Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Lightstone Value Plus REIT I, Inc. and Subsidiaries and the notes thereto. As used herein, the terms "we," "our" and "us" refer to Lightstone Value Plus REIT I, Inc., a Maryland corporation, and, as required by context, Lightstone Value Plus REIT, L.P. and its wholly owned subsidiaries, which we collectively refer to as "the Operating Partnership." Dollar amounts are presented in thousands, except per share data, revenue per available room ("RevPAR"), average daily rate ("ADR"), annualized revenue per square foot and where indicated in millions.

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements include discussion and analysis of the financial condition of Lightstone Value Plus REIT I, 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 United States ("U.S.") and global economies or real estate industry as a whole and the local economic conditions and regulatory matters in the markets in which our investments are located. Additionally, our business and financial performance may be adversely affected by current and future economic and other conditions; such as inflation, tariffs, recession, political upheaval or uncertainty, terrorism and acts of war, natural and man-made disasters, cybercrime, and outbreaks of contagious diseases;
	●	the availability of cash flow from operating activities for distributions, if required to maintain our status as a real estate investment trust ("REIT");
	●	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, property management and property management oversight services to us;
	●	our level of debt and the terms and limitations imposed on us by our debt agreements;
	●	our ability to obtain construction financing, which could adversely impact our ability to ultimately commence and/or complete construction as planned, on budget or at all for our development projects;
	●	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;
	●	our ability to diversify our portfolio of assets;
	●	changes in market factors that could impact our 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 REIT.

Forward-looking statements in this Quarterly Report on Form 10-Q reflect our management's view only as of the date of this Quarterly Report on Form 10-Q, 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 27A of the Securities Act and 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.

General Description of Business and Structure

Lightstone Value Plus REIT I, Inc. ("Lightstone REIT I"), is a Maryland corporation formed on June 8, 2004, which has elected to be taxed and qualify as a real estate investment trust ("REIT") for United States ("U.S.") federal income tax purposes. Lightstone REIT I was formed primarily for the purpose of engaging in the business of investing in and owning commercial and multifamily residential real estate properties and making other real estate-related investments located throughout the U.S.

Lightstone REIT I is structured as an umbrella partnership REIT, or UPREIT, and substantially all of our current and future business is and will be conducted through Lightstone Value Plus REIT, L.P. (the "Operating Partnership"), a Delaware limited partnership formed on July 12, 2004. As of September 30, 2026, Lightstone REIT I held a 98% general partnership interest in the Operating Partnership's common units ("Common Units").

Lightstone REIT I, together with the Operating Partnership and its subsidiaries are collectively referred to as the "Company" and the use of "we," "our," "us" or similar pronouns refers to Lightstone REIT I, its Operating Partnership or the Company as required by the context in which such pronoun is used.

Through our Operating Partnership, we own, operate and develop commercial and multifamily residential properties and make other real estate-related investments, principally in the U.S. Our real estate investments are held by us alone or jointly with other parties. We may also originate or acquire mortgage loans secured by real estate. Although most of our investments are of these types, we may invest in whatever types of real estate or real estate-related investments that we believe are in our best interests. Since our inception, we have owned and managed various commercial and multifamily residential properties located throughout the U.S. We evaluate all of our real estate investments as one operating segment. We intend to hold our real estate investments until such time as we determine 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.

As of September 30, 2026, we (i) have ownership interests in and consolidate two operating properties and (ii) have ownership interests through three unconsolidated joint ventures in a portfolio of nine multifamily residential properties (the "Columbus Portfolio") located in the Columbus, Ohio metropolitan area; an aggregate 151-acre plot of land (the "Jones Road Property") located in Spartanburg, South Carolina, consisting of various parcels, including one which is suitable for the immediate development of a data center; and a portfolio of five limited-service hotels (the "Hotel JV Portfolio").

With respect to our consolidated operating properties, we wholly own a 303-room Marriott branded hotel (the "Lower East Side Moxy Hotel"), located in the Lower East Side neighborhood in the Manhattan borough of New York City, which we developed, constructed and opened on October 27, 2022 and have a 59.2% majority ownership interest in 50-01 2^nd Street Associates LLC (the "2^nd Street Joint Venture"), a joint venture between us and a related party, which developed, constructed and owns a 199-unit luxury multifamily residential property ("Gantry Park Landing"), located in the Long Island City neighborhood in the Queens borough of New York City.

With respect to our unconsolidated properties, we have a 19% joint venture ownership interest in Columbus Portfolio Member LLC (the "Columbus Joint Venture"), which owns the Columbus Portfolio; we, through our 47.7% joint venture ownership interest in the Jones Road Investor Member LLC (the "LSG Joint Venture"), have an indirect 45.3% joint venture ownership interest in Jones Road Member LLC (the "Jones Road Joint Venture"), which owns the Jones Road Property; and we have a 2.5% joint venture ownership interest in LVP Holdco JV LLC (the "Hotel Joint Venture"), which owns the Hotel JV Portfolio. We account for our ownership interests in the Columbus Joint Venture and the LSG Joint Venture under the equity method of accounting and they are included in investments in unconsolidated affiliated entities on our consolidated balance sheets. We account for our ownership interest in the Hotel Joint Venture using a measurement alternative pursuant to which our investment is measured at cost, adjusted for observable price changes and impairments, if any, and it is classified as investment in related party joint venture on our consolidated balance sheets. Both the Columbus Joint Venture and the Hotel Joint Venture are between us and related parties. The LSG Joint Venture, which is between us and related parties, has a 95% joint venture ownership interest in the Jones Road Joint Venture while an unrelated third-party has the remaining 5% joint venture ownership.

Our advisor is Lightstone Value Plus REIT, LLC (the "Advisor"), which is majority owned by David Lichtenstein. On July 6, 2004, the Advisor contributed $2 to the Operating Partnership in exchange for 200 Common Units. Our Advisor also owns 20,000 shares of our common stock ("Common Shares") which were issued on July 6, 2004 for $200, or $10.00 per share. Mr. Lichtenstein also is the majority owner of the equity interests of The Lightstone Group, LLC (the "Sponsor"), which served as our sponsor during our initial public offering (the "Offering"), which terminated on October 10, 2008. Our Advisor, pursuant to the terms of an advisory agreement, together with our board of directors (the "Board of Directors"), is primarily responsible for making investment decisions on our behalf and managing our day-to-day operations. Through his ownership and control of the Sponsor, Mr. Lichtenstein is the indirect owner and manager of Lightstone SLP, LLC, a Delaware limited liability company, which owns an aggregate of $30.0 million of special general partner interests ("SLP Units") in the Operating Partnership, which were purchased, at a cost of $100,000 per unit in connection with our Offering. Mr. Lichtenstein also acts as our Chairman and Chief Executive Officer. As a result, he exerts influence over but does not control Lightstone REIT I or the Operating Partnership.

We have no employees. We are dependent on the Advisor and certain affiliates of our Sponsor for performing a full range of services that are essential to us, including asset management, property management (excluding our hospitality property, which is managed by unrelated third-party property managers) and acquisition, disposition and financing activities, and other general administrative responsibilities; such as tax, accounting, legal, information technology and investor relations. If the Advisor and certain affiliates of our Sponsor are unable to provide these services to us, we would be required to provide the services ourselves or obtain the services from another party or other parties.

Our Common Shares are not listed on any national securities exchange. We may seek to list our Common Shares for trading on a national securities exchange only if a majority of our independent directors believe listing them would be in the best interest of our stockholders. However, we do not intend to list our Common Shares at this time. We do not anticipate that there would be any active market for our Common Shares until they are listed for trading.

Concentration of Credit Risk

As of September 30, 2026 and December 31, 2025, we had cash deposited in certain financial institutions in excess of U.S. federally insured levels. We regularly monitor the financial stability of these financial institutions and believe that we are not exposed to any significant credit risk for our cash and cash equivalents or restricted cash.

Current Environment

Our operating results and financial condition 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 and banking failures, political upheaval or uncertainty, natural and man-made disasters, terrorism and acts of war, unfavorable changes in laws, ordinances and regulations, outbreaks of contagious diseases, cybercrime, technological advances and challenges, such as the use and impact of artificial intelligence and machine learning, loss of key relationships, inflation, tariffs and recession.

Our overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on consumer behavior. Worsening economic conditions, increases in costs due to inflation, tariffs, higher interest rates, labor and supply chain challenges and other changes in economic conditions could adversely affect our future results from operations and our financial condition.

Owned and Consolidated Real Estate Properties:

As of September 30, 2026, we (i) have ownership interests in and consolidate two operating properties and (ii) have ownership interests through three unconsolidated joint ventures in the Columbus Portfolio, a portfolio of nine multifamily residential properties located in the Columbus, Ohio metropolitan area; the Jones Road Property, an aggregate 151-acre plot of land located in Spartanburg, South Carolina, consisting of various parcels of land, including one which is suitable for the immediate development of a data center; and the Hotel JV Portfolio, a portfolio of five limited-service hotels.

Consolidated Properties

Lower East Side Moxy Hotel

We wholly own the Lower East Side Moxy Hotel, a 303-room Marriott branded hotel located in the Lower East Side neighborhood in the Manhattan borough of New York City, which we developed, constructed and opened on October 27, 2022. The following table contains certain information for the Lower East Side Moxy Hotel.

						Year to Date September 30, 2026				Percentage Occupied for the Nine Months Ended				RevPAR for the Nine Months Ended				ADR for the Nine Months Ended
		Location		Year Built		Available Rooms				September 30, 2026				September 30, 2026				September 30, 2026
Lower East Side Moxy Hotel		Bowery, New York		2022			82,719				92	%		$	272.41			$	296.33

Gantry Park Landing

We have a 59.2% majority ownership interest in the 2nd Street Joint Venture, which developed, constructed and owns Gantry Park Landing, a 199-unit luxury, multifamily residential property, located in the Long Island City neighborhood in the Queens borough of New York City. The 2nd Street Joint Venture is between us and an affiliate of the Sponsor, which is a related party. We consolidate the 2nd Street Joint Venture and account for the other interest as a noncontrolling interest in our consolidated financial statements. The following table contains certain information for Gantry Park Landing.

		Location		Year Built		Leasable Units				Percentage Occupied as of September 30, 2026				Annualized Revenues based on Rents at September 30, 2026		Annualized Revenues per unit at September 30, 2026
Gantry Park Landing		Queens, New York		2013			199				95	%		$11.0 million		$	58,433

Annualized revenue is defined as the minimum monthly payments due as of September 30, 2026 annualized.

Unconsolidated Properties

Jones Road Property

Through our 47.7% joint venture ownership interest in the LSG Joint Venture, we hold a 45.3% indirect joint venture ownership interest in the Jones Road Joint Venture, which owns the Jones Road Property, an aggregate 151-acre plot of land located in Spartanburg, South Carolina, consisting of various parcels, including one suitable for the immediate development of a data center. We account for our ownership interest in the LSG Joint Venture under the equity method of accounting. The LSG Joint Venture, which is between us and related parties, has a 95% joint ownership interest in the Jones Road Joint Venture while an unrelated third party has the remaining 5% joint venture ownership.

Columbus Portfolio

We hold a 19% joint venture ownership interest in the Columbus Joint Venture, which owns the Columbus Portfolio. We account for our ownership interest in the Columbus Joint Venture under the equity method of accounting. The Columbus Joint Venture is between us and two affiliates of the Sponsor, which are related parties. The following table contains certain information for the Columbus Portfolio.

Percentage Occupied as of

Annualized Revenues based on Rents at

Annualized Revenue per unit at

Location

Year Built

Leasable Units

September 30, 2026

September 30, 2026

September 30, 2026

9 multifamily residential properties within the Columbus Joint Venture

Columbus, Ohio

2004

2,564

92

%

$46.2 million

$

19,606

Hotel Joint Venture

We hold a 2.5% joint venture ownership interest in the Hotel Joint Venture, which owns the Hotel JV Portfolio. We account for our ownership interest using a measurement alternative pursuant to which our investment is measured at cost, adjusted for observable price changes and impairments, if any. The Hotel Joint Venture is between us and Lightstone Value Plus REIT II, Inc., a related party REIT also sponsored by the Sponsor.

The following information generally applies to our investments in our real estate properties:

●

we believe our real estate properties are adequately covered by insurance and suitable for their intended purpose;

●

our real estate properties are located in markets where we are subject to competition in attracting and retaining tenants; and

●

depreciation is provided on a straight-line basis over the estimated useful life of the applicable improvements.

Results of Operations

For the Three Months Ended September 30, 2026 vs. September 30, 2025

Consolidated

Rental revenues

Our rental revenues are primarily comprised of rental income and tenant recovery income from Gantry Park Landing. Total rental revenues increased by $0.2 million to $3.0 million for the three months ended September 30, 2026 compared to $2.8 million for the same period in 2025.

Hotel revenues

Our hotel revenues for the Lower East Side Moxy Hotel are comprised of room revenue and food, beverage and other revenue. During the three months ended September 30, 2026 compared to the same period in 2025, the Lower East Side Moxy Hotel experienced increases in RevPAR to $314.76 from $288.92, ADR to $329.18 from $303.73 and the percentage of rooms occupied to 96% from 95%. Total hotel revenues were $14.6 million and $13.6 million for the three months ended September 30, 2026 and 2025, respectively. Room revenue increased by $0.7 million to $8.8 million from $8.1 million and food, beverage and other revenue increased by $0.2 million to $5.8 million from $5.6 million for the three months ended September 30, 2026 and 2025, respectively.

Property operating expenses

Our property operating expenses are primarily comprised of expenses to operate Gantry Park Landing and certain holding costs related to two former development projects, the Santa Monica Project and the Exterior Street Project, which were disposed of during June 2025 and July 2025, respectively. Property operating expenses were relatively unchanged at $0.7 million during both the three months ended September 30, 2026 and 2025.

Hotel operating expenses

Our total hotel operating expenses, consisting of room expenses and food and beverage costs, for the Lower East Side Moxy Hotel were $9.2 million and $9.0 million for the three months ended September 30, 2026 and 2025, respectively. Room expenses were $4.8 million and $4.7 million and food and beverage costs were $4.4 million and $4.3 million for the three months ended September 30, 2026 and 2025, respectively.

Real estate taxes

Real estate taxes increased by $0.3 million to $1.2 million for the three months ended September 30, 2026 compared to $0.9 million for the same period in 2025.

General and administrative costs

General and administrative costs decreased by $0.8 million to $0.9 million for the three months ended September 30, 2026 compared to $1.7 million for the same period in 2025. The decrease in general and administrative costs was primarily related to non-recurring professional fees incurred during the third quarter of 2025 in connection with the amendments to the Moxy Mortgage Loans on August 15, 2025. See Note 5 of the Notes to Consolidated Financial Statements.

Depreciation and amortization

Depreciation and amortization was relatively unchanged at $1.8 million during both the three months ended September 30, 2026 and 2025.

Interest and dividend income

Interest and dividend income was relatively unchanged at $0.9 million during both the three months ended September 30, 2026 and 2025.

Interest expense

Interest expense, including amortization of deferred financing costs, decreased by $0.5 million to $4.5 million for the three months ended September 30, 2026 compared to $5.0 million for the same period in 2025. The decrease in interest expense during the 2026 period reflects the refinancing of the Gantry Park Loan in January 2025; the repayment in full of certain mortgage debt in connection with the disposition of the Exterior Street Project in July 2025; and amendments to the Moxy Mortgage Loans in August 2025. Additionally, our interest expense reflects both the changes in market interest rates on our variable rate indebtedness and the weighted average principal outstanding during the periods.

Unrealized (loss)/gain on marketable equity securities

During the three months ended September 30, 2026 we recorded unrealized losses on marketable equity securities of $4.8 million and during the three months ended September 30, 2025 we recorded unrealized gains on marketable equity securities of $5.6 million.

Loss from investment in unconsolidated affiliated entities

Our loss from investment in unconsolidated affiliated entities was $0.9 million during both the three months ended September 30, 2026 and 2025. Our loss from investment in unconsolidated affiliated entities is primarily attributable to our unconsolidated 19% joint venture ownership interest in the Columbus Joint Venture.

Noncontrolling interests

The net earnings allocated to noncontrolling interests relates to (i) parties that hold units in the Operating Partnership and (ii) the ownership interests in the 2^nd Street Joint Venture held by our Sponsor and other affiliates.

For the Nine Months Ended September 30, 2026 vs. September 30, 2025

Consolidated

Rental revenues

Our rental revenues are primarily comprised of rental income and tenant recovery income from Gantry Park Landing. Total rental revenues increased by $0.2 million to $8.8 million for the nine months ended September 30, 2026 compared to $8.6 million for the same period in 2025.

Hotel revenues

Our hotel revenues for the Lower East Side Moxy Hotel are comprised of room revenue and food, beverage and other revenue. During the nine months ended September 30, 2026 compared to the same period in 2025, the Lower East Side Moxy Hotel experienced increases in RevPAR to $272.41 from $257.70, ADR to $296.33 from $281.80 and the percentage of rooms occupied to 92% from 91%. Total hotel revenues were $38.8 million and $37.5 million for the nine months ended September 30, 2026 and 2025, respectively. Room revenue increased by $1.1 million to $22.5 million from $21.4 million and food, beverage and other revenue increased by $0.2 million to $16.3 million from $16.1 million during the nine months ended September 30, 2026 and 2025, respectively.

Property operating expenses

Our property operating expenses are primarily comprised of expenses to operate Gantry Park Landing and certain holding costs related to two former development projects, the Santa Monica Project and the Exterior Street Project, which were disposed of during June 2025 and July 2025, respectively. Property operating expenses decreased by $0.2 million to $2.1 million for the nine months ended September 30, 2026 compared to $2.3 million for the same period in 2025.

Hotel operating expenses

Our total hotel operating expenses, consisting of room expenses and food and beverage costs, for the Moxy Lower East Side Moxy Hotel were $26.7 million and $25.8 million for the nine months ended September 30, 2026 and 2025, respectively. Room expenses were $13.6 million and $13.0 million and food and beverage costs were $13.1 million and $12.8 million for the nine months ended September 30, 2026 and 2025, respectively. The increase in room expenses of $0.6 million was primarily attributable to higher franchise fees of $0.9 million resulting from an increase in the franchise fee rate from 3% to 4% of hotel revenue effective November 2025, partially offset by a market study incurred in 2025 that did not recur in 2026.

Real estate taxes

Real estate taxes increased by $0.4 million to $3.0 million for the nine months ended September 30, 2026 compared to $2.6 million for the same period in 2025.

General and administrative costs

General and administrative costs decreased by $0.7 million to $3.0 million for the nine months ended September 30, 2026 compared to $3.7 million for the same period in 2025. The decrease in general and administrative costs was primarily related to non-recurring professional fees incurred in the third quarter of 2025 in connection with the amendments to the Moxy Mortgage Loans on August 15, 2025. See Note 5 of the Notes to Consolidated Financial Statements.

Depreciation and amortization

Depreciation and amortization increased slightly by $0.1 million to $5.4 million for the nine months ended September 30, 2026 compared to $5.3 million for the same period in 2025.

Interest and dividend income

Interest and dividend income increased by $0.4 million to $2.7 million for the nine months ended September 30, 2026 compared to $2.3 million for the same period in 2025. The increase in interest and dividend income is primarily attributable to an increase in interest income due to a substantially higher amount of cash on hand during the 2026 period as a result of the net proceeds from the disposition of one of our former development projects, the Exterior Street Project, in July 2025.

Interest expense

Interest expense, including amortization of deferred financing costs, decreased by $4.8 million to $13.3 million for the nine months ended September 30, 2026 compared to $18.1 million for the same period in 2025. The decrease in interest expense during the 2026 period reflects the extinguishment of certain mortgage debt in connection with the transfer of the ownership of the Santa Monica Project to the lender in June 2025; the repayment in full of certain mortgage debt in connection with the disposition of the Exterior Street Project in July 2025; and amendments to the Moxy Mortgage Loans in August 2025. Additionally, our interest expense reflects both the changes in market interest rates on our variable rate indebtedness and the weighted average principal outstanding during the periods.

Unrealized gains on marketable equity securities

During both the nine months ended September 30, 2026 and 2025, we recorded unrealized gains on marketable equity securities of $3.3 million.

Loss from investment in unconsolidated affiliated entities

Our loss from investment in unconsolidated affiliated entities was $2.7 million during both the nine months ended September 30, 2026 and 2025. Our loss from investment in unconsolidated affiliated entities is primarily attributable to our unconsolidated 19% joint venture ownership interest in the Columbus Joint Venture.

Noncontrolling interests

The net earnings allocated to noncontrolling interests relates to (i) parties that hold units in the Operating Partnership and (ii) the ownership interests in the 2^nd Street Joint Venture held by our Sponsor and other affiliates.

Financial Condition, Liquidity and Capital Resources

Overview:

As of September 30, 2026, we had $57.8 million of cash on hand, $8.5 million of restricted cash and $45.9 million of marketable securities. Additionally, we have the ability to make draws from our Line of Credit, subject to certain conditions, and our Margin Loan. See "Notes Payable" for additional information. We believe that these items along with revenues from our operating properties and interest and dividend income earned on our cash and marketable securities will be sufficient to satisfy our expected cash requirements for at least 12 months from the date of filing this report, which primarily consist of our anticipated operating expenses, scheduled debt service (excluding any balloon payments due at maturity), capital expenditures, contributions to our unconsolidated affiliated entities (the Columbus Joint Venture and the LSG Joint Venture), redemptions and cancellations of Common Shares, if any, and distributions to our shareholders, if any, required to maintain our status as a REIT for the foreseeable future. However, we may also obtain additional funds through selective asset dispositions, joint venture arrangements, new borrowings and/or refinancing of existing debt.

Our borrowings consist of single-property mortgages as well as mortgages cross-collateralized by a pool of properties. We typically have obtained level payment financing, meaning that the amount of debt service payable would be substantially the same each year. As such, most of the mortgages on our properties provide for balloon payments upon maturity.

Our charter provides that the aggregate amount of borrowing, both secured and unsecured, may not exceed 300% of net assets in the absence of a justification showing that a higher level is appropriate, the approval of the Board of Directors and disclosure to stockholders. Net assets means our total assets, other than intangibles, at cost before deducting depreciation or other non-cash reserves less our total liabilities, calculated at least quarterly on a basis consistently applied. Any excess in borrowing over such 300% of net assets level must be approved by a majority of our independent directors and disclosed to our stockholders in our next quarterly report to stockholders, along with justification for such excess. As of September 30, 2026, our total borrowings of $222.0 million represented 115% of net assets.

Any future properties that we may acquire or investments we may make may be funded through a combination of borrowings, proceeds generated from the sale and redemption of our marketable securities, available for sale, and proceeds received from the selective disposition of our properties. These borrowings may consist of single-property mortgages as well as mortgages cross-collateralized by a pool of properties. Such mortgages may be put in place either at the time we acquire a property or subsequent to our purchasing a property for cash. In addition, we may acquire properties that are subject to existing indebtedness where we choose to assume the existing mortgages. Generally, though not exclusively, we intend to seek to encumber our properties with debt, which will be on a non-recourse basis. This means that a lender's rights on default will generally be limited to foreclosing on the property. However, we may, at our discretion, secure recourse financing or provide a guarantee to lenders if we believe this may result in more favorable terms. When we give a guaranty for a property-owning entity, we will be responsible to the lender for the satisfaction of the indebtedness if it is not paid by the property-owning entity.

We may obtain additional lines of credit to be used to acquire properties or real estate-related assets. Any new lines of credit would likely be at prevailing market terms and would be repaid from proceeds from the sale or refinancing of properties, working capital or permanent financing. Our Sponsor or its affiliates may guarantee the lines of credit although they may not be obligated to do so. We expect that such properties may be purchased by our Sponsor's affiliates on our behalf, in our name, in order to minimize the imposition of a transfer tax upon a transfer of such properties to us.

We also may issue bonds through a general public offering (either domestically or internationally) to financial institutions or to institutional investors to raise funds to acquire properties or real estate-related assets. Such bonds may be unsecured bonds that are not collateralized by any specific asset or they may be secured bonds that are collateralized by our specific properties.

We have various agreements, including an advisory agreement, with the Advisor to pay certain fees in exchange for services performed by the Advisor and/or its affiliated entities. Additionally, our ability to secure financing and our real estate operations are dependent upon our Advisor and its affiliates to perform such services as provided in these agreements.

In addition to meeting working capital needs and making distributions to our stockholders, if any, required to maintain our status as a REIT, our capital resources are used to make certain payments to our Advisor and its affiliates, including payments for asset acquisition fees and the reimbursement of acquisition related expense, development fees, construction management fees, leasing commissions, asset management fees, and property management fees (except for our Lower East Side Moxy Hotel, which is managed by unrelated third party property managers). We also reimburse our Advisor and its affiliates for actual expenses it incurs for certain administrative and other services provided to us. In the event of a liquidation of our assets, we may pay the Advisor or its affiliates disposition commissions.

The advisory agreement has a one-year term and is renewable for an unlimited number of successive one-year periods upon the mutual consent of the Advisor and our independent directors.

The following table represents the fees incurred and reimbursement associated with the payments to our Advisor and their affiliates:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2026				2025				2026				2025
Asset management fees (general and administrative costs)		$	496			$	480			$	1,484			$	1,455
Property management fees (property operating expenses)			98				80				258				238
Development fees and cost reimbursement(1)			-				26				-				118
Total		$	594			$	586			$	1,742			$	1,811

(1)

Development fees and the reimbursement of development-related costs that we pay to the Advisor and its affiliates are capitalized and are included in the carrying value of the associated development project which are classified as development projects on the consolidated balance sheets until construction is substantially completed. Once construction is substantially completed these amounts are recorded as property operating expenses.

Amounts owed to the Advisor and its affiliated entities are included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets. As of September 30, 2026 and December 31, 2025, we owed the Advisor and its affiliated entities an aggregate of $1.6 million and $1.0 million, respectively.

Summary of Cash Flows

The following summary discussion of our cash flows is based on the consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below:

		For the Nine Months Ended September 30,
		2026				2025
Net cash provided by/(used in) operating activities		$	4,851			$	(4,246	)
Net cash (used in)/provided by investing activities			(4,414	)			76,303
Net cash used in financing activities			(3,698	)			(28,880	)
Change in cash, cash equivalents and restricted cash including those classified within assets held for sale			(3,261	)			43,177
Less: decrease in cash, cash equivalents and restricted cash classified within assets held for sale			-				1,251
Change in cash, cash equivalents and restricted cash			(3,261	)			44,428
Cash, cash equivalents and restricted cash, beginning of year			69,541				35,119
Cash, cash equivalents and restricted cash, end of the period		$	66,280			$	79,547

Operating activities

The net cash provided by operating activities of $4.9 million for the nine months ended September 30, 2026 consists of the following:

●

cash inflows of $3.2 million from our net loss after adjustment for non-cash items; and

●

cash inflows of $1.6 million associated with the net changes in operating assets and liabilities.

Investing activities

The net cash used in investing activities of $4.4 million for the nine months ended September 30, 2026 is primarily related to the following:

●

the purchase of investment property of $0.8 million; and

●

capital contributions of $3.5 million to the LSG Joint Venture and $0.1 million to the Columbus Joint Venture.

Financing activities

The net cash used in financing activities of $3.7 million for the nine months ended September 30, 2026 is primarily related to the following:

●

debt principal payments of $0.6 million;

●

redemptions and cancellation of common shares of $2.7 million; and

●

distributions paid to noncontrolling interests of $0.4 million.

Gantry Park Loan

On January 28, 2025, the 2^nd Street Joint Venture refinanced a prior mortgage loan on Gantry Park Landing with a new $67.2 million non-recourse mortgage loan (the "Gantry Park Loan"), which has a maturity date of February 7, 2030, bears interest at a fixed rate of 6.30%, requires monthly principal and interest payments pursuant to a 30-year amortization schedule for the first three years of the term, interest-only payments thereafter and the unpaid principal balance due upon maturity. In connection with the refinancing transaction, a substantial portion of the proceeds received at the closing of the Gantry Park Loan were used to repay in full the prior mortgage indebtedness.

Moxy Mortgage Loans

On November 29, 2023, we refinanced the prior mortgage loan on the Lower East Side Moxy Hotel with a new senior mortgage loan facility (the "Moxy Senior Loan") from an unrelated third party providing for up to $110.0 million and a new junior mortgage loan facility (the "Moxy Junior Loan" and together with the Moxy Senior Loan the "Moxy Mortgage Loans") from an unrelated third party providing for up to $31.3 million. The Moxy Mortgage Loans require monthly interest-only payments with their outstanding principal balances due upon maturity and while they are both collateralized by the Lower East Side Moxy Hotel; the Moxy Junior Loan is subordinate to the Moxy Senior Loan. In connection with the refinancing transaction, a substantial portion of the initial proceeds from the Moxy Mortgage Loans were used to repay in the full the prior mortgage indebtedness.

On August 15, 2025, the Moxy Senior Loan was amended to increase its availability by $14.7 million from up to $110.0 million to up to $124.7 million, its maturity was extended to September 15, 2028 and its interest rate was prospectively reduced to SOFR + 3.25%, subject to a 6.50% floor. The Moxy Senior Loan is fully funded and its outstanding principal balance was $124.7 million as of both September 30, 2026 and December 31, 2025.

Simultaneously, on August 15, 2025, the Moxy Junior Loan was also amended pursuant to which its maturity was extended to September 15, 2028 and its interest rate was prospectively reduced to SOFR + 7.75%, subject to a 11.00% floor. The Moxy Junior Loan is fully funded and its outstanding principal balance was $31.3 million as of both September 30, 2026 and December 31, 2025.

Pursuant to the terms of the Moxy Mortgage Loans, we are required to enter into interest rate cap contracts with an aggregate notional amount equal to the total maximum amount available under the Moxy Mortgage Loans for as long as they remain outstanding.

On November 29, 2023, we entered into two interest rate cap agreements with notional amounts of $110.0 million and $31.3 million pursuant to which the SOFR rate was capped at 5.50% through June 1, 2025 and December 1, 2024, respectively.

In November 2024, we extended the term of the interest rate cap agreement with the notional amount of $31.3 million through December 1, 2025. Subsequently in November 2025, we further extended the term of this interest rate cap contract through December 1, 2026.

On May 30, 2025, we extended the term of the interest rate cap agreement with the notional amount of $110.0 million through June 1, 2026. In connection with the amendment of the Moxy Senior Loan, we restructured this interest rate cap agreement to increase its notional amount by $14.7 million to $124.7 million pursuant to which the SOFR rate was capped at 5.50% through June 1, 2026.

In May 2026, we extended the term of the interest rate cap agreement with the notional amount of $124.7 million through June 1, 2027.

As of September 30, 2026 and December 31, 2025, the aggregate outstanding principal balance of the Moxy Mortgage Loans was $156.0 million.

The Moxy Mortgage Loans require the maintenance of a prescribed minimum debt yield ratio ("DYR") measured at the end of each calendar quarter based on the trailing twelve months of operating results from the Lower East Side Moxy Hotel, subject to various adjustments at the lender's discretion. However, any failure to meet the DYR does not constitute an event of default; rather, it provides the lender with the option to elect to retain any excess cash flow from the Lower East Side Moxy Hotel until the DYR is met. We also have the ability, at our option, to make proportional principal paydowns to the Moxy Senior Loan and the Moxy Junior Loan to achieve financial covenant compliance.

During the fourth quarter of 2025, we were informed by the lender that we did not meet the minimum DYR as of September 30, 2025 as a result of their discretionary adjustments and therefore, they have elected to retain any excess cash flow from the operations of the Lower East Side Moxy Hotel until the minimum DYR is met. We have also been informed by the lender that we did not meet the DYR as of December 31, 2025 and March 31, 2026. As of September 30, 2026 and December 31, 2025, a total of $7.7 million and $6.8 million, respectively, was held by the lender in escrow accounts, which is included in restricted cash on the consolidated balance sheet.

Based on the trailing twelve months of operating results of the Lower East Side Moxy Hotel, we also do not expect to meet the minimum DYR as of September 30, 2026, assuming the lender makes similar discretionary adjustments.

Contractual Mortgage Obligations

The following is a summary of our contractual mortgage obligations outstanding over the next five years and thereafter as of September 30, 2026.

Contractual Obligations		2026				2027				2028				2029				2030				Thereafter				Total
Principal Payments		$	197			$	811			$	156,137			$	-			$	64,860			$	-			$	222,005
Interest Payments(1)			4,134				16,548				13,473				4,140				703				-				38,998
Total Contractual Obligations		$	4,331			$	17,359			$	169,610			$	4,140			$	65,563			$	-			$	261,003

1)

These amounts represent future interest payments related to mortgage payable obligations based on the fixed and variable interest rates specified in the associated debt agreement. All variable rate debt agreements are based on the one-month SOFR rate. For purposes of calculating future interest amounts on variable interest rate debt the one-month SOFR rate, as applicable as of September 30, 2026 was used.

Certain of our debt agreements require the maintenance of various financial ratios, including debt service coverage. As of September 30, 2026, we were in compliance with all our financial debt covenants, other than for the Moxy Mortgage Loans as discussed above. Additionally, certain of our mortgages payable also contain clauses providing for prepayment penalties.

Mortgage Debt Maturities

We have no significant maturities of mortgage debt over the next 12 months.

Notes Payable

Margin Loan

We have access to the Margin Loan from a financial institution that holds custody of certain of our marketable securities. The Margin Loan, which is due on demand, bears interest at SOFR plus 0.85% (4.76% as of September 30, 2026) and is collateralized by the marketable securities in our account. The amounts available to us under the Margin Loan are at the discretion of the financial institution and not limited to the amount of collateral in our account. There were no amounts outstanding under the Margin Loan as of both September 30, 2026 and December 31, 2025.

Line of Credit

We have a Line of Credit with a financial institution that provides for borrowings up to a maximum of $20.0 million, subject to a 40% loan-to-value ratio based on the fair value of the underlying collateral, which matures on November 30, 2026 and bears interest at SOFR plus 1.35% (5.26% as of September 30, 2026). The Line of Credit is collateralized by an aggregate of 200,247 of Simon OP Units. As of September 30, 2026, the amount of borrowings available to be drawn under the Line of Credit was $16.1 million. No amounts were outstanding under the Line of Credit as of both September 30, 2026 and December 31, 2025. Additionally, we intend to seek an extension to the Line of Credit on or before its maturity date.

LSG Joint Venture

On December 11, 2025, we along with LSG Enterprises LLC (the "Enterprises Member"), a wholly owned subsidiary of Lightstone Enterprises Limited (the "Lightstone BVI"), a real estate investment company indirectly owned by the Sponsor, and the Spartanburg Investor LLC (the "Co-investor") entered into a joint venture agreement to form the LSG Joint Venture. We have a 47.7% joint venture ownership interest in the LSG Joint Venture and the Enterprises Member and the Co-investor, which are both related parties, have joint venture ownership interests of 47.7% and 4.6%, respectively. Additionally, the manager of the LSG Joint Venture is the Jones Road Manager LLC, an entity wholly owned by the Lightstone BVI.

We have determined that the LSG Joint Venture is a VIE but it is not the primary beneficiary. We account for our ownership interest in the LSG Joint Venture in accordance with the equity method of accounting because we exert significant influence over but do not control the LSG Joint Venture. All capital contributions and distributions of earnings from the LSG Joint Venture are made on a pro rata basis in proportion to each member's equity interest percentage. Any distributions in excess of earnings from the LSG Joint Venture are made to the members pursuant to the terms of the LSG Joint Venture's operating agreement.

Jones Road Joint Venture

Concurrently, the LSG Joint Venture and W/L Spartanburg LLC (the "Wharton Member"), an unrelated third party, entered into a separate joint venture agreement to form the Jones Road Joint Venture. The LSG Joint Venture has a 95% joint venture ownership interest in the Jones Road Joint Venture and the Wharton Member has a 5% joint venture ownership interest. Accordingly, through our 47.7% ownership interest in the LSG Joint Venture we have an indirect 45.3% joint venture ownership interest in the Jones Road Joint Venture, which is consolidated by the LSG Joint Venture as discussed below.

We have also determined that the Jones Road Joint Venture is a VIE and the LSG Joint Venture is the primary beneficiary. As a result, the LSG Joint Venture consolidates the Jones Road Joint Venture and accounts for the Wharton Member's joint venture ownership interest as a noncontrolling interest in its consolidated financial statements. All capital contributions to the Jones Road Joint Venture are made on a pro rata basis in proportion to each member's equity interest percentage. However, earnings and distributions from the Jones Road Joint Venture are made to its members pursuant to the terms of the Jones Road Joint Venture's operating agreement.

The Jones Road Joint Venture was formed to simultaneously acquire the Jones Road Property, a 151-acre plot of land located in Spartanburg, South Carolina, from 300 Jones Road LLC, (the "Jones Road Seller"), an unrelated third-party, at an initial contractual sales price of $18.1 million pursuant to the terms of a purchase and sale agreement (the "Jones Road Agreement") plus $0.9 million of closing and other related transaction costs. The Jones Road Property previously served as an industrial site. At closing, the Jones Road Joint Venture also paid a $4.0 million refundable advance to an unrelated third-party electric power and natural gas energy company (the "Utility Company"), in exchange for a commitment (the "Phase I Energy Commitment") from the Utility Company to supply 60 megawatts ("MW") of electrical power to the area by September 2026. The return of the $4.0 million deposit is contingent on the Jones Road Joint Venture using certain prescribed power thresholds subsequent to the Utility Company's fulfillment of the Phase I Energy Commitment. At closing, the LSG Joint Venture and the Wharton Member funded $21.9 million and $1.1 million, respectively. In connection with the acquisition of the Jones Road Property, our pro rata share of the total consideration was approximately $10.4 million. Of this amount, approximately $10.2 million was funded at closing, while the remaining $0.2 million was payable to an affiliate of Lightstone and was included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheet as of December 31, 2025 and paid during the first half of 2026.

The Jones Road Joint Venture currently intends to use the Jones Road property to develop one or more data center projects, including using a portion the land for a proposed 200,000 square foot data center (the "Phase I Data Center Project") which is expected to be powered pursuant to the Phase I Energy Commitment.

On June 22, 2026, the Spartanburg County Council advanced a proposed ordinance to place a 12-month pause on accepting, processing or approving new data center applications, to give county staff time to study appropriate zoning and regional impacts. The ordinance passed an initial vote by the Spartanburg County Council on June 22, 2026 and a second reading on July 20, 2026. On September 21, 2026, the Spartanburg County Council approved the proposed ordinance on a third and final reading after making certain changes pursuant to which the moratorium would only apply to facilities larger than 65 MW and would not affect projects already approved by the county and facilities no larger than 65 MW would be eligible to proceed provided they meet certain criteria, including location on established or former industrial site.

With respect to the Jones Road Joint Venture's proposed Phase I Data Center, the county staff initially denied the related development application in June 2026 citing certain violations of the county's Unified Land Management Ordinance, and then its Board of Zoning Appeals subsequently upheld the denial on August 25, 2026 citing the noncompliance and the pending data center restrictions. However, in light of the above noted changes included in the approved third and final reading of the of the data center moratorium ordinance, the county staff agreed to allow the Phase I Data Center Project to move forward subject to a project-specific development agreement requiring county review regarding light, noise and landscaping.

Due to uncertainties associated with the data center moratorium, the Jones Road Joint Venture and the Utility Company agreed to extend the delivery date for the 60 MW of supply from September 2026 to July 2027.

During the nine months ended September 30, 2026, we made additional pro rata capital contributions of $3.2 million to the LSG Joint Venture, which immediately contributed them to the Jones Road Joint Venture.

During the three and nine months ended September 30, 2026, the LSG Joint Venture incurred expenses of $1 and $7, respectively, which resulted in a net loss of $1 and $7, respectively, of which our share was $0 and $3, respectively. The LSG Joint Venture had no results of operations during the period from its formation on December 11, 2025 through December 31, 2025, and therefore we did not recognize any equity earnings during the year ended December 31, 2025.

In connection with the acquisition of the Jones Road Property, we owed the Advisor a separate acquisition fee of $0.1 million (included in accounts payable, accrued expenses and other liabilities as of December 31, 2025 in our consolidated balance sheet), which is reflected in the carrying value of our investment in the LSG Joint Venture. We subsequently paid the Advisor the acquisition fee during the first quarter of 2026.

Columbus Joint Venture

On November 29, 2022, we, along with CRE Columbus Member ("Converge"), a majority owned subsidiary of Converge Holdings LLC, a reinsurance business owned by the Sponsor, and LEL Columbus Member LLC (the "BVI Member"), a wholly owned subsidiary of the Lightstone BVI, a real estate investment company owned by the Sponsor, entered into a joint venture agreement to form the Columbus Joint Venture for the purpose of acquiring the Columbus Properties, a portfolio of nine multifamily residential properties consisting of 2,564 units located in the Columbus, Ohio metropolitan area for a contractual purchase price of $465.0 million. We have a 19% joint venture ownership interest in the Columbus Joint Venture. Converge and the BVI Member, which are both related parties, have joint venture ownership interests of 19% and 62%, respectively. Additionally, the manager of the Columbus Joint Venture is LEL Bronx Manager LLC, an entity wholly owned by BVI.

On November 29, 2022, the Columbus Joint Venture completed the purchase of the Columbus Properties. The acquisition was funded with $74.3 million of cash and $390.7 million of aggregate proceeds from preferred investments from unrelated third-parties and loans from two financial institutions. In connection with the acquisition and financings, the total cash paid, including closing costs, was $92.3 million and the Company paid $17.5 million representing its 19.0% pro rata share. In connection with the acquisition, we also paid the Advisor a separate acquisition fee of $2.4 million, which is reflected in the carrying value of our investment in the Columbus Joint Venture, which is included in investments in unconsolidated affiliated entities on the consolidated balance sheets. During the nine months ended September 30, 2026 and 2025, we made $0.1 million and $18, respectively, of additional capital contributions to the Columbus Joint Venture.

We have determined that the Columbus Joint Venture is a VIE but it is not the primary beneficiary. We account for our ownership interest in the Columbus Joint Venture in accordance with the equity method of accounting because it exerts significant influence over but does not control the Columbus Joint Venture. All capital contributions and distributions of earnings from the Columbus Joint Venture are made on a pro rata basis in proportion to each member's equity interest percentage. Any distributions in excess of earnings from the Columbus Joint Venture are made to the members pursuant to the terms of the Columbus Joint Venture's operating agreement.

In connection with the purchase of the Columbus Properties on November 29, 2022, the Columbus Joint Venture obtained senior mortgage loans from two different financial institutions. The first financial institution provided four separate senior mortgage loans, all to subsidiaries of the Columbus Joint Venture, aggregating $133.6 million. These four senior mortgage loans all have a 10-year term, bear interest at SOFR + 2.19%, provide for monthly interest-only payments for the first six years of their term, monthly principal and interest payments thereafter, and the unpaid principal due upon maturity in December 2032. Each of these four senior mortgage loans is individually collateralized by one of the Columbus Properties (collectively, the "Columbus Portfolio I Properties"). The second financial institution provided five separate senior mortgage loans, all to subsidiaries of the Columbus Joint Venture, aggregating $167.2 million. These five senior mortgage loans all have a ten-year initial term, bear interest at 4.85%, provided for monthly interest-only payments for the first two years of their term, monthly principal and interest payments thereafter and the unpaid principal due upon final maturity. These five separate mortgage loans all mature in December 2032. Each of these five senior mortgage loans is individually collateralized by one of the Columbus Properties (collectively, the "Columbus Portfolio II Properties").

Additionally, in connection with the purchase of the Columbus Properties on November 29, 2022, the Columbus Joint Venture obtained an aggregate of $90.0 million in financing through two preferred investments (the "Columbus Preferred Investments") from unrelated third parties. The first preferred investment of $38.6 million is collateralized by the Columbus Portfolio I Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal and has a mandatory redemption date of December 1, 2032. The second preferred investment of $51.4 million is collateralized by the Columbus Portfolio II Properties, bears interest at 11.25%, with a minimum monthly pay rate of 4.00% with any shortfall accrued to principal, and has a mandatory redemption date of December 1, 2027. As of September 30, 2026, the aggregate unpaid interest included in the outstanding principal balance of the Columbus Preferred Investments was $23.6 million. Furthermore, the Columbus Preferred Investments are subordinate to the nine senior mortgage loans.

Because the Columbus Preferred Investments have mandatory redemption dates, the Columbus Joint Venture treats them as financial liabilities and includes them in mortgages and loans payable on its condensed balance sheets. The Company's Sponsor (the "Guarantor") has fully guaranteed the nine senior mortgage loans and the Columbus Preferred Investments (the "Debt Guarantee"). Each of the members of the Columbus Joint Venture have agreed to reimburse the Guarantor for their pro rata share of any balance that becomes due under the Debt Guarantee, of which our share is up to 19%. We have determined that the fair value of the Debt Guarantee is immaterial.

SRP

Our SRP may provide our stockholders with limited, interim liquidity by enabling them to sell their Common Shares back to us, subject to various restrictions.

Our SRP currently provides for redemption requests to be submitted in connection with either a stockholder's death or certain hardships and the price for all such purchases has been set at our estimated NAV per Share as of the date of actual redemption. Our estimated NAV per Share is determined by our Board of Directors and reported by us from time to time. Requests for redemptions in connection with a stockholder's death must be submitted and received by us within one year of the stockholder's date of death to be eligible for consideration.

Additionally, our Board of Directors has established that on an annual basis we will not redeem in excess of 1.0% and 0.5% of the number of Common Shares outstanding as of the end of the preceding year for either death redemptions or hardship redemptions, respectively. Additionally, eligible redemption requests are generally expected to be processed on a quarterly basis and will be subject to proration if either type of redemption requests exceeds the annual limitations established by our Board of Directors. Furthermore, our Board of Directors may, at their sole discretion, amend or suspend the SRP at any time without any notice to stockholders.

For the nine months ended September 30, 2026, we repurchased 236,734 Common Shares at a weighted average price per share of $11.42. For the nine months ended September 30, 2025, we repurchased 240,352 Common Shares at a weighted average price per share of $11.22.

Funds from Operations and Modified Funds from Operations

We believe that the historical cost accounting convention used for real estate assets in accordance with GAAP implicitly assumes that the value of a real estate asset diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe the presentation of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be insufficient by themselves.

The National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has published a standardized non-GAAP 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. However, FFO is not equivalent to our net income or loss as determined under GAAP.

We calculate FFO in accordance with the current NAREIT definition. FFO represents 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, income taxes attributable to gains 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 computation of FFO may not be comparable to other REITs that do not compute FFO in accordance with the current NAREIT 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 rules have resulted in a substantial increase in the number of non-operating and non-cash items included in the calculation of FFO. As a result, the Investment Program Association (the "IPA"), another industry trade group, published a standardized non-GAAP 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 another supplemental measure of operating performance because we believe that 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 or loss. However, MFFO is also not equivalent to our net income or loss as determined under GAAP.

We compute MFFO in accordance with the definition included in 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 as interpreted by management. The Practice Guideline defines MFFO as FFO further adjusted for acquisition and transaction-related fees and expenses and other items.

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 or loss or income or 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, if any, 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 loss 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 our FFO or MFFO. In the future, NAREIT, the IPA or another industry trade group may publish updates to the current definitions of FFO and MFFO or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry, and we may have to adjust our calculations and characterizations of FFO or MFFO accordingly.

Our calculations of FFO and MFFO are presented below. Items are presented net of non-controlling interest portions where applicable.

		For the Three Months Ended								For the Nine Months Ended
		September 30, 2026				September 30, 2025				September 30, 2026				September 30, 2025
Net income/(loss)		$	(5,503	)		$	2,596			$	(2,595	)		$	(7,418	)
FFO adjustments:
Depreciation and amortization			1,821				1,791				5,434				5,336
Adjustments to equity earnings from unconsolidated affiliated entity			682				651				2,018				1,928
Loss on disposal of investment property			-				441				-				441
FFO			(3,000	)			5,479				4,857				287
MFFO adjustments:
Noncash adjustments:
Mark to market adjustments (1)			4,815				(5,626	)			(3,260	)			(3,318	)
Gain on debt extinguishment (2)			-				-				-				(1,929	)
Loss on sale of marketable securities (2)			-				-				-				108
MFFO			1,815				(147	)			1,597				(4,852	)
Straight-line rent (3)			11				7				33				21
MFFO - IPA recommended format		$	1,826			$	(140	)		$	1,630			$	(4,831	)
Net income/(loss)		$	(5,503	)		$	2,596			$	(2,595	)		$	(7,418	)
Less: income attributable to noncontrolling interests			80				(109	)			(205	)			(178	)
Net income/(loss) applicable to Company's common shares		$	(5,423	)		$	2,487			$	(2,800	)		$	(7,596	)
Net income/(loss) per common share, basic and diluted		$	(0.26	)		$	0.12			$	(0.13	)		$	(0.36	)
FFO		$	(3,000	)		$	5,479			$	4,857			$	287
Less: FFO attributable to noncontrolling interests			(140	)			(334	)			(861	)			(826	)
FFO attributable to Company's common shares		$	(3,140	)		$	5,145			$	3,996			$	(539	)
FFO per common share, basic and diluted		$	(0.15	)		$	0.24			$	0.19			$	(0.03	)
MFFO - IPA recommended format		$	1,826			$	(140	)		$	1,630			$	(4,831	)
Less: MFFO attributable to noncontrolling interests			(257	)			(207	)			(799	)			226
MFFO attributable to Company's common shares		$	1,569			$	(347	)		$	831			$	(4,605	)
Weighted average number of common shares outstanding, basic and diluted			20,723				21,036				20,801				21,116

(1)

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. 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.

(2)

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.

(3)

Under GAAP, rental revenue is recognized on a straight-line basis through the expiration of the non-cancelable term of the lease. This may result in income recognition that is significantly different than underlying contract terms. By adjusting for this item, MFFO provides useful supplemental information on the realized economic impact of lease terms, providing insight on the contractual cash flows of such lease terms, and aligns results with management's analysis of operating performance.

The table below presents our cumulative distributions paid and cumulative FFO:

		From inception through
		September 30, 2026
FFO attributable to Company's common shares		$	258,515
Distributions paid		$	292,086