Notes to Consolidated Financial Statements
(unaudited)
(Dollar amounts in thousands, except
per share/unit data and where indicated in millions)
Lightstone Value Plus Real Estate Investment
Trust V, Inc. which was previously named Behringer Harvard Opportunity REIT II, Inc., prior to July 20, 2017 (which may be
referred to as the “Company,” “we,” “us,” or “our”), was organized as a Maryland
corporation on January 9, 2007 and has elected to be taxed, and currently qualifies, as a real estate investment trust (“REIT”)
for federal income tax purposes.
The Company was formed primarily to acquire
and operate commercial real estate and real estate-related assets on an opportunistic and value-add basis. In particular, the Company
has focused generally on acquiring commercial properties with significant possibilities for capital appreciation, such as those
requiring development, redevelopment, or repositioning, those located in markets and submarkets with high growth potential, and
those available from sellers who are distressed or face time-sensitive deadlines. The Company has acquired a wide variety
of commercial properties, including office, industrial, retail, hospitality, and multifamily. The Company has purchased existing,
income-producing properties, and newly-constructed properties. The Company has also invested in other real estate-related investments
such as mortgage and mezzanine loans. The Company intends to hold the various real properties in which it has invested until such
time as its board of directors determines that a sale or other disposition appears to be advantageous to achieve the Company’s
investment objectives or until it appears that the objectives will not be met. The Company currently has one operating segment.
As of March 31, 2021, the Company had seven real estate investments (five wholly owned properties and two properties consolidated
through investments in joint ventures) and one real estate-related investment (mezzanine loan).
Substantially all of the Company’s
business is conducted through Lightstone REIT V OP LP, a limited partnership organized in Delaware (the “Operating Partnership”).
As of March 31, 2021, the Company’s wholly-owned subsidiary, BHO II, Inc., a Delaware corporation, owned a 0.1% partnership
interest in the Operating Partnership as its sole general partner. As of March 31, 2021, the Company’s wholly-owned
subsidiary, BHO Business Trust II, a Maryland business trust, was the sole limited partner of the Operating Partnership and owned
the remaining 99.9% interest in the Operating Partnership.
The Company’s business is managed
by an external advisor and the Company has no employees. Effective February 10, 2017, the Company engaged affiliates of The Lightstone
Group (“Lightstone”), LSG-BH II Advisor LLC and LSG Development Advisor LLC (collectively, the “Advisor”),
to provide advisory services to the Company. Lightstone is majority owned by the chairman of the Company’s board of directors,
David Lichtenstein. Pursuant to the terms of an advisory agreement and subject to the oversight of the Company’s board of
directors, the Advisor is responsible for managing the Company’s day-to-day affairs and for services related to the management
of the Company’s assets.
Organization
In connection with the Company’s
initial capitalization, the Company issued 22,500 shares of its common stock and 1,000 shares of its convertible stock to the Company’s
previous advisor on January 19, 2007. The 1,000 shares of convertible stock were transferred to an affiliate of Lightstone
on February 10, 2017 and remain outstanding. As of March 31, 2021, the Company had 20.2 million shares of common stock outstanding.
The Company’s common stock is not
currently listed on a national securities exchange. The timing of a liquidity event for the Company’s stockholders will depend
upon then prevailing market conditions. On January 9, 2020, the Company’s board of directors extended the targeted timeline for
the Company to commence a liquidity event until June 30, 2028 based on their assessment of the Company’s investment objectives
and liquidity options for the Company’s stockholders. The Company can provide no assurances as to the actual timing of the
commencement of a liquidity event for its stockholders or the ultimate liquidation of the Company. The Company will seek stockholder
approval prior to liquidating its entire portfolio.
Lightstone Value Plus Real Estate Investment
Trust V, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(Dollar amounts in thousands, except
per share/unit data and where indicated in millions)
Noncontrolling Interests
Noncontrolling interests represents the
noncontrolling ownership interest’s proportionate share of the equity in our consolidated real estate investments.
Income and losses are allocated to noncontrolling interest holders based generally on their ownership percentage. If
a property reaches a defined return threshold, then it will result in distributions to noncontrolling interests which is different
from the standard pro-rata allocation percentage. In certain instances, our joint venture agreements provide for liquidating distributions
based on achieving certain return metrics.
Acquisition of Noncontrolling Member’s
Ownership Interest (Lakes of Margate)
On March 17, 2021, the Company acquired
the noncontrolling member’s 7.5% ownership interest in the Lakes of Margate for $1.1 million and as a result, owned 100%
of the Lakes of Margate, which was subsequently sold (see Note 3).
|
2.
|
Summary of Significant Accounting Policies
|
Interim Unaudited Financial Information
The accompanying unaudited interim consolidated
financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related
notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was
filed with the Securities and Exchange Commission (the “SEC”) on March 25, 2021. The unaudited interim consolidated
financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment
of management for a fair presentation of the results for the periods presented. The accompanying unaudited consolidated financial
statements of Lightstone Value Plus Real Estate Investment Trust V, Inc. have been prepared in accordance with generally accepted
accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions
to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required
by GAAP for complete financial statements.
Principles of Consolidation and Basis
of Presentation
Our consolidated financial statements include
our accounts and the accounts of other subsidiaries over which the Company has control. All inter-company transactions, balances,
and profits have been eliminated in consolidation. In addition, interests in entities acquired are evaluated based on applicable
GAAP, and entities deemed to be variable interest entities (“VIE”) in which the Company is the primary beneficiary
are also consolidated. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation
based on legal form, economic substance, and the extent to which the Company has control, substantive participating rights or both
under the respective ownership agreement. For entities in which the Company has less than a controlling interest or entities which
we are not deemed to be the primary beneficiary, it accounts for the investment using the equity method of accounting.
The consolidated balance sheet as of December
31, 2020 included herein has been derived from the consolidated balance sheet included in the Company’s Annual Report on Form 10-K.
The unaudited consolidated statements of
operations for interim periods are not necessarily indicative of results for the full year or any other period.
Investment in Unconsolidated Joint
Venture (Prospect Park)
On May 10, 2021 the Company received a payment
of $1.5 million for the settlement of its prior participation in the residual interests of a mezzanine financing to an unaffiliated
third-party entity that owned an apartment complex in Denver, Colorado.
Lightstone Value Plus Real Estate Investment
Trust V, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(Dollar amounts in thousands, except
per share/unit data and where indicated in millions)
Earnings per Share
The Company had no potentially dilutive
securities outstanding during the periods presented. Accordingly, basic and diluted earnings per share is calculated by dividing
net income/(loss) by the weighted-average number of shares of common stock outstanding during the applicable period.
Restricted cash
As required by the Company’s
lenders, restricted cash is held in escrow accounts for anticipated capital expenditures, real estate taxes, and other reserves
for certain of our consolidated properties. Capital reserves are typically utilized for non-operating expenses such as major capital
expenditures. Alternatively, a lender may require its own formula for an escrow of capital reserves. As of March 31, 2021, restricted
cash also included $14.1 million of the proceeds from the sale of Lakes of Margate. These funds have been temporarily placed in
escrow with a qualified intermediary to potentially facilitate a like-kind exchange transaction in accordance with Section 1031
of the Internal Revenue Code of 1986, as amended. See Note 3 for additional information.
COVID-19 Pandemic
On March 11, 2020, the World Health Organization
declared COVID-19 a global pandemic leading many countries, including the United States, particularly at the individual state level,
to subsequently impose various degrees of restrictions and other measures, including, but not limited to, mandatory temporary closures,
quarantine guidelines, limitations on travel, and “shelter in place” rules in an effort to reduce its duration and
the severity of its spread. Although the COVID-19 pandemic has continued to evolve, most of these previously imposed restrictions
and other measures have now been reduced and/or lifted. However, the COVID-19 pandemic remains highly unpredictable and dynamic
and its duration and extent is likely dependent on numerous developments such as the regulatory approval, mass production, administration
and ultimate effectiveness of vaccines, as well as the timeline to achieve a level of sufficient herd immunity amongst the general
population. Accordingly, the COVID-19 pandemic may continue to have negative effects on the overall health of the U.S. economy
for the foreseeable future. The Company’s consolidated portfolio of properties currently consists of six multi-family apartment
complexes and one student housing complex. Despite past and current restrictions and mitigation strategies, the Company’s
multi-family properties still have not yet seen any significant impact from the COVID-19 pandemic. The Company’s student
housing complex, which consists of the River Club Apartments and the Townhomes at River Club, are located in Athens, Georgia and
principally serve as “off-campus” lodging for students attending the University of Georgia (“UGA”). Leases
for the River Club Apartments and Townhomes at River Club generally have a term of one year running from August through July. Because
of the COVID-19 pandemic, UGA previously transitioned to online instruction during its Spring 2020 semester before resuming to
“on-campus” classes beginning with its Fall 2020 semester. The Company’s student housing complex is located “off-campus”
and therefore, its tenants are not required to vacate even if UGA does not conduct “on-campus” classes. However, if
UGA decides to return to online instruction for its students in lieu of “on-campus” classes in future semesters, it
could adversely impact leasing demand, occupancy levels and the operating results of the Company’s student housing complex
in future periods. Additionally, the Company’s note receivable is collateralized by a condominium development project located
in New Yok City (the “Condominium Project”), which is subject to similar restrictions and risks. To date, the Condominium
Project and the Company’s note receivable have not been significantly impacted by the COVID-19 pandemic.
While the Company’s business has
not yet seen any material impact from the ongoing COVID-19 pandemic, the extent to which it may be affected in future periods will
largely depend on current and future developments, all of which are highly uncertain and cannot be reasonably predicted.
If the Company’s properties and real
estate-related investments are negatively impacted in future periods for an extended period because (i) tenants are unable to pay
their rent, (ii) demand for its student housing complex declines, and (iii) its borrower is unable to pay scheduled debt service
on the outstanding note receivable; the Company’s business and financial results could be materially and adversely impacted.
Lightstone Value Plus Real Estate Investment
Trust V, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(Dollar amounts in thousands, except
per share/unit data and where indicated in millions)
New Accounting Pronouncements
In June 2016, the FASB issued new guidance
which replaces the incurred loss impairment methodology currently in use with a methodology that reflects expected credit losses
and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal
years. The Company is currently in the process of evaluating the impact the adoption of this standard will have on the Company’s
consolidated financial statements.
The Company has reviewed and
determined that other recently issued accounting pronouncements will not have a material impact on its financial position, results
of operations and cash flows, or do not apply to its current operations.
|
3.
|
Held for Sale and Disposition of Lakes of Margate
|
Lakes of Margate
During the fourth quarter of 2020, Lakes
of Margate met the criteria to be classified as held for sale and therefore, its associated assets and liabilities were classified
as held for sale in the consolidated balance sheet as of December 31, 2020.
On March 17, 2021, the Company completed the
disposition of the Lakes of Margate to Lakes of Margate FL LLC, an unrelated third party (the “Lakes of Margate Buyer”),
for aggregate consideration of $50.8 million. At closing, the Lakes of Margate Buyer paid $15.1 million and assumed the existing
Lakes of Margate Loan with an outstanding principal balance of $35.7 million and $14.1 million of the proceeds were placed in escrow
with a qualified intermediary to potentially facilitate a like-kind exchange transaction in accordance with Section 1031 of
the Internal Revenue Code of 1986, as amended, and is included in restricted cash on the consolidated balance sheet as of March
31, 2021. In connection with the disposition of the Lakes of Margate, the Company recognized a gain on sale of investment
property of $27.8 million during the first quarter of 2021.
The disposition of the Lakes of Margate
did not qualify to be reported as discontinued operations since it did not represent a strategic shift that had a major effect
on the Company’s operations and financial results. Accordingly, the operating results of the Lakes of Margate are reflected
in our results from continuing operations for all periods presented through its date of disposition.
The following summary presents the major
components of the Lakes of Margate’s assets and liabilities held for sale, of as December 31, 2020.
|
|
As of
|
|
|
|
December 31,
2020
|
|
|
|
|
|
Net investment property
|
|
$
|
21,308
|
|
Other assets
|
|
|
2,832
|
|
|
|
|
|
|
Total assets held for sale
|
|
$
|
24,140
|
|
|
|
|
|
|
Note payable, net
|
|
$
|
35,136
|
|
Accounts payable and accrued expenses
|
|
|
2,029
|
|
|
|
|
|
|
Total liabilities held for sale
|
|
$
|
37,165
|
|
500 West 22nd Street Mezzanine Loan
On February 28, 2019, the Company,
as the lender, and an unrelated third party (the “500 West 22nd Street Mezzanine Loan Borrower”), as the borrower,
entered into a loan promissory note (the “500 West 22nd Street Mezzanine Loan”) pursuant to which the Company would
fund up to $12.0 million of mezzanine financing. On the same date, the Company initially funded $8.0 million of the 500 West 22nd
Street Mezzanine Loan. Subsequently, through the first quarter of 2020, the Company funded an additional $4.0 million and as a
result, the 500 West 22nd Street Mezzanine Loan has been fully funded.
Lightstone Value Plus Real Estate Investment
Trust V, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(Dollar amounts in thousands, except
per share/unit data and where indicated in millions)
The 500 West 22nd Street Mezzanine Loan
is recorded in note receivable, net on the consolidated balance sheet. In connection with the fundings made for the 500 West 22nd
Street Mezzanine Loan, the Advisor has received an aggregate of approximately $0.2 million in acquisition fees from the Company.
The acquisition fees are accounted for as an addition to the carrying value of the 500 West 22nd Street Mezzanine
Loan and are being amortized as a reduction to interest income over the initial term of the 500 West 22nd Street
Mezzanine Loan using a straight-line method that approximates the effective interest method.
The 500 West 22nd Street Mezzanine
Loan is due August 31, 2021 and is collateralized by the ownership interests of the 500 West 22nd Street Mezzanine Loan
Borrower. The 500 West 22nd Street Mezzanine Loan Borrower owns a parcel of land located at 500 West 22nd Street, New York,
New York on which it is developing and constructing the Condominium Project. At the onset of the COVID-19 pandemic, the Borrower’s
construction activities related to the Condominium Project were temporarily suspended due to restrictions on certain non-essential
construction activities imposed by New York City. However, construction activities for the Condominium Project fully resumed in
early May 2020 and its anticipated construction timeline has not been significantly impacted to date.
The 500 West 22nd Street Mezzanine
Loan bears interest at a rate of LIBOR + 11.0% per annum with a floor of 13.493% (13.493% as of March 31, 2021). The Company received
an origination fee of 1.0% of the loan balance, or approximately $0.1 million, which is presented in the consolidated balance
sheets as a direct deduction from the carrying value of the 500 West 22nd Street Mezzanine Loan and is being amortized to
interest income, using a straight-line method that approximates the effective interest method, over the initial term of the 500
West 22nd Street Mezzanine Loan. The 500 West 22nd Street Mezzanine Loan may be extended two additional six-month periods
by the 500 West 22nd Street Mezzanine Loan Borrower provided certain conditions are met, including the establishment of an
additional reserve for interest and the payment of an extension fee equal to 0.25% of the outstanding loan balance.
In connection with the initial funding
under the 500 West 22nd Street Mezzanine Loan, the Company retained approximately $2.1 million of the proceeds to establish
a reserve for interest and other items, which is presented in the consolidated balance sheets as a direct deduction from the
carrying value of the 500 West 22nd Street Mezzanine Loan and are being applied against the first 8.0% of monthly
interest due during the initial term of the 500 West 22nd Street Mezzanine Loan. Through March 31, 2021, approximately $2.0 million
of the reserve has been recognized as interest income and the remaining balance of the reserve was approximately $0.1 million as
of March 31, 2021. The additional monthly interest due above the 8.0% threshold is added to the balance of the 500 West 22nd Street
Mezzanine Loan and payable at maturity. As of March 31, 2021, approximately $1.3 million of additional interest due is included
in the balance of the 500 West 22nd Street Mezzanine Loan.
During both the three months ended March
31, 2021 and 2020, the Company recorded approximately $0.4 million of interest income related to the note receivable. As of March
31, 2021, the outstanding principal balance of the 500 West 22nd Street Mezzanine Loan was approximately $13.4 million.
The Company determined the following disclosure
of estimated fair values using available market information and appropriate valuation methodologies. However, considerable judgment
is necessary to interpret market data and develop the related estimates of fair value. The use of different market assumptions
or only estimation methodologies may have a material effect on the estimated fair value amounts.
As of March 31, 2021 and December 31, 2020,
management estimated that the carrying value of cash and cash equivalents, restricted cash, note receivable, prepaid expenses
and other assets, accounts payable and accrued and other liabilities were at amounts that reasonably approximated their fair value
based on their highly-liquid nature and/or short-term maturities.
Lightstone Value Plus Real Estate Investment
Trust V, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(Dollar amounts in thousands, except
per share/unit data and where indicated in millions)
The fair value of the notes payable is
categorized as a Level 2 in the fair value hierarchy. The fair value was estimated using a discounted cash flow analysis valuation
on the estimated borrowing rates currently available for loans with similar terms and maturities. The fair value of the notes payable
was determined by discounting the future contractual interest and principal payments by a market rate. Disclosure about fair value
of financial instruments is based on pertinent information available to management as of March 31, 2021 and December 31, 2020.
Carrying amounts of our notes payable and the related estimated fair value is summarized as follows:
|
|
As of March
31, 2021
|
|
|
As of December
31, 2020
|
|
|
|
Carrying
Amount
|
|
|
Estimated Fair
Value
|
|
|
Carrying
Amount
|
|
|
Estimated Fair
Value
|
|
Notes payable
|
|
$
|
216,242
|
|
|
$
|
220,496
|
|
|
$
|
216,382
|
|
|
$
|
219,625
|
|
|
6.
|
Marketable Securities and Fair Value Measurements
|
Marketable Securities
The following is a summary of
the Company’s available for sale securities as of the dates indicated:
|
|
As of March 31, 2021
|
|
|
|
Adjusted Cost
|
|
|
Gross Unrealized Gains
|
|
|
Gross Unrealized Losses
|
|
|
Fair Value
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and Government Bonds
|
|
$
|
3,504
|
|
|
$
|
103
|
|
|
$
|
(14
|
)
|
|
$
|
3,593
|
|
|
|
As of December 31, 2020
|
|
|
|
Adjusted Cost
|
|
|
Gross Unrealized Gains
|
|
|
Gross Unrealized Losses
|
|
|
Fair Value
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and Government Bonds
|
|
$
|
3,515
|
|
|
$
|
140
|
|
|
$
|
(1
|
)
|
|
$
|
3,654
|
|
When evaluating the investments
for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has
been below cost basis, the financial condition of the issuer and any changes thereto, and the Company’s intent to sell, or
whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s amortized
cost basis. As of March 31, 2021, the Company did not recognize any impairment charges.
Fair Value Measurements
Fair value is defined as the
exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques
used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
Lightstone Value Plus Real Estate Investment
Trust V, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(Dollar amounts in thousands, except
per share/unit data and where indicated in millions)
The standard describes a fair
value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that
may be used to measure fair value:
|
●
|
Level 1 – Quoted prices in active markets for identical assets or liabilities.
|
|
|
|
|
●
|
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
|
|
|
●
|
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
The fair values of the Company’s
investments in debt securities are measured using quoted prices for these investments; however, the markets for these assets are
not active. As of March 31, 2021, all of the Company’s debt securities were classified as Level 2 assets and there were no
transfers between the level classifications during the three months ended March 31, 2021.
The following table summarizes
the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates, accounted for
as available-for-sale securities and classified by the contractual maturity date of the securities:
|
|
As of
March 31,
2021
|
|
Due in 1 year
|
|
$
|
629
|
|
Due in 1 year through 5 years
|
|
|
2,867
|
|
Due in 5 years through 10 years
|
|
|
97
|
|
Due after 10 years
|
|
|
-
|
|
Total
|
|
$
|
3,593
|
|
Lightstone Value Plus Real Estate Investment
Trust V, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(Dollar amounts in thousands, except
per share/unit data and where indicated in millions)
Notes payable, excluding debt classified
as held for sale, consists of the following:
Property
|
|
Interest Rate
|
|
Weighted Average Interest Rate as of
March 31,
2021
|
|
|
Maturity Date
|
|
Amount Due at Maturity
|
|
|
As of
March 31,
2021
|
|
|
As of
December 31,
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
River Club and the Townhomes at River Club
|
|
LIBOR + 1.78%
|
|
|
1.89
|
%
|
|
May 1, 2025
|
|
$
|
28,419
|
|
|
$
|
30,359
|
|
|
$
|
30,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arbors Harbor Town
|
|
4.53%
|
|
|
4.53
|
%
|
|
December 28, 2025
|
|
|
29,000
|
|
|
|
29,000
|
|
|
|
29,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parkside
|
|
4.45%
|
|
|
4.45
|
%
|
|
June 1, 2025
|
|
|
15,782
|
|
|
|
17,209
|
|
|
|
17,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axis at Westmont
|
|
4.39%
|
|
|
4.39
|
%
|
|
February 1, 2026
|
|
|
34,343
|
|
|
|
37,540
|
|
|
|
37,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valley Ranch Apartments
|
|
4.16%
|
|
|
4.16
|
%
|
|
March 1, 2026
|
|
|
43,414
|
|
|
|
43,414
|
|
|
|
43,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flats at Fishers
|
|
3.78%
|
|
|
3.78
|
%
|
|
July 1, 2026
|
|
|
26,090
|
|
|
|
28,800
|
|
|
|
28,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Autumn Breeze Apartments
|
|
3.39%
|
|
|
3.39
|
%
|
|
April 1, 2030
|
|
|
25,518
|
|
|
|
29,920
|
|
|
|
29,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total notes payable
|
|
|
|
|
3.80
|
%
|
|
|
|
$
|
202,566
|
|
|
|
216,242
|
|
|
|
216,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Deferred financing costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,912
|
)
|
|
|
(3,393
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total notes payable, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
213,330
|
|
|
$
|
212,989
|
|
The following table provides information
with respect to the contractual maturities and scheduled principal repayments of the Company’s indebtedness as of March 31,
2021.
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
2024
|
|
|
2025
|
|
|
Thereafter
|
|
|
Total
|
|
Principal maturities
|
|
$
|
883
|
|
|
$
|
1,468
|
|
|
$
|
2,498
|
|
|
$
|
3,181
|
|
|
$
|
46,590
|
|
|
$
|
161,622
|
|
|
$
|
216,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: deferred financing costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,912
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total notes payable, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
213,330
|
|
Share Redemption Program and Redemption
Price
The Company’s board of directors
has adopted a share redemption program (the “SRP”) that permits stockholders to sell their shares back to it, subject
to the significant conditions and limitations of the program. The Company’s board of directors can amend the provisions
of the SRP at any time without the approval of the stockholders.
On August 9, 2017, the board of directors
adopted a Fourth Amended and Restated Share Redemption Program (the “Fourth Amended SRP”) which became effective July 1,
2018. The Fourth Amended SRP established that the price at which the Company would redeem shares submitted for redemption will
be a percentage of the estimated net asset value per share (“NAV per Share”) as of the Effective Date, as defined,
as follows:
For Redemptions with an Effective Date Between
|
|
July 1, 2018 and June 30, 2019:
|
92.5% of the estimated NAV per Share
|
July 1, 2019 and June 30, 2020:
|
95.0% of the estimated NAV per Share
|
July 1, 2020 and June 30, 2021:
|
97.5% of the estimated NAV per Share
|
Thereafter:
|
100% of the estimated NAV per Share
|
Lightstone Value Plus Real Estate Investment
Trust V, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(Dollar amounts in thousands, except
per share/unit data and where indicated in millions)
Pursuant to the terms of the Fourth Amended
SRP, any shares approved for redemption are redeemed on a periodic basis as determined from time to time by the Company’s
board of directors, and no less frequently than annually. The Company will not redeem, during any twelve-month period, more
than 5% of the weighted average number of shares outstanding during the twelve-month period immediately prior to the date of redemption.
In addition, the cash available for redemptions is limited to no more than $10.0 million in any twelve-month period. Any
redemption requests are honored pro rata among all requests received based on funds available and are not honored on a first come,
first served basis.
On December 28, 2018, the Company’s
board of directors adopted a Fifth Amended and Restated Share Redemption Program (the “Fifth Amended SRP”) which became
effective on January 31, 2019. The only material change to the program was to change the measurement period for the limitations
on the number and dollar amount of shares that may be accepted for redemption from a rolling 12 month-period to a calendar year.
In accordance with the Company’s
Fifth Amended SRP, the per share redemption price automatically adjusted to $8.64 effective November 7, 2019 as a result of
the determination and approval by the Company’s board of directors of the updated estimated NAV per Share.
On December 13, 2019, the Company’s
board of directors approved the suspension of the SRP. Pursuant to the terms of the SRP, while the SRP is suspended, the Company
will not accept any requests for redemption.
Effective March 25, 2021, the Company’s
Board of Directors reopened the SRP solely for redemptions submitted in connection with a stockholder’s death and set the
price for all such purchases to $9.42, which is 100% of the NAV per Share as of September 30, 2020. Deaths that occurred subsequent
to January 1, 2020 are eligible for consideration. Beginning January 1, 2022, requests for redemptions in connection with a stockholder’s
death must be submitted and received by the Company within one year of the stockholder’s date of death for consideration.
On an annual basis, the Company will not
redeem in excess of 0.5% of the number of shares outstanding as of the end of the preceding year. Death redemption requests are
expected to be processed on a quarterly basis and may be subject to pro ration if death redemption requests exceed the annual limitation.
The Company’s board of directors
will continue to consider the liquidity available to stockholders going forward, balanced with other long-term interests of the
stockholders and the Company. It is possible that in the future additional liquidity will be made available by the Company through
the SRP, issuer tender offers or other methods, though it can make no assurances as to whether that will happen, or the timing
or terms of any such liquidity.
Distributions
The Company made an election to qualify
as a REIT for federal income tax purposes commencing with its taxable year ended December 31, 2008. U.S. federal tax law requires
a REIT distribute at least 90% of its annual REIT taxable income (which does not equal net income, as calculated in accordance
with GAAP) determined without regard to the deduction for dividends paid and excluding any net capital gain. In order to continue
to qualify for REIT status, the Company may be required to make distributions in excess of cash available. Distributions are authorized
at the discretion of the Company’s board of directors based on their analysis of the Company’s performance over the
previous periods and expectations of performance for future periods. Such analyses may include actual and anticipated operating
cash flow, changes in market capitalization rates for investments suitable for the Company’s portfolio, capital expenditure
needs, general financial and market conditions, proceeds from asset sales, and other factors that the Company’s board of
directors deems relevant.
The Company’s board of directors’
decision will be substantially influenced by their obligation to ensure that the Company maintains its federal tax status as a
REIT. The Company cannot provide assurance that it will pay distributions at any particular level, or at all.
The Company did not make any distributions
to its stockholders during the three months ended March 31, 2021 and 2020.
|
9.
|
Related Party Transactions
|
The Company has agreements with the Advisor
and its affiliates to pay certain fees in exchange for services performed by these entities and other related parties. On June
10, 2020, these agreements were extended an additional year through June 10, 2021. The Company is dependent on the Advisor
and property manager for certain services that are essential to it, including asset disposition decisions, property management
and leasing services, and other general administrative responsibilities. In the event that these companies were unable to provide
the Company with their respective services, the Company would be required to obtain such services from other sources.
Lightstone Value Plus Real Estate Investment
Trust V, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(Dollar amounts in thousands, except
per share/unit data and where indicated in millions)
The following table represents the fees
incurred associated with the payments to the Company’s Advisor for the periods indicated:
|
|
For the Three
Months Ended March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Acquisition fees and acquisition expense reimbursement(1)
|
|
$
|
-
|
|
|
$
|
764
|
|
Debt financing fees(2)
|
|
|
-
|
|
|
|
299
|
|
Property management fees (property operating expenses)
|
|
|
118
|
|
|
|
115
|
|
Administrative services reimbursement (general and administrative costs)
|
|
|
333
|
|
|
|
328
|
|
Asset management fees (general and administrative costs)
|
|
|
695
|
|
|
|
632
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,146
|
|
|
$
|
2,138
|
|
|
(1)
|
Capitalized to the corresponding asset and amortized over its estimated useful life.
|
|
(2)
|
Capitalized upon the execution of the loan, presented in the consolidated balance sheets as a direct deduction from the carrying
value of the corresponding loan and amortized over the initial term of the corresponding loan.
|
|
10.
|
Commitments and Contingencies
|
Legal Proceedings
From time to time in the ordinary course
of business, the Company may become subject to legal proceedings, claims or disputes.
As of the date hereof, the Company is not
a party to any material pending legal proceedings of which the outcome is probable or reasonably possible to have a material adverse
effect on its results of operations or financial condition, which would require accrual or disclosure of the contingency and possible
range of loss.