2020

2021 Highlights

During 2020,2021, we completed the following key transactions:

For further information regarding our consolidated real estate properties, see Item 2. Additionally, see Note 9 of the Notes to Consolidated Financial Statements for further information related to subsequent events during the period from January 1, 2021 through the date of this filing.

Investment Objectives

Our primary investment objectives are:

Investment Policies

We have and expect to continue to invest in commercial properties, such as office, industrial, retail, hospitality, multifamily, and student housing, and other real estate-related investments such as mortgage loans and mezzanine loans. Our investments may be in existing income-producing properties and newly-constructed properties that are initially identified as opportunistic and value-add investments with significant possibilities for capital appreciation due to their property-specific characteristics or their market characteristics.

We have and expect to continue to generally make our real estate investments in fee title or a long-term leasehold estate through the Operating Partnership or indirectly through special purpose limited liability companies or through investments in joint ventures, partnerships, co-tenancies, or other co-ownership arrangements with the developers of the properties or other persons.

Borrowing Policies

There is no limitation on the amount we may invest in or borrow related to any single property or other investment. Under our charter, the maximum amount of our indebtedness cannot exceed 300% of our “net assets” (as defined by the Statement of Policy Regarding Real Estate Investment Trusts adopted by the North American Securities Administrators Association on May 7, 2007) as of the date of any borrowing; however, we may exceed that limit if approved by a majority of our independent directors. In addition to our charter limitation, our board of directors has adopted a policy to generally limit our aggregate borrowings to approximately 75% of the aggregate value of our assets unless substantial justification exists that borrowing a greater amount is in our best interests. Our board of directors must review our aggregate borrowings at least quarterly. As of December 31, 2020,2021, we had an aggregate debt leverage ratio of approximately 62.4%64.3% of the aggregate value of our assets.

Disposition Policies

As each of our investments reaches what we believe to be the asset’s optimum value during the expected life of the program, we will consider disposing of the investment and may do so for the purpose of reinvesting the net sales proceeds into real estate and real estate-related investments, distributing the net sale proceeds to our stockholders or satisfying our obligations. A property may be sold before or after the expected holding period if, in the judgment of our Advisor and our independent board members, the sale of the property is determined to be in our best interest and the best interests of our stockholders.

Distribution Policy

We made an election to qualify as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2008. U.S. federal tax law requires a REIT to distribute at least 90% of its annual REIT taxable income (which does not equal net income, as calculated in accordance with generally accepted accounting principles, or GAAP) determined without regard to the deduction for dividends paid and excluding any net capital gain. In order to continue to qualify for REIT status, we may be required to make distributions in excess of cash available. Distributions, if any, are authorized at the discretion of our board of directors based on their analysis of our performance over the previous periods and expectations of performance for future periods. Such analyses may include actual and anticipated operating cash flow, capital expenditure needs, general financial and market conditions, proceeds from asset sales and other factors that our board of directors deems relevant. Our board of directors’ decisions will be substantially influenced by their obligation to ensure that we maintain our federal tax status as a REIT. We cannot provide assurance that we will pay distributions at any particular level, or at all.

Prior to 2012, our board of directors declared regular distributions on a quarterly basis based on daily record dates, portions of which were paid on a monthly basis. During the first quarter of 2012, our board of directors determined to cease regular monthly distributions in favor of payment of periodic special distributions.

During 2014 and 2015, our board of directors declared a total of $77.1 million, or $3.00 per share of common stock, in special cash distributions, all of which were paid to stockholders during 2014, 2015, and 2016. These special cash distributions were paid with a portion of proceeds from asset sales. No special cashfurther distributions have been declared or paid since 2016.

Competition

Competition

We are subject to significant competition in seeking tenants for the leasing of our properties and buyers for the potential sale of our properties. The competition for creditworthy tenants is intense, and we have been required to provide rent concessions, incur charges for tenant improvements, and provide other inducements in order to lease vacant space at our properties. Without these inducements, we may not be able to continue to lease vacant space timely, or at all, which would adversely impact our results of operations. We also compete with sellers of similar properties when we sell properties, which may result in our receiving lower proceeds from the sale of our properties or not being able to sell our properties at prices that will achieve our original return objectives. We compete for buyers and tenants with many third parties engaged in real estate investment activities, including other REITs, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, investment banking firms, lenders, hedge funds, governmental bodies, and other entities. Many of our competitors, including larger REITs, have greater financial resources than we have and generally may be able to accept more risk. They also may enjoy competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies.

Regulations

Our investments are subject to various federal, state and local laws, ordinances, and regulations, including, among other things, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution, and indirect environmental impacts such as increased motor vehicle activity.environmental. We believe that we have all permits and approvals necessary under current law to operate our investments.

COVID-19 Pandemic 

On March 11, 2020, theThe World Health Organization declared COVID-19 a global pandemic leadingon March 11, 2020 and since that time many countries, includingof the United States, particularly at the individual state level, to subsequently impose various degrees of restrictions and other measures, including, but not limited to, mandatory temporary closures, quarantine guidelines, limitations on travel, and “shelter in place” rules in an effort to reduce its duration and the severity of its spread. Although the COVID-19 pandemic has continued to evolve, most of these previously imposed restrictions and other measures which were instituted in response have now been subsequently reduced and/or lifted. However, the continuing COVID-19 pandemic remains highly unpredictable and dynamic and its ultimate duration and extent is likelycontinue to be dependent on numerousvarious developments, such as the regulatory approval, mass production,emergence of variants to the virus that may cause additional strains of COVID-19, the ongoing administration and ultimate effectiveness of vaccines, as well asincluding booster shots, and the eventual timeline to achieve a sufficient level of sufficient herd immunity amongstamong the general population. Accordingly, the ongoing COVID-19 pandemic may continue to have negative effects on the overall health of the U.S. economy for the foreseeable future.

OurAs of December 31, 2021, our consolidated portfolio of properties currently consistsconsisted of seveneight wholly owned multi-family apartment complexes and one student housing complex. Despite past and current restrictions and mitigation strategies, ourcomplexes. Our multi-family properties still have not yet seen any significant impact frombeen significantly impacted by the COVID-19 pandemic. Our student housing complex, which consists of the River Club Apartmentspandemic and the Townhomes at River Club, are located in Athens, Georgia and principally serve as “off-campus” lodging for students attending the University of Georgia (“UGA”). Leases for the River Club Apartments and Townhomes at River Club generally have a term of one year running from August through July. UGA previously transitioned to online instruction during its Spring 2020 semester and for its other course offerings throughout the summer. However, UGA returned to “on-campus” classes beginning with its Fall 2020 semester and has continued “on-campus” classes into the current Spring 2021 semester. Our student housing complex is located “off-campus” and therefore, our tenants are not required to vacate even if UGA does not conduct “on-campus” classes. However, if UGA decides to return to online instruction for its students in lieu of ��on-campus” classes in future semesters, it could adversely impact leasing demand,their occupancy levels, rental rates and the operating results of our student housing complex in future periods.rental collection have remained stable. Additionally, our note receivable relates tois collateralized by a condominium development project located in New YokYork City (the “Condominium Project”), which ishas been subject to similar restrictions and risks. To date, both the Condominium Project and our note receivable hashave not been significantly impacted by the COVID-19 pandemic.

WhileWe continue to closely monitor the overall extent as to which our business has not yet seen any material impact frommay be affected by the ongoing COVID-19 pandemic the extent to which we may be affected in future periods will largely depend on both current and future developments, all of which are highly uncertain and cannot be reasonably predicted. 

If our properties and real estate-related investments are negatively impacted in future periods for an extended period because (i) tenants are unable to pay their rent, (ii) leasing demand for its student housing complexfalls causing declines in occupancy levels and/or rental rates, and (iii) our borrower is unable to pay scheduled debt service on the outstanding note receivable; our business and financial results could be materially and adversely impacted.

Environmental

As an owner of real estate, we are subject to various environmental laws of federal, state, and local governments. Compliance with existing laws has not had a material adverse effect on our financial condition or results of operations, and management does not believe it will have such an impact in the future. However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on properties in which we hold an interest.

Employees

Employees

We have no employees. Our Advisor and its affiliates perform a full range of real estate services for us, including asset management, accounting, legal, and property management, as well as investor relations services.

We are dependent on the Advisor and its affiliates for services that are essential to us, including asset management and acquisition, disposition and financing activities, and other general administrative responsibilities. If these companies were unable to provide these services to us, we would be required to provide the services ourselves or obtain the services from other sources.

Available Information

We electronically submit various filings to the United States Securities and Exchange Commission (the “SEC”) including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports. Copies of our filings with the SEC may be obtained from our website at www.lightstonecapitalmarkets.com or at the SEC’s website at www.sec.gov. Access to these filings is free of charge. We are not incorporating our website or any information from the website into this Annual Report on Form 10-K.

Item 2. Properties.

General

The following table presents certain additional information about our wholly owned and consolidated investments in real estate properties as of December 31, 2020:2021:

The following information generally applies to our consolidated investments in our real estate properties:

Item 3. Legal Proceedings.

From time to time in the ordinary course of business, we 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 of which the outcome is probable or reasonably possible to have a material adverse effect on our results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, we have not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.

Item 4. Mine Safety Disclosure.

None

None

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

There currently is no established public trading market for our shares of common stock. Therefore, there is a risk that a stockholder may not be able to sell their shares of common stock at a time or price acceptable to them. Unless and until our shares of common stock are listed on a national securities exchange, it is not expected that a public market for them will develop.

Estimated Net Asset Value (“NAV”) and NAV per Share of Common Stock (“NAV per Share”)

On November 12, 2020,11, 2021, pursuant to the Policy for Estimation of Common Stock Value (the “Estimated Valuation Policy”), the board of directors of Lightstone Value Plus Real Estate Investment TrustREIT V, Inc. (the “Company,” “we,” “us,” or “our”) determined and approved our estimated NAV of approximately $190.2$260.1 million and resulting estimated NAV per Share of $9.42$12.91 both as of September 30, 2020.2021. Our estimated NAV and resulting NAV per Share are based upon the estimated fair values of our assets and liabilities as of September 30, 20202021 and are effective as of November 12, 2020.11, 2021.

The estimated NAV of our shares was calculated as of a particular point in time. The estimated NAV of our shares will fluctuate over time in response to developments related to individual assets in the portfolio and the management of those assets and in response to the real estate and finance markets. There is no assurance of the extent to which the current estimated valuation should be relied upon for any purpose after its effective date regardless that it may be published on any statement issued by us or otherwise.

Process and Methodology

Our business is managed by LSG-BH II Advisor LLC and LSG Development Advisor LLC (collectively, the(the “Advisor”), which are affiliatesis an affiliate of The Lightstone Group LLC (“Lightstone”) and we have no employees. Our Advisor, along with any necessary material assistance or confirmation of a third-party valuation expert or service, is responsible for calculating our estimated NAV and resulting NAV per Share, which we currently expect will be done on at least an annual basis unless and until our shares of common stock are approved for listing on a national securities exchange. Our board of directors will review and approve each estimate of NAV and resulting NAV per Share.

Our estimated NAV and resulting NAV per Share as of September 30, 20202021 were calculated with both the assistance of our Advisor and Capright Property Advisors, LLC (“Capright”), an independent third-party valuation firm engaged to assist with the valuation of our assets and liabilities. Our Advisor recommended and our board of directors established the estimated NAV per Share based upon the analyses and reports provided by our Advisor and Capright. The process of estimating the value of our assets and liabilities is performed in accordance with our Estimated Valuation Policy and the provisions of the Investment Program Association Practice Guideline 2013-01, “Valuation of Publicly Registered Non-Listed REITs.” We believe our valuations were developed in a manner reasonably designed to ensure their reliability.

In arriving at an estimated NAV and resulting NAV per Share, our board of directors reviewed and considered the valuation analyses prepared by our Advisor and Capright. Our Advisor presented a report to the board of directors with an estimated NAV and resulting NAV per Share. Capright provided our board of directors an opinion that the resulting “as-is” market value for the Company’s properties, as calculated by our Advisor, and the other assets and liabilities as valued by our Advisor, along with the corresponding NAV valuation methodologies and assumptions used by our Advisor to arrive at a recommended NAV per Share of $9.42$12.91 as of September 30, 20202021 were appropriate and reasonable. Our board of directors conferred with our Advisor and a representative from Capright regarding the methodologies and assumptions used to reach their respective conclusions. Our board of directors, which is responsible for determining our estimated per share value, considered all information provided in light of its own familiarity with our assets and liabilities and unanimously approved a NAV per Share of $9.42$12.91 as of September 30, 2020.2021.

The engagement of Capright with respect to our estimated NAV and resulting NAV per Share as of September 30, 20202021 was approved by our board of directors, including all of our independent directors. Capright has extensive experience in conducting asset valuations, including valuations of commercial real estate, debt, properties and real estate-related investments.

Capright’s opinion was subject to various limitations. In forming its opinion, Capright relied on certain information provided by our Advisor and third parties without independent verification. Our Advisor provided Capright with certain information regarding lease terms and the physical condition and capital expenditure requirements of each property. Capright did not perform engineering or structural studies or environmental studies of any of the properties, nor did they perform an independent appraisal of the other assets and liabilities included in our estimated NAV and resulting NAV per Share.

In forming their conclusion as to the “as-is” value of the real estate investments held by us as of September 30, 2020,2021, Capright’s opinion was subject to various limitations. In connection with their engagement, Capright completed appraisals of seven of our eight consolidated properties. An appraisal was not deemed necessary for Autumn Breezethe BayVue Apartments as it was recently acquired and its value was determined by our Advisor based on its contractual purchase price. With respect to the seven appraisals performed by Capright, the scope of their work included:

In addition to their appraisals of seven of our eight consolidated properties, Capright also evaluated the following information to arrive at their opinion of our other assets and liabilities:

Capright has acted as a valuation advisor to us in connection with this assignment. The compensation paid to Capright in connection with this assignment was not contingent upon the successful completion of any transaction or conclusion reached by Capright. Capright may be engaged to provide financial advisory services to us, our Advisor, or other Lightstone-sponsored investment programs or their affiliates in the future.

The following is a summary of the valuation methodologies used for each type of asset:

Investments in real estate. We have generally focused on acquiring commercial real estate properties in various asset classes. Accordingly, Capright and our Advisor utilized a variety of valuation methodologies, each deemed appropriate for the asset type under consideration to assign an estimated value to each asset.

The value of our investments in real estate were estimated utilizing multiple valuation methods, as appropriate for each asset, including an income approach using discounted cash flow analysis and a sales comparable analysis. The key assumptions used in the discounted cash flow approach were specific to each property type, market location, and quality of each property and were based on similar investors’ return expectations and market assessments. The key assumptions are reflected in the table included under “Allocation of Estimated NAV per Share” below. In calculating values for our assets, both balance sheet and estimates of cash flow as of September 30, 20202021 were used.

In forming its opinion, Capright prepared appraisals on seven of our eight consolidated investment properties in connection with the valuation. An appraisal was not deemed necessary for one of our investment properties, Autumn BreezeBayVue Apartments, as it was recently acquired and its value was determined by our Advisor based on its contractual purchase price. The appraisals estimated values by using discounted cash flow, comparable sales, or a weighting of these approaches in determining each property’s value. The appraisals employed a range of terminal capitalization rates, discount rates, growth rates, and other variables that fell within ranges that Capright and our Advisor believed would be used by similar investors to value the properties we own. The assumptions used in developing these estimates were specific to each property (including holding periods) and were determined based upon a number of factors including the market in which the property is located, the specific location of the property within the market, property and market vacancy, tenant demand for space, and investor demand and return requirements.

While we and our Advisor believe that the approaches used by appraisers in valuing our real estate assets, including an income approach using discounted cash flow analysis and sales comparable analysis, isare standard in the real estate industry, the estimated values for our investments in real estate may or may not represent current market values or fair values determined in accordance with generally accepted accounting principles in the United States (“GAAP”). Real estate is currently carried at its amortized cost basis in our financial statements, subject to any adjustments applicable under GAAP.

Cash and cash equivalents. The estimated value of our cash and cash equivalents approximate their carrying value due to their short term maturities.

Marketable securities, available for sale. The estimated values of our marketable securities are based on Level 2 inputs. Level 2 inputs are inputs 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. All of our marketable securities measured using Level 2 inputs were valued based on a market approach using readily available quoted market prices for similar assets.

Restricted cash. The estimated value of our restricted cash approximate their carrying value due to their short term maturities.

Note receivable, net. The estimated value of our note receivable, net approximates its carrying value as of September 30, 20202021 based on current market rates for similar instruments.

Notes payable. We have notes payable, which consist of mortgage loans, that bear interest at both variable and fixed rates. The estimated values of our variable-rate mortgage loans were deemed to approximate their carrying values because their interest rates move in conjunction with changes to market interest rates. The estimated values of our fixed-rate notes payable were estimated by the Advisor and reviewed by Capright using a discounted cash flow analysis, which used inputs based on the remaining loan terms and estimated current market interest rates for mortgage loans with similar characteristics, including remaining loan term and loan-to-value ratios. The current market interest rates for our fixed-rate notes payable were generally determined based on market rates for available comparable debt. The estimated current market interest rates for our fixed-rate mortgage loans ranged from 3.7%2.8% to 4.2%3.8%.

Other assets and liabilities, net. Our other assets and liabilities, net consist of prepaid expenses and other assets, accounts payable and accrued and other liabilities, payables to related parties, and accrued property tax. For a majority of our other assets and liabilities, the carrying values as of September 30, 20202021 were considered equal to fair value by our Advisor due to their cost-based characteristics or short maturities. Certain other items, primarily straight-line rent receivable, intangibles and deferred costs, have been eliminated for the purpose of the valuation because those items are already considered in our valuation of the respective investments in real estate operating properties or financial instruments (i.e., notes payable).

Noncontrolling interests. In those situations where our consolidated operating properties are held in joint venture structures in which other equity holders have an ownership interest, our Advisor has valued those noncontrolling interests based on the terms of the respective joint venture agreement applied assuming a liquidation of the joint venture as of the date of valuation. The resulting allocation of value to noncontrolling interests is a deduction to the estimated NAV.

Common stock outstanding. In deriving an estimated NAV per Share, the total estimated NAV was divided by 20.2approximately 20.1 million, the total number of common shares outstanding as of September 30, 2020,2021, on a fully diluted basis, which includes financial instruments that can be converted into a known or determinable number of common shares. As of the valuation date, none of our financial instruments that could be converted into common shares are currently convertible into a known or determinable number of common shares. The determination of the number of common shares outstanding used in the estimated NAV per Share is the same as used in GAAP computations for per share amounts.

Our estimated NAV per Share was calculated by aggregating the value of our assets, subtracting the value of both our liabilities and noncontrolling interests, and dividing the net amount by the fully-diluted shares of common stock outstanding, all as of September 30, 2020.2021.

Allocation of Estimated NAV per Share

The table below sets forth the calculation of our estimated NAV per Share as of September 30, 2020,2021, as well as the calculation of our prior estimated NAV per Share as of September 30, 2019.2020. The estimated NAV per Share of $12.91 as of September 30, 2021, reflects an increase of $3.49, or 37.0%, from the estimated NAV per Share of $9.42 as of September 30, 2020, reflects an increase of $0.32, or 3.5%, from the estimated NAV per Share of $9.10 as of September 30, 2019.2020.

Notes:

Notes:

The following are ranges of the key assumptions used in the discounted cash flow models to estimate the value of our sevensix multifamily properties. The discounted cash flow analysis for our student housing asset is for only one property, and therefore, a range of values is not applicable.

The

As of September 30, 2021, the aggregate estimated values of our investments in real estate aswas $494.1 million and the aggregate carrying value of September 30, 2020 reflectour investments in real estate was $320.6 million, which equates to an aggregateoverall increase in value of 26.4% compared to their original contractual purchase price or an aggregate increase of 18.8% compared to their original contractual purchase price plus capital expenditures after acquisition.54.1%.

While we believe that our assumptions utilized are reasonable, a change in these assumptions would affect the calculation of the value of our real estate assets. The table below presents the estimated increase or decrease to our estimated NAV per Share resulting from a 25 basis point increase and decrease in the discount rates and capitalization rates for seven of the eight consolidated properties we currently own. The table is presented to provide a hypothetical illustration of possible results if only one change in assumptions was made, with all other factors remaining constant. Further, each of these assumptions could change by more or less than 25 basis points or not at all.

Historical Estimated NAV per Share

The historical reported estimated NAV per Share of our common stock as approved by our board of directors for the preceding year is set forth below:

Limitations and Risks

As with any valuation methodology, the methodology used to determine our estimated NAV and resulting NAV per Share is based upon a number of estimates and assumptions that may prove later not to be accurate or complete. Further, different participants with different property-specific and general real estate and capital market assumptions, estimates, judgments and standards could derive a different estimated NAV per Share, which could be significantly different from the estimated NAV per Share approved by our board of directors. The estimated NAV per Share approved by our board of directors does not represents the fair value of our assets and liabilities in accordance with GAAP, and such estimated NAV per Share is not a representation, warranty or guarantee that:

The Internal Revenue Service and the Department of Labor do not provide any guidance on the methodology an issuer must use to determine its estimated NAV per share. FINRA guidance provides that NAV valuations be derived from a methodology that conforms to standard industry practice.

As with any valuation methodology, our methodology is based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive different estimated NAVs and resulting NAVs per share, and these differences could be significant. The estimated NAV per Share is not audited and does not represent the fair value of our assets less our liabilities in accordance GAAP, nor do they represent an actual liquidation value of our assets and liabilities or the amount shares of our common stock would trade at on a national securities exchange. Our estimated NAV per Share is based on the estimated value of our assets less the estimated value of our liabilities and other non-controlling interests divided by the number of our diluted shares of common stock outstanding, all as of the date indicated. Our estimated NAV per Share does not reflect a discount for the fact we are externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values. Our estimated NAV per Share does not take into account estimated disposition costs or fees or penalties, if any, that may apply upon the prepayment of certain of our debt obligations or the impact of restrictions on the assumption of certain debt. Our estimated NAV per Share will fluctuate over time as a result of, among other things, future acquisitions or dispositions of assets, developments related to individual assets and the management of those assets and changes in the real estate and capital markets. Different parties using different assumptions and estimates could derive different NAVs and resulting estimated NAVs per share, and these differences could be significant. Markets for real estate and real estate-related investments can fluctuate and values are expected to change in the future. Our Estimated Valuation Policy requires us to update our estimated NAV per Share value on an annual basis. Our board of directors will review and approve each estimate of NAV and resulting estimated NAV per Share.

The following factors may cause a stockholder not to ultimately realize distributions per share of common stock equal to the estimated NAV per Share upon liquidation:

Holders

As of March 15, 2021,2022, we had 20.220.1 million shares of common stock outstanding held by 9,9629,971 stockholders.

Distributions

Distributions

We made an election to qualify as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2008. U.S. federal tax law requires a REIT distribute at least 90% of its annual REIT taxable income (which does not equal net income, as calculated in accordance with generally accepted accounting principles, or GAAP) determined without regard to the deduction for dividends paid and excluding any net capital gain. In order to continue to qualify for REIT status, we may be required to make distributions in excess of cash available. Distributions are authorized at the discretion of our board of directors based on their analysis of our performance over the previous periods and expectations of performance for future periods. Such analyses may include actual and anticipated operating cash flow, capital expenditure needs, general financial and market conditions, proceeds from asset sales and other factors that our board of directors deem relevant. Our board of directors’ decisions will be substantially influenced by their obligation to ensure that we maintain our federal tax status as a REIT. We cannot provide assurance that we will pay distributions at any particular level, or at all.

Prior to 2012, our board of directors declared distributions on a regular quarterly basis based on daily record dates, portions of which were paid on a monthly basis. During the first quarter of 2012, our board of directors determined to cease regular monthly distributions in favor of payment of periodic special distributions.

During 2014 and 2015, our board of directors declared a total of $77.1 million, or $3.00 per share of common stock, in special cash distributions, all of which were paid to stockholders during 2014, 2015, and 2016. These special cash distributions were paid with a portion of proceeds from asset sales. No special cashfurther distributions have been declared or paid since 2016.

Recent Sales of Unregistered Securities

During the year ended December 31, 2021 and 2020, we did not sell any equity securities that were not registered under the Securities Act of 1933.

Securities Authorized for Issuance under Equity Compensation Plans

None.

Tender Offers

2020 Tender Offer

We commenced a tender offer on June 16, 2020, pursuant to which we offered to acquire up to 300,000 shares of our common stock at a purchase price of $2.25 per share, or approximately $0.7 million in the aggregate (the “2020 Tender Offer”).

The 2020 Tender Offer terminated on July 24, 2020, and a total of 26,637 shares were validly tendered and not withdrawn pursuant to the 2020 Tender Offer as of such date. In accordance with the terms of the 2020 Tender Offer, we subsequently repurchased all of the tendered shares for approximately $0.1 million in August 2020.

2019 Tender Offer

We commenced a tender offer on December 17, 2019, pursuant to which we offered to acquire up to 2.0 million shares of our common stock at a purchase price of $7.75 per share, or $15.5 million in the aggregate (the “2019 Tender Offer”).

The 2019 Tender Offer terminated on February 28, 2020, and a total of 2,183,888 shares were validly tendered and not withdrawn pursuant to the 2019 Tender Offer as of such date, an amount that exceeded the maximum number of shares we offered to purchase pursuant to the 2019 Tender Offer. In accordance with the terms of the 2019 Tender Offer, we subsequently repurchased a total of approximately 2.0 million shares for approximately $15.6 million in April 2020.

Because the amount of repurchase requests exceeded the maximum number of shares we had offered to repurchase, we repurchased shares on a pro-rata basis, subject to “odd lot” priority as described in the 2019 Tender Offer. Excluding the stockholders eligible for “odd lot” priority that were not be subject to proration, approximately 91.58% of the number of shares tendered by each remaining stockholder who participated in the 2019 Tender Offer were repurchased by us. 

Share Redemption Program and Redemption Price

Our board of directors has adopted a share redemption program (the “SRP”) that permits stockholders to sell their shares back to us, subject to the significant conditions and limitations of the SRP. Our board of directors can amend the provisions of our SRP at any time without the approval of our stockholders.

On August 9, 2017, our board of directors adopted a Fourth Amended and Restated Share Redemption Program (the “Fourth Amended SRP”) which became effective July 1, 2018. The material changes made to the SRP were as follows. We no longer process redemptions upon death, “qualifying disability,” or confinement to a long-term care facility on terms different than those on which we process all other redemptions. The price at which we redeem shares submitted for redemption will be a percentage of the estimated NAV per Share as of the Effective Date (as defined in the Fourth Amended SRP), as follows:

Pursuant to the terms of the Fourth Amended SRP, any shares approved for redemption are redeemed on a periodic basis as determined from time to time by our board of directors, and no less frequently than annually.  We will not redeem, during any twelve-month period, more than 5% of the weighted average number of shares outstanding during the twelve-month period immediately prior to the date of redemption.  In addition, the cash available for redemptions is limited to no more than $10.0 million in any twelve-month period.  Any redemption requests are honored pro rata among all requests received based on funds available and are not honored on a first come, first served basis.

On December 28, 2018, our board of directors adopted a Fifth Amended and Restated Share Redemption Program (the “Fifth Amended SRP”) which became effective on January 31, 2019. The only material change to the SRP was to change the measurement period for the limitations on the number and dollar amount of shares that may be accepted for redemption from a rolling 12 month-period to a calendar year.

In accordance with our Fifth Amended SRP, the per share redemption price automatically adjusted to $9.18 effective November 12, 2020 as a result of the determination and approval by our board of directors of the updated estimated NAV per Share.

On December 13, 2019, our board of directors approved the suspension of the SRP. Pursuant to the terms of the SRP, while the SRP is suspended, we will not accept any requests for redemption and any such requests and all pending requests will not be honored or retained, but will be returned to the requestor.

Our board of directors will continue to consider the liquidity available to stockholders going forward, balanced with our other long-term interests and other long-term interests of the stockholders. It is possible that in the future additional liquidity will be made available by through the SRP, issuer tender offers or other methods, though we can make no assurances as to whether that will happen, or the timing or terms of any such liquidity.

During the year ended December 31, 2019, we redeemed 1.2 million shares of our common stock at an average price per share of $7.94.

Effective March 25, 2021, the Company’s Boardour board of Directorsdirectors reopened the SRP solely for redemptions submitted in connection with a stockholder’s death and at that date set the price for all such purchases to $9.42, which iswas 100% of the NAV per Share.Share as of September 30, 2020. Deaths that occurred subsequent to January 1, 2020 arewere eligible for consideration. Beginningconsideration, however, beginning January 1, 2022, requests for redemptions in connection with a stockholder’s death must be submitted and received by us within one year of the stockholder’s date of death for consideration.

On an annual basis, we will not redeem in excess of 0.5% of the number of shares outstanding as of the end of the preceding year. Death redemption requests are expected to be processed on a quarterly basis and may be subject to pro ration if death redemption requests exceed the annual limitation.

Our board of directors will continue to consider the liquidity available to stockholders going forward, balanced with other long-term interests of the stockholders and us. It is possible that in the future additional liquidity will be made available by us through the SRP, issuer tender offers or other methods, though we can make no assurances as to whether that will happen, or the timing or terms of any such liquidity.

In accordance with the SRP, the per share redemption price automatically adjusted to $12.91 effective November 11, 2021 as a result of the determination and approval by our board of directors of the updated estimated NAV per Share.

During the year ended December 31, 2021 we redeemed 65,029 shares of common stock, pursuant to the SRP at an average price per share of $9.42 per share.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and the notes thereto.

Executive Overview

We were formed primarily to acquire and operate commercial real estate and real estate-related assets on an opportunistic and value-add basis. In particular, we have focused generally on acquiring commercial properties with significant possibilities for capital appreciation, such as those requiring development, redevelopment or repositioning, those located in markets and submarkets with high growth potential, and those available from sellers who were distressed or faced time-sensitive deadlines. In addition, our opportunistic and value-add investment strategy has included investments in real estate-related assets that present opportunities for higher current income. Since inception, we have acquired a wide variety of commercial properties, including office, industrial, retail, hospitality, and multifamily. We have purchased existing, income-producing properties and newly constructed properties. We have also invested in mortgage and mezzanine loans. We have made our investments in or in respect of real estate assets located in the United States and other countries based on our view of existing market conditions. As of December 31, 2020,2021, our investments included multifamily and student housing communitiesmulti-family apartment complexes and a note receivable. All of our current investments are located in the United States. We currently intend to hold our various real properties until such time as our board of directors determines that a sale or other disposition appears to be advantageous to achieve our investment objectives or until it appears that the objectives will not be met.

Current Environment

Our operating results are substantially impacted by the overall health of local, U.S. national and global economies and may be influenced by market and other challenges. Additionally, our business and financial performance may be adversely affected by current and future economic and other conditions; including, but not limited to, availability or terms of financings, financial markets volatility, political upheaval or uncertainty, natural and man-made disasters, terrorism and acts of war, unfavorable changes in laws and regulations, outbreaks of contagious diseases, cybercrime, loss of key relationships, and recession.

COVID-19 Pandemic

On March 11, 2020, theThe World Health Organization declared COVID-19 a global pandemic leadingon March 11, 2020 and since that time many countries, includingof the United States, particularly at the individual state level, to subsequently impose various degrees of restrictions and other measures, including, but not limited to, mandatory temporary closures, quarantine guidelines, limitations on travel, and “shelter in place” rules in an effort to reduce its duration and the severity of its spread. Although the COVID-19 pandemic has continued to evolve, most of these previously imposed restrictions and other measures which were instituted in response have now been subsequently reduced and/or lifted. However, the continuing COVID-19 pandemic remains highly unpredictable and dynamic and its ultimate duration and extent is likelycontinue to be dependent on numerousvarious developments, such as the regulatory approval, mass production,emergence of variants to the virus that may cause additional strains of COVID-19, the ongoing administration and ultimate effectiveness of vaccines, as well asincluding booster shots, and the eventual timeline to achieve a sufficient level of sufficient herd immunity amongstamong the general population. Accordingly, the ongoing COVID-19 pandemic may continue to have negative effects on the overall health of the U.S. economy for the foreseeable future. 

OurAs of December 31, 2021, our consolidated portfolio of properties currently consistsconsisted of seveneight wholly owned multi-family apartment complexes and one student housing complex. Despite past and current restrictions and mitigation strategies, ourcomplexes. Our multi-family properties still have not yet seen any significant impact frombeen significantly impacted by the COVID-19 pandemic. Our student housing complex, which consists of the River Club Apartmentspandemic and the Townhomes at River Club, are located in Athens, Georgia and principally serve as “off-campus” lodging for students attending the University of Georgia (“UGA”). Leases for the River Club Apartments and Townhomes at River Club generally have a term of one year running from August through July. UGA previously transitioned to online instruction during its Spring 2020 semester and for its other course offerings throughout the summer. However, UGA returned to “on-campus” classes beginning with its Fall 2020 semester and has continued “on-campus” classes into the current Spring 2021 semester. Our student housing complex is located “off-campus” and therefore, its tenants are not required to vacate even if UGA does not conduct “on-campus” classes. However, if UGA decides to return to online instruction for its students in lieu of “on-campus” classes in future semesters, it could adversely impact leasing demand,their occupancy levels, rental rates and the operating results of our student housing complex in future periods.rental collection have remained stable. Additionally, our note receivable relates tois collateralized by a condominium development project located in New Yok City (the “Condominium Project”), which ishas been subject to similar restrictions and risks. To date, both the Condominium Project and our note receivable hashave not been significantly impacted by the COVID-19 pandemic.

WhileWe continue to closely monitor the overall extent as to which our business has not yet seen any material impact frommay be affected by the ongoing COVID-19 pandemic the extent to which we may be affected in future periods will largely depend on both current and future developments, all of which are highly uncertain and cannot be reasonably predicted. 

If our properties and real estate-related investments are negatively impacted in future periods for an extended period because (i) tenants are unable to pay their rent, (ii) leasing demand for its student housing complexfalls causing declines in occupancy levels and/or rental rates, and (iii) itsour borrower is unable to pay scheduled debt service on the outstanding note receivable; our business and financial results could be materially and adversely impacted.

Liquidity and Capital Resources

We had cash and cash equivalents of $27.1$24.4 million, and marketable securities, available for sale of $3.7$3.6 million and restricted cash of $20.9 million as of December 31, 2020.2021. Our principal demands for funds going forward willare expected to be for the payment of (a) operating expenses, including capital expenditures, and (b) scheduled interest and principal paymentsdebt service on our outstanding indebtedness. We also may, at our discretion, use funds for (a) tender offers and/or redemptions of shares of our common stock, (b) distributions, if any, to our shareholders, and (c) selective acquisitions and/or real estate-related investments. Generally, we expect to meet our cash needs with our cash and cash equivalents on hand andalong with our cash flow from operations.operations, the release of certain funds held in restricted cash, the remaining availability on certain of our mortgage loans and the repayment of our outstanding note receivable. However, to the extent that our cash on hand and cash flow from operationsthese sources are not sufficient to cover our cash needs, we may also use proceeds from additional borrowings and/or selective asset sales to fund such needs.

We have borrowed money to acquire properties and make other investments. Under our charter, the maximum amount of our indebtedness is limited to 300% of our “net assets” (as defined by our charter) as of the date of any borrowing; however, we may exceed that limit if approved by a majority of our independent directors. In addition to our charter limitation, our board of directors has adopted a policy to generally limit our aggregate borrowings to approximately 75% of the aggregate value of our assets unless substantial justification exists that borrowing a greater amount is in our best interests. Our policy limitation, however, does not apply to individual real estate assets.

Acquisition and Disposition Activities

Year Ended December 31, 2021

Disposition of the Lakes of Margate

On March 17, 2021, we completed the disposition of a 280-unit multifamily property located in Margate, Florida (the “Lakes of Margate”) for a contractual sales price of $50.8 million to an unrelated third party (the “Lakes of Margate Buyer”). At closing, the Lakes of Margate Buyer paid $15.1 million and assumed the existing mortgage loan secured by the Lakes of Margate with an outstanding principal balance of $35.7 million (see “Debt Financings – Lakes of Margate Loan”). Additionally, on March 17, 2021, we paid approximately $1.1 million for the 7.5% membership interest held in the Lakes of Margate by a minority owner and as a result, at the time of the completion of the sale of the Lakes of Margate it was wholly owned by us. In connection with the disposition of the Lakes of Margate, we recognized a gain on the sale of investment property of $27.8 million during the first quarter of 2021.

Acquisition of the BayVue Apartments

On July 7, 2021, we completed the acquisition of a 368-unit multifamily property located in Tampa, Florida (the “BayVue Apartments”) from an unrelated third party, for a contractual purchase price of $59.5 million, excluding closing and other related transaction costs. The acquisition was funded with $44.3 million of initial proceeds from a mortgage financing (see “Debt Financings – BayVue Apartments Mortgage”) and $15.2 million of cash on hand, including escrowed funds released by a qualified intermediary. In connection with the acquisition, we paid the Advisor an aggregate of $1.0 million in acquisition fees and acquisition expense reimbursements.

Acquisition of the Citadel Apartments

On October 6, 2021, we acquired a 293-unit multifamily property located in Houston, Texas (the “Citadel Apartments”), from an unrelated third party, for a contractual purchase price of $66.0 million, excluding closing and other acquisition related costs. The acquisition was funded with $38.0 million of initial proceeds from mortgage financings (see “Debt Financings – Citadel Apartments Mortgages”) and $28.0 million of cash on hand. In connection with the acquisition, we paid the Advisor an aggregate of $1.2 million in acquisition fees and acquisition expense reimbursements.

Disposition of the River Club Properties

On December 22, 2021, we completed the disposition of the River Club Apartments and the Townhomes at River Club, two student housing complexes with a total of 1,134 beds (collectively, the “River Club Properties”) located in Athens, Georgia, for a contractual sales price of $77.3 million to an unrelated third party. In connection with the transaction, we repaid in full the existing outstanding mortgage indebtedness of $30.4 million secured by the River Club Properties. Additionally, on December 20, 2021, we paid approximately $10.2 million for the 15.0% membership interest held in the River Club Properties by a minority owner and as a result, at the time of the completion of the sale of the River Club Properties it was wholly owned by us. In connection with the disposition of the River Club Properties, we recognized a gain on the sale of investment property of $55.0 million during the fourth quarter of 2021.

Acquisition of Noncontrolling Interest in Parkside

On December 30, 2021, we acquired the noncontrolling member’s 10.0% ownership interest in Parkside for $3.6 million and as a result, now own 100% of Parkside.

Acquisitions and Investments Activity

Year Ended December 31, 2020

Acquisition of Autumn Breeze Apartments

On March 17, 2020, we acquiredcompleted the acquisition of a 280-unit multifamily property located in Noblesville, Indiana (the “Autumn Breeze Apartments”) from an unrelated third party for a contractual purchase price of $43.0 million.million, excluding closing and other related transaction costs. The acquisition was initially funded with cash on hand and we subsequently obtained mortgage financing (see “Debt Financings. – Autumn Breeze Apartments Loan”). In connection with the acquisition, we paid the Advisor $0.8 million in acquisition fees and acquisition expense reimbursements.

Disposition of Gardens Medical Pavilion

On January 15, 2020, we and our noncontrolling member completed the disposition of the Gardens Medical Pavilion located in Palm Beach Gardens, Florida for a contractual sales price of $24.3 million to an unrelated third-party. In connection with the transaction, we repaid in full the existing mortgage indebtedness of $12.6 million and $1.8 million of the proceeds were distributed to the noncontrolling member. In connection with the disposition of the Gardens Medical Pavilion, we recognized a gain on the sale of investment property of $5.5 million during the first quarter of 2020.

Debt Financings

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

Our aggregate notes payable balance was $277.5 million, net of deferred financing fees of $4.8 million, and had a weighted average interest rate of 3.79% as of December 31, 2021. Excluding the Lakes of Margate Loan (which was included in liabilities held for sale on the consolidated balance sheet as of December 31, 2020 and subsequently assumed by the Lakes of Margate Buyer on March 17, 2021), our aggregate notes payable balance was $213.0 million, net of deferred financing fees of $3.4 million, and had a weighted average interest rate of 3.71% as of December 31, 2020.

Year Ended December 31, 2021

BayVue Apartments Mortgage

On July 7, 2021, we entered into a non-recourse mortgage loan facility for up to $52.2 million (the “BayVue Apartments Mortgage”) scheduled to initially mature on July 9, 2024, with two, one-year extension options, subject to the satisfaction of certain conditions. At closing $44.3 million was initially funded under the BayVue Apartments Mortgage. The BayVue Apartments Mortgage requires monthly interest-only payments through its maturity date and bears interest at London Interbank Offered Rate (“LIBOR”)+3.10% subject to a 3.10% floor. The BayVue Apartments Mortgage is collateralized by the BayVue Apartments. In connection with the BayVue Apartments Mortgage, we paid the Advisor $0.3 million in debt financing fees. As of December 31, 2021, the outstanding principal balance and remaining availability under the BayVue Apartments Mortgage was $44.4 million and $7.8 million, respectively. The remaining availability may be drawn for certain capital improvements to the property pursuant to the terms of the loan agreement

Flats at Fisher Supplemental Mortgage

On August 16, 2021, we entered into a non-recourse subordinated mortgage loan for $9.2 million (the “Flats at Fisher Supplemental Mortgage”) scheduled to mature on July 1, 2026. The Flats at Fisher Supplemental Mortgage requires monthly payments of interest and principal of $43,083 through its maturity date and bears interest at 3.85%. The Flats at Fisher Supplemental Mortgage is collateralized with a subordinated mortgage interest in the Flats at Fisher. In connection with the Flats at Fisher Supplemental Mortgage, we paid the Advisor $0.1 million in debt financing fees.

Arbors Harbor Town Supplemental Mortgage

On September 30, 2021, we entered into a non-recourse subordinated mortgage loan for $5.9 million (the “Arbors Harbor Town Supplemental Mortgage”) scheduled to mature on January 1, 2026. The Arbors Harbor Town Supplemental Mortgage requires monthly payments of interest and principal of $26,379 through its maturity date and bears interest at 3.52%. The Arbors Harbor Town Supplemental Mortgage is collateralized with a subordinated mortgage interest in the Arbors Harbor Town. In connection with the Arbors Harbor Town Supplemental Mortgage, we paid the Advisor $0.1 million in debt financing fees.

Citadel Apartments Mortgages

On October 6, 2021, we entered into a non-recourse mortgage loan facility for up to $39.2 million (the “Citadel Apartments Senior Mortgage”). At closing, $30.4 million of proceeds were initially advanced under the Citadel Apartments Senior Mortgage. The Citadel Apartments Senior Mortgage requires monthly interest-only payments through its maturity date and bears interest at LIBOR+1.50% subject to a 1.60% floor. Simultaneously, on October 6, 2021, we also entered into a non-recourse mortgage loan facility for $9.8 million (the “Citadel Apartments Junior Mortgage” and together with the Citadel Apartments Senior Mortgage, the “Citadel Apartments Mortgages”). At closing, $7.6 million of proceeds were initially advanced under the Citadel Apartments Junior Mortgage. The Citadel Apartments Junior Mortgage requires monthly interest-only payments through its maturity date and bears interest at LIBOR+8.75%, subject to a 8.85% floor.

The Citadel Apartments Mortgages initially mature on October 11, 2024, with two one-year extension options, subject to the satisfaction of certain conditions, and are collateralized by the Citadel Apartments while the Citadel Apartments Junior Mortgage is subordinate to the Citadel Apartments Senior Mortgage. In connection with the acquisition of the Citadel Apartments, an aggregate $38.0 million was initially funded under the Citadel Apartments Mortgages and we paid the balance of the purchase price of $28.0 million with cash. In connection with the Citadel Apartments Mortgages, we paid the Advisor an aggregate of $0.5 million in debt financing fees. As of December 31, 2021, the aggregate outstanding principal balance and remaining availability under the Citadel Apartment Mortgages were $38.0 million and $11.0 million, respectively. All of the remaining availability of $11.0 million under the Citadel Apartment Mortgages was subsequently advanced to us in January 2022.

Year Ended December 31, 2020

Autumn Breeze Apartments Loan

On March 31, 2020, we entered into a 10-year $29.9 million non-recourse mortgage loan (the “Autumn Breeze Apartments Loan”) scheduled to mature on April 1, 2030. The Autumn Breeze Apartments Loan bears interest at 3.39% and requires monthly interest-only payments through June 30, 2023 and monthly principal and interest payments of approximately $0.1 million thereafter, through its stated maturity. The Autumn Breeze Apartments Loan is collateralized by the Autumn Breeze Apartments.

Valley Ranch Apartments

On February 14, 2019, we completed the acquisition of a 384-unit multifamily property located in Ann Arbor, Michigan (the “Valley Ranch Apartments”) from an unrelated third party, for an aggregate purchase price of approximately $70.3 million, excluding closing and other related transaction costs.

In connection with the acquisition of the Valley Ranch Apartments, we simultaneously entered into a seven-year $43.4 million non-recourse mortgage loan (the “Valley Ranch Mortgage”) scheduled to mature on March 1, 2026. The Valley Ranch Mortgage bears interest at 4.16% and requires monthly interest-only payments through its stated maturity. The Valley Ranch Mortgage is collateralized by the Valley Ranch Apartments.

500 West 22^nd Street Mezzanine Loan

On February 28, 2019, we, as the lender, and an unrelated third party (the “500 West 22^nd Street Mezzanine Loan Borrower), as the borrower, entered into a promissory note (the “500 West 22nd Street Mezzanine Loan”) pursuant to which we would fund up to $12.0 million of mezzanine financing. The 500 West 22^nd Street Mezzanine Loan is classified in Note Receivable on our consolidated balance sheet as of December 31, 2020 and 2019. See Note 7 – “Note Receivable” of the Notes to Consolidated Financial Statements for additional information.

Disposition Activity and Properties Held for Sale

Gardens Medical Pavilion

On January 15, 2020, we and the noncontrolling member completed the disposition of the Gardens Medical Pavilion for an aggregate contractual sales price of $24.3 million. In connection with the disposition of the Gardens Medical Pavilion, we recognized a gain on the sale of investment property of approximately $5.5 million during the year ended December 31, 2020. Approximately $12.6 million of the proceeds were used towards the repayment in full of a mortgage loan (the “Gardens Medical Mortgage”) secured by the Gardens Medical Pavilion . Additionally, approximately $1.8 million of the remaining proceeds were distributed to the noncontrolling member. As of December 31, 2019, the Gardens Medical Pavilion met the criteria to be classified as held for sale and therefore, its associated assets and liabilities are classified as held for sale in the consolidated balance sheet as of December 31, 2019.

Lakes of Margate

Beginning with the fourth quarter of 2019, Lakes of Margate met the criteria to be classified as held for sale and therefore, its associated assets and liabilities, which were expected to be sold within 12 months, were previously classified as held for sale in the consolidated balance sheets as of both March 31, 2020 and December 31, 2019.

However, because of the COVID-19 pandemic we subsequently decided during the second quarter of 2020 to discontinue our marketing efforts and to retain the property for the foreseeable future. Additionally, on June 26, 2020 we obtained a new 10-year mortgage financing (the “Lakes of Margate Loan”) on the property, which previously was unencumbered. As a result, we determined the property should no longer be classified as held for sale effective as of June 30, 2020 because a sale was no longer considered probable within the next 12 months.  Since the fair value of the property was in excess of our carrying value, we recorded catch-up depreciation for the period the property was previously classified as held for sale. In addition, we no longer have classified the long-lived asset as held for sale on the consolidated balance sheet as of December 31, 2019.

Despite us discontinuing marketing efforts and deciding to retain the property for the foreseeable future, we were approached by an unrelated third-party during the third quarter of 2020 and ultimately entered into a purchase and sale agreement (the “Lakes of Margate Agreement”) with Lakes at Margate Apartments FL LLC (the “Lakes of Margate Buyer”). Pursuant to the terms of the Lakes of Margate Agreement, the Lakes at Margate would be sold to the Lakes of Margate Buyer for aggregate consideration of $51.0 million, including the assumption of the existing Lakes of Margate Loan, which was subject to the Lakes of Margate Buyer obtaining the lender’s consent. Because the proposed transaction was contingent on the Lakes of Margate Buyer obtaining lender approval for the assumption of the existing Lakes of Margate Loan, which was outside of our control, a sale of the property within the next 12 months was not deemed probable as of September 30, 2020 and we continued to classify Lakes of Margate as held for use on our consolidated balance sheet as of that date.

During the fourth quarter of 2020, the Lakes of Margate Buyer successfully obtained the lender’s approval to assume the existing Lakes of Margate Loan in connection with the proposed transaction and, as a result, the Lakes of Margate now met the criteria to be classified as held for sale and therefore, its associated assets and liabilities are classified as held for sale in the consolidated balance sheet as of December 31, 2020.

On March 17, 2021, the disposition of the Lakes of Margate was completed pursuant to the terms of the Lakes of Margate Agreement. At closing, the Buyer paid $15.3 million and assumed the existing Lakes of Margate Loan with an outstanding principal balance of $35.7 million.

Additionally, see Note 9 of the Notes to Consolidated Financial Statements for further information related to subsequent events during the period from January 1, 2021 through the date of this filing.

Debt Financings

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

Excluding the Lakes of Margate Loan (which was included in liabilities held for sale on the consolidated balance sheet as of December 31, 2020 and subsequently assumed by the Buyer of Lakes of Margate on March 17, 2021), our aggregate notes payable balance was $213.0 million, net of deferred financing fees of $3.4 million, and had a weighted average interest rate of 3.71% as of December 31, 2020. Excluding the Gardens Medical Mortgage Loan (which was included in liabilities held for sale on the consolidated balance sheet and subsequently paid off in full in connection with the sale of the Gardens Medical Pavilion on January 15, 2020), our aggregate notes payable balance was $183.8 million, net of deferred financing fees of $3.0 million, and had a weighted average interest rate of 4.14% as of December 31, 2019.

Debt Transactions

On February 14, 2019, we entered into the Valley Ranch Mortgage scheduled to mature on March 1, 2026. The Valley Ranch Mortgage bears interest at 4.16% and requires monthly interest-only payments through its stated maturity. The Valley Ranch Mortgage is collateralized by the Valley Ranch Apartments.

On June 13, 2019, we entered into a seven-year $28.8 million non-recourse mortgage loan (the "Flats at Fishers Mortgage") scheduled to mature on July 1, 2026. The Flats at Fishers Mortgage bears interest at 3.78% and requires monthly interest-only payments through the first two years of the term and thereafter, monthly payments of principal and interest based upon a 30-year amortization. The Flats at Fishers Mortgage is collateralized by the Flats at Fishers.

On December 31, 2019, we repaid in full a $13.4 million non-recourse mortgage loan (the “Lakes of Margate Mortgage”) which was collateralized by the Lakes of Margate.

On March 17, 2020, we entered into the Autumn Breeze Apartments Loan, scheduled to mature on April 1, 2030. The Autumn Breeze Apartmentswe paid the Advisor $0.3 million in debt financing fees.

Lakes of Margate Loan bears interest at 3.39% and requires monthly interest-only payments through June 30, 2023 and monthly principal and interest payments of approximately $0.1 million thereafter, through its stated maturity. The Autumn Breeze Apartments Loan is collateralized by the Autumn Breeze Apartments.

On June 26, 2020, we and the noncontrolling member entered into a 10-year, $35.7 million non-recourse mortgage loan (the "Lakes“Lakes of Margate Loan"Loan”) scheduled to mature on July 1, 2030. The Lakes of Margate Loan bears interest at LIBOR + LIBOR+2.98% and requires monthly interest-only payments through the first four years of the term and thereafter, monthly payments of principal and interest based upon a 30-year amortization. The Lakes of Margate Loan is collateralized by the Lakes of Margate. In connection with the Lakes of Margate Loan, we paid the Advisor an aggregate of approximately $0.4 million in debt financing fees. Additionally, approximately $1.4 million of the financing proceeds were distributed to the noncontrolling member. On March 15, 2021, the Lakes of Margate Loan was assumed by the Lakes of Margate Buyer in connection with the disposition of the property (see Note 9property.

LIBOR

The Citadel Apartments Mortgages and the BayVue Apartments Mortgage are indexed to LIBOR. In late 2021, it was announced LIBOR interest rates will cease publication altogether by June 30, 2023. We have and intend continue to incorporate relatively standardized replacement rate provisions into our LIBOR-indexed debt documents, including a spread adjustment mechanism designed to equate to the current LIBOR “all in” rate. There is significant uncertainty with respect to the implementation of the Notes to Consolidated Financial Statements).phase out and what alternative indexes will be adopted which will ultimately be determined by the market as a whole. It therefore remains uncertain how such changes will be implemented and the effects such changes would have on us and the financial markets generally.

Contractual Obligations

One of our principal short-term and long-term liquidity requirements includes the repayment of maturing debt. The following table provides information with respect to the contractual maturities and scheduled principal repaymentsdebt service payments of our indebtedness as of December 31, 2020, excluding the Lakes of Margate Loan, which was included in liabilities held for sale on the consolidated balance sheet as of that date and subsequently assumed by the Lakes of Margate Buyer on March 15, 2021 (dollars in thousands):

Results of Operations

As of December 31, 2020,2021, we had eight wholly owned real estate investments (five wholly owned properties and three properties consolidated through investments in joint ventures)(multi-family apartment complexes) and one real estate-related investment (mezzanine loan).

On July 7, 2021 we acquired the BayVue Apartments and on October 6, 2021 we acquired the Citadel Apartments (collectively, the “2021 Acquisitions”) and on March 17, 2020, we acquired the Autumn Breeze Apartments (the “2020 Acquisition” and together with the 2021 Acquisitions, the “Acquisitions”).

On March 17, 2021 we disposed of the Lakes of Margate and on December 22, 2021 we disposed of the River Club Properties (collectively, the “2021 Dispositions”) and on February 14, 2019, we acquired the Valley Ranch Apartments (the “2019 Acquisition” and collectively, the “Acquisitions”).

On February 28, 2019, we entered into a mezzanine loan (500 West 22nd Street Mezzanine Loan) and in January 2019, we received proceeds of approximately $10.9 million related to our equity method investment in Prospect Park representing the minimum amount payable for our participation in the residual interests of our equity method investment in Prospect Park. Any additional amounts received will be recognized upon receipt.

On JanuaryMarch 15, 2020 we disposed of the Gardens Medical Pavilion (the “Disposition”)“2020 Disposition” and together with the disposition of this property2021 Dispositions, the “Dispositions”).

The Dispositions did not qualify to be reported as discontinued operations since itthey did not represent a strategic shift that had a major effect on our operations and financial results. Accordingly, the operating results of this propertythe Dispositions are reflected in our results from continuing operations for all periods presented through its datetheir dates of disposition.

Year ended December 31, 20202021 as compared to the year ended December 31, 20192020

Our results of operations for the year ended December 31, 20202021 compared to the same period in 20192020 reflect our acquisition and disposition activities during such periods. Properties which were owned by us during the entire periods presented are referred to as our “Same Store” properties.

The following table provides summary information about our results of operations for the years ended December 31, 20202021 and 20192020 (dollars in thousands):

The following table reflects total rental revenues and total property operating expenses for the years ended December 31, 20202021 and 20192020 for our (i) Same Store properties, (ii) acquisitions and (iii) dispositions (dollars in thousands):

The tables below reflect occupancy and effective monthly rental rates for our Same Store properties:

Revenues. Rental revenues for the year ended December 31, 20202021 were $40.0$43.1 million, an increase of $2.8$3.1 million, compared to $37.2$40.0 million for the same period 2019.2020. Excluding the effect of our acquisition and disposition activities, our rental revenues increased by $1.2$1.9 million for our Same Store properties primarily as a result of higher occupancy and/or rental rates at most of our Same Store properties during the 2020 period.average monthly rent per unit.

Property Operating Expenses.Property operating expenses for the year ended December 31, 20202021 were $13.0$14.5 million, an increase of $0.3$1.5 million, compared to $12.7$13.0 million for the same period in 2019.2020. Excluding the effect of our acquisition and disposition activities, our property operating expenses decreasedincreased by $0.3$0.6 million for our Same Store properties.properties primarily as a result of higher utilities and repair and maintenance costs.

Real Estate Taxes. Real estate taxes for the year ended December 31, 20202021 were $5.5$5.9 million, an increase of $0.3$0.4 million, compared to $5.2$5.5 million for the same period in 2019.2020. Excluding the effect of our acquisition and disposition activities, our real estate taxes decreasedincreased by $0.2$0.3 million for our Same Store properties.

General and Administrative Expenses. General and administrative expenses for the years ended December 31, 2021 and 2020 and 2019 were $6.5$7.0 million and $6.3$6.5 million, respectively. The increase is principally attributable to higher asset management fees during the 20202021 period resulting from our acquisition and investment activities. General and administrative expenses primarily consist of audit fees, legal fees, board of directors’ fees, and other administrative expenses, including certain costs paid to our advisor.

Depreciation and Amortization. Depreciation and amortization for the years ended December 31, 2021 and 2020 and 2019 were $12.2$14.9 million and $13.2$12.2 million, respectively. Excluding the effect of our acquisition and disposition activities, depreciation and amortization decreased by $0.6 million for our Same Store Properties primarily as a result of decreased amortization expense resulting from in-place lease intangibles becoming fully amortized during the first quarter of 2020.properties was flat.

Interest Expense, Net. Interest expense, net for the year ended December 31, 20202021 was $9.6$10.6 million, an increase of $0.4$1.0 million, compared to $9.2$9.6 million for the same period in 2019.2020. Excluding the effect of our acquisition and disposition activities, interest expense increaseddecreased slightly by $0.1 million for our Same Store properties.

Interest income.Income. Interest income for the year ended December 31, 20202021 was $1.9$2.0 million, ana slight increase of $0.2$0.1 million, compared to $1.7$1.9 million for the same period in 2019. The increase was principally2020. Our interest income is primarily attributable to the increase in the interest earned on our note receivable which was entered into on February 28, 2019.receivable.

Gain on Sale of Investment Property. DuringOur gain on the sale of investment property for the year ended December 31, 2021 of $82.8 million consists of a gain on the sale of Lakes of Margate of $27.8 million recognized during the first quarter of 2021 and a gain on the sale of the River Club Properties of $55.0 million recognized during the fourth quarter of 2021. Our gain on the sale of investment property for the year ended December 31, 2020 we recognizedwas attributable to a gain on the sale of the Gardens Medical Pavilion of approximately $5.5 million. million recognized during the first quarter of 2020. 

Gain on Sale of Unconsolidated Joint Venture. During the second quarter of 2021 we recognized a gain of $1.5 million in connection with our receipt of the final settlement of our prior participation in the residual interests of Prospect Park. See Note 8 of the Notes to Consolidated Financial Statements for additional information.

Summary of Cash Flows

Operating activities

The net cash provided by operating activities of $5.3$10.2 million for the year ended December 31, 20202021 consisted primarily of our net income of $1.2$77.5 million, plus depreciation and amortization and amortization of deferred financing costs aggregating $12.8$15.8 million partiallyand the net change in assets and liabilities of $2.3 million offset by a gainthe aggregate gains on the sale of investment property related toof $82.8 million, the salegain on the disposition of unconsolidated joint venture from the Gardens Medical Pavilionsettlement of $5.5our participation in the residual interests of Prospect Park of $1.5 million and non-cash interest income of $1.7 million and the net change in operating assets and liabilities of $1.4$1.2 million.

Investing activities

The net cash used in investing activities of $25.3$58.2 million for the year ended December 31, 2020 consists2021 consisted primarily of the following:

Financing activities

The net cash provided by financing activities of $31.4$61.8 million for the year ended December 31, 2020 consists2021 consisted primarily of the following:

Funds from Operations and Modified Funds from Operations

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings, improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative.

Because of these factors, the National Association of Real Estate Investment Trusts ("NAREIT"(“NAREIT”), an industry trade group, has published a standardized measure of performance known as funds from operations ("FFO"(“FFO”), which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT'sREIT’s operating performance. FFO is not equivalent to our net income or loss as determined under GAAP.

We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the "White Paper"“White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Our FFO calculation complies with NAREIT'sNAREIT’s definition.

We believe that the use of FFO provides a more complete understanding of our performance to investors and to management, and reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT'sNAREIT’s definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.

Because of these factors, the Investment Program Association (the "IPA"“IPA”), an industry trade group, published a standardized measure of performance known as modified funds from operations ("MFFO"(“MFFO”), which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that both before and after we have deployed all of our offering proceeds and are no longer incurring a significant amount of acquisition fees or other related costs, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. MFFO is not equivalent to our net income or loss as determined under GAAP.

We define MFFO, a non-GAAP measure, consistent with the IPA'sIPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the "Practice Guideline"“Practice Guideline”) issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for acquisition and transaction-related fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition and transaction-related fees and expenses (which includes costs incurred in connection with strategic alternatives), amounts relating to deferred rent receivables and amortization of market lease and other intangibles, net (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), accretion of discounts and amortization of premiums on debt investments and borrowings, mark-to-market adjustments included in net income (including gains or losses incurred on assets held for sale), gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. Certain of the above adjustments are also made to reconcile net income (loss) to net cash provided by (used in) operating activities, such as for the amortization of a premium and accretion of a discount on debt and securities investments, amortization of fees, any unrealized gains (losses) on derivatives, securities or other investments, as well as other adjustments.

MFFO excludes non-recurring impairment of real estate-related investments. We assess the credit quality of our investments and adequacy of reserves on a quarterly basis, or more frequently as necessary. Significant judgment is required in this analysis. We consider the estimated net recoverable value of a loan as well as other factors, including but not limited to the fair value of any collateral, the amount and the status of any senior debt, the prospects for the borrower and the competitive situation of the region where the borrower does business.

We believe that, because MFFO excludes costs that we consider more reflective of acquisition activities and other non-operating items, MFFO can provide, on a going-forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we are acquiring properties and once our portfolio is stabilized. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs.

Not all REITs, including publicly registered, non-listed REITs, calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs, including publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO and MFFO are not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as determined under GAAP as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance. FFO and MFFO should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and MFFO, and the adjustments to GAAP in calculating FFO and MFFO.

Neither the SEC, NAREIT, the IPA nor any other regulatory body or industry trade group has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, NAREIT, the IPA or another industry trade group may publish updates to the White Paper or the Practice Guidelines or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry, and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.