~~The accompanying notes are an integral part of these consolidated financial statements.~~

The accompanying notes are an integral part of these consolidated financial statements.

PART I. FINANCIAL INFORMATION, CONTINUED:

ITEM 1. FINANCIAL STATEMENTS, CONTINUED:

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Net income	$	4,686		$	4,489		$	23,800		$	16,607

Other comprehensive income
Holding gain/(loss) on available for sale debt securities		210			127			1,711			(1,370	)
Reclassification adjustment for loss included in net income		94			3			719			81

Other comprehensive income/(loss)		304			130			2,430			(1,289	)

Comprehensive income		4,990			4,619			26,230			15,318

Less: Comprehensive income attributable to noncontrolling interests		(816	)		(468	)		(2,019	)		(1,083	)

Comprehensive income attributable to Company's common shares	$	4,174		$	4,151		$	24,211		$	14,235

The accompanying notes are an integral part of these consolidated financial statements.

PART I. FINANCIAL INFORMATION, CONTINUED:

ITEM 1. FINANCIAL STATEMENTS, CONTINUED:

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands)

(Unaudited)

										Accumulated
							Additional			Other									Total
	Common						Paid-In			Comprehensive			Accumulated			Noncontrolling			Stockholders'
	Shares			Amount			Capital			Income/(loss)			Surplus			Interests			Equity
BALANCE, June 30, 2018		24,611		$	246		$	192,142		$	(1,400	)	$	105,338		$	17,168		$	313,494
Net income		-			-			-			-			4,024			465			4,489
Transfer of membership interests		-			-			1,500			-			-			(1,500	)		-
Other comprehensive income		-			-			-			127			-			3			130
Distributions declared (a)		-			-			-			-			(4,240	)		-			(4,240	)
Distributions paid to noncontrolling interests		-			-			-			-			-			(909	)		(909	)
Contributions received from noncontrolling interests		-			-			-			-			-			2			2
Redemption and cancellation of shares		(599	)		(6	)		(5,734	)		-			-			-			(5,740	)
BALANCE, September 30, 2018		24,012		$	240		$	187,908		$	(1,273	)	$	105,122		$	15,229		$	307,226

(a) Distributions per share were $0.175.

										Accumulated
							Additional			Other									Total
	Common						Paid-In			Comprehensive			Accumulated			Noncontrolling			Stockholders'
	Shares			Amount			Capital			Income/(loss)			Surplus			Interests			Equity
BALANCE, December 31, 2017		24,847		$	248		$	194,497		$	15,467		$	86,956		$	18,202		$	315,370
Reclassification of other accumulated comprehensive income to accumulated surplus		-			-			-			(15,476	)		15,476			-			-
Net income		-			-			-			-			15,499			1,108			16,607
Transfer of membership interests		-			-			1,500			-			-			(1,500	)		-
Other comprehensive loss		-			-			-			(1,264	)		-			(25	)		(1,289	)
Distributions declared (a)		-			-			-			-			(12,809	)		-			(12,809	)
Distributions paid to noncontrolling interests		-			-			-			-			-			(2,562	)		(2,562	)
Contributions received from noncontrolling interests		-			-			-			-			-			6			6
Redemption and cancellation of shares		(835	)		(8	)		(8,089	)		-			-			-			(8,097	)
BALANCE, September 30, 2018		24,012		$	240		$	187,908		$	(1,273	)	$	105,122		$	15,229		$	307,226

(a) Distributions per share were $0.525.

	Common						Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total Stockholders'
	Shares			Amount			Capital			Income/(loss)			Surplus			Interests			Equity
BALANCE, June 30, 2019		23,052		$	231		$	177,559		$	(169	)	$	111,215		$	25,848		$	314,684
Net income		-			-			-			-			3,877			809			4,686
Other comprehensive income		-			-			-			297			-			7			304
Distributions declared (a)		-			-			-			-			(3,990	)		-			(3,990	)
Distributions paid to noncontrolling interests		-			-			-			-			-			(785	)		(785	)
Contributions received from noncontrolling interests		-			-			-			-			-			21,170			21,170
Redemption, cancellation and tender of shares		(266	)		(3	)		(2,879	)		-			-			-			(2,882	)
Shares issued from distribution reinvestment program		7			-			74			-			-			-			74
BALANCE, September 30, 2019		22,793		$	228		$	174,754		$	128		$	111,102		$	47,049		$	333,261

(a) Distributions per share were $0.175.

	Common						Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total Stockholders'
	Shares			Amount			Capital			Income/(loss)			Surplus			Interests			Equity
BALANCE, December 31, 2018		23,708		$	237		$	184,469		$	(2,251	)	$	101,382		$	14,404		$	298,241
Net income		-			-			-			-			21,832			1,968			23,800
Other comprehensive income		-			-			-			2,379			-			51			2,430
Distributions declared (a)		-			-			-			-			(12,112	)		-			(12,112	)
Distributions paid to noncontrolling interests		-			-			-			-			-			(2,496	)		(2,496	)
Contributions received from noncontrolling interests		-			-			-			-			-			33,122			33,122
Redemption, cancellation and tender of shares		(933	)		(9	)		(9,915	)		-			-			-			(9,924	)
Shares issued from distribution reinvestment program		18			-			200			-			-			-			200
BALANCE, September 30, 2019		22,793		$	228		$	174,754		$	128		$	111,102		$	47,049		$	333,261

(a) Distributions per share were $0.525.

The accompanying notes are an integral part of these consolidated financial statements.

PART I. FINANCIAL INFORMATION, CONTINUED:

ITEM 1. FINANCIAL STATEMENTS, CONTINUED:

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)(Unaudited)

	For the Nine Months Ended September 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	23,800		$	16,607
Less net income – discontinued operations		13,481			5,085
Net income – continuing operations		10,319			11,522
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,822			3,987
Mark to market adjustment on derivative financial instruments		162			(163	)
Unrealized loss/(gain) on marketable equity securities, available for sale		2,247			(1,096	)
Loss on sale and redemption of marketable securities, available for sale		719			81
Gain on disposition of real estate		(1,013	)		-
Amortization of deferred financing costs		1,330			401
Other non-cash adjustments		398			(105	)
Noncash interest income		(1,770	)		-
Changes in assets and liabilities:
Increase in prepaid expenses and other assets		(223	)		(195	)
Increase in tenant allowances and deposits payable		(24	)		(30	)
Decrease in accounts payable, accrued expenses and other liabilities		(127	)		(1,008	)
Decrease in due to related parties		(95	)		(203	)
(Decrease)/increase in deferred rental income		(139	)		7
Net cash provided by operating activities – continuing operations		15,606			13,198
Net cash (used in)/provided by operating activities – discontinued operations		(55	)		2,272
Net cash provided by operating activities		15,551			15,470

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment property		(85,130	)		(556	)
Purchase of marketable securities		(10,526	)		(72,477	)
Proceeds from sale of marketable securities		61,376			9,982
Proceeds from sale of investment property		19,502			-
Investment in joint venture		(89	)		(644	)
Proceeds from joint venture		140			765
Funding of notes receivable		(65,363	)		-
Proceeds from investments in related parties		27,000			60,000
Investments in related parties		(2,266	)		(15,120	)
Net cash used in investing activities – continuing operations		(55,356	)		(18,050	)
Net cash used in investing activities – discontinued operations		(239	)		(476	)
Net cash used in investing activities		(55,595	)		(18,526	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage financing		36,685			-
Mortgage principal payments		(14,974	)		(21,568	)
Payment of loan fees and expenses		(2,453	)		-
Redemption and cancellation of common shares		(9,924	)		(8,097	)
Contributions received from noncontrolling interests		33,122			6
Distributions paid to noncontrolling interests		(2,496	)		(2,562	)
Distributions paid to Company's common stockholders		(12,056	)		(12,956	)

Net cash provided by/(used in) financing activities		27,904			(45,177	)

Net change in cash, cash equivalents and restricted cash		(12,140	)		(48,233	)
Cash, cash equivalents and restricted cash, beginning of year		36,582			119,219
Cash, cash equivalents and restricted cash, end of period	$	24,442		$	70,986

See Note 2 for supplemental cash flow information.

The following is a summary of the Company’s cash, cash equivalents, and restricted cash total as presented in our statements of cash flows for the periods presented:
Cash and cash equivalents	$	22,834	$	61,829
Restricted cash		1,608		9,157
Total cash, cash equivalents and restricted cash	$	24,442	$	70,986

The accompanying notes are an integral part of these consolidated financial statements.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)

Organization

Lightstone Value Plus Real Estate Investment Trust, Inc., a Maryland corporation (“Lightstone REIT”) was formed on June 8, 2004 (date of inception) and subsequently qualified as a real estate investment trust (“REIT”) during the year ending December 31, 2006. Lightstone REIT was formed primarily for the purpose of engaging in the business of investing in and owning commercial and residential real estate properties located throughout the United States. The Company currently seeks to originate, acquire and manage a diverse portfolio of real estate-related investments.

Lightstone REIT is structured as an umbrella partnership REIT, or UPREIT, and substantially all of its current and future business is and will be conducted through Lightstone Value Plus REIT, L.P., a Delaware limited partnership formed on July 12, 2004 (the “Operating Partnership”), in which Lightstone REIT as the general partner, held a 98% interest as of ~~March 31,~~September 30, 2019.

The Lightstone REIT and the Operating Partnership and its subsidiaries are collectively referred to as the ~~‘‘Company’’~~“Company” and the use of ~~‘‘we,’’ ‘‘our,’’ ‘‘us’’~~“we,” “our,” “us” or similar pronouns refers to the Lightstone REIT, its Operating Partnership or the Company as required by the context in which such pronoun is used.

The Company is managed by Lightstone Value Plus REIT, LLC (the “Advisor”), an affiliate of the Lightstone Group, Inc., under the terms and conditions of an advisory agreement. The Lightstone Group, Inc. previously served as the Company’s sponsor (the “Sponsor”) during its initial public offering, which closed on October 10, 2008. Subject to the oversight of the Company’s board of directors (the “Board of Directors”), the Advisor has primary responsibility for making investment decisions and managing the Company’s day-to-day operations. Through his ownership and control of The Lightstone Group, David Lichtenstein is the indirect owner of the Advisor and the indirect owner and manager of Lightstone SLP, LLC, which has subordinated profits interests (“SLP units”) in the Operating Partnership. Mr. Lichtenstein also acts as the Company’s Chairman and Chief Executive Officer. As a result, he exerts influence over but does not control the Lightstone REIT or the Operating Partnership.

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

As of ~~March 31,~~September 30, 2019, on a collective basis, the Company wholly owned or majority owned and consolidated the operating results and financial condition of ~~two~~one retail ~~properties~~property (St. Augustine Outlet ~~Center and DePaul Plaza)~~Center) containing a total of approximately ~~0.5~~0.3 million square feet of retail space, and one multi-family residential property (Gantry Park Landing) containing a total of 199 units. All of the Company’s properties are located within the United States. As of ~~March 31,~~September 30, 2019, the St. Augustine Outlet Center ~~DePaul Plaza~~ and Gantry Park Landing were ~~76%, 85%~~73% and ~~97%~~99% occupied, respectively.

Tender Offer

The Company commenced a tender offer on April 19, 2019, pursuant to which it is ~~offering~~offered to acquire up to 0.5 million shares of its common stock ~~from the holders of the shares~~ at a purchase price ~~equal to~~of $7.00 per share,or $3.5 million in the aggregate (the “Tender Offer”). ~~Unless extended or withdrawn,~~Pursuant to the ~~Tender Offer will expire on May 31, 2019. The Company has suspended its share repurchase program during the pendency~~terms of the Tender Offer, ~~as required by~~which expired on June 14, 2019, the ~~rules~~Company repurchased approximately 63,532 of ~~the United States Securities and Exchange Commission (the (“SEC”). No repurchases will be made under the~~its shares of common stock at $7.00 per share, ~~repurchase program during the pendency~~or an aggregate of ~~this Offer and for ten business days thereafter.~~approximately $0.4 million.

Discontinued Operations

During the first quarter of 2019, a portfolio comprised of the Company’s industrial properties (the “Gulf Coast Industrial Portfolio”) which were previously included in the Company’s Industrial Segment, met the criteria to be classified as discontinued operations in the consolidated statements of operations for all periods presented. Additionally, the associated assets and liabilities of ten of the properties within the Gulf Coast Industrial Portfolio which are located in Louisiana (the “Louisiana Properties”) have been reclassified as held for disposition in the consolidated balance sheet as of December 31, 2018. The disposition of the Louisiana Properties, which represented all of the Company’s remaining industrial properties, represented a strategic shift that had a major effect on the Company’s operations and financial results and therefore, upon their disposition, the operating results of the entire Gulf Coast Industrial Portfolio were classified as discontinued operations in the Company’s consolidated statements of operations for all periods presented (See Note 7)8).

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)

Segment Reporting

Since its inception, the Company has owned and managed various commercial and residential properties located ~~thoughout~~throughout the United States. It historically operated within four business segments which were: (i) retail real estate (the “Retail Segment”), (ii) multi-family residential real estate (the “Multi-Family Residential Segment”), (iii) industrial real estate (the “Industrial Segment”) and (iv) hospitality (the “Hospitality Segment”). Additionally, it presented as unallocated amounts (“Unallocated”) its (i) investments in real estate companies which were unconsolidated, (ii) other real estate-related investments and (iii) corporate operations. However, during 2015 the Company disposed of substantially all of its hospitality properties and subsequently in 2017 sold its only remaining hospitality property and therefore, no longer had a Hospitality Segment. Additionally, during the first quarter of 2019, the Company disposed of all of its remaining industrial properties and no longer has an Industrial ~~Segment.~~Segment and during the third quarter of 2019 the Company disposed of DePaul Plaza, a retail property. As a result of these disposition activities, the Company’s only remaining properties are one retail property (St. Augustine Outlet Center) and one multi-family property (Gantry Park Landing).

As of March 31, 2019, on a collective basis, the Company wholly owned or majority owned and consolidated the operating results and financial condition of the St. Augustine Outlet Center, DePaul Plaza and Gantry Park Landing. As a resultBecause of the changes in the composition of the Company’s real estate investments, the segment financial information is no longer relevant to the Company’s chief operating decision maker and it ~~does not drive~~no longer is a driver of resource allocation decisions. ~~Therefore,~~Rather, the Company now evaluates all of its real estate investments as one operating segment and ~~accordingly will~~ no longer ~~report~~reports any segment information in its consolidated financial statements.

Noncontrolling Interests

Partners of Operating Partnership

On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 limited partner units in the Operating Partnership. The limited partner has the right to convert operating partnership units into cash or, at the option of the Company, an equal number of shares of common stock of the Company, as allowed by the limited partnership agreement.

In connection with the Company’s initial public offering, Lightstone SLP, LLC, an affiliate of the Advisor, purchased an aggregate of $30.0 million of SLP Units in the Operating Partnership at a cost of $100,000 per unit.

In addition, 497,209 units of common limited partnership interest in the Operating Partnership (“Common Units”) were issued during the years ended December 31, 2008 and 2009 and remain outstanding as of ~~March 31,~~September 30, 2019.

Other Noncontrolling Interests in Consolidated Subsidiaries

As of ~~March 31,~~September 30, 2019, the other noncontrolling interests in consolidated subsidiaries include ownership interests in (i) Pro-DFJV Holdings LLC (“PRO”) held by the Company’s Sponsor, (ii) 50-01 2nd St. Associates LLC (the “2nd Street Joint Venture”), held by the Company’s Sponsor and other affiliates and (iii) ~~the 162nd Street Joint Venture I~~various joint ventures held by ~~an affiliate~~affiliates of ~~the Company’s~~our Sponsor ~~and (iv) the 162nd Street Joint Venture II held by an affiliate of the Company’s Sponsor.~~that have originated promissorynotes to unaffiliated third parties (see Note 5). PRO’s holdings principally consist of Marco OP Units and Marco II OP Units (see Note 4). The 2nd Street Joint Venture owns Gantry Park Landing, a multi-family apartment building located in Queens, ~~NY. Both the 162nd Street Joint Venture I and the 162nd Street Joint Venture II each hold a promissory note collateralized by land parcels being developed by unaffiliated third parties.~~New York.

Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of theLightstone REIT and its Operating Partnership and its subsidiaries (over which the Company exercises financial and operating control). All inter-company balances and transactions have been eliminated in consolidation. In addition, interests in entities acquired are evaluated based on applicable GAAP, and if deemed to be variable interest entities (“VIE”) in which ~~we are~~the Company is the primary beneficiary are also consolidated. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation based on legal form, economic substance, and the extent to which ~~we have~~the Company has control, substantive participating rights or both under the respective ownership agreement. For entities in which ~~we have~~the Company has less than a controlling interest but have significant influence, ~~we account~~the Company accounts for the investment using the equity method of accounting.

There are judgments and estimates involved in determining if an entity in which ~~we have~~the Company has made an investment is a VIE and, if so, whether ~~we are~~the Company is the primary beneficiary. The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage of equity being risked compared to the total equity of the entity. Determining expected future losses involves assumptions of various possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate to determine the net present value of those future losses. A change in the judgments, assumptions, and estimates outlined above could result in consolidating an entity that should not be consolidated or accounting for an investment using the equity method that should in fact be consolidated, the effects of which could be material to our financial statements.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)

The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited Consolidated Financial Statements of the Company and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The unaudited interim consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair presentation of the results for the periods presented. The accompanying unaudited consolidated financial statements of Lightstone Value Plus Real Estate Investment Trust, Inc. and its Subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America(“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period. The most significant assumptions and estimates relate to the valuation of real estate and real-estate related investments, marketable securities, notes receivable, depreciable lives, and revenue recognition. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.

The consolidated balance sheet as of December 31, 2018 included herein has been derived from the consolidated balance sheet included in the Company's Annual Report on Form 10-K.

The unaudited consolidated statements of operations for interim periods are not necessarily indicative of results for the full year or any other period.

Consolidated VIEs

The Company consolidates the ~~162nd Street Joint Venture I and 162nd Street Joint Venture II,~~certainjoint ventures which have originated nonrecourse loans to unaffiliated third-party borrowers (see Note 5) which are variable interest entities, or VIEs, for which ~~we are~~the Company is the primary beneficiary. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A limited partnership, or legal entities such as an LLC, are considered a VIE when the majority of the limited partners unrelated to the general partner possess neither the right to remove the general partner without cause, nor certain rights to participate in the decisions that most significantly affect the financial results of the partnership. In determining whether ~~we are~~the Company is the primary beneficiary of a VIE, ~~we consider~~the Company considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; and the similarity with and significance to our business activities and the business activities of the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.

Recently Adopted Accounting Pronouncements

In August 2018, the SEC adopted the final rule amending certain disclosure requirements that have become redundant, duplicative, overlapping, outdated, or superseded. In addition, the amendments expand the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statements. The rule was effective on November 5, 2018 and will be effective for the quarter that begins after the effective date. Since the Company already includes a year to date consolidated statement of stockholders’ equity in our interim financial statement filings, the adoption of this guidance ~~will result~~resulted in the inclusion of a quarter to date consolidated statement of stockholders equity in our second and third quarter interim financial statement filings and the inclusion of corresponding prior periods statement of stockholders’ equity for all periods presented.

In February 2016, the FASB issued an accounting standards update (“ASU”) that amends the existing lease accounting guidance and requires lessees to recognize a lease liability and a right-of-use asset for all leases on their balance sheets. Lessees of operating leases will continue to recognize lease expense in a manner similar to current accounting. For lessors, accounting for leases under the new guidance is substantially the same as in prior periods, but eliminates current real estate- specific provisions and changes the treatment of initial direct costs. The standard became effective for the Company on January 1, 2019.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)

The Company elected the following package of practical expedients provided by the standard: (i) an entity need not reassess whether any expired or existing contract is a lease or contains a lease, (ii) an entity need not reassess the lease classification of any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases. The Company also elected the short-term lease exception provided for in the standard and therefore will only recognize right-of-use assets and lease liabilities for leases with a term greater than one year.

The Company did not recognize any right-of-use assets or lease liabilities upon adoption of the standard. The Company does not have any material leases such as ground leases or building leases or any material leases for leases with a term greater than one year. From time to time the Company will enter into immaterial leases for office equipment such as copiers. The resulting right-of-use assets or lease liabilities would be immaterial in the aggregate and are recognized in the period they are incurred as lease expense.

The ASU provides a practical expedient which allows lessors to not separate lease and non-lease components in a contract and allocate the consideration in the contract to the separate components if both: (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be classified as an operating lease. The Company elected the practical expedient to account for lease and non-lease components as a single component in lease contracts where we are the lessor. The ASU also provides a transition option that permits entities to not recast the comparative periods presented when transitioning to the standard, which the Company also elected.

The adoption of this standard did not have a material effect on our consolidated financial position or our results of operations.

New Accounting Pronouncements

In June 2016, the FASB issued an accounting standards update which replaces the incurred loss impairment methodology currently in use with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new guidance is effective for fiscal years beginning after December 15, ~~2019,~~2022, including interim periods within those fiscal years. The Company is currently in the process of evaluating the impact the adoption of this standard will have on the Company’s consolidated financial statements.

The Company has reviewed and determined that other recently issued accounting pronouncements will not have a material impact on its financial position, results of operations and cash flows, or do not apply to its current operations.

Supplemental Cash Flow Information

Supplemental cash flow information for the periods indicated is as follows:

	For the Three Months Ended March 31,
	2019		2018		For the Nine Months Ended September 30,
					2019		2018
Cash paid for interest	$	1,601	$	1,433	$	5,621	$	5,163
Distributions declared but not paid	$	4,043	$	4,270	$	3,992	$	4,240
Investment property acquired but not paid	$	160	$	-	$	300	$	6
Assets transferred due to foreclosure	$	37,299	$	-	$	37,299	$	13,521
Liabilities extinguised in foreclosure	$	50,914	$	-
Liabilities extinguished/credited in foreclosure					$	50,914	$	20,658
Reclassification of accumulated other comprehensive income and noncontrolling interests to accumulated surplus	$	-	$	15,476	$	-	$	15,476
Holding loss on marketable securities	$	1,671	$	1,029
Holding gain/loss on marketable securities					$	2,430	$	1,289
Value of shares issued from distribution reinvestment program	$	53	$	-	$	200	$	-
Transfer of membership interests from noncontrolling interests to additional paid-in-capital					$	-	$	1,500

Reclassifications

Certain prior period amounts may have been reclassified to conform to the current year presentation.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)

~~Development Projects~~

3. Development Projects

Lower East Side Moxy Hotel

On December 3, 2018, the Company, through a subsidiary of the Operating Partnership, acquired three parcels of land located at 147-151 Bowery, New York, New York (collectively, the “Bowery Land”) from 151 Emmut Properties LLC and 145-149 Bowery LLC, both unaffiliated third parties, for aggregate consideration of approximately $56.5 million, excluding closing and other acquisition related costs, on which it intends to develop and construct a 296-room Marriott Moxy hotel (the “Lower East Side Moxy Hotel”). Additionally, on December 6, 2018, the Company, though a subsidiary of the Operating Partnership, acquired certain air rights located at 329 Broome Street, New York, New York (the “Air Rights”) from B.R.P. Realty Corp., an unaffiliated third party, for approximately $2.4 million, excluding closing and other acquisition related costs. The Company intends to use the Air Rights in connection with the development and construction of the Lower East Side Moxy Hotel.In connection with the acquisitionof the Bowery Land and the Air Rights,, the Advisor earned an acquisition fee equal to 2.75% of the gross contractual purchase price, which was approximately $1.6 million.

As of ~~March 31,~~September 30, 2019 and December 31, 2018, the Company ~~has~~ incurred and capitalized to construction in progress an aggregate of ~~$64.5~~$71.0 million (including the acquisition fee of $1.6 million and capitalized interest of $3.2 million) and $63.3 million ~~respectively, related to~~(including the acquisition fee of ~~the Bowery Land and Air Rights~~$1.6 million), respectively, consisting of acquisition and other development costs attributable to the Lower East Side Moxy Hotel. During the three and nine months ended ~~March 31,~~September 30, 2019, the Company capitalized interest of approximately ~~$1.1~~$1.4 million and $3.2 million, respectively in connection with the development of the Lower East Side Moxy Hotel.

Exterior Street ~~Land~~Project

On February 27, 2019, the Company, through subsidiaries of the Operating Partnership, acquired two adjacent parcels of land located at 355 and 399 Exterior Street, New York, New York (collectively, the “Exterior Street Land”), from Borden Realty Corp and 399 Exterior Street Associates LLC, unaffiliated third parties, for an aggregate purchase price of approximately $59.0 million, excluding closing and other acquisition related ~~costs. The Company currently expects~~costs, on which it intends to develop and construct a multi-family residential property ~~on the Exterior~~(the “Exterior Street ~~Land~~Project”).

On March 29, 2019, the Company entered into a $35.0 million loan (the “Exterior Street Loan”) which bears interest at 4.50% and is scheduled to initially mature on April 9, 2020, ~~with~~but may be further extended through the exercise of two, six-month extension options, subject to certain conditions. The Exterior Street Loan requires monthly interest payments through its maturity date and ~~bears interest at 4.50% through its maturity. The Exterior Street Mortgage~~ is collateralized by the Exterior Street Land. In connection with the acquisition of the Exterior Street Land, the Advisor earned an acquisition fee equal to 2.75% of the gross aggregate contractual purchase price, which was approximately $1.6 million.

As of ~~March 31,~~September 30, 2019, the Company ~~has~~ incurred and capitalized to construction in progress an aggregate of ~~$61.7~~ $64.3million (including the acquisition fee of $1.6 million and ~~$0.3~~$2.6 million of capitalized interest) ~~related to the~~consisting of acquisition ~~of the Exterior Street Land~~ and other development costs attributable to the Exterior Street ~~Land.~~Project. During the three and nine months ended ~~March 31,~~September 30, 2019, the Company capitalized interest of approximately ~~$0.3~~$1.6 million and $2.6 million, respectively in connection with the development of the Exterior Street ~~Land.~~Project.

Santa Clara Data Center

On January 10, 2019, the Company, through subsidiaries of the Operating Partnership, acquired a parcel of land located at 2175 Martin Avenue, Santa Clara, CA (the “Martin Avenue Land”) from The Chioini Living Trust, an unaffiliated third party, for approximately $10.6 million, excluding closing and other acquisition related costs, on which the Company is developing a data center (the “Santa Clara Data Center”).In connection with the acquisitionof the Martin Avenue Land,, the Advisor earned an acquisition fee equal to 2.75% of the gross contractual purchase price, which was approximately $0.2 million.

As of ~~March 31,~~September 30, 2019, the Company has incurred and capitalized to construction in progress an aggregate of ~~$11.3~~ $12.8million (including the acquisition fee of $0.2 million and ~~$0.1~~$0.3 million of capitalized interest) ~~related to the~~consisting of acquisition ~~of theMartin Avenue Land~~ and other development costs attributable to the Santa Clara Data Center. During the three and nine months ended ~~March 31,~~September 30, 2019, the Company capitalized interest of approximately $0.1 million and $0.3 million, respectively in connection with the development of the Santa Clara Data Center.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)

~~Marketable Securities, Fair Value Measurements and Notes Payable~~

4. Marketable Securities, Fair Value Measurements and Notes Payable

Marketable Securities:

The following is a summary of the Company’s available for sale securities as of the dates ~~indicated~~indicated:

	As of March 31, 2019									As of September 30, 2019
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable Securities:
Equity securities:
Equity Securities, primarily REITs	$	1,439	$	368	$	(14	)	$	1,793
Equity Securities										$	4,012	$	576	$	(15	)	$	4,573
Marco OP Units and Marco II OP Units		19,227		18,899		-			38,126		19,227		13,342		-			32,569
		20,666		19,267		(14	)		39,919		23,239		13,918		(15	)		37,142
Debt securities:
Corporate Bonds		17,379		10		(336	)		17,053		18,287		179		(46	)		18,420
Mortgage Backed Securities ("MBS")		1,551		-		(300	)		1,251
		18,930		10		(636	)		18,304
Other Investments:
Certificate of Deposit		5,044		-		-			5,044
		5,044		-		-			5,044
Total	$	44,640	$	19,277	$	(650	)	$	63,267	$	41,526	$	14,097	$	(61	)	$	55,562

	As of December 31, 2018									As of December 31, 2018
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable Securities:
Equity securities:
Equity Securities, primarily REITs	$	1,439	$	230	$	(18	)	$	1,651
Equity Securities										$	1,439	$	230	$	(18	)	$	1,651
Marco OP Units and Marco II OP Units		19,227		15,924		-			35,151		19,227		15,924		-			35,151
		20,666		16,154		(18	)		36,802		20,666		16,154		(18	)		36,802
Debt securities:
Corporate Bonds		65,817		124		(2,120	)		63,821		65,817		124		(2,120	)		63,821
Mortgage Backed Securities ("MBS")		1,615		-		(301	)		1,314		1,615		-		(301	)		1,314
		67,432		124		(2,421	)		65,135		67,432		124		(2,421	)		65,135
Other Investments:
Certificate of Deposit		5,012		-		-			5,012		5,012		-		-			5,012
		5,012		-		-			5,012		5,012		-		-			5,012
Total	$	93,110	$	16,278	$	(2,439	)	$	106,949	$	93,110	$	16,278	$	(2,439	)	$	106,949

As of both ~~March 31,~~September 30, 2019 and December 31, 2018, the Company held an aggregate of 209,243 Marco OP Units and Marco II OP Units, of which 89,695 were owned by PRO. The Marco OP Units and the Marco II OP Units are exchangeable for a similar number of common operating partnership units (“Simon OP Units”) of Simon Property Group, L.P., (“Simon OP”), the operating partnership of Simon Property Group, Inc. (“Simon”). Subject to the various conditions, the Company may elect to exchange the Marco OP Units and/or the Marco II OP Units to Simon OP Units which must be immediately delivered to Simon in exchange for cash or similar number of shares of Simon’s common stock (“Simon Stock”).

Prior to January 1, 2018,the Company accounted for marketable equity securities at fair value with unrealized gains and losses recognized in AOCI on the consolidated balance sheet. Realized gains and losses on marketable equity securities sold or impaired were recognized on the consolidated statements of operations.

On January 1, 2018, the Company adopted guidance issued by the FASB that required it to change the way it accounts for marketable equity securities. The Company’s marketable equity securities are measured at fair value and starting January 1, 2018 unrealized gains and losses are recognized on the consolidated statements of operations. Upon adoption, the Company reclassified $15.5 million of aggregate net unrealized gains from AOCI to opening accumulated surplus.

~~LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)~~

The Company considers the declines in market value of certain of its investments to be temporary in nature as the unrealized losses were caused primarily by changes in market interest rates or widening credit spreads. When evaluating these investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and the Company’s intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s amortized cost basis. During the three and nine months ended ~~March 31,~~September 30, 2019 and 2018, the Company did not recognize any impairment charges. As of ~~March 31,~~September 30, 2019, the Company does not consider any of its investments to be other-than-temporarily impaired.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)

The Company may sell certain of its investments prior to their stated maturities for strategic purposes, in anticipation of credit deterioration, or for duration management. At the time of purchase, the maturities of the Company’s MBS generally ranged from 27 years to 30 years.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

·•

Level 1 – Quoted prices in active markets for identical assets or liabilities.

	·
	•		Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

	·
	•		Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Marketable securities measured at fair value on a recurring basis as of the dates indicated are as follows:

	Fair Value Measurement Using								Fair Value Measurement Using
As of March 31, 2019	Level 1		Level 2		Level 3		Total
As of September 30, 2019									Level 1		Level 2		Level 3		Total

Marketable Securities:
Equity Securities, primarily REITs	$	1,793	$	-	$	-	$	1,793	$	4,573	$	-	$	-	$	4,573
Marco OP and OP II Units		-		38,126		-		38,126		-		32,569		-		32,569
Corporate Bonds		-		17,053		-		17,053		-		18,420		-		18,420
MBS		-		1,251		-		1,251
Certificate of Deposit		-		5,044		-		5,044		-		-		-		-
Total	$	1,793	$	61,474	$	-	$	63,267	$	4,573	$	50,989	$	-	$	55,562

	Fair Value Measurement Using								Fair Value Measurement Using
As of December 31, 2018	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

Marketable Securities:
Equity Securities, primarily REITs	$	1,651	$	-	$	-	$	1,651	$	1,651	$	-	$	-	$	1,651
Marco OP and OP II Units		-		35,151		-		35,151		-		35,151		-		35,151
Corporate Bonds		-		63,821		-		63,821		-		63,821		-		63,821
MBS		-		1,314		-		1,314		-		1,314		-		1,314
Certificate of Deposit		-		5,012		-		5,012		-		5,012		-		5,012
Total	$	1,651	$	105,298	$	-	$	106,949	$	1,651	$	105,298	$	-	$	106,949

The fair values of the Company’s investments in Corporate Bonds and MBS are measured using readily available quoted prices for similar assets. Additionally, as noted and disclosed above, the Company’s Marco OP and Marco OP II Units are ultimately exchangeable for cash or similar number of shares of Simon Stock, therefore the Company uses the quoted market price of Simon Stock to measure the fair value of the Company’s Marco OP and Marco OP II Units.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)

The following table summarizes the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates, accounted for as available-for-sale securities and classified by the contractual maturity date of the securities:

	As of March 31, 2019		As of September 30, 2019
Due in 1 year	$	8,602	$	2,016
Due in 1 year through 5 years		4,295		2,530
Due in 5 years through 10 years		4,156		4,303
Due after 10 years		1,251		9,571
Total	$	18,304	$	18,420

The Company did not have any other significant financial assets or liabilities, which would require revised valuations that are recognized at fair value.

Notes Payable

Margin Loan

The Company has access to a margin loan (the “Margin Loan”) from a financial institution that holds custody of certain of the Company’s marketable securities. The Margin Loan, which is due on demand, bears interest at Libor plus 0.85% ~~(3.35%~~(2.87% as of ~~March 31,~~September 30, 2019) and is collateralized by the marketable securities in the Company’s account. The amounts available to the Company under the Margin Loan are at the discretion of the financial institution and not limited to the amount of collateral in its account. There were no amounts outstanding under this Margin Loan as of ~~March 31,~~September 30, 2019 and December 31, 2018.

Line of Credit

The Company ~~has~~had a non-revolving credit facility (the “Line of Credit”) with a financial institution which ~~permits~~previously permitted borrowings up to $25.0 million and was scheduled to expire on June 19, 2019. Effective June 19, 2019, the Line of Credit was extended until June 19, 2021 and the amount available for borrowings was reduced to $20.0 million. The Line of Credit ~~expires on June 19, 2019 and~~ bears interest at Libor plus 1.35% ~~(3.85%~~(3.37% as of ~~March 31,~~September 30, 2019). The Line of Credit is collateralized by approximately 209,000 Marco OP Units and PRO has guaranteed the Line of Credit. ~~The amount outstanding under the Line of Credit was $18.0 million as of March 31, 2019 and is included in Notes Payable on the consolidated balance sheets.~~ No amounts were outstanding under the Line of Credit as of September 30, 2019 and December 31, 2018. ~~The Company subsequently repaid the amount outstanding under the Line of Credit in full during April 2019.~~

The Company currently intends to seek to extend or replace the Line of Credit on or before its expiration. If we are unable to extend or replace the Line of Credit, we will repay the then outstanding balance, if any, in full at the expiration date using working capital, cash proceeds from the sale of assets and/or redemptions of our preferred investments in related parties.

Notes Receivable

~~162nd Street~~Beginning in 2019, the Company has formed certain joint ventures (collectively, the “NR Joint ~~Venture I~~

~~On February 5, 2019, a~~Ventures”) between wholly-owned ~~subsidiary~~subsidiaries of the Operating Partnership ~~(the “162nd Street Sub I”~~(collectively, the “NR Subsidiaries”) and ~~an affiliate~~affiliates of the Sponsor ~~(“CRE Capital I”~~(the “NR Affiliates”) ~~formed~~which have originated nonrecourse loans (collectively, the ~~162nd Street Joint~~“Joint Venture ~~I, a joint venture in which~~Promissory Notes”) to unaffiliated third-party borrowers (collectively, the ~~Company~~“Joint Venture Borrowers”).

The NR Subsidiaries and ~~CRE Capital I~~NR Affiliates have ~~45.45% and 55.55%~~varying ownership interests ~~respectively. On~~in the ~~same date,~~NR Joint Ventures and certain other wholly-owned subsidiaries of the ~~162nd Street~~Operating Partnership serve as the manager and are the sole decision-maker for each of the NR Joint ~~Venture I made a $4.2 million, nonrecourse loan (the “162nd Street Joint Venture I Promissory Note”) to an unaffiliated third party (the “162nd Street Joint Venture I Borrower”).~~ Ventures.

The Company has determined that the ~~162nd Street~~NR Joint ~~Venture I is a variable interest entity~~Ventures are VIEs and the ~~162nd Street Sub I is~~NR Subsidiaries are the primary ~~beneficiary. Another wholly-owned subsidiary of the Operating Partnership is the manager and sole decision maker of the 162nd Street Joint Venture I.~~beneficiaries. Since the ~~162nd Street Sub I is~~NR Subsidiaries are the primary ~~beneficiary,~~beneficiaries, beginning on ~~February 5, 2019,~~the applicable date of formation, the Company has consolidated the operating results and financial condition of the ~~162nd Street~~NR Joint ~~Venture I~~Ventures and accounted for the respective ownership ~~interest~~interests of ~~CRE Capital I~~the NR Affiliates as a noncontrolling ~~interest.~~ interests.

The ~~162nd Street~~ Joint Venture I Promissory ~~Note is~~Notes provide for monthly interest at a prescribed variable rate, subject to a floor. In connection with funding of the Joint Venture Promissory Notes, the NR Joint Ventures have received origination fees (1.00% -1.50%) based on the principal amount of the loan and retained 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 ~~sheet.~~sheets.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)

The ~~162nd Street~~ Joint Venture I Promissory ~~Note, is due March 1, 2020~~Notes generally have an initial term of one year and ismay provide for an additional one-year extension option subject to satisfaction of certain prescribed conditions, including the funding of an additional reserve for interest and payment of an extension fee. The Joint Venture Promissory Notes are collateralized by either the ~~ownership~~membership interests of the ~~162nd Street~~ Joint Venture ~~I Borrower. The 162nd Street~~Borrowers in the borrowing entity or the underlying real property being developed by the Joint Venture I Borrower owns a parcel of land located at 89-25 East 162nd Street, Jamaica, New York (Lot 30) that the 162nd Street Joint Venture I Borrower intends to develop. Additionally, the 162nd Street Joint Venture I Promissory Note and the 162nd Street Joint Venture II Promissory Note (as defined and described below)Borrower.

The origination fees received are cross-collateralized. The 162nd Street Joint Venture I Promissory Note bears interest at a rate of Libor + 7.5% per annum with a floor of 10% (10.0 % as of March 31, 2019). The 162nd Street Joint Venture I received an origination fee of 1.5% of the loan balance or approximately $0.1 million, which ispresented in the consolidated balance sheets as a direct deduction from the carrying value of the~~162nd Street~~ Joint Venture I Promissory ~~Note~~Notesand ~~will be~~are amortized into interest income, using a straight-line method that approximates the effective interest method,over the initial term of the ~~162nd Street~~ Joint Venture I Promissory ~~Note.~~Notes. The ~~162nd Street Joint Venture I Promissory Note can be extended for an additional year at the discretion of the 162nd Street Joint Venture I Borrower provided certain conditions~~Loan Reserves are ~~met, including the funding of an additional reserve for interest and the payment of an extension fee equal to 1% of the outstanding loan balance.~~

Upon funding of the 162nd Street Joint Venture I Promissory Note, the 162nd Street Joint Venture I retained approximately $0.4 million of the proceeds to establish a reserve for interest and other items which ispresented in the consolidated balance sheets as a direct deduction from the carrying value of the~~162nd Street~~ Joint Venture I Promissory ~~Note~~Notesand ~~will be~~areapplied against the monthly interest due ~~during~~over the initial ~~term of the 162nd Street Joint Venture I Promissory Note.~~term.

~~162nd Street Joint Venture II~~The Notes Receivable are summarized as follows:

Company's Original Initial Contractual As of September 30, 2019
Joint Venture/Lender Ownership
Percentage Loan
Amount Origination
Fee Origination
Date Maturity
Date Interest
Rate Outstanding
Principal Reserves Unamortized
Origination Fee Carrying Value
LSC 162nd Capital I LLC 45.45 % $ 4,234 1.50 % February 5, 2019 March 1, 2020 Libor plus 7.50% (Floor of 10%) $ 4,234 $ (191 ) $ (22 ) $ 4,021

LSC 162nd Capital II LLC 45.45 % $ 9,166 1.50 % February 5, 2019 March 1, 2020 Libor plus 7.50% (Floor of 10%) 9,166 (413 ) (48 ) 8,705

LSC 47-16 Greenpoint LLC 50 % $ 13,000 1.00 % April 5, 2019 April 4, 2020 Libor plus 5.75% (Floor of 8.25%) 13,000 (161 ) (66 ) 12,773

LSC 1543 7th LLC 50 % $ 20,000 1.00 % August 27, 2019 August 26, 2020 Libor plus 5.15% (Floor of 7.65%) 20,000 (895 ) (181 ) 18,924

LSC 1650 Lincoln LLC 50 % $ 24,000 1.00 % August 27, 2019 August 26, 2020 Libor plus 5.15% (Floor of 7.65%) 24,000 (1,074 ) (217 ) 22,709

Total $ 70,400 $ (2,734 ) $ (534 ) $ 67,132
~~On February 5, 2019, a wholly-owned subsidiary of~~
The following summarizes the ~~Operating Partnership (the “162nd Street Sub II”)~~interest earned (included in interest and an affiliate of the Sponsor (“CRE Capital II”) formed the 162nd Street Joint Venture II, a joint venture in which the Company and CRE Capital II have 45.45% and 55.55% ownership interests, respectively. On the same date, the 162nd Street Joint Venture II made a $9.2 million, nonrecourse loan (the “162nd Street Joint Venture II Promissory Note”) to an unaffiliated third party (the “162nd Street Joint Venture II Borrower”). The Company has determined that the 162nd Street Joint Venture II is a variable interest entity and the 162nd Street Sub II is the primary beneficiary. Another wholly-owned subsidiary of the Operating Partnership is the manager and sole decision maker of the 162nd Street Joint Venture II. Since the 162nd Street Sub II is the primary beneficiary, beginning on February 5, 2019, the Company has consolidated the operating results and financial condition of the 162nd Street Joint Venture II and accounted for the ownership interest of CRE Capital II as a noncontrolling interest. The 162nd Street Joint Venture II Promissory Note is recorded in notes receivabledividend income on the consolidated ~~balance sheet.~~statements of operations) for each of the Joint Venture Promissory Notes during the periods indicated:

The 162nd Street Joint Venture II Promissory Note is due March 1, 2020 and is collateralized by the ownership interests of the 162nd Street Joint Venture II Borrower. The 162nd Street Joint Venture II Borrower owns a parcel of land located at 89-12 East 162nd Street, Jamaica, New York (Lot 50) that the 162nd Street Joint Venture II Borrower intends to develop. Additionally, the 162nd Street Joint Venture II Promissory Note and the 162nd Street Joint Venture I Promissory Note are cross-collateralized. The 162nd Street Joint Venture II Promissory Note bears interest at a rate of Libor + 7.5% per annum with a floor of 10% (10.0% as of March 31, 2019). The 162nd Street Joint Venture II received an origination fee of 1.5% of the loan balance or approximately $0.1 million, which is~~presented in the consolidated balance sheets as a direct deduction from the carrying value of the162nd Street Joint Venture II Promissory Noteand will be amortized, to interest income using a straight-line method that approximates the effective interest method, over the initial term of the~~162nd Street Joint Venture II Promissory Note. The 162nd Street Joint Venture II Promissory Note can be extended for an additional year at the discretion of the 162nd Street Joint Venture II Borrower provided certain conditions are met, including the establishment of an additional reserve for interest and the payment of an extension fee equal to 1% of the outstanding loan balance.
Upon funding of the 162nd Street Joint Venture II Promissory Note, the 162nd Street Joint Venture II retained approximately $0.9 million of the proceeds to establish a reserve for interest and other items, which is~~presented in the consolidated balance sheets as a direct deduction from the carrying value of the162nd Street Joint Venture II Promissory Noteand will be~~ ~~applied against the monthly interest due during the initial term of the 162nd Street Joint Venture II Promissory Note.~~
During the three months ended March 31, 2019, the Company recorded $0.2 million of interest income related to the Notes Receivable and as of March 31, 2019, the remaining reserves for interest and other items aggregated $1.2 million.
For the Three Months
For the Three Months
For the Nine Months For the Nine Months
Ended Ended Ended Ended
Joint Venture/Lender September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
LSC 162nd Capital I LLC $ 118 $                     - $ 321 $                       -

LSC 162nd Capital II LLC 269 - 695 -

LSC 47-16 Greenpoint LLC 313 - 597 -

LSC 1543 7th LLC 168 - 168 -

LSC 1650 Lincoln LLC 201 - 202 -

Total $ 1,069 $          - $ 1,983 $         -

16

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)
6. Mortgages Payable, Net

Mortgages payable, net consists of the following:

Property Interest Rate Weighted Average
Interest Rate as of
March 31, 2019 Maturity Date Amount Due at
Maturity As of
March 31, 2019 As of
December 31, 2018 Interest Rate Weighted Average
Interest Rate as of
September 30, 2019 Maturity Date Amount Due at Maturity As of
September 30, 2019 As of
December 31, 2018

Gantry Park 4.48 % 4.48 % November 2024 $ 65,317 $ 73,031 $ 73,341 4.48% 4.48 % November 2024 $ 65,317 $ 72,438 $ 73,341

DePaul Plaza LIBOR + 2.75 % 5.26 % June 2020 13,494 13,971 14,072 (Repaid in full on September 20, 2019) - - 14,072

Bowery Land and Air Rights LIBOR + 4.25 % 6.76 % December 2020 33,102 33,102 32,567 LIBOR + 4.25% 6.71 % December 2020 34,252 34,252 32,567

Exterior Street Land 4.50 % 4.50 % April 2020 35,000 35,000 - 4.50% 4.50 % April 2020 35,000 35,000 -

Total mortgages payable 5.04 % $ 146,913 155,104 119,980 5.02 % $ 134,569 141,690 119,980

Less: Deferred financing costs (3,995 ) (1,579 ) (2,677 ) (1,579 )

Total mortgages payable, net $ 151,109 $ 118,401 $ 139,013 $ 118,401

Libor as of ~~March 31,~~September 30, 2019 and December 31, 2018 was ~~2.50%~~2.02% and 2.52%, respectively. The Company’s loans are secured by the indicated real estate and are non-recourse to the Company, unless otherwise indicated.

On September 20, 2019, approximately $13.8 million of the proceeds from the disposition of DePaul Plaza were used to repay in full the existing non-recourse mortgage loan collateralized by the DePaul Plaza (See note 8).
On March 29, 2019, the Company entered into the $35.0 million Exterior Street Loan ~~collateralized by the Exterior Street Land for $35.0 million. The Exterior Street Loan~~which bears interest at 4.50% and is scheduled to initially mature on April 9, 2020 ~~with~~but may be further extended through the exercise of two, six-month extension options, subject to certain conditions. The Exterior Street Loan requires monthly interest payments through its maturity date and ~~bears interest at 4.50% through its maturity.~~is collateralized by the Exterior Street Land.

On December 3, 2018, the Company entered into ~~the Bowery Mortgage~~a mortgage loan collateralized by the Bowery Land and the Air Rights (the “Bowery Mortgage)for approximately $35.6 million. The Bowery Mortgage has a term of two years, bears interest at LIBOR+4.25% and requires monthly interest-only payments through its stated maturity with the entire unpaid balance due upon maturity. Through ~~March 31,~~September 30, 2019, the Company received aggregate proceeds of ~~$33.1~~$34.3 million under the Bowery Mortgage. As a result, the Bowery Mortgage had an outstanding balance and remaining availability of ~~$33.1~~$34.3 million and ~~$2.5~~$1.3 million, respectively, as of ~~March 31,~~September 30, 2019.

The Exterior Street Loan (outstanding principal balance of $35.0 million as of ~~March 31,~~September 30, 2019) initially matures on April 9, 2020 but has two, six-month extension options, subject to certain conditions. The Company intends to seek to exercise the ~~option~~extension options or refinance ~~such existing indebtedness~~the Exterior Street Loan on or before its applicable stated maturity date. However, if we are unable to extend or refinance the outstanding indebtedness at favorable terms, we will look to repay the then outstanding balance with available cash and/or proceeds from selective asset sales. The Company has no additional significant maturities of mortgage debt over the next 12 months.

The following table shows the contractually scheduled principal maturities of the Company’s mortgage debt during the next five years and thereafter as of ~~March 31,~~September 30, 2019:
2019 2020 2021 2022 2023 Thereafter Total
2019 2020 2021 2022 2023 Thereafter Total
Principal maturities $ 1,210 $ 83,026 $ 1,328 $ 1,389 $ 1,454 $ 66,697 $ 155,104 $ 311 $ 70,512 $ 1,328 $ 1,389 $ 1,454 $ 66,696 $ 141,690

Less: Deferred financing costs (3,995 ) (2,677 )

Total principal maturities, net $ 151,109 $ 139,013

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)
7. Leases

The Company’s ~~two~~ retail ~~properties~~property and multi-family residential property are both leased to tenants under operating leases. Substantially all of our multi-family residential property leases have initial terms of 12 months or less. Our retail space leases expire between 2019 and ~~2030.~~2026.

We, as a lessor, retain substantially all of the risks and benefits of ownership of the investment properties and continue to account for our leases as operating leases. We accrue fixed lease income on a straight-line basis over the terms of the leases. Some of our tenants are also required to pay overage rents based on sales over a stated base amount during the lease year. We recognize this variable lease consideration only when each tenant’s sales exceed the applicable sales threshold. We amortize any tenant inducements as a reduction of revenue utilizing the straight-line method over the term of the related lease.
17
~~LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES~~
~~Notes to Consolidated Financial Statements~~
~~(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)~~

We structure our leases to allow us to recover a portion of our property operating expenses from our tenants. A portion of our leases require the tenant to reimburse us for a portion of our operating expenses, including common area maintenance (“CAM”), real estate taxes and insurance. Such property operating expenses typically include utility, insurance and other administrative expenses. For some of our leases we receive a fixed payment from the tenant for the CAM component which is recognized as revenue on a straight-line basis over the term of the lease. When not reimbursed by the fixed CAM component, CAM expense reimbursements are based on the tenant’s proportionate share of the allocable operating expenses for the property. We accrue reimbursements from tenants for recoverable portions of all of these expenses as variable lease consideration in the period the applicable expenditures are incurred. We recognize differences between estimated recoveries and the final billed amounts in the subsequent year. These differences were not material in any period presented.

As of ~~March 31,~~September 30, 2019, the approximate fixed future minimum rent payments, excluding variable lease consideration, from the Company’s ~~two~~ retail ~~properties,~~property, due to us under non-cancelable leases are as follows:

2019 2019 2020 2021 2022 2023 Thereafter Total 2019 2020 2021 2022 2023 Thereafter Total
$ 3,243 $ 3,566 $ 3,006 $ 2,448 $ 2,351 $ 7,504 $ 22,118 537 $ 1,833 $ 1,433 $ 1,184 $ 1,114 $ 686 $ 6,787

Pursuant to the lease agreements, tenants of the property may be required to reimburse the Company for some or the entire portion of the particular tenant's pro rata share of the real estate taxes and operating expenses of the property. Such amounts are not included in the future minimum lease payments above, but are included in tenant recovery income on the accompanying consolidated statements of operations. Lease income of approximately ~~$0.3~~$0.1 million and ~~$0.6~~$0.8 million for the three and nine months ended ~~March 31,~~September 30, 2019, respectively, and, lease income of approximately $0.5 million and $1.9 million for the three and nine months ended September 30, 2018, respectively, related to variable lease payments was included in tenant recovery income on the accompanying consolidated statements of operations.

The Company has excluded ourmulti-family residential property leases from this table as substantially all of its multi-family residential property leases have initial terms of 12 months of less.

8. Dispositions andDiscontinued Operations
Dispositions - Continuing Operations
The following disposition did not represent a strategic shift that had a major effect on the Company’s operations and financial results and therefore did not qualify to be reported as discontinued operations and its operating results are reflected in the Company’s results from continuing operations in the consolidated statements of operations for all periods presented through the date of disposition:
DePaul Plaza
On September 20, 2019, the Company disposed of a retail center located in Bridgeton, Missouri (“DePaul Plaza”), to an unrelated third party for aggregate consideration of approximately $19.8 million, excluding closing and other related costs. In connection with the disposition, the Company recorded a gain on the disposition of real estate of approximately $1.0 million during the third quarter of 2019.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)
Dispositions - Discontinued Operations
The following dispositions qualified to be reported as discontinued operations and their operating results are classified as discontinued operations in the consolidated statements of operations for all periods presented through their respective dates of disposition:
Disposition Transactions related toGulf Coast Industrial Portfolio

The Company had an outstanding non-recourse mortgage loan (the “Gulf Coast Industrial Portfolio Mortgage Loan”) which was originated in February 2007 and subsequently transferred during the third quarter of 2012 to a special servicer that discontinued scheduled debt service payments and notified the Company that the loan was in default and due on demand. The Gulf Coast Industrial Portfolio Mortgage Loan was initially cross-collateralized by a portfolio of 14 industrial properties (collectively, the “Gulf Coast Industrial Portfolio”) including ten properties located in Louisiana (seven properties located in New Orleans and three properties located in Baton Rouge, and collectively, the “Louisiana Properties”) and four properties located in San Antonio, Texas (the “San Antonio Properties”).

Foreclosure of San Antonio Assets

On June 5, 2018, the special servicer completed a partial foreclosure of the Gulf Coast Industrial Portfolio pursuant to which it foreclosed on the San Antonio Assets. The San Antonio Assets were sold in a foreclosure sale by the special servicer for an aggregate amount of approximately $20.7 million.

Upon consummation of the foreclosure sale, the buyers assumed the significant risks and rewards of ownership and took legal title and physical possession of the San Antonio Assets for the agreed upon aggregate sales price of $20.7 million. The Company simultaneously received an aggregate credit of approximately $20.7 million which it applied against the total outstanding indebtedness (approximately $19.6 million and $1.1 million of principal and accrued interest payable, respectively) of the Gulf Coast Industrial Portfolio Mortgage.
18
~~LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES~~
~~Notes to Consolidated Financial Statements~~
~~(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)~~

The aggregate carrying value of the assets transferred and the liabilities extinguished in connection with the foreclosure of the San Antonio Assets were approximately $13.6 million and $20.7 million, respectively.

Since the Company’s performance obligations were met at the closing of the foreclosure sales and the Company had no continuing involvement with the San Antonio Assets an aggregate gain on disposition of real estate of approximately $7.1 million was recognized during the second quarter of 2018.

During 2018, the disposition of the San Antonio Assets did not initially qualify to be reported as discontinued operations since their disposition did not represent a strategic shift that had a major effect on the Company’s operations and financial results.

Assignment of Ownership in Louisiana Assets to Lender

On February 12, 2019, the Company and the lender of the Gulf Coast Industrial Portfolio Mortgage entered into an assignment agreement (the “Assignment Agreement”) pursuant to which the Company assigned its membership interests in the Louisiana Assets to the lender with an effective date of February 7, 2019. Under the terms of the Assignment Agreement, the lender assumed the significant risks and rewards of ownership and took legal title and physical possession of the Louisiana Assets and assumed all the other assets and related liabilities, including the Gulf Coast Industrial Mortgage and its accrued and unpaid interest, and released the Company of any claims against the liabilities assumed.

As a result of the Assignment Agreement, the Company has fully satisfied all of its obligations with respect to the Gulf Coast Industrial Portfolio Mortgage and all amounts accrued but not paid for interest (including default interest) and no amounts are due to the lender. Additionally, the Company has no continuing involvement with the Louisiana Assets.

The aggregate carrying value of the assets transferred and the liabilities extinguished in connection with the Company’s assignment of its ownership interests in the Louisiana Assets to the lender was approximately $37.0 million and $49.6 million, respectively.

Since the Company’s performance obligations were met upon the assignment of its ownership interests in the Louisiana Assets to the lender and the Company has no continuing involvement with the Louisiana Assets, an aggregate gain on debt extinguishment of approximately $13.6 million was recognized during the first quarter of 2019.

The disposition of the Louisiana Assets, which comprised all of the Company’s remaining industrial properties, represented a strategic shift that had a major effect on the Company’s operations and financial results.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)
As a result of the disposition transactions related to both the San Antonio Assets and the Louisiana Assets, the Company no longer has any industrial properties. Because the Gulf Coast Industrial Portfolio Mortgage was cross-collateralized by the Gulf Coast Industrial Portfolio, comprised of both the San Antonio Assets and Louisiana Assets, the operating results of the entire Gulf Coast Industrial Portfolio have been classified as discontinued operations in the Company’s consolidated statements of operations for all periods presented.

The following summary presents the operating results of the Gulf Coast Industrial Portfolio included in discontinued operations in the Consolidated Statements of Operations for the periods indicated.

For the Three Months Ended March 31,
2019 2018 For the Three Months Ended
September 30, For the Nine Months Ended
September 30,
2019 2018 2019 2018
Revenues $ 409 $ 1,645 $ - $ 966 $ 409 $ 3,981
Operating expenses 317 1,169 - 804 317 3,066
Operating income 92 476 - 162 92 915

Interest expense and other, net (226 ) (1,207 ) - (767 ) (226 ) (2,967 )
Gain on debt extinguisment 13,615 -
Net income/(loss) from discontinued operations $ 13,481 $ (731 )
- - -
Gain on disposition of real estate - - - 7,137

Gain on debt extinguishment - - 13,615 -
Net (loss)/income from discontinued operations $ - $ (605 ) $ 13,481 $ 5,085

Cash flows generated from discontinued operations are presented separately on the Company’s consolidated statements of cash flows.
19
~~LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES~~
~~Notes to Consolidated Financial Statements~~
~~(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)~~

The following summary presents the major components of assets and liabilities held for disposition, of as the date indicated.

As of
December 31, 2018 As of
December 31,
2018
Net investment property $ 32,778 $ 32,778
Restricted escrows 3,274 3,274
Other assets 1,174 1,174
Total assets held for disposition $ 37,226 $ 37,226

Mortgages payable $ 30,642 $ 30,642
Accounts payable and accrued expenses 19,069 19,069
Other liabilities 993 993
Total liabilities held for disposition $ 50,704 $ 50,704

9.
Net Earnings Per Share

Basic net earnings per share is calculated by dividing net income attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the applicable period. Diluted net income per share includes the potentially dilutive effect, if any, which would occur if our outstanding options to purchase our common stock were exercised. For all periods presented, dilutive net income per share is equivalent to basic net income per share.

10. Related Party Transactions

The Company has agreements with the Advisor and Lightstone Value Plus REIT Management LLC (the “Property Manager”) to pay certain fees in exchange for services performed by these entities and other affiliated entities. The Company’s ability to secure financing and subsequent real estate operations are dependent upon its Advisor, Property Manager and their affiliates to perform such services as provided in these agreements.
��

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)

The Company, pursuant to the related party arrangements, has recorded the following amounts for the periods indicated:

Three Months Ended March 31,
2019 2018
Acquisition fees (capitalized and are reflected in the carrying value of the investment) $ 1,823 $ -
Asset management fees (general and administrative costs) 336 465
Property management fees (property operating expenses) 79 87
Development fees and leasing commissions* 74 77
Total $ 2,312 $ 629
* Generally, capitalized and amortized over the estimated useful life of the associated asset.
Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018 2019 2018
Acquisition fees (capitalized and are reflected in the carrying value of the investment) $ - $ - $ 1,823 $ -
Asset management fees (general and administrative costs) 303 392 941 1,283
Property management fees (property operating expenses) 67 120 222 409
Development fees and leasing commissions* - 62 167 182
Total $ 370 $ 574 $ 3,153 $ 1,874
*   Generally, capitalized and amortized over the estimated useful life of the associated asset.

In connection with the Company’s initial public offering, Lightstone SLP, LLC, an affiliate of the Company’s Sponsor, previously purchased an aggregate of $30.0 million of SLP units which are included in noncontrolling interests in the consolidated balance sheets. These SLP units, the purchase price of which will be repaid only after stockholders receive a stated preferred return and their net investment, entitle Lightstone SLP, LLC to a portion of any regular distributions made by the Operating Partnership.

During both the three and nine months ended ~~March 31,~~September 30, 2019 and 2018, distributions of $0.5 million and $1.5 million were declared and paid on the SLP units.

Preferred Investments

The Company has entered into several agreements ~~with~~with various related party entities that provide for it to make preferred contributions pursuant to certain instruments (the “Preferred Investments”) that entitle the Company to certain prescribed monthly preferred distributions. The Preferred Investments had an aggregate balance of ~~$80.7~~$76.0 million and $100.7 million as of ~~March 31,~~September 30, 2019 and December 31, 2018, respectively, and are classified as held-to-maturity securities, recorded at cost and included in investments in related parties on the consolidated balance sheets. The fair value of these investments approximated their carrying values based on market rates for similar instruments.

20
~~LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES~~
~~Notes to Consolidated Financial Statements~~
~~(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)~~
During the ~~three~~nine months ended ~~March 31,~~September 30, 2019, the Company (i) redeemed ~~$10.0~~an aggregate of $17.0 million of the East 11th Street Preferred Investment and the entire 30-02 39th Street Preferred Investment of $10.0 million and (ii) made aggregate contributions of $2.3 million for the Miami Moxy Preferred Investment and as of ~~March 31,~~September 30, 2019, ~~remaining contributions of up to $2.3 million~~there were ~~unfunded. The Company did not make any additional contributions to the Preferred Investments during the three months ended March 31, 2019.~~no unfunded contributions.

The Preferred Investments are summarized as follows:

Preferred Investment Balance Unfunded
Contributions Investment Income Preferred Investment Balance Investment Income⁽¹⁾
As of As of As of Three Months Ended March 31, As of As of Three Months Ended
September 30, Nine Months Ended
September 30,
Preferred Investments Dividend Rate March 31, 2019 December 31, 2018 March 31, 2019 2019 2018 Dividend Rate September 30,
2019 December 31,
2018 2019 2018 2019 2018
40 East End Avenue 12 % $ 30,000 $ 30,000 $      - $ 900 $ 900 12 % $ 30,000 $ 30,000 $ 920 $ 920 $ 2,730 $ 2,730
30-02 39^th Avenue 12 % - 10,000 - 140 300 12 % - 10,000 - 307 140 910
485 7th Avenue 12 % - - - - 1,025 12 % - - - - - 1,095
East 11th Street 12 % 33,000 43,000 - 1,100 1,481 12 % 26,000 43,000 797 1,763 2,705 4,970
Miami Moxy 12 % 17,733 17,733 2,267 532 374 12 % 20,000 17,733 615 457 1,705 1,229
Total Preferred Investments $ 80,733 $ 100,733 $ 2,267 $ 2,672 $ 4,080 $ 76,000 $ 100,733 $ 2,332 $ 3,447 $ 7,280 $ 10,934
Note:
(1) – Included in interest and dividend income on the consolidated statements of operations.

The Joint Venture
The Company has a 2.5% membership interest in a joint venture (the “Joint Venture”) with Lightstone Value Plus Real Estate Investment Trust II, Inc. (“Lightstone II”), a related party REIT also sponsored by our Sponsor. The Joint Ventureholds ownership interests in eight hotels as of ~~March 31,~~September 30, 2019.

The Company accounts for its 2.5% membership interest in the Joint Venture under the cost method and as of ~~both March 31,~~September 30, 2019 and December 31, 2018, the carrying value of its investment was $1.2 million and $1.3 million, respectively, which is included in investment in related parties on the consolidated balance sheets.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)
11. Financial Instruments

The carrying amounts reported in the consolidated balance sheets forcash and cash equivalents, restricted escrows, tenants’ accounts receivable, notes receivable and accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.
The carrying amount of the note receivable approximates fair value because the interest rate is variable and reflective of the market rate.

The estimated fair value (in millions) of the Company’s mortgage debt is summarized as follows:

As of March 31, 2019 As of December 31, 2018
Carrying Amount Estimated Fair
Value Carrying Amount Estimated Fair
Value
Mortgages payable $ 155.1 $ 154.9 $ 120.0 $ 119.8
As of September 30, 2019 As of December 31, 2018
Carrying Amount Estimated Fair
Value Carrying Amount Estimated Fair
Value
Mortgages payable $ 141.7 $ 143.1 $ 120.0 $ 119.8

The fair value of the mortgages payable was determined by discounting the future contractual interest and principal payments by estimated current market interest rates.

12. Commitments and Contingencies

Legal Proceedings

From time to time in the ordinary course of business, the Company may become subject to legal proceedings, claims or disputes.

As of the date hereof, the Company is not a party to any material pending legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on its results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss.

21
~~LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARIES~~
~~Notes to Consolidated Financial Statements~~
~~(Dollar amounts in thousands, except per share/unit data and where indicated in millions)(Unaudited)~~
13. Subsequent Events

Distribution Payment

On ~~April~~October 15, 2019, the distribution for the ~~three-month~~quarterly period ending ~~March 31,~~September 30, 2019 of ~~$4.1~~$4.0 million was paid in full using a combination of cash and approximately ~~5,000~~7,000 shares of the Company’s common stock issued pursuant to the Company’s Distribution Reinvestment Program (“DRIP”), at a discounted price of $11.23 per share.
Distribution Declaration
On ~~May 7,~~November 11, 2019, the Company’s Board of Directors authorized and the Company declared a distribution of $0.175 per share for the ~~three-month~~quarterly period ending ~~June 30,~~December 31, 2019. The quarterly distribution ~~will be calculated based on shareholders~~is the pro rata equivalent of ~~record each day during this three-month period at a~~an annual distribution of $0.70 per share, or an annualized rate of ~~$0.0019178 per day, and will equal~~7.0% assuming a ~~daily amount that, if paid each day for a 365-day period, would equal a 7.0% annualized rate based on a share~~purchase price of ~~$10.00.~~$10.00 per share. The distribution will be paid ~~in cash~~ on or about ~~July 15, 2019~~the 15th day of the month following the quarter-end to ~~shareholders~~stockholders of record asat the close of ~~June 30, 2019.~~business on the last day of the quarter-end. The ~~shareholders~~stockholders have an option to elect the receipt of shares under the Company’s DRIP.

22
Future distributions declared will be at the discretion of the Board of Directors based on their analysis of our performance over the previous periods and expectations of performance for future periods and may differ from the amount of the distribution determined for this period. The Board of Directors will consider various factors in its determination, including but not limited to, the sources and availability of capital, current rental revenues, operating and interest expenses and our ability to refinance near-term debt. In addition, the Company currently intends to continue to comply with the REIT distribution requirement that it annually distribute no less than 90% of its taxable income. The Company cannot assure that regular distributions will continue to be made or that it will maintain any particular level of distributions that it has established or may establish.

PART I. FINANCIAL INFORMATION, CONTINUED:
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Lightstone Value Plus Real Estate Investment Trust, Inc. and Subsidiaries and the notes thereto. As used herein, the terms “we,” “our” and “us” refer to Lightstone Value Plus Real Estate Investment Trust, Inc., a Maryland corporation, and, as required by context, Lightstone Value Plus REIT, L.P. and its wholly owned subsidiaries, which we collectively refer to as “the Operating Partnership.” Dollar amounts are presented in thousands, except per share data and where indicated in millions.

As discussed in Notes 1 and 78 of the Notes to Consolidated Financial Statements, the results of operations presented below exclude certain properties due to their classification as discontinued operations.

Forward-Looking Statements

Certain information included in this Quarterly Report on Form 10-Q contains, and other materials filed or to be filed by us with the Securities and Exchange Commission, or the SEC, contain or will contain, forward-looking statements. All statements, other than statements of historical facts, including, among others, statements regarding our possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives, are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of Lightstone Value Plus Real Estate Investment Trust, Inc. and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that actual results may differ materially from those contemplated by such forward-looking statements.

Such statements are based on assumptions and expectations which may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial and otherwise, may differ from the results discussed in the forward-looking statements.

Risks and other factors that might cause differences, some of which could be material, include, but are not limited to, economic and market conditions, competition, tenant or joint venture partner(s) bankruptcies, changes in governmental, tax, real estate and zoning laws and regulations, failure to increase tenant occupancy and operating income, rejection of leases by tenants in bankruptcy, financing and development risks, construction and lease-up delays, cost overruns, the level and volatility of interest rates, the rate of revenue increases versus expense increases, the financial stability of various tenants and industries, the failure of the Company (defined herein) to make additional investments in real estate properties, the failure to upgrade our tenant mix, restrictions in current financing arrangements, the failure to fully recover tenant obligations for common area maintenance (“CAM”), insurance, taxes and other property expenses, the failure of the Company to continue to qualify as a real estate investment trust (“REIT”), the failure to refinance debt at favorable terms and conditions, an increase in impairment charges, loss of key personnel, failure to achieve earnings/funds from operations targets or estimates, conflicts of interest with the Advisor, Sponsor and their affiliates, failure of joint venture relationships, significant costs related to environmental issues as well as other risks listed from time to time in this Form 10-Q, our Form 10-K and in the Company’s other reports filed with the SEC.

We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time unless required by law.

Overview

Lightstone Value Plus Real Estate Investment Trust, Inc. (the “Lightstone REIT”)and Lightstone Value Plus REIT, LP, (the “Operating Partnership”) and its subsidiaries are collectively referred to as the ‘‘Company’’ and the use of ‘‘we,’’ ‘‘our,’’ ‘‘us’’ or similar pronouns refers to the Lightstone REIT, its Operating Partnership or the Company as required by the context in which such pronoun is used.

23

Lightstone REIT has and may continue to acquire and operate in the future, commercial, residential and hospitality properties and make real estate-related investments, principally in the United States. Our acquisitions and investments are principally conducted through the Operating Partnership, and have included both portfolios and individual properties. Our commercial holdings currently consist of retail (primarily multi-tenant shopping centers), and residential properties comprised of multi-family complexes. All such properties have been and will continue to be acquired and operating by us alone or jointly with others.

As discussed in Notes 1 and 78 of the Notes to Consolidated Financial Statements, the results of operations presented below exclude certain properties due to their classification as discontinued operations.

We do not have employees. We have an advisory agreement with Lightstone Value Plus REIT LLC, a Delaware limited liability company, which we refer to as the “Advisor,” pursuant to which the Advisor supervises and manages our day-to-day operations and selects our real estate and real estate related investments, subject to oversight by our board of directors. We pay the Advisor fees for services related to the investment and management of our assets, and we reimburse the Advisor for certain expenses incurred on our behalf.

Beginning with the year ended December 31, 2006, we qualified to be taxed as a real estate investment trust (a “REIT”), under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our ordinary taxable income to stockholders. As a REIT, we generally will not be subject to U.S. federal income tax on taxable income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, it will then be subject to federal income taxes on its taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to our stockholders. As of ~~March 31,~~September 30, 2019, we continue to comply with the requirements for maintaining our REIT status.

To maintain our qualification as a REIT, we engage in certain activities such as providing real estate-related services through taxable REIT subsidiaries (“TRSs”). As such, we are subject to U.S. federal and state income and franchise taxes from these activities.

Current Environment

Our operating results as well as our investment opportunities are generally impacted by the health of the North American economies. Our business and financial performance may be adversely affected by current and future economic conditions, such as an availability of credit, financial markets volatility and recession.

Our business may be affected by market and economic challenges experienced by the U.S. and global economies. These conditions may materially affect the value and performance of our properties, and may affect our ability to pay distributions, the availability or the terms of financing that we have or may anticipate utilizing, and our ability to make principal and interest payments on, or refinance, any outstanding debt when due.

We are not aware of any other material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from the acquisition and operation of real estate and real estate related investments, other than those referred to in this Form 10-Q.

Wholly Owned and Consolidated Real Estate Properties:

Location Year Built
(Range of
years built) Date
Acquired Gross Leasable
Area ("GLA")
in Square
Feet/Leaseable
Units Percentage
Occupied as of
March 31, 2019 Annualized
Revenues based
on rents at
March 31, 2019 Annualized
Revenues per
square foot/unit at
March 31, 2019

St. Augustine Outlet Center St. Augustine, FL 1998 March 2006 327,862 GLA 75.6 % $ 2.8 million $ 11.37 sqft
DePaul Plaza Bridgeton, MO 1985 November 2011 187,142 GLA 84.5 % $ 2.0 million $ 12.48 sqft
Gantry Park (Multi-Family Apartment Building) Queens, NY 2013 August 2013 199 units 97.0 % $ 8.6 million $ 44,685 unit
Location Year Built
(Range of years built) Date Acquired Gross Leasable Area ("GLA")
in Square Feet/Leaseable Units Percentage Occupied as of
September 30, 2019 Annualized Revenues
based on
rents at
September 30, 2019 Annualized Revenues per square
foot/unit at
September 30, 2019
St. Augustine Outlet Center (Retail Outlet Mall) St. Augustine, Florida 1998 March 2006 328,120 GLA 73.4 % $2.4 million $9.78 sqft
Gantry Park Landing (Multi-Family Apartment Building) Queens, New York 2013 August 2013 199 units 98.5 % $8.9 million $45,411 unit

Annualized revenue is defined as the minimum monthly payments due as of ~~March 31,~~September 30, 2019 annualized, excluding periodic contractual fixed increases and rents calculated based on a percentage of tenants’ sales. The annualized base rent disclosed in the table above includes all concessions, abatements and reimbursements of rent to tenants.

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Results of Operations

~~Our primary~~Dispositions
Dispositions - Continuing Operations
The following disposition did not represent a strategic shift that had a major effect on our operations and financial ~~measure for evaluating each of our properties is net operating income (“NOI”). NOI represents revenues less property operating expenses, real estate taxes~~results and ~~general~~therefore did not qualify to be reported as discontinued operations and ~~administrative expenses. We believe that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual~~its operating results are reflected in tour results from continuing operations in the consolidated statements of ~~our properties.~~operations for all periods presented through the date of disposition:
DePaul Plaza

~~Dispositions~~On September 20, 2019, we disposed of a retail center located in Bridgeton, Missouri (“DePaul Plaza”), to an unrelated third party for aggregate consideration of approximately $19.8 million, excluding closing and other related costs. In connection with the disposition, we recorded a gain on the disposition of real estate of approximately $1.0 million during the third quarter of 2019.
Dispositions - Discontinued Operations
The following dispositions qualified to be reported as discontinued operations and their operating results are classified as discontinued operations in the consolidated statements of operations for all periods presented through their respective dates of disposition:
Disposition Transactions related toGulf Coast Industrial Portfolio

We had an outstanding non-recourse mortgage loan (the “Gulf Coast Industrial Portfolio Mortgage Loan”) which was originated in February 2007 and subsequently transferred during the third quarter of 2012 to a special servicer that discontinued scheduled debt service payments and notified us that the loan was in default and due on demand. The Gulf Coast Industrial Portfolio Mortgage Loan was initially cross-collateralized by a portfolio of 14 industrial properties (collectively, the “Gulf Coast Industrial Portfolio”) including ten properties located in Louisiana (seven properties located in New Orleans and three properties located in Baton Rouge, and collectively, the “Louisiana Properties”) and four properties located in San Antonio, Texas (the “San Antonio Properties”).

Foreclosure of San Antonio Assets

On June 5, 2018, the special servicer completed a partial foreclosure of the Gulf Coast Industrial Portfolio pursuant to which it foreclosed on the San Antonio Assets. The San Antonio Assets were sold in a foreclosure sale by the special servicer for an aggregate amount of approximately $20.7 million.

Upon consummation of the foreclosure sale, the buyers assumed the significant risks and rewards of ownership and took legal title and physical possession of the San Antonio Assets for the agreed upon aggregate sales price of $20.7 million. We simultaneously received an aggregate credit of approximately $20.7 million which we applied against the total outstanding indebtedness (approximately $19.6 million and $1.1 million of principal and accrued interest payable, respectively) of the Gulf Coast Industrial Portfolio Mortgage.

The aggregate carrying value of the assets transferred and the liabilities extinguished in connection with the foreclosure of the San Antonio Assets were approximately $13.6 million and $20.7 million, respectively.

Since our performance obligations were met at the closing of the foreclosure sales and we had no continuing involvement with the San Antonio Assets an aggregate gain on disposition of real estate of approximately $7.1 million was recognized during the second quarter of 2018.

During 2018, the disposition of the San Antonio Assets did not initially qualify to be reported as discontinued operations since their disposition did not represent a strategic shift that had a major effect on our operations and financial results.

Assignment of Ownership in Louisiana Assets to Lender

On February 12, 2019, we and the lender of the Gulf Coast Industrial Portfolio Mortgage entered into an assignment agreement (the “Assignment Agreement”) pursuant to which we assigned our membership interests in the Louisiana Assets to the lender with an effective date of February 7, 2019. Under the terms of the Assignment Agreement, the lender assumed the significant risks and rewards of ownership and took legal title and physical possession of the Louisiana Assets and assumed all the other assets and related liabilities, including the Gulf Coast Industrial Mortgage and its accrued and unpaid interest, and released us of any claims against the liabilities assumed.

As a result of the Assignment Agreement, we have fully satisfied all of our obligations with respect to the Gulf Coast Industrial Portfolio Mortgage and all amounts accrued but not paid for interest (including default interest) and no amounts are due to the lender. Additionally, we have no continuing involvement with the Louisiana Assets.

The aggregate carrying value of the assets transferred and the liabilities extinguished in connection with our assignment of our ownership interests in the Louisiana Assets to the lender was approximately $37.0 million and $49.6 million, respectively.

Since our performance obligations were met upon the assignment of our ownership interests in the Louisiana Assets to the lender and we have no continuing involvement with the Louisiana Assets, an aggregate gain on debt extinguishment of approximately $13.6 million was recognized during the first quarter of 2019.

The disposition of the Louisiana Assets, which comprised all of our remaining industrial properties, represented a strategic shift that had a major effect on our operations and financial results.

25
As a result of the disposition transactions related to both the San Antonio Assets and the Louisiana Assets, we no longer have any industrial properties. Because the Gulf Coast Industrial Portfolio Mortgage was cross-collateralized by the Gulf Coast Industrial Portfolio, comprised of both the San Antonio Assets and Louisiana Assets, the operating results of the entire Gulf Coast Industrial Portfolio have been classified as discontinued operations in our consolidated statements of operations for all periods presented.

For the Three Months Ended ~~March 31,~~September 30, 2019 vs. ~~March 31,~~September 30, 2018

Consolidated – Continuing Operations
Revenues

Our revenues are comprised of rental income and tenant recovery income. Total revenues ~~were relatively unchanged at approximately $4.0 million during~~for both the three months ended ~~March 31,~~September 30, 2019 and ~~2018.~~2018 were $4.0 million.

Property operating expenses
~~Property operating expenses were relatively unchanged at approximately $1.2 million during both the three months ended March 31, 2019 and 2018.~~

~~Real estate taxes~~Property operating expenses
~~Real estate taxes were relatively unchanged at approximately $0.3 million during both the three months ended March 31, 2019 and 2018.~~
~~General and administrative expenses~~
~~General and administrative expenses decreased~~increased slightly by approximately ~~$0.4~~$0.1 million to ~~$0.8~~$1.3 million for the three months ended ~~March 31,~~September 30, 2019 compared to $1.2 million for the same period in 2018.
Real estate taxes
Real estate taxesincreased slightly by approximately $0.1 million to $0.3 million for the three months ended September 30, 2019 compared to $0.2 million for the same period in 2018.
General and administrative expenses
General and administrative expenses decreased by approximately $0.4 million to $0.7 million for the three months ended September 30, 2019 compared to $1.1 million for the same period in 2018 principally due to a decrease in professional fees and lower asset management fees as a result of the disposition transactions related to the Gulf Coast Industrial Portfolio.
Depreciation and amortization
~~Depreciation and amortization was relatively unchanged at approximately $1.3 million during both the three months ended March 31, 2019 and 2018.~~

~~Interest~~Depreciation and ~~dividend income~~amortization
~~Interest and dividend income~~ decreased slightly by approximately ~~$1.3~~$0.1 million to ~~$3.9~~$1.2 million for the three months ended ~~March 31,~~September 30, 2019 compared to ~~$5.2~~$1.3 million for the same period in 2018.
Gain on disposition of real estate
During thethree months ended September 30, 2019, we recognized gain on disposition of real estate of approximately $1.0 million related to the disposition of DePaul Plaza.

Interest and dividend income
Interest and dividend incomedecreased by approximately $0.5 million to $4.1 million for the three months ended September 30, 2019 compared to $4.6 million for the same period in 2018. The decrease primarily reflects lower investment income of ~~$1.4~~$1.1 million from our Preferred Investments ~~partially offset by higher interest~~ and a decrease in dividend income from our investments in marketable securities of $0.4 million partially offset by interest income earned on our notes receivable of $0.9 million and an increase in interest earned on available cash of $0.1 million.

Interest expense

Interest expense, including amortization of deferred financing costs, decreased by approximately ~~$1.2~~$0.8 million to $0.4 million for the three months ended ~~March 31,~~September 30, 2019 compared to ~~$1.6~~$1.2 million for the same period in 2018. This decrease primarily reflects lower interest expenseresulting from the capitalization of interest in connection with our development activities and a reduction in outstanding mortgage indebtedness during the 2019 period resulting from the repayment in full of a mortgage that was collateralized by the St. Augustine Outlet Center in May 2018.

Unrealized loss on marketable equity securities

Duringthe three months ended ~~March 31,~~September 30, 2019, we recorded an unrealized loss on marketable equity securities of $0.6 million and during the three months ended September 30, 2018, we recorded an unrealized gain on marketable equity securities of ~~$3.1 million and during the three months ended March 31, 2018, we recorded an unrealized loss on marketable equity securities of $3.8~~$1.4 million which represents the change in the fair value of our marketable equity securities during the three months ended ~~March 31,~~September 30, 2019 and 2018, respectively.

26
Noncontrolling interests

The net earnings allocated to noncontrolling interests relates to (i) parties of the Company that hold units in the Operating Partnership, (ii) the interest in PRO-DFJV Holdings LLC (“PRO”) held by our Sponsor, (iii) the ownership interests in 50-01 2nd St. Associates LLC (the “2nd Street Joint Venture”) held by our Sponsor and other affiliates, ~~(iii)~~(iv) the ownership interest in various joint ventures held by affiliates of our Sponsor that hold promissory notes collateralized by land parcels being developed by unaffiliated third parties.
For the ~~162nd~~Nine Months Ended September 30, 2019 vs. September 30, 2018
Consolidated – Continuing Operations
Revenues
Our revenues are comprised of rental income and tenant recovery income. Total revenues decreased slightly by approximately $0.1 million to $11.9 million for the nine months ended September 30, 2019 compared to $12.0 million for the same period in 2018.
Property operating expenses
Property operating expensesdecreased by approximately $0.2 million to $3.5 million for the nine months ended September 30, 2019 compared to $3.7 million for the same period in 2018.
Real estate taxes
Real estate taxesincreased by approximately $0.2 million to $1.0 million for the nine months ended September 30, 2019 compared to $0.8 million for the same period in 2018. The increase was principally attributable to real estate taxes associated with our two land parcels located at 355 and 399 Exterior Street, New York (collectively, the “Exterior Street Land”) which were acquired in February 2019.
General and administrative expenses
General and administrative expenses decreased by approximately $1.0 million to $2.3 million for the nine months ended September 30, 2019 compared to $3.3 million for the same period in 2018 principally due to a decrease in professional fees and lower asset management fees as a result of the disposition transactions related to the Gulf Coast Industrial Portfolio.
Depreciation and amortization
Depreciation and amortizationdecreased by approximately $0.2 million to $3.8 million for the nine months ended September 30, 2019 compared to $4.0 million for the same period in 2018.

Gain on disposition of real estate
During the nine months ended September 30, 2019, we recognized a third quarter gain on disposition of real estate of approximately $1.0 million related to the disposition of DePaul Plaza.
Interest and dividend income
Interest and dividend incomedecreased by approximately $2.4 million to $11.9 million for the nine months ended September 30, 2019 compared to $14.3 million for the same period in 2018. The decrease primarily reflects lower investment income of $3.7 million from our Preferred Investments and a decrease in dividend income from our investments in marketable securities of $1.0 million partially offset by interest on our notes receivable of $1.7 million and an increase in interest earned on available cash of $0.4 million.
Interest expense
Interest expense, including amortization of deferred financing costs, decreased by approximately $3.2 million to $1.1 million for the nine months ended September 30, 2019 compared to $4.3 million for the same period in 2018. This decrease primarily reflects lower interest expenseresulting from the capitalization of interest in connection with our development activities and a reduction in outstanding mortgage indebtedness during the 2019 period resulting from the repayment in full of a mortgage that was collateralized by the St. Augustine Outlet Center in May 2018.
Unrealized loss on marketable equity securities
Duringthe nine months ended September 30, 2019, we recorded an unrealized loss on marketable equity securities of $2.2 million and during the nine months ended September 30, 2018, we recorded an unrealized gain on marketable equity securities of $1.1 million which represents the change in the fair value of our marketable equity securities during the nine months ended September 30, 2019 and 2018, respectively.
Noncontrolling interests
The net earnings allocated to noncontrolling interests relates to (i) parties of the Company that hold units in the Operating Partnership, (ii) the interest in PRO-DFJV Holdings LLC (“PRO”) held by our Sponsor, (iii) the ownership interests in 50-01 2nd St. Associates LLC (the “2nd Street Joint ~~Venture I~~Venture”) held by ~~an affiliate of~~ our Sponsor and other affiliates and (iv) the ownership interest in ~~the 162nd Street Joint Venture II~~various joint ventures held by ~~an affiliate~~affiliates of our ~~Sponsor.~~Sponsor that have originated promissory notes to unaffiliated third parties.

Financial Condition, Liquidity and Capital Resources

Overview:

Rental income, interest and dividend income and borrowings are our principal source of funds to pay operating expenses, scheduled debt service, capital expenditures and distributions, excluding non-recurring capital expenditures.

We expect to meet our short-term liquidity requirements, including the costs of our expected non-recurring capital expenditures, including development activities, ~~and the funding of our remaining contributions for investments in related parties (Preferred Investments) of up to $2.3 million as of March 31, 2019,~~ generally through working capital, redemptions of our Preferred Investments, repayments of our outstanding notes receivable, the remaining availability on the Bowery Mortgage ($~~2.5~~1.3 million as of ~~March 31,~~September 30, 2019) and new borrowings. As of ~~March 31,~~September 30, 2019, we had approximately ~~$69.8~~$22.8 million of cash and cash equivalents on hand and ~~$63.3~~$55.6 million of marketable securities, available for sale. We believe that these cash resources will be sufficient to satisfy our cash requirements for the foreseeable future, and we do not anticipate a need to raise funds from other than these sources within the next twelve months.

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 a so-called “balloon” payment and are at a fixed interest rate.

Additionally, in order to leverage our investments in marketable securities and seek a higher rate of return, we ~~borrowed using~~have access to borrowings under a margin loan and line of credit collateralized by the securities held with the financial institution that provided the margin ~~loan. This~~ loan isand line of credit as well as a portion of our Marco OP Units. These loans are due on demand and ~~will~~any outstanding balance must be paid upon the liquidation of securities.

The Exterior Street Loan (outstanding principal balance of $35.0 million as of ~~March 31,~~September 30, 2019) initially matures on April 9, 2020 but has two, six-month extension options, subject to certain conditions. The Company intends to seek to exercise the ~~option~~extension options or refinance ~~such existing indebtedness~~the Exterior Street Loan on or before its applicable stated maturity date. However, if we are unable to extend or refinance the outstanding indebtedness at favorable terms, we will look to repay the then outstanding balance with available cash and/or proceeds from selective asset sales. The Company has no additional significant maturities of mortgage debt over the next 12 months.

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 satisfactory showing that a higher level is appropriate, the approval of our 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 ~~March 31,~~September 30, 2019, our total borrowings of ~~$173.1~~$141.7 million represented ~~50%~~39% 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, proceeds received from the selective disposition of our properties and proceeds received from the redemption of our preferred investments in related parties. 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.

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In addition to meeting working capital needs and distributions, if any, to our stockholders, our capital resources are used to make certain payments to our Advisor and our Property Manager, including payments related to asset acquisition fees, development fees and leasing commissions, asset management fees, the reimbursement of acquisition related expenses to our Advisor and property management fees. We also reimburse our Advisor and its affiliates for actual expenses it incurs for administrative and other services provided to us. Additionally, the Operating Partnership may be required to make distributions to Lightstone SLP, LLC, an affiliate of the Advisor.

The following table represents the fees incurred associated with the payments to our Advisor and our Property Manager for the periods indicated:

Three Months Ended March 31, Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018 2019 2018 2019 2018
Acquisition fees (capitalized and are reflected in the carrying value of the investment) $ 1,823 $ - $ - $ - $ 1,823 $ -
Asset management fees (general and administrative costs) 336 465 303 392 941 1,283
Property management fees (property operating expenses) 79 87 67 120 222 409
Development fees and leasing commissions* 74 77 - 62 167 182
Total $ 2,312 $ 629 $ 370 $ 574 $ 3,153 $ 1,874

*   Generally, capitalized and amortized over the estimated useful life of the associated asset.

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:

For the Three Months Ended March 31,
2019 2018

Net cash flows provided by operating activities $ 5,968 $ 4,476
Net cash flows used in investing activities (18,399 ) (35,436 )
Net cash flows provided by/(used in) financing activities 48,566 (6,870 )
Net change in cash, cash equivalents and restricted cash 36,135 (37,830 )

Cash, cash equivalents and restricted cash, beginning of year 36,582 119,219
Cash, cash equivalents and restricted cash, end of the period $ 72,717 $ 81,389

For the Nine Months Ended
September 30,
2019 2018
Net cash flows provided by operating activities $ 15,551 $ 15,470
Net cash flows used in investing activities (55,595 ) (18,526 )
Net cash flows provided by/(used in) financing activities 27,904 (45,177 )
Net change in cash, cash equivalents and restricted cash (12,140 ) (48,233 )

Cash, cash equivalents and restricted cash, beginning of year 36,582 119,219
Cash, cash equivalents and restricted cash, end of the period $ 24,442 $ 70,986

Our principal sources of cash flow are derived from the operation of our rental properties, interest and dividend income on our marketable securities and real estate-related investments, as well as loan proceeds and proceeds from redemptions of preferred investments in related parties. We intend that our properties and real estate-related investments will provide a relatively consistent stream of cash flow that provides us with resources to fund operating expenses, debt service and quarterly distributions if authorized by our board of directors.

Our principal demands for liquidity are (i) our property operating expenses, (ii) real estate taxes, (iii) insurance costs, (iv) leasing costs and related tenant improvements, (v) capital expenditures, (vi) acquisition and development activities, including our investments in related parties (vii) scheduled debt service and (viii) distributions to our stockholders and noncontrolling interests. The principal sources of funding for our operations are operating cash flows and proceeds from (i) the sale and redemption of marketable securities, (ii) the selective disposition of properties or interests in properties, (iii) redemptions of our preferred investments in related parties, (iv) the issuance of equity and debt securities and (v) the placement of mortgage loans or other indebtedness.

Operating activities

Net cash flows provided by operating activities of ~~$6.0~~$15.6 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 consists of the following:

· cash inflows of approximately ~~$5.8~~$16.2 million from our net income after adjustment for non-cash items; and

· cash ~~inflows~~outflows of approximately ~~$0.2~~$0.6 million associated with the net changes in operating assets and ~~liabilities;~~liabilities and
· net cash used in discontinued ~~operation of $0.1 million.~~operations.

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Investing activities

The net cash used in investing activities of ~~$18.4~~$55.6 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 consists primarily of the following:

· net purchases of investment property of approximately ~~$74.3~~$85.1 million;

· net funding of notes receivable of ~~$12.0~~$65.4 million;
· net proceeds from the sale of DePaul Plaza of $19.5 million;

· net proceeds from preferred investments in related parties of ~~$20.0~~$24.7 million;

· net proceeds from the sale and purchase of marketable securities of ~~$48.2~~$50.9 million; and

· net cash used in discontinued operation of $0.2 million.

Financing activities

The net cash provided by financing activities of approximately ~~$48.6~~$27.9 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 is primarily related to the following:

· proceeds from mortgage financing, net of fees and expenses of ~~$32.8~~$34.2 million;

· debt principal payments ~~$0.4~~$15.0 million;

· ~~proceeds from borrowings on our line of credit of $18.0 million;~~

· contributions of $33.1 million received from the noncontrolling interests ~~of $6.4 million;~~in our joint ventures which have originated nonrecourse loans to unaffiliated third-party borrowers;

· redemptions and cancellation of common stock of ~~$3.3~~$9.9 million;

· aggregate distributions to our noncontrolling interests of ~~$0.8~~$2.5 million; and

· distributions to our common shareholders of ~~$4.1~~$12.1 million.

Development Activities

Lower East Side Moxy Hotel

On December 3, 2018, we, through a subsidiary of the Operating Partnership, acquired three parcels of land located at 147-151 Bowery, New York, New York (collectively, the “Bowery Land”) from 151 Emmut Properties LLC and 145-149 Bowery LLC, both unaffiliated third parties, for aggregate consideration of approximately $56.5 million, excluding closing and other acquisition related costs, on which it intends to develop and construct a 296-room Marriott Moxy hotel (the “Lower East Side Moxy Hotel”). Additionally, on December 6, 2018, we, though a subsidiary of the Operating Partnership, acquired certain air rights located at 329 Broome Street, New York, New York (the “Air Rights”) from B.R.P. Realty Corp., an unaffiliated third party, for approximately $2.4 million, excluding closing and other acquisition related costs. We intend to use the Air Rights in connection with the development and construction of the Lower East Side Moxy Hotel.

On December 3, 2018, we entered into a mortgage loan collateralized by the Bowery Land and the Air Rights (the “Bowery Mortgage”) for approximately $35.6 million. The Bowery Mortgage has a term of two years, bears interest at LIBOR+4.25% and requires monthly interest-only payments through its stated maturity with the entire unpaid balance due upon maturity. Through ~~March 31,~~September 30, 2019, ~~the Company~~we received aggregate proceeds of ~~$33.1~~$34.3 million under the Bowery Mortgage. As a result, the Bowery Mortgage had an outstanding balance and remaining availability of ~~$33.1~~$34.3 million and ~~$2.5~~$1.3 million, respectively, as of ~~March 31,~~September 30, 2019.

As of ~~March 31,~~September 30, 2019 and December 31, 2018, we ~~have~~ incurred and capitalized to construction in progress an aggregate of ~~$64.2~~$71.0 million and $63.3 million, respectively, ~~related to the~~consisting of acquisition ~~of the Bowery Land and Air Rights~~ and other development costs attributable to the Lower East Side Moxy Hotel.

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Exterior Street ~~Land~~Project
On February 27, 2019, we, through subsidiaries of the Operating Partnership, acquired two adjacent parcels of land located at 355 and 399 Exterior Street, New York, New York (collectively, the “Exterior Street Land”), from Borden Realty Corp and 399 Exterior Street Associates LLC, unaffiliated third parties, for an aggregate purchase price of approximately $59.0 million, excluding closing and other acquisition related ~~costs. We currently expect~~costs, on which it intends to develop and construct a multi-family residential property ~~on the Exterior~~(the “Exterior Street ~~Land~~Project”).

On March 29, 2019, we entered into a $35.0 million loan (the “Exterior Street Loan”) which bears interest and 4.50% and is scheduled to initially mature on April 9, 2020, ~~with~~but may be further extended through the exercise of two, six-month extension options, subject to certain conditions. The Exterior Street Loan requires monthly interest payments through its maturity date and ~~bears interest at 4.50% through its maturity. The Exterior Street Mortgage~~ is collateralized by the Exterior Street Land.

As of ~~March 31,~~September 30, 2019, we ~~have~~ incurred and capitalized to construction in progress an aggregate of ~~$61.4~~ $64.3million ~~related to the~~consisting of acquisition ~~of the Exterior Street Land~~ and other development costs attributable to the Exterior Street ~~Land.~~Project.

Santa Clara Data Center

On January 10, 2019, we, through subsidiaries of the Operating Partnership, acquired a parcel of land located at 2175 Martin Avenue, Santa Clara, CA (the “Martin Avenue Land”) from The Chioini Living Trust, an unaffiliated third party, for approximately $10.6 million, excluding closing and other acquisition related costs, on which we are developing a data center (the “Santa Clara Data Center”).

As of ~~March 31,~~September 30, 2019, we have incurred and capitalized to construction in progress an aggregate of ~~$11.3~~ $12.8million ~~related to the~~consisting of acquisition of theMartin Avenue Land and other development costs attributable to the Santa Clara Data Center.

We believe our capital resources are sufficient to fund our expected development activities related to the Lower East Side Moxy Hotel, the Exterior Land and the Santa Clara Data Center for the next ~~twelve~~12 months. However, we ultimately expect to finance a substantial portion of our development costs through construction loans. There can be no assurance we will be successful in obtaining construction financing at favorable terms, if at all.

Preferred Investments
We have entered into several agreements ~~with~~with various related party entities that provide for us to make preferred contributions pursuant to certain instruments (the “Preferred Investments”) that entitle us to monthly preferred distributions. The Preferred Investments had an aggregate balance of ~~$80.7~~$76.0 million and $100.7 million as of ~~March 31,~~September 30, 2019 and December 31, 2018, respectively, and are classified as held-to-maturity securities, recorded at cost and included in investments in related parties on the consolidated balance sheets. The fair value of these investments approximated their carrying values based on market rates for similar instruments.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2019, we (i) redeemed ~~$10.0~~an aggregate of $17.0 million of the East 11th Street Preferred Investment and the entire 30-02 39th Street Preferred Investment of $10.0 million and (ii) made aggregate contributions of $2.3 million for the Miami Moxy Preferred Investment and as of ~~March 31,~~September 30, 2019, ~~remaining contributions of up to $2.3 million~~there were ~~unfunded.~~no unfunded contributions.

The Preferred Investments are summarized as follows:

Preferred Investment Balance Unfunded
Contributions Investment Income Preferred Investment Balance Investment Income⁽¹⁾
As of As of As of Three Months Ended March 31, As of
September 30, As of
December 31, Three Months Ended
September 30, Nine Months Ended
September 30,
Preferred Investments Dividend Rate March 31, 2019 December 31, 2018 March 31, 2019 2019 2018 Dividend Rate 2019 2018 2019 2018 2019 2018
40 East End Avenue 12 % $ 30,000 30,000 $ - $ 900 $ 900 12 % $ 30,000 $ 30,000 $ 920 $ 920 $ 2,730 $ 2,730
30-02 39^th Avenue 12 % - 10,000 - 140 300 12 % - 10,000 - 307 140 910
485 7th Avenue 12 % - - - - 1,025 12 % - - - - - 1,095
East 11th Street 12 % 33,000 43,000 - 1,100 1,481 12 % 26,000 43,000 797 1,763 2,705 4,970
Miami Moxy 12 % 17,733 17,733 2,267 532 374 12 % 20,000 17,733 615 457 1,705 1,229
Total Preferred Investments $ 80,733 $ 100,733 $ 2,267 $ 2,672 $ 4,080 $ 76,000 $ 100,733 $ 2,332 $ 3,447 $ 7,280 $ 10,934
Note:
(1) – Included in interest and dividend income on the statements of operations.
Notes Receivable
Beginning in 2019, 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 have an initial term of one year and may provide for an additional one-year extension option subject to satisfaction of certain prescribed conditions, including the funding of an additional reserve for interest and payment of an extension fee. 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 arepresented in the consolidated balance sheets as a direct deduction from the carrying value of the Joint Venture Promissory Notesand are amortized into interest income, using a straight-line method that approximates the effective interest method,over the initial term of theJoint Venture Promissory Notes. The Loan Reserves arepresented in the consolidated balance sheets as a direct deduction from the carrying value of theJoint Venture Promissory Notesand areapplied against the monthly interest due over the initial term.

The Notes Receivable are summarized as follows:
As of September 30, 2019
Company's
Ownership Original
Loan Origination Origination Initial
Maturity Contractual
Interest Outstanding Unamortized Origination Carrying
Joint Venture/Lender Percentage Amount Fee Date Date Rate Principal Reserves Fee Value
LSC 162nd Capital I LLC 45.45 % $ 4,234 1.50 % February 5, 2019 March 1, 2020 Libor plus 7.50% (Floor of 10%) $ 4,234 $ (191 ) $ (22 ) $ 4,021

LSC 162nd Capital II LLC 45.45 % $ 9,166 1.50 % February 5, 2019 March 1, 2020 Libor plus 7.50% (Floor of 10%) 9,166 (413 ) (48 ) 8,705

LSC 47-16 Greenpoint LLC 50 % $ 13,000 1.00 % April 5, 2019 April 4, 2020 Libor plus 5.75% (Floor of 8.25%) 13,000 (161 ) (66 ) 12,773

LSC 1543 7th LLC 50 % $ 20,000 1.00 % August 27, 2019 August 26, 2020 Libor plus 5.15% (Floor of 7.65%) 20,000 (895 ) (181 ) 18,924

LSC 1650 Lincoln LLC 50 % $ 24,000 1.00 % August 27, 2019 August 26, 2020 Libor plus 5.15% (Floor of 7.65%) 24,000 (1,074 ) (217 ) 22,709

Total $ 70,400 $ (2,734 ) $ (534 ) $ 67,132
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:
For the Three For the Three For the Nine For the Nine
Months Ended Months Ended Months Ended Months Ended
Joint Venture/Lender September 30,
2019 September 30,
2018 September 30,
2019 September 30,
2018
LSC 162nd Capital I LLC $ 118 $ - $ 321 $ -

LSC 162nd Capital II LLC 269 - 695 -

LSC 47-16 Greenpoint LLC 313 - 597 -

LSC 1543 7th LLC 168 - 168 -

LSC 1650 Lincoln LLC 201 - 202 -

Total $ 1,069 $ - $ 1,983 $ -
Distribution Reinvestment Program (“DRIP”), Share Repurchase Program and Tender Offer

Our DRIP provides our stockholders with an opportunity to purchase additional shares of our common stock at a discount by reinvesting distributions. Our share repurchase program may provide our stockholders with limited, interim liquidity by enabling them to sell their shares of common stock back to us, subject to restrictions. From our inception through December 31, 2018 we repurchased approximately 5.0 million shares of common stock. For the ~~three~~nine months ended ~~March 31,~~September 30, 2019, we repurchased ~~306,182~~869,886 shares of common stock for $10.87 per share, pursuant to our share repurchase program. We funded share repurchases for the periods noted above from the cumulative proceeds of the sale of our shares pursuant to our DRIP and from our operating funds.
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On May 10, 2018, the Board of Directors amended the share repurchase program to (i) change to the price for all purchases under our share repurchase program from $10.00 per share to 92% of the estimated net asset value per share of the Company’s common stock (previously the purchase price was $10.00 per share) and (ii) increase the number of shares repurchased during any calendar year from two (2.0%) of the weighted average number of shares outstanding during the prior calendar year to five (5.0%) of the weighted average number of shares outstanding during the previous twelve months.

On January 19, 2015, the Board of Directors suspended our DRIP effective April 15, 2015.

On October 16, 2018, the Company mailed a prospectus related to its amended and restated DRIP to its existing stockholders. The DRIP was reactivated as amended and restated effective on October 25, 2018.

Pursuant to the DRIP following its reactivation, the Company’s stockholders who elect to participate may invest all or a portion of the cash distributions that the Company pays them on shares of the Company’s common stock in additional shares of the Company’s common stock without paying any fees or commissions. The purchase price for shares under the DRIP will be equal to 95% of the Company’s current estimated per-share net asset value (the “Estimated Per-Share NAV”), as determined by the Company’s board of directors and reported by the Company from time to time.On December 13, 2018, our Board of Directors determined our NAV per Share of $11.82 as of September 30, 2018, which resulted in a purchase price for shares under the DRIP of $11.23 per share. As of ~~March 31,~~September 30, 2019, we had ~~approximately10.0~~approximately 10.0 million shares available for issuance under our DRIP.

Our Board of Directors reserves the right to terminate either program for any reason without cause by providing written notice of termination of the DRIP to all participants or written notice of termination of the share repurchase program to all stockholders.

Tender Offer

The Company commenced a tender offer on April 19, 2019, pursuant to which it is ~~offering~~offered to acquire up to 0.5 million shares of its common stock ~~from the holders of the shares~~ at a purchase price ~~equal to~~of $7.00 per share, or $3.5 million in the aggregate (the “Tender Offer”). ~~Unless extended or withdrawn,~~Pursuant to the ~~Tender Offer will expire on May 31, 2019. The Company has suspended its share repurchase program during the pendency~~terms of the Tender Offer, ~~as required by~~which expired on June 14, 2019, the ~~rules~~Company repurchased approximately 63,532 of ~~the United States Securities and Exchange Commission. No repurchases will be made under the~~its shares of common stock at $7.00 per share, ~~repurchase program during the pendency~~or an aggregate of ~~this Tender Offer and for ten business days thereafter.~~approximately $0.4 million.

Contractual Obligations

The following is a summary of our contractual obligations outstanding over the next five years and thereafter as of ~~March 31,~~September 30, 2019.

Contractual Obligations 2019 2020 2021 2022 2023 Thereafter Total 2019 2020 2021 2022 2023 Thereafter Total
Mortgage Payable $ 1,210 $ 83,026 $ 1,328 $ 1,389 $ 1,454 $ 66,697 $ 155,104 $ 311 $ 70,512 $ 1,328 $ 1,389 $ 1,454 $ 66,696 $ 141,690
Interest Payments¹ 5,864 6,446 3,191 3,130 3,065 2,917 24,613 1,760 5,993 3,191 3,130 3,065 2,917 20,056

Total Contractual Obligations $ 7,074 $ 89,472 $ 4,519 $ 4,519 $ 4,519 $ 69,614 $ 179,717 $ 2,071 $ 76,505 $ 4,519 $ 4,519 $ 4,519 $ 69,613 $ 161,746

1) These amounts represent future interest payments related to mortgage payable obligations based on the fixed and variable interest rates specified in the associated debt agreement. All variable rate debt agreements are based on the one month LIBOR rate. For purposes of calculating future interest amounts on variable interest rate debt the one month LIBOR rate as of ~~March 31,~~September 30, 2019 was used.

Notes Payable
Margin Loan

We have access to a margin loan (the “Margin Loan”) from a financial institution that holds custody of certain of our marketable securities. The Margin Loan, which is due on demand, bears interest at Libor plus 0.85% ~~(3.35%~~(2.87% as of ~~March 31,~~September 30, 2019) and is collateralized by the marketable securities in our account. The amounts available to us under the Margin Loan are at the discretion of the financial institution and not limited to the amount of collateral in our account. There were no amounts outstanding under the Margin Loan as of ~~March 31,~~September 30, 2019 and December 31, 2018.

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Line of Credit

We have a non-revolving credit facility (the “Line of Credit”) with a financial institution which permits borrowings up to ~~$25.0~~$20.0 million. The Line of Credit expires on June 19, ~~2019~~2021 and bears interest at Libor plus 1.35% ~~(3.85%~~(3.37% as of ~~March 31,~~September 30, 2019). The Line of Credit is collateralized by approximately 209,000 Marco OP Units and PRO has guaranteed the Line of Credit. ~~The amount outstanding under the Line of Credit was $18.0 million as of March 31, 2019 and is included in Notes Payable on the consolidated balance sheets.~~ No amounts were outstanding under the Line of Credit as of September 30, 2019 and December 31, 2018. ~~We subsequently repaid the amount outstanding under the Line of Credit in full during April 2019.~~

We currently intend to seek to extend or replace the Line of Credit on or before its expiration. If we are unable to extend or replace the Line of Credit, we will repay the then outstanding balance, if any, in full at the expiration date using working capital, cash proceeds from the sale of assets and/or redemptions of our preferred investments in related parties.
Funds from Operations and Modified Funds from Operations

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

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

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

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

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

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

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

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

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

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

The below table illustrates the items deducted in the calculation of FFO and MFFO. Items are presented net of non-controlling interest portions where applicable.

For the Three Months Ended
March 31, 2019 March 31, 2018
Net income/(loss) $ 20,227 $ (795 )
FFO adjustments:
Depreciation and amortization:
Depreciation and amortization of real estate assets 1,279 1,311
Equity in depreciation and amortization for unconsolidated affiliated real estate entities - -
Discontinued operations
Depreciation and amortization of real estate assets 121 462
Gain on disposal of investment property (70 ) -

FFO 21,557 978
MFFO adjustments:
Other Adjustment
Acquisition and other transaction related costs expensed⁽¹⁾ (22 ) -
Amortization of above or below market leases and liabilities⁽²⁾ (35 ) (35 )
Discontinued operations:
Gain on debt extinguishment (13,615 ) -
Accretion of discounts and amortization of premiums on debt investments - -
Mark-to-market adjustments⁽³⁾ (3,068 ) 3,699
Non-recurring (losses)/gains from extinguishment/sale of debt, derivatives or securities holdings⁽⁴⁾ 311 3

MFFO 5,128 4,645
Straight-line rent⁽⁵⁾ $ (4 ) $ 15
MFFO - IPA recommended format⁽⁶⁾ $ 5,124 $ 4,660

Net income/(loss) $ 20,227 $ (795 )
Less: (income)/loss attributable to noncontrolling interests (854 ) 110
Net income/(loss) applicable to Company's common shares $ 19,373 $ (685 )
Net income/(loss) per common share, basic and diluted $ 0.83 $ (0.03 )

FFO $ 21,557 $ 978
Less: FFO attributable to noncontrolling interests (1,047 ) (88 )
FFO attributable to Company's common shares $ 20,510 $ 890
FFO per common share, basic and diluted $ 0.87 $ 0.04

MFFO - IPA recommended format $ 5,124 $ 4,660
Less: MFFO attributable to noncontrolling interests (577 ) (450 )
MFFO attributable to Company's common shares $ 4,547 $ 4,210

Weighted average number of common shares outstanding, basic and diluted 23,478 24,781
For the Three Months Ended For the Nine Months Ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Net income $ 4,686 $ 4,489 $ 23,800 $ 16,607
FFO adjustments:
Depreciation and amortization:
Depreciation and amortization of real estate assets 1,241 1,300 3,822 3,987
Gain on disposal of investment property (1,013 ) - (1,013 ) -
Discontinued operations
Depreciation and amortization of real estate assets - 338 121 1,229
Gain on disposal of investment property - - (70 ) (7,137 )

FFO 4,914 6,127 26,660 14,686
MFFO adjustments:
Other Adjustment
Acquisition and other transaction related costsexpensed⁽¹⁾ - - (22 ) -
Amortization of above or below market leases andliabilities⁽²⁾ (35 ) (35 ) (105 ) (105 )
Discontinued operations:
(Gain)loss on debt extinguishment - - (13,615 ) 117
Accretion of discounts and amortization of premiums on debt investments - - - -
Mark-to-market adjustments⁽³⁾ 609 (1,448 ) 2,408 (1,259 )
Non-recurring gains from extinguishment/saleof debt, derivatives or securities holdings⁽⁴⁾ 94 3 719 81

MFFO 5,582 4,647 16,045 13,520
Straight-line rent⁽⁵⁾ $ 29 $ 13 $ 33 $ 125
MFFO - IPA recommended format⁽⁶⁾ $ 5,611 $ 4,660 $ 16,078 $ 13,645

Net income $ 4,686 $ 4,489 $ 23,800 $ 16,607
Less: income attributable to noncontrolling interests (809 ) (465 ) (1,968 ) (1,108 )
Net income applicable to Company's common shares $ 3,877 $ 4,024 $ 21,832 $ 15,499
Net income  per common share, basic and diluted $ 0.17 $ 0.17 $ 0.94 $ 0.63

FFO $ 4,914 $ 6,127 $ 26,660 $ 14,686
Less: FFO attributable to noncontrollinginterests (764 ) (608 ) (2,307 ) (1,502 )
FFO attributable to Company's common shares $ 4,150 $ 5,519 $ 24,353 $ 13,184
FFO per common share, basic and diluted $ 0.18 $ 0.23 $ 1.05 $ 0.54

MFFO - IPA recommended format $ 5,611 $ 4,660 $ 16,078 $ 13,645
Less: MFFO attributable to noncontrolling interests (1,026 ) (470 ) (2,402 ) (1,391 )
MFFO attributable to Company's common shares $ 4,585 $ 4,190 $ 13,676 $ 12,254

Weighted average number of common shares outstanding, basic and diluted 22,859 24,299 23,168 24,575

33

Notes:

(1) The purchase of properties, and the corresponding expenses associated with that process, is a key operational feature of our business plan to generate operational income and cash flows in order to make distributions to investors. In evaluating investments in real estate, management differentiates the costs to acquire the investment from the operations derived from the investment. Such information would be comparable only for non-listed REITs that have completed their acquisition activity and have other similar operating characteristics. By excluding expensed acquisition costs, management believes MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. Acquisition fees and expenses include payments to our advisor or third parties. Acquisition fees and expenses under GAAP are considered operating expenses and as expenses included in the determination of net income and income from continuing operations, both of which are performance measures under GAAP. Such fees and expenses are paid in cash, and therefore such funds will not be available to distribute to investors. Such fees and expenses negatively impact our operating performance during the period in which properties are being acquired. Therefore, MFFO may not be an accurate indicator of our operating performance, especially during periods in which properties are being acquired. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to the property. Acquisition fees and expenses will not be paid or reimbursed, as applicable, to our advisor even if there are no further proceeds from the sale of shares in our offering, and therefore such fees and expenses would need to be paid from either additional debt, operational earnings or cash flows, net proceeds from the sale of properties or from ancillary cash flows.

(2) Under GAAP, certain intangibles are accounted for at cost and reviewed at least annually for impairment, and certain intangibles are assumed to diminish predictably in value over time and amortized, similar to depreciation and amortization of other real estate related assets that are excluded from FFO. However, because real estate values and market lease rates historically rise or fall with market conditions, management believes that by excluding charges relating to amortization of these intangibles, MFFO provides useful supplemental information on the performance of the real estate.

(3) Management believes that adjusting for mark-to-market adjustments is appropriate because they are nonrecurring items that may not be reflective of ongoing operations and reflects unrealized impacts on value based only on then current market conditions, although they may be based upon current operational issues related to an individual property or industry or general market conditions. Mark-to-market adjustments are made for items such as ineffective derivative instruments, certain marketable equity securities and any other items that GAAP requires we make a mark-to-market adjustment for. The need to reflect mark-to-market adjustments is a continuous process and is analyzed on a quarterly and/or annual basis in accordance with GAAP.
(4) Management believes that adjusting for gains or losses related to extinguishment/sale of debt, derivatives or securities holdings is appropriate because they are items that may not be reflective of ongoing operations. By excluding these items, management believes that MFFO provides supplemental information related to sustainable operations that will be more comparable between other reporting periods.
(5) Under GAAP, rental receipts are allocated to periods using various methodologies. This may result in income recognition that is significantly different than underlying contract terms. By adjusting for these items (to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments, providing insight on the contractual cash flows of such lease terms and debt investments, and aligns results with management’s analysis of operating performance.

34
~~The~~The table below presents our cumulative distributions paid and cumulative FFO attributable to the Company’s common shares:

From inception
through From inception
through
March 31, 2019 September 30,
2019

FFO attributable to Company’s common shares $ 228,572
FFO attributable to 0Company’s common shares $ 232,415
Distributions paid $ 219,951 $ 228,021

On ~~April~~Oct 15, 2019, the distribution for the three-month period ending ~~March 31,~~September 30, 2019 of ~~$4.1~~$4.0 million was paid in full using a combination of cash and approximately ~~5,000~~7,000 shares of the Company’s common stock issued pursuant to the Company’s DRIP, at a discounted price of $11.23 per share.

The amount of distributions paid to our stockholders in the future will be determined by our Board and is dependent on a number of factors, including funds available for payment of dividends, our financial condition, capital expenditure requirements and annual distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code.
New Accounting Pronouncements

See Note 2 to the Notes to Consolidated Financial Statements for further information of certain accounting standards that have been adopted during 2019, if any, and certain accounting standards that we have not yet been required to implement and may be applicable to our future operations.

ITEM 4. CONTROLS AND PROCEDURES.

As of the end of the period covered by this report, management, including our chief executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of the evaluation, our chief executive officer and principal financial officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required.

There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. There were no material weaknesses identified in the evaluation, and therefore, no corrective actions were taken.

PART II. OTHER INFORMATION:

ITEM 1. 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, the Company is not a party to any material pending legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on its results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.
35

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

Exhibit
Number
Description
31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.2* Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15 d-14(a) of the Securities Exchange Act, as amended.
32.1* Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551 this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
32.2* Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551 this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
101* XBRL (eXtensible Business Reporting Language). The following financial information from Lightstone Value Plus Real Estate Investment Trust, Inc. on Form 10-Q for the quarter ended ~~March 31,~~September 30, 2019, filed with the SEC on ~~May 15,~~November 12, 2019, formatted in XBRL includes: (1) Consolidated Balance Sheets, (2) Consolidated Statements of Operations, (3) Consolidated Statements of Comprehensive Income, (4) Consolidated Statements of Stockholders’ Equity, (5) Consolidated Statements of Cash Flows and (6) the Notes to the Consolidated Financial Statement.

*Filed herewith

36

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

LIGHTSTONE VALUE PLUS REAL ESTATE

INVESTMENT TRUST, INC.
Date:     ~~May 15,~~November 12, 2019 By:   /s/ David Lichtenstein
David Lichtenstein
Chairman and Chief Executive Officer (Principal Executive Officer)

Date:     ~~May 15,~~November 12, 2019 By:   /s/ Seth Molod
Seth Molod

Chief Financial Officer and Treasurer
(Duly Authorized Officer and Principal Financial and Accounting Officer)

37

1985 Cedar Bridge Avenue, Suite 1
Lakewood, New Jersey		08701
(Address of Principal Executive Offices)		(Zip Code)

Large accelerated filer ¨			Accelerated filer ¨
Non-accelerated filer þx			Smaller reporting company þx
			Emerging growth company¨

		Page
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	3

	Consolidated Balance Sheets as of ~~March 31,~~September 30, 2019 and December 31, 2018	3

	Consolidated Statements of Operations for the Three and Nine Months Ended ~~March 31,~~September 30, 2019 and 2018	4

	Consolidated Statements of Comprehensive (Loss)/Income for the Three and Nine Months Ended ~~March 31,~~September 30, 2019 and 2018	5

	Consolidated ~~Statement~~Statements of Stockholders’ Equity for the Three and Nine Months Ended ~~March 31,~~September 30, 2019 and 2018	6

	Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2019 and 2018	7

	Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 4.	Controls and Procedures	3537

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	3538

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3638

Item 3.	Defaults Upon Senior Securities	3638

Item 4.	Mine Safety Disclosures	3638

Item 5.	Other Information	3638

Item 6.	Exhibits	3638

	As of March 31, 2019			As of December 31, 2018			As ofSeptember 30, 2019			As ofDecember 31, 2018
	(unaudited)						(unaudited)
Assets
Investment property:
Land and improvements	$	36,687		$	36,786		$	30,664		$	36,786
Building and improvements		117,112			117,852			101,674			117,852
Furniture and fixtures		2,284			2,265			2,346			2,265
Construction in progress		137,817			63,519			148,160			63,519
Gross investment property		293,900			220,422			282,844			220,422
Less accumulated depreciation		(30,455	)		(30,028	)		(28,700	)		(30,028	)
Net investment property		263,445			190,394			254,144			190,394
Investments in related parties		82,039			102,008			77,223			102,008
Cash and cash equivalents		69,752			35,565			22,834			35,565
Marketable securities and other investments		63,267			106,949			55,562			106,949
Restricted cash		2,965			1,017			1,608			1,017
Notes receivable, net		11,944			-			67,132			-
Prepaid expenses and other assets		3,027			3,050			2,122			3,050
Assets held for disposition		-			37,226			-			37,226

Total Assets	$	496,439		$	476,209		$	480,625		$	476,209

Liabilities and Stockholders' Equity
Mortgages payable, net	$	151,109		$	118,401		$	139,013		$	118,401
Notes payable, net		17,996			-
Accounts payable, accrued expenses and other liabilities		3,202			3,024			2,912			3,024
Due to related parties		341			432			337			432
Tenant allowances and deposits payable		706			611			587			611
Distributions payable		4,043			4,134			3,992			4,134
Deferred rental income		715			662			523			662
Liabilities held for disposition		-			50,704			-			50,704

Total Liabilities		178,112			177,968			147,364			177,968

Commitments and contingencies

Stockholders' equity:
Company's Stockholders Equity:
Preferred shares, $0.01 par value, 10,000 shares authorized, none issued and outstanding		-			-
Common stock, $0.01 par value; 60,000 shares authorized, 23,407 and 23,708 shares issued and outstanding, respectively		235			237
Preferred shares, $0.01 par value, 10.0 million shares authorized, none issued and outstanding								-			-
Common stock, $0.01 par value; 60.0 million shares authorized, 22.8 million and 23.7 million shares issued and outstanding, respectively								228			237
Additional paid-in-capital		181,196			184,469			174,754			184,469
Accumulated other comprehensive loss		(615	)		(2,251	)
Accumulated other comprehensive income/(loss)								128			(2,251	)
Accumulated surplus		116,659			101,382			111,102			101,382

Total Company's stockholders' equity		297,475			283,837			286,212			283,837
		-			-
Noncontrolling interests		20,852			14,404			47,049			14,404

Total Stockholders' Equity		318,327			298,241			333,261			298,241

Total Liabilities and Stockholders' Equity	$	496,439		$	476,209		$	480,625		$	476,209

	Common						Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total Stockholders'
	Shares			Amount			Capital			Income/(loss)			Surplus			Interests			Equity
BALANCE, December 31, 2018		23,708		$	237		$	184,469		$	(2,251	)	$	101,382		$	14,404		$	298,241
Net income		-			-			-			-			19,373			854			20,227
Other comprehensive income		-			-			-			1,636			-			35			1,671
Distributions declared (a)		-			-			-			-			(4,096	)		-			(4,096	)
Distributions paid to noncontrolling interests		-			-			-			-			-			(831	)		(831	)
Contributions received from noncontrolling interests		-			-			-			-			-			6,390			6,390
Redemption and cancellation of shares		(306	)		(3	)		(3,325	)											(3,328	)
Shares issued from distribution reinvestment program		5			1			52			-			-			-			53
BALANCE, March 31, 2019		23,407		$	235		$	181,196		$	(615	)	$	116,659		$	20,852		$	318,327

	Company's			Original							Initial		Contractual	As of September 30, 2019
Joint Venture/Lender	Ownership Percentage			Loan Amount		Origination Fee			Origination Date		Maturity Date		Interest Rate	Outstanding Principal		Reserves			Unamortized Origination Fee			Carrying Value
LSC 162nd Capital I LLC		45.45	%	$	4,234		1.50	%		February 5, 2019		March 1, 2020	Libor plus 7.50% (Floor of 10%)	$	4,234	$	(191	)	$	(22	)	$	4,021

LSC 162nd Capital II LLC		45.45	%	$	9,166		1.50	%		February 5, 2019		March 1, 2020	Libor plus 7.50% (Floor of 10%)		9,166		(413	)		(48	)		8,705

LSC 47-16 Greenpoint LLC		50	%	$	13,000		1.00	%		April 5, 2019		April 4, 2020	Libor plus 5.75% (Floor of 8.25%)		13,000		(161	)		(66	)		12,773

LSC 1543 7th LLC		50	%	$	20,000		1.00	%		August 27, 2019		August 26, 2020	Libor plus 5.15% (Floor of 7.65%)		20,000		(895	)		(181	)		18,924

LSC 1650 Lincoln LLC		50	%	$	24,000		1.00	%		August 27, 2019		August 26, 2020	Libor plus 5.15% (Floor of 7.65%)		24,000		(1,074	)		(217	)		22,709

Total														$	70,400	$	(2,734	)	$	(534	)	$	67,132

	For the Three Months		For the Three Months		For the Nine Months		For the Nine Months
	Ended		Ended		Ended		Ended
Joint Venture/Lender	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
LSC 162nd Capital I LLC	$	118	$	-	$	321	$	-

LSC 162nd Capital II LLC		269		-		695		-

LSC 47-16 Greenpoint LLC		313		-		597		-

LSC 1543 7th LLC		168		-		168		-

LSC 1650 Lincoln LLC		201		-		202		-

Total	$	1,069	$	-	$	1,983	$	-

Property	Interest Rate			Weighted Average Interest Rate as of March 31, 2019			Maturity Date	Amount Due at Maturity		As of March 31, 2019			As of December 31, 2018			Interest Rate		Weighted Average Interest Rate as of September 30, 2019			Maturity Date	Amount Due at Maturity		As of September 30, 2019			As of December 31, 2018

Gantry Park		4.48	%		4.48	%	November 2024	$	65,317	$	73,031		$	73,341			4.48%		4.48	%	November 2024	$	65,317	$	72,438		$	73,341

DePaul Plaza		LIBOR + 2.75	%		5.26	%	June 2020		13,494		13,971			14,072				(Repaid in full on September 20, 2019)					-		-			14,072

Bowery Land and Air Rights		LIBOR + 4.25	%		6.76	%	December 2020		33,102		33,102			32,567			LIBOR + 4.25%		6.71	%	December 2020		34,252		34,252			32,567

Exterior Street Land		4.50	%		4.50	%	April 2020		35,000		35,000			-			4.50%		4.50	%	April 2020		35,000		35,000			-

Total mortgages payable					5.04	%		$	146,913		155,104			119,980					5.02	%		$	134,569		141,690			119,980

Less: Deferred financing costs											(3,995	)		(1,579	)										(2,677	)		(1,579	)

Total mortgages payable, net										$	151,109		$	118,401										$	139,013		$	118,401

	2019		2020		2021		2022		2023		Thereafter		Total
																2019		2020		2021		2022		2023		Thereafter		Total
Principal maturities	$	1,210	$	83,026	$	1,328	$	1,389	$	1,454	$	66,697	$	155,104		$	311	$	70,512	$	1,328	$	1,389	$	1,454	$	66,696	$	141,690

Less: Deferred financing costs														(3,995	)														(2,677	)

Total principal maturities, net													$	151,109														$	139,013

	As of
	December 31, 2018		As of
			December 31, 2018
Net investment property	$	32,778	$	32,778
Restricted escrows		3,274		3,274
Other assets		1,174		1,174
Total assets held for disposition	$	37,226	$	37,226

Mortgages payable	$	30,642	$	30,642
Accounts payable and accrued expenses		19,069		19,069
Other liabilities		993		993
Total liabilities held for disposition	$	50,704	$	50,704

	Three Months Ended March 31,
	2019		2018
Acquisition fees (capitalized and are reflected in the carrying value of the investment)	$	1,823	$	-
Asset management fees (general and administrative costs)		336		465
Property management fees (property operating expenses)		79		87
Development fees and leasing commissions*		74		77
Total	$	2,312	$	629

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Acquisition fees (capitalized and are reflected in the carrying value of the investment)	$	-	$	-	$	1,823	$	-
Asset management fees (general and administrative costs)		303		392		941		1,283
Property management fees (property operating expenses)		67		120		222		409
Development fees and leasing commissions*		-		62		167		182
Total	$	370	$	574	$	3,153	$	1,874
* Generally, capitalized and amortized over the estimated useful life of the associated asset.

				Preferred Investment Balance				Unfunded Contributions		Investment Income							Preferred Investment Balance				Investment Income⁽¹⁾
				As of		As of		As of		Three Months Ended March 31,							As of		As of		Three Months Ended September 30,				Nine Months Ended September 30,
Preferred Investments	Dividend Rate			March 31, 2019		December 31, 2018		March 31, 2019		2019		2018		Dividend Rate			September 30, 2019		December 31, 2018		2019		2018		2019		2018
40 East End Avenue		12	%	$	30,000	$	30,000	$	-	$	900	$	900		12	%	$	30,000	$	30,000	$	920	$	920	$	2,730	$	2,730
30-02 39^th Avenue		12	%		-		10,000		-		140		300		12	%		-		10,000		-		307		140		910
485 7th Avenue		12	%		-		-		-		-		1,025		12	%		-		-		-		-		-		1,095
East 11th Street		12	%		33,000		43,000		-		1,100		1,481		12	%		26,000		43,000		797		1,763		2,705		4,970
Miami Moxy		12	%		17,733		17,733		2,267		532		374		12	%		20,000		17,733		615		457		1,705		1,229
Total Preferred Investments				$	80,733	$	100,733	$	2,267	$	2,672	$	4,080				$	76,000	$	100,733	$	2,332	$	3,447	$	7,280	$	10,934

	As of March 31, 2019				As of December 31, 2018
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Mortgages payable	$	155.1	$	154.9	$	120.0	$	119.8

												As of September 30, 2019
	Company's Ownership			Original Loan		Origination			Origination	Initial Maturity	Contractual Interest	Outstanding					Unamortized Origination			Carrying
Joint Venture/Lender	Percentage			Amount		Fee			Date	Date	Rate	Principal		Reserves			Fee			Value
LSC 162nd Capital I LLC		45.45	%	$	4,234		1.50	%	February 5, 2019	March 1, 2020	Libor plus 7.50% (Floor of 10%)	$	4,234	$	(191	)	$	(22	)	$	4,021

LSC 162nd Capital II LLC		45.45	%	$	9,166		1.50	%	February 5, 2019	March 1, 2020	Libor plus 7.50% (Floor of 10%)		9,166		(413	)		(48	)		8,705

LSC 47-16 Greenpoint LLC		50	%	$	13,000		1.00	%	April 5, 2019	April 4, 2020	Libor plus 5.75% (Floor of 8.25%)		13,000		(161	)		(66	)		12,773

LSC 1543 7th LLC		50	%	$	20,000		1.00	%	August 27, 2019	August 26, 2020	Libor plus 5.15% (Floor of 7.65%)		20,000		(895	)		(181	)		18,924

LSC 1650 Lincoln LLC		50	%	$	24,000		1.00	%	August 27, 2019	August 26, 2020	Libor plus 5.15% (Floor of 7.65%)		24,000		(1,074	)		(217	)		22,709

Total												$	70,400	$	(2,734	)	$	(534	)	$	67,132

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
Joint Venture/Lender	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
LSC 162nd Capital I LLC	$	118	$	-	$	321	$	-

LSC 162nd Capital II LLC		269		-		695		-

LSC 47-16 Greenpoint LLC		313		-		597		-

LSC 1543 7th LLC		168		-		168		-

LSC 1650 Lincoln LLC		201		-		202		-

Total	$	1,069	$	-	$	1,983	$	-

Contractual Obligations	2019		2020		2021		2022		2023		Thereafter		Total		2019		2020		2021		2022		2023		Thereafter		Total
Mortgage Payable	$	1,210	$	83,026	$	1,328	$	1,389	$	1,454	$	66,697	$	155,104	$	311	$	70,512	$	1,328	$	1,389	$	1,454	$	66,696	$	141,690
Interest Payments¹		5,864		6,446		3,191		3,130		3,065		2,917		24,613		1,760		5,993		3,191		3,130		3,065		2,917		20,056

Total Contractual Obligations	$	7,074	$	89,472	$	4,519	$	4,519	$	4,519	$	69,614	$	179,717	$	2,071	$	76,505	$	4,519	$	4,519	$	4,519	$	69,613	$	161,746

	For the Three Months Ended
	March 31, 2019			March 31, 2018
Net income/(loss)	$	20,227		$	(795	)
FFO adjustments:
Depreciation and amortization:
Depreciation and amortization of real estate assets		1,279			1,311
Equity in depreciation and amortization for unconsolidated affiliated real estate entities		-			-
Discontinued operations
Depreciation and amortization of real estate assets		121			462
Gain on disposal of investment property		(70	)		-

FFO		21,557			978
MFFO adjustments:
Other Adjustment
Acquisition and other transaction related costs expensed⁽¹⁾		(22	)		-
Amortization of above or below market leases and liabilities⁽²⁾		(35	)		(35	)
Discontinued operations:
Gain on debt extinguishment		(13,615	)		-
Accretion of discounts and amortization of premiums on debt investments		-			-
Mark-to-market adjustments⁽³⁾		(3,068	)		3,699
Non-recurring (losses)/gains from extinguishment/sale of debt, derivatives or securities holdings⁽⁴⁾		311			3

MFFO		5,128			4,645
Straight-line rent⁽⁵⁾	$	(4	)	$	15
MFFO - IPA recommended format⁽⁶⁾	$	5,124		$	4,660

Net income/(loss)	$	20,227		$	(795	)
Less: (income)/loss attributable to noncontrolling interests		(854	)		110
Net income/(loss) applicable to Company's common shares	$	19,373		$	(685	)
Net income/(loss) per common share, basic and diluted	$	0.83		$	(0.03	)

FFO	$	21,557		$	978
Less: FFO attributable to noncontrolling interests		(1,047	)		(88	)
FFO attributable to Company's common shares	$	20,510		$	890
FFO per common share, basic and diluted	$	0.87		$	0.04

MFFO - IPA recommended format	$	5,124		$	4,660
Less: MFFO attributable to noncontrolling interests		(577	)		(450	)
MFFO attributable to Company's common shares	$	4,547		$	4,210

Weighted average number of common shares outstanding, basic and diluted		23,478			24,781

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Net income	$	4,686		$	4,489		$	23,800		$	16,607
FFO adjustments:
Depreciation and amortization:
Depreciation and amortization of real estate assets		1,241			1,300			3,822			3,987
Gain on disposal of investment property		(1,013	)		-			(1,013	)		-
Discontinued operations
Depreciation and amortization of real estate assets		-			338			121			1,229
Gain on disposal of investment property		-			-			(70	)		(7,137	)

FFO		4,914			6,127			26,660			14,686
MFFO adjustments:
Other Adjustment
Acquisition and other transaction related costsexpensed⁽¹⁾		-			-			(22	)		-
Amortization of above or below market leases andliabilities⁽²⁾		(35	)		(35	)		(105	)		(105	)
Discontinued operations:
(Gain)loss on debt extinguishment		-			-			(13,615	)		117
Accretion of discounts and amortization of premiums on debt investments		-			-			-			-
Mark-to-market adjustments⁽³⁾		609			(1,448	)		2,408			(1,259	)
Non-recurring gains from extinguishment/saleof debt, derivatives or securities holdings⁽⁴⁾		94			3			719			81

MFFO		5,582			4,647			16,045			13,520
Straight-line rent⁽⁵⁾	$	29		$	13		$	33		$	125
MFFO - IPA recommended format⁽⁶⁾	$	5,611		$	4,660		$	16,078		$	13,645

Net income	$	4,686		$	4,489		$	23,800		$	16,607
Less: income attributable to noncontrolling interests		(809	)		(465	)		(1,968	)		(1,108	)
Net income applicable to Company's common shares	$	3,877		$	4,024		$	21,832		$	15,499
Net income per common share, basic and diluted	$	0.17		$	0.17		$	0.94		$	0.63

FFO	$	4,914		$	6,127		$	26,660		$	14,686
Less: FFO attributable to noncontrollinginterests		(764	)		(608	)		(2,307	)		(1,502	)
FFO attributable to Company's common shares	$	4,150		$	5,519		$	24,353		$	13,184
FFO per common share, basic and diluted	$	0.18		$	0.23		$	1.05		$	0.54

MFFO - IPA recommended format	$	5,611		$	4,660		$	16,078		$	13,645
Less: MFFO attributable to noncontrolling interests		(1,026	)		(470	)		(2,402	)		(1,391	)
MFFO attributable to Company's common shares	$	4,585		$	4,190		$	13,676		$	12,254

Weighted average number of common shares outstanding, basic and diluted		22,859			24,299			23,168			24,575

	From inception through		From inception through
	March 31, 2019		September 30, 2019

FFO attributable to Company’s common shares	$	228,572
FFO attributable to 0Company’s common shares			$	232,415
Distributions paid	$	219,951	$	228,021

Exhibit Number		Description

31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15 d-14(a) of the Securities Exchange Act, as amended.
32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551 this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551 this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
101*		XBRL (eXtensible Business Reporting Language). The following financial information from Lightstone Value Plus Real Estate Investment Trust, Inc. on Form 10-Q for the quarter ended ~~March 31,~~September 30, 2019, filed with the SEC on ~~May 15,~~November 12, 2019, formatted in XBRL includes: (1) Consolidated Balance Sheets, (2) Consolidated Statements of Operations, (3) Consolidated Statements of Comprehensive Income, (4) Consolidated Statements of Stockholders’ Equity, (5) Consolidated Statements of Cash Flows and (6) the Notes to the Consolidated Financial Statement.

Date: ~~May 15,~~November 12, 2019	By:	/s/ David Lichtenstein
		David Lichtenstein
		Chairman and Chief Executive Officer (Principal Executive Officer)