Gantry Park Landing

We have a 59.2% majority ownership interest in a joint venture, between us and a related party,the 2^nd Street Joint Venture, which developed, constructed and owns Gantry Park Landing, a 199-unit luxury, multifamily residential property, (“Gantry Park Landing”), located in the Long Island City neighborhood in the Queens borough of New York City. The 2^nd Street Joint Venture is between us and a related party. The following table contains certain information for Gantry Park Landing as of December 31, 2022.for the dates indicated.

Annualized revenue is defined as the minimum monthly payments due as of December 31, 20222023 annualized.

Development Projects

Exterior Street Project

We wholly own the Exterior Street Project, a proposed mixed-use multifamily residential and commercial retail project. In February 2019, we acquired two adjacent parcels of land located at 355 and 399 Exterior Street, located in the Mott Haven neighborhood in the Bronx borough of New York City, and subsequently acquired an additional adjacent wedge parcel in September 2021. On these three land parcels we plan, subject to certain conditions, to construct a proposed mixed-use multifamily residential and commercial retail project (“the Exterior Street Project”). ThroughProject. As of December 31, 2023 and 2022, we have incurred and capitalized $93.6 million of costs related to the developmentcarrying value of the Exterior Street Project.Project was $95.6 million and $93.6 million, respectively, which is included in development projects on the consolidated balance sheets.

Santa Monica Project

We have a 50% joint venture ownership interest in the Santa Monica Joint Venture, which owns the Santa Monica Project, a proposed multifamily residential project. The Santa Monica Joint Venture owns land parcels located in Santa Monica, California, which were acquired in December 2023 via a deed in lieu of foreclosure transaction. The Santa Monica Joint Venture, which we consolidate, is between us and a related party. As of December 31, 2023, the carrying value of the Santa Monica Project was $36.7 million, which is included in development projects on the consolidated balance sheets.

St. Augustine Land Holdings

Effective July 15, 2022,We wholly own the St. Augustine Land Holdings, consisting of various adjacent land parcels located in St. Augustine, Florida on which we ceased operations of our wholly ownedpreviously operated the St. Augustine Outlet Center, a commercial retail property, located inthrough July 15, 2022. The St. Augustine Florida, and shortly thereafter, commenced demolitionOutlet Center was substantially demolished during the third quarter of the property’s building and improvements2022 in order to prepare the site’s various land parcels for potential sale and/or lease. The demolitionDuring the first quarter of 2023, we completed the disposition of a parcel of land, which was part of the property’s buildingsSt. Augustine Land Holdings, to an unrelated third party for a contractual sales price of $1.5 million and improvements was substantially completedrecognized a gain on disposition of real estate of $1.1 million during the thirdfirst quarter of 2022. As a result, we owned various adjacent land parcels (the “St. Augustine Land Holdings”) with an2023. The aggregate carrying value of the St. Augustine Land Holdings, which is included in land and land improvements on the consolidated balance sheets, was $4.6 million and $4.9 million as of December 31, 2022. The St. Augustine Land Holdings are included in land2023 and improvements on the consolidated balance sheet.2022, respectively.

Unconsolidated Properties

Columbus Joint Venture

We hold a 19.0%19% joint venture ownership interest in the Columbus Portfolio Member LLC (the “Columbus Joint Venture”),Venture, which owns the Columbus Properties, a portfolio of nine multifamily residential properties which weconsisting of 2,564 units located in the Columbus, Ohio metropolitan area. We account for usingour 19% joint venture ownership interest in the Columbus Joint Venture under the equity method of accounting. The Columbus Joint Venture is between us and related parties. The following table contains certain information for these properties as of December 31, 2022.for the dates indicated.

Hotel Joint Venture

We hold a 2.5% joint venture ownership interest in LVP Holdcothe Hotel Joint Venture, which owns the Hotel JV LLC (the “Hotel Joint Venture”),Properties, a portfolio of five limited service hotels. We account for our 2.5% joint venture between us and a related party, which owns seven hotel properties, which we account forownership interest using a measurement alternative underpursuant to which the Hotel Joint Ventureour investment is measured at cost, adjusted for observable price changes and impairments, if any. During July 2023, the Hotel Joint Venture sold two hotel properties reducing the number of its remaining hotel properties to five.

The following information generally applies to our 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.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES:

Shareholder Information

As of March 15, 2023,2024, we had 21.821.5 million of our common shares (“Common Shares”)Shares outstanding, held by a total of 5,8625,845 stockholders. The number of stockholders is based on the records of DST Systems Inc., which serves as our registrar and transfer agent.

Market Information

The Company’s common stock isOur Common Shares are not currently listed on a national securities exchange. The CompanyWe may seek to list its common stockour Common Shares for trading on a national securities exchange only if a majority of itsour independent directors believe listing would be in the best interest of itsour stockholders. The Company doesWe do not intend to list itsour shares at this time. The Company doesWe do not anticipate that there would be any active market for its shares of common stockour Common Shares until they are listed for trading.

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

On December 8, 2022,March 22, 2024, our boardBoard of directors (the “Board of Directors”)Directors determined and approved our estimated NAV of $323.7$303.8 million and resulting estimated NAV per Share of $12.19,$11.73, after allocations of value to special general partner interests (the “SLP Units”)the SLP units in Lightstone Real Estate Investment Trust, L.P. (the “Operating Partnership”),the Operating Partnership, held by Lightstone SLP, LLC, an affiliate of our Lightstone Value Plus REIT, LLC (the “Advisor”),Advisor, assuming a liquidation event, both as of September 30, 2022.December 31, 2023. From our inception through the termination of our initial public offeringOffering on October 10, 2008, Lightstone SLP, LLC, an affiliate of our Advisor, contributed cash of $30.0 million in exchange for 300 SLP Units, at a cost of $100,000 per unit. The purchase price of the SLP Units will be repaid only after stockholders receive a stated preferred return and their net investment. Our estimated NAV and resulting NAV per Share are based upon the estimated fair values of our assets and liabilities as of September 30, 2022December 31, 2023 and are effective as of December 8, 2022.March 22, 2024.

TheOur estimated NAV of our sharesand resulting NAV per Share was calculated as of a particular point in time. TheAccordingly, our estimated NAV of our sharesand resulting NAV per Share 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 inis externally managed by Lightstone Value Plus REIT LLC (the “Advisor”), an affiliate of the Lightstone Group, LLC,Advisor which provides advisory services to us 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 Common Shares are approved for listing on a national securities exchange. Our Boardboard of Directorsdirectors have and will continue to review and approve each estimate of our NAV and resulting NAV per Share.

Our estimated NAV and resulting NAV per Share as of September 30, 2022December 31, 2023 were calculated with both the assistance of our Advisor and Robert A. Stanger & Co, Inc. (“Stanger”), an independent third-party valuation firm engaged by us to assist with the valuation of our assets, liabilities, other noncontrolling interests and allocation of value to the SLP Units. Our Advisor recommended and our Board of Directors established the estimated NAV per Share as of September 30, 2022December 31, 2023 based upon the analysis and reports provided by our Advisor and Stanger. The process for estimating the value of our assets, liabilities, other noncontrolling interests and any allocation of value to the SLP Units, is performed in accordance with the provisions of the Investment Program Association Practice Guideline 2013-01, “Valuations of Publicly Registered Non-Listed REITs.” We believe that our valuations were developed in a manner reasonably designed to ensure their reliability.

The engagement of Stanger with respect to our estimated NAV and resulting NAV per Share as of September 30, 2022December 31, 2023 was approved by our Board of Directors, including all of our independent directors. Stanger has extensive experience in conducting asset valuations, including valuations of commercial real estate, debt, properties and real estate-related investments.

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

As of December 31, 2023, we have ownership interests in 14 investment properties, of which five are consolidated and nine are unconsolidated and accounted for under the equity method of accounting. We also have an 2.5% joint venture ownership interest in the Hotel Joint Venture, which owns five hotels, for which we account for our ownership interest at cost, adjusted for observable price changes and impairments, if any.

With respect to our estimated NAV and resulting NAV per Share as of September 30, 2022,December 31, 2023, Stanger prepared appraisal reports (the “Stanger Appraisal Reports”), summarizing key inputs and assumptions, for our three wholly owned and consolidated properties (the “Stanger Appraised Properties”) consisting of (i) the St. Augustine Land Holdings and (ii) the Lower East Side Moxy Hotel, and the Exterior Street Project (collectively,and the “Development Properties”).St. Augustine Land Holdings. The 11 other properties consisting of (i) two investment properties held in consolidated joint ventures (Gantry Park Landing - 59.2% ownership interest and the Santa Monica Project - 50% ownership interest) and (ii) nine investment properties held in an unconsolidated joint venture (Columbus Properties – 19% ownership interest), for which we account for our ownership interest under the equity method of accounting, were appraised by other independent third party valuation firms and not by Stanger.

Stanger also prepared a NAV report (the “September 2022“December 2023 NAV Report”), which summarized the values of our ownership interests in real estatethe 14 investment properties, investments in related parties, non-real estate assets, liabilities, other noncontrolling interests and the allocation of value to the SLP Units which werewas used to calculate our estimated NAV and resulting NAV per Share, all as of September 30, 2022.December 31, 2023. The values of our ownership interests in real estate properties were based upon the Stanger Appraisal Reports for the Stanger Appraised Properties and anthe appraisal reportreports prepared by anotherother independent third-party valuation firmfirms for Gantry Park Landing, our 59.2% majority-owned and consolidated multifamily residential propertythe properties not appraised by Stanger. The values of our non-real estate assets, liabilities, other noncontrolling interests and allocation of value to the SLP Units were based upon (i) Stanger’s estimated values for our notes receivable and mortgage notes payable as well as their estimate of the allocation of value to the SLP Units and (ii) our Advisor’s estimated opinion of value for our cash and cash equivalents, investments in related parties, marketable securities, prepaid expenses, restricted cash and other assets, other liabilities and other noncontrolling interests.

The table below sets forth the calculation of our estimated NAV and resulting NAV per Share as of September 30, 2022,December 31, 2023, as well as the comparable calculation as of September 30, 2021.2022. Certain amounts are reflected net of noncontrolling interests, as applicable. Dollar and share amounts are presented in thousands, except per share data.

Note:

Use of Independent Valuation Firm:

As discussed above, our Advisor is responsible for calculating our NAV. In connection with determining our NAV, our Advisor may rely on the material assistance or confirmation of a third-party valuation expert or service. In this regard, Stanger was selected by our Boardboard of Directorsdirectors to assist our Advisor in the calculation of our estimated NAV and resulting NAV per Share as of September 30, 2022.December 31, 2023. Stanger’s service included appraising the Stanger Appraised Properties and preparing the September 2022December 2023 NAV Report. Stanger relied on the appraisals prepared by other independent third party valuation firms for the 11 investment properties which were not appraised by Stanger. Stanger is engaged in the business of appraising commercial real estate properties and is not affiliated with us or our Advisor. The compensation we paid to Stanger was based on the scope of work and not on the appraised values of our real estateinvestment properties. TheStanger’s appraisals were performed in accordance with the Code of Ethics and the Uniform Standards of Professional Appraisal Practice, or USPAP, the real estate appraisal industry standards created by The Appraisal Foundation. The Stanger Appraisal Reports were reviewed, approved, and signed by an individual with the professional designation of MAI licensed in the state where each realinvestment property is located. The use of the reports is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. In preparing its reports, Stanger did not, and was not requested to; solicit third-partythird party indications of interest for our common stock in connection with possible purchases thereof or the acquisition of all or any part of us.

Stanger collected reasonably available material information that it deemed relevant in appraising our real estateinvestment properties. Stanger relied in part on property-level information provided by our Advisor, including (i) property historical and projected operating revenues and expenses; (ii) property lease agreements and/or lease abstracts; and (iii) information regarding recent or planned capital expenditures.

In conducting their investigation and analyses, Stanger took into account customary and accepted financial and commercial procedures and considerations as they deemed relevant. Although Stanger reviewed information supplied or otherwise made available by us or the Advisor for reasonableness, they assumed and relied upon the accuracy and completeness of all such information and of all information supplied or otherwise made available to them by any other party and did not independently verify any such information. Stanger has assumed that any operating or financial forecasts and other information and data provided to or otherwise reviewed by or discussed with Stanger were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of our management, our Boardboard of Directors,directors, and/or our Advisor. Stanger relied on us to advise them promptly if any information previously provided became inaccurate or was required to be updated during the period of their review.

In performing its analyses, Stanger made numerous other assumptions as of various points in time with respect to industry performance, general business, economic, and regulatory conditions, and other matters, many of which are beyond their control and our control. Stanger also made assumptions with respect to certain factual matters. For example, unless specifically informed to the contrary, Stanger assumed that we have clear and marketable title to each real estate property appraised, that no title defects exist, that any improvements were made in accordance with law, that no hazardous materials are present or were present previously, that no significant deed restrictions exist, and that no changes to zoning ordinances or regulations governing use, density, or shape are pending or being considered. Furthermore, Stanger’s analyses, opinions, and conclusions were necessarily based upon market, economic, financial, and other circumstances and conditions existing as of or prior to the date of the Stanger Appraisal Reports, and any material change in such circumstances and conditions may affect Stanger’s analyses and conclusions. The Stanger Appraisal Reports contain other assumptions, qualifications, and limitations that qualify the analyses, opinions, and conclusions set forth therein. Furthermore, the prices at which our ownership interests in our real estateinvestment properties may actually be sold could differ from Stanger’s analyses.

Stanger is actively engaged in the business of appraising commercial real estate properties, similar to those investment properties wholly and partially owned by us, in connection with public security offerings, private placements, business combinations, and similar transactions. We do not believe that there are any material conflicts of interest between Stanger, on the one hand, and us, our Sponsor, our Advisor, and our affiliates, on the other hand. Our Advisor engaged Stanger on behalf of our Boardboard of Directorsdirectors to deliver their reports to assist in the NAV calculation as of September 30, 2022December 31, 2023 and Stanger received compensation for those efforts. In addition, we agreed to indemnify Stanger against certain liabilities arising out of this engagement. In the two years prior to the date of this filing, Stanger was previously engaged by us for appraisal and valuation services in connection with our financial reporting requirements. Stanger has received usual and customary fees in connection with those services. Stanger may from time to time in the future perform other services for us, and our Sponsor and/or other affiliates of the Sponsor, so long as such other services do not adversely affect the independence of Stanger as certified in the applicable Stanger Appraisal Reports. During the past two years Stanger has also been engaged to provide appraisal services to another non-traded REIT sponsored by our Sponsor for which it was paid usual and customary fees.

Although Stanger considered any comments received from us and our Advisor relating to their reports, the final appraised values of the Stanger Appraised Properties were determined by Stanger. TheStanger’s reports are addressed to our Boardboard of Directorsdirectors to assist our Boardthem in their determination of Directors in calculating our estimated NAV per Share as of September 30, 2022. TheDecember 31, 2023. Stanger’s reports are not addressed to the public, may not be relied upon by any other person to establish our estimated NAV per Share, and do not constitute a recommendation to any person to purchase or sell any shares of our common stock.

Our goal in calculating our estimated NAV is to arrive at values that are reasonable and supportable using what we deem to be appropriate valuation methodologies and assumptions. TheStanger’s reports, including the analysis, opinions, and conclusions set forth in such reports, are qualified by the assumptions, qualifications, and limitations set forth in the respective reports. The following is a summary of our valuation methodologies used to value our assets and liabilities by key component:

Real estate propertiesInvestment Properties:

As of September 30, 2022,December 31, 2023, we have ownership interests in four(i) five consolidated properties (collectively,(the “Consolidated Properties”) and (ii) nine equity method unconsolidated properties held in a joint venture (the “Unconsolidated Equity Method Properties” and collectively, the “Real Estate‘‘Investment Properties”). We also have an 2.5% joint venture ownership interest in the Hotel Joint Venture which owns the Hotel JV Properties, a portfolio of five limited service hotels, and for which we account for our 2.5% joint venture ownership interest using a measurement alternative pursuant to which our investment is measured at cost, adjusted for observable price changes and impairments, if any. See “Investment in Related Party” below for additional information.

With respect to the Consolidated Properties as of December 31, 2023, we majority own and consolidate the operating results and financial condition of the Lower East Side Moxy Hotel, Gantry Park Landing, the Exterior Street Project, the Santa Monica Project and the St. Augustine Land Holdings. We wholly own the Lower East Side Moxy Hotel, a 303-room Marriott branded hotel located in the Lower East Side neighborhood in the Manhattan borough of New York City, which we developed, constructed and opened on October 27, 2022. We have a 59.2% joint venture ownership interest in Gantry Park Landing, a 199-unit luxury, multifamily residential property located in the Long Island City neighborhood in the Queens borough of New York City. We wholly own the Exterior Street Project, which consists of three land parcels located at 355 & 399 Exterior Street in the Mott Haven neighborhood in the Bronx borough of New York City, on which we expect, subject to certain conditions, to construct a proposed mixed-use multifamily residential and commercial retail project. We have a 50% joint venture ownership interest in the Santa Monica Project, which consists of a proposed multifamily residential project on land parcels located in Santa Monica, California, which were acquired in December 2023 via a deed in lieu of foreclosure transaction. The St. Augustine Land Holdings consists of our wholly owned adjacent land parcels located in St. Augustine, Florida.

With respect to the Equity Method Properties as of December 31, 2023, we have a 19% ownership interest in the Columbus Joint Venture which owns the Columbus Properties, a portfolio of nine multifamily residential properties, with an aggregate of 2,564 units, located in the Columbus, Ohio metropolitan area. We do not consolidate our ownership interest in the Columbus Joint Venture, but rather account for it under the equity method of accounting.

As described above, we engaged Stanger to provide an appraisal for each of the Stanger Appraised Properties as of September 30, 2022. The Stanger Appraised Properties consist of the St. Augustine Land Holdings and the Development Properties.December 31, 2023. We also engaged anotherother independent third-partythird party valuation firmfirms to provide an appraisal report for Gantry Park Landing.each of the 11 investment properties held in joint ventures, which were not appraised by Stanger. In preparing their appraisal reports, the scope of the work performed by Stanger and the other independent third-partythird party valuation firmfirms included the following procedures, as well other factors:

Stanger and the other independent third-partythird party valuation firmfirms employed the income approach and/or the sales comparison approach to estimate the value of thetheir respective appraised properties. The income approach involves an economic analysis of the property based on its potential to provide future net annual income. As part of the valuation, a discounted cash flow analysis (“DCF Analysis”) and/or direct capitalization analysis (“DC Analysis”) was used in the income approach to determine the value of our ownership interest in the portfolio.property. The indicated value by the income approach represents the amount an investor may pay for the expectation of receiving the net cash flow from the property.

The direct capitalization analysisDC Analysis is based upon the net operating income (“NOI”) of the property capitalized at an appropriate capitalization rate for the property based upon property characteristics and competitive position and market conditions at the date of the appraisal. NOI is all gross revenues from the property less all operating expenses, including property taxes and management fees but excluding depreciation.

In applying the DCF Analysis, pro forma statements of operations for the property including revenues and expenses are analyzed and projected over a multi-year period. The property is assumed to be sold at the end of the multi-year holding period. The reversion value of the property, which can be realized upon sale at the end of the holding period, is calculated based on the capitalization of the estimated net operating incomeNOI of the property in the year of sale utilizing a capitalization rate deemed appropriate in light of the age, anticipated functional and economic obsolescence and competitive position of the property at the time of sale. Net proceeds to owners are determined by deducting appropriate costs of sale. The discount rate selected for the DCF Analysis is based upon estimated target rates of return for buyers of similar properties.

The sales comparison approach utilizes indices of value derived from actual or proposed sales of comparable properties to estimate the value of the subject property. The appraiser analyzed such comparable sale data as was available to develop a market value conclusion for the subject property.

Stanger prepared the Stanger Appraisal Reports and the other independent third-partythird party valuation firmfirms prepared an appraisal report for Gantry Park Landing,reports summarizing key inputs and assumptions for each of thetheir respective appraised properties using financial information provided by us and our Advisor. From such review, Stanger and the other independent third-partythird party valuation firmfirms selected (i) the appropriate cash flow discount rate, residual discount rate, and terminal capitalization rate in the DCF Analysis, if applicable,(ii) the appropriate capitalization rate in the direct capitalization analysis andDC Analysis and/or (iii) the appropriate price per applicable unit in the sales comparison analysis. As forFor those investment properties consolidated on our financials, and for which we do not ownhave a 100% of the ownership interest, the propertyproperty’s value was adjusted to reflect our ownership interest in such property after consideration of theany distribution priorities associated with such property.

The estimated values for our investments in real estateinvestment properties may or may not represent current market values and do not equal the bookor fair values of our real estate investmentsdetermined in accordance with U.S. GAAP. Our consolidated investments in real estateinvestment properties are currently carried in our consolidated financial statements at their amortized cost, basis, adjusted forsubject to any loss impairments and bargain purchase gains recognized to date.adjustments applicable under GAAP.

St. Augustine Land Holdings

Effective July 15, 2022, we ceased operations of our wholly owned St. Augustine Outlet Center, a retail property located in St. Augustine, Florida, and shortly thereafter, commenced demolition of the property’s building and improvements in order to prepare the various land parcels for sale and/or lease. The demolition of the property’s buildings and improvements was substantially completed during the third quarter of 2022 and we recognized a loss on demolition of $16.6 million consisting of the write-off of the carrying value of the property’s building and improvements plus related costs. As a result, we owned various adjacent land parcels (the “St. Augustine Land Holdings”), which were valued at $29.5 million as of September 30, 2022, based on a sales comparison approach.

Gantry Park Landing

As of September 30, 2022, our 59.2% ownership interest in Gantry Park Landing, a multifamily residential property, was valued at $77.0 million. The following summarizes the key assumptions that were used in the discounted cash flow modeleach DCF Analysis to estimate the valuevalues of Gantry Park Landingthe indicated Consolidated Properties as of September 30, 2022:December 31, 2023:

While we believe that the assumptions made by the other independent third-party appraisal firm for Gantry Park Landing are reasonable, a change in these assumptions would impact the calculation of the estimated value included in our Real Estate Properties. The table below represents the estimated increase or decrease to our estimated NAV per Share resulting from a 25-basis point increase and decrease in the capitalization rate and discount rate which were used in the valuation for Gantry Park Landing. The table is presented to provide a hypothetical illustration of the 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.

Development Properties

As of September 30, 2022, we wholly owned the Development Properties consisting of the following:

Lower East Side Moxy Hotel

We are developing a 296-room branded hotel (the “Lower East Side Moxy Hotel”) on various adjacent parcels of land located at 147-151 Bowery, in the Lower East Side neighborhood of the borough of Manhattan in New York City. As of September 30, 2022, the construction of the Lower East Side Moxy Hotel was substantially complete and the hotel and two of its four food and beverage venues subsequently opened in October 2022. The remaining food and beverage venues are currently expected to open by the end of 2022.

Stanger deemed it appropriate to determine the estimated fair value of the Lower East Side Moxy Hotel as of September 30, 2022 of $220.0 million using a DCF Analysis taking into consideration the expected net operating income (“NOI”) of the property upon stabilization less the remaining estimated costs to complete. Stanger used a capitalization rate of 7.0% and a discount rate of 9.0% in their DCF Analysis. NOI is all gross revenues from the property less all operating expenses, including property taxes and management fees but excluding depreciation.

While we believe that the assumptions utilized in the DCF Analysis are reasonable, a change in these assumptions would affect the calculation of the value of the Lower East Side Moxy Hotel.these investment properties. 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 raterates and capitalization rate used in the DCF Analysis.rates. 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-basis25 basis points or not at all.

The following investment properties were appraised based on a sales comparison approach as of December 31, 2023:

Exterior Street Project

We are developing a mixed use multifamily residential and commercial retail project (the “Exterior Street Project”) on various adjacent parcels of land located at 355 and 399 Exterior Street in the Mott Haven neighborhood in the Bronx borough of New York City. As of September 30, 2022, because the Exterior Street Project was under development,December 31, 2023, Stanger deemed it appropriate to determine itsthe Exterior Street Project’s fair value of $112.9$107.8 million as of that date based on the aggregate estimated fair value of the underlying land parcels of $79.3$72.2 million (using a sales comparison approach) plus our other development costs incurred of $33.6$35.6 million.

The aggregateSanta Monica Project

As of December 31, 2023, the fair value of our 50% joint venture ownership interest in the Santa Monica Project approximates its carrying value of $36.7 million, which equates to $18.4 million. Our Advisor deemed it appropriate to determine the value of the Santa Monica Project as of that date based on a sales comparison approach taken from a recent appraisal prepared by an independent third party valuation firm.

St. Augustine Land Holdings

As of December 31, 2023, Stanger deemed it appropriate to determine the St. Augustine Land Holdings’ fair value of $21.4 million as of that date based on a sales comparison approach.

As of December 31, 2023, the aggregate estimated fair value of our ownership interests in the Consolidated Real Estate Properties of $439.4was $468.3 million compared to theirand the aggregate carrying value of $327.4our Consolidated Real Estate Properties was $397.0 million, which equates to an overall increase in value of 18.0%.

As of December 31, 2023, the estimated fair value of our 19% joint venture ownership interest in the Columbus Joint Venture of $21.2 million was calculated based on our pro rata share of the gross appraised value of the Columbus Properties of $477.1 million less the fair value of the outstanding indebtedness of $397.5 million plus all other non-real estate assets and liabilities, net of $31.8 million. The estimated fair value of our 19% joint venture ownership interest in the Columbus Joint Venture of $21.2 million compared to our carrying value of $16.9 million, both as of September 30, 2022,December 31, 2023, equates to an increase in value of 34.2%25.0%.

The estimated gross fair value of the Columbus Properties was determined by the other independent valuation firm using a DC analysis for each of the nine multifamily residential properties. Capitalization rates ranged from 5.25% to 6.25%. While we believe that the assumptions utilized are reasonable, a change in these assumptions would affect the calculation of the value of these investment properties. A 25-basis point increase and decrease in the capitalization rates would change our NAV per Share by an estimated $(0.17) and $0.18, respectively. This estimate 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, this assumption could change by more or less than 25 basis points or not at all.

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

InvestmentsInvestment in related parties:party: As of September 30, 2022,December 31, 2023, we have investmentsa 2.5% non-managing ownership interest in related parties as follows:

Marketable securities: The estimated values of our marketable securities, which are available for sale, are based on Level 1 and Level 2 inputs. Level 1 inputs are inputs that are observable, either directly or indirectly, such as quoted prices in active markets for identical assets or liabilities. 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.

Notes receivable: The estimated value of our notes receivable approximates its carrying value as of September 30, 2022 based on current market rates for similar instruments.

Other assets: Our other assets consist of restricted cash and other assets. The estimated values of these items approximate their carrying values due to their 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 Properties or financial instruments.

Mortgage notes payable: The estimated values for our mortgage loans were estimated 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 mortgage loans were generally determined based on market rates for available comparable debt. The estimated current market interest rates for our mortgage loans ranged from 5.52%4.55% to 8.40%14.34% as of September 30, 2022.December 31, 2023.

Other liabilities: Our other liabilities consist of our accounts payable, accrued expenses and other liabilities, amounts due to related parties, and distributions payable. The carrying values of these items were considered to equal their fair value due to their short maturities. Certain other items, primarily intangibles, have been eliminated for the purpose of the valuation because those items are already considered in our valuation of the respective Real Estate Properties or financial instruments.

Other noncontrolling interests: Our other noncontrolling interests consist of accrued distributions on common unitsCommon Units and SLP Units.Units, if any.

Allocations of value to SLP units: The carrying value of the SLP Units held by Lightstone SLP, LLC, an affiliate of our Advisor, are classified in noncontrolling interests on our consolidated balance sheet. The IPA’s Practice Guideline 2013—01 provides for adjustments to the NAV for preferred securities, special interests and incentive fees based on the aggregate NAV of the companyCompany and payable to the sponsor in a hypothetical liquidation of the companyCompany as of the valuation date in accordance with the provisions of the partnership or advisory agreements and the terms of the preferred securities. Because certain distributions related to our SLP Units are only payable to their holder in a liquidation event, we believe they should be valued for our NAV in accordance with these provisions.

Our operating agreement provides for distributions to be made during our liquidating stage to our stockholders and the holder of the SLP Units at certain prescribed thresholds. In connection with our initial public offering of common stock, Lightstone SLP, LLC purchased an aggregate of $30.0 million of SLP Units. In the calculation of our estimated NAV, a $51.0$44.9 million allocation of value was made to the SLP Units representing the amount of estimated distributions which would have been payable to the holder of the SLP Units, assuming a liquidation event as of September 30, 2022.December 31, 2023.

Historical Estimated NAV and NAV per Share

Additional information on our historical reported estimated NAV and NAV per Share for the preceding year may be found in the following referenced filing:

As of September 30, 20212022 – Current Report on Form 8-K filed on December 16, 2021.12, 2022.

Limitations and Risks

As with any valuation methodology, the methodology used to determine our estimated NAV and resulting estimated 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 Boardboard of Directors.directors. The estimated NAV per Share approved by our Boardboard of Directorsdirectors does not represent 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 ServiceIRS 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 with 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. As of the date of this filing, although we have not sought stockholder approval to adopt a plan of liquidation of the Company, certain distributions may be payable to Lightstone SLP, LLC for its SLP Units in connection with a liquidation event. Accordingly, our estimated NAV reflects any allocations of value to the SLP Units representing the amount that would be payable to Lightstone SLP, LLC in connection with a liquidation event pursuant to the guidelines for estimating NAV contained in IPA Practice Guideline 2013-01, “Valuation‘‘Valuation of Publicly Registered Non-Listed REITs.”’’ 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 less any allocations to the SLP Units 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. We currently expect that our Advisor will estimate our NAV on at least 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:

SRP

Our share repurchase program (the “SRP”) may provide our stockholders with limited, interim liquidity by enabling them to sell their shares of common stockCommon Shares back to us, subject to restrictions.

On March 25, 2020, our the Board of Directors amended the SRP to remove stockholder notice requirements and also approved the suspension of all redemptions effective immediately.redemptions.

Effective March 15,18, 2021 and May 14, 2021, the Board of Directors partially reopened the SRP to allow, subject to various conditions as set forth below, for redemptions submitted in connection with a stockholder’s death and hardship, respectively, and set the price for all such purchases to our current estimated NAV per Share, as determined by ourthe Board of Directors and reported by us from time to time. Deaths that occurred subsequent to January 1, 2020 were eligible for consideration, subject to certain conditions. 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 March 18, 2022, the Board of Directors approved an increase to the annual threshold for death redemptions from up to 0.5% to 1.0%.

At the above noted dates, the Board of Directors established that on an annual basis, we would not redeem in excess of 1.0% and 0.5% of the number of sharesCommon Shares outstanding as of the end of the preceding year for either death or hardship redemptions, respectively. Additionally, redemption requests are generally expected to be processed on a quarterly basis and would be subject to pro rationproration if either type of redemption requests exceeded the annual limitation.

For the year ended December 31, 2023, we repurchased 283,091 Common Shares at a weighted average price per share of $12.19. For the year ended December 31, 2022, we repurchased 371,318 Common Shares at a weighted average price per share of $11.75. For the year ended December 31, 2021, we repurchased 143,918 Common Shares at a weighted average price per share of $11.18.$11.75

DRIP

DRIP

Our distribution reinvestment program (“DRIP”) provides our shareholders with an opportunity to purchase additional shares of our common stockCommon Shares at a discount by reinvesting distributions. Under our DRIP, a shareholder may acquire, from time to time, additional shares of our common stockCommon Shares by reinvesting cash distributions payable by us to such shareholder, without incurring any brokerage commission, fees or service charges.

The DRIP had been suspended since 2015 until ourOur current DRIP Registration Statement on Form S-3D was filed and became effective as amended and restated, under the Securities Act of 1933 on October 25, 2018.

Pursuant to the terms of our DRIP, following its reactivation, our stockholders who elect to participate may invest all or a portion of the cash distributions that we pay them on shares of our common stockCommon Shares in additional shares of our common stockCommon Shares at a purchase price equal to 95% of our currentestimated NAV per Share in effect as determined byof the ourrecord date of such distribution. Effective on March 22, 2024, the Board of Directors determined and reported by us from time to time. Effective on December 8, 2022, our Board of Directors determinedapproved our NAV per Share of $12.19,$11.73 as of September 30, 2022, which resulted inDecember 31, 2023. As a result, effective on that date, the purchase price for sharesCommon Shares under the DRIP of $11.58became $11.14 per share. As of December 31, 2022,2023, 9.9 million shares remainCommon Shares were available for issuance under our DRIP.

Our Board of Directors reserves the right to terminate the DRIP for any reason without cause by providing written notice of the termination to all participants.

Distributions

Common Shares

Our BoardDuring each of Directors commenced declaringthe four calendar quarters during 2022 and we began paying regularduring each of the first two calendar quarters of 2023, quarterly distributions on our Common Shares were declared at the pro rata equivalent of an annual distribution of $0.70 per share, or an annualized rate of 7.0%7% assuming a purchase price of $10.00 per share, beginning February 1, 2006. Subsequently, our Board of Directors has declared regular quarterly distributions at the annualized rate of 7.0% assuming a purchase price of $10.00 per share, with the exception of the three-month period ended June 30, 2010. The distributions for the three-month period ended June 30, 2010 were at an aggregate annualized rate of 8% based on the share price of $10.00. Through December 31, 2022, we have paid aggregate distributions in the amount of $278.7 million, which includes cash distributions paid to stockholders and common stock issued under our DRIP.

Total distributions declared during the years ended December 31, 2022 and 2021 were $15.4 million and $15.6 million, respectively.

On November 9, 2022 and November 8, 2021 the Board of Directors authorized and we declared distributions of $0.175 per share for the quarterly periods ending December 31, 2022 and 2021. The distributions payable of $3.8 million and $3.9 million as of December 31, 2022 and 2021, respectively, were paid in January 2023 and 2022, respectively.

On March 15, 2023, our Board of Directors authorized and declared a Common Share distribution of $0.175 per share for the quarterly period ending March 31, 2023. The distribution will be paid on or about the 15th day of the month following the quarter-end to stockholders of record at the close of business on the last day of the quarter-end. TheDuring the third calendar quarter of 2023, a quarterly distribution on our Common Shares was declared at the pro rata equivalent of an annual distribution of $0.35 per share, or an annualized rate of 3.5% assuming a purchase price of $10.00 per share, to stockholders have anof record at the close of business on the last day of the quarter-end. All distributions were paid on or about the 15^th day of the month following the quarter-end and stockholder had the option to elect the receipt of sharesCommon Shares under our DRIP in lieu of payment of cash for the our DRIP.distributions from us.

Future distributions, if any, declared will be at the discretion ofOn November 10, 2023, the Board of Directors baseddetermined to suspend regular quarterly distributions.

During the year ended December 31, 2023, total distributions declared and paid on their analysisour Common Shares were $9.5 million and $13.3 million, respectively. During the year ended December 31, 2022, total distributions declared and paid on our Common shares were $15.4 million and $15.1 million, respectively.

SLP Units

During each of the Company’s performance overfour calendar quarters during 2022 and during each of the previous periods and expectationsfirst two calendar quarters of performance for future periods. The Board of Directors will consider various factors in its determination, including but not limited to, the sources and availability of capital, operating and interest expenses, the Company’s ability to refinance near-term debt, as well as the IRS’s annual distribution requirement that REITs distribute no less than 90% of their taxable income. The Company cannot assure that any future distributions will be made or that it will maintain any particular level of distributions that it has previously established or may establish.

SLP Units

From our inception through March 31, 2010, cumulative2023, quarterly distributions declared on the special general partner interests (the “SLP Units”) in Lightstone Value Plus REIT, L.P. (the “Operating Partnership”) owned by Lightstone SLP, LLC were $4.9 million, all of which had beenand paid as of April 2010. For the three months ended June 30, 2010, the Operating Partnership did not declare a distribution related to the SLP Units as the distribution to the stockholders was less than 7% for this period. On August 30, 2010, we declared additional distributions to the stockholders to bring the annualized distribution to at least 7%. As such, as of August 30, 2010, we recommenced declaring distributions on the SLP Units at the 7% annualized rate, except for the three months ended June 30, 2010 which was at an 8% annualized rate which represents the same rate paid to the stockholders.

During each of the years ended December 31, 2022 and 2021, distributions of $2.1 million were declared and paid related to the SLP Units and are part of noncontrolling interests. Since inception through December 31, 2022, cumulative distributions declared were $31.8 million, of which $31.3 million have been paid. Such distributions, paid currently at a 7% annualized rate of returnreturn. Because the quarterly distribution declared by the Board of Directors on the SLP Units through December 31, 2022, with the exception of the distribution related to the three months ended June 30, 2010, which was paid at an 8% annualized rate will always be subordinated until stockholders receive a stated preferred return, as described below.

Additionally, on March 15, 2023, our Operating Partnership declared a quarterly distributionCommon Shares for the quarterly period ending March 31,September 30, 2023 did not equate to at least an annualized rate of 7%, assuming a purchase price of $10.00 per share, no distributions were declared on the SLP Units for the quarterly period ending September 30, 2023. Until distributions on Common Shares are brought current to at least an annualized rate of 7.0%.7% assuming a purchase price of $10.00 per share, no distributions will be declared on the SLP Units. Any future distributions on the SLP Units will always be subordinated until stockholders receive a stated preferred return.

During the year ended December 31, 2023, total distributions declared and paid on the SLP Units were $1.0 million and $1.6 million, respectively, and are part of noncontrolling interests. During the year ended December 31, 2022, total distributions declared and paid on the SLP Units were both $2.1 million, and are part of noncontrolling interests.

Recent Sales of Unregistered Securities

During the period covered by this Form 10-K,Annual Report, we did not sell any equity securities that were not registered under the Securities Act of 1933.

Act.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS:

You should read the following discussion and analysis together with our consolidated financial statements and notes thereto included in this Annual Report on Form 10-K.Report. The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. Please see “Special Note Regarding Forward-Looking Statements” abovebefore Item 1 of this Annual Report for a description of these risks and uncertainties. Dollar amounts are presented in thousands, except per shareshare/unit data and where indicated in millions.

Overview

Lightstone Value Plus REIT I Inc. (the “Lightstone REIT I”), (togethertogether with the Operating Partnership and its operating partnership, Lightstone Value Plus REIT, L.P. (the “Operating Partnership”), the “Company”, alsosubsidiaries are collectively referred to as “we”, “our”the “Company” and the use of “we,” “our,” “us” or “us” herein) hassimilar pronouns refers to Lightstone REIT I, its Operating Partnership or the Company as required by the context in which such pronoun is used.

Through our Operating Partnership, we own, operate and expects to continue to acquire and operate or develop in the future, commercial and multifamily residential properties and/orand make other real estate-related investments, principally in the United States.U.S. Our acquisitions andreal estate investments are principally conducted throughheld by us alone or jointly with other parties. We may also originate or acquire mortgage loans secured by real estate. Although most of our investments are of these types, we may invest in whatever types of real estate or real estate-related investments that we believe are in our best interests. Since our inception, we have owned and managed various commercial and multifamily residential properties located throughout the Operating Partnership, and may include both portfolios and individual properties.U.S. We evaluate all of our real estate investments as one operating segment. We currently intend to hold our real estate investments until such time as we determine 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.

As of December 31, 2022, we held a 98% general partnership interest in our Operating Partnership’s common units.

As of December 31, 2022,2023, we (i) have ownership interests in and consolidate two operating properties, onetwo development propertyprojects and certain land holdings and (ii) have ownership interests through two unconsolidated joint ventures in the Columbus Properties, a portfolio of nine unconsolidated multifamily residential properties and seven unconsolidated commercialthe Hotel JV Properties, a portfolio of five limited service hotel properties. Additionally, as of December 31, 2022, we have other real estate-related investments consisting of a preferred investment in a related party and a promissory loan we originated, through a joint venture with a related party, to an unaffiliated third-party borrower. We evaluate all of our real estate investments as one operating segment.

With respect to our consolidated operating properties, we wholly own a 296-room Marriott Moxy hotel (the “Lowerthe Lower East Side Moxy Hotel”),Hotel, a 303-room Marriott branded hotel, located in the Lower East Side neighborhood in the Manhattan borough of New York City, which we developed, constructed and opened on October 27, 2022 and have a 59.2% majority ownership interest in 50-01 2nd St. Associates LLC (the “2ndthe 2^nd Street Joint Venture”),Venture, a joint venture between us and a related party, which developed, constructed and owns Gantry Park Landing, a 199-unit199-room luxury multifamily residential property, (“Gantry Park Landing”), located in the Long Island City neighborhood in the Queens borough of New York City.

With respect to our consolidated development property,project, we wholly own three land parcels located at 355 & 399 Exterior Street in the Mott Haven neighborhood in the Bronx borough of New York City, on which we planexpect, subject to certain conditions, to construct the Exterior Street Project and we have a proposed mixed-use50% joint venture ownership interest in the Santa Monica Joint Venture, a joint venture between us and a related party, which owns certain land parcels located in Santa Monica, California on which the Santa Monica Project, a multifamily residential and commercial retail project (the “Exterior Street Project”).is proposed.

We also wholly own and consolidate the St. Augustine Land Holdings, which consist of certain adjacent land parcels (the “St. Augustine Land Holdings) located in St. Augustine, Florida.

Additionally,With respect to our unconsolidated properties, we hold a 19.0%19% joint venture ownership interest in the Columbus Joint Venture, which owns the Columbus Portfolio, Member LLC (the “Columbus Joint Venture”), which ownsa portfolio of nine multifamily residential properties which we account for usinglocated in the equity method of accountingColumbus Ohio metropolitan area, and we and hold a 2.5% joint venture ownership interest in LVP Holdco JV LLC (the “Hotelthe Hotel Joint Venture”)Venture, which owns seven hotel properties, whichthe Hotel JV Properties, a portfolio of five limited service hotels. We account for our 19% joint venture ownership interest in the Columbus Joint Venture under the equity method of accounting and we account forof our 2.5% joint venture ownership interest in the Hotel Joint Venture using a measurement alternative underpursuant to which the Hotel Joint Ventureour investment is measured at cost, adjusted for observable price changes and impairments, if any. Both the Columbus Joint Venture and the Hotel Joint Venture are between us and related parties.

We do not have employees. We entered intoOn July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units. Our Advisor also owns 20,000 Common Shares which were issued on July 6, 2004 for $200, or $10.00 per share. Our Advisor, pursuant to the terms of an advisory agreement, pursuant to which Lightstone Value Plus REIT, LLC (the “Advisor”) supervisestogether with our Board of Directors, is primarily responsible for making investment decisions on our behalf and managesmanaging our day-to-day operationsoperations. Through his ownership and selectscontrol of the Sponsor, Mr. Lichtenstein is the indirect owner and manager of Lightstone SLP, LLC, a Delaware limited liability company, which owns an aggregate of $30.0 million of SLP Units in the Operating Partnership which were purchased, at a cost of $100,000 per unit, in connection with our real estateOffering. Mr. Lichtenstein also acts as our Chairman and real estate related investments, subject to oversight by our board of directors (the “Board of Directors”). Chief Executive Officer. As a result, he exerts influence over but does not control Lightstone REIT I or the Operating Partnership.

We payhave no employees. We are dependent on the Advisor feesand certain affiliates of our Sponsor for preforming a full range of services that are essential to us, including asset management, property management (excluding our hospitality property, which is managed by an unrelated third party property manager) and acquisition, disposition and financing activities, and other general administrative responsibilities; such as tax, accounting, legal information technology and investor relations. If the Advisor and certain affiliates of our Sponsor are unable to provide these services to us, we would be required to provide the services ourselves or obtain the services from other parties.

Our Sponsor, Advisor and their affiliates, including Lightstone SLP, LLC, are related parties of ours as well as other public REITs also sponsored and/or advised by these entities. Pursuant to the terms of various agreements, certain of these entities are entitled to compensation and reimbursement of costs incurred for services related to the investment, development, management and managementdisposition of our assets,assets. The compensation is generally based on the cost of acquired properties/investments and we will reimburse the Advisor for certain expenses incurred on our behalf.

To maintain our qualificationannual revenue earned from such properties/investments, and other such fees and expense reimbursements as a REIT, we engageoutlined in certain activities through taxable REIT subsidiaries (“TRSs”). As such, we are subject to U.S. federal and state income and franchise taxes from these activities.each of the respective agreements.

Acquisition and Investment Strategy and Policies

We have and expect to continue to invest in commercial and multifamily residential properties, such as office, industrial, retail, hospitality and multifamily apartments, and make other real estate-related investments such as through preferred investments or the origination of mortgage and mezzanine loans. Our investments may be made through the acquisition of or the development and construction of properties.

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.

We have not and do not intend to make significant investments in single family residential properties; leisure home sites; farms; ranches; timberlands; unimproved properties not intended to be developed; or mining properties.

Not more than 10% of our total assets may be invested in unimproved real property. For purposes of this paragraph, “unimproved real properties” does not include properties acquired for the purpose of producing rental or other operating income, properties currently under construction and properties for which development or construction is planned within one year. Additionally, we do not invest in contracts for the sale of real estate unless in recordable form and appropriately recorded.

Although we are not limited as to the geographic area where we may conduct our operations, we have invested and may continue to invest in properties located near the existing operations of our Sponsor, in order to achieve economies of scale where possible.

Concentration of Credit Risk

As of December 31, 2023 and 2022, we had cash deposited in certain financial institutions in excess of U.S. federally insured levels. We regularly monitor the financial stability of these financial institutions and believe that we are not exposed to any significant credit risk with respect to our cash and cash equivalents or restricted cash.

Current Environment

Our operating results and financial condition 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 and banking failures, political upheaval or uncertainty, natural and man-made disasters, terrorism and acts of war, unfavorable changes in laws and regulations, outbreaks of contagious diseases, cybercrime, loss of key relationships, inflation and recession.

Our overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on consumer behavior. Worsening economic conditions, increases in costs due to inflation, higher interest rates, certain labor and supply chain challenges and developments related to the COVID-19 pandemic, and other changes in economic conditions may adversely affect our results of operations and financial performance.performance.

We are not currently aware of any other material trends or uncertainties, favorable or unfavorable, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from our operations, other than those referred to above or throughout this Form 10-K.Annual Report. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”)GAAP requires our 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.

Critical Accounting Estimates and Policies

General

Our consolidated financial statements, included in this annual report,Annual Report, include our accounts, the Operating Partnership and its subsidiaries (over which we exercise financial and operating control). All inter-company balances and transactions have been eliminated in consolidation.

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our financial statements requires us to make estimates and judgments about the effects of matters or future events that are inherently uncertain. These estimates and judgments may affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates, including contingencies and litigation. We base these estimates on historical experience and on various other assumptions that we believe to be reasonable in the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

To assist in understanding our results of operations and financial position, we have identified our critical accounting policies and discussed them below. These accounting policies are most important to the portrayal of our results and financial position, either because of the significance of the financial statement items to which they relate or because they require our management’s most difficult, subjective or complex judgments.

Investments in Real Estate

We generally record investments in real estate at cost and capitalize improvements and replacements when they extend the useful life or improve the efficiency of the asset. We expense costs of ordinary repairs and maintenance as incurred. We compute depreciation using the straight-line method over the estimated useful lives of the applicable real estate asset. We generally use estimated useful lives of up to thirty-nine years for buildings and improvements, five to ten years for furniture and fixtures and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

We make subjective assessments as to the useful lives of our properties for purposes of determining the amount of depreciation to record on an annual basis with respect to our investments in real estate. These assessments have a direct impact on our net income because, if we were to shorten the expected useful lives of our investments in real estate, we would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis.

We record assets and groups of assets and liabilities which comprise disposal groups as “held for sale” when all of the following criteria are met: a decision has been made to sell, the assets are available for sale immediately, the assets are being actively marketed at a reasonable price in relation to the current fair value, a sale has been or is expected to be concluded within twelve months of the balance sheet date, and significant changes to the plan to sell are not expected. The assets and disposal groups held for sale are valued at the lower of book value or fair value less disposal costs. For sales of real estate or assets classified as held for sale, we evaluate whether a disposal transaction meets the criteria of a strategic shift and will have a major effect on our operations and financial results to determine if the results of operations and gains on sale of real estate will be presented as part of our continuing operations or as discontinued operations in our consolidated statements of operations. If the disposal represents a strategic shift, it will be classified as discontinued operations for all periods presented; if not, it will be presented in continuing operations.

We evaluate the recoverability of our investments in real estate assets at the lowest identifiable level, which is primarily at the individual property level. An impairment loss is recognized only if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value.

We evaluatethe long-lived assets for potential impairment whenever events or changes in circumstances indicate that the undiscounted projected cash flows are less than the carrying amount for a particular property. No single indicator would necessarily result in us preparing an estimate to determine if a long-lived asset’s future undiscounted cash flows are less than its book value. We use judgment to determine if the severity of any single indicator, or the fact there are a number of indicators of less severity that when combined, would result in an indication that a long-lived asset requires an estimate of the undiscounted cash flows to determine if an impairment has occurred. Relevant facts and circumstances include, among others, significant underperformance relative to historical or projected future operating results and significant negative industry or economic trends. The estimated cash flows used for the impairment analysis are subjective and require us to use our judgment and the determination of estimated fair value are based on our plans for the respective assets and our views of market and economic conditions. The estimates consider matters such as future operating income, market and other applicable trends and residual value, as well as the effects of demand, competition, and recent sales data for comparable properties. Changes in estimated future cash flows due to changes in our plans or views of market and economic conditions could result in recognition of impairment losses, which, under the applicable accounting guidance, may be substantial.

Accounting for Asset Acquisitions

The cost of the acquisition in an asset acquisition is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases for acquired in-place leases and the value of tenant relationships, and certain liabilities such as assumed debt and contingent liabilities on the basis of their relative fair values. Fees incurred related to asset acquisitions are capitalized as part of the cost of the investment.

Accounting for Development Projects

We incur a variety of costs in the development of a property. The costs of land and building under development include specifically identifiable costs. The capitalized costs include, but are not limited to, pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes and other costs incurred during the period of development. We cease capitalization when the development project is substantially complete and placed in service, which may occur in phases.phases. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. We expense the costs associated with pre-opening activities associated with our development and construction projects as incurred. Pre-opening costs generally consist of non-recurring personnel, marketing and other costs.

Once a development project is placed in service, which may occur in phases or for an entire building or project, the costs capitalized to that development project are transferred to land and improvements, buildings and improvements, and furniture and fixtures on our consolidated balance sheets at the historical cost of the property.

Notes Receivable

Notes receivable that we intend to hold to maturity are carried at cost, net of any unamortized origination costs, fees, discounts, premiums and unfunded commitments.

Investment income will be recognized on an accrual basis and any related premium, discount, origination costs and fees are amortized over the life of the investment using the effective interest method. The amortization is reflected as an adjustment to investment income in our statements of operations.

Income recognition is suspended when, in the opinion of management, a full recovery of income and principal becomes doubtful. When the ultimate collectability of the principal is in doubt, all payments are applied to principal under the cost recovery method. When the ultimate collectability of the principal is not in doubt, contractual interest is recorded as investment income when received, under the cash basis method, until an accrual is resumed when the instrument becomes contractually current and performance is demonstrated to be resumed.

Credit Losses and Impairment on Notes Receivable

Notes receivable are considered impaired when, based on current information and events, it is probable that we will not be able to collect principal and interest amounts due according to the contractual terms. We assess the credit quality of our notes receivable and adequacy of reserves on a quarterly basis, or more frequently as necessary. Significant judgment of management is required in this analysis. We consider the estimated net recoverable value of the notes receivable 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 quality and financial condition of the borrower and the competitive situation of the area where the underlying collateral is located. Because this determination is based on projections of future economic events, which are inherently subjective, the amount ultimately realized may differ materially from the carrying value as of the balance sheet date. If upon completion of the assessment, the estimated fair value of the underlying collateral is less than the net carrying value of the notes receivable, a reserve is recorded with a corresponding charge to investment income. The reserve for each note receivable is maintained at a level that is determined to be adequate by management to absorb probable losses.

Investments in Unconsolidated Entities

We evaluate all investments in other entities for consolidation. We consider our percentage interest in the joint venture, evaluation of control and whether a variable interest entity, or VIE, exists when determining whether or not the investment qualifies for consolidation or if it should be accounted for as an unconsolidated investment under the equity method of accounting.

If an investment qualifies for the equity method of accounting, our investment is recorded initially at cost, and subsequently adjusted for equity in net income or lossearnings and cash contributions and distributions. The net income or lossearnings of an unconsolidated investment isare allocated to its investors in accordance with the provisions of the operating agreement of the entity. The allocation provisions in these agreements may differ from the ownership interest held by each investor. Differences, if any, between the carrying amount of our investment in the respective joint venture and our share of the underlying equity of such unconsolidated entity are amortized over the respective lives of the underlying assets as applicable. These items are reported in the statements of operations as income or lossearnings from investments in unconsolidated entities.

We review investments in unconsolidated entities for impairment in value whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable. An investment in unconsolidated entities is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. The ultimate realization of our investment in partially owned entities is dependent on a number of factors including the performance of that entity and market conditions. If we determine that a decline in the value of a partially owned entity is other than temporary, we record an impairment charge.

Treatment of Management Compensation, Expense Reimbursements and Operating Partnership Participation Interest

Management of our operations is outsourced to our Advisor and certain other affiliates of our Sponsor. Fees related to each of these services are accounted for based on the nature of such service and the relevant accounting literature. Such fees include acquisition fees associated with the purchase of interests in affiliated real estate entities; asset management fees paid to our Advisor and property management fees paid to affiliates of our Property Manager,Sponsor, which managemanages certain of theour properties, we acquire, or to other unaffiliated third-party property managers, principally for the management of our hospitality properties.property. These fees are expensed or capitalized to the basis of acquired assets, as appropriate.

Our Property Manager mayAdvisor and certain affiliates of our Sponsor also perform fee-based construction management services for both our re-developmentdevelopment and redevelopment activities and tenant construction projects. These fees are considered incremental to the construction effort and will beare capitalized to the associated real estate project as incurred. Costs incurred for tenant construction will beare depreciated over the shorter of their useful life or the term of the related lease. Costs related to development and redevelopment activities will beare depreciated over the estimated useful life of the associated project.

Leasing activity at certain of our properties has also beenis outsourced to certain affiliates of our Property Manager.Sponsor. Any corresponding leasing fees we pay are capitalized and amortized over the life of the related lease.

Expense reimbursements made to both our Advisor and Property Manager will becertain affiliates of our Sponsor are expensed or capitalized to the basis of acquired assets, as appropriate.

In connection with our initial public offering,Offering, Lightstone SLP, LLC, an affiliate of the Advisor, purchased an aggregate of $30.0 million of special partner interests in the Operating Partnership (the “SLP Units”)SLP Units at a cost of $100,000 per unit through March 31, 2009, and none thereafter. These SLP units are included in noncontrolling interests on the consolidated balance sheets.

Tax Status and Income Taxes

We elected to be taxed and qualify as a REIT commencing with the taxable year ended December 31, 2005.2005. If we remain qualified as a REIT, we generally will not be subject to U.S. federal income tax on our net taxable income that we distribute currently to our stockholders. To maintain our REIT qualification under the Internal Revenue Code of 1986, as amended, or the Code, we must meet a number of organizational and operational requirements, including a requirement that we annually distribute to our stockholders at least 90% of our REIT taxable income (which does not equal net income, as calculated in accordance with generally accepted accounting principles in the United States of America, or GAAP),GAAP, determined without regard to the deduction for dividends paid and excluding any net capital gain. If we fail to remain qualified for taxation as a REIT in any subsequent year and do not qualify for certain statutory relief provisions, our income for that year will be taxed at regular corporate rates, and we may be precluded from qualifying for treatment as a REIT for the four-year period following our failure to qualify as a REIT. Such an event could materially adversely affect our net income and net cash available for distribution to our stockholders. Additionally, even if we continue to qualify as a REIT for U.S. federal income tax purposes, we may still be subject to some U.S. federal, state and local taxes on our income and property and to U.S. federal income taxes and excise taxes on our undistributed income, if any.

To maintain our qualification as a REIT, we engage in certain activities through taxable REIT subsidiaries (“TRSs”).a TRS, including when we acquire or develop and construct a hotel we usually establish a new TRS and enter into an operating lease agreement for the hotel. As such, we may still beare subject to U.S. federal and state income taxes and franchise taxes from these activities.

As of December 31, 20222023 and 2021,2022, we had no material uncertain income tax positions.

Results of Operations

Significant Transactions and Events during 20222023 and 20212022

Columbus Joint Venture - Acquisition of Columbus Properties

On November 29, 2022, we along with CRE Columbus Member (“Converge”), a majority owned subsidiary of Converge Holdings LLC, a reinsurance business owned by the Sponsor, and LEL Columbus Member LLC (the “BVI Member”), a wholly owned subsidiary of Lightstone Enterprises Limited (“BVI”), a real estate investment company owned by the Sponsor, entered into a joint venture agreement to form the Columbus Portfolio Member LLC (the “Columbus Joint Venture”)Venture for the purpose of acquiring the Columbus Properties, a portfolio of nine multifamily residential properties (the “Columbus Properties”) located in the metropolitan area of Columbus, Ohio for a contractual purchase price of $465.0 million. We have an19% joint venture ownership interest of 19% in the Columbus Joint Venture. Converge and the BVI Member, which are both related parties, have joint venture ownership interests of 19% and 62%, respectively. Additionally, the Manager of the Columbus Joint Venture is LEL Bronx Manager LLC, an entity wholly owned by BVI.

On November 29, 2022, the Columbus Joint Venture completed the purchase of the Columbus Properties. The acquisition was funded with $74.3 million of cash and $390.7 millionmillion of aggregate proceeds from preferred investments from unrelated third-parties and loans from two financial institutions. In connection with the acquisition and financings, the total cash paid, including closing, financing and other transaction costs and pro-rations, was $92.3 million and we paid $17.5 million representing our 19.0%19% pro rata share. In connection with the acquisition, we also paid the Advisor a separate acquisition fee of $2.4 million, equal to 2.75% of our pro-rata share of the contractual purchase price which is reflected in the carrying value of our investment in unconsolidated affiliated real estate entity on the consolidated balance sheets. Commencing on the date of acquisition, we have accountedWe account for our ownership interest in the Columbus Joint Venture in accordance with the equity method of accounting.

Opening of Lower East Side Moxy Hotel

On October 27, 2022, we substantially completed the development of our wholly owned Lower East Side Moxy Hotel, a 303-room Marriott branded hotel located in the Lower East Side neighborhood in the Manhattan borough of New York City, and it opened for business. Additionally, all four of the food and beverage venues within the Lower East Side Moxy Hotel opened during the fourth quarter of 2022.

Closure and Demolition of the St. Augustine Outlet Center

We wholly owned the St. Augustine Outlet Center, a retail center located in St. Augustine, Florida, which was originally built in 1998 and subsequently acquired by us in 2006 and renovated and further expanded in 2008 to 0.3 million of gross leasable area. During the COVID-19 pandemic, the occupancy of our St. Augustine Outlet Center significantly declined and because of limited leasing success, we began exploring various strategic alternatives for the property. As a result, during the third quarter of 2021, we determined that we would no longer continue to pursue leasing of space to tenants and therefore, began to enter into lease termination agreements with certain tenants and also provided notice to our other tenants that we would not renew their leases at the scheduled expiration of their lease. Due to this change in leasing strategy and resulting decrease in the fair value of the St. Augustine Outlet Center, we recorded a non-cash loss on impairment of real estate of $11.3 million during the third quarter of 2021.

Because of the aforementioned lease terminations and scheduled expirations, substantially all of the tenants vacated the property during the first quarter of 2022 and on June 29, 2022, we entered into a lease termination agreement with the property’s final tenant providing for them to receive an aggregate of $0.8 million provided they vacated the property no later than July 15, 2022. The final tenant vacated the property in July 2022 and we ceased operations of the St. Augustine Outlet Center effective July 15, 2022 and shortly thereafter, commenced demolition of the property’s building and improvements in order to prepare the various land parcels for potential sale and/or lease. The demolition of the property’s buildings and improvements was substantially completed during the third quarter of 2022 and therefore, we recognized a loss on demolition of $16.6 million consisting of the write-off of the carrying value of the property’s building and improvements plus related costs. As a result the remaining carrying value of the St. Augustine land and improvements was $4.9 million as of December 31, 2022 and is included in land and improvements on the consolidated balance sheet.

In connection with the terms of certain of the lease termination agreements, we agreed to make various payments to certain tenants provided they closed their store and vacated the property. We expense lease termination fees in the period the lease termination agreement is executed and such expenses are included in property operating expenses on the consolidated statements of operations. During the yearsyear ended December 31, 2022, and 2021, we recognized lease termination fees of $0.8 million and $0.4 million, respectively.million.

DispositionResults of the Santa Clara ProjectOperations

In January 2019, we acquired a parcel of land located at 2175 Martin Avenue, Santa Clara, California (the “Martin Avenue Land”) from an unaffiliated third party for $10.6 million. Subsequently, we completed certain activities associated with the potential development and construction of a data center on the Martin Avenue Land (the “Santa Clara Project”).

On July 7, 2021, we disposed of the Santa Clara Project to an unrelated third party for a contractual sales price of $13.9 million. In connection with the disposition of the Santa Clara Project, we recognized a gain on sale of investment property of $0.2 million during the third quarter of 2021.

The disposition of the Santa Clara Project did not qualify to be reported as discontinued operations since it did not represent a strategic shift that had a major effect on our operations and financial results. Accordingly, the operating results of the Santa Clara Project are reflected in our results from continuing operations for all periods presented through its date of disposition.

Sale of Land Parcel

On May 25, 2021, we completed the disposition of a parcel of land adjacent to the St. Augustine Outlet Center to an unrelated third party for a contractual sales price of $6.8 million and recognized a gain of $3.6 million during the second quarter of 2021, which is included in gain on disposition of real estate, net on the consolidated statements of operations.

For the Year Ended December 31, 20222023 vs. December 31, 20212022

Consolidated

Rental revenues

Our rental revenues are comprised of rental income and tenant recovery income. Total rental revenues decreasedincreased by $0.8$0.6 million to $9.6$10.2 million for the year ended December 31, 20222023 compared to $10.4$9.6 million for the same period in 2021.2022. This decreaseincrease reflects higher rental revenues of $0.8 million for Gantry Park Landing primarily resulting from higher average monthly rent per unit partially offset by lower rental revenues of $2.3$0.2 million for the St. Augustine Outlet Center resulting from substantially all of its tenants vacating during the first quarter of 2022 and us subsequently ceasing operations of the property effective July 15, 2022, partially offset by higher rental revenues of $1.5 million for Gantry Park Landing resulting from higher occupancy and rental rates.2022.

Hotel revenues

Our hotel revenues are comprised of room revenue and food, beverage and other revenue. On October 27, 2022, we substantially completed the development and construction of our wholly owned Lower East Side Moxy Hotel and it opened for business. Additionally, all four of the food and beverage venues within the Lower East Side Moxy Hotel opened during the fourth quarter of 2022.

Total hotel revenues were $50.3 million and $5.4 million for the years ended December 31, 2023 and 2022, respectively. Room revenues were $24.9 million and $3.1 million and food, beverage and other revenues were $25.4 million and $2.3 million for the years ended December 31, 2023 and 2022, respectively.

Property operating expenses

Property operating expenses decreased by $0.8 million to $3.2 million for the year ended December 31, 2022 as a result of the opening of the Lower East Side Moxy Hotel on October 27, 2022. Hotel revenues consisted of $3.1 million of room revenue and $2.3 million of food, beverage and other revenue.

Property operating expenses

Property operating expenses decreased by $0.2 million2023 compared to $4.0 million for the year ended December 31, 2022 compared to $4.2 million for the same period in 2021. 2022. The decrease is primarily attributable toreflects lower property operating costs of $0.4$1.1 million forresulting from the closure of the St. Augustine Outlet Center, which ceased operations effective July 15, 2022, partially offset by higher property operating expenses of $0.2$0.3 million for Gantry Park Landing resulting from higher utility expenses.

Hotel operating expenses

HotelTotal hotel operating expenses were $35.7 million and $4.7 million for the years ended December 31, 2023 and 2022, respectively. Room expenses were $14.9 million and $2.2 million and food and beverage costs were $20.8 million and $2.5 million for the years ended December 31, 2023 and 2022, respectively. These increases are attributable to a full year of operations for the Lower East Side Moxy, which opened on October 27, 2022.

Real estate taxes

Real estate taxes increased by $1.2 million to $1.5 million for the year ended December 31, 2022 as a result of2023 compared to $0.3 million for the opening ofsame period in 2022. The increase is primarily attributable to real estate taxes for the Lower East Side Moxy Hotel, which opened on October 27, 2022.

General and administrative costs

General and administrative costs increased by $1.4 million to $4.0 million for the year ended December 31, 2023 compared to $2.6 million for the same period in 2022. The increase is primarily due to asset management fees related to the Moxy Lower East Side Hotel, operating expenses consistedcommencing upon its opening.

Pre-opening costs

We incurred pre-opening costs of $2.2$0.1 million of room expense and $2.5$4.5 million ofrelated to the Lower East Side Moxy Hotel, including its food and beverage costs.

Real estate taxes

Real estate taxes were $0.3 million for both ofvenues, during the years ended December 31, 2023 and 2022, and 2021.

General and administrative costs

General and administrative costs were $2.6 million for both of the years ended December 31, 2022 and 2021.

Impairment charge

During the year ended December 31, 2021, we recorded a third quarter non-cash impairment charge of $11.3 million to reduce the carrying value of our St. Augustine Outlet Center to its estimated fair value.

Pre-opening costs

respectively. Pre-opening costs generally consist of non-recurring personnel, marketing and other costs. In preparation

Depreciation and amortization

Depreciation and amortization increased by $3.7 million to $6.9 million for the openingyear ended December 31, 2023 compared to $3.2 million for the same period in 2022. The increase is attributable to higher depreciation of $4.5 million for the Lower East Side Moxy Hotel, which opened on October 27, 2022, we incurred pre-opening costs of $4.5 million during the year ended December 31, 2022. No pre-opening costs were incurred during 2021.

Depreciation and amortization

Depreciation and amortization decreasedpartially offset by $2.3 million to $3.2 million for the year ended December 31, 2022 compared to $5.5 million for the same period in 2021. The decrease is attributable to lower depreciation and amortization of $3.1$0.8 million for the St. Augustine Outlet Center, which ceased operations effective July 15, 2022, offset by higher depreciationand was substantially demolished during the third quarter of $0.8 million for the Lower East Side Moxy Hotel, which opened on October 27, 2022.

Interest and dividend income

Interest and dividend income decreased by $4.7$2.6 million to $9.1$6.5 million for the year ended December 31, 20222023 compared to $13.8$9.1 million for the same period in 2021. 2022. The decrease primarily reflects lower interest and dividend income earned on our notes receivable of $4.3 million and preferred investments of $0.4 million.and our notes receivable.

Interest expense

Interest expense, including amortization of deferred financing costs, decreasedincreased by $2.7$20.7 million to $5.3$26.0 million for the year ended December 31, 20222023 compared to $2.6$5.3 million for the same period in 2021.2022. Interest expense is primarily attributable to financings associated with our investments and reflects both changes inhigher market interest rates on our variable rate indebtedness during the 2023 period and changes in the weighted average principal outstanding during the periods. Additionally,

The significant increase in interest expense is also attributable to the cessation of the capitalization of all interest expense associated with the development of the Lower East Side Moxy Hotel on October 27, 2022 effective when its construction was substantially completed and it opened and the cessation of the capitalization of interest on the Exterior Street Project during the second quarter of 2023 in connection with our decision to temporarily pause active development activities. During the years ended December 31, 2023 and 2022, we capitalized an aggregate of $1.5 million and $14.5 million, respectively, of interest to our development projects.

Unrealized gain/loss on marketable equity securities

During the year ended December 31, 2023, we recorded unrealized gains on marketable equity securities of $7.1 million and during the year ended December 31, 2022, we recorded unrealized losses on marketable equity securities of $13.4 million. These unrealized gains and 2021, $14.5losses represented the change in the fair value of our marketable equity securities during those periods.

Mark to market adjustments on derivative financial instruments

During the years ended December 31, 2023 and 2022, we recorded a negative mark to market adjustment of $1.8 million and $8.2a positive mark to market adjustment of $3.0 million, respectively, of interest was capitalized to development projects.respectively.

Gain on disposition of real estate

During the year ended December 31,first quarter of 2023, we recognized a gain on the disposition of real estate of $1.1 million related to the sale of a parcel of land which was part of the St. Augustine Land Holdings.

During the third quarter of 2022,, we recognized a gain on disposition of real estate of $1.1 million related to Oakview, a shopping center located in Omaha, Nebraska,property which we previously disposed of in September 2017.

During the year ended December 31, 2021, we recognized an aggregate gain on the disposition of real estate of $3.9 million consisting of a gain of $3.6 million related to the sale of a parcel of land adjacent to the St. Augustine Outlet Center on May 21, 2021 and a gain of $0.2 million related to the sale of the Santa Clara Project on July 7, 2021.

Loss on demolition

We ceased operations of the St. Augustine Outlet Center effective July 15, 2022 and shortly thereafter, commenced demolition of the property’s building and improvements. During the third quarter of 2022, the demolition was substantially completed and we recognized a loss on demolition of $16.6 million consisting of the write-off of the carrying value of the property’s building and improvements plus related costs.

Unrealized (loss)(Loss)/gain on sale of marketable equity securities

During the year ended December 31, 2022,2023, we recorded unrealized lossesa loss on marketable equity securities of $13.4 million and during the year ended December 31, 2021, we recorded unrealized gains on marketable equity securities of $16.5 million. These unrealized gains and losses represented the change in the fair value of our marketable equity securities during those periods.

Gain on sale of marketable securities

During of $1.0 million and during the year ended December 31, 2022, we recorded a gain on the sale of marketable securities of $0.6 million.

Loss on debt extinguishment

During the fourth quarter of 2023, we recorded a loss on debt extinguishment of $1.2 million principally consisting of the write-off of the remaining unamortized deferred financing associated with the constructing mortgage indebtedness collateralized by the Lower East Side Moxy Hotel, which was repaid in full.

Loss from investment in unconsolidated affiliated entity

Our loss from investment in unconsolidated affiliated entity was $4.8 million and $0.4 million during the yearyears ended December 31, 2021, we recorded a gain on the sale of marketable securities of $5.9 million. These gains represented the difference between the sales price2023 and carrying value of2022, respectively. Our loss from investment in unconsolidated affiliated entity is attributable to our marketable securities sold during those periods.

Mark to market adjustments on derivative financial instruments

During the year ended December 31, 2022, we recorded positive mark to market adjustments on our derivative financial instruments of $3.0 million and during the year ended December 31, 2021, we recorded positive mark to market adjustments on our derivative financial instruments of $0.2 million. These mark to market adjustments represented the changeunconsolidated 19% joint venture ownership interest in the fair valueColumbus Joint Venture. We commenced recording our allocated portion earnings from the Columbus Joint Venture beginning as of our interest rate cap contracts during the period.November 29, 2022.

Noncontrolling interests

The net earnings allocated to noncontrolling interests relates to (i) certain parties of that hold unitsCommon Units in the Operating Partnership, (ii) the interest in PRO-DFJV Holdings LLC (“PRO”)PRO held by our Sponsor, (iii) the ownership interests in 50-01 2nd St. Associates LLC (the “2ndthe 2^nd Street Joint Venture”)Venture held by our Sponsor and other affiliates and (iv) the ownership interest in various joint venturesthe Santa Monica Joint Venture held by affiliatesan affiliate of our Sponsor that have originated promissory loans to unaffiliated third-party borrowers.Sponsor.

Financial Condition, Liquidity and Capital Resources

Overview:Overview:

As of December 31, 2022,2023, we had $12.2$10.5 million of cash on hand, $10.4$7.8 million of restricted cash and $45.9$35.2 million of marketable securities. We also have the ability to make draws from a non-revolving line of credit (the “Line of Credit”) up to $20.0 million, subject to certain conditions (seeand a margin loan (the “Margin Loan”). See “Notes Payable – Line of Credit”). and “Notes Payable” – Margin Loan” for additional information. We currently believe that these items along with revenues from our operating properties; and interest and dividend income earned on our cash and marketable securities, notes receivable and preferred investment;securities; as well as proceeds received from the salepotential sales of our marketable securities repayment of our notes receivable and redemption of our preferred investment will be sufficient to satisfy our expected cash requirements for at least twelve months from the date of filing this report, which primarily consist of our anticipated operating expenses, scheduled debt service (excluding balloon payments due at maturity), capital expenditures (including certain of our development activities), contributions to our unconsolidated affiliated real estate entity (Columbus Joint Venture), redemptions and cancellations of shares of our common stockCommon Shares, and distributions to our shareholders, if any, required to maintain our status as a REIT for the foreseeable future. However, we may also obtain additional funds through selective asset dispositions, joint venture arrangements, new borrowings andand/or refinancing of existing debt.

Additionally, we still have remaining costs related to the development and construction of the Lower East Side Moxy Hotel, which opened on October 27, 2022. These remaining costs are expected to be funded from the remaining availability under existing construction financings as well as lender escrowed funds. See “Lower East Side Moxy Hotel” for additional information. We also have another development project, our Exterior Street Project, which is currently under development and for which we expect to seek construction financing and/or a joint venture arrangement to fund a substantial portion of its future development and construction costs. See “Exterior Street Project” for additional information.

Our borrowings consist of single-property mortgages as well as mortgages cross-collateralized by a pool of properties. We typically have obtained level payment financing, meaning that the amount of debt service payable would be substantially the same each year. As such, most of the mortgages on our properties provide for so-called “balloon” payments.

Additionally, in order to leverage our investments in marketable securities and seek a higher rate of return, we have access to borrowings under a margin loan and line of creditthe Margin Loan, which is collateralized by the securities held with the financial institution that provided the marginMargin loan, and linethe Line of credit as well asCredit, which is collateralized by a portion of our Marco OP Units. These loans areThe Margin Loan is due on demand and any outstanding balance must be paid upon the liquidation of our securities.

Our charter provides that the aggregate amount of borrowing, both secured and unsecured, may not exceed 300% of net assets in the absence of a justification showing that a higher level is appropriate, the approval of the Board of Directors and disclosure to stockholders. Net assets means our total assets, other than intangibles, at cost before deducting depreciation or other non-cash reserves less our total liabilities, calculated at least quarterly on a basis consistently applied. Any excess in borrowing over such 300% of net assets level must be approved by a majority of our independent directors and disclosed to our stockholders in our next quarterly report to stockholders, along with justification for such excess. As of December 31, 2022,2023, our total borrowings of $265.1$264.5 million represented 109%120% of net assets.

Any future properties that we may acquire or investments we may make may be funded through a combination of borrowings, proceeds generated from the sale and redemption of our marketable securities, available for sale, and proceeds received from the selective disposition of our properties and proceeds received from the redemption of our preferred investments in related parties.properties. These borrowings may consist of single-property mortgages as well as mortgages cross-collateralized by a pool of properties. Such mortgages may be put in place either at the time we acquire a property or subsequent to our purchasing a property for cash. In addition, we may acquire properties that are subject to existing indebtedness where we choose to assume the existing mortgages. Generally, though not exclusively, we intend to seek to encumber our properties with debt, which will be on a non-recourse basis. This means that a lender’s rights on default will generally be limited to foreclosing on the property. However, we may, at our discretion, secure recourse financing or provide a guarantee to lenders if we believe this may result in more favorable terms. When we give a guaranty for a property owning entity, we will be responsible to the lender for the satisfaction of the indebtedness if it is not paid by the property owning entity.

We may also obtain lines of credit to be used to acquire properties or real estate-related assets. These lines of credit will be at prevailing market terms and will be repaid from proceeds from the sale or refinancing of properties, working capital or permanent financing. Our Sponsor or its affiliates may guarantee the lines of credit although they will not be obligated to do so. We expect that such properties may be purchased by our Sponsor’s affiliates on our behalf, in our name, in order to minimize the imposition of a transfer tax upon a transfer of such properties to us.

We have various agreements, including an advisory agreement, with the Advisor to pay certain fees in exchange for services performed by the Advisor and/or its affiliated entities. Additionally, our ability to secure financing and our real estate operations are dependent upon our Advisor and its affiliates to perform such services as provided in these agreements.

In addition to meeting working capital needs and making distributions to our stockholders, if any, required to maintain our stockholders,status as a REIT, our capital resources are used to make certain payments to our Advisor and its affiliates, including payments related tofor asset acquisition fees and the reimbursement of acquisition related expense, development fees, andconstruction management fees, leasing commissions, asset management fees, the reimbursement of acquisition related expenses to our Advisor and property management fees.fees (except for our hotel, which is managed by unrelated third party property managers). We also reimburse our Advisor and its affiliates for actual expenses it incurs for certain administrative and other services provided to us. Additionally,During the Operating Partnership may be required to make distributions to Lightstone SLP, LLC, an affiliatefirst quarter of 2024, the Advisor provided our shareholders.agreed to allow us to temporarily defer the payment of asset management fees.

The advisory agreement has a one-year term and is renewable for an unlimited number of successive one-year periods upon the mutual consent of the Advisor and our independent directors.

The following table represents the fees incurred and reimbursement associated with the payments to our Sponsor, Advisor and their affiliates:

Additionally, we may be required to make distributions on the special general partner interests (“SLP Units”)Units in the Operating Partnership held by Lightstone SLP, LLC, an affiliate of the Advisor, provided our stockholders have received a stated preferred return. In connection with our initial public offering,Offering, which terminated on October 10, 2008, Lightstone SLP, LLC purchased an aggregate of $30.0 million of SLP Units.Units, at a cost of $100,000 per unit. These SLP Units, the purchase price of which will be repaid only after stockholders receive a stated preferred return and their net investment, may entitle Lightstone SLP, LLC to a portion of any regular distributions made by the Operating Partnership. However, any future distributions on the SLP Units will always be subordinated until stockholders receive a stated preferred return.

During both the of the yearsyear ended December 31, 20222023, distributions of $1.0 million were declared and 2021,distributions of $1.6 million were paid related to the SLP Units and are part of noncontrolling interests. During the year ended December 31, 2022, distributions of $2.1 million were declared and paid onrelated to the SLP units.Units and are part of noncontrolling interests.

Our charter states that our operating expenses, excluding offering costs, property operating expenses and real estate taxes, as well as acquisition fees and non-cash related items (“Qualified Operating Expenses”) are to be less than the greater of 2% of our average invested net assets or 25% of net income. For the year ended December 31, 2022,2023, our Qualified Operating Expenses were less than the greater of 2% of our average invested net assets or 25% of net income.

In addition, our charter states that our acquisition fees and expenses shall not exceed 6% of the contractual purchase price or in the case of a mortgage, 6% of funds advanced unless approved by a majority of the independent directors. ForThere were no acquisition fees or acquisition expenses during the year ended the year ended December 31, 2022, the acquisition fees and acquisition expenses were less than 6% of each of the contract prices.2023.

Summary of Cash Flows.

The following summary discussion of our cash flows is based on the consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below:

Operating activities

The net cash provided byused in operating activities of $8.0$7.6 million for the year ended December 31, 20222023 consists of the following:

Investing activities

The net cash used inprovided by investing activities of $88.5$27.9 million for the year ended December 31, 20222023 consists primarily of the following:

Financing activities

The net cash provided byused in financing activities of $60.4$24.5 million for the year ended December 31, 20222023 is primarily related to the following:

Lower East Side Moxy Hotel

In December 2018, we, through a subsidiary of the Operating Partnership, acquired three adjacent parcels of land located at 147-151 Bowery, in the Lower East Side neighborhood of the borough of Manhattan in New York City, from unaffiliated third parties for aggregate consideration of $56.5 million, excluding closing and other acquisition related costs. Additionally, in December 2018, we, though a subsidiary of the Operating Partnership, acquired certain air rights located at 329 Broome Street, also in the Lower East Side neighborhood, from an unaffiliated third party for $2.4 million, excluding closing and other acquisition related costs. The land and air rights were acquired for the development and construction of the Lower East Side Moxy Hotel. On June 3, 2021,we entered into a development agreement (the “Development Agreement”) with an affiliate of the Advisor (the “Moxy Lower East Side Developer”) pursuant to which the Lower East Side Moxy Developer is beingwas paid a development fee equal to 3% of hard and soft costs incurred in connection with the development and construction of the Lower East Side Moxy Hotel. The Advisor and its affiliates arewere also reimbursed for certain development-related costs attributable to the Lower East Side Moxy Hotel. Additionally on June 3, 2021, we obtained construction financing for the Lower East Side Moxy Hotel. The development and construction of the Lower East Side Moxy Hotel was substantially completed and it opened for business on October 27, 2022 and all four of its food and beverage venues opened during the fourth quarter of 2022.

In connection with the opening of the Lower East Side Moxy Hotel on October 27, 2022, its aggregate development costs ($203.8 million), which were previously included in development projects on the consolidated balance sheets, were placed in service and reclassified to land and improvements ($71.5 million), buildings and improvements ($117.1 million), and furniture and fixtures ($15.2 million) on the consolidated balance sheets.

In preparation for the opening of the Lower East Side Moxy Hotel, we incurred pre-opening costs of $0.1 million and $4.5 million during the yearyears ended December 31, 2022. No pre-opening costs were incurred in 2021.2023 and 2022, respectively. Pre-opening costs generally consist of non-recurring personnel, marketing and other costs.

Moxy Financings

Moxy Permanent Mortgage Loans

On November 29, 2023, we entered into a mortgage loan facility (the “Moxy Senior Loan”) with an unrelated third party providing for up to $110.0 million. At closing, $106.1 million of proceeds were advanced under the Moxy Senior Loan. The Moxy Senior Loan bears interest at SOFR plus 4.00%, subject to a 7.50% floor, and initially matures on December 1, 2026, with two one-year extension options subject to the satisfaction of certain conditions. The remaining availability of $3.9 million under the Moxy Senior Loan may only be drawn to cover operating losses, subject to various conditions. Simultaneously on November 29, 2023, we also entered into a mortgage loan facility (the “Moxy Junior Loan” and together with the Moxy Senior Loan, the “Moxy Permanent Mortgage Loans”) with an unrelated third party providing for up to $31.3 million. At closing, $30.2 million of proceeds were advanced under the Moxy Junior Loan. The Moxy Junior Loan bears interest at SOFR plus 8.75%, subject to a 12.25% floor, and initially matures on December 1, 2026, with two one-year extension options subject to the satisfaction of certain conditions. The remaining availability of $1.1 million under the Moxy Junior Loan may only be drawn to cover operating losses, subject to various conditions.

The Moxy Permanent Mortgage Loans require monthly interest-only payments through their maturity dates and are collateralized by the Lower East Side Moxy Hotel, however, the Moxy Junior Loan is subordinate to the Moxy Senior Loan. Aggregate proceeds of $130.0 million advanced at the closing of the Moxy Permanent Mortgage Loans were used to repay in full existing construction mortgage indebtedness (the “Moxy Construction Loans”) collateralized by the Lower East Side Moxy Hotel.

Pursuant to the terms of the Moxy Mortgage Loans, we are required to enter into two interest rate cap contracts with an aggregate notional amount of $141.3 million (equal to the total maximum amounts available under the Senior Mortgage Loan and the Junior Mortgage Loan) for as long as the Moxy Permanent Mortgage Loans remain outstanding. On November 29, 2023, we entered into two interest rate cap agreements with notional amounts of $110.0 million and $31.3 million ($141.3 million in the aggregate) pursuant to which the SOFR rate is capped at 5.50% through December 1, 2024 and June 1, 2025 for the Moxy Junior Loan and the Moxy Senior Loan, respectively, at an aggregate cost of $0.2 million.

As of December 31, 2023, the aggregate outstanding balance of the Moxy Permanent Mortgage Loans was $137.4 million.

In connection with obtaining the Moxy Permanent Mortgage Loans, we provided an interest and carry costs guarantee and paid $4.1 million of loan fees and expenses.

Moxy Construction Loans

On June 3, 2021, we previously closed on a recourse construction loan facility (the “Moxy Construction Senior Loan”) providing for up to $90.0 million of funds for the development, construction and certain pre-opening costs associated with the Lower East Side Moxy Hotel. Simultaneously on June 3, 2021, we also previously entered into a mezzanine construction loan facility (the “Moxy Construction Junior Loan” and together with the Moxy Construction Senior Loan, the Moxy Construction Loans) providing for up to $40.0 million of additional funds for the development, construction and certain pre-opening costs associated with the Lower East Side Moxy Hotel. The Moxy Construction Loans were scheduled to mature on June 3, 2024 and were collateralized by the Lower East Side Moxy Hotel.

In connection with the Moxy Construction Loans, we were required by the lender to deposit the $4.7 million of key money (“Key Money”) received from Marriott during the fourth quarter of 2022 into an escrow account (included in restricted cash on the consolidated balance sheet as of December 31, 2022), all of which was subsequently used to fund remaining construction costs for the project during the first quarter of 2023.

We also previously entered into two interest rate cap agreements with notional amounts of $90.0 million and $40.0 million pursuant to which the LIBOR rate was capped at 3.00% through June 30, 2023, and its replacement rate of SOFR was capped at 3.00% thereafter through June 3, 2024.

Furthermore, in connection with obtaining the Moxy Construction Loans, we paid $5.3 million of loan fees and expenses and accrued $1.1 million of loan exit fees (included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheet as December 31, 2022).

On November 29, 2023, the Moxy Construction Loans were repaid in full along with the accrued loan exit fees of $1.1 million. In connection with the repayment of the Moxy Construction Loans, we recorded a loss on debt extinguishment of $1.2 million, principally consisting of the write-off of remaining unamortized deferred financing costs, during the fourth quarter of 2023.

Hotel Franchise Agreement

The Lower East Side Moxy Hotel operates pursuant to a 30-year franchise agreement (the “Hotel Franchise Agreement”) with Marriott. The Hotel Franchise Agreement provides for us to pay franchise fees and marketing fund charges equal to certain prescribed percentages of gross room sales, as defined. Additionally, pursuant to the terms of the Hotel Franchise Agreement, we received a key moneyKey Money payment of $4.7 million from Marriott during the fourth quarter of 2022,2022. The Key Money, which is included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheet as of December 31, 2022, andsheets is being amortized as a reduction to franchise fees over the term of the Hotel Franchise Agreement. As of December 31, 2023 and 2022, the remaining unamortized balance of the Key Money was $4.6 million and $4.7 million, respectively. Pursuant to the terms of the Hotel Franchise Agreement, we may be obligated to return the unamortized portion of the key moneyKey Money back to Marriott upon the occurrence of certain events. The franchise fees and marketing fund charges are recorded as a component of hotel operating expenses in the consolidated statements of operations.

Hotel Management Agreements

With respect to the Lower East Side Moxy Hotel, we have entered into a hotel management agreement, food and beverage operations management agreement and an asset management agreement (collectively, the “Hotel Management Agreements”) with various third-party management companies pursuant to which they provide oversight and management over the operation of the Lower East Side Moxy Hotel and its food and beverage venues and receive payment of certain prescribed management fees, generally based on a percentage of revenues and certain incentives for exceeding targeted earnings thresholds. The management fees are recorded as a component of hotel operating expenses on the consolidated statements of operations. The Hotel Management Agreements have initial terms ranging from five to 20 years.

Moxy Construction Loans

On June 3, 2021, we, through a wholly owned subsidiary, closed on a recourse construction loan facility (the “Moxy Senior Loan”) providing for up to $90.0 million of funds for the development, construction and certain pre-opening costs associated with the Lower East Side Moxy Hotel. At closing, $35.6 million of proceeds were initially advanced under the Moxy Senior Loan, which were used to repay in full a then outstanding mortgage loan. The Moxy Senior Loan bears interest at LIBOR plus 7.50%, subject to an 7.75% floor, and initially matures on June 3, 2024, with two one-year extension options, subject to the satisfaction of certain conditions. Additionally, the Moxy Senior Loan provides for a replacement benchmark rate in connection with the phase-out of LIBOR, which is expected to be for periods after June 30, 2023. The Moxy Senior Loan is collateralized by the Lower East Side Moxy Hotel. As of December 31, 2022, the outstanding principal balance of the Moxy Senior Loan was $82.8 million, the interest rate was 11.89% and the remaining availability under the facility was up to $7.2 million, which is expected to be used to fund the remaining construction costs for the project. Additionally, we were required by the lender to deposit the $4.7 million of key money received from Marriott into an escrow account (included in restricted cash on the consolidated balance sheet as of December 31, 2022) which may also be used to fund the remaining construction costs for the project.

Simultaneously on June 3, 2021, we, through the same wholly owned subsidiary, also entered into a mezzanine construction loan facility (the “Moxy Junior Loan” and together with the Moxy Senior Loan, the “Moxy Construction Loans”) providing for up to $40.0 million of additional funds for the development, construction and certain pre-opening costs associated with the Lower East Side Moxy Hotel. The Moxy Junior Loan bears interest at LIBOR plus 13.50%, subject to a 14.00% floor, and initially matures on June 3, 2024, with two one-year extension options, subject to the satisfaction of certain conditions. Additionally, the Moxy Junior Loan provides for a replacement benchmark rate in connection with the phase-out of LIBOR, which is expected to be for periods after June 30, 2023. The Moxy Junior Loan is subordinate to the Moxy Senior Loan but also collateralized by the Lower East Side Moxy Hotel. We provided a principal guarantee of up to $7.0 million with respect to the Moxy Junior Loan. As of December 31, 2022, the outstanding principal balance of the Moxy Junior Loan was $40.0 million and its interest rate was 17.89%.

In connection with the Moxy Construction Loans, we provided certain completion and carry cost guarantees. We also entered into two interest rate cap agreements with notional amounts of $90.0 million and $40.0 million pursuant to which LIBOR through June 30, 2023 and its replacement rate thereafter is capped at 3.00% through June 3, 2024. Furthermore, in connection with the Moxy Construction Loans, we paid $5.3 million of loan fees and expenses and accrued $1.1 million of loan exit fees which are due at the initial maturity date and are included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets as of both December 31, 2022 and 2021.

Preferred Investments

We entered into several agreements with various related party entities that provide for us to make preferred contributions pursuant to certain instruments (the “Preferred Investments”) that entitle us to certain prescribed monthly preferred distributions. During the year ended December 31, 2022, we redeemed the remaining $8.5 million of the East 11th Street Preferred Investment, which is now fully redeemed. As a result, as of December 31, 2022, we only have one remaining Preferred Investment, which is the 40 East End Avenue Preferred Investment with an outstanding balance of $6.0 million. The fair value of our remaining Preferred Investment approximates its carrying value based on market rates for similar instruments. See Note 5 of the Notes to Consolidated Financial Statements for additional information.

The Preferred Investments are summarized as follows:

Note:

Notes Receivable

We formed certain joint ventures (collectively, the “NR Joint Ventures”) between wholly owned subsidiaries of the Operating Partnership (collectively, the “NR Subsidiaries”) and affiliates of the Sponsor (the “NR Affiliates”) which have originated nonrecourse loans (collectively, the “Joint Venture Promissory Notes”) to unaffiliated third-party borrowers (collectively, the “Joint Venture Borrowers”).

We determined that the NR Joint Ventures are VIEs and the NR Subsidiaries are the primary beneficiaries. Since the NR Subsidiaries are the primary beneficiaries, beginning on the applicable date of formation, we consolidated the operating results and financial condition of the NR Joint Ventures and accounted for the respective ownership interests of the NR Affiliates as noncontrolling interests.

The Joint Venture Promissory Notes generally provide for monthly interest at a prescribed variable rate, subject to a floor. In connection with the initial funding of the Joint Venture Promissory Notes, the NR Joint Ventures receive origination fees (ranging from 1.00% to 1.50%) based on the principal commitment under the loan and retain a portion of the loan proceeds to establish a reserve for interest and other items (the “Loan Reserves”). The Joint Venture Promissory Notes are recorded in notes receivable, net on the consolidated balance sheets.

The Joint Venture Promissory Notes generally have an initial term of one or two years and may provide for additional one-year extension options subject to satisfaction of certain conditions, including the funding of additional Loan Reserves and payment of extension fees. The Joint Venture Promissory Notes are collateralized by either the membership interests of the Joint Venture Borrowers in the borrowing entity or the underlying real property being developed by the Joint Venture Borrower.

The Joint Venture Promissory Notes are recorded in notes receivable, net on the consolidated balance sheets. The origination fees received are presented in the consolidated balance sheets as a direct deduction from the carrying value of the Joint Venture Promissory Notes and are amortized into interest income, using a straight-line method that approximates the effective interest method, over the initial term of the Joint Venture Promissory Notes. The Loan Reserves are presented in the consolidated balance sheets as a direct deduction from the carrying value of the Joint Venture Promissory Notes and are applied against the monthly interest due over the initial term.

The Notes Receivable are summarized as follows:

The following summarizes the interest earned (included in interest and dividend income on the consolidated statements of operations) for each of the Joint Venture Promissory Notes during the periods indicated:

LSC 1543 7th LLC Loan

On June 30, 2022, LSC 1543 7th LLC obtained a loan of up to $33.1 million (the “LSC 1543 7th LLC Loan”) which bears interest at SOFR + 3.50% (7.86% as of December 31, 2022). The LSC 1543 7th LLC Loan is initially scheduled to mature on December 30, 2023, but may be further extended through December 30, 2024 and September 20, 2025, through the exercise of two extension options. The LSC 1543 7th LLC Loan requires monthly interest-only payments with the outstanding principal balance due at its maturity date and is collateralized by a nonrecourse loan originated by LSC 1543 7th LLC (the “LSC 1543 7th LLC Note Receivable”). As of December 31, 2022, the outstanding principal balance of the LSC 1543 7th LLC Loan was $32.2 million.

Exterior Street Project

In February 2019, we, through subsidiaries of the Operating Partnership, acquired two adjacent parcels of land located at 355 and 399 Exterior Street in the Mott Haven neighborhood in the Bronx borough of New York City from unaffiliated third parties for an aggregate purchase price of $59.0 million, excluding closing and other acquisition related costs. In September 2021, we subsequently acquired an additional adjacent parcel of land at cost from an affiliate of the Advisor for $1.0 million in order to achieve certain zoning compliance. On these three land parcels we plan, subject to certain conditions, to construct the Exterior Street Project, a proposed mixed-use multifamily residential and commercial retail property (the “Exteriorproject.

During the second quarter of 2023, we decided to temporarily pause active development activities associated with the Exterior Street Project”). Project, due to prevailing unfavorable economic and local market conditions and regulations, and therefore, ceased capitalization of interest and other carrying costs. There can be no assurances that the unfavorable circumstances will improve and we will resume active development activities and ultimately construct the Exterior Street Project. However, if we do resume active development activities for the Exterior Street Project, we will need to obtain construction financing and/or seek a joint venture arrangement. Current and future economic conditions as well as other uncertainties may (i) affect our ability to obtain construction financing, which could adversely impact its ability to ultimately commence and/or complete construction as planned, on budget or at all for the Exterior Street Project.

Through December 31, 2023 and 2022, we have incurred and capitalized $95.6 million and $93.6 million, respectively, of costs related to the development of the Exterior Street Project. During the years ended December 31, 2023 and 2022, interest of $1.5 million and $3.2 million, respectively, was capitalized to the Exterior Street Project, which is included in development projects on the consolidated balance sheets.

On March 29, 2019, the Companywe obtained a $35.0 million loan (the “Exterior Street Loan”) from a financial institution which, commencing on October 10, 2020, bore interest at LIBOR plus 2.25% through November 24, 2022. On December 21, 2021, the loan agreement was amended to provide an additional $7.0 million loan (the “Exterior Street Supplemental Loan” and collectively with the Exterior Street Loan, the “Exterior Street Loans”) which bore interest at LIBOR plus 2.50% through November 24, 2002.2022. The Exterior Street Loans require monthly interest-only payments with the outstanding principal balances due in full at their maturity date. The Exterior Street Loans are collateralized by the Exterior Street Project.

On November 22, 2022, we and the financial institution entered into the second amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans was adjusted to SOFR plus 2.60% and their maturity dates were extended to November 24, 2023. On October 31, 2023, we and the financial institution entered into an additional amendment to the Exterior Street Loans pursuant to which the interest rate on the Exterior Street Loans werewas adjusted to SOFR plus 2.60% (6.96%2.85% (8.20% as of December 31, 2022)2023) and their maturity dates weredate was further extended to November 24, 2023.

The2024. As of December 31, 2023, the outstanding aggregate principal balance of the Exterior Street Loans was $42.0 million.

Preferred Investments

We previously entered into agreements with various related party entities that provided for us to make preferred contributions pursuant to certain instruments (the “Preferred Investments”) that entitled us to certain prescribed monthly preferred distributions. As of December 31, 2022, we had one remaining Preferred Investment that had an outstanding balance of $6.0 million. During the first and second quarters of 2023, we redeemed $2.3 million and $3.7 million, respectively, of the Preferred Investment and as a result, it has been fully redeemed and we have no remaining Preferred Investments.

For the years ended December 31, 2023 and 2022, we recognized $0.3 million and $1.3 million of investment income on Preferred Investments, which is included in interest and dividend income on the consolidated statements of operations.

Notes Receivable, Santa Monica Project and Santa Monica Loan

We previously formed certain joint ventures (collectively, the “NR Joint Ventures”) between wholly owned subsidiaries of the Operating Partnership (collectively, the “NR Subsidiaries”) and affiliates of the Sponsor (collectively, the “NR Affiliates”) which originated nonrecourse loans (collectively, the “JV Promissory Notes”) to unaffiliated third-party borrowers.

We determined that the NR Joint Ventures are VIEs and the NR Subsidiaries are the primary beneficiaries. Since the NR Subsidiaries are the primary beneficiaries, beginning on the applicable date of formation, we consolidated the operating results and financial condition of the NR Joint Ventures and accounted for the respective ownership interests of the NR Affiliates as noncontrolling interests in our consolidated financial statements. The JV Promissory Notes were collateralized by either the membership interests in the borrowing entity or the underlying real property being developed.

The Joint Venture Promissory Notes were recorded in notes receivable, net on the consolidated balance sheets. Origination fees were presented in the consolidated balance sheets as a direct deduction from the carrying value of the JV Promissory Notes and were amortized into interest income, using a straight-line method that approximated the effective interest method, over the initial term of the JV Promissory Notes. Any portion of the loan proceeds held back by the NR Joint Ventures for reserves for interest and other items were presented in the consolidated balance sheets as a direct deduction from the carrying value of the Joint Venture Promissory Notes and were applied against the monthly interest due over the initial term.

During the years ended December 31, 2023 and 2022, both the NR Subsidiaries and the NR Affiliates made aggregate contributions to the NR Joint Ventures of $1.9 million and $21.9 million, respectively. Additionally, during the years ended December 31, 2023 and 2022, the NR Joint Ventures made aggregate distributions to both the NR Subsidiaries and NR Affiliates of $1.6 million and $29.3 million, respectively, based on their respective membership interests.

As of December 31, 2022, the NR Joint Ventures, through the Santa Monica Joint Venture, had one remaining JV Promissory Note, the Santa Monica Note Receivable, which had an outstanding principal balance of $49.0 million, reserves of $0.6 million and an unamortized origination fee of $0.3 million, resulting in a net carrying value of $48.1 million. The Santa Monica Note Receivable bore interest at SOFR + 7.00%. During the first quarter of 2023, the Santa Monica Joint Venture received a payment of $14.0 million on the Santa Monica Note Receivable which reduced its outstanding balance to $35.0 million.

As a result of financial difficulties, the Joint Venture Borrower under the Santa Monica Note Receivable (the “Santa Monica Borrower”) discontinued making monthly interest payments during the second quarter of 2023 and the Santa Monica Note Receivable subsequently matured on August 31, 2023. On December 29, 2023, ownership of the Santa Monica Project was transferred to the Santa Monica Joint Venture via a deed in lieu of foreclosure transaction. In connection with the transfer, the aggregate outstanding principal and accrued interest for the Santa Monica Note Receivable of $36.7 million, which represented the fair value of the Santa Monica Project and approximated the carrying value of the Santa Monica Note Receivable, was reclassified from notes receivable, net to development projects on the consolidated balance sheets.

For the years ended December 31, 2023 and 2022, we recorded $4.0 million and $4.9 million of interest income on the JV Promissory Notes, which is included in interest and dividend income on the consolidated statements of operations.

Santa Monica Loan

On June 30, 2022, the Santa Monica Joint Venture obtained a loan of up to $33.1 million (the “Santa Monica Loan”) which bore interest at SOFR + 3.50% (8.85% as of December 31, 2023). The Santa Monica Loan requires monthly interest-only payments with the outstanding principal balance due in full at its maturity date.date and was collateralized by the Santa Monica Note Receivable. During the first quarter of 2023, the Santa Monica Joint Venture received a payment of $14.0 million on the Santa Monica Note Receivable and used a portion of the proceeds to repay $11.3 million of the Santa Monica Loan, which reduced its outstanding balance to $21.5 million. The Exterior StreetSanta Monica Loan was initially scheduled to mature on December 30, 2023, however, on September 5, 2023, the Santa Monica Joint Venture exercised an option to extend its maturity date to February 29, 2024. In connection with this extension, the Santa Monica Joint Venture made a principal paydown of $2.1 million which reduced the outstanding balance of the Santa Monica Loan to $19.5 million, which was unchanged as of December 31, 2023. Additionally, the Santa Monica Joint Venture funded $0.9 million into a cash collateral reserve account to cover the interest payments through February 29, 2024.

In connection with the transfer of ownership of the Santa Monica Project to the Santa Monica Joint Venture on December 29, 2023, the Santa Monica Loan was modified to substitute the Santa Monica Project as collateral. Subsequently, in March 2024, the Santa Monica Loan was again modified pursuant to which the interest rate was changed to SOFR + 4.5%, subject to a floor of 7.5%, the maturity date was changed to August 31, 2024 and the interest reserve was replenished to cover the payments due through August 31, 2024.

The Columbus Joint Venture

On November 29, 2022, we, along with Converge, a majority owned subsidiary of Converge Holdings LLC, a reinsurance business owned by the Sponsor, and the BVI member, a wholly owned subsidiary of BVI, a real estate investment company owned by the Sponsor, entered into a joint venture agreement to form the Columbus Joint Venture for the purpose of acquiring the Columbus Properties, a portfolio of nine multifamily residential properties consisting of 2,564 units located in the Columbus, Ohio metropolitan area, for a contractual purchase price of $465.0 million. We have a 19% joint venture ownership interest in the Columbus Joint Venture. Converge and the BVI Member, which are both related parties, have joint venture ownership interests of 19% and 62%, respectively. Additionally, the manager of the Columbus Joint Venture is LEL Bronx Manager LLC, an entity wholly owned by BVI.

On November 29, 2022, the Columbus Joint Venture completed the purchase of the Columbus Properties. The acquisition was funded with $74.3 million of cash and $390.7 million of aggregate proceeds from preferred investments from unrelated third-parties and loans from two financial institutions. In connection with the acquisition and financings, the total cash paid, including closing costs, was $92.3 million and we paid $17.5 million representing our 19% pro rata share. In connection with the acquisition, we also paid the Advisor a separate acquisition fee of $2.4 million, equal to 2.75% of our pro-rata share of the contractual purchase price which is reflected in the carrying value of our investment in unconsolidated affiliated entity on the consolidated balance sheets. During the year ended December 31, 2023, we made $2.0 million of additional capital contributions to the Columbus Joint Venture.

We determined that the Columbus Joint Venture is a VIE but we are not the primary beneficiary. We account for our ownership interest in the Columbus Joint Venture in accordance with the equity method of accounting because we exert significant influence over but do not control the Columbus Joint Venture. All capital contributions and distributions of earnings from the Columbus 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 Columbus Joint Venture are made to the members pursuant to the terms of the Columbus Joint Venture’s operating agreement. We commenced recording its allocated portion of profit/loss and cash distributions beginning as of November 29, 2022 with respect to its membership interest of 19% in the Columbus Joint Venture.

In connection with the purchase of the Columbus Properties on November 29, 2022, the Columbus Joint Venture obtained senior loans from two different financial institutions. The first financial institution provided four separate senior mortgage loans, all to subsidiaries of the Columbus Joint Venture, aggregating $133.6 million. These four loans bear interest at SOFR + 2.19%, provide for interest-only payments for the first six years of their term and mature in December 2032. Each of these four senior mortgage loans is individually collateralized by one of the Columbus Properties (collectively, the “Columbus Portfolio I Properties”). The second financial institution provided five separate senior loans, all to subsidiaries of the Columbus Joint Venture, aggregating $167.2 million. These five senior loans bear interest at 4.85%, provide for interest-only payments for the first two years of their term and initially mature in December 2027, but may be further extended for an additional five years, subject to satisfaction of certain conditions. Each of these five senior mortgage loans is individually collateralized by one of the Columbus Properties (collectively, the “Columbus Portfolio II Properties”).

Additionally, in connection with the purchase of the Columbus Properties on November 29, 2022, the Columbus Joint Venture obtained an aggregate of $90.0 million in financing through two preferred investments (the “Columbus Preferred Investments”) from unrelated third parties. The first preferred investment of $38.6 million is collateralized by the Exterior Street Project.Columbus Portfolio I Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal and has a mandatory redemption date of December 1, 2032. The second preferred investment of $51.4 million is collateralized by the Columbus Portfolio II Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal, and has a mandatory redemption date of December 1, 2027. As of December 31, 2023, the aggregate unpaid interest included in the outstanding balance of the Columbus Preferred Investments was $6.8 million. Furthermore, the Columbus Preferred Investments are subordinate to the nine senior mortgage loans.

Because the Columbus Preferred Investments have mandatory redemption dates, the Columbus Joint Venture treats them as financial liabilities and includes them in mortgages and loans payable on its condensed balance sheets. The Sponsor (the “Guarantor”) has fully guaranteed the nine senior mortgage loans and the Columbus Preferred Investments (the “Debt Guarantee”). Each of the members of the Columbus Joint Venture have agreed to reimburse the Guarantor for their pro rata share of any balance that becomes due under the Debt Guarantee, of which our share is up to 19%. We determined that the fair value of the Debt Guarantee is immaterial.

Our Exterior Street Project is currently under development, we expect to seek construction financing and/or a joint venture arrangement to fund a substantial portion of its future development and construction costs. The ongoing COVID-19 pandemic as well as other economic conditions and uncertainties may (i) affect our ability to obtain construction financing, and/or (ii) cause delays or increase costs associated with building materials or construction services necessary for construction, which could adversely impact our ability to either ultimately commence and/or complete construction as planned, on budget or at all for the Exterior Street Project.

SRP

Our share repurchase program (the “SRP”)SRP may provide our stockholders with limited, interim liquidity by enabling them to sell their shares of common stockCommon Shares back to us, subject to restrictions.