☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November 10, 2021,~~August 8, 2022, the Registrant had approximately 20.1 million shares of common stock outstanding.

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements.

~~Item 1. Financial Statements.~~

Lightstone Value Plus REIT V, Inc.

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)


	September 30, 2021			December 31, 2020			June 30, 2022			December 31, 2021
	(unaudited)						(unaudited)
Assets

Investment property:
Land and improvements	$	76,892		$	63,873		$	83,822		$	83,599
Building and improvements		294,753			248,079			320,303			316,370
Furniture, fixtures and equipment		8,473			6,552			9,331			8,952
Gross investment property		380,118			318,504			413,456			408,921
Less accumulated depreciation		(59,493	)		(50,823	)		(52,497	)		(45,915	)
Net investment property		320,625			267,681			360,959			363,006

Cash and cash equivalents		38,065			27,078			59,435			24,360
Marketable securities, available for sale		3,674			3,654			3,446			3,645
Restricted cash		7,148			4,373			4,716			20,879
Note receivable, net		13,742			12,794			5,422			13,919
Prepaid expenses and other assets		4,148			1,604			4,252			5,690
Assets held for sale		-			24,140
Total Assets	$	387,402		$	341,324		$	438,230		$	431,499

Liabilities and Stockholders’ Equity

Notes payable, net	$	270,593		$	212,989		$	288,997		$	277,598
Accounts payable and accrued and other liabilities		8,502			6,530
Liabilities held for sale		-			37,165
Accounts payable, accrued expenses and other liabilities								8,617			8,031
Total liabilities		279,095			256,684			297,614			285,629

Commitments and Contingencies

Stockholders’ Equity:

Company’s stockholders’ equity:
Preferred stock, $.0001 par value per share; 50.0 million shares authorized, NaN issued and outstanding		-			-			0			0
Convertible stock, $.0001 par value per share; 1,000 shares authorized, issued and outstanding		-			-			0			0
Common stock, $.0001 par value per share; 350.0 million shares authorized, 20.2 million shares issued and outstanding		2			2
Common stock, $.0001 par value per share; 350.0 million shares authorized, 20.1 million shares issued and outstanding								2			2
Additional paid-in-capital		186,686			189,216			170,507			171,079
Accumulated other comprehensive income		224			140
Accumulated other comprehensive (loss)/income								(174	)		13
Accumulated deficit		(77,142	)		(102,519	)		(29,719	)		(25,224	)
Total Company’s stockholders’ equity		109,770			86,839
Total stockholders’ equity								140,616			145,870

Noncontrolling interests		(1,463	)		(2,199	)
Total Stockholders’ Equity		108,307			84,640
Total Liabilities and Stockholders’ Equity	$	387,402		$	341,324		$	438,230		$	431,499

See Notes to Consolidated Financial Statements.

Lightstone Value Plus REIT V, Inc.

Consolidated Statements of Operations and Comprehensive Income

(dollars and shares in thousands, except per share amounts)

(unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020			For the Three Months Ended June 30,						For the Six Months Ended June 30,
													2022			2021			2022			2021
Rental revenues	$	11,187		$	10,185		$	30,864		$	29,662		$	11,612		$	9,390		$	22,818		$	19,677

Expenses
Property operating expenses		4,097			3,694			10,336			9,749			4,030			3,062			7,277			6,239
Real estate taxes		1,399			1,496			4,228			4,161			1,646			1,358			3,374			2,829
General and administrative		1,825			1,634			5,046			4,745			1,899			1,568			3,717			3,221
Depreciation and amortization		3,925			3,145			9,590			9,067			4,953			2,755			9,872			5,665
Total operating expenses		11,246			9,969			29,200			27,722			12,528			8,743			24,240			17,954

Operating (loss)/income		(59	)		216			1,664			1,940			(916	)		647			(1,422	)		1,723

Interest expense, net		(2,735	)		(2,556	)		(7,403	)		(7,087	)
Interest expense														(3,307	)		(2,215	)		(6,421	)		(4,668	)
Interest income		515			465			1,493			1,402			368			495			877			978
Gain on sale of investment property		0			0			27,821			5,474			0			0			0			27,825
Gain on disposition of unconsolidated joint venture		0			0			1,457			0			0			1,457			0			1,457
Mark to market adjustment on derivative financial instruments														492			0			1,110			0
Income tax benefit														0			0			776			0
Other income, net		190			196			490			522			247			115			585			296
Net (loss)/income		(2,089	)		(1,679	)		25,522			2,251			(3,116	)		499			(4,495	)		27,611
Net (income)/loss attributable to noncontrolling interests		(14	)		5			(145	)		(1,227	)
Net income attributable to noncontrolling interests														0			(54	)		0			(131	)
Net (loss)/income attributable to the Company’s shares	$	(2,103	)	$	(1,674	)	$	25,377		$	1,024		$	(3,116	)	$	445		$	(4,495	)	$	27,480
Weighted average shares outstanding:
Basic and diluted		20,157			20,201			20,181			20,925			20,089			20,193			20,100			20,193
Basic and diluted (loss)/income per share	$	(0.10	)	$	(0.08	)	$	1.26		$	0.05
Basic and diluted income/(loss) per share													$	(0.16	)	$	0.02		$	(0.22	)	$	1.36

Comprehensive (loss)/income:
Net (loss)/income	$	(2,089	)	$	(1,679	)	$	25,522		$	2,251		$	(3,116	)	$	499		$	(4,495	)	$	27,611
Other comprehensive income/(loss):
Holding (loss)/gain on marketable securities, available for sale		(20	)		(4	)		(68	)		96
Other comprehensive loss:
Holding loss on marketable securities, available for sale														(62	)		(6	)		(185	)		(48	)
Reclassification adjustment for loss/(gain) included in net (loss)/income		159			(11	)		152			(63	)		2			1			(2	)		(7	)
Total other comprehensive income/(loss)		139			(15	)		84			33
Comprehensive (loss)/income:		(1,950	)		(1,694	)		25,606			2,284
Comprehensive (income)/loss attributable to noncontrolling interests		(14	)		5			(145	)		(1,227	)
Comprehensive (loss)/income attributable to the Company’s shares	$	(1,964	)	$	(1,689	)	$	25,461		$	1,057
Total other comprehensive loss														(60	)		(5	)		(187	)		(55	)
Comprehensive(loss)/income:														(3,176	)		494			(4,682	)		27,556
Comprehensive income attributable to noncontrolling interests														0			(54	)		0			(131	)
Comprehensive(loss)/income attributable to the Company’s shares													$	(3,176	)	$	440		$	(4,682	)	$	27,425

See Notes to Consolidated Financial Statements.

Lightstone Value Plus REIT V, Inc.

Consolidated Statements of Stockholders’ Equity

(dollars and shares in thousands)

(unaudited)

Convertible Stock Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Noncontrolling Total Stockholders’
Shares Amount Shares Amount Capital Income Deficit Interests Equity

BALANCE, December 31, 2019 1 $ - 22,223 $ 2 $ 204,912 $ 111 $ (102,404 ) $ 478 $ 103,099

Net income - - - - - - 1,024 1,227 2,251
Distributions paid to noncontrolling interests - - - - - - - (3,488 ) (3,488 )
Tender of common stock - - (2,030 ) - (15,695 ) - - - (15,695 )
Other comprehensive loss:
Holding gain on marketable securities, available for sale - - - - - 96 - - 96
Reclassification adjustment for gain on sale of marketable securities included in net income - - - - - (63 ) - - (63 )
BALANCE, September 30, 2020 1 $ - 20,193 $ 2 $ 189,217 $ 144 $ (101,380 ) $ (1,783 ) $ 86,200

Accumulated Other
Convertible Additional Comprehensive Total
Stock Common Stock Paid-In (Loss)/ Accumulated Noncontrolling Stockholders’
Shares Amount Shares Amount Capital Income Deficit Interests Equity

BALANCE, June 30, 2020 1 $ - 20,220 $ 2 $ 189,311 $ 159 $ (99,706 ) $ (1,567 ) $ 88,199
-
Net loss - - - - - - (1,674 ) (5 ) (1,679 )
Distributions paid to noncontrolling interests - - - - - - - (211 ) (211 )
Tender of common stock - - (27 ) - (94 ) - - - (94 )
Other comprehensive loss:
Holding loss on marketable securities, available for sale - - - - - (4 ) - - (4 )
Reclassification adjustment for gain on sale of marketable securities included in net loss - - - - - (11 ) - - (11 )
BALANCE, September 30, 2020 1 $ - 20,193 $ 2 $ 189,217 $ 144 $ (101,380 ) $ (1,783 ) $ 86,200


	Convertible Stock				Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Income			Deficit			Interests			Equity
BALANCE, March 31, 2021		1	$	-		20,193	$	2	$	187,088	$	90		$	(75,484	)	$	(1,324	)	$	110,372
															-
Net income		-		-		-		-		-		-			445			54			499
Distributions paid to noncontrolling interests		-		-		-		-		-		-			-			(99	)		(99	)
Other comprehensive loss:
Holding loss on marketable securities, available for sale		-		-		-		-		-		(6	)		-			-			(6	)
Reclassification adjustment for loss on sale of marketable securities included in net income		-		-		-		-		-		1			-			-			1

BALANCE, June 30, 2021		1	$	-		20,193	$	2	$	187,088	$	85		$	(75,039	)	$	(1,369	)	$	110,767

													Accumulated
	Convertible									Additional			Other									Total
	Stock				Common Stock					Paid-In			Comprehensive			Accumulated			Noncontrolling			Stockholders’
	Shares		Amount		Shares			Amount		Capital			Income			Deficit			Interests			Equity			Convertible Stock				Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total Stockholders’
																									Shares		Amount		Shares		Amount		Capital			Income			Deficit			Interests			Equity
BALANCE, December 31, 2020		1	$	-		20,193		$	2	$	189,216		$	140		$	(102,519	)	$	(2,199	)	$	84,640			1	$	-		20,193	$	2	$	189,216		$	140		$	(102,519	)	$	(2,199	)	$	84,640

Net income		-		-		-			-		-			-			25,377			145			25,522			-		-		-		-		-			-			27,480			131			27,611
Distributions paid to noncontrolling interests		-		-		-			-		-			-			-			(451	)		(451	)		-		-		-		-		-			-			-			(343	)		(343	)
Acquisition of noncontrolling interest in a subsidiary		-		-		-			-		(2,128	)		-			-			1,042			(1,086	)		-		-		-		-		(2,128	)		-			-			1,042			(1,086	)
Redemption and cancellation of common stock						(43	)		-		(402	)		-			-			-			(402	)
Other comprehensive loss:
Holding loss on marketable securities, available for sale		-		-		-			-		-			(68	)		-			-			(68	)		-		-		-		-		-			(48	)		-			-			(48	)
Reclassification adjustment for gain on sale of marketable securities included in net income		-		-		-			-		-			152			-			-			152			-		-		-		-		-			(7	)		-			-			(7	)
BALANCE, September 30, 2021		1	$	-		20,150		$	2	$	186,686		$	224		$	(77,142	)	$	(1,463	)	$	108,307

BALANCE, June 30, 2021																										1	$	-		20,193	$	2	$	187,088		$	85		$	(75,039	)	$	(1,369	)	$	110,767

	Convertible Stock				Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated				Total Stockholders’
	Shares		Amount		Shares			Amount		Capital			Income			Deficit				Equity
BALANCE, March 31, 2022		1	$	-		20,104		$	2	$	170,764		$	(114	)	$	(26,603	)	-	$	144,049

Net loss		-		-		-			-		-			-			(3,116	)			(3,116	)
Redemption and cancellation of common stock		-		-		(20	)		-		(257	)		-			-				(257	)
Other comprehensive loss:
Holding loss on marketable securities, available for sale		-		-		-			-		-			(62	)		-				(62	)
Reclassification adjustment for loss on sale of marketable securities included in net loss		-		-		-			-		-			2			-		-		2

BALANCE, June 30, 2022		1	$	-		20,084		$	2	$	170,507		$	(174	)	$	(29,719	)	-	$	140,616

	Convertible									Additional			Accumulated Other									Total			Convertible Stock				Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated				Total Stockholders’
	Stock				Common Stock					Paid-In			Comprehensive			Accumulated			Noncontrolling			Stockholders'			Shares		Amount		Shares			Amount		Capital			Income			Deficit				Equity
	Shares		Amount		Shares			Amount		Capital			Income			Deficit			Interests			Equity
BALANCE, June 30, 2021		1	$	-		20,193		$	2	$	187,088		$	85		$	(75,039	)	$	(1,369	)	$	110,767
BALANCE, December 31, 2021																										1	$	-		20,128		$	2	$	171,079		$	13		$	(25,224	)	-	$	145,870

Net loss		-		-		-			-		-			-			(2,103	)		14			(2,089	)		-		-		-			-		-			-			(4,495	)			(4,495	)
Distributions paid to noncontrolling interests		-		-		-			-		-			-			-			(108	)		(108	)
Redemption and cancellation of common stock		-		-		(43	)		-		(402	)		-			-			-			(402	)		-		-		(44	)		-		(572	)		-			-				(572	)
Other comprehensive loss:		-		-		-			-		-			-			-			-			-
Holding loss on marketable securities, available for sale		-		-		-			-		-			(20	)		-			-			(20	)		-		-		-			-		-			(185	)		-				(185	)
Reclassification adjustment for gain on sale of marketable securities included in net loss		-		-		-			-		-			159			-			-			159			-		-		-			-		-			(2	)		-		-		(2	)
BALANCE, September 30, 2021		1	$	-		20,150		$	2	$	186,686		$	224		$	(77,142	)	$	(1,463	)	$	108,307

BALANCE, June 30, 2022																										1	$	-		20,084		$	2	$	170,507		$	(174	)	$	(29,719	)	-	$	140,616

See Notes to Consolidated Financial Statements.

Lightstone Value Plus REIT V, Inc.

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)


	For the Nine Months Ended September 30,
	2021			2020			For the Six Months Ended June 30,
							2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	25,522		$	2,251
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss)/income							$	(4,495	)	$	27,611
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation and amortization		9,590			9,067			9,872			5,665
Amortization of deferred financing fees		576			432			711			308
Gain on disposition of unconsolidated joint venture		(1,457	)		-			0			(1,457	)
Gain on sale of investment property		(27,821	)		(5,474	)		0			(27,825	)
Mark to market adjustment on derivative financial instruments								(1,110	)		0
Non-cash interest income		(976	)		(1,295	)		(324	)		(785	)
Other non-cash adjustments		34			(63	)		(2	)		0
Changes in operating assets and liabilities:
Decrease in prepaid expenses and other assets		2,537			(93	)
Decrease in accounts payable and accrued and other liabilities		(52	)		1,461
Decrease in payables to related parties		59			(3	)
(Increase)/decrease in prepaid expenses and other assets								(761	)		2,542
Increase/(decrease) in accounts payable, accrued expenses and other liabilities								515			(2,037	)
Net cash provided by operating activities		8,012			6,283			4,406			4,022

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment property		(64,755	)		(48,035	)		(4,464	)		(2,235	)
Purchases of marketable securities		(934	)		(1,280	)		(721	)		(795	)
Proceeds from sale of marketable securities		846			3,220			735			736
Funding of note receivable, net		-			(636	)
Proceeds from repayment of note receivable								8,821			0
Acquisition of noncontrolling interest		(1,086	)		-			0			(1,086	)
Proceeds from sale of investment property, net of closing costs		14,360			23,673			0			14,364
Proceeds from disposition of unconsolidated joint venture		1,457			-			0			1,457
Net cash used in investing activities		(50,112	)		(23,058	)
Net cash provided by investing activities								4,371			12,441

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable		59,350			65,620			11,587			0
Payments on notes payable		(677	)		(12,862	)		(867	)		(360	)
Proceeds from advance from advisor		-			25,000
Payments on advance from advisor		-			(25,000	)
Payment of loan fees and expenses		(1,958	)		(1,583	)		(13	)		0
Tender, redemption and cancellation of common stock		(402	)		(15,695	)
Distributions to noncontrolling interests		(451	)		(3,488	)
Net cash provided by financing activities		55,862			31,992
Redemption and cancellation of common stock								(572	)		0
Distributions to noncontrolling interest holders								0			(343	)
Net cash provided by/(used in) by financing activities								10,135			(703	)

Net change in cash, cash equivalents and restricted cash		13,762			15,217			18,912			15,760
Cash, cash equivalents and restricted cash, beginning of year		31,451			19,950			45,239			31,451
Cash, cash equivalents and restricted cash, end of period	$	45,213		$	35,167		$	64,151		$	47,211

Supplemental cash flow information for the periods indicated is as follows:
Cash paid for interest	$	6,793		$	6,538		$	5,667		$	4,385
Debt assumed by buyer in connection with disposition of investment property	$	35,700		$	-		$	0		$	35,700
Capital expenditures for real estate in accrued liabilities and accounts payable	$	122		$	259
Holding gain on marketable securities, available for sale	$	84		$	33
Capital expenditures for investment property in accrued liabilities and accounts payable							$	156		$	175
Holding loss on marketable securities, available for sale							$	187		$	55

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	$	38,065		$	27,811
Cash							$	59,435		$	25,074
Restricted cash		7,148			7,356			4,716			22,137
Total cash, cash equivalents and restricted cash	$	45,213		$	35,167
Total cash and restricted cash							$	64,151		$	47,211

See Notes to Consolidated Financial Statements.

Lightstone Value Plus REIT V, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

Business

Lightstone Value Plus REIT V, Inc. (“Lightstone REIT V”) which was formerly known as Lightstone Value Plus Real Estate Investment Trust V, Inc. before August 31, 2021, was organized as a Maryland corporation on January 9, 2007 and has elected to be taxed, and currently qualifies, as a real estate investment trust (“REIT”) for federal income tax purposes.

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

The Company was formed primarily to acquire and operate commercial real estate and real estate-related assets on an opportunistic and value-add basis. In particular, the Company has focused generally on acquiring commercial properties with significant possibilities for capital appreciation, such as those requiring development, redevelopment, or repositioning, those located in markets and submarkets with high growth potential, and those available from sellers who are distressed or face time-sensitive deadlines. The Company has acquired a wide variety of commercial properties, including office, industrial, retail, hospitality, and multifamily. The Company has purchased existing, income-producing properties, and newly-constructed properties. The Company has also invested in other real estate-related investments such as mortgage and mezzanine loans. The Company intends to hold the various real properties in which it has invested until such time as its board of directors determines that a sale or other disposition appears to be advantageous to achieve the Company’s investment objectives or until it appears that the objectives will not be met. The Company currently has one operating segment. As of ~~September~~June 30, ~~2021,~~2022, the Company had eight wholly owned real estate investments ~~(six wholly owned properties and two properties consolidated through investments in joint ventures)~~(multi-family apartment complexes) and one real estate-related investment (mezzanine loan).

Substantially all of the Company’s business is conducted through Lightstone REIT V OP LP, a limited partnership organized in Delaware (the “Operating Partnership”). As of ~~September~~June 30, ~~2021,~~2022, the Company’s wholly-owned subsidiary, BHO II, Inc., a Delaware corporation, owned a 0.1% partnership interest in the Operating Partnership as its sole general partner. As of ~~September~~June 30, ~~2021,~~2022, the Company’s wholly-owned subsidiary, BHO Business Trust II, a Maryland business trust, was the sole limited partner of the Operating Partnership and owned the remaining 99.9% interest in the Operating Partnership.

The Company’s business is externally managed by LSG Development Advisor LLC (the “Advisor”), an affiliate of the Lightstone Group LLC (“Lightstone”) which provides advisory services to the Company and the Company has no employees. Lightstone is majority owned by the chairman emeritus of the Company’s board of directors, David Lichtenstein. Pursuant to the terms of an advisory agreement and subject to the oversight of the Company’s board of directors, the Advisor is responsible for managing the Company’s day-to-day affairs and for services related to the management of the Company’s assets.

Organization

In connection with the Company’s initial capitalization, the Company issued 22,500 shares of its common stock and 1,000 shares of its convertible stock to the Company’s previous advisor on January 19, 2007. The 1,000 shares of convertible stock were transferred to an affiliate of Lightstone on February 10, 2017 and remain outstanding. As of ~~September~~June 30, ~~2021,~~2022, the Company had ~~20.2~~20.1 million shares of common stock outstanding.

The Company’s common stock is not currently listed on a national securities exchange. The timing of a liquidity event for the Company’s stockholders will depend upon then prevailing market ~~conditions. On January 9, 2020,~~conditions and the Company’s board of ~~directors extended the targeted timeline for the Company to commence a liquidity event until June 30, 2028 based on their~~directors’ assessment of the Company’s investment objectives and liquidity options for the Company’s stockholders. ~~The~~Currently, the Company’s board of directors has targeted June 30, 2028 for the commencement of a liquidity event. However, the Company can provide no assurances as to the actual timing of the commencement of a liquidity event for its stockholders or the ultimate liquidation of the Company. ~~The~~Furthermore, the Company will seek stockholder approval prior to liquidating its entire portfolio.

Lightstone Value Plus REIT V, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

Noncontrolling Interests

~~Noncontrolling~~Effective as of December 30, 2021, the Company wholly-owns all of its real estate investments and does not have any remaining noncontrolling interests. Prior to December 30, 2021, noncontrolling interests ~~represents~~represented the noncontrolling ownership interest’s proportionate share of the equity in ~~our~~the Company’s consolidated real estate investments. Income and losses ~~are~~were allocated to noncontrolling interest holders based generally on their ownership ~~percentage. If~~percentage but in certain instances, if a property ~~reaches~~reached a defined return threshold, then it ~~will result~~may have resulted in distributions to noncontrolling interests which iswere different from the standard pro-rata allocation percentage. InAdditionally, in certain instances, ~~our~~the joint venture agreements ~~provide~~may have provided for liquidating distributions based on achieving certain return metrics.

~~Acquisition~~Acquisitions of Noncontrolling ~~Member’s~~Members’ Ownership ~~Interest (Lakes of Margate)~~Interests in Consolidated Real Estate Investments

On March 17, 2021, the Company acquired the noncontrolling member’s 7.5% ownership interest in the Lakes of Margate for $1.1 million and as a result, owned 100% of the Lakes of Margate, which was subsequently sold (see Note 4)5).

On December 20, 2021, the Company acquired the noncontrolling member’s 15.0% membership interest in the River Club Properties for $10.2 million and as a result, owned 100% of the River Club Properties, which were subsequently sold (see Note 5).

On December 30, 2021, the Company acquired the noncontrolling member’s 10.0% ownership interest in Parkside for $3.6 million and recorded the $3.7 million difference between the contractual purchase price and the carrying value of the noncontrolling member’s interest to additional paid in capital. As a result, the Company now owns 100% of Parkside.

Summary of Significant Accounting Policies

Interim Unaudited Financial Information

The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, which was filed with the Securities and Exchange Commission (the “SEC”) on March ~~25, 2021.~~24, 2022. 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 REIT V, Inc. have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.’

Principles of Consolidation and Basis of Presentation

Our consolidated financial statements include our accounts and the accounts of other subsidiaries over which the Company has control. All inter-company transactions, balances, and profits have been eliminated in consolidation. In addition, interests in entities acquired are evaluated based on applicable GAAP, and entities deemed to be variable interest entities (“VIE”) in which 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 the Company has control, substantive participating rights or both under the respective ownership agreement. For entities in which the Company has less than a controlling interest or entities which we are not deemed to be the primary beneficiary, it accounts for the investment using the equity method of accounting.

The consolidated balance sheet as of December 31, ~~2020~~2021 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.

~~Investment in Unconsolidated Joint Venture (Prospect Park)~~6

The Company previously participated in the residual interests of a mezzanine financing made to an unaffiliated third-party entity, which it accounted for in accordance with the equity method of accounting. The third-party entity owned an apartment complex located in Denver, Colorado (“Prospect Park”) which was sold to a third-party buyer in December 2017 and the carrying value of the Company’s unconsolidated investment was subsequently reduced to zero during the first quarter of 2018. On May 10, 2021, the Company received an additional payment of $~~1.5~~ ~~million in full settlement related to its prior participation in the residual interests of Prospect Park and recognized a gain on disposition of unconsolidated joint venture of $1.5~~ ~~million in the consolidated statements of operations during the second quarter of 2021.~~

Lightstone Value Plus REIT V, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

Earnings per Share

The Company had no potentially dilutive securities outstanding during the periods presented. Accordingly, basic and diluted earnings per share is calculated by dividing net income/(loss) by the weighted-average number of shares of common stock outstanding during the applicable period.

Restricted cash

As required by the Company’s lenders, restricted cash is held in escrow accounts for anticipated capital expenditures, real estate taxes, and other reserves for certain of our consolidated properties. Capital reserves are typically utilized for non-operating expenses such as tenant improvements, leasing commissions, major capital expenditures. Alternatively, a lender may require its own formula for an escrow of capital reserves. Restricted cash may also include certain funds temporarily placed in escrow with qualified intermediaries to facilitate potential like-kind exchange transactions in accordance with Section 1031 of the Internal Revenue Code.

Interest Rate Cap Contracts

The Company utilizes derivative financial instruments to reduce interest rate risk. The Company does not hold or issue derivative financial instruments for trading purposes. The Company recognizes all derivatives as either assets or liabilities in the consolidated balance sheets and measures those instruments at fair value. Changes in fair value of those instruments are recorded in the consolidated statements of operations.

Income Taxes

The Company has elected to be taxed as a REIT commencing with the taxable year ended December 31, 2008. If the Company qualifies as a REIT, it generally will not be subject to U.S. federal income tax on its taxable income or capital gain that it distributes to its stockholders. To maintain its REIT qualification, the Company must meet a number of organizational and operational requirements, including a requirement that it annually distribute to its stockholders at least 90% of its REIT taxable income (which does not equal net income, as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. If the Company fails to remain qualified for taxation as a REIT in any subsequent year and does not qualify for certain statutory relief provisions, its income for that year will be taxed at the regular corporate rate, and it may be precluded from qualifying for treatment as a REIT for the four-year period following its failure to qualify as a REIT. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to stockholders.

During 2015, the Company recorded an aggregate provision for income tax of $2.7 million representing estimated foreign income tax due as a result of the sale of two foreign investments, Alte Jakobstraße and Holstenplatz. During the first quarter of 2022, the Company recorded an income tax benefit of $0.8 million representing a partial refund of the foreign income tax paid.

Reclassifications

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

COVID-19 Pandemic

~~The~~On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic ~~on March 11, 2020~~ and ~~since that time many of the previously imposed restrictions and other measures which were instituted in response have been subsequently reduced or lifted. However, the COVID-19 pandemic~~it remains highly unpredictable and dynamic and its ultimate duration and extent continue to be dependent on various developments, such as the emergence of variants to the virus that may cause additional strains of COVID-19, and the development, administration and ultimate effectiveness of vaccines, ~~and the eventual timeline to achieve a sufficient level of herd immunity among the general population.~~including booster shots. Accordingly, the ongoing COVID-19 pandemic may continue to have negative effects on the ~~health of the~~ U.S. ~~economy~~and global economies for the foreseeable future.

Lightstone Value Plus REIT V, Inc.
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

As of ~~September~~June 30, ~~2021,~~2022, the Company’s consolidated portfolio of properties consisted of ~~seven~~eight multi-family apartment complexes, ~~and one student housing complex.~~all of which are located in the U.S. Its multi-family properties have not been significantly impacted by the COVID-19 pandemic and their occupancy levels, rental rates and rental collections have remained stable. The Company’s student housing complex, which consists of the River Club Apartments and the Townhomes at River Club, are located in Athens, Georgia and principally serve as “off-campus” lodging for students attending the University of Georgia (“UGA”). Leases for the River Club Apartments and Townhomes at River Club generally have a term of one year running from August through July. Shortly afterstable since the onset of the COVID-19 pandemic, UGA transitioned to online instruction during its Spring 2020 semester but subsequently resumed “on-campus” classes beginning with its Fall 2020 semester. The Company’s student housing complex is located “off-campus” and therefore, its tenants would not be required to vacate even if UGA did not conduct “on-campus” classes. The Company’s student housing complex has also not been significantly impacted by the COVID-19 pandemic and its occupancy level, rental rates and rental collections have remained stable. However, if UGA decides to return to online instruction for its students in lieu of “on-campus” classes in future semesters, it could adversely impact leasing demand, occupancy levels and the operating results of the Company’s student housing complex in future periods.pandemic. Additionally, the Company’s note receivable (the “500 West 22nd Street Mezzanine Loan”) is collateralized by a substantially completed 10-unit condominium development project located in New York City (the “Condominium Project”), which ~~has been~~is subject to ~~similar restrictions and risks.~~risks related to the COVID-19 pandemic. To date, both the Condominium Project and the Company’s ~~note receivable~~500 West 22nd Street Mezzanine Loan have not been significantly impacted by the COVID-19 pandemic.

The Company continues to closely monitor the overall extent as to which its business may be affected by the ongoing COVID-19 pandemic which will largely depend on current and future developments, all of which are highly uncertain and cannot be reasonably predicted.

If the Company’s properties and its real estate-related investments are negatively impacted by the ongoing COVID-19 pandemic in future periods for an extended period because (i) tenants are unable to pay their rent, (ii) leasing demand falls causing declines in occupancy levels and/or rental rates, and (iii) ~~its~~the borrower is unable to pay scheduled debt service on the ~~outstanding note receivable;~~500 West 22nd Street Mezzanine Loan; the Company’s business and financial results could be materially and adversely impacted.

~~Lightstone Value Plus REIT V, Inc.~~

~~Notes to Consolidated Financial Statements (unaudited)~~

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

New Accounting Pronouncements

In June 2016, the FASB issued new guidance 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, 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 not have a material effect on the Company’s consolidated financial ~~statements.~~position, results of operations or cash flows.

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.

~~Real Estate Asset Acquisition~~

~~BayVue Apartments~~

On July 7, 2021, the Company completed the acquisition of a 368-unit multifamily property located in Tampa, Florida (the “BayVue Apartments”), from an unrelated third party, for an aggregate purchase price of $~~59.5~~ ~~million, excluding closing and other acquisition related costs. In connection with the acquisition, the Advisor received an aggregate of $1.3~~ ~~million in acquisition fees, acquisition expense reimbursements and debt financing fees.~~

The Company determined this acquisition was an asset acquisition and allocated the total purchase price, including acquisition fees and expenses, to the assets acquired based on their relative fair value. Approximately $~~12.7~~ ~~million was allocated to land and improvements, $43.5~~ ~~million was allocated to building and improvements, $1.3~~ ~~million was allocated to furniture and fixtures and $3.0~~ ~~million was allocated to in-place lease intangibles.~~

~~The Company simultaneously entered into a non-recourse mortgage loan facility for up to $52.2~~ million (the “BayVue Mortgage”) scheduled to initially mature on July 7, 2024, with two, one-year extension options, subject to certain conditions. The BayVue Mortgage requires monthly interest-only payments through its maturity date and bears interest at ~~LIBOR+3.10% subject to a 3.10% floor. The BayVue Mortgage is collateralized by the BayVue Apartments. In connection with the acquisition of the BayVue Apartments, $44.3~~ ~~million was initially funded under the BayVue Mortgage and the Company paid the balance of the purchase price of $15.2~~ ~~million with cash, including escrowed funds released by a qualified intermediary. See Note 8 for additional information.~~

The capitalization rate for the acquisition of the BayVue Apartments was approximately 4.22%. The Company calculates the capitalization rate for a real property by dividing the net operating income (“NOI”) of the property by the purchase price of the property, excluding costs. For purposes of this calculation, NOI was based upon the twelve months ended March 31, 2021. Additionally, NOI is all gross revenues from the property less all operating expenses, including property taxes and management fees but excluding depreciation.

~~Held for Sale and Disposition of Lakes of Margate~~

~~Lakes of Margate~~

During the fourth quarter of 2020, Lakes of Margate met the criteria to be classified as held for sale and therefore, its associated assets and liabilities were classified as held for sale in the consolidated balance sheet as of December 31, 2020.

On March 17, 2021, the Company completed the disposition of the Lakes of Margate to Lakes of Margate FL LLC, an unrelated third party (the “Lakes of Margate Buyer”), for aggregate consideration of $~~50.8~~ ~~million. At closing, the Lakes of Margate Buyer paid $15.1~~ ~~million and assumed the existing Lakes of Margate Loan with an outstanding principal balance of $35.7~~ ~~million and $14.1~~ million of the proceeds were temporarily placed in escrow with a qualified intermediary and subsequently released on July 7, 2021 in order to complete a like-kind exchange transaction in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended. In connection with the disposition of the Lakes of Margate, the Company recognized a gain on sale of investment property of $~~27.8~~ ~~million during the first quarter of 2021.~~

~~Lightstone Value Plus REIT V, Inc.~~

~~Notes to Consolidated Financial Statements (unaudited)~~

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

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

~~The following summary presents the major components of the Lakes of Margate’s assets and liabilities held for sale, of as December 31, 2020.~~

Schedule of assets and liabilities held for sale
As of
December 31,
2020

Net investment property $ 21,308
Other assets 2,832
Total assets held for sale $ 24,140

Note payable, net $ 35,136
Accounts payable and accrued expenses 2,029
Total liabilities held for sale $ 37,165

Note Receivable

500 West 22nd Street Mezzanine Loan

On February 28, 2019, the Company, as the lender, and an unrelated third party (the “500 West 22nd Street Mezzanine Loan Borrower”), as the borrower, entered into ~~a loan promissory note (the “500~~the 500 West 22nd Street Mezzanine ~~Loan”)~~Loan, a loan promissory note, pursuant to which the Company ~~would fund up to~~funded $12.0 million of mezzanine financing. On the same date, the Company initially funded $8.0 million of the 500 West 22nd Street Mezzanine ~~Loan. Subsequently,~~Loan and subsequently, through a series of draws, the ~~first quarter of 2020, the Company funded an additional~~remaining $4.0 million ~~and as a result,~~of the 500 West 22nd Street Mezzanine Loan ~~has been~~was fully ~~funded.~~ funded by the end of the first quarter of 2020.

The 500 West 22nd Street Mezzanine Loan bears interest at a rate of LIBOR+11.0% per annum with a floor of 13.493% (13.493% as of June 30, 2022) and had an initial maturity date of August 31, 2021, which has been extended to September 1, 2022 due to the exercise of two six-month extension options, and is collateralized by the ownership interests of the 500 West 22nd Street Mezzanine Loan Borrower. The 500 West 22nd Street Mezzanine Loan provides for monthly interest-only payments at a rate of 8% with the additional interest above the 8% threshold added to the outstanding principal balance and due at maturity.

The 500 West 22nd Street Mezzanine Loan Borrower has developed and constructed the Condominium Project located at 500 West 22nd Street, New York, New York, which is substantially complete. During the six months ended June 30, 2022, the 500 West 22nd Street Mezzanine Loan Borrower repaid $8.8 million (of which $7.2 million was paid in the second quarter) of the 500 West 22nd Street Mezzanine Loan with proceeds from the sale of condominium units.

As of June 30, 2022, the remaining outstanding principal balance of the 500 West 22nd Street Mezzanine Loan was $5.4 million, including $2.3 million of additional interest due at maturity. The 500 West 22nd Street Mezzanine Loan is classified as note receivable, net on the consolidated balance sheet. ~~In connection with the fundings made for the 500 West 22nd Street Mezzanine Loan, the Advisor has received an aggregate of $0.2~~ million in acquisition fees from the Company. The acquisition fees were accounted for as an addition to the carrying value of the 500 West 22nd Street Mezzanine Loan and were amortized as a reduction to interest income over the initial term of the 500 West 22nd Street Mezzanine Loan using a straight-line method that approximated the effective interest method.

~~The 500 West 22nd Street Mezzanine Loan had an initial maturity date of~~ ~~August 31, 2021~~ and is collateralized by the ownership interests of the 500 West 22nd Street Mezzanine Loan Borrower. However, because the 500 West 22nd Street Mezzanine Loan Borrower exercised the first of two six-month extension options, the current maturity date is now February 28, 2022. The 500 West 22nd Street Mezzanine Loan Borrower owns a parcel of land located at 500 West 22nd Street, New York, New York on which it is developing and constructing the Condominium Project. At the onset of the COVID-19 pandemic, the Borrower’s construction activities related to the Condominium Project were temporarily suspended due to restrictions on certain non-essential construction activities imposed by New York City. However, construction activities for the Condominium Project fully resumed in early May 2020 and its anticipated construction timeline has not been significantly impacted to date.

~~The 500 West 22nd Street Mezzanine Loan bears interest at a rate of~~ ~~LIBOR + 11.0%~~ ~~per annum with a floor of~~ ~~13.493% (13.493% as of September 30, 2021). The~~ ~~Company received an origination fee of 1.0% of the loan balance, or $0.1 million~~, which was presented in the consolidated balance sheets as a direct deduction from the carrying value of the 500 West 22nd Street Mezzanine Loan and was amortized to interest income, using a straight-line method that approximated the effective interest method, over the initial term of the 500 West 22nd Street Mezzanine Loan.

~~Lightstone Value Plus REIT V, Inc.~~

~~Notes to Consolidated Financial Statements (unaudited)~~

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

~~In connection with the initial funding under the 500 West 22nd Street Mezzanine Loan, the Company retained $2.1~~ million of the proceeds to establish a reserve for interest and other items, which was presented in the consolidated balance sheets as a direct deduction from the carrying value of the 500 West 22nd Street Mezzanine Loan and was applied against the first ~~8.0% of monthly interest due during the initial term of the 500 West 22nd Street Mezzanine Loan. Through September 30, 2021, the entire $2.1~~ ~~million reserve has been recognized as interest income. The additional monthly interest due above the~~ ~~8.0% threshold is added to the balance of the 500 West 22nd Street Mezzanine Loan and payable at maturity. As of September 30, 2021, $1.7~~ ~~million of additional interest due is included in the balance of the 500 West 22nd Street Mezzanine Loan.~~

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, the Company recorded $~~0.5~~0.3 million and $~~1.3~~0.8 million, respectively, of interest income related to the note receivable and during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company recorded $0.5 million and $~~1.3~~0.9 million, respectively, of interest income related to the note receivable. ~~As of September 30, 2021, the outstanding principal balance of the 500 West 22nd Street Mezzanine Loan was $13.7~~ ~~million.~~

Lightstone Value Plus REIT V, Inc.
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

6.4.

Financial Instruments

The Company determined the following disclosure of estimated fair values using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop the related estimates of fair value. The use of different market assumptions or only estimation methodologies may have a material effect on the estimated fair value amounts.

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, management estimated that the carrying value of cash and cash equivalents, restricted cash, note receivable, prepaid expenses and other assets and accounts payable, ~~and~~ accrued expenses and other liabilities were at amounts that reasonably approximated their fair value based on their highly-liquid nature and/or short-term maturities.

The fair value of the notes payable is categorized as a Level 2 in the fair value hierarchy. The fair value was estimated using a discounted cash flow analysis valuation on the estimated borrowing rates currently available for loans with similar terms and maturities. The fair value of the notes payable was determined by discounting the future contractual interest and principal payments by a market rate. Disclosure about fair value of financial instruments is based on pertinent information available to management as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. Carrying amounts of our notes payable and the related estimated fair value is summarized as follows:

Schedule of Notes payable and the related estimated fair value
	As of September 30, 2021				As of December 31, 2020				As of June 30, 2022				As of December 31, 2021
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Notes payable	$	275,055	$	276,688	$	216,382	$	219,625	$	293,095	$	283,769	$	282,375	$	287,194

Real Estate Properties

The following table presents certain information about the Company’s wholly owned and consolidated multifamily real estate properties as of June 30, 2022:

Schedule Of Real Estate Properties	10
Property Name	Location	Date Acquired
Arbors Harbor Town	Memphis, Tennessee	December 20, 2011
Parkside Apartments (“Parkside”)	Sugar Land, Texas	August 8, 2013
Flats at Fishers	Fishers, Indiana	November 30, 2017
Axis at Westmont	Westmont, Illinois	November 27, 2018
Valley Ranch Apartments	Ann Arbor, Michigan	February 14, 2019
Autumn Breeze Apartments	Noblesville, Indiana	March 17, 2020
BayVue Apartments	Tampa, Florida	July 7, 2021
Citadel Apartments	Houston, Texas	October 6, 2021

Acquisition Activities

Acquisition of BayVue Apartments

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

Lightstone Value Plus REIT V, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

Acquisition of Citadel Apartments

On October 6, 2021, the Company acquired a 293-unit multifamily property located in Houston, Texas (the “Citadel Apartments”), from an unrelated third party for a contractual purchase price of $66.0 million, excluding closing and other acquisition related costs. The acquisition was funded with $38.0 million of initial proceeds from mortgage financings (see Note 7 for additional information) and $28.0 million of cash on hand. In connection with the acquisition, the Company paid the Advisor an aggregate of $1.2 million in acquisition fees and acquisition expense reimbursements.

Dispositions Activities

The following dispositions 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 their operating results are reflected in the Company’s results from continuing operations in the consolidated statements of operations for all periods presented through their respective dates of disposition:

Disposition of Lakes of Margate

On March 17, 2021, the Company completed the disposition of the Lakes of Margate for a contractual sales price of $50.8 million to an unrelated third party (the “Lakes of Margate Buyer”). At closing, the Lakes of Margate Buyer paid $15.1 million and assumed the existing mortgage loan secured by the Lakes of Margate Loan with an outstanding principal balance of $35.7 million. Additionally, on March 17, 2021, the Company paid $1.1 million for the 7.5% membership interest held in the Lakes of Margate by the minority owner and recorded the $2.1 million difference between the contractual purchase price and the carrying value of the noncontrolling member’s interest to additional paid in capital. As a result, at the time of the completion of the sale of the Lakes at Margate it was wholly owned by the Company. In connection with the disposition of the Lakes of Margate, the Company recognized a gain on sale of investment property of $27.8 million during the first quarter of 2021.

Disposition of the River Club Properties

On December 22, 2021, the Company completed the disposition of the River Club Apartments and the Townhomes at River Club, two student housing complexes with a total of 1,134 beds (collectively, the “River Club Properties”) located in Athens, Georgia, for a contractual sales price of $77.3 million to an unrelated third party. In connection with the transaction, the Company repaid in full the existing outstanding mortgage indebtedness of $30.4 million secured by the River Club Properties. Additionally, on December 20, 2021, the Company paid $10.2 million for the 15.0% membership interest held in the River Club Properties by the minority owner and recorded the $11.7 million difference between the contractual purchase price and the carrying value of the noncontrolling member’s interest to additional paid in capital. As a result, at the time of the completion of the sale of the River Club Properties it was wholly owned by the Company. In connection with the disposition of the River Club Properties, the Company recognized a gain on the sale of investment property of $55.0 million during the fourth quarter of 2021.

Lightstone Value Plus REIT V, Inc.
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

7.6.

Marketable Securities, Derivative Financial Instruments and Fair Value Measurements

Marketable Securities

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

Schedule of available-for-sale securities reconciliation
	As of September 30, 2021									As of June 30, 2022
*Debt securities:*	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

Corporate and Government Bonds	$	3,451	$	240	$	(17	)	$	3,674	$	3,620	$	3	$	(177	)	$	3,446

	As of December 31, 2020									As of December 31, 2021
*Debt securities:*	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

Corporate and Government Bonds	$	3,515	$	140	$	(1	)	$	3,654	$	3,634	$	47	$	(36	)	$	3,645

When evaluating the 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. As of ~~September~~June 30, ~~2021,~~2022, the Company did not recognize any impairment charges.

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:

Summary of the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates
	As of June 30, 2022
Due in 1 year	$	621
Due in 1 year through 5 years		2,769
Due in 5 years through 10 years		56
Due after 10 years		0
Total	$	3,446

Lightstone Value Plus REIT V, Inc.
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

Derivative Financial Instruments

The Company has entered into two interest rate cap contracts with unrelated financial institutions in order to reduce the effect of interest rate fluctuations or risk of certain real estate investment’s interest expense on its variable rate debt. The Company is exposed to credit risk in the event of non-performance by the counterparty to these financial instruments. Management believes the risk of loss due to non-performance to be minimal.

The Company is accounting for the interest rate cap contracts as economic hedges, marking these contracts to market, taking into account present interest rates compared to the contracted fixed rate over the life of the contract and recording the unrealized gain or loss on the interest rate cap contracts in the consolidated statements of operations.

For the three and six months ended June 30, 2022, the Company recorded an unrealized gain of $0.5 million and $1.1 million, respectively, in the consolidated statements of operations representing the change in the fair value of these economic hedges during such periods.

The interest rate cap contracts have notional amounts of $52.2 million and $49.0 million, respectively, mature on July 15, 2023 and October 11, 2023, respectively, and effectively cap LIBOR at 2.50% and 2.00%, respectively. The aggregate fair value of the interest rate cap contracts was $1.2 million as of June 30, 2022 and is included in prepaid expenses and other assets on the consolidated balance sheets. See Note 7 for additional information.

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.

The fair ~~values~~value of the Company’s investments in debt securities are measured using quoted prices for these investments; however, the markets for these assets are not active. The fair value of the Company’s interest rate cap contracts are measured using other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. As of ~~September~~June 30, ~~2021,~~2022, all of the Company’s debt securities and interest rate cap contracts were classified as Level 2 assets and there were no transfers between the level classifications during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

Lightstone Value Plus REIT V, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

Summary of the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates
As of September 30,
2021
Due in 1 year $ 824
Due in 1 year through 5 years 2,673
Due in 5 years through 10 years 177
Due after 10 years -
Total $ 3,674

8.7.

Notes Payable

Notes payable ~~excluding debt classified as held for sale,~~ consists of the following:

Schedule of information on notes payable
Property Interest Rate Weighted Average Interest Rate as of
September 30,
2021 Maturity Date Amount Due at Maturity As of
September 30,
2021 As of
December 31,
2020

River Club and the Townhomes at River Club LIBOR + 1.78% 1.89 % May 1, 2025 $ 28,419 $ 30,359 $ 30,359

Arbors Harbor Town 4.53% 4.53 % December 28, 2025 29,000 29,000 29,000

Arbors Harbor Town Supplemental 3.52% 3.52 % January 1, 2026 5,379 5,860 -

Parkside 4.45% 4.45 % June 1, 2025 15,782 17,054 17,289

Axis at Westmont 4.39% 4.39 % February 1, 2026 34,343 37,252 37,600

Valley Ranch Apartments 4.16% 4.16 % March 1, 2026 43,414 43,414 43,414

Flats at Fishers 3.78% 3.78 % July 1, 2026 26,090 28,720 28,800

Flats at Fishers Supplemental 3.85% 3.85 % July 1, 2026 8,366 9,176 -

Autumn Breeze Apartments 3.39% 3.39 % April 1, 2030 25,518 29,920 29,920

Bay Vue Apartments LIBOR + 3.10% (floor 3.10%) 3.12 % July 9, 2024 44,300 44,300 -

Total notes payable 3.68 % $ 260,611 275,055 216,382

Less: Deferred financing costs (4,462 ) (3,393 )

Total notes payable, net $ 270,593 $ 212,989

Schedule of information on notes payable
Property	Interest Rate	Weighted Average Interest Rate as of June 30, 2022	Maturity Date	Amount Due at Maturity		As of June 30, 2022			As of December 31, 2021
Arbors Harbor Town	4.53%	4.53%	January 1, 2026	$	29,000	$	29,000		$	29,000

Arbors Harbor Town Supplemental	3.52%	3.52%	January 1, 2026		5,379		5,787			5,842

Parkside	4.45%	4.45%	June 1, 2025		15,782		16,810			16,974

Axis at Westmont	4.39%	4.39%	February 1, 2026		34,343		36,792			37,100

Valley Ranch Apartments	4.16%	4.16%	March 1, 2026		43,414		43,414			43,414

Flats at Fishers	3.78%	3.78%	July 1, 2026		26,090		28,333			28,592

Flats at Fishers Supplemental	3.85%	3.85%	July 1, 2026		8,366		9,069			9,150

Autumn Breeze Apartments	3.39%	3.39%	April 1, 2030		25,518		29,920			29,920

BayVue Apartments	LIBOR + 3.10% (floor 3.10%)	3.52%	July 9, 2024		44,970		44,970			44,383

Citadel Apartments Senior	LIBOR + 1.50% (floor 1.60%)	2.25%	October 11, 2024		39,200		39,200			30,400

Citadel Apartments Junior	LIBOR + 8.75% (floor 8.85%)	9.11%	October 11, 2024		9,800		9,800			7,600

Total notes payable		3.92%		$	281,862		293,095			282,375

Less: Deferred financing costs							(4,098	)		(4,777	)

Total notes payable, net						$	288,997		$	277,598

Lightstone Value Plus REIT V, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

Citadel Apartments

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

The Citadel Apartments Mortgages initially mature on October 11, 2024, with two one-year extension options, subject to the satisfaction of certain conditions, and are collateralized by the Citadel Apartments, while the Citadel Apartments Junior Mortgage is subordinate to the Citadel Apartments Senior Mortgage. In connection with the acquisition of the Citadel Apartments, an aggregate $38.0 million was initially funded under the Citadel Apartments Mortgages and the Company paid the balance of the purchase price of $28.0 million with cash. In connection with the Citadel Apartments Mortgages, the Company paid the Advisor an aggregate of $0.5 million in debt financing fees. All of the remaining availability of $11.0 million under the Citadel Apartment Mortgages was subsequently advanced to the Company in January 2022 and as of June 30, 2022, the aggregate outstanding principal balance under the Citadel Apartment Mortgages was $49.0 million.

In connection with the Citadel Apartment Mortgages, the Company has entered into an interest rate cap agreement with a notional amount of $49.0 million pursuant to which the LIBOR rate is capped at 2.00% through October 11, 2023.

BayVue ~~Mortgage~~Apartments

On July 7, 2021, the Company entered into ~~the BayVue Mortgage~~a non-recourse mortgage loan facility for up to $52.2 million (the “BayVue Apartments Mortgage”) scheduled to initially mature on July 9, 2024, with two, one-year extension options, subject to the satisfaction of certain conditions. The BayVue Apartments Mortgage requires monthly interest-only payments through its maturity date and bears interest at LIBOR+3.10% subject to a 3.10% floor. The BayVue Apartments Mortgage is collateralized by the BayVue Apartments. In connection with the BayVue Apartments Mortgage, the Company paid the Advisor $0.3 million in debt financing fees. As of ~~September~~June 30, ~~2021,~~2022, the outstanding principal balance ~~of the BayVue Mortgage was $44.3~~ ~~million~~ and ~~the~~ remaining availability under the ~~facility~~BayVue Apartments Mortgage was up$45.0 million and $7.2 million, respectively. The remaining availability may be drawn for certain capital improvements to ~~$7.9 million.~~the property pursuant to the loan agreement.

~~Flats at Fisher Supplemental Mortgage~~

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

~~Arbors Harbor Town Supplemental Mortgage~~

~~On September 30, 2021, the~~ Company has entered into a non-recourse subordinated mortgage loan for $5.9 million (the “Arbors Harbor Town Supplemental Mortgage”) scheduled to mature on January 1, 2026. The Arbors Harbor Town Supplemental Mortgage requires monthly payments ofan interest ~~and principal of $26 through its maturity date and bears interest at 3.52%. The Arbors Harbor Town Supplemental Mortgage is collateralized~~rate cap agreement with a ~~subordinated interest in~~notional amount of $52.2 million pursuant to which the ~~Arbors Harbor Town. In connection with the Arbors Harbor Town Supplemental Mortgage, the Advisor received $0.1 million in debt financing fees.~~LIBOR rate is capped at 2.50% through July 15, 2023.

The following table provides information with respect to the contractual maturities and scheduled principal repayments of the Company’s indebtedness as of ~~September~~June 30, ~~2021.~~2022.

Schedule of contractual obligations for principal payments
	2022		2023		2024		2025		2026		Thereafter		Total
Principal maturities	$	874	$	2,191	$	96,431	$	18,138	$	147,729	$	27,732	$	293,095

Less: deferred financing costs														(4,098	)

Total notes payable, net													$	288,997

Schedule of contractual obligations for principal payments
2021 2022 2023 2024 2025 Thereafter Total
Principal maturities $ 404 $ 1,740 $ 2,781 $ 47,773 $ 46,895 $ 175,462 $ 275,055

Less: deferred financing costs (4,462 )

Total notes payable, net $ 270,593

Lightstone Value Plus REIT V, Inc.
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

9.8.

Stockholders’ Equity

Share Redemption Program and Redemption Price

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

On December 13, 2019, the Company’s board of directors approved the suspension of the SRP. Pursuant to the terms of the SRP, while the SRP is suspended, the Company will not accept any requests for redemption.

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

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

~~Lightstone Value Plus REIT V, Inc.~~

~~Notes to Consolidated Financial Statements (unaudited)~~

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

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

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

For the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 the Company repurchased ~~42,696~~44,275 shares of common stock, pursuant to its ~~share repurchase program~~SRP at an average price per share of $~~9.42~~12.91 per share.

Distributions

The Company made an election to qualify as a REIT for federal income tax purposes commencing with its taxable year ended December 31, 2008. U.S. federal tax law requires a REIT distribute at least 90% of its annual REIT taxable income (which does not equal net income, as calculated in accordance with GAAP) determined without regard to the deduction for dividends paid and excluding any net capital gain. In order to continue to qualify for REIT status, the Company may be required to make distributions in excess of cash available. Distributions are authorized at the discretion of the Company’s board of directors based on their analysis of the Company’s performance over the previous periods and expectations of performance for future periods. Such analyses may include actual and anticipated operating cash flow, changes in market capitalization rates for investments suitable for the Company’s portfolio, capital expenditure needs, general financial and market conditions, proceeds from asset sales, and other factors that the Company’s board of directors deems relevant.

The Company’s board of directors’ decision will be substantially influenced by their obligation to ensure that the Company maintains its federal tax status as a REIT. The Company cannot provide assurance that it will pay distributions at any particular level, or at all.

The Company did not make any distributions to its stockholders during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021.

Lightstone Value Plus REIT V, Inc.
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share/unit data and where indicated in millions)

~~10.~~9.

Related Party Transactions

The Company has agreements with the Advisor and its ~~affiliate~~affiliates to pay certain fees in exchange for services performed by these entities and other related parties. These agreements have a one-year term and currently extend through June ~~10, 2022.~~30, 2023. The Company is dependent on the Advisor and its affiliates for certain services that are essential to it, including asset acquisition and disposition decisions, property management and leasing services, financing services, and other general administrative responsibilities. In the event that these ~~companies were~~entities are unable to provide the Company with their respective services, the Company would be required to obtain such services from other sources.

The following table represents the fees incurred associated with the payments to the Company’s Advisor and its affiliates for the periods indicated:

Schedule of Redemption Program
Schedule of Related Party Transactions
	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Acquisition fees and acquisition expense reimbursement ⁽¹⁾	$	1,041	$	-	$	1,041	$	764
Debt financing fees ⁽²⁾		448		-		448		656
Property management fees (property operating expenses)		109		123		337		350	$	124	$	110	$	242	$	228
Administrative services reimbursement (general and administrative costs)		347		333		1,012		989		346		332		693		665
Asset management fees (general and administrative costs)		723		691		2,044		2,014		861		626		1,729		1,321

Total	$	2,668	$	1,147	$	4,882	$	4,773	$	1,331	$	1,068	$	2,664	$	2,214

~~(1)~~

~~Capitalized to the corresponding asset and amortized over its estimated useful life.~~

~~(2)~~

Capitalized upon the execution of the loan, presented in the consolidated balance sheets as a direct deduction from the carrying value of the corresponding loan and amortized over the initial term of the corresponding loan.

~~Lightstone Value Plus REIT V, Inc.~~

~~Notes to Consolidated Financial Statements (unaudited)~~

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

~~11.~~10.

Commitments and Contingencies

Legal Proceedings

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

As of the date hereof, 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.

~~12.~~

~~Subsequent Events~~

~~Acquisition of Citadel Apartments located in Houston, Texas~~

On October 6, 2021, the Company acquired a 293-unit multifamily property located in Houston, Texas (the “Citadel Apartments”), from AHC Citadel, LLC, an unaffiliated third party, for an aggregate purchase price of $~~66.0~~ ~~million, excluding closing and other acquisition related costs.~~

~~In connection with the acquisition of the Citadel Apartments, the Company simultaneously entered into a non-recourse mortgage loan facility for up to $49.0~~ million (the “Citadel Mortgage”) scheduled to initially mature on October 11, 2024, with two, one-year extension options, subject to certain conditions. The Citadel Mortgage requires monthly interest-only payments through its maturity date and bears interest at ~~LIBOR+2.95% subject to a 3.05% floor~~. The Citadel Mortgage is collateralized by the Citadel Apartments. In connection with the acquisition of the Citadel Apartments, $38.0 million was initially funded under the Citadel Mortgage and the Company paid the balance of the purchase price of $28.0 million with cash. ~~As a result, the Citadel Mortgage has remaining availability of $11.0~~ ~~million.~~

~~In connection with the acquisition, the Advisor received an aggregate of $1.6~~ ~~million in acquisition fees, acquisition expense reimbursements and debt financing fees.~~

Item 2.

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

~~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 and the notes thereto.

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include discussion and analysis of the financial condition of Lightstone Value Plus REIT V, Inc. and our subsidiaries (which may be referred to herein as the “Company,” “we,” “us” or “our”), which was formerly known as Lightstone Value Plus Real Estate Investment Trust V, Inc. before August 31, 2021, including our ability to make accretive real estate or real estate-related investments, rent space on favorable terms, to address our debt maturities and to fund our liquidity requirements, to sell our assets when we believe advantageous to achieve our investment objectives, our anticipated capital expenditures, the amount and timing of ~~anticipated~~any future cash distributions to our stockholders, the estimated net asset value per share of our common stock (“NAV per Share”), and other matters. Words such as “may,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “could,” “should” and variations of these words and similar expressions are intended to identify forward-looking statements.

These forward-looking statements are not historical facts but reflect the intent, belief or current expectations of our management based on their knowledge and understanding of the business and industry, the economy and other future conditions. These statements are not guarantees of future performance, and we caution stockholders not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors described below:

	●	market and economic challenges experienced by the U.S. and global economies or real estate industry as a whole and the local economic conditions in the markets in which our investments are located. Additionally, our business and financial performance may be adversely affected by current and future economic and other conditions; such as inflation, competition, recession, political upheaval or uncertainty, terrorism and acts of war, natural and man-made disasters, cybercrime, and outbreaks of contagious diseases;

	●	uncertainties regarding the impact of the current COVID-19 pandemic, and restrictions and other measures intended to prevent its spread on our business and the economy generally;

	●	the availability of cash flow from operating activities for distributions, if any;

	●	conflicts of interest arising out of our relationships with our advisor and its affiliates;

	●	our ability to retain our executive officers and other key individuals who provide advisory and property management services to us;

	●	our level of debt and the terms and limitations imposed on us by our debt agreements;

	●	the availability of credit generally, and any failure to obtain debt financing at favorable terms or a failure to satisfy the conditions and requirements of that debt;

	●	our ability to make accretive investments in a diversified portfolio of assets;

	●	future changes in market factors that could affect the ultimate performance of any development or redevelopment projects, including but not limited to construction costs, plan or design changes, availability of materials, schedule delays, availability of construction financing, performance of developers, contractors and consultants and growth in rental rates and operating costs;

	●	our ability to secure leases at favorable rental rates;

	●	our ability to sell our assets at a price and on a timeline consistent with our investment objectives;

	●	the ability of our tenants to pay their rent;

	●	the ability of our borrowers to make scheduled debt service;

	●	impairment charges;

	●	unfavorable changes in laws or regulations impacting our business, our assets or our key relationships; and

	●	factors that could affect our ability to qualify as a real estate investment trust.

Forward-looking statements in this Quarterly Report on Form 10-Q reflect our management’s view only as of the date of this Report, and may ultimately prove to be incorrect. 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, except as required by applicable law. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 21E of the Exchange Act.

Cautionary Note

The representations, warranties, and covenants made by us in any agreement filed as an exhibit to this Quarterly Report on Form 10-Q are made solely for the benefit of the parties to the agreement, including, in some cases, for the purpose of allocating risk among the parties to the agreement, and should not be deemed to be representations, warranties, or covenants to or with any other parties. Moreover, these representations, warranties, or covenants should not be relied upon as accurately describing or reflecting the current state of our affairs.

Executive Overview

We were formed primarily to acquire and operate commercial real estate and real estate-related assets on an opportunistic and value-add basis. In particular, we have focused generally on acquiring commercial properties with significant possibilities for capital appreciation, such as those requiring development, redevelopment or repositioning, those located in markets and submarkets with high growth potential, and those available from sellers who were distressed or faced time-sensitive deadlines. In addition, our opportunistic and value-add investment strategy has included investments in real estate-related assets that present opportunities for higher current income. Since inception, we have acquired a wide variety of commercial properties, including office, industrial, retail, hospitality, and multifamily. We have purchased existing, income-producing properties and newly constructed properties. We have also invested in mortgage and mezzanine loans. We have made our investments in or in respect of real estate assets located in the United States and other countries based on our view of existing market conditions. As of ~~September~~June 30 ~~2021,~~, 2022, our investments included ~~multifamily and student housing communities~~eight wholly owned multi-family apartment complexes and a note ~~receivable.~~receivable (the “500 West 22nd Street Mezzanine Loan”). All of our current investments are located in the ~~United States.~~U.S. We currently intend to hold our various real properties until such time as our board of directors determines that a sale or other disposition appears to be advantageous to achieve our investment objectives or until it appears that the objectives will not be met.

Current Environment

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

COVID-19 Pandemic

~~The~~On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic ~~on March 11, 2020~~ and ~~since that time many of the previously imposed restrictions and other measures which were instituted in response have been subsequently reduced or lifted. However, the COVID-19 pandemic~~it remains highly unpredictable and dynamic and its ultimate duration and extent continue to be dependent on various developments, such as the emergence of variants to the virus that may cause additional strains of COVID-19, and the development, administration and ultimate effectiveness of vaccines, ~~and~~including booster shots. Accordingly, the ~~eventual timeline to achieve a sufficient level of herd immunity among the general population. Accordingly, the~~ongoing COVID-19 pandemic may continue to have negative effects on the ~~health of the~~ U.S. ~~economy~~and global economies for the foreseeable future.

As of ~~September~~June 30 ~~2021,~~, 2022, our consolidated portfolio of properties consisted of ~~seven~~eight wholly owned multi-family apartment complexes, ~~and one student housing complex.~~all of which are located in the U.S. Our multi-family properties have not been significantly impacted by the COVID-19 pandemic and their occupancy levels, rental rates and rental collection have remained stable. Our student housing complex, which consists of the River Club Apartments and the Townhomes at River Club, are located in Athens, Georgia and principally serve as “off-campus” lodging for students attending the University of Georgia (“UGA”). Leases for the River Club Apartments and Townhomes at River Club generally have a term of one year running from August through July. Shortly afterstable since the onset of the COVID-19 pandemic, UGA transitioned to online instruction during its Spring 2020 semester but subsequently resumed “on-campus” classes beginning with its Fall 2020. Our student housing complex is located “off-campus” and therefore, its tenants would not be required to vacate even if UGA did not conduct “on-campus” classes. Our student housing complex has also not been significantly impacted by the COVID-19 pandemic and its occupancy level, rental rates and rental collections have remained stable. However, if UGA decides to return to online instruction for its students in lieu of “on-campus” classes in future semesters, it could adversely impact leasing demand, occupancy levels and the operating results of our student housing complex in future periods.pandemic. Additionally, our ~~note receivable~~500 West 22nd Street Mezzanine Loan is collateralized by a condominium development project located in New ~~Yok~~York City (the “Condominium Project”), which ~~has been~~is subject to ~~similar restrictions and risks.~~risks related to the COVID-19 pandemic. To date, both the Condominium Project and our ~~note receivable~~500 West 22nd Street Mezzanine Loan have not been significantly impacted by the COVID-19 pandemic.

We continue to closely monitor the overall extent as to which our business may be affected by the ongoing COVID-19 pandemic which will largely depend on both current and future developments, all of which are highly uncertain and cannot be reasonably predicted.

If our properties and real estate-related investments are negatively impacted by the ongoing COVID-19 pandemic in future periods for an extended period because (i) tenants are unable to pay their rent, (ii) leasing demand falls causing declines in occupancy levels and/or rental rates, and (iii) ~~our~~the borrower is unable to pay scheduled debt service on the ~~outstanding note receivable;~~500 West 22nd Street Mezzanine Loan; our business and financial results could be materially and adversely impacted.

We are not currently aware of any other material trends or uncertainties, favorable or unfavorable, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from our operations, other than those referred to above or throughout this Form 10-Q. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period. Actual results may differ from those estimates and assumptions used in these consolidated financial statements.

Liquidity and Capital Resources

We had cash and cash equivalents of ~~$38.1~~$59.4 million, marketable securities, available for sale of ~~$3.7~~$3.4 million and restricted cash of ~~$7.1~~$4.7 million as of ~~September~~June 30 ~~2021.~~, 2022. Our principal demands for funds going forward ~~will~~are expected to be for the payment of (a) operating expenses, including capital expenditures, and (b) scheduled ~~interest and principal payments~~debt service on our outstanding indebtedness. We also may, at our discretion, use funds for (a) tender offers and/or redemptions of shares of our common stock, (b) distributions, if any, to our shareholders, and (c) selective acquisitions and/or real estate-related investments. Generally, we expect to meet our cash needs with our cash and cash equivalents on hand ~~and~~along with our cash flow from operations, ~~as well as~~ the release of certain funds held in restricted ~~cash.~~cash, the remaining availability on certain of our mortgage loans and the repayment of our outstanding note receivable. However, to the extent that ~~our cash on hand and cash flow from operations~~these sources are not sufficient to cover our cash needs, we may also use proceeds from additional borrowings and/or selective asset sales to fund such needs.

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

Acquisition and Disposition Activities

~~Acquisition of BayVue Apartments~~

On July 7, 2021, we completed the acquisition of a 368-unit multifamily property located in Tampa, Florida (the “BayVue Apartments”) from an unrelated third party, for an aggregate purchase price of $59.5 million, excluding closing and other related transaction costs. In connection with the acquisition, we paid the Advisor an aggregate of $1.3 million in acquisition fees, acquisition expense reimbursements and debt financing fees.

Disposition of the Lakes of Margate

On March 17, 2021, we completed the disposition of ~~the Lakes~~a 280-unit multifamily property located in Margate, Florida (the “Lakes of ~~Margate~~Margate”) for a contractual sales price of $50.8 million to an unrelated third party. ~~At closing, the buyer paid $15.1 million and assumed the existing mortgage loan secured by the Lakes of Margate with an outstanding principal balance of $35.7 million.~~ In connection with the disposition of the Lakes of Margate, we recognized a gain on the sale of investment property of $27.8 million during the first quarter of 2021.

Acquisition of ~~Autumn Breeze~~the BayVue Apartments

On ~~March 17, 2020,~~July 7, 2021, we completed the acquisition of a ~~280-unit~~368-unit multifamily property located in ~~Noblesville, Indiana~~Tampa, Florida (the ~~“Autumn Breeze~~“BayVue Apartments”) from an unrelated third party, for ~~an aggregate~~a contractual purchase price of ~~$43.0~~$59.5 million, excluding closing and other related transaction costs. ~~In connection with the acquisition, we paid the Advisor an aggregate of $0.8 million in acquisition fees and acquisition expense reimbursements.~~

~~Disposition of Gardens Medical Pavilion~~19

On January 15, 2020, we and our noncontrolling member completed the disposition of the Gardens Medical Pavilion for a contractual sales price of $24.3 million to an unrelated third-party. In connection with the disposition of the Gardens Medical Pavilion, we recognized a gain on the sale of investment property of $5.5 million during the first quarter of 2020. $12.6 million of the proceeds were used towards the repayment in full of a mortgage loan secured by the Gardens Medical Pavilion. Additionally, $1.8 million of the remaining proceeds were distributed to the noncontrolling member.

Acquisition of the Citadel Apartments ~~located in Houston, Texas~~

On October 6, 2021, we acquired a 293-unit multifamily property located in Houston, Texas (the “Citadel Apartments”), from ~~AHC Citadel, LLC,~~ an ~~unaffiliated~~unrelated third party, for ~~an aggregate~~a contractual purchase price of $66.0 million, excluding closing and other acquisition related costs.

~~In connection with the acquisition~~Disposition of the Citadel Apartments, we simultaneously entered into a non-recourse mortgage loan facility for up to $49.0 million (the “Citadel Mortgage”) scheduled to initially mature on October 11, 2024, with two, one-year extension options, subject to certain conditions. The Citadel Mortgage requires monthly interest-only payments through its maturity date and bears interest at LIBOR+2.95% subject to a 3.05% floor. The Citadel Mortgage is collateralized by the Citadel Apartments. In connection with the acquisition of the Citadel Apartments, $38.0 million was initially funded under the Citadel Mortgage and we paid the balance of the purchase price of $28.0 million with cash. As a result, the Citadel Mortgage has remaining availability of $11.0 million. River Club Properties

On December 22, 2021, we completed the disposition of the River Club Apartments and the Townhomes at River Club, two student housing complexes with a total of 1,134 beds (collectively, the “River Club Properties”) located in Athens, Georgia, for a contractual sales price of $77.3 million to an unrelated third party. In connection with the ~~acquisition, the Advisor received an aggregate of $1.6 million in acquisition fees, acquisition expense reimbursements and debt financing fees.~~

~~Debt Financings~~

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

~~BayVue Mortgage~~

On July 7, 2021, we entered into a non-recourse mortgage loan facility for up to $52.2 million (the “BayVue Mortgage”) scheduled to initially mature on July 7, 2024, with two, one-year extension options, subject to certain conditions. The BayVue Mortgage requires monthly interest-only payments through its maturity date and bears interest at LIBOR+3.10% subject to a 3.10% floor. The BayVue Mortgage is collateralized by the BayVue Apartments. As of September 30, 2021, the outstanding principal balancedisposition of the ~~BayVue Mortgage was $44.3~~River Club Properties, we recognized a gain on the sale of investment property of $55.0 million ~~and~~during the ~~remaining availability under the facility was up to $7.9 million.~~fourth quarter of 2021.

~~Flats at Fisher Supplemental Mortgage~~

On August 16, 2021, we entered into a non-recourse subordinated mortgage loan for $9.2 million (the “Flats at Fisher Supplemental Mortgage”) scheduled to mature on July 1, 2026. The Flats at Fisher Supplemental Mortgage requires monthly payments of interest and principal of $43,083 through its maturity date and bears interest at 3.85%. The Flats at Fisher Supplemental Mortgage is collateralized with a subordinated mortgage interest in the Flats at Fisher. As of September 30, 2021, the outstanding principal balance of the Flats at Fisher Supplemental Mortgage was $9.2 million. In connection with the Flats at Fisher Supplemental Mortgage, the Advisor received $0.1 million in debt financing fees.

~~Arbors Harbor Town Supplemental Mortgage~~

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

As of September 30, 2021, our outstanding notes payable were $270.6 million, net of deferred financing fees of $4.5 million and had a weighted average interest rate of 3.68%. As of December 31, 2020, we had notes payable of $213.0 million, net of deferred financing fees of $3.4 million, with a weighted average interest rate of 3.71%.

One of our principal short-term and long-term liquidity requirements includes the repayment of maturing debt. The following table provides information with respect to the contractual maturities and scheduled principal repayments of our indebtedness as of September 30, 2021 (dollars in thousands).

Contractual Obligations 2021 2022 2023 2024 2025 Thereafter Total
Mortgage Payable $ 404 $ 1,740 $ 2,781 $ 47,773 $ 46,895 $ 175,462 $ 275,055
Interest Payments 2,544 10,238 10,157 9,474 7,832 5,752 45,997

Total Contractual Obligations $ 2,948 $ 11,978 $ 12,938 $ 57,247 $ 54,727 $ 181,214 $ 321,052

Results of Operations

As of ~~September~~June 30 ~~2021,~~, 2022, we had eight wholly owned real estate investments ~~(six wholly owned properties and two properties consolidated through investments in joint ventures)~~(multi-family apartment complexes) and one real estate-related investment (mezzanine loan).

The tables below reflect occupancy and effective monthly rental rates for our operating properties owned as of ~~September 30, 2021:~~the dates indicated:

	Occupancy						Effective Monthly Rent per Bed/Unit⁽¹⁾					Occupancy						Effective Monthly Rent per Unit⁽¹⁾
	As of September 30,						As of September 30,					As of June 30,						As of June 30,
Property	2021			2020			2021		2020			2022			2021			2022		2021
River Club and the Townhomes at River Club		99	%		97	%	$	487.91	$	471.84	per bed
Arbors Harbor Town		96	%		95	%	$	1,460.73	$	1,331.67	per unit		94	%		94	%	$	1,551	$	1,404
Parkside		98	%		95	%	$	1,256.29	$	1,179.61	per unit		96	%		97	%	$	1,338	$	1,208
Flats at Fishers		97	%		96	%	$	1,335.79	$	1,169.65	per unit		99	%		97	%	$	1,386	$	1,244
Axis at Westmont		95	%		94	%	$	1,268.38	$	1,167.06	per unit		96	%		96	%	$	1,363	$	1,205
Valley Ranch Apartments		93	%		95	%	$	1,581.53	$	1,378.67	per unit		95	%		95	%	$	1,641	$	1,495
Autumn Breeze Apartments ⁽²⁾		91	%		95	%	$	1,192.62	$	1,058.45	per unit
BayVue Apartments ⁽³⁾		96	%		N/A		$	1,123.31		N/A	per unit
Autumn Breeze Apartments													99	%		94	%	$	1,245	$	1,123
BayVue Apartments (2)													95	%		N/A		$	1,279		N/A
Citadel Apartments (3)													96	%		N/A		$	1,598		N/A

(1)

Effective monthly rent is calculated as in-place contracted monthly rental revenue, including any premiums due for short-term or month-to-month leases, less any concessions or discounts.

(2)

The ~~Autumn Breeze Apartments were acquired on March 17, 2020.~~

~~(3)~~

~~The~~ BayVue Apartments were acquired on July 7, 2021.

(3)

The Citadel Apartments were acquired on October 6, 2021.

On ~~March 17, 2020, we acquired the Autumn Breeze Apartments (the “2020 Acquisition”) and on~~ July 7, 2021 we acquired the BayVue Apartments ~~(the~~and on October 6, 2021 we acquired the Citadel Apartments (collectively, the “2021 ~~Acquisition” and collectively, the “Acquisitions”~~Acquisitions”). On ~~January 15, 2020, we disposed of the Gardens Medical Pavilion (the “2020 Disposition”) and on~~ March 17, 2021 we disposed of the Lakes of Margate ~~(the~~and on December 22, 2021 we disposed of the River Club Properties (collectively, the “2021 ~~Disposition” and collectively, the “Dispositions”~~Dispositions”). In connection with the dispositions of Gardens Medical Pavilion and the Lakes of Margate, we recognized gains on the sale of investment property of $5.5 million during the first quarter of 2020 and $27.8 million during the first quarter of

The 2021 ~~respectively. The~~ Dispositions did not qualify to be reported as discontinued operations since ~~neither disposition represented~~they did not represent a strategic shift that had a major effect on our operations and financial results. Accordingly, the operating results of ~~these properties~~the 2021 Dispositions are reflected in our results from continuing operations for all periods presented through their ~~respective~~ dates of disposition.

Our results of operations for the respective periods presented reflect our acquisition and disposition activities. Properties owned by us during the entire periods presented are referred to as our “Same Store” properties.20

Three months ended ~~September~~June 30, ~~2021~~2022 as compared to the three months ended ~~September~~June 30, ~~2020.~~2021.

The following table provides summary information about our results of operations (dollars in thousands):

	Three Months Ended										Change		Change			Change
	September 30,				Increase/			Percentage			due to		due to			due to			Three Months Ended June 30,				Increase/		Percentage			Change due to		Change due to			Change due to
	2021		2020		(Decrease)			Change			Acquisitions⁽¹⁾		Dispositions⁽²⁾			Same Store⁽³⁾			2022		2021		(Decrease)		Change			Acquisitions⁽¹⁾		Dispositions⁽²⁾			Same Store⁽³⁾
Rental revenues	$	11,187	$	10,185	$	1,002			10.0	%	$	1,446	$	(1,185	)	$	741		$	11,612	$	9,390	$	2,222		24.0	%	$	2,943	$	(1,613	)	$	892
Property operating expenses		4,097		3,694		403			11.0	%		658		(425	)		170			4,030		3,062		968		32.0	%		1,183		(555	)		340
Real estate taxes		1,399		1,496		(97	)		(6.0	%)		147		(221	)		(23	)		1,646		1,358		288		21.0	%		537		(140	)		(109	)
General and administrative		1,825		1,634		191			12.0	%		26		(5	)		170			1,899		1,568		331		21.0	%		32		(10	)		309
Depreciation and amortization		3,925		3,145		780			25.0	%		1,143		(263	)		(100	)		4,953		2,755		2,198		80.0	%		2,490		(388	)		96
Interest expense, net		2,735		2,556		179			7.0	%		452		(303	)		30
Interest expense																				3,307		2,215		1,092		49.0	%		1,109		160			(177	)

Notes:

(1)

Represents the effect on our operating results for the periods indicated resulting from the 2021 ~~Acquisition.~~Acquisitions,.

(2)

Represents the effect on our operating results for the periods indicated resulting from the ~~2021 Disposition.~~disposition of the River Club Properties on December 22, 2021.

(3)

Represents the change for the three months ended ~~September~~June 30, ~~2021~~2022 compared to the same period in ~~2020~~2021 for real estate and real estate-related investments owned by us during the entire periods presented (“Same Store”). Our results for Same Store properties for the three months ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ include ~~River Club and the Townhomes at River Club,~~ Arbors Harbor Town, Parkside, Flats at Fishers, Axis at Westmont, the Valley Ranch Apartments and the Autumn Breeze Apartments.

The following table reflects total rental revenues and total property operating expenses for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 for: (i) our Same Store properties, (ii) the 2021 ~~Acquisition~~Acquisitions and (iii) the disposition of the River Club Properties on December 22, 2021 ~~Disposition~~ (dollars in thousands):

	Three Months Ended September 30,							Three Months Ended June 30,
Description	2021		2020		Change			2022		2021		Change
Rental Revenues:
Same Store	$	9,741	$	9,000	$	741		$	8,669	$	7,777	$	892
2021 Acquisition		1,446		-		1,446
2021 Disposition		-		1,185		(1,185	)
2021 Acquisitions									2,943		-		2,943
Disposition - River Club Properties									-		1,613		(1,613	)
Total rental revenues	$	11,187	$	10,185	$	1,002		$	11,612	$	9,390	$	2,222

Property operating expenses:
Same Store	$	3,426	$	3,256	$	170		$	2,844	$	2,504	$	340
2021 Acquisition		658		-		658
2021 Disposition		13		438		(425	)
Total property operating expenses	$	4,097	$	3,694	$	403
2021 Acquisitions									1,183		-		1,183
Disposition - River Club Properties									3		558		(555	)
Total property expenses								$	4,030	$	3,062	$	968

~~Revenues.~~Revenues Rental revenues for the three months ended ~~September~~June 30, ~~2021~~2022 were ~~$11.2~~$11.6 million, an increase of ~~$1.0~~$2.2 million, compared to ~~$10.2~~$9.4 million for the same period in ~~2020.~~2021. Excluding the effect of our acquisition and disposition activities, our rental revenues increased by ~~$0.7~~$0.9 million for our Same Store properties ~~primarily~~during the 2022 period as a result of ~~increased~~higher occupancy and average monthly rent per ~~unit and increased occupancy during the 2021 period.~~unit.

Property Operating ~~Expenses.~~Expenses Property operating expenses for the three months ended ~~September~~June 30, ~~2021~~2022 were ~~$4.1~~$4.0 million, an increase of ~~$0.4~~$0.9 million, compared to ~~$3.7~~$3.1 million for the same period in ~~2020.~~2021. Excluding the effect of our acquisition and disposition activities, our property operating expenses, increased by ~~$0.2~~$0.3 million for our Same Store properties, which was primarily asattributable to a ~~result~~community association special assessment of ~~higher occupancy~~$0.3 million for Arbors Harbor Town during the ~~2021 period and the resulting increase in utilities and repair and maintenance costs.~~second quarter of 2022.

Real Estate ~~Taxes.~~Taxes Real estate taxes for the three months ended ~~September~~June 30, ~~2021~~2022 were ~~$1.4~~$1.6 million, ~~a decrease~~an increase of ~~$0.1~~$0.2 million, compared to ~~$1.5~~$1.4 million for the same period in ~~2020.~~2021. Excluding the effect of our acquisition and disposition activities, real estate taxes ~~were unchanged~~decreased slightly by $0.1 million for our Same Store properties.

General and Administrative ~~Expenses.~~Expenses General and administrative expenses for the three months ended ~~September~~June 30, ~~2021~~2022 were ~~$1.8~~$1.9 million, an increase of ~~$0.2~~$0.3 million, compared to $1.6 million for the same period in ~~2020.~~2021. Excluding the effect of our acquisition and disposition activities, our general and administrative expenses increased by ~~$0.2~~$0.3 million for our Same Store properties. The increase is principally attributable to higher asset management fees during the 2022 period resulting from our acquisition and investment activities.

Depreciation and ~~Amortization.~~Amortization Depreciation and amortization expense for the three months ended ~~September~~June 30, ~~2021~~2022 was ~~$3.9~~$5.0 million, an increase of ~~$0.8~~$2.2 million, compared to ~~$3.1~~$2.8 million for the same period in ~~2020.~~2021. Excluding the effect of our acquisition and disposition activities, depreciation and amortization expenses ~~decreased~~increased slightly by $0.1 million for our Same Store properties.

Interest Expense ~~net.~~ Interest expense for the three months ended ~~September~~June 30, ~~2021~~2022 was ~~$2.7~~$3.3 million, an increase of ~~$0.1~~$1.1 million, compared to ~~$2.6~~$2.2 million for the same period in ~~2020.~~2021. Excluding the effect of our acquisition and disposition activities, interest expense ~~was unchanged~~decreased by $0.2 million for our Same Store properties.

Mark to Market Adjustment on Derivative Financial Instruments During the three months ended June 30, 2022, we recorded positive mark to market adjustments on our derivative financial instruments of $0.5 million. These mark to market adjustments represented the change in the fair value of our interest rate cap contracts during the period.

~~Nine~~Six months ended ~~September~~June 30, ~~2021~~2022 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

The following table provides summary information about our results of operations (dollars in thousands):

	Nine Months Ended									Change		Change			Change
	September 30,				Increase/		Percentage			due to		due to			due to			Six Months Ended June 30,				Increase/		Percentage			Change due to		Change due to			Change due to
	2021		2020		(Decrease)		Change			Acquisitions⁽¹⁾		Dispositions⁽²⁾			Same Store⁽³⁾			2022		2021		(Decrease)		Change			Acquisitions⁽⁴⁾		Dispositions⁽⁵⁾			Same Store⁽⁶⁾
Rental revenues	$	30,864	$	29,662	$	1,202		4.0	%	$	2,434	$	(2,685	)	$	1,453		$	22,818	$	19,677	$	3,141		16.0	%	$	5,800	$	(4,288	)	$	1,629
Property operating expenses		10,336		9,749		587		6.0	%		954		(895	)		528			7,277		6,239		1,038		17.0	%		2,110		(1,550	)		478
Real estate taxes		4,228		4,161		67		2.0	%		300		(513	)		280			3,374		2,829		545		19.0	%		1,074		(444	)		(85	)
General and administrative		5,046		4,745		301		6.0	%		36		(23	)		288			3,717		3,221		496		15.0	%		67		(77	)		506
Depreciation and amortization		9,590		9,067		523		6.0	%		1,360		(793	)		(44	)		9,872		5,665		4,207		74.0	%		4,965		(776	)		18
Interest expense, net		7,403		7,087		316		4.0	%		720		(53	)		(351	)
Interest expense																			6,421		4,668		1,753		38.0	%		2,042		72			(361	)

Notes:

~~(1)~~(4)

Represents the effect on our operating results for the periods indicated resulting from the 2021 Acquisitions.

~~(2)~~(5)

Represents the effect on our operating results for the periods indicated resulting from the 2021 Dispositions.

~~(3)~~(6)

Represents the change for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to the same period in ~~2020~~2021 for real estate and real estate-related investments owned by us during the entire periods presented (“Same Store”). Our results for Same Store properties for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ include ~~River Club and the Townhomes at River Club,~~ Arbors Harbor Town, Parkside, Flats at Fishers, ~~the~~ Axis at Westmont, ~~and~~ the Valley Ranch Apartments and the Autumn Breeze Apartments.

The following table reflects total rental revenues and total property operating expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 for: (i) our Same Store properties, (ii) the 2021 Acquisitions and (iii) the 2021 Dispositions (dollars in thousands):

	Nine Months Ended September 30,							Six Months Ended June 30,
Description	2021		2020		Change			2022			2021		Change
Rental Revenues:
Same Store	$	25,387	$	23,934	$	1,453		$	17,018		$	15,389	$	1,629
Acquisitions		4,416		1,982		2,434
Disposition		1,061		3,746		(2,685	)
2021 Acquisitions									5,800			-		5,800
2021 Dispositions									-			4,288		(4,288	)
Total rental revenues	$	30,864	$	29,662	$	1,202		$	22,818		$	19,677	$	3,141

Property operating expenses:
Same Store	$	8,318	$	7,790	$	528		$	5,218		$	4,740	$	478
Acquisitions		1,616		662		954
Disposition		402		1,297		(895	)
Total property operating expenses	$	10,336	$	9,749	$	587
2021 Acquisitions									2,110			-		2,110
2021 Dispositions									(51	)		1,499		(1,550	)
Total property expenses								$	7,277		$	6,239	$	1,038

~~Revenues.~~Revenues Rental revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were ~~$30.9~~$22.8 million, an increase of ~~$1.2~~$3.1 million, compared to ~~$29.7~~$19.7 million for the same period in ~~2020.~~2021. Excluding the effect of our acquisition and disposition activities, our rental revenues increased by ~~$1.5~~$1.6 million for our Same Store properties ~~primarily~~during the 2022 period as a result of ~~increased~~higher occupancy and average monthly rent per ~~unit and increased occupancy during the 2021 period.~~unit.

Property Operating ~~Expenses.~~Expenses Property operating expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were ~~$10.3~~$7.3 million, an increase of ~~$0.6~~$1.1 million, compared to ~~$9.7~~$6.2 million for the same period in ~~2020.~~2021. Excluding the effect of our acquisition and disposition activities, our property operating expenses increased by $0.5 million for our Same Store properties, ~~primarily as~~which was attributable to a ~~result~~community association special assessment of ~~higher occupancy~~$0.3 million for Arbors Harbor Town during the ~~2021 period and the resulting increase in utilities and repair and maintenance costs.~~second quarter of 2022.

Real Estate ~~Taxes.~~Taxes Real estate taxes for ~~both~~ the ~~three~~six months ended ~~September~~June 30, ~~2021 and 2020~~2022 were ~~$4.2 million.~~$3.4 million, an increase of $0.6 million, compared to $2.8 million for the same period in 2021. Excluding the effect of our acquisition and disposition activities, ~~our~~ real estate taxes ~~increased~~decreased slightly by ~~$0.3~~$0.1 million for our Same Store properties.

General and Administrative Expenses. General and administrative expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2021 was $5.0~~2022 were $3.7 million, an increase of ~~$0.3~~$0.5 million, compared to ~~$4.7~~$3.2 million for the same period in ~~2020.~~2021. Excluding the effect of our acquisition and disposition activities, our general and administrative expenses increased by ~~$0.3~~$0.5 million for our Same Store ~~Properties.~~properties. The increase is principally attributable to higher asset management fees during the 2022 period resulting from our acquisition and investment activities.

Depreciation and ~~Amortization.~~Amortization Depreciation and amortization expense for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$9.6~~$9.9 million, an increase of ~~$0.5~~$4.2 million, compared to ~~$9.1~~$5.7 million for the same period in ~~2020.~~2021. Excluding the effect of our acquisition and disposition activities, depreciation and amortization expense was relatively unchanged for our Same Store properties.

Interest Expense ~~net.~~ Interest expense for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$7.4~~$6.4 million, an increase of ~~$0.3~~$1.7 million, compared to ~~$7.1~~$4.7 million for the same period in ~~2020.~~2021. Excluding the effect of our acquisition and disposition activities, interest expense decreased by $0.4 million for our Same Store ~~properties primarily as a result of lower interest rates on our variable rate loan resulting from the decrease in LIBOR.~~properties.

~~Gain~~Mark to Market Adjustment on ~~Sale~~Derivative Financial Instruments During the six months ended June 30, 2022, we recorded positive mark to market adjustments on our derivative financial instruments of ~~Investment Property.~~$1.1 million. These mark to market adjustments represented the change in the fair value of our interest rate cap contracts during the period.

Income Tax Benefit During 2015, we recorded an aggregate provision for income tax of $2.7 million representing estimated foreign income tax due as a result of the sale of two foreign investments, Alte Jakobstraße and Holstenplatz. During the first quarter of ~~2021,~~2022, we ~~recognized~~recorded an income tax benefit of $0.8 million representing a ~~gain on the sale of Lakes of Margate of $27.8 million. See Note 4~~partial refund of the ~~Notes to Consolidated Financial Statements for additional information. During the first quarter of 2020, we recognized a gain on the sale of the Gardens Medical Pavilion of $5.5 million.~~ foreign income tax paid.

~~Gain on Disposition of Unconsolidated Joint Venture.~~ During the second quarter of 2021, we recognized a gain of $1.5 million for the settlement of our prior participation in the residual interests of Prospect Park. See Note 2 of the Notes to Consolidated Financial Statements for additional information.

Related Party Transactions

We have agreements with the Advisor and its ~~affiliate~~affiliates to pay certain fees in exchange for services performed by these entities and other related parties. These agreements have one-year terms and currently extend through June ~~10, 2022.~~30, 2023. We are dependent on the Advisor and its affiliates for certain services that are essential to us, including asset acquisition and disposition decisions, property management and leasing services, financing services, and other general administrative responsibilities. In the event that these ~~companies were~~entities are unable to provide us with their respective services, we would be required to obtain such services from other sources.

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

For the Three Months Ended
September 30, For the Nine Months Ended
September 30,
2021 2020 2021 2020
Acquisition fees and acquisition expense reimbursement ⁽¹⁾ $ 1,041 $ - $ 1,041 $ 764
Debt financing fees ⁽²⁾ 448 - 448 656
Property management fees (property operating expenses) 109 123 337 350
Administrative services reimbursement (general and administrative costs) 347 333 1,012 989
Asset management fees (general and administrative costs) 723 691 2,044 2,014
Total $ 2,668 $ 1,147 $ 4,882 $ 4,773

~~(1)~~

~~Capitalized to the corresponding asset and amortized over its estimated useful life.~~

~~(2)~~

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Property management fees (property operating expenses)	$	124	$	110	$	242	$	228
Administrative services reimbursement (general and administrative costs)		346		332		693		665
Asset management fees (general and administrative costs)		861		626		1,729		1,321
Total	$	1,331	$	1,068	$	2,664	$	2,214

Summary of Cash Flows

Operating activities

The net cash provided by operating activities of ~~$8.0~~$4.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 consisted primarily of our net loss of $4.5 million less (i) the positive mark to market adjustments on derivative financial instruments of $1.1 million, (ii) non-cash interest income of ~~$25.5~~$0.3 million and (iii) the net change in operating assets and liabilities of $0.2 million plus (i) depreciation and amortization of $9.9 million and (ii) amortization of deferred financing costs ~~aggregating $10.2 million and the net change in assets and liabilities~~ of $2.5 million offset by a gain on the sale of investment property from the sale of the Lakes of Margate of $27.8 million, a gain on the disposition of unconsolidated joint venture from the settlement of our participation in the residual interests of Prospect Park of $1.5 million and non-cash interest income of $1.0$0.7 million.

Investing activities

The net cash ~~used in~~provided by investing activities of ~~$50.1~~$4.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021 consists~~2022 consisted primarily of the following:

●

~~net~~ proceeds from the ~~sale~~repayment of ~~Lakes~~note receivable of ~~Margate of $14.4~~$8.8 million;

●

~~net proceeds from the settlement of our participation in the residual interests of Prospect Park of $1.5 million;~~

●

~~the acquisition of the BayVue Apartments for $60.5 million;~~

●

~~payment of $1.1 million to acquire the noncontrolling member’s 7.5% ownership interest in the Lakes of Margate;~~ and

●

capital expenditures of ~~$4.3~~$4.5 million.

Financing activities

The net cash provided by financing activities of ~~$55.9~~$10.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021 consists~~2022 consisted primarily of the following:

●

~~net~~ proceeds from notes payable of ~~$57.4~~$11.6 million;

●

~~debt~~ principal payments of ~~$0.7 million;~~

●

~~distributions paid to noncontrolling interests~~notes payable of ~~$0.5~~$0.9 million; and

●

redemptions and cancellation of common stock of ~~$0.4~~$0.6 million.

One of our principal short-term and long-term liquidity requirements includes the debt service payments on our outstanding notes payable. The following table provides information with respect to the contractual maturities and scheduled principal repayments of our indebtedness as of June 30, 2022 (dollars in thousands).

Contractual Obligations	Remainder of 2022		2023		2024		2025		2026		Thereafter		Total
Principal	$	874	$	2,191	$	96,431	$	18,138	$	147,729	$	27,732	$	293,095
Interest Payments⁽¹⁾		6,522		12,569		11,359		7,617		2,842		3,243		44,152
Total Contractual Obligations	$	7,396	$	14,760	$	107,790	$	25,755	$	150,571	$	30,975	$	337,247

(1)

These amounts represent future interest payments related to notes 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 June 30, 2022 was used.

Funds from Operations and Modified Funds from Operations

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and 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 generally accepted accounting principles in the United States of America (“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 that the use of FFO provides a more complete understanding of our performance to investors and to management and reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT’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.

We define MFFO, a non-GAAP measure, consistent with the IPA’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 exclude acquisition and transaction-related fees and expenses (which includes costs incurred in connection with strategic alternatives), amounts relating to deferred rent receivables and amortization of market lease and other intangibles, net (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), accretion of discounts and amortization of premiums on debt investments and borrowings, mark-to-market adjustments included in net income (including gains or losses incurred on assets held for sale), gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.

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

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

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

Our calculations of FFO and MFFO are presented below (dollars and shares in thousands, except per share amounts):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Description	2022			2021			2022			2021
Net (loss)/income	$	(3,116	)	$	499		$	(4,495	)	$	27,611
FFO adjustments:
Depreciation and amortization of real estate assets		4,953			2,755			9,872			5,665
Gain on disposition of unconsolidated joint venture		-			(1,457	)		-			(1,457	)
Gain on sale of investment property		-			-			-			(27,825	)
FFO		1,837			1,797			5,377			3,994
MFFO adjustments:
Other adjustments:
Acquisition and other transaction related costs expensed⁽¹⁾		-			-			-			-
Noncash adjustments:
Amortization of above or below market leases and liabilities		-			-			-			-
Mark-to-market adjustments⁽²⁾		(492	)		-			(1,110	)		(2	)
Non-recurring (loss)/gain from extinguishment/sale of debt, derivatives or securities holdings⁽³⁾		2			1			(2	)		(7	)
MFFO before straight-line rent		1,347			1,798			4,265			3,985
Straight-line rent⁽⁴⁾		-			-			-			-
MFFO - IPA recommended format	$	1,347		$	1,798		$	4,265		$	3,985

Net (loss)/income	$	(3,116	)	$	499		$	(4,495	)	$	27,611
Less: income attributable to noncontrolling interests		-			(54	)		-			(131	)
Net (loss)/income applicable to Company’s common shares	$	(3,116	)	$	445		$	(4,495	)	$	27,480
Net (loss)/income per common share, basic and diluted	$	(0.16	)	$	0.02		$	(0.22	)	$	1.36

FFO	$	1,837		$	1,797		$	5,377		$	3,994
Less: FFO attributable to noncontrolling interests		-			(138	)		-			(288	)
FFO attributable to Company’s common shares	$	1,837		$	1,659		$	5,377		$	3,706
FFO per common share, basic and diluted	$	0.09		$	0.08		$	0.27		$	0.18

MFFO - IPA recommended format	$	1,347		$	1,798		$	4,265		$	3,985
Less: MFFO attributable to noncontrolling interests		-			(138	)		-			(288	)
MFFO attributable to Company’s common shares	$	1,347		$	1,660		$	4,265		$	3,697

Weighted average number of common shares outstanding, basic and diluted		20,089			20,193			20,100			20,193

For the Three Months Ended
September 30, For the Nine Months Ended
September 30,
Description 2021 2020 2021 2020
Net (loss)/income $ (2,089 ) $ (1,679 ) $ 25,522 $ 2,251
FFO adjustments:
Depreciation and amortization of real estate assets 3,925 3,145 9,590 9,067
Gain on disposition of unconsolidated joint venture - - (1,457 ) -
Gain on sale of investment property - - (27,821 ) (5,474 )
FFO 1,836 1,466 5,834 5,844
MFFO adjustments:
Other adjustments:
Acquisition and other transaction related costs expensed⁽¹⁾ - - - -
Noncash adjustments:
Gain on on forgiveness of debt⁽³⁾ (128 ) - (128 ) -
Amortization of above or below market leases and liabilities - - - -
Mark-to-market adjustments⁽²⁾ (7 ) (4 ) (9 ) 5
Loss/(gain) on sale of marketable securities⁽³⁾ 159 (11 ) 152 (63 )
MFFO before straight-line rent 1,860 1,451 5,849 5,786
Straight-line rent⁽⁴⁾ - - (32 )
MFFO - IPA recommended format $ 1,860 $ 1,451 $ 5,849 $ 5,754

Net (loss)/income $ (2,089 ) $ (1,679 ) $ 25,522 $ 2,251
Less: (income)/loss attributable to noncontrolling interests (14 ) 5 (145 ) (1,227 )
Net (loss)/income applicable to Company’s common shares $ (2,103 ) $ (1,674 ) $ 25,377 $ 1,024
Net (loss)/income per common share, basic and diluted $ (0.10 ) $ (0.08 ) $ 1.26 $ 0.05

FFO $ 1,836 $ 1,466 $ 5,834 $ 5,844
Less: FFO attributable to noncontrolling interests (97 ) (89 ) (385 ) (368 )
FFO attributable to Company’s common shares $ 1,739 $ 1,377 $ 5,449 $ 5,476
FFO per common share, basic and diluted $ 0.09 $ 0.07 $ 0.27 $ 0.26

MFFO - IPA recommended format $ 1,860 $ 1,451 $ 5,849 $ 5,754
Less: MFFO attributable to noncontrolling interests (97 ) (89 ) (385 ) (362 )
MFFO attributable to Company’s common shares $ 1,763 $ 1,362 $ 5,464 $ 5,392

Weighted average number of common shares outstanding, basic and diluted 20,157 20,201 20,181 20,925

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.

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.

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.

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.

Distributions

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

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On a regular basis, we evaluate these estimates, including investment impairment. These estimates include such items as impairment of long-lived assets, depreciation and amortization, and allowance for doubtful accounts. Actual results could differ from those estimates.

Our critical accounting policies and estimates have not changed significantly from the discussion found in the Management Discussion and Analysis and Results of Operations in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March ~~25, 2021.~~24, 2022.

~~Item 4. Controls and Procedures.~~

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) and Rule 15d-15(b) under the Exchange Act, our management, including our principal executive officer and principal financial officer, evaluated, as of ~~September~~June 30, ~~2021,~~2022, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e) using the criteria established in Internal Control-New Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective, as of ~~September~~June 30, ~~2021,~~2022, to provide reasonable assurance that information required to be disclosed by us in this report is recorded, processed, summarized, and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

There has been no change in 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.

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings.

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

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

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

Recent Sales of Unregistered Securities

During the period covered by this quarterly report, we did not sell any equity securities that were not registered under the Securities Act of 1933.

Our common stock is not currently listed on a national securities exchange. The timing of a liquidity event for our stockholders will depend upon then prevailing market ~~conditions. On January 9, 2020,~~conditions and our board of ~~directors extended the targeted timeline for us to commence a liquidity event until June 30, 2028 based on their~~directors’ assessment of our investment objectives and liquidity options for our stockholders. WeCurrently, our board of directors has targeted June 30, 2028 for the commencement of a liquidity event. However, we can provide no assurances as to the actual timing of the commencement of a liquidity event for our stockholders or our ultimate liquidation. WeFurthermore, we will seek stockholder approval prior to liquidating our entire portfolio.

~~Item 3. Defaults Upon Senior Securities.~~

~~None.~~

Item 3.

Defaults Upon Senior Securities.

~~Item 4. Mine Safety Disclosures.~~

~~None.~~

~~Item 5. Other Information.~~

None.

Item 4.

Mine Safety Disclosures.

~~Item 6. Exhibits.~~

None.

Item 5.

Other Information.

None.

Item 6.

Exhibits.

The exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.

��

SIGNATURE

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 REIT V, INC.

Date: ~~November 12, 2021~~August 11, 2022	By:	/s/ Mitchell C. Hochberg
		Mitchell C. Hochberg
		Chief Executive Officer (Principal Executive Officer)

Date: ~~November 12, 2021~~August 11, 2022

By:

/s/ Seth Molod

Seth Molod

Chief Financial Officer

(Duly Authorized Officer and Principal Financial and Accounting Officer)

Index to Exhibits

~~Index to Exhibits~~Exhibit Number		Description
10.1*
3.2*		~~Third Amended~~Advisory Agreement among Lightstone Value Plus REIT V, Inc., Lightstone Value Plus REIT V OP LP and ~~Restated Bylaws,~~LSG Development LLC effective as ~~amended by Amendment No. 2 (incorporated by reference to Exhibit 3.2 to Form 10-Q on August 12, 2021)~~of July 1, 2022.
31.1*		Rule 13a-14(a)/15d-14(a) Certification
31.2*		Rule 13a-14(a)/15d-14(a) Certification
32.1*		Section 1350 Certification**
32.2*		Section 1350 Certification**
101*		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2021,~~2022, filed on ~~November 12, 2021,~~August 11, 2022, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements.

Filed or furnished herewith

In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

Maryland		20-8198863
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Large accelerated filer ☐	☐	Accelerated filer	☐
Non-accelerated filer ☒	☒	Smaller reporting company	☒
		Emerging growth company	☐

			Page
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)		1

	Consolidated Balance Sheets as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021		1

	Consolidated Statements of Operations and Comprehensive Income for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021		2

	Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021		3

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021		4

	Notes to Consolidated Financial Statements ~~of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020~~	3	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 4.	~~Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021~~Controls and ~~2020~~Procedures	4

	~~Notes to Consolidated Financial Statements~~	530

~~Item 2.~~PART II	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~OTHER INFORMATION	16

~~Item 4.~~	~~Controls and Procedures~~	28

~~PART II~~	~~OTHER INFORMATION~~

Item 1.	Legal Proceedings	29	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29	31

Item 3.3.	Defaults Upon Senior Securities	29	31

Item 4.	Mine Safety Disclosures	29	31

Item 5.	Other Information	29	31

Item 6.	Exhibits	29	31


	Convertible Stock				Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total Stockholders’
	Shares		Amount		Shares			Amount		Capital			Income			Deficit			Interests			Equity

BALANCE, December 31, 2019		1	$	-		22,223		$	2	$	204,912		$	111		$	(102,404	)	$	478		$	103,099

Net income		-		-		-			-		-			-			1,024			1,227			2,251
Distributions paid to noncontrolling interests		-		-		-			-		-			-			-			(3,488	)		(3,488	)
Tender of common stock		-		-		(2,030	)		-		(15,695	)		-			-			-			(15,695	)
Other comprehensive loss:
Holding gain on marketable securities, available for sale		-		-		-			-		-			96			-			-			96
Reclassification adjustment for gain on sale of marketable securities included in net income		-		-		-			-		-			(63	)		-			-			(63	)
BALANCE, September 30, 2020		1	$	-		20,193		$	2	$	189,217		$	144		$	(101,380	)	$	(1,783	)	$	86,200

Schedule of assets and liabilities held for sale
	As of
	December 31, 2020

Net investment property	$	21,308
Other assets		2,832
Total assets held for sale	$	24,140

Note payable, net	$	35,136
Accounts payable and accrued expenses		2,029
Total liabilities held for sale	$	37,165

Summary of the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates
	As of September 30, 2021
Due in 1 year	$	824
Due in 1 year through 5 years		2,673
Due in 5 years through 10 years		177
Due after 10 years		-
Total	$	3,674

Schedule of information on notes payable
Property	Interest Rate	Weighted Average Interest Rate as of September 30, 2021			Maturity Date	Amount Due at Maturity		As of September 30, 2021			As of December 31, 2020

River Club and the Townhomes at River Club	LIBOR + 1.78%		1.89	%	May 1, 2025	$	28,419	$	30,359		$	30,359

Arbors Harbor Town	4.53%		4.53	%	December 28, 2025		29,000		29,000			29,000

Arbors Harbor Town Supplemental	3.52%		3.52	%	January 1, 2026		5,379		5,860			-

Parkside	4.45%		4.45	%	June 1, 2025		15,782		17,054			17,289

Axis at Westmont	4.39%		4.39	%	February 1, 2026		34,343		37,252			37,600

Valley Ranch Apartments	4.16%		4.16	%	March 1, 2026		43,414		43,414			43,414

Flats at Fishers	3.78%		3.78	%	July 1, 2026		26,090		28,720			28,800

Flats at Fishers Supplemental	3.85%		3.85	%	July 1, 2026		8,366		9,176			-

Autumn Breeze Apartments	3.39%		3.39	%	April 1, 2030		25,518		29,920			29,920

Bay Vue Apartments	LIBOR + 3.10% (floor 3.10%)		3.12	%	July 9, 2024		44,300		44,300			-

Total notes payable			3.68	%		$	260,611		275,055			216,382

Less: Deferred financing costs									(4,462	)		(3,393	)

Total notes payable, net								$	270,593		$	212,989

Schedule of contractual obligations for principal payments
	2021		2022		2023		2024		2025		Thereafter		Total
Principal maturities	$	404	$	1,740	$	2,781	$	47,773	$	46,895	$	175,462	$	275,055

Less: deferred financing costs														(4,462	)

Total notes payable, net													$	270,593