Lightstone Value Plus Real Estate Investment Trust V, Inc. (Form: 10-Q, Received: 08/12/2021 15:55:48)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

☐

For the quarterly period ended June 30, 2021

Commission File Number: 000-53650

Lightstone Value Plus Real Estate Investment Trust V, Inc.

(Exact Name of Registrant as Specified in Its Charter)

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

1985 Cedar Bridge Avenue, Suite 1, Lakewood, New Jersey 08701

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (888) 808-7348

Securities registered pursuant to Section 12(b) of the Act: None.

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

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

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

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

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

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

As of August 10, 2021, the Registrant had approximately 20.2 million shares of common stock outstanding.

LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST V, INC.

INDEX

		Page
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

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

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

	Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2021 and 2020	3-4

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020	5

	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 4.	Controls and Procedures	27

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 3.	Defaults Upon Senior Securities	28

Item 4.	Mine Safety Disclosures	28

Item 5.	Other Information	28

Item 6.	Exhibits	28

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)


	June 30, 2021			December 31, 2020
	(unaudited)
Assets
Investment property:
Land and improvements	$	63,977		$	63,873
Building and improvements		249,863			248,079
Furniture, fixtures and equipment		6,856			6,552
Gross investment property		320,696			318,504
Less accumulated depreciation		(56,328	)		(50,823	)
Net investment property		264,368			267,681

Cash and cash equivalents		25,074			27,078
Marketable securities, available for sale		3,665			3,654
Restricted cash		22,137			4,373
Note receivable, net		13,556			12,794
Prepaid expenses and other assets		1,863			1,604
Assets held for sale		-			24,140
Total Assets	$	330,663		$	341,324

Liabilities and Stockholders’ Equity
Notes payable, net	$	213,251		$	212,989
Accounts payable and accrued and other liabilities		6,645			6,530
Liabilities held for sale		-			37,165
Total liabilities		219,896			256,684

Commitments and Contingencies

Stockholders’ Equity:

Company’s stockholders’ equity:
Preferred stock, $.0001 par value per share; 50.0 million shares authorized, none issued and outstanding		-			-
Convertible stock, $.0001 par value per share; 1,000 shares authorized, issued and outstanding		-			-
Common stock, $.0001 par value per share; 350.0 million shares authorized, 20.2 million shares issued and outstanding		2			2
Additional paid-in-capital		187,088			189,216
Accumulated other comprehensive income		85			140
Accumulated deficit		(75,039	)		(102,519	)
Total Company’s stockholders’ equity		112,136			86,839

Noncontrolling interests		(1,369	)		(2,199	)

Total Stockholders’ Equity		110,767			84,640

Total Liabilities and Stockholders’ Equity	$	330,663		$	341,324

See Notes to Consolidated Financial Statements.

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Consolidated Statements of Operations and Comprehensive Income

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

(unaudited)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2021			2020			2021			2020

Rental revenues	$	9,390		$	10,077		$	19,677		$	19,477

Expenses
Property operating expenses		3,062			3,095			6,239			6,055
Real estate taxes		1,358			1,447			2,829			2,665
General and administrative		1,568			1,572			3,221			3,111
Depreciation and amortization		2,755			3,411			5,665			5,922
Total operating expenses		8,743			9,525			17,954			17,753

Operating income		647			552			1,723			1,724

Interest expense, net		(2,215	)		(2,391	)		(4,668	)		(4,531	)
Interest income		495			450			978			937
Gain on sale of investment property		-			-			27,825			5,474
Gain on disposition of unconsolidated joint venture		1,457			-			1,457			-
Other income, net		115			127			296			326
Net income/(loss)		499			(1,262	)		27,611			3,930
Net income attributable to noncontrolling interests		(54	)		(21	)		(131	)		(1,232	)
Net income/(loss) attributable to the Company’s shares	$	445		$	(1,283	)	$	27,480		$	2,698
Weighted average shares outstanding:
Basic and diluted		20,193			20,353			20,193			21,293
Basic and diluted income/(loss) per share	$	0.02		$	(0.06	)	$	1.36		$	0.13
Comprehensive income/(loss):
Net income/(loss)	$	499		$	(1,262	)	$	27,611		$	3,930
Other comprehensive (loss)/income:
Holding gain/(loss) on marketable securities, available for sale		(6	)		128			(48	)		100
Reclassification adjustment for loss/(gain) included in net income/(loss)		1			(46	)		(7	)		(52	)

Total other comprehensive (loss)/income		(5	)		82			(55	)		48
Comprehensive income/(loss):		494			(1,180	)		27,556			3,978
Comprehensive income attributable to noncontrolling interests		(54	)		(21	)		(131	)		(1,232	)
Comprehensive income/(loss) attributable to the Company’s shares	$	440		$	(1,201	)	$	27,425		$	2,746

See Notes to Consolidated Financial Statements.

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Consolidated Statements of Stockholders’ Equity

(dollars and shares in thousands)

(unaudited)


										Additional			Accumulated Other									Total
	Convertible Stock				Common Stock					Paid-In			Comprehensive			Accumulated			Noncontrolling			Stockholders’
	Shares		Amount		Shares			Amount		Capital			Income			Deficit			Interests			Equity
BALANCE, December 31, 2019		1	$	-		22,223		$	2	$	204,912		$	111		$	(102,404	)	$	478		$	103,099

Net income		-		-		-			-		-			-			2,698			1,232			3,930
Distributions paid to noncontrolling interests		-		-		-			-		-			-			-			(3,277	)		(3,277	)
Tender of common stock		-		-		(2,003	)		-		(15,601	)		-			-			-			(15,601	)
Other comprehensive income:
Holding gain on marketable securities, available for sale		-		-		-			-		-			100			-			-			100
Reclassification adjustment for gain on sale of marketable securities included in net income		-		-		-			-		-			(52	)		-			-			(52	)

BALANCE, June 30, 2020		1	$	-		20,220		$	2	$	189,311		$	159		$	(99,706	)	$	(1,567	)	$	88,199

										Additional			Accumulated Other									Total
	Convertible Stock				Common Stock					Paid-In			Comprehensive			Accumulated			Noncontrolling			Stockholders’
	Shares		Amount		Shares			Amount		Capital			Income			Deficit			Interests			Equity
BALANCE, March 31, 2020		1	$	-		22,223		$	2	$	204,841		$	77		$	(98,423	)	$	(151	)	$	106,346
																	-
Net loss		-		-		-			-		-			-			(1,283	)		21			(1,262	)
Distributions paid to noncontrolling interests		-		-		-			-		-			-			-			(1,437	)		(1,437	)
Tender of common stock		-		-		(2,003	)		-		(15,530	)		-			-			-			(15,530	)
Other comprehensive income:
Holding gain on marketable securities, available for sale		-		-		-			-		-			128			-			-			128
Reclassification adjustment for gain on sale of marketable securities included in net loss		-		-		-			-		-			(46	)		-			-			(46	)

BALANCE, June 30, 2020		1	$	-		20,220		$	2	$	189,311		$	159		$	(99,706	)	$	(1,567	)	$	88,199

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

Net income		-		-		-		-		-			-			27,480			131			27,611
Distributions paid to noncontrolling interests		-		-		-		-		-			-			-			(343	)		(343	)
Acquisition of noncontrolling interest in a subsidiary		-		-		-		-		(2,128	)		-			-			1,042			(1,086	)
Other comprehensive loss:
Holding loss on marketable securities, available for sale		-		-		-		-		-			(48	)		-			-			(48	)
Reclassification adjustment for gain on sale of marketable securities included in net income		-		-		-		-		-			(7	)		-			-			(7	)

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

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

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

See Notes to Consolidated Financial Statements.

Lightstone Value Plus Real Estate Investment Trust V, Inc.

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)


	For the Six Months Ended June 30,
	2021			2020

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	27,611		$	3,930
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,665			5,922
Amortization of deferred financing fees		308			266
Gain on disposition of unconsolidated joint venture		(1,457	)		-
Gain on sale of investment property		(27,825	)		(5,474	)
Non-cash interest income		(785	)		(852	)
Other non-cash adjustments		-			(52	)
Changes in operating assets and liabilities:
Decrease in prepaid expenses and other assets		2,542			23
Decrease in accounts payable and accrued and other liabilities		(2,037	)		(60	)
Decrease in payables to related parties		-			(6	)

Net cash provided by operating activities		4,022			3,697

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment property		(2,235	)		(46,189	)
Purchases of marketable securities		(795	)		(835	)
Proceeds from sale of marketable securities		736			2,742
Funding of note receivable, net		-			(648	)
Acquisition of noncontrolling interest		(1,086	)		-
Proceeds from sale of investment property, net of closing costs		14,364			23,673
Proceeds from disposition of unconsolidated joint venture		1,457			-

Cash provided by/(used in) investing activities		12,441			(21,257	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable		-			65,620
Payments on notes payable		(360	)		(12,788	)
Proceeds from advance from advisor		-			25,000
Payments on advance from advisor		-			(25,000	)
Payment of loan fees and expenses		-			(1,566	)
Tender of common stock		-			(15,601	)
Distributions to noncontrolling interests		(343	)		(3,277	)

Net cash (used in)/provided by financing activities		(703	)		32,388

Net change in cash, cash equivalents and restricted cash		15,760			14,828
Cash, cash equivalents and restricted cash, beginning of year		31,451			19,950
Cash, cash equivalents and restricted cash, end of period	$	47,211		$	34,778

Supplemental cash flow information for the periods indicated is as follows:
Cash paid for interest	$	4,385		$	4,927
Debt assumed by buyer in connection with disposition of investment property	$	35,700		$	-
Capital expenditures for real estate in accrued liabilities and accounts payable	$	175		$	88
Holding loss/gain on marketable securities, available for sale	$	55		$	48

The following is a summary of the Company’s cash, cash equivalents, and restricted cash total as presented in our statements of cash flows for the periods presented:
Cash and cash equivalents	$	25,074		$	28,186
Restricted cash		22,137			6,592
Total cash, cash equivalents and restricted cash	$	47,211		$	34,778

See Notes to Consolidated Financial Statements.

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)

Business

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 June 30, 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 June 30, 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 June 30, 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 June 30, 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).

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)

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

Lightstone Value Plus 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 June 30, 2021, restricted cash also included $14.1 million of the proceeds from the sale of Lakes of Margate. These funds were temporarily placed in escrow with a qualified intermediary and subsequently released on July 7, 2021 in order to complete a like-kind exchange transaction in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended. See Notes 3 and 11 for additional information.

COVID-19 Pandemic

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

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

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

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)

If the Company’s properties and its real estate-related investments are negatively impacted in future periods for an extended period because (i) tenants are unable to pay their rent, (ii) leasing demand falls causing declines in occupancy levels and/or rental rates, and (iii) its 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.

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.

Held for Sale and Disposition of Lakes of Margate

Lakes of Margate

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

On March 17, 2021, the Company completed the disposition of the Lakes of Margate to Lakes of Margate FL LLC, an unrelated third party (the “Lakes of Margate Buyer”), for aggregate consideration of $50.8 million. At closing, the Lakes of Margate Buyer paid $15.1 million and assumed the existing Lakes of Margate Loan with an outstanding principal balance of $35.7 million and $14.1 million of the proceeds were temporarily placed in escrow with a qualified intermediary and subsequently released on July 7, 2021 in order to complete a like-kind exchange transaction in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended, and is included in restricted cash on the consolidated balance sheet as of June 30, 2021. See Note 11 for additional information. 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

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)

Note Receivable

500 West 22nd Street Mezzanine Loan

On February 28, 2019, the Company, as the lender, and an unrelated third party (the “500 West 22nd Street Mezzanine Loan Borrower”), as the borrower, entered into a loan promissory note (the “500 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.

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 $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 has an initial maturity date of August 31, 2021, subject to two six-month extension options discussed below, 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 June 30, 2021). The Company received an origination fee of 1.0% of the loan balance, or $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 $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 June 30, 2021, the entire $2.1 million reserve has been recognized as interest income. The additional monthly interest due above the 8.0% threshold is added to the balance of the 500 West 22nd Street Mezzanine Loan and payable at maturity. As of June 30, 2021, $1.6 million of additional interest due is included in the balance of the 500 West 22nd Street Mezzanine Loan.

During the three and six months ended June 30, 2021, the Company recorded $0.5 million and $0.9 million, respectively, of interest income related to the note receivable and during the three and six months ended June 30, 2020, the Company recorded $0.4 million and $0.8 million, respectively, of interest income related to the note receivable. As of June 30, 2021, the outstanding principal balance of the 500 West 22nd Street Mezzanine Loan was $13.6 million.

Financial Instruments

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

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)

As of June 30, 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.

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 June 30, 2021 and December 31, 2020. Carrying amounts of our notes payable and the related estimated fair value is summarized as follows:


	As of June 30, 2021				As of December 31, 2020
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Notes payable	$	216,022	$	219,321	$	216,382	$	219,625

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 June 30, 2021
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Debt securities:
Corporate and Government Bonds	$	3,580	$	95	$	(10	)	$	3,665

	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 June 30, 2021, the Company did not recognize any impairment charges.

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)

Fair Value Measurements

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

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

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

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

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

The fair values 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 June 30, 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 six months ended June 30, 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 June 30, 2021
Due in 1 year	$	760
Due in 1 year through 5 years		2,865
Due in 5 years through 10 years		40
Due after 10 years		-
Total	$	3,665

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

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


Property	Interest Rate	Weighted Average Interest Rate as of June 30, 2021			Maturity Date	Amount Due at Maturity		As of June 30, 2021			As of December 31, 2020

River Club and the Townhomes at River Club	LIBOR + 1.78%		1.88	%	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		17,132			17,289

Axis at Westmont	4.39%		4.39	%	February 1, 2026		34,343		37,397			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			3.79	%		$	202,566		216,022			216,382

Less: Deferred financing costs									(2,771	)		(3,393	)

Total notes payable, net								$	213,251		$	212,989

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


	2021		2022		2023		2024		2025		Thereafter		Total
Principal maturities	$	663	$	1,468	$	2,498	$	3,181	$	46,590	$	161,622	$	216,022

Less: deferred financing costs														(2,771	)

Total notes payable, net													$	213,251

Stockholders’ Equity

Share Redemption Program and Redemption Price

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

On 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:

Schedule of Redemption Program
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 six months ended June 30, 2021 and 2020.

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)

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 11, 2021, these agreements were extended an additional year through June 10, 2022. 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.

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

Schedule of fees to related parties
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
Acquisition fees and acquisition expense reimbursement⁽¹⁾	$	-	$	-	$	-	$	764
Debt financing fees⁽²⁾		-		357		-		656
Property management fees (property operating expenses)		110		112		228		227
Administrative services reimbursement (general and administrative costs)		332		328		665		656
Asset management fees (general and administrative costs)		626		691		1,321		1,323
Total	$	1,068	$	1,488	$	2,214	$	3,626

(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.

11.

Subsequent Events

Acquisition of BayVue Apartments located in Tampa, Florida

On July 7, 2021, the Company acquired a 368-unit multifamily property located in Tampa, Florida (the “BayVue Apartments”), from BayVue Apartments Holdings, LLC, an unaffiliated third party, for an aggregate purchase price of $59.5 million, excluding closing and other acquisition related costs.

In connection with the acquisition of the BayVue Apartments, the Company simultaneously entered into a non-recourse mortgage loan facility for up to $52.2 million (the “BayVue Mortgage”) scheduled to initially mature on July 7, 2024, with two, one-year extension options, subject to certain conditions. The BayVue Mortgage requires monthly interest-only payments through its maturity date and bears interest at LIBOR+3.00% subject to a 3.10% floor. The BayVue Mortgage is collateralized by the BayVue Apartments. In connection with the acquisition of the BayVue Apartments, $44.3 million was initially funded under the BayVue Mortgage and the Company paid the balance of the purchase price of $15.2 million with cash, including escrowed funds released by a qualified intermediary. As a result, the BayVue Mortgage has remaining availability of $7.9 million.

The acquisition was funded with available cash and restricted cash and the initial proceeds from the BayVue Mortgage.

In connection with the acquisition, the Advisor received an aggregate of $1.3 million in acquisition fees, acquisition expense reimbursements and debt financing fees.

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

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and the notes thereto.

Forward-Looking Statements

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

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

	●	market and economic challenges experienced by the U.S. and global economies or real estate industry as a whole and the local economic conditions in the markets in which our investments are located. Additionally, our business and financial performance may be adversely affected by current and future economic and other conditions; such as recession, political upheaval or uncertainty, terrorism and acts of war, natural and man-made disasters, cybercrime, and outbreaks of contagious diseases;
	●	uncertainties regarding the impact of the current COVID-19 pandemic, and restrictions and other measures intended to prevent its spread on our business and the economy generally;
	●	the availability of cash flow from operating activities for distributions, if any;
	●	conflicts of interest arising out of our relationships with our advisor and its affiliates;
	●	our ability to retain our executive officers and other key individuals who provide advisory and property management services to us;
	●	our level of debt and the terms and limitations imposed on us by our debt agreements;
	●	the availability of credit generally, and any failure to obtain debt financing at favorable terms or a failure to satisfy the conditions and requirements of that debt;
	●	our ability to make accretive investments in a diversified portfolio of assets;
	●	future changes in market factors that could affect the ultimate performance of any development or redevelopment projects, including but not limited to construction costs, plan or design changes, schedule delays, availability of construction financing, performance of developers, contractors and consultants and growth in rental rates and operating costs;
	●	our ability to secure leases at favorable rental rates;
	●	our ability to sell our assets at a price and on a timeline consistent with our investment objectives;
	●	impairment charges;
	●	unfavorable changes in laws or regulations impacting our business, our assets or our key relationships; and
	●	factors that could affect our ability to qualify as a real estate investment trust.

Forward-looking statements in this Quarterly Report on Form 10-Q reflect our management’s view only as of the date of this Report, and may ultimately prove to be incorrect. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results, except as required by applicable law. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 21E of the Exchange Act.

Cautionary Note

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

Executive Overview

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

Current Environment

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

COVID-19 Pandemic

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

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

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

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

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

Liquidity and Capital Resources

We had cash and cash equivalents of $25.1 million, marketable securities, available for sale of $3.7 million and restricted cash of $22.1 million as of June 30, 2021. Our principal demands for funds going forward will be for the payment of (a) operating expenses and (b) scheduled interest and principal payments on our outstanding indebtedness. We also may, at our discretion use funds for (a) tender offers and/or redemptions of shares of our common stock, (b) distributions, if any, to our shareholders, and (c) selective acquisitions and/or real estate-related investments. Generally, we expect to meet our cash needs with our cash on hand and cash flow from operations as well as the release of certain funds held in restricted cash. However, to the extent that our cash on hand and cash flow from operations are not sufficient to cover our cash needs, we may use proceeds from additional borrowings and/or selective asset sales to fund such needs. We have borrowed money to acquire properties and make other investments. Under our charter, the maximum amount of our indebtedness is limited to 300% of our “net assets” (as defined by our charter) as of the date of any borrowing; however, we may exceed that limit if approved by a majority of our independent directors. In addition to our charter limitation, our board of directors has adopted a policy to generally limit our aggregate borrowings to 75% of the aggregate value of our assets unless substantial justification exists that borrowing a greater amount is in our best interests. Our policy limitation, however, does not apply to individual real estate assets.

Acquisition and Disposition Activities

Disposition of Lakes of Margate

On March 17, 2021, we completed the disposition of the Lakes of Margate for a contractual sales price of $50.8 million to an unrelated third party. At closing, the buyer paid $15.1 million and assumed the existing mortgage loan secured by the Lakes of Margate with an outstanding principal balance of $35.7 million. $14.1 million of the proceeds were temporary placed in escrow with a qualified intermediary and subsequently released on July 7, 2021 in order to complete a like-kind exchange transaction in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended, and is included in restricted cash on the consolidated balance sheet as of June 30, 2021. See “Acquisition of BayVue Apartments located in Tampa, Florida” below for additional information. In connection with the disposition of the Lakes of Margate, we recognized a gain on the sale of investment property of $27.8 million during the first quarter of 2021.

Acquisition of Autumn Breeze Apartments

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

Disposition of Gardens Medical Pavilion

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

Acquisition of BayVue Apartments located in Tampa, Florida

On July 7, 2021, we acquired a 368-unit multifamily property located in Tampa, Florida (the “BayVue Apartments”), from BayVue Apartments Holdings, LLC, an unaffiliated third party, for an aggregate purchase price of $59.5 million, excluding closing and other acquisition related costs.

In connection with the acquisition of the BayVue Apartments, we simultaneously entered into a non-recourse mortgage loan facility for up to $52.2 million (the “BayVue Mortgage”) scheduled to initially mature on July 7, 2024, with two, one-year extension options, subject to certain conditions. The BayVue Mortgage requires monthly interest-only payments through its maturity date and bears interest at LIBOR+3.00% subject to a 3.10% floor. The BayVue Mortgage is collateralized by the BayVue Apartments. In connection with the acquisition of the BayVue Apartments, $44.3 million was initially funded under the BayVue Mortgage and we paid the balance of the purchase price of $15.2 million with cash, including escrowed funds released by a qualified intermediary. As a result, the BayVue Mortgage has remaining availability of $7.9 million.

The acquisition was funded with available cash and restricted cash and initial proceeds from the BayVue Mortgage.

In connection with the acquisition, the Advisor received an aggregate of $1.3 million in acquisition fees, acquisition expense reimbursements and debt financing fees.

Debt Financings

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

As of June 30, 2021, our outstanding notes payable were $213.3 million, net of deferred financing fees of $2.8 million and had a weighted average interest rate of 3.79%. As of December 31, 2020, we had notes payable of $213.0 million, net of deferred financing fees of $3.4 million, with a weighted average interest rate of 3.71%.

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

Contractual Obligations	2021		2022		2023		2024		2025		Thereafter		Total
Mortgage Payable	$	663	$	1,468	$	2,498	$	3,181	$	46,590	$	161,622	$	216,022
Interest Payments		4,162		8,255		8,185		8,105		7,306		5,544		41,557

Total Contractual Obligations	$	4,825	$	9,723	$	10,683	$	11,286	$	53,896	$	167,166	$	257,579

Results of Operations

As of June 30, 2021, we 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).

The tables below reflect occupancy and effective monthly rental rates for our operating properties owned as of June 30, 2021:

	Occupancy						Effective Monthly Rent per Bed/Unit⁽¹⁾
	As of June 30,						As of June 30,
Property	2021			2020			2021		2020
River Club and the Townhomes at River Club		93	%		90	%	$	486.02	$	461.11	per bed
Arbors Harbor Town		94	%		93	%		1,404.05		1,325.83	per unit
Parkside		97	%		96	%		1,208.42		1,177.12	per unit
Flats at Fishers		97	%		94	%		1,244.49		1,177.40	per unit
Axis at Westmont		96	%		96	%		1,204.80		1,172.18	per unit
Valley Ranch Apartments		95	%		95	%		1,494.66		1,444.82	per unit
Autumn Breeze Apartments⁽²⁾		94	%		95	%		1,122.96		1,020.88	per unit

(1)

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

(2)

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

On March 17, 2020, we acquired the Autumn Breeze Apartments (the “2020 Acquisition”). On January 15, 2020, we disposed of the Gardens Medical Pavilion (the “2020 Disposition”) and on March 17, 2021, we disposed of the Lakes of Margate (the “2021 Disposition” and collectively, the “Dispositions”). In connection with the dispositions of Gardens Medical Pavilion and the Lakes of Margate, we recognized gains on the sale of investment property of $5.5 million during the first quarter of 2020 and $27.8 million during the first quarter of 2021, respectively. The Dispositions did not qualify to be reported as discontinued operations since neither disposition represented a strategic shift that had a major effect on our operations and financial results. Accordingly, the operating results of these properties are reflected in our results from continuing operations for all periods presented through their respective dates of disposition.

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

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

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

	Three Months Ended										Change			Change
	June 30,				Increase/			Percentage			due to			due to
	2021		2020		(Decrease)			Change			Dispositions⁽¹⁾			Same Store⁽²⁾

Rental revenues	$	9,390	$	10,077	$	(687	)		(7.0	%)	$	(1,216	)	$	529
Property operating expenses		3,062		3,095		(33	)		(1.0	%)		(385	)		352
Real estate taxes		1,358		1,447		(89	)		(6.0	%)		(222	)		133
General and administrative		1,568		1,572		(4	)		0.0	%		(44	)		40
Depreciation and amortization		2,755		3,411		(656	)		(19.0	%)		(530	)		(126	)
Interest expense, net		2,215		2,391		(176	)		(7.0	%)		(16	)		(160	)

Notes:

(1)

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

(2)

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

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

	Three Months Ended June 30,
Description	2021		2020		Change
Rental Revenues:
Same Store	$	9,389	$	8,860	$	529
Dispositions		1		1,217		(1,216	)
Total rental revenues	$	9,390	$	10,077	$	(687	)

Property operating expenses:
Same Store	$	3,039	$	2,687	$	352
Dispositions		23		408		(385	)
Total property operating expenses	$	3,062	$	3,095	$	(33	)

Revenues. Rental revenues for the three months ended June 30, 2021 were $9.4 million, a decrease of $0.7 million, compared to $10.1 million for the same period in 2020. Excluding the effect of our disposition activities, our rental revenues increased by $0.5 million for our Same Store properties primarily as a result of higher occupancy levels and average monthly rent per unit during the 2021 quarterly period.

Property Operating Expenses. Property operating expenses for both the three months ended June 30, 2021 and 2020 were $3.1 million. Excluding the effect of our disposition activities, our property operating expenses increased by $0.4 million for our Same Store properties primarily as a result of higher occupancy during the 2021 quarterly period.

Real Estate Taxes. Real estate taxes for both the three months ended June 30, 2021 and 2020 were $1.4 million. Excluding the effect of our disposition activities, real estate taxes increased slightly by $0.1 million for our Same Store properties.

General and Administrative Expenses. General and administrative expenses for both the three months ended June 30, 2021 and 2020 were $1.6 million.

Depreciation and Amortization. Depreciation and amortization expense for the three months ended June 30, 2021 was $2.8 million, a decrease of $0.6 million, compared to $3.4 million for the same period in 2020. Excluding the effect of our disposition activities, depreciation and amortization expenses decreased slightly by $0.1 million for our Same Store properties.

Interest Expense, net. Interest expense for the three months ended June 30, 2021 was $2.2 million, a decrease of $0.2 million, compared to $2.4 million for the same period in 2020. All of the decrease in interest expense was attributable to our Same Store properties.

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

Six months ended June 30, 2021 as compared to the six months ended June 30, 2020.

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

	Six Months Ended										Change		Change			Change
	June 30,				Increase/			Percentage			due to		due to			due to
	2021		2020		(Decrease)			Change			Acquisitions⁽¹⁾		Dispositions⁽²⁾			Same Store⁽³⁾

Rental revenues	$	19,677	$	19,477	$	200			1.0	%	$	897	$	(1,499	)	$	802
Property operating expenses		6,239		6,055		184			3.0	%		334		(470	)		320
Real estate taxes		2,829		2,665		164			6.0	%		145		(292	)		311
General and administrative		3,221		3,111		110			4.0	%		7		(18	)		121
Depreciation and amortization		5,665		5,922		(257	)		(4.0	%)		345		(530	)		(72	)
Interest expense, net		4,668		4,531		137			3.0	%		267		214			(344	)

Notes:

(1)

Represents the effect on our operating results for the periods indicated resulting from the 2020 Acquisition.

(2)

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

(3)

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

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

	Six Months Ended June 30,
Description	2021		2020		Change
Rental Revenues:
Same Store	$	16,678	$	15,876	$	802
Acquisitions		1,938		1,041		897
Dispositions		1,061		2,560		(1,499	)
Total rental revenues	$	19,677	$	19,477	$	200

Property operating expenses:
Same Store	$	5,197	$	4,877	$	320
Acquisitions		654		320		334
Dispositions		388		858		(470	)
Total property operating expenses	$	6,239	$	6,055	$	184

Revenues. Rental revenues for the six months ended June 30, 2021 were $19.7 million, an increase of $0.2 million, compared to $19.5 million for the same period in 2020. Excluding the effect of our acquisition and disposition activities, our rental revenues increased by $0.8 million for our Same Store properties primarily as a result of increased occupancy and average monthly rent per unit during the 2021 period.

Property Operating Expenses. Property operating expenses for the six months ended June 30, 2021 were $6.2 million, an increase of $0.1 million, compared to $6.1 million for the same period in 2020. Excluding the effect of our acquisition and disposition activities, our property operating expenses increased by $0.3 million for our Same Store properties primarily as a result of higher occupancy during the 2021 period.

Real Estate Taxes. Real estate taxes for the six months ended June 30, 2021 were $2.8 million, an increase of $0.1 million, compared to $2.7 million for the same period in 2020. Excluding the effect of our acquisition and disposition activities, our real estate taxes increased by $0.3 million for our Same Store properties.

General and Administrative Expenses. General and administrative expenses for the six months ended June 30, 2021 were $3.2 million, a slight increase of $0.1 million, compared to $3.1 million for the same period in 2020.

Depreciation and Amortization. Depreciation and amortization expense for the six months ended June 30, 2021 was $5.7 million, a decrease of $0.2 million, compared to $5.9 million for the same period in 2020. Excluding the effect of our acquisition and disposition activities, depreciation and amortization decreased slightly $0.1 million for our Same Store Properties.

Interest Expense, net. Interest expense for the six months ended June 30, 2021 was $4.7 million, an increase of $0.2 million, compared to $4.5 million for the same period in 2020. Excluding the effect of our acquisition and disposition activities, interest expense decreased by $0.3 million for our Same Store properties.

Gain on Sale of Investment Property. During the first quarter of 2021, we recognized a gain on the sale of Lakes of Margate of $27.8 million. See Note 3 of the Notes to Consolidated Financial Statements for additional information. During the first quarter of 2020, we recognized a gain on the sale of the Gardens Medical Pavilion of $5.5 million.

Related Party Transactions

We have 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 11, 2021, these agreements were extended an additional year through June 10, 2022. We are dependent on the Advisor and property manager for certain services that are essential to us, including asset disposition decisions, property management and leasing services, and other general administrative responsibilities. In the event that these companies were unable to provide us with their respective services, we would be required to obtain such services from other sources.

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

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
Acquisition fees and acquisition expense reimbursement⁽¹⁾	$		$	-	$	-	$	764
Debt financing fees⁽²⁾		-		357		-		656
Property management fees (property operating expenses)		110		112		228		227
Administrative services reimbursement (general and administrative costs)		332		328		665		656
Asset management fees (general and administrative costs)		626		691		1,321		1,323
Total	$	1,068	$	1,488	$	2,214	$	3,626

(1)

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

(2)

Summary of Cash Flows

Operating activities

The net cash provided by operating activities of $4.0 million for the six months ended June 30, 2021 consisted primarily of our net income of $27.6 million, depreciation and amortization and amortization of deferred financing costs aggregating $6.0 million and the net change in assets and liabilities of $0.5 million offset by a gain on the sale of investment property from the sale of the Lakes of Margate of $27.8 million, a gain on the disposition of unconsolidated joint venture from the settlement of our participation in the residual interests of Prospect Park of $1.5 million and non-cash interest income of $0.8 million.

Investing activities

The net cash provided by investing activities of $12.5 million for the six months ended June 30, 2021 consists primarily of the following:

●

net proceeds from the sale of Lakes of Margate of $14.4 million;

●

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

●

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

●

capital expenditures of $2.2 million.

Financing activities

The net cash used in financing activities of $0.7 million for the six months ended June 30, 2021 consists primarily of the following:

●

debt principal payments of $0.4 million; and

●

distributions paid to noncontrolling interests of $0.3 million.

Funds from Operations and Modified Funds from Operations

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

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

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

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

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

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

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

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

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

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

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

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Description	2021			2020			2021			2020
Net income/(loss)	$	499		$	(1,262	)	$	27,611		$	3,930
FFO adjustments:
Depreciation and amortization of real estate assets		2,755			3,411			5,665			5,922
Gain on disposition of unconsolidated joint venture		(1,457	)		-			(1,457	)		-
Gain on sale of investment property		-			-			(27,825	)		(5,474	)
FFO		1,797			2,149			3,994			4,378
MFFO adjustments:
Other adjustments:
Acquisition and other transaction related costs expensed⁽¹⁾		-			-			-			-
Noncash adjustments:
Amortization of above or below market leases and liabilities		-			-			-			-
Mark-to-market adjustments⁽²⁾					9			(2	)		9
Non-recurring (loss)/gain from extinguishment/sale of debt, derivatives or securities holdings⁽³⁾		1			(46	)		(7	)		(52	)
MFFO before straight-line rent		1,798			2,112			3,985			4,335
Straight-line rent⁽⁴⁾		-			-						(32	)
MFFO - IPA recommended format	$	1,798		$	2,112		$	3,985		$	4,303

Net income/(loss)	$	499		$	(1,262	)	$	27,611		$	3,930
Less: income attributable to noncontrolling interests		(54	)		(21	)		(131	)		(1,232	)
Net income/(loss) applicable to Company’s common shares	$	445		$	(1,283	)	$	27,480		$	2,698
Net income/(loss) per common share, basic and diluted	$	0.02		$	(0.06	)	$	1.36		$	0.13

FFO	$	1,797		$	2,149		$	3,994		$	4,378
Less: FFO attributable to noncontrolling interests		(138	)		(161	)		(288	)		(331	)
FFO attributable to Company’s common shares	$	1,659		$	1,988		$	3,706		$	4,047
FFO per common share, basic and diluted	$	0.08		$	0.10		$	0.18		$	0.19

MFFO - IPA recommended format	$	1,798		$	2,112		$	3,985		$	4,303
Less: MFFO attributable to noncontrolling interests		(138	)		(161	)		(288	)		(326	)
MFFO attributable to Company’s common shares	$	1,660		$	1,951		$	3,697		$	3,977

Weighted average number of common shares outstanding, basic and diluted		20,193			20,353			20,193			21,293

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

Management believes that adjusting for mark-to-market adjustments is appropriate because they are nonrecurring items that may not be reflective of ongoing operations and reflects unrealized impacts on value based only on then current market conditions, although they may be based upon current operational issues related to an individual property or industry or general market conditions. Mark-to-market adjustments are made for items such as ineffective derivative instruments, certain marketable equity securities and any other items that GAAP requires we make a mark-to-market adjustment for. The need to reflect mark-to-market adjustments is a continuous process and is analyzed on a quarterly and/or annual basis in accordance with GAAP.

Management believes that adjusting for gains or losses related to extinguishment/sale of debt, derivatives or securities holdings is appropriate because they are items that may not be reflective of ongoing operations. By excluding these items, management believes that MFFO provides supplemental information related to sustainable operations that will be more comparable between other reporting periods.

Under GAAP, rental receipts are allocated to periods using various methodologies. This may result in income recognition that is significantly different than underlying contract terms. By adjusting for these items (to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments, providing insight on the contractual cash flows of such lease terms and debt investments, and aligns results with management’s analysis of operating performance.

Distributions

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

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

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

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

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

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

Changes in Internal Control over Financial Reporting

There has been no change in internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

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

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

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

Recent Sales of Unregistered Securities

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

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

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

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

SIGNATURE

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

	LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST V, INC.

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

Date: August 12, 2021	By:	/s/ Seth Molod
		Seth Molod
		Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)

Index to Exhibits

Exhibit Number		Description

3.2*		Third Amended and Restated Bylaws, as amended by Amendment No. 2
31.1*		Rule 13a-14(a)/15d-14(a) Certification
31.2*		Rule 13a-14(a)/15d-14(a) Certification
32.1*		Section 1350 Certification**
32.2*		Section 1350 Certification**
101*		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed on August 12, 2021, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements.

Filed or furnished herewith

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

Exhibit 3.2

THIrD AMENDED AND RESTATED
BYLAWS

LIGHTSTONE VALUE PLUS
REAL ESTATE INVESTMENT TRUST V, INC.

a Maryland Corporation

TABLE OF CONTENTS

		Page
Article I OFFICES		1
Section 1.01	Principal Offices	1
Section 1.02	Additional Offices	1
Article II MEETINGS OF STOCKHOLDERS		1
Section 2.01	Place	1
Section 2.02	Annual Meeting	1
Section 2.03	Special Meetings	1
Section 2.04	Notice for Meetings	2
Section 2.05	Scope of Notice	2
Section 2.06	Organization and Conduct	2
Section 2.07	Quorum; Adjournment	2
Section 2.08	Voting	3
Section 2.09	Proxies	3
Section 2.10	Voting of Stock by Certain Holders	3
Section 2.11	Exemption From Control Share Acquisition Statute	3
Section 2.12	Inspectors	4
Section 2.13	Nominations and Stockholder Business	4
Section 2.14	Voting by Ballot	6
Article III DIRECTORS		7
Section 3.01	General Powers	7
Section 3.02	Number, Tenure And Qualifications	7
Section 3.03	Annual And Regular Meetings	7
Section 3.04	Special Meetings	7
Section 3.05	Notice	7
Section 3.06	Quorum	7
Section 3.07	Voting	8
Section 3.08	Organization	8
Section 3.09	Action by Consent; Informal Action	8
Section 3.10	Presumption of Assent	8
Section 3.11	Telephone Meetings	9
Section 3.12	Removal	9
Section 3.13	Vacancies	9
Section 3.14	Compensation	9
Section 3.15	Loss of Deposits	9
Section 3.16	Surety Bonds	9
Section 3.17	Reliance	9
Section 3.18	Certain Rights of Directors, Officers, Employees and Agents	9
Article IV COMMITTEES		10
Section 4.01	Designation	10
Section 4.02	Number, Tenure and Qualifications	10
Section 4.03	Power	10
Section 4.04	Meetings	10
Section 4.05	Telephone Meetings	10
Section 4.06	Action by Consent; Informal Action	10
Section 4.07	Vacancies	10

-i-

Article V OFFICERS		11
Section 5.01	General Provisions	11
Section 5.02	Removal and Resignation	11
Section 5.03	Vacancies	11
Section 5.04	Power	11
Section 5.05	The Chairman of the Board	11
Section 5.06	The Chief Executive Officer	11
Section 5.07	The President	12
Section 5.08	The Chief Operating Officer	12
Section 5.09	The Treasurer; Chief Financial Officer	12
Section 5.10	Vice Presidents	12
Section 5.11	Assistant Treasurers	13
Section 5.12	Secretary	13
Section 5.13	Assistant Secretaries	13
Section 5.14	Compensation	13
Article VI CONTRACTS, LOANS, CHECKS AND DEPOSITS		13
Section 6.01	Contracts	13
Section 6.02	Checks and Drafts	13
Section 6.03	Deposits	13
Article VII STOCK CERTIFICATES; ISSUANCES, TRANSFERS		14
Section 7.01	Certificates	14
Section 7.02	Transfers; Registered Stockholders	14
Section 7.03	Closing of Transfer Books or Fixing of Record Date	14
Section 7.04	Stock Ledger	14
Section 7.05	Fractional Stock; Issuance of Units	14
Article VIII ACCOUNTING YEAR		15
Article IX DISTRIBUTIONS		15
Section 9.01	Authorization	15
Section 9.02	Contingencies	15
Article X INVESTMENT POLICY		15
Article XI SEAL		15
Section 11.01	Seal	15
Section 11.02	Affixing Seal	15
Article XII WAIVER OF NOTICE		16
Article XIII AMENDMENT OF BYLAWS		16

-ii-

THIRD AMENDED AND RESTATED
BYLAWS

LIGHTSTONE VALUE PLUS
REAL ESTATE INVESTMENT TRUST V, INC.

a Maryland Corporation

Article I

OFFICES

Section 1.01 Principal Offices. The principal office(s) of Lightstone Value Plus Real Estate Investment Trust V, Inc. (the “Corporation”) shall be located at such place or places as the Board of Directors may designate from time to time.

Section 1.02 Additional Offices. The Corporation may have additional offices, including a principal executive office, at such places as the Board of Directors may from time to time determine or otherwise as the business of the Corporation may require.

Article II

MEETINGS OF STOCKHOLDERS

Section 2.01 Place. All meetings of stockholders shall be held at a principal office of the Corporation or at such other place as shall be set by the Board of Directors and stated in the notice of the meeting.

Section 2.02 Annual Meeting. An annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on such day as the Board of Directors may determine. The purpose of each annual meeting of the stockholders shall be to elect directors of the Corporation and to transact such other business as may properly come before the meeting.

Section 2.03 Special Meetings. Special meetings of the stockholders may be called by (i) the President; (ii) a majority of the Board of Directors, (iii) a majority of the Independent Directors, as defined in the Corporation’s charter (the “Charter”); or (iv) upon the written request to the Secretary of the Corporation by the holders of shares entitled to cast at least 10% of all the votes entitled to be cast at such meeting whereby such written request states the purpose of the meeting and the matters proposed to be acted upon at such meeting. In the event of a stockholders’ meeting called in accordance with subsection (iv) above, the Secretary of the Corporation shall, within ten days of his or her receipt of the written request required in such subsection, notify, in the manner proscribed herein, each stockholder entitled to vote at meeting of the stockholders. Notwithstanding anything to the contrary herein, such meeting shall be held not less than 15 days nor more than 60 days after the Secretary’s delivery of such notice. Subject to the foregoing sentence, such meeting shall be held at the time and place specified in the stockholder request; provided, however, that if none is so specified, at such time and place convenient to the stockholders.

Section 2.04 Notice for Meetings. Except as provided otherwise in Section 2.03 of this Article II, the Secretary shall, not less than ten nor more than 90 days before each meeting of stockholders, give to each stockholder entitled to vote at the meeting and each other stockholder entitled to notice of the meeting, written or printed notice stating the time and place of the meeting and, in the case of a special meeting or as otherwise required by the Maryland General Corporation Law (as amended from time to time, the “MGCL”), the purpose of the meeting. Notice shall be deemed delivered to a stockholder upon being (i) personally delivered to the stockholder; (ii) left at the stockholder’s residence or usual place of business; (iii) mailed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, in which case such notice shall be deemed to be given when deposited in the United States mail with postage prepaid thereon; (iv) transmitted to the stockholder by electronic mail to any electronic mail address of the stockholder or by any other electronic means; or (v) delivered by any other means permitted by the MGCL.

Section 2.05 Scope of Notice. Any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except as otherwise set forth in Section 2.13(a) of this Article II and except for such business as is required by the MGCL or any other relevant statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice.

Section 2.06 Organization and Conduct. Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment, by the Chairman of the board or, in the case of a vacancy in the office or absence of the Chairman of the board, by one of the following officers present at the meeting: the Vice Chairman of the board, if there be one, the President, the Vice Presidents in their order of rank and seniority, or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The Secretary, or, in the Secretary’s absence, an Assistant Secretary, or in the absence of both the Secretary and Assistant Secretaries, a person appointed by the Board of Directors or, in the absence of such appointment, an individual appointed by the chairman of the meeting shall act as secretary. In the event that the Secretary presides at a meeting of the stockholders, an Assistant Secretary shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of such chairman, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies or other such persons as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies or other such persons as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments by participants; (e) determining when the polls should be opened and closed; (f) maintaining order and security at the meeting; (g) removing any stockholder who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; and (h) concluding the meeting or recessing or adjourning the meeting to a later date and time and place announced at the meeting. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 2.07 Quorum; Adjournment. At any meeting of the stockholders, the presence in person or by proxy of stockholders entitled to cast one-third (1/3) of all the votes entitled to be cast at such meeting shall constitute a quorum except as otherwise provided by law, the Charter or these Bylaws. If a quorum shall not be present at any meeting of the stockholders, the chairman of the meeting shall have the power to adjourn the meeting from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting as originally noticed.

The stockholders present either in person or by proxy, at a meeting that has been duly called and convened, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

Section 2.08 Voting. Except as otherwise required by law, the Charter or these Bylaws, a majority of the votes cast at a meeting of the stockholders duly called and at which a quorum is present shall be sufficient to approve any matter that may properly come before the meeting. With respect to the election of directors, each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. Unless otherwise provided in the Charter, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of the stockholders.

Section 2.09 Proxies. A stockholder may cast the votes entitled to be cast by the shares of stock owned of record by the stockholder in person or by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy.

Section 2.10 Voting of Stock by Certain Holders. Stock registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president, a vice president, a general partner, or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any director or other fiduciary may vote stock registered in his name as such fiduciary, either in person or by proxy.

Shares of the Corporation’s stock owned directly or indirectly by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case, subject to the terms of the Charter, they may be voted and shall be counted in determining the total number of outstanding shares at any given time.

The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date or closing of the stock transfer books, the time after the record date or closing of the stock transfer books within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the stockholder of record of the specified stock in place of the stockholder who makes the certification.

Section 2.11 Exemption From Control Share Acquisition Statute. Notwithstanding any other provision of the Charter or these Bylaws, Title 3, Subtitle 7 of the MGCL, or any successor statute thereto, shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of “control shares,” as such term is defined in the MGCL, and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.

Section 2.12 Inspectors.

(a) The Board of Directors or the chairman of the meeting may, but need not, appoint one or more individual inspectors or one or more entities that designate individuals as inspectors to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting or at the meeting by the chairman of the meeting.

(b) The inspectors, if any, shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. Each such report shall be in writing and signed by him or her or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

Section 2.13 Nominations and Stockholder Business.

(a) Annual Meetings of Stockholders.

(1) Nominations of individuals for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (A) pursuant to the Corporation’s notice of such meeting; (B) by or at the direction of the Board of Directors; or (C) by any stockholder of the Corporation who (i) was a stockholder of record both at the time of giving of notice provided for in this Section 2.13(a) and at the time of the annual meeting in question; (ii) is entitled to vote at such meeting; and (iii) has complied with the notice procedures set forth in this Section 2.13(a).

(2) For nominations or other business to be properly brought at an annual meeting by a stockholder pursuant to this paragraph (a)(2) or paragraph (a)(1) of this Section 2.13, the stockholder must give timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive office of the Corporation not less than 120 days nor more than 150 days prior to the first anniversary of the date of mailing of the notice for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the 120^th day prior to the date of such annual meeting and not later than the close of business on the later of the 90^th day prior to the date of such annual meeting or the 10^th day following the day on which disclosure of the date of such meeting is first made. In no event shall the public announcement of a postponement or adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth (A) as to each individual whom the stockholder proposes to nominate for election or reelection as a director (i) the name, age, business address, and residence address of such individual; (ii) the class and number of shares of stock of the Corporation that are beneficially owned by such individual; and (iii) all other information relating to such individual that is required 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 pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including such individual’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (B) as to any other business that the stockholder proposes to bring before the meeting, (i) a brief description of the business desired to be brought before the meeting; (ii) the reasons for conducting such business at the meeting; and (iii) any material interest in such business of such stockholder and any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder and the Stockholder Associated Person therefrom; (C) as to the stockholder giving the notice and any Stockholder Associated Person, the class, series and number of all shares of stock of the Corporation which are owned by such stockholder and by such Stockholder Associated Person, if any, and the nominee holder for, and number of, shares owned beneficially but not of record by such stockholder and by any such Stockholder Associated Person; (D) as to the stockholder giving the notice and any Stockholder Associated Person covered by clauses (B) or (C) of this Section 2.13(a), the name and address of such stockholder, as they appear on the Corporation’s stock ledger and current name and address, if different, and of such Stockholder Associated Person; and (E) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such stockholder’s notice.

(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 2.13 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for directors or specifying the size of the increased Board of Directors made by the Corporation at least 130 days prior to the first anniversary of the date of mailing of the notice for the preceding year’s annual meeting, a stockholder’s notice required by this Section 2.13(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation no later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.

(4) For purposes of this Section 2.13, “Stockholder Associated Person” of any stockholder shall mean (i) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder and (iii) any person controlling, controlled by or under common control with such Stockholder Associated Person.

(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of said meeting. Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) pursuant to the Corporation’s notice of said meeting; (ii) by or at the direction of the Board of Directors; or (iii) provided the Board of Directors has determined that directors shall be elected at such special meeting, by any stockholder of the Corporation who (A) is a stockholder of record both at the time of giving of notice provided for in this Section 2.13(b) at the time of the special meeting; (B) is entitled to vote at the meeting; and (C) complied with the notice procedures set forth in this Section 2.13(b). In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate an individual or individuals (as the case may be) for election to such position as specified in the Corporation’s notice of meeting, if the stockholder’s notice containing the information required by paragraph (a)(2) of this Section 2.13 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the 150^th day prior to such special meeting and not later than the close of business on the later of the 120^th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of a postponement or adjournment of a special meeting commence a new time period for the giving of a stockholder’s notice as described above.

(1) If information submitted pursuant to this Section 2.13 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall be inaccurate to a material extent, such information may be deemed not to have been provided in accordance with this Section 2.13. Upon written request by the Secretary or the Board of Directors or any committee thereof, any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall provide, within five business days of delivery of such request (or such other period as may be specified in such request), written verification, satisfactory, in the discretion of the Board of Directors or any committee thereof or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 2.13. If a stockholder fails to provide such written verification within such period, the information as to which written verification was requested may be deemed not to have been provided in accordance with this Section 2.13.

(2) Only such individuals who are nominated in accordance with the procedures set forth in this Section 2.13 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.13. The presiding officer of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 2.13, and, if any proposed nomination or business is not in compliance with this Section 2.13, to declare that such defective nomination or proposal, if any, be disregarded.

(3) For purposes of this Section 2.13, (i) the “date of mailing of the notice” shall mean the date of the proxy statement for the solicitation of proxies for election of directors and (ii) “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

(4) Notwithstanding the foregoing provisions of this Section 2.13, a stockholder shall also comply with all applicable requirements of state law and the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.13. Nothing in this Section 2.13 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

Section 2.14 Voting by Ballot. Voting on any question or in any election may be viva voce unless the presiding officer shall order, or any stockholder shall demand, that voting be by ballot.

Article III

DIRECTORS

Section 3.01 General Powers. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors.

Section 3.02 Number, Tenure And Qualifications. At any regular meeting or at any special meeting called for that purpose, a majority of the members then serving on the Board of Directors may increase or decrease the number of directors, provided that, except as otherwise provided in the Charter, the number thereof shall never be less than the minimum number required by the MGCL or the Charter (whichever is greater), nor more than the maximum number of directors set forth in the Charter, and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors.

Section 3.03 Annual And Regular Meetings. An annual meeting of the Board of Directors shall be held immediately after and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Maryland, for the holding of quarterly or regular meetings of the Board of Directors without other notice than such resolution.

Section 3.04 Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, President or by a majority of the Board of Directors. The individual or individuals authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Maryland, as the place for holding any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place for the holding of special meetings of the Board of Directors without other notice than such resolution.

Section 3.05 Notice. Notice of any special meeting of the Board of Directors shall be delivered personally, or by telephone, electronic mail, facsimile transmission, United States mail, or courier to each director at his business or residence address. Notice by personal delivery, telephone, electronic mail, facsimile transmission or courier shall be given at least twenty four hours prior to the meeting. Notice by United States mail shall be given at least five days prior to the meeting and shall be deemed to be given when deposited in the United States mail properly addressed, with postage prepaid thereon. Telephone notice shall be deemed to be given when the director or his agent is personally given such notice in a telephone call to which he or his agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws.

Section 3.06 Quorum. A majority of the directors then serving shall constitute a quorum for transaction of business at any meeting of the Board of Directors, provided that if less than a majority of such directors are present at said meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that, if pursuant to the Charter or these Bylaws, the vote of a majority of a particular group of directors is required for action, a quorum must also include a majority of such group. The directors present at a meeting which has been duly called and convened may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum.

Section 3.07 Voting.

(a) The action of the majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable statute or the Charter. If enough directors have withdrawn from a meeting to leave less than a quorum but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable statute or the Charter.

(b) Any action pertaining to any transaction in which the Corporation is purchasing, selling, leasing or mortgaging any real estate asset, making a joint venture investment or engaging in any other transaction in which an advisor, sponsor, director or officer of the Corporation, any affiliated lessee or affiliated contract manager of any property of the Corporation, or any affiliate of the foregoing, has any direct or indirect interest other than as a result of their status as a director, officer, or stockholder of the Corporation, shall be approved in accordance with the applicable provisions of the laws of the State of Maryland.

Section 3.08 Organization. At each meeting of the Board of Directors, the Chairman of the board or, in the absence of the Chairman, the Vice Chairman of the board, if any, shall act as chairman. In the absence of both the Chairman and Vice Chairman of the board, the Chief Executive Officer or in the absence of the Chief Executive Officer, the President or in the absence of the President, a director chosen by a majority of the directors present, shall act as chairman. The Secretary or, in his or her absence, an Assistant Secretary of the Corporation, or in the absence of the Secretary and all Assistant Secretaries, an individual appointed by the Chairman, shall act as secretary of the meeting.

Section 3.09 Action by Consent; Informal Action. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director, and such action is filed with the minutes of proceedings of the Board of Directors.

Section 3.10 Presumption of Assent. A director of the Corporation who is present at any meeting of the Board of Directors at which action on any matter is taken shall be presumed to have assented to the action unless his or her dissent shall be entered in the minutes of the meeting or unless he or she shall file a written dissent to such action with the individual acting as secretary of the meeting before the adjournment thereof, or shall forward any dissent by certified or registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

Section 3.11 Telephone Meetings. Directors may participate in a meeting of the Board of Directors by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

Section 3.12 Removal. At any meeting of stockholders called expressly, but not necessarily solely, for that purpose, any director or the entire Board of Directors may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote on the election of directors.

Section 3.13 Vacancies. If for any reason any or all the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder (even if fewer than 3 directors remain). Any vacancy on the Board of Directors for any cause may be filled by a majority of the remaining directors, although such majority is less than a quorum. Notwithstanding the foregoing, a majority of the Independent Directors shall nominate replacements for vacancies among the Independent Directors’ positions. Any individual so elected as director shall hold office until the next annual meeting of stockholders and until his or her successor is elected and qualifies.

Section 3.14 Compensation. Directors may, in the discretion of the entire Board of Directors, receive annual or monthly salary and/or equity-based compensation for their services as directors, fixed sums per meeting and/or per visit to real property or other facilities owned or leased by the Corporation, and/or for any service or activity performed or engaged in as directors on behalf of the Corporation. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their reasonable out-of-pocket expenses, if any, in connection with each such meeting, property visit, and/or other service or activity they performed or engaged in as directors on behalf of the Corporation. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

Section 3.15 Loss of Deposits. No director shall be liable for any loss which may occur by reason of the failure of the bank, trust company, savings and loan association, or other institution with whom moneys or stock have been deposited.

Section 3.16 Surety Bonds. Unless required by law, no director shall be obligated to give any bond or surety or other security for the performance of any of his duties.

Section 3.17 Reliance. Each director, officer, employee and agent of the Corporation shall, in the performance of his duties with respect to the Corporation, be fully justified and protected with regard to any act or failure to act in reliance in good faith upon the books of account or other records of the Corporation, upon an opinion of counsel or upon reports made to the Corporation by any of its officers or employees or by the adviser, accountants, appraisers or other experts or consultants selected by the Board of Directors or officers of the Corporation, regardless of whether such counsel or expert may also be a director.

Section 3.18 Certain Rights of Directors, Officers, Employees and Agents. The directors shall have no responsibility to devote their full time to the affairs of the Corporation. Any director or officer of the Corporation, in his personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to, in addition to, or in competition with those of or relating to the Corporation, subject to the provisions of applicable law, the Charter, or the adoption of any policies relating to such interests and activities adopted by the Board of Directors.

Article IV

COMMITTEES

Section 4.01 Designation. The Board of Directors may, by a resolution adopted by a majority of the entire Board of Directors, designate an Executive Committee, an Audit Committee, a Compensation Committee, a Leasing Committee, and any other committee it deems appropriate and in the best interest of the Corporation.

Section 4.02 Number, Tenure and Qualifications. Each committee shall be composed of one or more directors, and such committee members shall serve at the pleasure of the Board of Directors.

Section 4.03 Power. Subject to the limitations contained herein and the limitations contained in the resolution establishing such committee, to the extent permitted by law, the executive committee shall have and may exercise all of the power of the Board of Directors in the management of the business and affairs of the corporation. Each other committee, to the extent expressly provided for in the resolution establishing such committee and except as prohibited by law, shall have and may exercise all of the power of the Board of Directors in such other matters and affairs concerning the Corporation. Notwithstanding the foregoing, no committee shall have the power of the Board of Directors to fix the compensation of any committee member.

Section 4.04 Meetings. Notice of committee meetings shall be given in the same manner as notice for special or regular meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of any committee, and such chairman or, in the absence of a chairman, any two members of any committee may fix the time and place of its meeting unless the Board shall otherwise provide. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member. Each committee shall keep minutes of its proceedings.

Section 4.05 Telephone Meetings. Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

Section 4.06 Action by Consent; Informal Action. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and is filed with the minutes of proceedings of such committee.

Section 4.07 Vacancies. Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to fill all vacancies, to designate alternate members to replace any absent or disqualified member or to dissolve any such committee.

Article V

OFFICERS

Section 5.01 General Provisions. The officers of the Corporation shall be elected by the Board of Directors, and shall include a President, Treasurer, Secretary, and any other officers as determined by the Board of Directors. Such officers may include a Chairman of the Board, Vice Chairman of the Board, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, one or more Vice Presidents, one or more Assistant Treasurers, a Secretary, and/or one or more Assistant Secretaries. In addition, the Board of Directors may from time to time appoint such other officers with such powers and duties as they shall deem necessary or desirable. The officers of the Corporation shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of stockholders, except that the Chief Executive Officer may appoint one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as may be convenient. Each officer shall hold office until his successor is elected and qualifies or until his death, resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. In its discretion, the Board of Directors may leave unfilled any office except that of President, Treasurer and Secretary. Election of an officer or agent shall not itself create contract rights between the Corporation and such officer or agent.

Section 5.02 Removal and Resignation. Any officer or agent of the Corporation may be removed by the Board of Directors if in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by giving written notice of his resignation to the Board of Directors, the Chairman of the Board, the President or the Secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the notice of resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.

Section 5.03 Vacancies. A vacancy in any office may be filled by the Board of Directors for the balance of the term.

Section 5.04 Power. Officers shall have such power and perform such duties in the management of the corporation as are provided in these Bylaws or as may be determined by resolution of the Board of Directors not inconsistent with these Bylaws.

Section 5.05 The Chairman of the Board. The Board of Directors shall designate a Chairman of the Board. The Chairman of the Board shall preside at all meetings of the stockholders, the Board of Directors and any committee on which he serves.

Section 5.06 The Chief Executive Officer. Unless otherwise designated by the Board of Directors, the President shall also be the Chief Executive Officer. The Chief Executive Officer shall be the highest ranking executive officer of the Corporation and, subject to the supervision of the Board of Directors, shall have all authority and power with respect to, and shall be responsible for, the general management of the business, financial affairs, and day-to-day operations of the Corporation, including, but not limited to, (i) the supervision and management of all other executive officers; (ii) the development of the Corporation’s long-range strategic plan and the annual operating plan; (iii) the engagement, retention and termination of employees and independent contractors of the Company, the setting of the compensation and other material terms of employment or engagement of employees and independent contractors, and the establishment of work rules for employees; (iv) the representation of the Corporation at any business or financial meeting or presentation with stockholders, lenders, affiliates, strategic or joint venture partners, financial institutions, underwriters, analysts and any other entity with which the Corporation does business; and (v) the initiation, development, and implementation of new business, markets and technologies. The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors are carried into effect and shall perform such other duties and have such other authority and powers as the Board may from time to time prescribe. At the request of the Chief Executive Officer, or in case of his absence or inability to act, unless otherwise directed by the Board of Directors, the President shall perform the duties of the Chief Executive Officer and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Chief Executive Officer. Additionally, in the event that the Corporation has both a President and a Chief Executive Officer, any powers or duties conferred upon the President in these Bylaws shall concurrently be conferred upon the Chief Executive Officer, and in such event the powers granted to the President shall be subject to the exercise of such powers or duties by the Chief Executive Officer.

Section 5.07 The President. Unless the Board of Directors shall designate otherwise, the Chief Executive Officer shall be the President of the Corporation. The President shall report to the Chief Executive Officer, if distinct, and shall have, subject to the control of the Chief Executive Officer and the Board, active supervision and management over the day-to-day operations of the Corporation and over its subordinate officers, assistants, agents and employees. At the request of the President, or in case of his absence or inability to act, unless otherwise directed by the Board of Directors, the Chief Executive Officer shall perform the duties of the President and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President.

Section 5.08 The Chief Operating Officer. Unless the Board of Directors shall designate, the President shall be the Chief Operating Officer of the Corporation. The Chief Operating Officer shall report to the President, if distinct, and shall have, subject to the control of the President and the Board, active supervision over such portion of the day-to-day operations of the Corporation and over its subordinate officers, assistants, agents and employees as delegated by the President or the Board of Directors.

Section 5.09 The Treasurer; Chief Financial Officer. Unless the Board of Directors shall designate otherwise, the Treasurer shall be the Chief Financial Officer of the Corporation. The Treasurer shall report to the Chief Executive Officer and shall have, subject to the control of the Chief Executive Officer and the Board of Directors, the general care and custody of the funds and securities of the Corporation and the authority and power with respect to, and the responsibility for, the Corporation’s accounting, auditing, reporting and financial record-keeping methods and procedures; controls and procedures with respect to the receipt, tracking and disposition of the revenues and expenses of the Corporation; the establishment and maintenance of depository, checking, savings, investment and other accounts of the Corporation; relations with accountants, financial institutions, lenders, underwriters and analysts; the development and implementation of funds management and short-term investment strategies; the preparation of financial statements and all tax returns and filings of the Corporation; and the supervision and management of all subordinate officers and personnel associated with the foregoing.

Section 5.10 Vice Presidents. Each Vice President shall have such powers and duties as may be prescribed from time to time by the Board of Directors or as may be delegated from time to time by the President and (in the order as designated by the Board of Directors, or in the absence of such designation, as determined by the length of time each has held the office of Vice President continuously) shall exercise the powers of the President during that officer’s absence or inability to act. The Board of Directors may designate one or more Vice Presidents as Executive Vice President, Senior Vice President, or as Vice President for particular areas of responsibility.

Section 5.11 Assistant Treasurers. Each Assistant Treasurer shall perform such duties as may be prescribed from time to time by the Board of Directors or as may be delegated from time to time by the President. The Assistant Treasurers (in the order as designated by the Board of Directors or, in the absence of such designation, as determined by the length of time each has held the office of Assistant Treasurer continuously) shall exercise the powers of the Treasurer during that officer’s absence or inability to act.

Section 5.12 Secretary. The Secretary shall maintain minutes of all meetings of the Board of Directors, of any committee, and of the stockholders, or consents in lieu of such minutes, in the Corporation’s minute books, and shall cause notice of such meetings to be given when requested by any person authorized to call such meetings. The Secretary may sign with the President, in the name of the Corporation, all contracts of the Corporation and affix the seal of the Corporation thereto. The Secretary shall have charge of the certificate books, stock transfer books, and stock papers as the Board of Directors may direct, all of which shall at all reasonable times be open to inspection by any director at the office of the Corporation during business hours. The Secretary shall perform such other duties as may be prescribed from time to time by the Board of Directors or as may be delegated from time to time by the President.

Section 5.13 Assistant Secretaries. Each Assistant Secretary shall perform such duties as may be prescribed from time to time by the Board of Directors or as may be delegated from time to time by the President. The Assistant Secretaries (in the order designated by the Board of Directors or, in the absence of such designation, as determined by the length of time each has held the office of Assistant Secretary continuously) shall exercise the powers of the Secretary during that officer’s absence or inability to act.

Section 5.14 Compensation. The salaries and other compensation of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary or other compensation by reason of the fact that he is also a director.

Article VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS

Section 6.01 Contracts. The Board of Directors may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Board of Directors and upon the Corporation when authorized or ratified by action of the Board of Directors and executed by an authorized person.

Section 6.02 Checks and Drafts. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors.

Section 6.03 Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board of Directors may designate.

Article VII

STOCK CERTIFICATES; ISSUANCES, TRANSFERS

Section 7.01 Certificates. Except as otherwise provided in these Bylaws, this Section shall not be interpreted to limit the power of the Board of Directors to issue some or all of the shares of any or all of its classes or series without certificates.

Section 7.02 Transfers; Registered Stockholders. The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Maryland.

Notwithstanding the foregoing, transfers of shares of any class of stock will be subject in all respects to the Charter and all of the terms and conditions contained therein.

Section 7.03 Closing of Transfer Books or Fixing of Record Date. The Board of Directors may (i) set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose, (such record date, in any case, may not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken); or (ii) in lieu of fixing a record date, direct that the stock transfer books be closed for a period not greater than 20 days. In the case of a meeting of the stockholders, the record date or the date set for the closing of the stock transfer books shall be at least ten days before the date of such meeting.

If no record date is fixed and stock transfer books are not closed for the determination of stockholders, (i) the record date for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall be the later of (a) the close of business on the day on which the notice of meeting is mailed or (b) the 30^th day before the meeting; and (ii) the record date for the determination of stockholders entitled to receive payment of a dividend or an allotment of any other rights shall be the close of business on the day on which the resolution of the Board of Directors declaring the dividend or allotment of rights is adopted, provided that the payment or allotment may not be made more than 60 days after the date on which such resolution is adopted.

When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof, except when (i) the determination has been made through the closing of the transfer books and the stated period of closing has expired or (ii) the meeting is adjourned to a date more than 120 days after the record date fixed for the original meeting, in either of which case a new record date shall be determined as set forth herein.

Section 7.04 Stock Ledger. The Corporation shall maintain at one or more of its principal offices or at the office of its counsel, accountants, or transfer agent, an original or duplicate share ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder.

Section 7.05 Fractional Stock; Issuance of Units. The Board of Directors may issue fractional stock or provide for the issuance of scrip, all on such terms and under such conditions as they may determine. Notwithstanding any other provision of the Charter or these Bylaws, the Board of Directors may issue units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit.

Article VIII

ACCOUNTING YEAR

The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.

Article IX

DISTRIBUTIONS

Section 9.01 Authorization. Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the Charter. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the Charter.

Section 9.02 Contingencies. Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends or other distributions, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine to be in the best interest of the Corporation, and the Board of Directors may modify or abolish any such reserve.

Article X

INVESTMENT POLICY

Subject to the provisions of the Charter, the Board of Directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion.

Article XI

SEAL

Section 11.01 Seal. The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words “Incorporated Maryland.” The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.

Section 11.02 Affixing Seal. Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place “[SEAL]” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.

Article XII

WAIVER OF NOTICE

Whenever any notice is required to be given pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

Article XIII

AMENDMENT OF BYLAWS

The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws. The original or certified copy of these Bylaws, including any amendments thereto, shall be kept at the Corporation’s principal office, as determined pursuant to Article I, Section 1 of these Bylaws.

The foregoing is certified as the Third Amended and Restated Bylaws of the Company adopted by the Board of Directors as of August 9, 2017.

	/s/ Terri Warren Reynolds
	Secretary

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Mitchell C. Hochberg, certify that:

I have reviewed this quarterly report on Form 10-Q of Lightstone Value Plus Real Estate Investment Trust V, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Mitchell C. Hochberg
Mitchell C. Hochberg
Chief Executive Officer
Principal Executive Officer

Date: August 12, 2021

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Seth Molod, certify that:

I have reviewed this quarterly report on Form 10-Q of Lightstone Value Plus Real Estate Investment Trust V, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Seth Molod
Seth Molod
Chief Financial Officer
Principal Financial Officer

Date: August 12, 2021

Exhibit 32.1

SECTION 1350 CERTIFICATION

This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

The undersigned, who is the Chief Executive Officer of Lightstone Value Plus Real Estate Investment Trust V, Inc. (the “Company”), hereby certifies, to his knowledge:

The Quarterly Report on Form 10-Q of the Company (the “Report”), which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Mitchell C. Hochberg
Mitchell C. Hochberg
Chief Executive Officer

Date: August 12, 2021

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

SECTION 1350 CERTIFICATION

The undersigned, who is the Chief Financial Officer of Lightstone Value Plus Real Estate Investment Trust V, Inc. (the “Company”), hereby certifies, to his knowledge:

/s/ Seth Molod
Seth Molod
Chief Financial Officer

Date: August 12, 2021