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 and the notes thereto. Dollar and share amounts are presented in thousands, except per share data 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 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 future cash distributions, if any, to our stockholders, the estimated net asset value ("NAV") per Common Share ("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 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;
	●	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, regulations or ordinances impacting our business, our assets or our key relationships; and
	●	factors that could affect our ability to continue 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.

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 our inception, we have acquired a wide variety of commercial properties, including office, industrial, retail, hospitality, multifamily residential and student housing. 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 U.S. and other countries based on our view of existing market conditions.

All of our current investments are located in the U.S. We currently intend to hold our various real estate properties until such time as our board of directors (the "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. We currently have one operating segment. As of September 30, 2026, we wholly owned and consolidated eight multifamily residential properties containing an aggregate 2,480 apartment units.

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, new and existing competition, inflation, the impact of tariffs and global trade disruptions, recessionary pressures, supply chain disruptions, wars and acts of war, geopolitical tensions, political upheaval or uncertainty, potential violence, civil unrest, criminal activity or terrorism, the availability and cost of comprehensive insurance coverage, the effects of climate change, environmental liabilities, natural and other disasters, security breaches and cybercrime, any disruptions in the financial markets that may adversely affect the availability or terms of financings, unfavorable changes in laws, ordinances and regulations, technological advances and challenges, such as the use and impact of artificial intelligence and machine learning, and loss of key relationships.

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 or tariffs, higher interest rates, labor and supply chain challenges, and other changes in economic conditions, could adversely affect our future results of operations and financial condition.

Liquidity and Capital Resources

As of September 30, 2026, we had cash and cash equivalents of $62.9 million, marketable securities, available for sale of $4.1 million and restricted cash of $6.1 million.

Our principal demands for funds going forward are expected to be for the payment of (a) our anticipated operating expenses, including capital expenditures, and (b) scheduled debt service (excluding any balloon payments due at maturity) on our outstanding mortgage indebtedness including any required replacement interest rate cap contracts. We also may, at our discretion, use funds for (a) tender offers and/or redemptions of our Common Shares, (b) distributions, if any, to our shareholders, and (c) selective acquisitions and/or real estate-related investments. Generally, we expect to meet our cash needs with our cash and cash equivalents and marketable securities on hand along with our cash flow from operations and the release of certain funds held in restricted cash.

However, to the extent that these sources are not sufficient to cover our cash needs, we may use proceeds from additional borrowings and/or selective asset sales to fund such needs.

Fire Damage, Insurance Claim and Casualty Loss

On August 15, 2026, a fire occurred at one of the buildings of Axis at Westmont, affecting 20 units and rendering the units uninhabitable to varying degrees. Every affected unit requires some level of demolition, remediation, or rebuilding before it can be offered to tenants. As a result of the fire, we recognized a casualty loss of $0.7 million during the third quarter of 2026, which includes a $0.5 million noncash write-off of the carrying value of the damaged assets and $0.2 million of associated remediation costs. We maintain property and business interruption insurance and have filed claims for both property damages and lost income. Insurance recoveries, if any, will be recognized in the periods that the respective claims are resolved and proceeds are realizable.

Although we currently expect to receive insurance recoveries under the claim, there can be no assurance that we will receive any proceeds from the claim.

2026 Financing Activities

Citadel Apartments Mortgage

On October 8, 2026, we refinanced two prior mortgage loans aggregating $44.0 million on the Citadel Apartments with a new $44.0 million non-recourse mortgage loan (the "Citadel Apartments Mortgage"), which is scheduled to initially mature on November 5, 2029, but has two, one-year extension options, subject to the satisfaction of certain conditions. The Citadel Apartments Mortgage bears interest at SOFR + 2.40%, subject to a floor of 5.40%, and provides for monthly interest-only payments with the unpaid principal balance due at maturity. In connection with the refinancing transaction, the proceeds were used to repay in full the then aggregate outstanding balance of $44.0 million on the prior mortgage indebtedness.

Pursuant to the terms of the Citadel Apartments Mortgage, we are required to maintain an interest rate cap contract in the notional amount of $44.0 million pursuant to which the SOFR rate is capped at 4.50% for as long as the Citadel Apartments Mortgage remains outstanding.

Axis at Westmont Mortgage

On March 30, 2026, we refinanced a prior mortgage loan of $34.5 million on Axis at Westmont with a new $60.0 million non-recourse mortgage loan (the "Axis at Westmont Mortgage"), which is scheduled to initially mature on April 9, 2028, but has three, one-year extension options subject to the satisfaction of certain conditions. The Axis at Westmont Mortgage bears interest at SOFR + 2.35%, subject to a floor of 4.85%, and provides for monthly interest-only payments with the unpaid principal balance due at maturity. In connection with the refinancing transaction, a substantial portion of the proceeds from the Axis at Westmont Mortgage were used to repay in full the then outstanding balance of $34.5 million on the prior mortgage indebtedness and we also paid the Advisor a debt financing fee of $0.6 million.

Valley Ranch Apartments Mortgage

On February 27, 2026, we refinanced a prior mortgage loan of $43.4 million on the Valley Ranch Apartments with a new $60.5 million non-recourse mortgage loan (the "Valley Ranch Apartments Mortgage"), which is scheduled to mature on March 1, 2033. The Valley Ranch Apartments Mortgage bears interest at 5.23% and requires monthly interest-only payments through April 1, 2030, monthly principal and interest payments of approximately $0.3 million thereafter, and the unpaid principal balance due upon maturity. In connection with the refinancing transaction, a substantial portion of the proceeds from the Valley Ranch Apartments Mortgage were used to repay in full the then outstanding balance of $43.4 million on the prior mortgage indebtedness and we also paid the Advisor a debt financing fee of $0.6 million.

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 borrowings to 75% of the 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.

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 currently believe that we are not exposed to any significant credit risk for our cash and cash equivalents or restricted cash.

Results of Operations

The table below reflects the occupancy and effective monthly rental rates per unit for our eight wholly owned multifamily residential properties:

		Occupancy								Effective Monthly Rent per Unit(1)
		As of September 30,								As of September 30,
Property		2026				2025				2026				2025
Arbors Harbor Town			94	%			95	%		$	1,745			$	1,684
The Aster			94	%			95	%		$	1,467			$	1,417
Axis at Westmont			93	%			96	%		$	1,769			$	1,705
Valley Ranch Apartments			91	%			95	%		$	1,951			$	1,791
BayVue Apartments			90	%			92	%		$	1,521			$	1,550
Citadel Apartments			96	%			97	%		$	1,738			$	1,714
Camellia Apartments			95	%			93	%		$	1,638			$	1,551
Discovery at Space Coast Apartments			93	%			92	%		$	1,917			$	1,663
Weighted average total			93	%			94	%		$	1,727			$	1,649

(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.

We completed the disposition of the Autumn Breeze Apartments on February 27, 2025 and it did not qualify to be reported as discontinued operations since it did not represent a strategic shift that had a major effect on our operations and financial results. Accordingly, the operating results of the Autumn Breeze Apartments are reflected in our results from continuing operations for all periods presented through its date of disposition.

Three months ended September 30, 2026 as compared to the three months ended September 30, 2025.

Our results of operations for the three months ended September 30, 2026 and 2025 are attributable to our eight wholly owned investment properties, all of which were owned by us during the entire periods presented. The following table provides summary information about our results of operations:

		Three Months Ended September 30,								Increase/				Percentage
		2026				2025				(Decrease)				Change
Rental revenues		$	12,434			$	12,500			$	(66	)			(0.5	)%
Property operating expenses			4,446				4,216				230				5.5	%
Real estate taxes			1,683				1,611				72				4.5	%
General and administrative expenses			2,054				1,968				86				4.4	%
Depreciation and amortization expense			3,786				4,078				(292	)			(7.2	)%
Casualty loss			723				-				723				100.0	%
Interest expense, net			5,656				4,348				1,308				30.1	%

Rental Revenues

Rental revenues for the three months ended September 30, 2026 were $12.4 million, a slight decrease of $0.1 million, compared to $12.5 million for the same period in 2025.

Property Operating Expenses

Property operating expenses for the three months ended September 30, 2026 were $4.4 million, an increase of $0.2 million, compared to $4.2 million for the same period in 2025.

Real Estate Taxes

Real estate taxes for the three months ended September 30, 2026 were $1.7 million, a slight increase of $0.1 million, compared to $1.6 million for the same period in 2025.

General and Administrative Expenses

General and administrative expenses for the three months ended September 30, 2026 were $2.1 million, a slight increase of $0.1 million, compared to $2.0 million for the same period in 2025.

Depreciation and Amortization Expense

Depreciation and amortization expense for the three months ended September 30, 2026 was $3.8 million, a decrease of $0.3 million, compared to $4.1 million for the same period in 2025. This decrease was primarily attributable to lower amortization expense associated with in-place lease intangibles during the 2026 period as a result of certain of them becoming fully amortized during 2025.

Casualty Loss

As a result of the fire at Axis at Westmont on August 15, 2026, we recognized a casualty loss of $0.7 million during the third quarter of 2026. See Note 3 to the Notes to Consolidated Financial Statements.

Interest Expense, Net

Interest expense, net for the three months ended September 30, 2026 was $5.7 million, an increase of $1.4 million, compared to $4.3 million for the same period in 2025. Interest expense is primarily attributable to the mortgage financings associated with our multifamily residential properties and reflects changes in market interest rates on our variable rate indebtedness, the amortization of deferred financing costs and the weighted average principal outstanding during each of the periods. Additionally, during the three months ended September 30, 2026 and 2025, we earned $0.1 million and $0.2 million, respectively, from our interest rate cap contracts which is recorded in interest expense, net.

Nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.

Our results of operations for the nine months ended September 30, 2026 compared to the same period in 2025 reflect our acquisition and disposition activities during such periods. Properties which were owned by us during the entire periods presented are referred to as our "Same Store" properties.

The following table provides summary information about our results of operations:

																						Percentage of
		Nine Months Ended												Change				Change due to				Change due to
		September 30,												due to				Same				Same
		2026				2025				Change				Disposition(1)				Store(2)				Store
Rental revenues		$	37,633			$	38,724			$	(1,091	)		$	(893	)		$	(198	)			(0.5	)%
Property operating expenses			12,778				12,857				(79	)			(436	)			357				2.9	%
Real estate taxes			4,824				5,142				(318	)			(146	)			(172	)			(3.3	)%
General and administrative expenses			6,029				5,980				49				9				40				0.7	%
Depreciation and amortization expense			11,292				12,446				(1,154	)			(261	)			(893	)			(7.3	)%
Casualty loss			723				-				723				-				723				100.0	%
Interest expense, net			15,859				13,059				2,800				(171	)			2,971				22.8	%

(1)	Represents the effect on our results for the periods indicated resulting from our disposition of the Autumn Breeze Apartments on February 27, 2025.

(2)

Represents the change for nine months ended September 30, 2026 compared to the same period in 2025 for real estate investments owned by us during the entire periods presented ("Same Store"). We had eight Same Store properties for the periods ended September 30, 2026 and 2025 consisting of Arbors Harbor Town, The Aster, Axis at Westmont, Valley Ranch Apartments, BayVue Apartments, Citadel Apartments, Camellia Apartments and Discovery at Space Coast Apartments.

The following table reflects total rental revenues and total property operating expenses for the nine months ended September 30, 2026 and 2025 for our Same Store properties and the disposition of the Autumn Breeze Apartments:

		Nine Months Ended September 30,
Description		2026				2025				Change
Rental Revenues:
Same Store		$	37,633			$	37,831			$	(198	)
Disposition (Autumn Breeze Apartments)			-				893				(893	)
Total rental revenues		$	37,633			$	38,724			$	(1,091	)
Property Operating Expenses:
Same Store		$	12,778			$	12,421			$	357
Disposition (Autumn Breeze Apartments)			-				436				(436	)
Total property operating expenses		$	12,778			$	12,857			$	(79	)

Rental Revenues

Rental revenues for the nine months ended September 30, 2026 were $37.6 million, a decrease of $1.1 million, compared to $38.7 million for the same period in 2025. Excluding the effect of the disposition of the Autumn Breeze Apartments, our rental revenues decreased by $0.2 million for our Same Store properties during the 2026 period.

Property Operating Expenses

Property operating expenses for the nine months ended September 30, 2026 were $12.8 million, a decrease of $0.1 million, compared to $12.9 million for the same period in 2025. Excluding the effect of the disposition of the Autumn Breeze Apartments, our property operating expenses increased by $0.4 million for our Same Store properties during the 2026 period.

Real Estate Taxes

Real estate taxes for the nine months ended September 30, 2026 were $4.8 million, a decrease of $0.3 million, compared to $5.1 million for the same period in 2025. Excluding the effect of the disposition of the Autumn Breeze Apartments, our real estate taxes decreased by $0.2 million for our Same Store properties during the 2026 period.

General and Administrative Expenses

General and administrative expenses were unchanged at $6.0 million for both the nine months ended September 30, 2026 and 2025.

Depreciation and Amortization Expense

Depreciation and amortization expense for the nine months ended September 30, 2026 was $11.3 million, a decrease of $1.1 million, compared to $12.4 million for the same period in 2025. Excluding the effect of the disposition of the Autumn Breeze Apartments, our depreciation and amortization expenses decreased by $0.9 million for our Same Store properties during the 2026 period. This decrease was primarily attributable to lower amortization expense associated with in-place lease intangibles during the 2026 period as a result of certain of them becoming fully amortized during 2025.

Casualty Loss

As a result of the fire at Axis at Westmont on August 15, 2026, we recognized a casualty loss of $0.7 million during the nine months ended September 30, 2026. See Note 3 to the Notes to Consolidated Financial Statements.

Interest Expense, Net

Interest expense, net for the nine months ended September 30, 2026 was $15.9 million, an increase of $2.8 million, compared to $13.1 million for the same period in 2025. Interest expense is primarily attributable to the mortgage financings associated with our multifamily residential properties and reflects changes in market interest rates on our variable rate indebtedness, the amortization of deferred financing costs and the weighted average principal outstanding during each of the periods. Excluding the effect of the disposition of the Autumn Breeze Apartments, interest expense, net increased by $3.0 million for our Same Store properties during the 2026 period. Additionally, during the nine months ended September 30, 2026 and 2025, we earned $0.2 million and $0.9 million, respectively, from our interest rate cap contracts which is recorded in interest expense, net.

Gain on Sale of Investment Property

In connection with the sale of the Autumn Breeze Apartments on February 27, 2025, we recognized a gain on sale of investment property of $18.1 million during the first quarter of 2025.

Related Party Transactions

Our business is externally managed by the Advisor, an affiliate of Lightstone which provides advisory services to us and we have no employees. Lightstone is majority owned by David Lichtenstein, a member of the Board of Directors. Pursuant to the terms of an advisory agreement and subject to the oversight of our Board of Directors, the Advisor is responsible for managing our day-to-day affairs and for services related to the management of our assets.

We have agreements with the Advisor and its affiliates to pay certain fees and reimburse certain expenses in connection with services performed and costs incurred by these entities and other related parties. We are dependent on the Advisor and its affiliates for performing a full range of services that are essential to us, including asset management, property management, property management oversight (for those of our properties which are managed by an unrelated third-party property manager) and acquisition, disposition and financing activities, and other general administrative responsibilities; such as tax, accounting, legal, IT and investor relations services. If the Advisor and its affiliates 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.

The advisory agreement has a one-year term and is renewable annually upon the mutual consent of our Advisor and our independent directors.

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

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2026				2025				2026				2025
Property management oversight fees (property operating expenses)		$	133			$	133			$	401			$	404
Debt financing fees(1)			-				-				1,205				700
Administrative services reimbursement (general and administrative costs)			432				414				1,260				1,223
Asset management fees (general and administrative costs)			966				931				2,897				2,861
Total		$	1,531			$	1,478			$	5,763			$	5,188

(1)	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.

Summary of Cash Flows

Operating activities

The net cash provided by operating activities of $1.7 million for the nine months ended September 30, 2026 consisted of our net loss of $11.5 million and the net negative change in operating assets and liabilities of $0.2 million adjusted to add back depreciation and amortization expense of $11.3 million, amortization of deferred financing costs of $1.5 million and casualty loss of $0.5 million.

Investing activities

The net cash used in investing activities of $3.3 million for the nine months ended September 30, 2026 consisted primarily of capital expenditures.

Financing activities

The net cash provided by financing activities of $6.8 million for the nine months ended September 30, 2026 consisted primarily of the following:

	●	proceeds from notes payable of $120.5 million;
	●	principal payments on notes payable of $77.9 million;
	●	payment of loan fees and expenses of $2.7 million; and
	●	Redemption and tender of Common Shares of $33.1 million.

Debt Financings

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

Our notes payable balance was $351.9 million, net of deferred financing fees of $6.5 million, and had a weighted average interest rate of 5.59% as of September 30, 2026. Our notes payable balance was $310.5 million, net of deferred financing fees of $5.3 million, and had a weighted average interest rate of 5.37% as of December 31, 2025.

Derivative Financial Instruments

We have entered into interest rate cap contracts with unrelated financial institutions in order to reduce the effect of increases to interest rates associated with certain of our variable rate debt. We are exposed to credit risk in the event of non-performance by the counterparty to these financial instruments. Management believes the risk of loss due to non-performance is remote.

We account for our interest rate cap contracts as economic hedges marking them to their fair market value taking into account present market interest rates compared to the contractual fixed rate over the life of the contract. The changes in the fair value of these economic hedges represent unrealized gains or losses on the interest rate cap contracts which are included in other income, net on the consolidated statements of operations.

Pursuant to the terms of certain of our mortgage indebtedness, we are required to maintain interest rate cap contracts at certain required notional amounts capping SOFR at prescribed rates for as long as these mortgages remain outstanding. See Notes 4 and 5 of the Notes to Consolidated Financial Statements.

On March 30, 2026 we entered into an interest rate cap contract with a notional amount of $60.0 million that effectively caps SOFR at 5.50% from March 30, 2026 through April 15, 2028 at a cost of $0.1 million.

Additionally, on October 10, 2024, we entered into a one-year interest rate cap contract with a notional amount of $44.0 million that effectively capped SOFR at 3.00% from October 11, 2024 through October 11, 2025 at a cost of $0.5 million. On October 9, 2025, we extended the term of this interest rate cap contract through October 11, 2026 at a cost of $0.3 million.

Contractual Obligations

One of our principal short-term and long-term liquidity requirements includes the refinancing or repayment of our maturing mortgage debt. The following table provides information with respect to the contractual maturities and scheduled debt service payments of our mortgage indebtedness as of September 30, 2026, but after taking into consideration the aforementioned refinancing transaction on October 8, 2026:

Contractual Obligations		2026				2027				2028				2029				2030				Thereafter				Total
Principal Maturities		$	-			$	574			$	61,336			$	45,761			$	146,983			$	103,679			$	358,333
Interest Payments(1)			4,897				20,394				17,537				16,389				7,580				7,281				74,078
Total Contractual Obligations		$	4,897			$	20,968			$	78,873			$	62,150			$	154,563			$	110,960			$	432,411

(1)

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

As of September 30, 2026, we were in compliance with all of our financial debt covenants.

Mortgage Debt Maturities

After taking into consideration the aforementioned refinancing transaction on October 8, 2026, we have no additional maturities of mortgage debt over the next 12 months from the date of these consolidated financial statements.

Tender Offer

On December 30, 2025, our Board of Directors approved an issuer self-tender offer (the "Tender Offer") to commence on or about December 31, 2025, for up to 2.2 million of our Common Shares at a price of $14.08 per Common Share, or approximately $31.1 million.

We commenced the Tender Offer on December 31, 2025 and a total of approximately 3.9 million Common Shares were properly tendered and not withdrawn before the expiration of the Tender Offer on February 13, 2026. In accordance with the terms and conditions of the Tender Offer, on March 5, 2026 we accepted and purchased approximately 2.2 million Common Shares at a purchase price of $14.08 per Common Share, for an aggregate cost of approximately $31.1 million.

Due to the oversubscription of the Tender Offer, we accepted for purchase on a pro rata basis approximately 56.5% of the Common Shares validly tendered and not withdrawn (other than "odd lot" stockholders, whose Common Shares were purchased in full on a priority basis).

Amended SRP

On November 10, 2022, the Board of Directors adopted a Seventh Amended and Restated Share Redemption Program (the "Amended SRP"), which became effective on January 1, 2023. Under the terms of the Amended SRP, any stockholder may request redemption of their Common Shares, subject to significant conditions and limitations. Additionally, under the terms of the Amended SRP, Common Shares are redeemed at 85% of our most recently published NAV per Share (subject to adjustment for any distributions designated as "special distributions" by the Board of Directors), in effect as of the date the redemption request is approved.

Pursuant to the terms of the Amended SRP, any Common Shares approved for redemption are redeemed on a periodic basis as determined by the Board of Directors, generally shortly after the end of each quarterly period. However, we will not redeem, during any year, more than 5% of the number of Common Shares outstanding on last day of the previous year (the "5% Limitation"). The cash available for redemption of Common Shares is set by the Board of Directors not less often than at least annually (the "Funding Limitation" and, together with the 5% Limitation, the "Redemption Limitations"). We may change the amount of the Redemption Limitations upon 10 business days' notice to our stockholders and may provide notice of any change to the Redemption Limitations by either including such information in (a) a current report on Form 8-K, an annual report on Form 10-K or a quarterly report on Form 10-Q, all which are publicly filed with the SEC or (b) a separate mailing to our stockholders.

Redemption requests may be subject to proration due to the above noted Redemption Limitations and are not considered on a first come, first served basis.

The Board of Directors reserves the right in its sole discretion at any time and from time to time, subject to any notice requirements described in our Amended SRP, to (i) reject any request for redemption of Common Shares, (ii) change the purchase price for redemption of Common Shares, (iii) limit the funds to be used for redemption of Common Shares under the Amended SRP or otherwise change the Redemption Limitations, or (iv) amend, suspend (in whole or in part) or terminate the Amended SRP.

In connection with the approval of the Tender Offer and as required by the rules of the Securities Exchange Act of 1934, as amended, the Board of Directors approved the immediate suspension of the Amended SRP effective December 30, 2025. While the Amended SRP was suspended, we did not accept any requests for redemption and any such requests and all pending requests were not honored or retained.

On March 26, 2026, the Board of Directors reinstated the Amended SRP and determined it would consider the amount of cash available for redemption of Common Shares on a quarterly basis throughout 2026. On the same date, the Board of Directors approved that an amount up to $2.0 million would be made available for consideration of redemption requests for the second, third and fourth quarters of 2026.

For the nine months ended September 30, 2026, we repurchased 142,045 Common Shares, pursuant to our Amended SRP at a weighted average price of $14.08. For the nine months ended September 30, 2025, we repurchased 444,774 Common Shares, pursuant to our Amended SRP at a weighted average price of $13.49.

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 our 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 maintain our REIT status. However, in order to continue to qualify for REIT status, it is possible we may be unable to make any such required distributions if they are in an amount in excess of our available cash.

Our 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. The Board of Directors considers various factors in its determination, including but not limited to, our sources and availability of capital, our operating and interest expenses, our ability to refinance near-term debt, as well as the Internal Revenue Service's annual distribution requirement that REITs distribute no less than 90% of their taxable income. Although our Board of Directors' decisions will be substantially influenced by the intention to maintain our federal tax status as a REIT, we cannot provide assurance that we will pay distributions at any particular level, or at all.

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 excludes from FFO: acquisition fees and expenses (to the extent that such fees and expenses have been recorded as operating expenses); adjustments related to contingent purchase price obligations; amounts relating to straight-line rents and amortization of above- and below-market intangible lease assets and liabilities; accretion of discounts and amortization of premiums on debt investments; amortization of closing costs relating to debt investments; impairments of real estate-related investments; mark-to-market adjustments included in net income; and gains or losses included in net income for the extinguishment or sale of debt or hedges.

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. 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. Certain of the above adjustments are also made to reconcile net income or loss to net cash provided by or used in operating activities, such as for the amortization of a premium and accretion of a discount on debt and securities investments, amortization of fees, any unrealized gains or losses on derivatives, securities or other investments, as well as other adjustments.

MFFO excludes non-recurring impairment of real estate-related investments. We assess the credit quality of our investments and adequacy of reserves on a quarterly basis, or more frequently as necessary. Significant judgment is required in this analysis. We consider the estimated net recoverable value of a loan as well as other factors, including but not limited to the fair value of any collateral, the amount and the status of any senior debt, the prospects for the borrower and the competitive situation of the region where the borrower does business.

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 (dollar amounts and shares in thousands, except per share amounts):

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
Description		2026				2025				2026				2025
Net (loss)/income		$	(5,037	)		$	(3,339	)		$	(11,478	)		$	8,415
FFO adjustments:
Depreciation and amortization of real estate assets			3,786				4,078				11,292				12,446
Casualty loss			723				-				723				-
Gain on sale of investment property			-				-				-				(18,112	)
Income tax on sale of real estate			-				489				-				489
FFO			(528	)			1,228				537				3,238
MFFO adjustments:
Other adjustments:
Mark to market adjustments(1)			25				185				134				838
Non-recurring loss from extinguishment/sale of debt, derivatives or securities holdings(2)			-				8				(5	)			14
MFFO - IPA recommended format		$	(503	)		$	1,421			$	666			$	4,090
Net (loss)/income		$	(5,037	)		$	(3,339	)		$	(11,478	)		$	8,415
Net (loss)/income per common share, basic and diluted		$	(0.31	)		$	(0.18	)		$	(0.69	)		$	0.45
FFO		$	(528	)		$	1,228			$	537			$	3,238
FFO per common share, basic and diluted		$	(0.03	)		$	0.07			$	0.03			$	0.17
Weighted average number of common shares outstanding, basic and diluted			16,089				18,609				16,631				18,683

(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. Mark-to-market adjustments are made for items such as ineffective derivative instruments, certain marketable 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.

(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.

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 as of 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 impairment of investment property and depreciation and amortization. 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 for the year ended December 31, 2025, which was filed with the U.S. Securities and Exchange Commission, or SEC, on March 26, 2026.