UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
| Filed by the Registrant |
| Filed by a Party other than the Registrant |
Check the appropriate box:
| Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to §240.14a-12 |
LIGHTSTONE REAL ESTATE INCOME TRUST,VALUE PLUS REIT IV, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 11, 20178, 2022
To the Stockholders of Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc.:
I am pleased to invite our stockholders to the 20172022 Annual Meeting of Stockholders of Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc., a Maryland corporation. The annual meeting will be held at 460 Park Avenue, 13th Floor, New York, New York, 10022, at 9:3045 a.m., Eastern Standard Time, on December 11, 2017.8, 2022.
At the meeting, you will be asked to:
| ● | elect three individuals to serve on the Board of Directors until our 2023 Annual Meeting of Stockholders and until their successors are duly elected and qualify; and | |
| ● | conduct such other business as may properly come before the annual meeting or any adjournment or postponement of the Annual Meeting. |
Our Board of Directors has fixed the close of business on October 13, 201710, 2022 as the record date for the determination of stockholders entitled to notice of and to vote at the meeting or any adjournment or postponement thereof. Record holders of shares of our common stock at the close of business on the record date are entitled to notice of and to vote at the annual meeting.
For further information regarding the matters to be acted upon at the annual meeting, I urge you to carefully read the accompanying proxy statement. If you have questions about these proposalsthe proposal or would like additional copies of the proxy statement, please contact: Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc., 1985 Cedar Bridge Avenue, Suite 1, Lakewood, New Jersey 08701.
Whether you own a few or many shares and whether you plan to attend in personthe annual meeting and vote or not, it is important thatwe urge you to have your shares be voted on matters that come beforevote recorded as early as possible. Stockholders have the meeting. You may authorize a proxy to vote your sharesfollowing three options for submitting their votes by using a toll-free telephone number orproxy: (1) via the Internet. Instructions forInternet; (2) by telephone; or (3) by mail, using these convenient services are provided on the enclosed proxy cardcard.
YOUR VOTE IS VERY IMPORTANT! Your immediate response will help avoid potential delays and in the attached proxy statement. If you prefer, you may authorize a proxy by marking your voting instructions on the proxy card, signing and dating it, and mailing it in the postage paid return envelope provided. If you sign and return your proxy card without specifying your choices, it will be understood that you wish to have your shares voted in accordancesave us significant additional expenses associated with the Board’s recommendation. If we do not hear from you after a reasonable amount of time, you may receive a telephone call from our proxy solicitor, Computershare Fund Services, reminding you to vote your shares.soliciting stockholder votes.
You are cordially invited to attend the 20172022 Annual Meeting of Stockholders. Your vote is important.
By Order of the Board of Directors,
Joseph Teichman
General Counsel and Secretary
Lakewood, New Jersey
October 20, 201712, 2022
LIGHTSTONE VALUE PLUS REIT IV, INC.
PROXY STATEMENT
TABLE OF CONTENTS
i
INTRODUCTION
The accompanying proxy, mailed together with this proxy statement, is solicited by and on behalf of the board of directors (the “Board of Directors”) of Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc., a Maryland corporation (which we refer to in this proxy statement as the “Company”), for use at the 20172022 Annual Meeting of Stockholders and at any adjournment or postponement thereof. References in this proxy statement to “we,” “us,” “our” or like terms also refer to the Company, and references in this proxy statement to “you” refer to the stockholders of the Company. The mailing address of our principal executive offices is 1985 Cedar Bridge Avenue, Suite 1, Lakewood, New Jersey 08701. This proxy statement, the accompanying proxy card and notice of annual meeting are first being mailed to our stockholders on or about October 24, 2017.17, 2022. The 20162021 Annual Report on Form 10-K was previously mailed to our stockholders on or about April 20, 2017.15, 2022.
Our Annual Report on Form 10-K for the year ended December 31, 20162021 and the exhibits thereto may be accessed online through the Securities and Exchange Commission (the “SEC”) website atwww.sec.gov. In addition, stockholders may request a copy of our 20162021 Annual Report by writing or telephoning us at the following address: Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc., 1985 Cedar Bridge Avenue, Suite 1, Lakewood, New Jersey 08701, telephone (888) 808-7348.(866) 792-8700.
INFORMATION ABOUT THE MEETING AND VOTINGWhat
When is the date of the annual meeting and where will it be held?
Our 20172022 Annual Meeting of Stockholders will be held on December 11, 2017,8, 2022, at 9:3045 a.m., Eastern Standard Time. The meeting will be held at 460 Park Avenue, 13th Floor, New York, New York, 10022.
What will I be voting on at the meeting?
At the meeting, you will be asked to:
| ● | consider and vote upon the election of three directors to serve until our 2023 Annual Meeting of Stockholders and until their successors are duly elected and qualify; and | |
| ● | conduct such other business as may properly come before the annual meeting or any adjournment or postponement thereof. | |
The Board of Directors does not know of any matters that may be considered at the meeting other than the matters set forth in the items listed above.
Who can vote at the meeting?
The
Anyone who is a stockholder of record date for the determination of holders of shares of our common stock, $0.01 par value per share (the “Common Stock”), entitled to notice of and to vote at the meeting, or any adjournment or postponement of the meeting, is the close of business on October 13, 2017. Accordingly, any holder of shares of Common Stock on10, 2022, the record date, is entitled to notice of and to vote ator holds a valid proxy for the meeting. As of the record date, approximately 9.0 million shares of our Common Stock were issued and outstanding andannual meeting, is entitled to vote at the annual meeting.
Note that Lightstone Real Estate Income LLC (the “Advisor”), which is our external advisor, owned 20,000 shares of our common stock as of the record date and The Lightstone Group LLC (the “Sponsor”), which is our sponsor, owned 222,222 shares of our common stock as of the record date. The Sponsor and the Advisor will abstain from voting any shares in any vote for the election of directors. The Sponsor and the Advisor are affiliated with David Lichtenstein, one of our directors. Any shares owned by the Sponsor, the Advisor, or any of their affiliates will be excluded in determining the requisite percentage in interest of shares necessary to approve a matter on which they may not vote.
How many votes do I have?
Each share of Common Stock has one vote on each matter considered at the meeting or any adjournment or postponement thereof.
You may vote in person at the meeting or by proxy. Stockholders may submithave the following three options for submitting their votes by proxy by mail by completing, signing, dating and returning their proxy in the enclosed envelope. Stockholders also have the following two options for authorizing a proxy to vote their shares:proxy:
| via the Internet atwww.proxy-direct.com/; |
| ● | by telephone, by calling toll free (800) 337-3503; or |
| ● | by mail, using the pre-addressed, postage-paid envelope provided with this Proxy Statement. |
For those stockholders with Internet access, we encourage you to authorize a proxy to vote your shares via the Internet, a convenient means of authorizing a proxy that also provides cost savings to us. In addition, when you authorize a proxy to vote your shares via the Internet or by telephone prior tobefore the meeting date, your proxy authorization is recorded immediately and there is no risk that postal delays will cause your vote by proxy to arrive late and, therefore, not be counted. For further instructions on authorizing a proxy to vote your shares, see your proxy card enclosed with this proxy statement. You may also vote your shares at the meeting. If you attend the meeting, you may submit your vote in person, and any proxy that you authorized by mail, Internet or telephone will be superseded by the vote that you cast at the meeting.
How will proxies be voted?
Shares represented by valid proxies will be voted at the meeting in accordance with the directions given. If the enclosed proxy card is signed and returned without any directions given, the shares will be voted FOR each of the three nominees for director named in this proxy statement for election as director.
The Board of Directors does not intend to present, and has no information indicating that others will present, any business at the annual meeting other than as set forth in the attached Notice of Annual Meeting of Stockholders. However, if other matters requiring the vote of our stockholders come before the meeting, it is the intention of the persons named in the accompanying proxy to vote the proxies held by them in their discretion.
How can I change my vote or revoke a proxy?
You have the unconditional right to revoke your proxy at any time prior to the voting thereof by (i) submitting a later-dated proxy either by telephone, via the Internet or in the mail to Computershare Fund Services (“CFS”)CFS ”), whom we have retained to aid in the solicitation of proxies, at the following address: Proxy Tabulator, PO Box 43131, Providence, RI 02940-9920,1290 Avenue of the Americas, 9th Floor, New York, NY 10104, (ii) attending the meeting and voting in person or (iii) providing written notice to CFS. No written revocation of your proxy shall be effective, however, unless and until it is received at or prior tobefore the meeting. Your attendance at the meeting without voting will not be sufficient to revoke a previous proxy authorization.
What if I return my proxy but do not mark it to show how I am voting?
If your proxy card is signed and returned without specifying your choices, your shares will be voted as recommended by the Board of Directors.
What are the board’s recommendations?
The Board of Directors recommends that you vote FOR each of the three nominees for director named in this proxy statement for election as director.
What votes are required to elect directors?
There is no cumulative voting in the election of our directors. Each
Proposal 1: To be elected, each nominee for director is elected by the affirmative vote of the holders ofmust receive a majority of all shares of Common Stock entitled to vote who arethe votes present in person or by proxy at the meeting. Any shares deemed present at the meeting but not voted (whether by abstention orAnnual Meeting, assuming a quorum is present. Withheld votes and broker non-vote)non-votes will have the same impact aseffect of a vote against the directors. each nominee for director.
What is a “broker non-vote”?
A “broker non-vote” occurs when a broker who holds shares for the beneficial owner is deemed present for purposes of establishing a quorum for the meeting but does not vote on a proposal because the broker does not have discretionary voting authority for that proposal and has not received instructions from the beneficial owner of the shares.
How many shares of common stock are outstanding?
As of the record date, 8.4 million shares of our common stock were issued and outstanding and entitled to vote at the meeting. However, as noted above, The Lightstone Group, LLC, our external advisor and their affiliates will abstain from voting their shares in any vote for the election of directors.
What constitutes a “quorum”?
The presence at
A quorum consists of the meeting,presence in person or represented by proxy of stockholders entitled to cast 50%a majority of all the votes entitled to be cast at the meeting constitutesannual meeting. There must be a quorum. Abstentions and broker non-votes will be counted asquorum present in order for the purposeannual meeting to be a duly held meeting at which business can be conducted. No business may be conducted at the annual meeting if a quorum is not present. If you submit your proxy, even if you abstain from voting, then you will still be considered part of establishingthe quorum.
If a quorum.quorum is not present at the annual meeting, the chairman of the meeting may adjourn the annual meeting to another date, time or place, not later than 120 days after the original record date of October 10, 2022. Notice need not be given of the new date, time or place if announced at the annual meeting before an adjournment is taken.
Will you incur expenses in soliciting proxies?
We will bear all costs associated with soliciting proxies for the meeting. Solicitations may be made on behalf of the Board of Directors by mail, personal interview, telephone or other electronic means by our officers and other employees of Lightstone Real Estate Income LLC (the “Advisor”), who will receive no additional compensation. We will request banks, brokers, custodians, nominees, fiduciaries and other record holders to forward copies of this proxy statement to people on whose behalf they hold shares of Common Stock and to request authority for the exercise of proxies by the record holders on behalf of those people. In compliance with the regulations of the SEC, we will reimburse such persons for reasonable expenses incurred by them in forwarding proxy materials to the beneficial owners of shares of our Common Stock.
We have also retained CFS to aid in the solicitation of proxies. We will pay CFS a fee of approximately $17,000$13,000 in addition to reimbursement of its reasonable out-of-pocket expenses. As the date of the meeting approaches, certain stockholders may receive a telephone call from a representative of CFS if their votes have not yet been received. Proxies that are obtained telephonically will be recorded in accordance with the procedures described below. The Board of Directors believes that these procedures are reasonably designed to ensure that both the identity of the stockholder casting the vote and the voting instructions of the stockholder are accurately determined.
In all cases where a telephonic proxy is solicited, the CFS representative is required to ask for each stockholder’s full name and address, or the zip code or employer identification number, and to confirm that the stockholder has received the proxy materials in the mail. If the stockholder is a corporation or other entity, the CFS representative is required to ask for the person’s title and confirmation that the person is authorized to direct the voting of the shares. If the information solicited agrees with the information provided to CFS, then the CFS representative has the responsibility to explain the process, read the proposal listed on the proxy card and ask for the stockholder’s instructions on the proposal. Although the CFS representative is permitted to answer questions about the process, he or she is not permitted to recommend to the stockholder how to vote, other than to read any recommendation set forth in this proxy statement. CFS will record the stockholder’s instructions on the card. Within 72 hours, the stockholder will be sent a letter or mailgram to confirm his or her vote and asking the stockholder to call CFS immediately if his or her instructions are not correctly reflected in the confirmation.
What does it meanshould I do if I receive more than one set of meeting materials for the annual meeting?
You may receive more than one set of voting materials for the annual meeting, including multiple copies of this proxy card?
Some ofstatement and multiple proxy cards or voting instruction forms. For example, if you hold your shares may bein more than one brokerage account, you will receive a separate voting instruction form for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered differently or held in a different account. You shouldmore than one name, you will receive more than one proxy card and voting instruction form. For each and every proxy card and voting instruction form that you receive, please authorize a proxy to voteas soon as possible using one of the shares in each of your accounts by mail, by telephone or via the Internet. If you mail proxy cards, please sign, date and return each proxy card to ensure that all of your shares are voted. following methods:
| ● | via the Internet at www.proxy-direct.com/; |
| ● | by telephone, by calling toll free (800) 337-3503; or |
| ● | by mail, using the pre-addressed, postage-paid envelope provided with this Proxy Statement. |
If you hold your shares in registered form and wish to combine your stockholder accounts in the future, you should contact Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc., 1985 Cedar Bridge Avenue, Suite 1, Lakewood, New Jersey 08701, or call us at (888) 808-7348.(866) 792-8700. Combining accounts reduces excess printing and mailing costs, resulting in cost savings to us that benefit you as a stockholder.
What if I receive only one set of proxy materials although there are multiple stockholders at my address?
The SEC has adopted a rule concerning the delivery of documents filed by us with the SEC, including proxy statements and annual reports. The rule allows us to, with the consent of affected stockholders, send a single set of any annual report, proxy statement, proxy statement combined with a prospectus, or information statement to any household at which two or more stockholders reside if they share the same last name or we reasonably believe they are members of the same family. This procedure is referred to as “Householding.” This rule benefits both you and us. It reduces the volume of duplicate information received at your household and helps us reduce expenses. Each stockholder subject to Householding will continue to receive a separate proxy card or voting instruction card.
We will promptly deliver, upon written or oral request, a separate copy of our annual report or proxy statement, as applicable, to a stockholder at a shared address to which a single copy was previously delivered. If you received a single set of disclosure documents for this year, but you would prefer to receive your own copy, you may direct requests for separate copies to Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc., 1985 Cedar Bridge Avenue, Suite 1, New Jersey 08701, or call us at (888) 808-7348.(866) 792-8700. Likewise, if your household currently receives multiple copies of disclosure documents and you would like to receive one set, please contact us.
Who can help answer my questions?
If you have any questions about authorizing a proxy by mail, telephone or Internet to vote my shares?
Please call CFS, our proxy solicitor, at 1-866-641-4227.
| Lightstone Value Plus REIT IV, Inc. | Proxy Tabulator | |
| 1985 Cedar Bridge Ave., Suite 1 | P.O. Box 808001 | |
| Lakewood, New Jersey 08701 | Louisville KY 40233-8001 | |
| (866) 792-8700 | (866) 209-5914 | |
| Attn: Investor Services |
When are the director nominations and what isstockholder proposals for the deadlinenext annual meeting of stockholders due?
Any proposals by stockholders for submitting a proposal?
In orderinclusion in proxy solicitation material for a stockholder proposal tothe 2023 annual meeting of stockholders must be properly submitted for presentation atreceived by our 2018 Annual Meeting, pursuant to our current bylaws we must receive written notice of the proposalsecretary, Joseph E. Teichman, at our executive offices during the period beginning on May 10, 2018,21, 2023, and ending at 5:00 p.m., Eastern Daylight Time, on June 10, 2018.20, 2023. If you wish to present a proposal for inclusion in the proxy material for next year’s annual meeting, we must receive written notice of your proposal at our executive offices no later than June 10, 2018.20, 2023. However, if we hold the annual meeting before November 8, 2023 or after January 7, 2024, stockholders must submit proposals for inclusion in our 2023 proxy statement within a reasonable time before we begin to print our proxy materials. All proposals must contain the information specified in, and otherwise comply with, our bylaws. Proposals should be sent via registered, certified or express mail to: Lightstone Real Estate Income Trust,Value Plus REIT III, Inc., 1985 Cedar Bridge Avenue, Suite 1, Lakewood, New Jersey 08701, Attention: Joseph Teichman. For additional information, see the section in this proxy statement captioned “Stockholder Proposals for the 20182023 Annual Meeting.”
General
The Board of Directors ultimately is responsible for directing the management of our business and affairs. We have no employees and have retained the Advisor to manage our day-to-day operations, including the acquisition of our properties. The Advisor is an affiliate of our Sponsor, The Lightstone Group, LLC (the “Sponsor”). The Board of Directors, including our independent directors, is responsible for monitoring and supervising the Advisor’s conduct of our day-to-day operations.
Our bylaws provide for a Board of Directors with no fewer than three and no more than ten directors, a majority of whom must be independent. An “independent director” is defined under our charter (the “Charter”) and means a person who is not, and within the last two years has not been, directly or indirectly associated with the Company, the Sponsor, the Advisor or any of their affiliates by virtue of:
| ● | ownership of an interest in the Sponsor, the Advisor or any of their affiliates, other than the Company; |
| ● | employment by the Company, the Sponsor, the Advisors or any of their affiliates; |
| ● | service as an officer or director of the Sponsor, the Advisor or any of their affiliates, other than as a director of the Company; |
| ● | performance of services, other than as a director of the Company; |
| ● | service as a director of the Company or as a director of more than three real estate investment trusts organized by the Sponsor or advised by the Advisor; or |
| ● | maintenance of a material business or professional relationship with the Sponsor, the Advisor or any of their affiliates. |
An independent director cannot be associated with us, the Sponsor or the Advisor as set forth above either directly or indirectly. An indirect association with the Sponsor or the Advisor includes circumstances in which a director’s spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in-law or brother- or sister-in-law, is or has been associated with us, the Sponsor, the Advisor, or any of their affiliates.
A business or professional relationship is considered material if the aggregate gross revenue derived by the director from the Advisor or the Sponsor and their affiliates exceeds five percent of either the director’s annual gross income during either of the last two years or the director’s net worth on a fair market value basis.
We currently have three directors, two of whom are independent. Directors are elected annually by our stockholders, and there is no limit on the number of times a director may be elected to office. Each director serves until the next annual meeting of stockholders or (if longer) until his or her successor is duly elected and qualifies.
During 2016,2021, the Board of Directors held seven meetings including our annual stockholders’ meeting held on December 1, 2016.five meetings. The entire Board of Directors was present at all of the meetings. The Board of Directors expects each director to attend annual meetings of stockholders when possible. We anticipate that all directors and nominees will attend our 20172022 Annual Meeting of Stockholders.
Nominees for the Board of Directors
The Board of Directors has proposed the following nominees for election as directors, each to serve until our 20182023 Annual Meeting of stockholders and until his successor is duly elected and qualifies: Messrs. David W. Lichtenstein, EdwinMichael J. Glickman,DeMarco, and Steven Spinola. Each nominee currently serves as a director.
The proxy holder named on the enclosed proxy card intends to vote FOR the election of each of the three nominees for director. If you do not wish your shares to be voted for particular nominees, please identify the exceptions in the designated space provided on the proxy card or, if you are authorizing a proxy to vote your shares by telephone or the Internet, follow the instructions provided when you authorize a proxy.
We know of no reason why any nominee will be unable to serve if elected. If, at the time of the meeting, one or more of the nominees should become unable to serve, shares represented by proxies will be voted for the
remaining nominees and for any substitute nominee or nominees designated by the Board of Directors. No proxy will be voted for a greater number of persons than the number of nominees described in this proxy statement.
The principal occupation and certain other information about the nominees are set forth below.
 | | | | |||||||||
| Name | Age | Year First Elected | Business Experience and Principal Occupation; Directorships in Public Corporations and Investment Companies | Age | Year First Elected | Business Experience and Principal Occupation; Directorships in Public Corporations and Investment Companies | ||||||
| David Lichtenstein | 56 | 2015 | Mr. David Lichtenstein is our Chief Executive Officer and Chairman of our board of directors. Mr. Lichtenstein founded both American Shelter Corporation and The Lightstone Group. From 1988 to the present, Mr. Lichtenstein has served as Chairman of the Board of Directors and Chief Executive Officer of The Lightstone Group, directing all aspects of the acquisition, financing and management of a diverse portfolio of multifamily, lodging, retail and industrial properties located in 20 states and Puerto Rico. From June 2004 to the present, Mr. Lichtenstein has served as the Chairman of the Board of Directors and Chief Executive Officer of Lightstone Value Plus Real Estate Investment Trust, Inc. (“Lightstone I”) and Chief Executive Officer of Lightstone Value Plus REIT LLC, its advisor. From April 2008 to the present, Mr. Lichtenstein has served as the Chairman of the Board of Directors and Chief Executive Offer of Lightstone Value Plus Real Estate Investment Trust II, Inc. (“Lightstone II”) and Lightstone Value Plus REIT II LLC, its advisor. From September 2014 to the present, Mr. Lichtenstein has served as Chairman of the Board of Directors and Chief Executive Officer of Lightstone Value Plus Real Estate Investment Trust III, Inc, (“Lightstone III”), and as Chief Executive Officer of Lightstone Value Plus REIT III LLC, its advisor. From October 2014 to the present, Mr. Lichtenstein has served as Chairman of the Board of Directors and Chief Executive Officer of Lightstone Enterprises Limited (“Lightstone Enterprises”). Mr. Lichtenstein was appointed Chairman of the Board of Directors of Lightstone Value Plus Real Estate Investment Trust V, Inc. (“Lightstone V”), formerly known as Behringer Harvard Opportunity REIT II, Inc., effective as of September 28, 2017 and is Chairman and Chief Executive Officer of the its advisor. Mr. Lichtenstein was the president and/or director of certain subsidiaries of Extended Stay Hotels, Inc. (“Extended Stay”) that filed for Chapter 11 protection with Extended Stay. Extended Stay and its subsidiaries filed for bankruptcy protection on June 15, 2009 so they could reorganize their debts in the face of looming amortization payments. Extended Stay emerged from bankruptcy on October 8, 2010. Mr. Lichtenstein is no longer affiliated with Extended Stay. From July 2015 to the present, Mr. Lichtenstein has served as a member of the Board of Directors of the New York City Economic Development Corporation. Mr. Lichtenstein is also a member of the International Council of Shopping Centers and the National Association of Real Estate Investment Trusts, Inc., or NAREIT, an industry trade group, as well as a member of the Board of Directors of Touro College and New York Medical College. | 61 | 2015 | Mr. David Lichtenstein is our Chief Executive Officer and Chairman of our Board of Directors. Mr. Lichtenstein founded both American Shelter Corporation and The Lightstone Group. From 1988 to the present, Mr. Lichtenstein has served as Chairman of the Board of Directors and Chief Executive Officer of The Lightstone Group, directing all aspects of the acquisition, financing and management of a diverse portfolio of multifamily, lodging, retail and industrial properties located in 20 states and Puerto Rico. From June 2004 to the present, Mr. Lichtenstein has served as the Chairman of the Board of Directors and Chief Executive Officer of Lightstone Value Plus REIT I, Inc., (“Lightstone I”) and Chief Executive Officer of Lightstone Value Plus REIT LLC, its advisor. From April 2008 to the present, Mr. Lichtenstein has served as the Chairman of the Board of Directors and Chief Executive Offer of Lightstone Value Plus REIT II, Inc. (“Lightstone II”) and Lightstone Value Plus REIT II LLC, its advisor. From September 2014 to the present, Mr. Lichtenstein has served as Chairman of the Board of Directors and Chief Executive Officer of Lightstone Value Plus REIT III, Inc, (“Lightstone III”), and as Chief Executive Officer of Lightstone Value Plus REIT III LLC, its advisor. From October 2014 to the present, Mr. Lichtenstein has served as Chairman of the Board of Directors and Chief Executive Officer of Lightstone Enterprises Limited (“Lightstone Enterprises”). Mr. Lichtenstein was appointed Chairman Emeritus of the Board of Directors of Lightstone Value Plus REIT V, Inc. (“Lightstone V”) on August 31, 2021 and is Chairman and Chief Executive Officer of its advisor. Mr. Lichtenstein previously served as Chairman of the Board of Directors of Lightstone V from September 28, 2017 through August 30, 2021. From July 2015 to September 2020, Mr. Lichtenstein served as a member of the Board of Directors of the New York City Economic Development Corporation. Mr. Lichtenstein is also a member of the International Council of Shopping Centers and the National Association of Real Estate Investment Trusts, Inc., or NAREIT, an industry trade group, as well as a member of the Board of Directors of Touro College and New York Medical College.
Mr. Lichtenstein has been selected to serve as a director due to his experience and networking relationships in the real estate industry, along with his experience in acquiring and financing real estate properties. | ||||||
| Name | Age | Year First Elected | Business Experience and Principal Occupation; Directorships in Public Corporations and Investment Companies | |||
| Steven Spinola | 73 | 2015 | Mr. Spinola is one of our independent directors and is a member of our audit committee. Mr. Spinola has served as a member of the board of directors of Lightstone V from September 2017 to the present. Since 1986, Mr. Spinola has been the President of the Real Estate Board of New York (“REBNY”), and as of July 1, 2015 serves as President Emeritus. Prior to becoming REBNY’s President, Mr. Spinola served as President of the New York City Public Development Corporation (now known as the New York City Economic Development Corporation). Mr. Spinola holds a Bachelor of Arts degree from the City College of New York with a concentration in political science and government.
Mr. Spinola has been selected to serve as an independent director due to his extensive experience in the real estate industry. | |||
Michael J. DeMarco | 63 | 2021 | From April 2017 to July 2020, Mr. DeMarco served as chief executive officer of Mack-Cali Realty Corporation (“Mack-Cali”). From June 2015 to April 2017, Mr. DeMarco served as president and chief operating officer of Mack-Cali. From 2013 to June 2015, Mr. DeMarco served as the chief investment officer of CCRE, a non-bank finance company and one of the largest originators of CMBS. Mr. DeMarco previously served as an executive vice president at Vornado Realty Trust from 2010 to 2013, as a managing director at Fortress Investment Group from 2007 to 2010, and in various senior financial positions, including senior managing director at Lehman Brothers from 1993 to 2007. Mr. DeMarco also held senior positions at Credit Suisse First Boston and Arthur Andersen LLP.
Mr. DeMarco also is a member of the board of trustees of Saint Peter’s Preparatory School, as well as a member of the Urban Land Institute and the International Council of Shopping Centers. Since June 2015, Mr. DeMarco has served as a member of the board of trustees of Pennsylvania Real Estate Investment Trust, a publicly traded REIT (NYSE: PEI). He received a Bachelor of Business Administration in accounting with a minor in history from Pace University, as well as a Master of Business Administration in finance from the University of Chicago. He is a certified public accountant.
Mr. DeMarco has been selected to serve as an independent director due to his extensive experience in the real estate industry and finance. |
| | | | |||
| Name | Age | Year First Elected | Business Experience and Principal Occupation; Directorships in Public Corporations and Investment Companies | |||
| Mr. Lichtenstein has been selected to serve as a director due to his experience and networking relationships in the real estate industry, along with his experience in acquiring and financing real estate properties. | ||||||
| Edwin J. Glickman | 85 | 2015 | Mr. Glickman is one of our independent directors and is the chairman of our audit committee. From 2004 to January 14, 2015, Mr. Glickman served as a member of the board of directors of Lightstone I, and from 2008 to the present, has served as a member of the board of directors of Lightstone II and from December 2013 to the present has served as a member of the board of directors of Lightstone III. In January 1995, Mr. Glickman co-founded Capital Lease Funding, a leading mortgage lender for properties net leased to investment grade tenants, where he remained as Executive Vice President until May 2003. Mr. Glickman was previously a trustee of publicly traded RPS Realty Trust from October 1980 through May 1996 and Atlantic Realty Trust from May 1996 to March 2006. | |||
| Mr. Glickman graduated from Dartmouth College. Mr. Glickman has been selected to serve as an independent director due to his extensive experience in mortgage lending and finance. | ||||||
| Steven Spinola | 68 | 2015 | Mr. Spinola is one of our independent directors and is a member of our audit committee. Since 1986, Mr. Spinola has been the President of the Real Estate Board of New York (“REBNY”), and as of July 1, 2015 serves as President Emeritus. Prior to becoming REBNY’s President, Mr. Spinola served as President of the New York City Public Development Corporation (now known as the New York City Economic Development Corporation). Mr. Spinola holds a Bachelor of Arts degree from the City College of New York with a concentration in political science and government. | |||
| Mr. Spinola has been selected to serve as an independent director due to his extensive experience in the real estate industry. |
The members of the Board of Directors unanimously recommend a voteTHE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” each of the nominees to be elected as directors.EACH OF
THE NOMINEES TO BE ELECTED AS DIRECTORS
The only standing committee of the Board of Directors is the audit committee (the “Audit Committee”“Audit Committee”). The Audit Committee consists of two members composed entirely of our independent directors. The Board of Directors has determined that each of our independent directors is independent within the meaning of the applicable (i) provisions set forth in the Charter and (ii) requirements set forth in the Securities Exchange Act of 1934, as amended (the “Exchange Act”)Act ”), and the applicable SEC rules.
Interested parties may communicate matters they wish to raise with the directors by writing to our Secretary at: Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc., 1985 Cedar Bridge Avenue, Suite 1, Lakewood, New Jersey 08701, Attention: Joseph Teichman. Mr. Teichman will deliver all appropriate communications to the Board of Directors no later than the next regularly scheduled meeting of the Board of Directors.
Audit Committee
The Board of Directors established an Audit Committee in December 2014. A copy of the charter of the Audit Committee is available on our website atwww.lightstonecapitalmarkets.comor in print to any stockholder who requests it c/o Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc., 1985 Cedar Bridge Avenue, Suite 1, Lakewood, NJ 08701. Our Audit Committee consists of Messrs. EdwinMichael J. GlickmanDeMarco and Steven Spinola. Mr. GlickmanDeMarco is the chairman of our audit committee.
The Audit Committee, in performing its duties, monitors:
| ● | our financial reporting process; |
| ● | the integrity of our financial statements; |
| ● | compliance with legal and regulatory requirements; |
| ● | the independence and qualifications of our independent and internal auditors, as applicable; and |
| ● | the performance of our independent and internal auditors, as applicable. |
Each member of our Audit Committee is independent within the meaning of the applicable requirements set forth in or promulgated under the Exchange Act and within the meaning of the New York Stock Exchange (“NYSE”) listing standards. In addition, the Board of Directors has determined that Mr. GlickmanDeMarco and Mr. Spinola are qualified as “audit committee financial experts” within the meaning of the applicable rules promulgated by the SEC. Unless otherwise determined by the Board of Directors, no member of the Audit Committee may serve as a member of the audit committee of more than two other public companies.
During 2016,2021, the Audit Committee held five meetings. Each of the Audit Committee members attended all of the meetings held by the Audit Committee either in person or by telephone. The Audit Committee’s report on our financial statements for the fiscal year ended December 31, 20162021 is discussed below under the heading “Audit Committee Report.”
Nominating the Board of Directors
The Board of Directors does not have a standing nominating committee for the purpose of nominating individuals to serve as directors. All members of our Board of Directors participate in the consideration of director nominees. The primary functions of the members of the Board of Directors relating to the consideration of director nominees is to identify individuals qualified to serve on the Board of Directors. We have not adopted a specific policy regarding the consideration of director nominees recommended to us by stockholders.
In determining the composition of the Board of Directors, our goals are to assemble a board that, as a whole, possesses the appropriate balance of professional and real estate industry knowledge, financial expertise and high-level management experience to bring a diverse set of skills and experiences to the board as a whole to oversee our business. The Board of Directors believes that diversity is an important attribute of the members of our Board of Directors and that the members should represent an array of backgrounds. To that end, our Board of Directors includes directors who complement and strengthen the skills of other members and who also exhibit integrity, collegiality, sound business judgment and other qualities that we view as critical to effective functioning of the board. The brief biographies in “Proposal One” include information, as
of the date of this proxy, regarding the specific and particular experience, qualifications, attributes or skills of each director or nominee that led the board to believe that the director should serve on the board.
The Board of Directors annually reviews the appropriate experience, skills and characteristics required of directors in the context of our business. This review includes, in the context of the perceived needs of the board at that time, issues of knowledge, experience, judgment and skills relating to the understanding of the real estate industry, accounting or financial expertise. The Board of Directors gives consideration to the members of the Board of Directors having a diverse mix of background and skills. This review also includes the candidate’s ability to attend regular board meetings and to devote a sufficient amount of time and effort in preparation for such meetings.
Code of Business Conduct and Ethics
The Board of Directors has adopted a Code of Business Conduct and Ethics (the “Code of Ethics”), which is applicable to the directors, officers and employees of the Company and its subsidiaries and affiliates. The Code of Ethics covers topics including, but not limited to, conflicts of interest, confidentiality of information, full and fair disclosure, reporting of violations and compliance with laws and regulations. The Code of Ethics is available, free of charge, on our website atwww.lightstonecapitalmarkets.com. www.lightstonecapitalmarkets.com. You may also obtain a copy of the Code of Ethics by writing to: Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc., 1985 Cedar Bridge Avenue, Suite 1, Lakewood, New Jersey 08701, Attention: Joseph Teichman. A waiver of the Code of Ethics for our Chief Executive Officer may be made only by the Board of Directors and will be promptly disclosed to the extent required by law. A waiver of the Code of Ethics for all other directors, officers and employees may be made only by our Chief Executive Officer or General Counsel, and shall be discussed with the Board of Directors as appropriate.
Board Leadership Structure
As noted above, our Board of Directors currently is comprised of two independent and one affiliated directors. Mr. Lichtenstein has served as Chairman of the Board of Directors since 2014 and serves as our Chief Executive Officer. Mr. GlickmanDeMarco serves as the “presiding director” at any executive sessions of the independent directors, as defined under the rules of the NYSE. The Board of Directors believes that this provides an effective leadership model for the Company.
We recognize that different board leadership structures may be appropriate for companies in different situations, and that no one structure is suitable for all companies. We believe our current board leadership structure is optimal for us because it demonstrates to our investors and other stakeholders that the Company is under strong leadership, coordinated closely between Mr. Lichtenstein, who has over 20 years of real estate industry experience, and Mr. Glickman,DeMarco, who has served various public and private entities as a key executive and officer over the past 20 years. In our judgment, the Company, like many U.S. companies, has been well-served by this leadership structure.
Board Role in Risk Oversight
Our Board of Directors is actively involved in overseeing our risk management through our Audit Committee. Under its charter, our Audit Committee is responsible for discussing guidelines and policies governing the process by which our senior management and our relevant departments assess and manage our exposure to risk, as well as our major financial risk exposures and the steps management has taken to monitor and control such exposures.
Our charter and bylaws provide for a Board of Directors with no fewer than three and no more than ten directors, a majority of whom must be independent. An “independent director” is defined under our Charter and means a person who is not, and within the last two years has not been, directly or indirectly associated with the Company, our Sponsor or our Advisor or any of their affiliates by virtue of:
| ● | ownership of an interest in our Sponsor, our Advisor or any of their affiliates, other than the Company; |
| ● | employment by the Company, our Sponsor, our Advisor or any of their affiliates; |
| ● | service as an officer of our Sponsor, our Advisor or any of their affiliates, other than as a director of the Company; |
| ● | performance of services, other than as a director of the Company; |
| ● | service as a director of more than three real estate investment trusts organized or controlled by our Sponsor or advised by our Advisor; or |
| ● | maintenance of a material business or professional relationship with our Sponsor, our Advisor or any of their affiliates. |
An independent director cannot be associated with us, our Sponsor or our Advisor as set forth above either directly or indirectly. An indirect association with our Sponsor or our Advisor includes circumstances in which a director’s spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in-law or brother- or sister-in-law, is or has been associated with us, our Sponsor, our Advisor, or any of their affiliates.
A business or professional relationship is considered material if the aggregate gross revenue derived by the director from our Advisor or our Sponsor and their affiliates exceeds five percent of either the director’s annual gross income during either of the last two years or the director’s net worth on a fair market value basis.
The Board of Directors has considered the independence of each director and nominee for election as a director in accordance with the elements of independence set forth in the listing standards of the NYSE. Based upon information solicited from each nominee, the Board of Directors has affirmatively determined that Steven Spinola and EdwinMichael J. GlickmanDeMarco have no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) and are “independent” within the meaning of the NYSE’s director independence standards and Audit Committee independence standards, as currently in effect.
DIRECTOR AND EXECUTIVE COMPENSATION
Compensation of Our Directors
We have no standing compensation committee. Our entire Board of Directors determines matters relating to director and officer compensation. Our Board of Directors designs our director compensation with the goals of attracting and retaining highly qualified individuals to serve as independent directors and to fairly compensate them for their time and efforts. Because of our unique attributes as a REIT, service as an independent director on our Board of Directors requires broad expertise in the fields of real estate and real estate investment.
We pay our independent directors an annual fee of $40,000 (payable in quarterly installments) and are responsible for reimbursement of their out-of-pocket expenses, as incurred. We also pay our audit committee chair an additional aggregate annual fee of $10,000 (payable in quarterly installments).
Compensation of Our Executive Officers
We currently have no employees. Our Advisor performs our day-to-day management functions. Our executive officers are all employees of the Advisor. Our executive officers do not receive compensation from us for services rendered to us. Our executive officers are all employees of our Advisor and are compensated by our Advisor. As a result, our Board of Directors has determined that it is not necessary to establish a compensation committee. In addition, we do not have, and the Board of Directors has not considered, a compensation policy or program for our executive officers, and we have not included a “Compensation Discussion and Analysis” in this proxy statement. See “Certain Relationships and Related Party Transactions” below for a discussion of the fees paid to and services provided by our Advisor and Property Managers.
Compensation Committee Interlocks and Insider Participation
The Board of Directors in its entirety performs the duties typically delegated to a compensation committee. There are no interlocks or insider participation as to compensation decisions required to be disclosed pursuant to SEC regulations.
The following table presents certain information as of September 30, 201715, 2022 concerning each of our directors and officers serving in such capacity:
| | | | |||||||||
| Name | Age | Principal Occupation and Positions Held | Served as a Director Since | Age | Principal Occupation and Positions Held | Served as a Director Since | ||||||
| David Lichtenstein | 56 | Chief Executive Officer and Chairman of the Board of Directors | 2015 | 61 | Chief Executive Officer and Chairman of the Board of Directors | 2015 | ||||||
| Edwin J. Glickman | 85 | Director | 2015 | |||||||||
| Steven Spinola | 68 | Director | 2015 | 73 | Director | 2015 | ||||||
| Michael J. DeMarco | 63 | Director | 2021 | |||||||||
| Mitchell Hochberg | 65 | President and Chief Operating Officer | N/A | 70 | President and Chief Operating Officer | N/A | ||||||
| Joseph Teichman | 44 | General Counsel | N/A | 49 | General Counsel | N/A | ||||||
| Donna Brandin | 60 | Chief Financial Officer and Treasurer | N/A | |||||||||
| Seth Molod | 58 | Chief Financial Officer and Treasurer | N/A | |||||||||
David Lichtenstein— for biographical information about Mr. Lichtenstein, see “Nominees for the Board of Directors.”
Edwin J. Glickman — for biographical information about Mr. Glickman, see “Nominees for the Board of Directors.”
Steven Spinola— for biographical information about Mr. Spinola, see “Nominees for the Board of Directors.”
Michael J. DeMarco — for biographical information about Mr. DeMarco, see “Nominees for the Board of Directors.”
Mitchell Hochberg is our President and Chief Operating Officer and also serves as President and Chief Operating Officer of Lightstone I, Lightstone II and Lightstone III and their respective advisors. Mr. Hochberg also serves as the President of our Sponsor and as the President and Chief Operating Officer of our Advisor. From October 2014 to the present, Mr. Hochberg has served as President of Lightstone Enterprises. Mr. Hochberg was appointed Chief Executive Officer of Behringer Harvard Opportunity REIT I, Inc. (“OP I”1”) and Lightstone V effective as of September 28,June 15, 2017. Additionally, on August 31, 2021, Mr. Hochberg was appointed as a director and Chairman of the Board of Directors of Lightstone V and will continue to serve as the Lightstone V’s Chief Executive Officer. Prior to joining The Lightstone Group in August 2012, Mr. Hochberg served as principal of Madden Real Estate Ventures from 2007 to August 2012 when it combined with our Sponsor. Mr. Hochberg held the position of President and Chief Operating Officer of Ian Schrager Company, a developer and manager of innovative luxury hotels and residential projects in the United States from early 2006 to early 2007 and prior to that Mr. Hochberg founded Spectrum Communities, a developer of luxury neighborhoods in the northeast of the United States, in 1985 where for 20 years he served as its President and Chief Executive Officer. Additionally, Mr. Hochberg serves onserved a member of the board of directors of Belmond Ltd and through October 2014 served on the board of directors andLtd. from 2009 to April 2019. Additionally, Mr. Hochberg serves as Chairman of the board of directors of Orleans Homebuilders, Inc.WMC Health. Mr. Hochberg received his law degree as a Harlan Fiske Stone Scholar from Columbia University School of Law and graduated magna cum laude from New York University College of Business and Public Administration with a Bachelor of Science degree in accounting and finance.
Joseph E. Teichman is our General Counsel and Secretary and also serves as General Counsel and Secretary of Lightstone I, Lightstone II and Lightstone III and their respective advisors. Mr. Teichman also serves as Executive Vice President and General Counsel of our Sponsor and as General Counsel of our Advisor. From October 2014 to the present, Mr. Teichman has served as Secretary and a Director of Lightstone Enterprises. Prior to joining The Lightstone Group in January 2007, Mr. Teichman practiced law at the law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP in New York, NY from September 2001 to January 2007. Mr. Teichman earned a J.D. from the University of Pennsylvania Law School and a B.A. from Beth Medrash Govoha, Lakewood, New Jersey. Mr. Teichman is licensed to practice law in New York and New Jersey. Mr. Teichman was also a director of certain subsidiaries of Extended Stay that filed for Chapter 11 protection with Extended Stay. Extended Stay and its subsidiaries filed for bankruptcy protection on June 15, 2009 so they could reorganize their debts in the face of looming amortization payments. Extended Stay emerged from bankruptcy on October 8, 2010. Mr. Teichman is no longer affiliated with Extended Stay. Mr. Teichman is also a member of the Board of Directors of Yeshiva Orchos Chaim, Lakewood, New Jersey and was appointed to the Ocean County College Board of Trustees in February 2016.
Donna BrandinSeth Molod is our Chief Financial Officer and Treasurer and also serves as the Chief Financial Officer and Treasurer of Lightstone I, Lightstone II, Lightstone III and Lightstone III. Ms. BrandinV. Mr. Molod also serves as the Executive Vice President and Chief Financial Officer and Treasurer of our Sponsor and as the Chief Financial Officer and Treasurer of our Advisor and the advisors of Lightstone I, Lightstone II, Lightstone III and Lightstone III. From October 2014 to the present, Ms. Brandin has served as a Director of Lightstone Enterprises. Ms. Brandin was appointed Chief Financial Officer, Senior Vice President, and Treasurer of OP I and Lightstone V effective as of June 15, 2017.V. Prior to joining The Lightstone Groupthe Company in April 2008, Ms. Brandin held the positionAugust 2018, Mr. Molod served as an Audit Partner, Chair of Executive Vice PresidentReal Estate Services and Chief Financial Officer of US Power Generation from September 2007 through November 2007 and before that wason the Executive Vice PresidentCommittee of Berdon LLP, a full service accounting, tax, financial and Chief Financial Officermanagement advisory firm (“Berdon”). Mr. Molod joined Berdon in 1989. He has extensive experience advising some of Equity Residential, the largest publicly traded apartment REITnation’s most prominent real estate owners, developers, managers, and investors in both commercial and residential projects. Mr. Molod has worked with many privately held real estate companies as well as institutional investors, REITs, and other public companies. Mr. Molod is a licensed certified public accountant in New Jersey and New York and a member of the country, from August 2004 through September 2007. Prior to joining Equity Residential, Ms. Brandin held the positionAmerican Institute of Senior Vice President and Treasurer for Cardinal Health from June 2000 through August 2004. Prior to 2000, Ms. Brandin held various executive-level positions at Campbell Soup, Emerson Electric Company and Peabody Holding Company. Ms. Brandin earnedCertified Public Accountants. Mr. Molod holds a Bachelor of Science at Kutztown University and a MastersBusiness Administration degree in Finance at St. Louis University and is a certified public accountant.Accounting from Muhlenberg College.
The following table presents certain information as of September 30, 201715, 2022 concerning:
| | | ||||||
| Name and Address of Beneficial Owner(1) | Number of Shares of Common Stock of the Company | Percent of All Common Shares of the Company | ||||||
| David Lichtenstein(2) | 242,222 | 2.7 | % | |||||
| Edwin J. Glickman | — | — | ||||||
| Steven Spinola | — | — | ||||||
| Shawn Tominus | — | — | ||||||
| Mitchell Hochberg | — | — | ||||||
| Donna Brandin | — | — | ||||||
| Joseph Teichman | — | — | ||||||
| Our directors and officers as a group (6 persons) | 242,222 | 2.7 | % | |||||
| ● | each person known by us to be the beneficial owner of more than 5% of our outstanding shares of Common Stock based solely upon the amounts and percentages contained in the public filings of such persons; |
| ● | each of our directors and executive officers serving in such capacity; and |
| ● | all of our directors and executive officers as a group: |
| Name and Address of Beneficial Owner(1) | Number of Shares of Common Stock of the Company | Percent of All Common Shares of the Company | ||||||
| David Lichtenstein(2) | 242,222 | 2.9 | % | |||||
| Steven Spinola | — | — | ||||||
| Michael J. DeMarco | — | — | ||||||
| Mitchell Hochberg | — | — | ||||||
| Seth Molod | — | — | ||||||
| Joseph Teichman | — | — | ||||||
| Our directors and officers as a group (6 persons) | 242,222 | 2.9 | % | |||||
| (1) | The business address of each individual listed in the table is 1985 Cedar Bridge Avenue, Suite 1, Lakewood, New Jersey 08701. |
| (2) | Includes 20,000 shares owned by our Advisor and 222,222 shares owned by an entity 100% owned by David Lichtenstein. Our Advisor is majority owned by David Lichtenstein. The beneficial owner’s business address is 1985 Cedar Bridge Avenue, Lakewood, New Jersey 08701. |
Section 16(a) Beneficial Ownership Reporting Compliance
As of December 31, 2016, our common stock was not registered pursuant to
Section 1216(a) of the Securities Exchange Act. Our directors, executive officersAct of 1934, as amended, requires each director, officer and the holders ofindividual beneficially owning more than 10% of our common stockCommon Stock to file initial statements of beneficial ownership (Form 3) and statements of changes in beneficial ownership (Forms 4 and 5) of our Common Stock with the SEC. Officers, directors and greater than 10% beneficial owners are not subjectrequired by SEC rules to Section 16(a)furnish us with copies of all such forms they file. Based solely on a review of the Exchange Act,copies of such forms furnished to us during and theywith respect to the fiscal year ended December 31, 2021, or written representations that no additional forms were not required, to file reports under Section 16(a)we believe that all of our officers and directors and persons that beneficially own more than 10% of the Exchange Act for the period from October 5, 2012 (dateoutstanding shares of inception) to December 31, 2016. We became subject to Section 16(a) of the Exchange Act on April 21, 2017 when we filed our Form 8-ACommon Stock complied with the SEC.these filing requirements in 2021.
David Lichtenstein serves as the Chairman of our Board of Directors and our Chief Executive Officer. Our Advisor is majority owned and controlled by Mr. Lichtenstein. We have entered into agreements with our Advisor and Property Managers to pay certain fees, as described below, in exchange for services performed by these and other affiliated entities. As a majority owner of those entities, Mr. Lichtenstein benefits from fees and other compensation that they receive pursuant to these agreements.
Advisor
We reimbursed our Advisor for certain organization and offering expenses in connection with our initial public offering that terminated on March 31, 2017. We expect that such organization and offering expenses, will amount to approximately 2.0% of gross offering proceeds, and in no event will such expenses exceed 15.0% of gross offering proceeds.
We pay our Advisor an acquisition fee equal to 1.0% of the gross contractual purchase price (including any mortgage assumed) of each property purchased and reimburse our Advisor for expenses that it incurs in connection with the purchase of a property. We anticipate that acquisition expenses will be 0.6% of a property’s purchase price, and acquisitionAcquisition fees and expenses are capped at 5% of the gross contract purchase price of a property.
Beginning on the date on which our initial public offering ended (March 31, 2017), the
Our Advisor may beis paid an advisor asset management fee of one-twelfth ( 1/(1/12) of 0.75% of our average invested assets and we will reimburse some expenses of the Advisor relating to asset management.
If our Advisor provides services in connection with the financing of an asset, assumption of a loan in connection with the acquisition of an asset or origination or refinancing of any loan on an asset, we will pay our Advisor a financing coordination fee equal to 0.75% of the amount available or outstanding under such financing.
For substantial services in connection with the sale of a property, we will pay to our Advisor a commission in an amount equal to the lesser of (a) one-half of a real estate commission that is reasonable, customary and competitive in light of the size, type and location of the property and (b) 2.0% of the contract sales price of the property. The commission will not exceed the lesser of 6.0% of the contractgross contractual sales price or commission that is reasonable, customary and competitive in light of the size, type and location of the property.
We will pay our Advisor an annual subordinated performance fee calculated on the basis of our annual return to holders of our Common Shares, payable annually in arrears, such that for any year in which holders of our Common Shares receive payment of a 8.0% annual cumulative, pre-tax, non-compounded return on their respective net investments, our Advisor will be entitled to 15.0% of the amount in excess of such 8.0% per annum return,provided, that the amount paid to the Advisor will not exceed 10.0% of the aggregate return for such year, andprovided, further, that the annual subordinated performance fee will not be paid unless holders of our Common Shares receive a return of their respective net investments.
No
The following table represents the fees were paidincurred associated with the payments to the Advisor for the years ended December 31, 2016 and 2015.period indicated:
During the first quarter of 2015, we paid $33,260 related to organization and offering expenses that the Advisor reimbursed us for during the second quarter of 2015.
During the years ended December 31, 2016 and 2015, we paid $36,298 and $109,325 to an affiliate of the Sponsor for the Sponsor’s marketing expenses related to the Offering that were recorded as a reduction to additional paid in capital.
| For the Years Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| Development fee and cost reimbursement(1) | $ | 1,722,882 | $ | 304,366 | ||||
| Asset management fees (general and administrative costs) | - | 77,313 | ||||||
| Total | $ | 1,722,882 | $ | 381,679 | ||||
The Advisor has and will continue to advance the organization and offering costs to the extent that we do not have the funds to pay such costs. The related liability was $0.9 million for these organization and offering costs as of December 31, 2015 and is included in due to related parties in the balance sheets.
| (1) | Development fees and the reimbursement of development-related costs that the Williamsburg Moxy Joint Venture pays to the Advisor and its affiliates are capitalized and included in the carrying value of the investment in the Williamsburg Moxy Hotel, which is classified as construction in progress on the consolidated balance sheets. |
Sponsor
On March 18, 2016, we and our Sponsor entered into a subordinated unsecured loan agreement (the “Subordinated Agreement”) with the Sponsor, pursuant to which ourthe Sponsor had committed to make a significant investment (“Subordinated Advances”) in usmade aggregate principal advances of up to $36.0$12.6 million which is equivalent to 12.0%through March 31, 2017 (the termination date of the $300.0 million maximum amountOffering). The outstanding principal advances bear interest at a rate of 1.48%, but no interest or principal is due or payable to the Sponsor until holders of our public offering.Common Shares have received liquidation distributions equal to their respective net investments (defined as $10.00 per Common Share) plus a cumulative, pre-tax, non-compounded annual return of 8.0% on their respective net investments.
As
Distributions in connection with our liquidation will initially be made to holders of June 30, 2017 an aggregateour Common Shares until holders of approximately $12.6 millionour Common Shares have received liquidation distributions equal to their respective net investments plus a cumulative, pre-tax, non-compounded annual return of Subordinated Advances had been funded by our sponsor8.0% on their respective net investments. Thereafter, only if additional liquidating distributions are available, we will be obligated to repay the outstanding principal advances and we haverelated accrued interest to the Sponsor, as described in the Subordinated Agreement. In the event that additional liquidating distributions are available after we repay the holders of $164,572.our Common Shares their respective net investments plus their 8% return on investment and then the outstanding principal advances under the Subordinated Agreement and accrued interest to the Sponsor, such additional distributions will be paid to holders of our Common Shares and the Sponsor: 85.0% of the aggregate amount will be payable to holders of our Common Shares and the remaining 15.0% will be payable to the Sponsor.
The principal advances and the related interest are subordinate to all of our obligations as well as to the holders of our Common Shares in an amount equal to the shareholder’s net investment plus a cumulative, pre-tax, non-compounded annual return of 8.0% and only potentially payable in the event of our liquidation.
In connection with the termination of our public offering,the Offering, on March 31, 2017, we and ourthe Sponsor simultaneously terminated the Subordinated Agreement. As a result of the termination, ourthe Sponsor is no longer obligated to make Subordinated Advancesany additional principal advances to us. Interest will continue to accrue on the aggregate Subordinated Advancesoutstanding principal advances and repayment, if any, of the Subordinated Advancesprincipal advances and related accrued interest will be made according to the terms of the Subordinated Agreement.Agreement disclosed above.
105-109 W. 28th Street Preferred Investment
As of both December 31, 2021 and 2020, an aggregate of approximately $12.6 million of principal advances have been funded, which along with the related accrued interest of $1,006,633 and $819,679, respectively, are classified as Subordinated Advances – Related Party, a liability on the consolidated balance sheets. During both of the years ended December 31, 2021 and 2020, the Company accrued $186,954 of interest expense, on the principal advances.
Williamsburg Moxy Hotel
On November 25, 2015,July 17, 2019, we, through our then wholly owned subsidiary, Bedford Avenue Holdings LLC acquired four adjacent parcels of land located at 353-361 Bedford Avenue in Brooklyn, New York (collectively, the Company“Williamsburg Land”), from unaffiliated third parties, for an aggregate purchase price of approximately $30.4 million, excluding closing and other acquisition related costs, on which we are developing and constructing a 210-room branded hotel (the “Williamsburg Moxy Hotel”). In connection with the acquisition of the Williamsburg Land, we simultaneously entered into ana $16.0 million nonrecourse mortgage loan (the “Williamsburg Mortgage”) collateralized by the Williamsburg Land.
On August 5, 2021, we formed the Williamsburg Moxy Hotel Joint Venture with Lightstone REIT III, pursuant to which Lightstone REIT III acquired 25% of our membership interest in the Bedford Avenue Holdings LLC for aggregate consideration of $7.9 million. Subsequent to the initial acquisition, Lightstone REIT III made additional capital contributions to the Williamsburg Moxy Hotel Joint Venture of $4.3 million through December 31, 2021.
As a result, we and Lightstone REIT III have 75% and 25% membership interests, respectively, in the Williamsburg Moxy Hotel Joint Venture. Additionally, we are the managing member of the Williamsburg Moxy Hotel Joint Venture and Lightstone REIT III has consent rights with respect to all major decisions.
We determined that the Williamsburg Moxy Hotel Joint Venture is a VIE and we are the primary beneficiary. As we are the member most closely associated with the Williamsburg Moxy Hotel Joint Venture and therefore have the power to direct the activities of the Williamsburg Moxy Hotel Joint Venture that most significantly impact its performance, we consolidate the operating results and financial condition of the Williamsburg Moxy Hotel Joint Venture and account for the ownership interest of Lightstone REIT III as noncontrolling interests. Contributions are allocated in accordance with each investor’s ownership percentage. Profit and cash distributions are allocated in accordance with each investor’s ownership percentage.
On August 4, 2021, the Williamsburg Joint Venture entered into a development agreement (the “Development Agreement”) with an affiliate of the Advisor (the “Williamsburg Moxy Developer”) pursuant to which the Williamsburg Moxy Developer will be paid a development fee equal to 3% of hard and soft costs, as defined in the Development Agreement, incurred in connection with the development and construction of the Williamsburg Moxy Hotel (see Note 6). Additionally, on August 5, 2021, the Williamsburg Moxy Joint Venture obtained construction financing for the Williamsburg Moxy Hotel as discussed below. The Williamsburg Moxy Hotel is currently under construction and expected to open during the fourth quarter of 2022.
As of December 31, 2021, the Williamsburg Moxy Hotel Joint Venture incurred and capitalized to construction in progress an aggregate of $73.0 million (including capitalized interest of $3.2 million) consisting of acquisition and other costs attributable to the development of the Williamsburg Moxy Hotel. During the years ended December 31, 2021 and 2020, we capitalized interest of approximately $1.7 million and $1.0 million, respectively, in connection with the development of the Williamsburg Moxy Hotel.
Moxy Construction Loan
On August 5, 2021, the Williamsburg Moxy Hotel Joint Venture entered into a recourse construction loan facility for up to $77.0 million (the “Moxy Construction Loan”) scheduled to mature on February 5, 2024, with two, six-month extension options, subject to the satisfaction of certain conditions. The Moxy Construction Loan bears interest at LIBOR plus 9.00%, subject to a 9.50% floor, with monthly interest-only payments based on a rate of 7.50% with the accrued and unpaid interest added to the outstanding loan balance and due at maturity. The Moxy Construction Loan is collateralized by the Williamsburg Moxy Hotel. The Williamsburg Moxy Hotel Joint Venture received initial proceeds of $16.0 million under the Moxy Construction Loan and repaid the Williamsburg Mortgage ($16.0 million) in full. As of December 31, 2021, the outstanding principal balance of the Moxy Construction Loan was $18.6 million (including $0.1 million of interest capitalized to principal) which is presented, net of deferred financing fees of $3.7 million, on the consolidated balance sheet and is classified as Mortgage Payable, net and the remaining availability under the facility was up to $58.6 million.
In connection with the Moxy Construction Loan, the Williamsburg Moxy Hotel Joint Venture has provided certain completion and carry cost guarantees. Furthermore, in connection with the Moxy Construction Loan, the Williamsburg Moxy Hotel Joint Venture paid $3.7 million of loan fees and expenses and accrued $0.8 million of loan exit fees which are due at the initial maturity date and are included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets as of December 31, 2021.
40 East End Ave. Joint Venture
On March 31, 2017, we entered into a joint venture agreement (the “40 East End Ave. Transaction”) with variousSAYT Master Holdco LLC, an entity majority-owned and controlled by David Lichtenstein, who also majority owns and controls our Sponsor, and a related party, entities that provides(the “40 East End Seller”), providing for us to acquire approximately 33.3% of the Company40 East End Seller’s approximate 100% membership interest in the 40 East End Ave. Joint Venture for aggregate consideration of $10.3 million.
Our ownership interest in the 40 East End Ave. Joint Venture is a non-managing interest. Because we exert significant influence over but do not control the 40 East End Ave. Joint Venture, we account for our ownership interest in the 40 East End Ave. Joint Venture in accordance with the equity method of accounting. All contributions to make aggregateand distributions of earnings from the 40 East End Ave. Joint Venture are made on a pro rata basis in proportion to each member’s equity interest percentage. Any distributions in excess of earnings from the 40 East End Ave. Joint Venture are made to the members pursuant to the terms of its operating agreement. We commenced recording our allocated portion of earnings and cash distributions, if any, from the 40 East End Ave. Joint Venture beginning as of March 31, 2017 with respect to our membership interest of approximately 33.3% in the 40 East End Ave. Joint Venture. Additionally, Lightstone Value Plus REIT I, Inc.(“Lightstone REIT I”), a real estate investment trust also sponsored by our Sponsor, made $30.0 million of preferred equity contributions (the “105-109 W. 28th Street Preferred Investment”“Preferred Contributions”) to a subsidiary of up to $20.0 million in various affiliates of its Sponsor (the “Developer”) which owns a parcel of land located at 105-109 W. 28th Street, New York, NY at which they intend to develop a 343-room Marriott Moxy hotel. The 105-109 W. 28th Street Preferred Investment will be madethe 40 East End Ave. Joint Venture, pursuant to an instrument that entitles the CompanyLightstone REIT I to monthly preferred distributions at a rate of 12% per annum and was redeemable byannum. No distributions may be paid to the Companymembers until the Preferred Contributions are redeemed in full.
The 40 East End Ave. Joint Venture, through affiliates, owns the 40 East End Avenue Project, a luxury residential 29-unit condominium project located at the earliercorner of (i)81st Street and East End Avenue in the date thatUpper East Side neighborhood of New York City. The 40 East End Avenue Project received its final TCO in March 2020 and through December 31, 2021, 15 condominium units have been sold.
On December 19, 2019, the 40 East End Ave. Joint Venture obtained financing (the “Condo Loan”) from a financial institution of $95.2 million, of which $90.2 million was initially funded at closing and the remaining $5.0 million was subsequently advanced in April 2020. The Condo Loan, which was previously scheduled to mature on December 19, 2021, bears interest at LIBOR plus 2.45%, which is two yearspayable monthly, and requires principal payments to be made at certain prescribed amounts from proceeds from the datesales of condominium units with any remaining outstanding balance due in full at maturity.
On December 30, 2021, the 40 East End Ave. Joint Venture and the financial institution amended the Condo Loan providing for an extension of the Company’s final contribution or (ii)maturity date to December 20, 2022 and revisions to the third anniversarytiming and amounts of 105-109 W. 28th Street Preferred Investment. The Company may also request redemption or a restructuringrequired principal payments to be made from proceeds from the sale of condominium units. Pursuant to the amended terms of the agreementCondo Loan, the 40 East End Ave. Joint Venture would have been required to make a principal paydown on May 20, 2022, if the then outstanding principal balance of the Condo Loan has not been paid down to at least $26.5 million as of that date, with any remaining outstanding balance due in full at maturity. However, prior to May 20, 2022, the acceptance40 East End Ave. Joint Venture used an aggregate of any construction financing. On$17.3 million of proceeds from the sale of four condominium units to reduce the principal balance of the Condo Loan to $19.2 million, which remains outstanding as of June 30, 2016,2022.
As discussed above, the CompanyCondo Loan is currently scheduled to mature on December 20, 2022. If the Condo Loan has not been repaid in full before its maturity date, the 40 East End Ave. Joint Venture intends to seek a further extension to the maturity date. However, there can be no assurance that the 40 East End Ave. Joint Venture will be successful in such endeavors.
Our Sponsor and its affiliates (collectively, the “40 East End Guarantors”) have provided certain guarantees with respect to the Condo Loan and the Developer amendedmembers have agreed to reimburse the Moxy Transaction so40 East End Guarantors for any balance that may become due under the guarantees (the “40 East End Guarantee”), of which our share is approximately 33.3%. We have determined that the Company’s contributions would become redeemable on the fifth anniversaryfair value of our share of the Moxy Transaction.40 East End Guarantee is immaterial.
In connection with the closing of the Condo Loan, the 40 East End Ave. Joint Venture used a portion of the initial loan proceeds to (i) fully repay an aggregate of $80.5 million of principal and interest under a construction loan and (ii) redeem $9.5 million of Lightstone REIT I’s Preferred Contributions. The 105-109 W. 28th Street40 East End Ave. Joint Venture subsequently redeemed an additional $3.5 million and $11.0 million of Preferred Investment is classified as a held-to-maturity securityContributions on December 26, 2019 and recorded at cost.
On August 30, 2016, the Company and the Developer amended the Moxy Transaction so that Company’s total aggregate contributionsFebruary 13, 2020, respectively, reducing Lightstone REIT I’s Preferred Contributions to NYC Acquisitions IV LLC would increase by $17.0$6.0 million, to $37.0 million.
We commenced making contributions during the fourth quarter of 2015 andwhich remains outstanding as of December 31, 2015, the 105-109 W. 28th Street Preferred Investment had an outstanding balance of $4.0 million, which is classified in investments in related parties on the balance sheet. As of both June 30, 2017 and2021.
Subsequent to our acquisition through December 31, 2016,2021, we have made an aggregate of $5.9 million of additional capital contributions to the 105-109 W. 28th Street Preferred Investment had an outstanding balance40 East End Ave. Joint Venture, of $37.0 million. Duringwhich $0.2 million were made during the yearsyear ended December 31, 20162021.
Because proceeds from sales of condominium units must first be used to fully pay-down the Condo Loan and 2015, the Company recorded $1,928,708 and $49,333, respectively, of investment income relatedthereafter to the 105-109 W. 28th Streetredeem Lightstone REIT I’s remaining Preferred Investment. The Company’s Advisor elected to waive the acquisition fee associated with this transaction.
Our Charter generally requires that any transactions between us and our Sponsor, our Advisor, our directors, or their affiliates must be approved by a majority of our directors (including a majority of Independent Directors) not otherwise interested in the transaction. In addition, our Board of Directors has adopted a policy relating to the review, approval and ratification of transactions with related persons. This policy applies to any transaction, the amount of which exceeds $120,000, between us and any person who is a director, executive officer or the beneficial owner of more than 5% of any class of our voting securities. Any such related person transaction is subject to approval by the Board of Directors. The Board of Directors will decide whether or not to approve a related party transaction and will generally approve only those transactions thatContributions, we do not create a conflict of interest. The Board of Directors (including a majority ofexpect to receive any distributions from the Independent Directors) has approved40 East End Ave. Joint Venture over the transactions disclosed in this section titled “Certain Relationships and Related Party Transactions.”next 12 months.
EisnerAmper LLP audited our financial statements for the years ended December 31, 20162021 and 2015.2020. EisnerAmper LLP reports directly to our Audit Committee. The Audit Committee reviewed the audit and nonaudit services performed by EisnerAmper LLP, as well as the fees charged by EisnerAmper LLP for such services. In its review of the nonaudit service fees, the Audit Committee considered whether the provision of such services is compatible with maintaining the independence of EisnerAmper LLP.
One or more representatives of EisnerAmper LLP have been invited and are expected to be present at the 20172022 Annual Meeting of Stockholders. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
The following table presents the aggregate fees billed to the Company for the years ended December 31, 20162021 and 20152020 by the Company’s principal accounting firm:
| 2021 | 2020 | |||||||
| Audit Fees(a) | $ | 118,000 | $ | 128,725 | ||||
| Tax Fees(b) | 62,400 | 28,365 | ||||||
| Total Fees | $ | 180,400 | $ | 157,090 | ||||
| | | ||||||
| 2016 | 2015 | |||||||
| Audit Fees(a) | $ | 123,475 | $ | 97,125 | ||||
| Audit-Related Fees(b) | — | — | ||||||
| Tax Fees(c) | 10,000 | 4,100 | ||||||
| Total Fees | $ | 133,475 | $ | 101,225 | ||||
| (a) | Fees for audit services consisted of the audit of the Company’s annual consolidated financial statements and interim reviews, including services normally provided in connection with statutory and regulatory filings including registration statement consents. |
| (b) |
| Fees for tax services. |
Audit Committee’s Pre-Approval Policies and Procedures
The Audit Committee must approve any fee for services to be performed by the independent registered public accounting firm in advance of the services being performed. In considering the nature of the services provided by the independent auditor, the Audit Committee determined that such services are compatible with the provision of independent audit services. The Audit Committee discussed these services with the independent auditor and the Company’s management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the related requirements of the Sarbanes-Oxley Act of 2002, as well as the American Institute of Certified Public Accountants.
All services rendered by EisnerAmper LLP for the years ended December 31, 20162021 and 20152020 were approved by the Audit Committee.
To the Directors of Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc.:
We have reviewed and discussed with management Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc.’s audited consolidated financial statements as of and for the year ended December 31, 2016.2021.
We have discussed with the independent auditors the matters required to be discussed by Statement on Auditing StandardsStandard No. 61,16, “Communication with Audit Committees,” (Codification of Statements of Auditing Standards, August 2, 2007 AU 380), as amended, as adopted by the Public Company Accounting Oversight Board.
We have received and reviewed the written disclosures and the letter from the independent auditors required by Public Company Accounting Oversight Board in Rule 3200T.3526, Communication with Audit Committees Concerning Independence and have discussed with the auditors the auditors’ independence.
Based on the reviews and discussions referred to above, we recommend to the board of directors that the consolidated financial statements referred to above be included in Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2016.2021.
Audit Committee
Steven SpinolaEdwinMichael J. GlickmanDeMarco
To the Stockholders of Lightstone Real Estate Income Trust,Value Plus REIT IV, Inc.:
We have reviewed the Company’s policies and determined that they are in the best interest of the Company’s stockholders. Set forth below is a discussion of the basis for that determination.
General
The Company primarily intendsCompany’s strategy is to originate, acquire and manage a diverse portfolio of real estate or real estate-related investments suchlocated primarily in the United States. A substantial portion of its investments currently are related-party investments located in relatively large metropolitan areas. The Company generally has sought to create a portfolio of investments that either generate or are expected to generate attractive cash flow for distributions. However, the Company has and still may target capital appreciation from its investments.
The Company has not established any limits on the percentage of its portfolio that may be comprised of various categories of assets which present differing levels of risk. The allocation of the Company’s assets under management is dependent, in part, upon the then-current commercial real estate market, the investment opportunities it presents and available financing, if any, as well as other micro and macro market conditions.
The Company has and intends to continue to seek opportunities to invest in real estate and real estate-related investments. The Company’s real estate investments may include operating properties and development projects and its real estate-related investments may include mezzanine loans, first lien mortgage loans, second lien mortgage loans, bridge loans and preferred equity interests, in each case with a focus on development-related investments, including those intended to finance development or redevelopment opportunities. The Company may also invest in debt and derivative securities related to real estate assets, such as CMBS; CDOs; debt securities issuedassets. A portion of the Company’s investments by real estate companies; and credit default swaps. The Company will focus its origination and acquisition activity on real estate-related investmentsvalue may be secured by or related to properties or entities advised by, or wholly or partially, directly or indirectly, owned by, the Company’s sponsor, its affiliates or other real estate investment programs sponsored by it. Although the Company expects that most of its investments will be of these various types, it may make other investments. In fact, it may invest in whatever types of investments that it believes are in its best interests.
The Company has and expects to continue to focus its acquisition and origination activity on real estate properties and real estate-related investments located in the United States, and primarilyincluding certain related-party investments.investments generally conducted through joint venture arrangements. The Company sometimes refers to the foregoing types of investments as its targeted investments. The Company willexpects to target investments that generally will offer predictable current cash flow andand/or attractive risk-adjusted returns based on the underwriting criteria established and employed by tisits advisor, which may include the anticipated leverage point, market and economic conditions, the location and quality of the underlying collateral and the borrower’s exit or refinancing plan. The Company’s ability to continue to execute its investment strategy ismay be enhanced through access to itsthe sponsor’s extensive experience in both financing and developing real estate projects it has sponsored, as opposed to a strategy that relies solely onwell as in buying assets in the open market from third-party originators.third-parties. The Company seekshas and will continue to seek to build a portfolio that includesmay include some of or all the following investment characteristics: (a) provides current income; (b) is secured by high-quality commercial real estate; (c) includes subordinate capital investments by strong sponsors that support tisits investments and provide downside protection; and (d) possesses strong structural features that maximize repayment potential, such as a clear exit or refinancing plan by the borrower.
The Company has and intends to also continue to seek to invest in real estate-related loans and debt securities both by directly originating them and by purchasing them from third-party sellers. Although the Company generally prefers the benefits of direct origination, situations may arise to purchase real estate-related loans and debt securities, possibly at discounts to par, which compensate for the lack of control or structural enhancements typically associated with directly structured investments.
Financing Policies
The Company expects that once it has fully invested the proceeds of its Offering, assuming it sells the maximum amount, its portfolio-wide loan-to-value ratio (calculated after the close of this offering) will be approximately 45%. For purposes of calculating The Company’s 45% target leverage, the Company will determine the loan-to-value ratio on its portfolio based on the greater of the aggregate cost and the fair market value of its investments and other assets.
There is no limitation on the amount the Company may invest or borrow for the purchase or origination of any single property or investment. The Company’s charter allows it to incur leverage up to 300% of its total “net assets” (as defined in its charter) as of the date of any borrowing, which is generally expected to be approximately 75% of the cost of its investments. The Company may only exceed this 300% limit if a majority of its independent directors approves each borrowing in excess of this limit and the Company discloses such borrowing to its stockholders in its next quarterly report along with a justification for the excess borrowing. In all events, the Company expects that its secured and unsecured borrowings will be reasonable in relation to the net value of its assets and will be reviewed by the Company’s board of directors at least quarterly.
The Company does not currently intend to exceed the leverage limit in its charter after thecharter. The Company has fully invested the proceeds of its Offering, although the Company anticipates exceeding the leverage limit in the early stages of its development when the costs of its investments are most likely to exceed its net offering proceeds. Carefulbelieves that careful use of debt will helphelps the Company to achieve its diversification goals because the Company willmay have more funds available for investment. However, high levels of debt could cause the Company to incur higher interest charges and higher debt service payments, which would decrease the amount of cash available for distributiondistributions, if any, to the Company’s investors.
Policy on Sale or Disposition of Properties
The Company’s board of directors will determine whether a particular property should be sold or otherwise disposed of after considering the relevant factors, including performance or projected performance of the property and market conditions, with a view toward achieving its principal investment objectives.
The Company currently intends to hold each investment it acquires, develops or originates until its investment objectives are met or acquires for an extended period of time, generally three to five years from the termination of the Company’s initial public offering.it is likely they will not be met. The determination of whether an investment will be sold or otherwise disposed of will be made after consideration of relevant factors, including prevailing economic conditions, specific real estate market conditions, tax implications for the Company’s stockholders and other factors. The requirements for qualification as a REIT also will put some limits on the Company’s ability to sell investments after short holding periods. However, in accordance with the Company’s investment objective of realizing growth in the value of its investments, the Company may sell a particular investment before or after this anticipated holding period if,when, in the judgment of its advisor and its board of directors, selling the investment is in the Company’s best interest. The determination of when a particular investment should be sold or otherwise disposed of will be made after consideration of relevant factors, including prevailing and projected economic conditions, whether the value of the investment is anticipated to decline substantially, whether the Company could apply the proceeds from the sale of the investment to make other investments consistent with its investment objectives, whether disposition of the investment would allow the Company to increase cash flow, and whether the sale of the investment would constitute a prohibited transaction under the Code or otherwise impact the Company’s status as a REIT. The Company’s ability to dispose of an investment during the first few years following its acquisition is restricted to a substantial extent as a result of its REIT status. Under applicable provisions of the Code regarding prohibited transactions by REITs, a REIT that sells an asset other than foreclosure property that is deemed to be inventory or property held primarily for sale in the ordinary course of business is deemed a “dealer” and subject to a 100% penalty tax on the net income from any such transaction. As a result, the Company’s board of directors will attempt to structure any disposition of the Company’s investments to avoid this penalty tax through reliance on safe harbors available under the Code for assets held at least two years or through the use of a TRS.
When the Company determines to sell a particular investment, it will seek to achieve a selling price that maximizes the capital appreciation for investors based on then-current market conditions. The Company cannot assure its investors that this objective will be realized.
Independent Directors
Steven SpinolaEdwinMichael J. GlickmanDeMarco
Our Board of Directors does not intend to present for consideration at the 20172022 Annual Meeting of stockholders any matter other than those specifically set forth in the Notice of Annual Meeting of Stockholders. If any other matter is properly presented for consideration at the meeting, the persons named in the proxy will vote thereon pursuant to the discretionary authority conferred by the proxy.
STOCKHOLDER PROPOSALS FOR THE 20182023 ANNUAL MEETING
Stockholder Proposals in the Proxy Statement
Rule 14a-8 under the Exchange Act addresses when a company must include a stockholder’s proposal in its proxy statement and identify the proposal in its form of proxy when the company holds an annual or special meeting of stockholders. Under Rule 14a-8, in order for a stockholder proposal to be considered orfor inclusion in the proxy statement and proxy card relating to our 20182023 Annual Meeting of stockholders, the proposal must be received at our principal executive offices no later than June 10, 2018.20, 2023.
Stockholder Proposals and Nominations for Directors to Be Presented at MeetingsMeeting
For any proposal that is not submitted for inclusion in our proxy material for the 20182023 Annual Meeting of stockholders but is instead sought to be presented directly at that meeting, Rule 14a-4(c) under the Exchange Act permits our management to exercise discretionary voting authority under proxies it solicits unless we receive timely notice of the proposal in accordance with the procedures set forth in our bylaws. Under our current bylaws, for a stockholder proposal to be properly submitted for presentation at our 20182023 Annual Meeting of Stockholders, our Secretary must receive written notice of the proposal at our principal executive offices during the period beginning on May 10, 201821, 2023 and ending at 5:00 p.m., Eastern Daylight Time, on June 10, 201820, 2023 and must contain information specified in our bylaws, including:
| 1. | as to each director nominee, |
| ● | the name, age, business address, and residence address of the nominee; |
| ● | the class, series and number of any shares of stock of the Company beneficially owned by the nominee; |
| ● | the date such shares were acquired and the investment intent of such acquisitions; |
| ● | all other information relating to the nominee that is required under Regulation 14A under the Exchange Act to be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved) or is otherwise required; and |
| 2. | as to any other business that the stockholder proposes to bring before the meeting, |
| ● | a description of the business to be brought before the meeting; |
| ● | the reasons for proposing such business at the meeting; |
| ● | any material interest in such business that the proposing stockholder (and certain persons, which we refer to as “Stockholder Associated Persons” (as defined below), if any) may have, including any anticipated benefit to the proposing stockholder (and the Stockholder Associated Persons, if any); and |
| 3. | as to the proposing stockholder (and the Stockholder Associated Persons, if any), |
| ● | the class, series and number of all shares of stock of the Company owned by the proposing stockholder (and the Stockholder Associated Persons, if any), and the nominee holder for, and number of, shares owned beneficially but not of record by the proposing stockholder (and the Stockholder Associated Persons, if any); and |
| 4. | as to the proposing stockholder (and the Stockholder Associated Persons, if any) covered by clauses (2) or (3) above, |
| ● | the name and address of the proposing stockholder (and the Stockholder Associated Persons, if any) as they appear on the Company’s stock ledger, and current name and address, if different; and |
| 5. | to the extent known by the proposing stockholder, the name and address of any other stockholder supporting the director nominee or the proposal of other business on the date of the proposing stockholder’s notice. |
A “Stockholder Associated Person” means (i) any person controlling, directly or indirectly, or acting in concert with, the proposing stockholder, (ii) any beneficial owner of shares of stock of the Company owned by the proposing stockholder and (iii) any person controlling, controlled by or under common control with the Stockholder Associated Person.
All nominations must also comply with the Charter. All proposals should be sent via registered, certified or express mail to our Secretary at our principal executive offices at: Lightstone Real Estate Income Trust, Inc.Value Plus REIT I, INC., 1985 Cedar Bridge Avenue, Suite 1, Lakewood, New Jersey 08701, Attention: Joseph Teichman (888) 808-7348.(telephone: (866) 792-8700).
By Order of the Board of Directors,
| | |
| /s/ Joseph Teichman | ||
| Joseph Teichman | ||
| General Counsel and Secretary | ||
| Lakewood, New Jersey | ||
| October | 12, 2022 |
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