including the following: · The Company has implemented cost reduction strategies for all of its hotels, which has led to reductions in both operating expenses and planned capital expenditures. · On June 2, 2020, the Company and the lender agreed to certain changes to the terms of the Company's revolving credit facility (the "Revolving Credit Facility"), including (i) the deferral of monthly debt service for payments previously due from April 1, 2020 through September 30, 2020, which will now be due at maturity; (ii) subject to certain conditions, the interest rate spread was reduced by 100 bps to LIBOR + 2.15%, subject to a 3.00% floor, for the six-month period beginning September 1, 2020 through February 28, 2021; (iii) the Company deposited $0.8 million into a cash collateral account to be applied against the monthly debt service payments due from October 1, 2020 through March 1, 2021; and waiver of all financial covenants for periods before June 30, 2021 and the Company is currently in discussions with the lender to further extend the waiver of all financial covenants. However, there can be no assurances that it will be successful in such endeavors. See Note 5 for additional information. · In April 2020, the Company received an aggregate of $1.5 million from loans provided under the federal Paycheck Protection Program. See Note 6 for additional information. · On March 19, 2020, the Company’s board of directors approved the suspension of all redemptions under the Company’s shareholder redemption program. See Note 11 for additional information. · In May 2020, the Company had approximately $5.2 million of funds released to it from an escrow account. See Note 2 for additional information. Based on these actions, along with its cash and cash equivalents on hand, the Company believes that it will have sufficient liquidity to meet its obligations for at least twelve months from the date of issuance of these financial statements. |
New Accounting Pronouncements | New Accounting Pronouncements The Company has reviewed and determined that other recently issued accounting pronouncements will not have a material impact on its financial position, results of operations and cash flows, or do not apply to its current operations |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Schedule of revenues from hotel operations | The following table represents the total revenues from hotel operations on a disaggregated basis: For the Three Months Ended For the Nine Months Ended September 30, September 30, Revenues 2020 2019 2020 2019 Room $ 3,363,015 $ 9,148,423 $ 10,692,786 $ 24,414,976 Food, beverage and other 109,770 403,264 406,913 1,097,882 Total revenues $ 3,472,785 $ 9,551,687 $ 11,099,699 $ 25,512,858 |
Investments in Unconsolidated_2
Investments in Unconsolidated Affiliated Real Estate Entities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Schedule of investments in the unconsolidated affiliated real estate | A summary of the Company’s investments in the unconsolidated affiliated real estate entities is as follows: As of Entity Date Acquired Ownership % September 30, 2020 December 31, 2019 RP Maximus Cove, L.L.C. (the "Cove Joint Venture") January 31, 2017 22.50 % $ — $ 14,150,280 LVP LIC Hotel JV LLC (the "Hilton Garden Inn Joint Venture") March 27, 2018 50.00 % 11,115,909 11,779,128 Total investments in unconsolidated affiliated real estate entities $ 11,115,909 $ 25,929,408 |
RP Maximus Cove LLC [Member] | |
Schedule of condensed income statement | The following table represents the unaudited condensed income statements for the Cove Joint Venture: For the For the For the Period Three Months Nine Months January 1 through Ended Ended (amounts in thousands) February 12, 2020 September 30, 2019 September 30, 2019 Revenues $ 1,375 $ 4,227 $ 11,912 Property operating expenses 430 1,297 3,774 General and administrative costs 13 17 83 Depreciation and amortization 960 2,884 8,620 Operating loss/(income) (28) 29 (565) Loss on debt extinguishment — — (1,526) Interest expense and other, net (652) (2,019) (7,470) Net loss $ (680) $ (1,990) $ (9,561) Company's share of net loss (22.50%) $ (153) $ (448) $ (2,151) Adjustment to depreciation and amortization expense (1) (5) (10) (30) Company's loss from investment $ (158) $ (458) $ (2,181) |
Schedule of condensed balance sheet | The following table represents the unaudited condensed balance sheet for the Cove Joint Venture: As of (amounts in thousands) December 31, 2019 Real estate, at cost (net) $ 138,045 Cash and restricted cash 1,491 Other assets 1,141 Total assets $ 140,677 Mortgage payable, net $ 178,353 Other liabilities 1,339 Members' deficit (1) (39,015) Total liabilities and members' deficit $ 140,677 1) The adjustment to depreciation and amortization expense relates to the difference between the Company’s basis in the Cove Joint Venture and the amount of the underlying equity in net assets of the Cove Joint Venture. |
Hilton Garden Inn [Member] | |
Schedule of condensed income statement | The following table represents the condensed income statement for the Hilton Garden Inn Joint Venture for the period indicated: For the For the For the For the Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended (amounts in thousands) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Revenues $ 701 $ 3,016 $ 2,921 $ 8,110 Property operating expenses 674 1,750 2,635 5,020 General and administrative costs 4 1 33 (21) Depreciation and amortization 641 629 1,886 1,898 Operating (loss)/income (618) 636 (1,633) 1,213 Interest expense (435) (505) (1,352) (1,531) Net (loss)/income $ (1,053) $ 131 $ (2,985) $ (318) Company's share of net (loss)/income (50.00%) $ (527) $ 66 $ (1,493) $ (159) |
Schedule of condensed balance sheet | The following table represents the condensed balance sheet for the Hilton Garden Inn Joint Venture: As of As of (amounts in thousands) September 30, 2020 December 31, 2019 Investment property, net $ 55,457 $ 56,775 Cash 926 904 Other assets 1,743 894 Total assets $ 58,126 $ 58,573 Mortgage payable, net $ 35,239 $ 34,821 Other liabilities 1,255 794 Members' capital 21,632 22,958 Total liabilities and members' capital $ 58,126 $ 58,573 |
Marketable Securities and Fai_2
Marketable Securities and Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Marketable Securities and Fair Value Measurements | |
Schedule of available-for-sale Securities Reconciliation | The following is a summary of the Company’s available for sale securities as of the dates indicated: As of September 30, 2020 Gross Gross Unrealized Unrealized Marketable Securities: Adjusted Cost Gains Losses Fair Value Equity securities: Mutual funds $ 464,805 $ 1,348 $ — $ 466,153 Debt securities: Corporate Bonds 2,919,108 — (357,183) 2,561,925 Total $ 3,383,913 $ 1,348 $ (357,183) $ 3,028,078 As of December 31, 2019 Gross Gross Unrealized Unrealized Marketable Securities: Adjusted Cost Gains Losses Fair Value Equity securities: Mutual funds $ 387,529 $ 805 $ — $ 388,334 Debt securities: Corporate Bonds 2,919,095 60,550 (139,220) 2,840,425 Total $ 3,306,624 $ 61,355 $ (139,220) $ 3,228,759 |
Schedule of estimated fair value of investments | 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: As of September 30, 2020 Due in 1 year $ — Due in 1 year through 5 years 2,155,050 Due in 5 year through 10 years — Due after 10 years 406,875 Total $ 2,561,925 |
Mortgages payable, net (Tables)
Mortgages payable, net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Mortgages payable, net | |
Schedule of mortgages Payable, Net | Mortgages payable, net consists of the following: Weighted Average Interest Rate Interest as of Maturity Amount Due As of As of Description Rate September 30, 2020 Date at Maturity September 30, 2020 December 31, 2019 Revolving Credit Facility LIBOR + 2.15% (floor of 3.00%) 4.16 % July 2022 $ 38,414,814 $ 38,414,814 $ 38,988,014 Promissory Note, secured by two properties 4.73 % 4.73 % October 2021 26,127,572 26,635,069 26,995,705 Total mortgages payable 4.55 % $ 64,542,386 65,049,883 65,983,719 Less: Deferred financing costs (206,745) (342,442) Total mortgage payable, net $ 64,843,138 $ 65,641,277 |
Schedule of principal maturities | The following table, based on the initial terms of the mortgage, sets forth their aggregate estimated contractual principal maturities, including balloon payments due at maturity, as of September 30, 2020: 2020 2021 2022 2023 2024 Thereafter Total Principal maturities $ 125,456 $ 26,509,613 $ 38,414,814 $ — $ — $ — $ 65,049,883 Less: Deferred financing costs (206,745) Total principal maturities, net $ 64,843,138 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions | |
Schedule of fees payments to Company's Advisor | The following table represents the fees incurred associated with the payments to the Company’s Advisor for the periods indicated: For the For the Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Development fees (1) $ — $ — $ — $ 4,954 Disposition fees (general and administrative costs) — — 39,200 — Asset management fees (general and administrative costs) 300,292 460,009 955,706 1,370,791 Total $ 300,292 $ 460,009 $ 994,906 $ 1,375,745 (1) Generally, capitalized and amortized over the estimated useful life of the associated asset. |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Financial Instruments | |
Schedule of mortgage payables | As of September 30, 2020 As of December 31, 2019 Estimated Estimated Carrying Fair Carrying Fair Amount Value Amount Value Mortgages payable $ 65,049,883 $ 64,864,326 $ 65,983,719 $ 65,974,411 |
Business and Organization (Deta
Business and Organization (Details) | Mar. 31, 2017USD ($)$ / sharesshares | Jul. 16, 2014USD ($)shares | Dec. 24, 2012USD ($)$ / sharesshares | Sep. 30, 2020segmentitemroom$ / sharesshares | Dec. 31, 2019$ / sharesshares | Dec. 11, 2014shares |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||
Common Stock, shares issued | shares | 13,200,000 | 13,300,000 | ||||
Common Stock, Par Value | $ / shares | $ 0.01 | $ 0.01 | ||||
Issuance of Subordinated Participation Interest for Each Partner | $ | $ 50,000 | |||||
Number of Operating Segments | segment | 1 | |||||
Number Of Rooms | room | 872 | |||||
Number of service hotels | item | 8 | |||||
Joint Venture Ownership Interest Percentage | 50.00% | |||||
Lightstone REIT III [Member] | ||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||
General partner ownership interest | 99.00% | |||||
Lichtenstein [Member] | ||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||
Common Stock, shares issued | shares | 222,222 | |||||
Lightstone Value Plus REIT III LLC [Member] | ||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||
Issuance of common shares, shares | shares | 20,000 | |||||
Issuance of common shares, value | $ | $ 200,000 | |||||
Shares issued, price per share | $ / shares | $ 10 | |||||
Company owned by David Lichtenstein [Member] | ||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||
Shares reserved for issuance, price per share | $ / shares | $ 9 | |||||
Issuance of common shares, value | $ | $ 2,000,000 | |||||
General Partner [Member] | ||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||
Contribution from advisor | $ | $ 2,000 | |||||
Number of limited partner units issued to advisor | shares | 200 | |||||
Limited Partner [Member] | ||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||
Partners' Capital Account, Contributions | $ | $ 12,100,000 | |||||
Partners' Capital Account, Units, Contributed | shares | 242 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Summary of total revenues from hotel operations on a disaggregated basis (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Total revenues | $ 3,472,785 | $ 9,551,687 | $ 11,099,699 | $ 25,512,858 |
Room [Member] | ||||
Total revenues | 3,363,015 | 9,148,423 | 10,692,786 | 24,414,976 |
Food, beverage and other [Member] | ||||
Total revenues | $ 109,770 | $ 403,264 | $ 406,913 | $ 1,097,882 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) | Jul. 11, 2019 | Jul. 01, 2019 | Jun. 18, 2018 | Jul. 13, 2016 | May 31, 2020 | Apr. 30, 2020 | Feb. 28, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | Mar. 01, 2021 | Dec. 31, 2019 | Dec. 31, 2018 |
Accounting Policies [Line Items] | ||||||||||||
Proceeds from loans provided under the federal Paycheck Protection Program | $ 1,450,230 | $ 0 | ||||||||||
Total cash, cash equivalents and restricted cash | $ 31,447,987 | $ 8,071,780 | $ 13,543,193 | $ 11,638,681 | ||||||||
Restricted cash | $ 5,200,000 | |||||||||||
Funds released from escrow account | $ 5,200,000 | |||||||||||
Lightstone REIT III [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
General partner ownership interest | 99.00% | |||||||||||
Revolving Credit Facility [Member] | Subsequent Event [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 100.00% | |||||||||||
Cash collateral | $ 800,000 | $ 800,000 | ||||||||||
Federal Paycheck Protection Program | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Proceeds from loans provided under the federal Paycheck Protection Program | $ 1,500,000 | |||||||||||
Libor [Member] | Revolving Credit Facility [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 3.50% | 3.15% | 3.50% | 4.95% | ||||||||
Libor [Member] | Revolving Credit Facility [Member] | Subsequent Event [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Floor rate | 3.00% | |||||||||||
Debt Instrument, Interest Rate, Basis for Effective Rate | 2.15% |
Investments in Unconsolidated_3
Investments in Unconsolidated Affiliated Real Estate Entities - Summary of investments in the unconsolidated affiliated real estate entities (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Schedule of Equity Method Investments [Line Items] | ||
Total investments in unconsolidated affiliated real estate entities | $ 11,115,909 | $ 25,929,408 |
RP Maximus Cove LLC [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Business Acquisition, Date of Acquisition Agreement | Jan. 31, 2017 | |
Ownership Percentage | 22.50% | |
Total investments in unconsolidated affiliated real estate entities | 14,150,280 | |
LVP LIC Hotel JV LLC [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Business Acquisition, Date of Acquisition Agreement | Mar. 27, 2018 | |
Ownership Percentage | 50.00% | |
Total investments in unconsolidated affiliated real estate entities | $ 11,115,909 | $ 11,779,128 |
Investments in Unconsolidated_4
Investments in Unconsolidated Affiliated Real Estate Entities - Summary of unaudited condensed income statements for the Cove Joint Venture (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Feb. 12, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Schedule of Equity Method Investments [Line Items] | ||||||
Revenues | $ 3,472,785 | $ 9,551,687 | $ 11,099,699 | $ 25,512,858 | ||
Depreciation and amortization | 1,273,187 | 1,510,221 | 3,818,047 | 4,405,768 | ||
Net (loss)/income | (2,462,564) | (156,089) | (101,243) | (3,911,469) | ||
Company's loss from investment | (526,276) | (391,548) | (1,650,218) | (2,339,928) | ||
RP Maximus Cove LLC [Member] | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Revenues | $ 1,375,000 | 4,227,000 | 11,912,000 | |||
Property operating expenses | 430,000 | 1,297,000 | 3,774,000 | |||
General and administrative costs | 13,000 | 17,000 | 83,000 | |||
Depreciation and amortization | 960,000 | 2,884,000 | 8,620,000 | |||
Operating loss/(income) | 28,000 | (29,000) | 565,000 | |||
Loss on debt extinguishment | 0 | (1,526,000) | ||||
Interest expense and other, net | (652,000) | (2,019,000) | (7,470,000) | |||
Net (loss)/income | (680,000) | (1,990,000) | (9,561,000) | |||
Company's share of net loss | (153,000) | (448,000) | (2,151,000) | |||
Adjustment to depreciation and amortization expense | [1] | (5,000) | (10,000) | (30,000) | ||
Company's loss from investment | $ (158,000) | (458,000) | (2,181,000) | |||
Hilton Garden Inn [Member] | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Revenues | 701,000 | 3,016,000 | 2,921,000 | 8,110,000 | ||
Property operating expenses | 674,000 | 1,750,000 | 2,635,000 | 5,020,000 | ||
General and administrative costs | 4,000 | 1,000 | 33,000 | (21,000) | ||
Depreciation and amortization | 641,000 | 629,000 | 1,886,000 | 1,898,000 | ||
Operating loss/(income) | 618,000 | (636,000) | 1,633,000 | (1,213,000) | ||
Interest expense and other, net | (435,000) | (505,000) | (1,352,000) | (1,531,000) | ||
Net (loss)/income | (1,053,000) | 131,000 | (2,985,000) | (318,000) | ||
Company's share of net loss | $ (527,000) | $ 66,000 | $ (1,493,000) | $ (159,000) | ||
[1] | The adjustment to depreciation and amortization expense relates to the difference between the Company’s basis in the Cove Joint Venture and the amount of the underlying equity in net assets of the Cove Joint Venture. |
Investments in Unconsolidated_5
Investments in Unconsolidated Affiliated Real Estate Entities - Summary of unaudited condensed balance sheets for the Cove Joint Venture (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Schedule of Equity Method Investments [Line Items] | |||||||
Total assets | $ 155,724,289 | $ 156,084,845 | |||||
Other liabilities | 69,736,428 | 68,919,551 | |||||
Members' capital | (85,987,861) | $ (88,371,841) | (87,165,294) | $ (87,689,829) | $ (88,040,471) | $ (96,218,756) | |
Total liabilities and members' deficit | 155,724,289 | 156,084,845 | |||||
RP Maximus Cove LLC [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Members' capital | [1] | (39,015,000) | |||||
Total liabilities and members' deficit | 140,677,000 | ||||||
Hilton Garden Inn [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Members' capital | 21,632,000 | 22,958,000 | |||||
Total liabilities and members' deficit | 58,126,000 | 58,573,000 | |||||
Real Estate [Member] | RP Maximus Cove LLC [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Total assets | 138,045,000 | ||||||
Real Estate [Member] | Hilton Garden Inn [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Total assets | 55,457,000 | 56,775,000 | |||||
Cash and restricted cash [Member] | RP Maximus Cove LLC [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Total assets | 1,491,000 | ||||||
Cash and restricted cash [Member] | Hilton Garden Inn [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Total assets | 926,000 | 904,000 | |||||
Other Assets [Member] | RP Maximus Cove LLC [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Total assets | 1,141,000 | ||||||
Other Assets [Member] | Hilton Garden Inn [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Total assets | 1,743,000 | 894,000 | |||||
Total assets [Member] | RP Maximus Cove LLC [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Total assets | 140,677,000 | ||||||
Total assets [Member] | Hilton Garden Inn [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Total assets | 58,126,000 | 58,573,000 | |||||
Mortgage payable [Member] | RP Maximus Cove LLC [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Other liabilities | 178,353,000 | ||||||
Mortgage payable [Member] | Hilton Garden Inn [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Other liabilities | 35,239,000 | 34,821,000 | |||||
Other Liabilities [Member] | RP Maximus Cove LLC [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Other liabilities | 1,339,000 | ||||||
Other Liabilities [Member] | Hilton Garden Inn [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Other liabilities | $ 1,255,000 | $ 794,000 | |||||
[1] | The adjustment to depreciation and amortization expense relates to the difference between the Company’s basis in the Cove Joint Venture and the amount of the underlying equity in net assets of the Cove Joint Venture. |
Investments in Unconsolidated_6
Investments in Unconsolidated Affiliated Real Estate Entities - Additional Information (Details) | Feb. 12, 2020USD ($) | Dec. 17, 2019USD ($) | Jul. 11, 2019 | Jul. 01, 2019 | Jun. 18, 2018 | Mar. 27, 2018USD ($) | Oct. 05, 2016USD ($) | Jul. 13, 2016 | Aug. 31, 2020USD ($) | Jan. 31, 2017USD ($) | Sep. 30, 2020USD ($)room | Sep. 30, 2019USD ($) | Feb. 28, 2021USD ($) | Sep. 30, 2020USD ($)room | Sep. 30, 2020USD ($)room | Sep. 30, 2019USD ($) | Mar. 01, 2021USD ($) | Dec. 31, 2019USD ($) |
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Additional paid-in-capital | $ 113,205,240 | $ 113,205,240 | $ 113,205,240 | $ 114,002,133 | ||||||||||||||
Joint Venture Investment Property Description | The Cove Joint Venture owns and operates The Cove at Tiburon ("the Cove"), a 281-unit, luxury waterfront multifamily residential property located in Tiburon, California. Prior to entering into The Cove Transaction, Maximus previously owned a separate noncontrolling interest in the Cove Joint Venture. | |||||||||||||||||
Proceeds from Divestiture of Interest in Joint Venture | $ 21,900,000 | $ 100,000 | ||||||||||||||||
Number Of Rooms | room | 872 | 872 | 872 | |||||||||||||||
Gain on the disposition of investment property | $ 100,000 | |||||||||||||||||
Gain on the disposition of investment in unconsolidated affiliated real estate entity | $ 120,328 | $ 0 | $ 7,996,967 | $ 0 | ||||||||||||||
Refurbishment Guarantee [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Redemption of Joint Venture, Amount | $ 87,600,000 | |||||||||||||||||
Cove Joint Venture [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Additional paid-in-capital | $ 2,600,000 | |||||||||||||||||
Aggregate distributions received | 900,000 | |||||||||||||||||
Reportable Legal Entities [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Redemption of Joint Venture, Amount | $ 87,600,000 | |||||||||||||||||
Hilton Garden Inn [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Aggregate purchase price | $ 60,000,000 | |||||||||||||||||
Offering funds used in acquisition | 25,000,000 | |||||||||||||||||
Proceeds from Issuance of Debt | $ 35,000,000 | |||||||||||||||||
Business Acquisition, Percentage of Voting Interests Acquired | 50.00% | 50.00% | 50.00% | 50.00% | ||||||||||||||
Additional paid-in-capital | $ 900,000 | $ 900,000 | $ 900,000 | |||||||||||||||
Hilton Garden Inn [Member] | Cove Joint Venture [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Offering funds used in acquisition | $ 12,900,000 | |||||||||||||||||
Cove Transaction [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Aggregate purchase price | 255,000,000 | |||||||||||||||||
Offering funds used in acquisition | $ 20,000,000 | |||||||||||||||||
Business Acquisition, Percentage of Voting Interests Acquired | 22.50% | 22.50% | ||||||||||||||||
Gain on the disposition of investment property | $ 7,900,000 | |||||||||||||||||
Hilton Garden Inn Joint Venture [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Additional paid-in-capital | 1,500,000 | |||||||||||||||||
Aggregate distributions received | $ 1,500,000 | $ 44,000 | ||||||||||||||||
Revolving Credit Facility [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Face amount | $ 28,400,000 | |||||||||||||||||
Debt Instrument, Term | 5 years | |||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.73% | |||||||||||||||||
Revolving Credit Facility [Member] | Hilton Garden Inn Joint Venture [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Maturity date | Mar. 27, 2023 | |||||||||||||||||
Revolving Credit Facility [Member] | Subsequent Event [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 100.00% | |||||||||||||||||
Cash collateral | $ 800,000 | $ 800,000 | ||||||||||||||||
Revolving Credit Facility [Member] | Subsequent Event [Member] | Hilton Garden Inn Joint Venture [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 100.00% | |||||||||||||||||
Cash collateral | $ 1,200,000 | |||||||||||||||||
Revolving Credit Facility [Member] | Libor [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 3.50% | 3.15% | 3.50% | 4.95% | ||||||||||||||
Revolving Credit Facility [Member] | Libor [Member] | Subsequent Event [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Debt Instrument, Interest Rate, Basis for Effective Rate | 2.15% | |||||||||||||||||
Floor rate | 3.00% | |||||||||||||||||
Revolving Credit Facility [Member] | Libor [Member] | Subsequent Event [Member] | Hilton Garden Inn Joint Venture [Member] | ||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||
Debt Instrument, Interest Rate, Basis for Effective Rate | 2.15% | |||||||||||||||||
Floor rate | 4.03% |
Marketable Securities and Fai_3
Marketable Securities and Fair Value Measurements - Summary of the Company's available for sale securities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Debt securities, Fair Value | $ 2,561,925 | $ 2,561,925 | |
Marketable securities, Adjusted cost | 3,383,913 | 3,383,913 | $ 3,306,624 |
Marketable securities, Gross Unrealized Gain | 1,348 | 61,355 | |
Marketable securities, Gross Unrealized Loss | (357,183) | (139,220) | |
Marketable securities, Fair Value | 3,028,078 | 3,028,078 | 3,228,759 |
Debt Securities, Available-for-sale, Realized Loss | 300,000 | ||
Debt Securities, Available-for-sale, Realized Gain | 100,000 | ||
Debt Securities, Available-for-sale, Unrealized Gain (Loss) | 400,000 | ||
Mutual Fund [Member] | |||
Equity securities, Adjusted Cost | 464,805 | 464,805 | 387,529 |
Equity securities, Gross Unrealized Gains | 1,348 | 805 | |
Equity securities, Gross Unrealized Loss | 0 | 0 | |
Equity securities, Fair Value | 466,153 | 466,153 | 388,334 |
Corporate Bonds [Member] | |||
Debt securities, Adjusted Cost | 2,919,108 | 2,919,108 | 2,919,095 |
Debt securities, Gross Unrealized Gains | 0 | 60,550 | |
Debt securities, Gross Unrealized Losses | (357,183) | (139,220) | |
Debt securities, Fair Value | $ 2,561,925 | $ 2,561,925 | $ 2,840,425 |
Marketable Securities and Fai_4
Marketable Securities and Fair Value Measurements - Estimated fair value of our investments in marketable debt securities (Details) | Sep. 30, 2020USD ($) |
Marketable Securities and Fair Value Measurements | |
Due in 1 year | $ 0 |
Due in 1 year through 5 years | 2,155,050 |
Due in 5 year through 10 years | 0 |
Due after 10 years | 406,875 |
Total | $ 2,561,925 |
Mortgages payable, net - Summar
Mortgages payable, net - Summary of Mortgages payable, net (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2019 | Oct. 05, 2016 | |
Total mortgages payable | $ 65,049,883 | $ 65,983,719 | |
Less: Deferred financing costs | (206,745) | (342,442) | |
Total principal maturities, net | $ 64,843,138 | 65,641,277 | |
Weighted Average Interest Rate | 4.55% | ||
Amount Due at Maturity | $ 64,542,386 | ||
Revolving Credit Facility [Member] | |||
Total mortgages payable | $ 38,414,814 | 38,988,014 | |
Total principal maturities, net | $ 26,100,000 | ||
Interest Rate | LIBOR + 2.15% (floor of 3.00%) | ||
Interest Rate | 4.73% | ||
Weighted Average Interest Rate | 4.16% | ||
Maturity Date | July 2022 | ||
Amount Due at Maturity | $ 38,414,814 | ||
Promissory Note [Member] | |||
Total mortgages payable | $ 26,635,069 | $ 26,995,705 | |
Interest Rate | 4.73% | ||
Weighted Average Interest Rate | 4.73% | ||
Maturity Date | October 2021 | ||
Amount Due at Maturity | $ 26,127,572 |
Mortgages payable, net - Summ_2
Mortgages payable, net - Summary of principal maturities (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Mortgages payable, net | ||
2020 | $ 125,456 | |
2021 | 26,509,613 | |
2022 | 38,414,814 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 0 | |
Principal maturities | 65,049,883 | $ 65,983,719 |
Less: Deferred financing costs | (206,745) | (342,442) |
Total principal maturities, net | $ 64,843,138 | $ 65,641,277 |
Mortgages payable, net - Additi
Mortgages payable, net - Additional Information (Details) | Apr. 01, 2020USD ($) | Aug. 22, 2019USD ($)Options | Jul. 11, 2019 | Jul. 01, 2019 | Jun. 18, 2018 | Oct. 05, 2016USD ($) | Jul. 13, 2016Options | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Feb. 28, 2021USD ($) | Dec. 31, 2019USD ($) | Mar. 01, 2021USD ($) |
Period of extend the initial maturity date | 60 days | |||||||||||
Long-term Debt | $ 64,843,138 | $ 65,641,277 | ||||||||||
Revolving Credit Facility [Member] | ||||||||||||
Escrow Deposits Related to Debt Compliance | 3,300,000 | 2,300,000 | ||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 60,000,000 | |||||||||||
Line Of Credit Facility Current Borrowing Capacity Percentage | 65.00% | |||||||||||
Debt Instrument, Face Amount | $ 28,400,000 | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.73% | |||||||||||
Debt Instrument, Periodic Payment | $ 147,806 | |||||||||||
Number of options to extend | Options | 2 | 2 | ||||||||||
Extension term | 1 year | 1 year | ||||||||||
Principal paydown | $ 600,000 | $ 600,000 | $ 300,000 | $ 300,000 | $ 600,000 | |||||||
Outstanding principal balance | $ 38,400,000 | |||||||||||
Long-term Debt | $ 26,100,000 | |||||||||||
Debt Instrument, Term | 5 years | |||||||||||
Revolving Credit Facility [Member] | Subsequent Event [Member] | ||||||||||||
Spread on variable rate | 100.00% | |||||||||||
Cash collateral | $ 800,000 | $ 800,000 | ||||||||||
Revolving Credit Facility [Member] | Libor [Member] | ||||||||||||
Spread on variable rate | 3.50% | 3.15% | 3.50% | 4.95% | ||||||||
Revolving Credit Facility [Member] | Libor [Member] | Subsequent Event [Member] | ||||||||||||
Floor rate | 3.00% | |||||||||||
Debt Instrument, Interest Rate, Basis for Effective Rate | 2.15% |
Notes Payable - (Details)
Notes Payable - (Details) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Apr. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Line of Credit Facility [Line Items] | ||||
Proceeds from loans provided under the federal Paycheck Protection Program | $ 1,450,230 | $ 0 | ||
Notes payable | 1,450,230 | $ 0 | ||
Federal Paycheck Protection Program | ||||
Line of Credit Facility [Line Items] | ||||
Proceeds from loans provided under the federal Paycheck Protection Program | $ 1,500,000 | |||
Interest rate on loan | 1.00% | |||
Loan term | 5 years | |||
Period for repayment of loan deferred until the day forgiven amount is remitted to lender | 5 months | |||
Borrowers covered period upon repayment of loan | 10 months | |||
Notes payable | $ 1,500,000 |
Related Party Transactions - Su
Related Party Transactions - Summary of fees incurred associated with the payments - (Details) - Advisor [Member] - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Related Party Transaction [Line Items] | ||||
Development fees | $ 0 | $ 0 | $ 0 | $ 4,954 |
Disposition fees (general and administrative costs) | 0 | 0 | 39,200 | 0 |
Asset Management Fees (general and administrative costs) | 300,292 | 460,009 | 955,706 | 1,370,791 |
Total | $ 300,292 | $ 460,009 | $ 994,906 | $ 1,375,745 |
Financial Instruments - Summary
Financial Instruments - Summary of estimated fair value of our mortgages payable (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Financial Instruments | ||
Mortgages payable, Carrying Amount | $ 65,049,883 | $ 65,983,719 |
Mortgages payable, Estimated Fair Value | $ 64,864,326 | $ 65,974,411 |
Share Repurchase Program (Detai
Share Repurchase Program (Details) - $ / shares | 3 Months Ended | 87 Months Ended |
Mar. 18, 2020 | Dec. 31, 2019 | |
Repurchase of common stock | 80,436 | |
Average price per share of repurchase of common stock | $ 9.92 | |
Date of Inception Through December 31, 2019 [Member] | ||
Repurchase of common stock | 397,370 | |
Average price per share of repurchase of common stock | $ 9.72 |