Lightstone Value Plus Reit V Inc.
11/14/2025 | Press release | Distributed by Public on 11/14/2025 12:11
Quarterly Report for Quarter Ending September 30, 2025 (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, 2025, 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, 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 learning 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 of operations and financial condition.
Liquidity and Capital Resources
As of September 30, 2025, we had cash and cash equivalents of $49.9 million, marketable securities, available for sale of $3.9 million and restricted cash of $7.0 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 balloon payments due at maturity) on our outstanding 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.
Recent Financing activities
Autumn Breeze Apartments Mortgage
On March 31, 2020, we entered into the Autumn Breeze Apartments Mortgage, a 10-year $29.9 million non-recourse mortgage loan which was scheduled to mature on April 1, 2030. The Autumn Breeze Apartments Mortgage bore interest at 3.39% and required monthly interest-only payments through September 30, 2023 and monthly principal and interest payments of approximately $0.1 million thereafter through its stated maturity date with the unpaid principal balance due upon maturity. The Autumn Breeze Apartments Mortgage was collateralized by a 280-unit multifamily residential property located in Noblesville, Indiana (the "Autumn Breeze Apartments").
In connection with the disposition of the Autumn Breeze Apartments on February 27, 2025, the Autumn Breeze Apartments Mortgage of $28.8 million was fully defeased at a total cost of $28.1 million. See Note 3 of the Notes to Consolidated Financial Statements.
Aster Apartments Mortgage
On May 30, 2025, we entered into a five-year $21.8 million non-recourse mortgage loan (the "Aster Apartments Mortgage") scheduled to mature on June 1, 2030. The Aster Apartments Mortgage bears interest at 5.20% and requires monthly interest-only payments through its stated maturity date with the unpaid principal balance due upon maturity. The Aster Apartments Mortgage is collateralized by a 240-unit multifamily residential property located in Sugar Land, Texas ( "The Aster Apartments"). The majority of the proceeds from the Aster Apartments Mortgage were used to repay in full existing mortgages indebtedness of $15.9 million, which was also collateralized by The Aster Apartments. In connection with the Aster Apartments Mortgage, we paid the Advisor $0.2 million in debt financing fees.
BayVue Apartments Mortgage
On June 30, 2025, we entered into the BayVue Apartments Mortgage, a five-year $48.2 million non-recourse mortgage loan scheduled to mature on July 1, 2030. The BayVue Apartments Mortgage bears interest at 4.98% and requires monthly interest-only payments through June 30, 2028, monthly principal and interest payments of approximately $0.2 million thereafter, through its stated maturity date with the unpaid principal balance due upon maturity. The BayVue Apartments Mortgage is collateralized by a 368-unit multifamily residential property located in Tampa, Florida (the "BayVue Apartments"). The majority of the proceeds of the BayVue Apartments Mortgage were used to repay in full existing mortgages indebtedness of $47.4 million collateralized by the BayVue Apartments. In connection with the BayVue Apartments Mortgage, we paid the Advisor $0.5 million in debt financing fees.
The above noted existing mortgage loan required us to enter into one or more interest rate cap contracts in the aggregate notional amount of $52.2 million pursuant to which SOFR was capped at 2.50% for as long as it remained outstanding. We maintained interest rate cap contracts pursuant to the requisite terms beginning with the origination of this mortgage loan. On July 8, 2024, we entered into a one-year interest rate cap contract with an effective date of July 15, 2024, with an unrelated financial institution at a cost of $1.1 million. This interest rate cap contract replaced another interest rate cap contract that expired on July 15, 2024, had a notional amount of $52.2 million and effectively capped SOFR at 2.50% during its term. This interest rate cap contract expired on July 15, 2025.
Mortgage Debt Maturities
The following discussion relates to our current intentions with respect to our mortgage debt maturing over the next 12 months.
Our non-recourse mortgage loans (the "Arbors Harbor Town Mortgage" and the "Arbors Harbor Town Supplemental Mortgage" and collectively the "Arbors Harbor Town Mortgages") (aggregate outstanding principal balances of $34.4 million as of September 30, 2025) collateralized by a 345-unit multifamily residential property located in Memphis, Tennessee (the "Arbors Harbor Town") are scheduled to mature on January 1, 2026. We currently intend to refinance the Arbors Harbor Town Mortgages on or before their scheduled maturity dates.
Our non-recourse mortgage loan (the "Axis at Westmont Mortgage") (outstanding principal balance of $34.6 million as of September 30, 2025) collateralized by a 345-unit multifamily residential property located in Westmont, Illinois (the "Axis at Westmont") is scheduled to mature on February 1, 2026. We currently intend to refinance the Axis at Westmont Mortgage on or before its scheduled maturity date.
Our non-recourse mortgage loan (the "Valley Ranch Apartments Mortgage") (outstanding principal balance of $43.4 million as of September 30, 2025) collateralized by a 384-unit multifamily residential property located in Ann Arbor, Michigan (the "Valley Ranch Apartments") is scheduled to mature on March 1, 2026. We currently intend to refinance the Valley Ranch Apartments Mortgage on or before its scheduled maturity date.
Our non-recourse mortgage loans (the "Citadel Apartments Senior Mortgage" and the "Citadel Apartments Junior Mortgage" and collectively the "Citadel Apartments Mortgages") (aggregate outstanding principal balance of $44.0 million as of September 30, 2025) collateralized by a 293-unit multifamily residential property located in Houston, Texas (the "Citadel Apartments") are scheduled to mature on October 11, 2026. We currently intend to refinance the Citadel Apartments Mortgages on or before their scheduled maturity date.
We do not currently expect any issues in extending or refinancing our maturing mortgage indebtedness at favorable terms although there can be no assurances that we will be able to do so. If we are unable to successfully extend or refinance our maturing mortgage indebtedness, we may also consider repaying the then outstanding principal balances due at their respective maturity dates with available cash on hand and/or proceeds from selective asset sales even though such mortgage indebtedness in not recourse to us. We have no additional maturities of mortgage debt over the next 12 months.
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, 2025 and December 31, 2024, 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 in cash and cash equivalents or restricted cash.
Recent Acquisition and Disposition Activities
Acquisition of the Discovery at Space Coast Apartments - December 2024
On December 19, 2024, we acquired a 240-unit multifamily residential property located in Rockledge, Florida (the "Discovery at Space Coast Apartments") from an unrelated third party for a contractual purchase price of $63.8 million, plus closing and other acquisition related costs totaling $1.7 million. The acquisition was funded with $43.7 million of proceeds from a mortgage financing (the "Discovery at Space Coast Apartments Mortgage") and $21.8 million of cash on hand. Additionally, in connection with the acquisition of the Discovery at Space Coast Apartments, the Advisor received an aggregate of $1.6 million in acquisition fees, acquisition expense reimbursements and debt financing fees.
Disposition of the Autumn Breeze Apartments - February 2025
On February 27, 2025, we completed the disposition of the "Autumn Breeze Apartments to an unrelated third-party for a contractual sales price of $59.5 million. In connection with the disposition of the Autumn Breeze Apartments, (the Autumn Breeze Apartments Mortgage of $28.8 million was fully defeased at a total cost of $28.1 million. Our net proceeds from the disposition of the Autumn Breeze Apartments were $30.5 million, after the aforementioned defeasance of the Autumn Breeze Apartments Mortgage, pro rations, and closing and other related transaction costs. In connection with the disposition of Autumn Breeze Apartments, we recognized a gain on sale of investment property of $18.1 million during the first calendar quarter of 2025.
In connection with the sale of the Autumn Breeze Apartments, we funded $31.0 million into an escrow account with a qualified intermediary in order to facilitate potential like-kind exchange transactions in accordance with Section 1031 of the Internal Revenue Code, as amended. These funds, which were initially classified in restricted cash on our consolidated balance sheet, were subsequently released to us during the second and third quarters of 2025.
The disposition of the Autumn Breeze Apartments 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.
Results of Operations
Three months ended September 30, 2025 as compared to the three months ended September 30, 2024.
Our results of operations for the three months ended September 30, 2025 compared to the same period in 2024 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:
| Three Months Ended | Change | Change | Change | |||||||||||||||||||||||||
| September 30, | Increase/ | Percentage | due to | due to | due to | |||||||||||||||||||||||
| 2025 | 2024 | (Decrease) | Change | Acquisitions(1) | Dispositions(2) | Same Store(3) | ||||||||||||||||||||||
| Rental revenues | $ | 12,500 | $ | 12,513 | $ | (13 | ) | 0.0 | % | $ | 1,176 | $ | (1,300 | ) | $ | 111 | ||||||||||||
| Property operating expenses | 4,216 | 4,279 | (63 | ) | (1.0 | %) | 408 | (522 | ) | 51 | ||||||||||||||||||
| Real estate taxes | 1,611 | 1,858 | (247 | ) | (13.0 | %) | 201 | (181 | ) | (267 | ) | |||||||||||||||||
| General and administrative | 1,968 | 1,967 | 1 | 0.0 | % | 28 | (3 | ) | (24 | ) | ||||||||||||||||||
| Depreciation and amortization | 4,078 | 3,854 | 224 | 6.0 | % | 844 | (383 | ) | (237 | ) | ||||||||||||||||||
| Interest expense, net | 4,348 | 3,782 | 566 | 15.0 | % | 720 | (268 | ) | 114 | |||||||||||||||||||
| (1) | Represents the effect on our operating results for the periods indicated resulting from our acquisition of the Discovery at Space Coast Apartments on December 19, 2024. |
| (2) | Represents the effect on our results for the periods indicated resulting from our disposition of the Autumn Breeze Apartments on February 27, 2025. |
| (3) | Represents the change for three months ended September 30, 2025 compared to the same period in 2024 for real estate and real estate-related investments owned by us during the entire periods presented ("Same Store").Our Same Store properties for the periods ended September 30, 2025 and 2024 include Arbors Harbor Town, The Aster Apartments, Axis at Westmont, Valley Ranch Apartments, Camellia Apartments, Citadel Apartments and BayVue Apartments. |
The following table reflects total rental revenues and total property operating expenses for the three months ended September 30, 2025 and 2024 for our Same Store properties, acquisition (Discovery at Space Coast Apartments) and disposition (Autumn Breeze Apartments):
| Three Months Ended September 30, | ||||||||||||
| Description | 2025 | 2024 | Change | |||||||||
| Rental revenues: | ||||||||||||
| Same Store | $ | 11,324 | $ | 11,213 | $ | 111 | ||||||
| Acquisition | 1,176 | - | 1,176 | |||||||||
| Disposition | - | 1,300 | (1,300 | ) | ||||||||
| Total rental revenues | $ | 12,500 | $ | 12,513 | $ | (13 | ) | |||||
| Property operating expenses: | ||||||||||||
| Same Store | $ | 3,818 | $ | 3,767 | $ | 51 | ||||||
| Acquisition | 408 | - | 408 | |||||||||
| Disposition | (10 | ) | 512 | (522 | ) | |||||||
| Total property operating expenses | $ | 4,216 | $ | 4,279 | $ | (63 | ) | |||||
The tables below reflect occupancy and effective monthly rental rates for our eight multifamily residential properties as of the dates indicated:
| Occupancy |
Effective Monthly Rent per Unit(1) |
|||||||||||||||
| As of September 30, | As of September 30, | |||||||||||||||
| Property | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Arbors Harbor Town | 95 | % | 91 | % | $ | 1,684 | $ | 1,729 | ||||||||
| Aster Apartments | 95 | % | 91 | % | $ | 1,417 | $ | 1,414 | ||||||||
| Axis at Westmont | 96 | % | 95 | % | $ | 1,705 | $ | 1,620 | ||||||||
| Valley Ranch Apartments | 95 | % | 95 | % | $ | 1,791 | $ | 1,888 | ||||||||
| BayVue Apartments | 92 | % | 90 | % | $ | 1,550 | $ | 1,598 | ||||||||
| Citadel Apartments | 97 | % | 96 | % | $ | 1,714 | $ | 1,719 | ||||||||
| Camellia World Apartments | 93 | % | 94 | % | $ | 1,551 | $ | 1,507 | ||||||||
| Discovery at Space Coast Apartments | 92 | % | (2 | ) | $ | 1,663 | (2 | ) | ||||||||
| (1) | Effective monthly rent is calculated as in-place contracted monthly rental revenue, including any premiums due for short-term or month-to-month leases, less any concessions or discounts. |
| (2) | Discovery at Space Coast Apartments were acquired on December 19, 2024. |
Revenues Rental revenues were $12.5 million for both the three months ended September 30, 2025 and 2024. Excluding the effect of our acquisition and disposition activities discussed above, our rental revenues increased slightly by $0.1 million for our Same Store properties during the 2025 period.
Property Operating Expenses Property operating expenses for the three months ended September 30, 2025 were $4.2 million, a decrease of $0.1 million, compared to $4.3 million for the same period in 2024. Excluding the effect of our acquisition and disposition activities discussed above, our property operating expenses increased slightly by $0.1 million for our Same Store properties during the 2025 period.
Real Estate Taxes Real estate taxes for the three months ended September 30, 2025 were $1.6 million, a decrease of $0.3 million, compared to $1.9 million for the same period in 2024. Excluding the effect of our acquisition and disposition activities discussed above, our real estate taxes decreased by $0.3 million for our Same Store properties during the 2025 period. This decrease was primarily due to lower real estate taxes for the Citadel Apartments during the 2025 period.
General and Administrative Expenses General and administrative expenses were relatively unchanged at $2.0 million for both the three months ended September 30, 2025 and 2024.
Depreciation and Amortization Depreciation and amortization expense for the three months ended September 30, 2025 was $4.1 million, an increase of $0.2 million, compared to $3.9 million for the same period in 2024. Excluding the effect of our acquisition and disposition activities discussed above, our depreciation and amortization expenses decreased by $0.2 million for our Same Store properties during the 2025 period. This decrease was primarily due to lower amortization expense attributable to in-place lease intangibles during the 2025 period as a result of certain of them becoming fully amortized during 2024.
Interest Expense, Net Interest expense, net for the three months ended September 30, 2025 was $4.3 million, an increase of $0.5 million, compared to $3.8 million for the same period in 2024. Interest expense is primarily attributable to mortgage financings associated with our multifamily residential properties and reflects both changes in market interest rates on our variable rate indebtedness and the weighted average principal outstanding during the periods. Excluding the effect of our acquisition and disposition activities discussed above, interest expense, net increased slightly by $0.1 million for our Same Store properties during the 2025 period. Additionally, during the three months ended September 30, 2025 and 2024, we earned $0.2 million and $0.7 million, respectively, from our interest rate cap contracts which is recorded in interest expense, net.
Nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.
Our results of operations for the nine months ended September 30, 2025 compared to the same period in 2024 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:
|
Nine Months Ended September 30, |
Increase/ | Percentage |
Change due to |
Change due to |
Change due to |
|||||||||||||||||||||||
| 2025 | 2024 | (Decrease) | Change | Acquisitions(1) | Dispositions(2) | Same Store(3) | ||||||||||||||||||||||
| Rental revenues | $ | 38,724 | $ | 37,422 | $ | 1,302 | 3.0 | % | $ | 3,766 | $ | (2,998 | ) | $ | 534 | |||||||||||||
| Property operating expenses | 12,857 | 12,115 | 742 | 6.0 | % | 1,226 | (876 | ) | 392 | |||||||||||||||||||
| Real estate taxes | 5,142 | 5,373 | (231 | ) | (4.0 | %) | 602 | (432 | ) | (401 | ) | |||||||||||||||||
| General and administrative | 5,980 | 5,780 | 200 | 3.0 | % | 137 | (15 | ) | 78 | |||||||||||||||||||
| Depreciation and amortization | 12,446 | 11,513 | 933 | 8.0 | % | 2,529 | (879 | ) | (717 | ) | ||||||||||||||||||
| Interest expense, net | 13,059 | 11,402 | 1,657 | 15.0 | % | 2,138 | (632 | ) | 151 | |||||||||||||||||||
| (1) | Represents the effect on our operating results for the periods indicated resulting from our acquisition of the Discovery at Space Coast Apartments on December 19, 2024. |
| (2) | Represents the effect on our results for the periods indicated resulting from our disposition of the Autumn Breeze Apartments on February 27, 2025. |
| (3) | Represents the change for nine months ended September 30, 2025 compared to the same period in 2024 for real estate and real estate-related investments owned by us during the entire periods presented ("Same Store").Same Store properties for the periods ended September 30, 2025 and 2024 include Arbors Harbor Town, The Aster Apartments, Axis at Westmont, Valley Ranch Apartments, Camellia Apartments, Citadel Apartments and BayVue Apartments. |
The following table reflects total rental revenues and total property operating expenses for the nine months ended September 30, 2025 and 2024 for our Same Store properties, acquisition (Discovery at Space Coast Apartments) and disposition (Autumn Breeze Apartments):
|
Nine Months Ended September 30, |
||||||||||||
| Description | 2025 | 2024 | Change | |||||||||
| Rental revenues: | ||||||||||||
| Same Store | $ | 34,065 | $ | 33,531 | $ | 534 | ||||||
| Acquisition | 3,766 | - | 3,766 | |||||||||
| Disposition | 893 | 3,891 | (2,998 | ) | ||||||||
| Total rental revenues | $ | 38,724 | $ | 37,422 | $ | 1,302 | ||||||
| Property operating expenses: | ||||||||||||
| Same Store | $ | 11,192 | $ | 10,800 | $ | 392 | ||||||
| Acquisition | 1,226 | - | 1,226 | |||||||||
| Disposition | 439 | 1,315 | (876 | ) | ||||||||
| Total property operating expenses | $ | 12,857 | $ | 12,115 | $ | 742 | ||||||
Revenues Rental revenues for the nine months ended September 30, 2025 were $38.7 million, an increase of $1.3 million, compared to $37.4 million for the same period in 2024. Excluding the effect of our acquisition and disposition activities discussed above, our rental revenues increased by $0.5 million for our Same Store properties during the 2025 period. This increase was primarily as a result of higher monthly rent per unit for Axis at Westmont during the 2025 period.
Property Operating Expenses Property operating expenses for the nine months ended September 30, 2025 were $12.9 million, an increase of $0.8 million, compared to $12.1 million for the same period in 2024. Excluding the effect of our acquisition and disposition activities discussed above, our property operating expenses increased by $0.4 million for our Same Store properties during the 2025 period primarily as a result of increased professional fees.
Real Estate Taxes Real estate taxes for the nine months ended September 30, 2025 were $5.1 million, a decrease of $0.3 million, compared to $5.4 million for the same period in 2024. Excluding the effect of our acquisition and disposition activities discussed above, our real estate taxes decreased by $0.4 million for our Same Store properties during the 2025 period. This decrease was primarily as a result of lower real estate taxes for the Citadel Apartments during the 2025 period.
General and Administrative Expenses General and administrative expenses were $6.0 million, an increase of $0.2 million, compared to $5.8 million for the same period in 2024.
Depreciation and Amortization Depreciation and amortization expense for the nine months ended September 30, 2025 was $12.4 million, an increase of $0.9 million, compared to $11.5 million for the same period in 2024. Excluding the effect of our acquisition and disposition activities discussed above, our depreciation and amortization expenses decreased by $0.7 million for our Same Store properties during the 2025 period. This decrease was primarily due to lower amortization expense attributable to in-place lease intangibles during the 2025 period as a result of certain of them becoming fully amortized during 2024.
Interest Expense, Net Interest expense, net for the nine months ended September 30, 2025 was $13.1 million, an increase of $1.7 million, compared to $11.4 million for the same period in 2024. Interest expense is primarily attributable to financings associated with our multifamily real estate properties and reflects both changes in market interest rates on our variable rate indebtedness and the weighted average principal outstanding during each of the periods. Excluding the effect of our acquisition and disposition activities discussed above, interest expense, net increased by $0.2 millioncompared to the 2024 period. Additionally, during the nine months ended September 30, 2025 and 2024, we earned $0.9 million and $2.3 million, respectively, from our interest rate cap contracts which is recorded in interest expense, net.
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 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, information technology 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 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 periods indicated:
|
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Property management oversight fees (property operating expenses) | $ | 133 | $ | 134 | $ | 404 | $ | 401 | ||||||||
| Debt financing fees(1) | - | - | 700 | - | ||||||||||||
| Administrative services reimbursement (general and administrative costs) | 414 | 404 | 1,223 | 1,187 | ||||||||||||
| Asset management fees (general and administrative costs) | 931 | 897 | 2,861 | 2,695 | ||||||||||||
| Total | $ | 1,478 | $ | 1,435 | $ | 5,188 | $ | 4,283 | ||||||||
| (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 $3.2 million for the nine months ended September 30, 2025 consisted of our net income of $8.4 million adjusted to add back depreciation and amortization of $12.4 million, the negative mark to market adjustments on derivative financial instruments of $0.8 million and amortization of deferred financing costs of $1.0 million less the gain on the sale of investment property (Autumn Breeze Apartments) of $18.1 million and the net negative change in operating assets and liabilities of $1.5 million.
Investing activities
The net cash provided by investing activities of $56.6 million for the nine months ended September 30, 2025 consisted of our proceeds from the sale of investment property (Autumn Breeze Apartments) of $59.2 million less our capital expenditures of $2.7 million.
Financing activities
The net cash used in financing activities of $30.6 million for the nine months ended September 30, 2025 consisted primarily of the following:
| ● | principal payments on notes payable of $92.2 million; | |
| ● | proceeds from notes payable of $70.0 million; | |
| ● | payment of loan fees and expenses of $2.4 million; and | |
| ● | redemptions and cancellation of common stock of $6.0 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 $299.2 million, net of deferred financing fees of $4.9 million, and had a weighted average interest rate of 5.30% as of September 30, 2025. Our notes payable balance was $323.2 million, net of deferred financing fees of $3.8 million, and had a weighted average interest rate of 4.98% as of December 31, 2024.
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 classified as mark to market adjustment on derivative financial instruments on the consolidated statements of operations.
Pursuant to the terms of our Citadel Apartments Mortgages, we are required to enter into one or more interest rate cap contracts at certain prescribed notional amounts capping SOFR at certain prescribed rates for as long as these mortgages remain outstanding.
In addition to our interest rate cap contract which expired on July 15, 2025 (see "BayVue Apartments Mortgage"), as of September 30, 2025, we also had another interest rate cap contract which was entered into at a cost of $0.5 million in October 2024 with an effective date of October 11, 2024 and notional amount of $44.0 million, matured on October 11, 2025 and effectively capped SOFR at 3.00% during its term. On October 9, 2025, we extended the maturity date 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, 2025:
| Contractual Obligations | 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | |||||||||||||||||||||
| Principal Maturities | $ | 211 | $ | 156,252 | $ | - | $ | 689 | $ | 1,072 | $ | 145,839 | $ | 304,063 | ||||||||||||||
| Interest Payments(1) | 4,058 | 12,010 | 8,144 | 8,151 | 8,248 | 2,056 | 42,667 | |||||||||||||||||||||
| Total Contractual Obligations | $ | 4,269 | $ | 168,262 | $ | 8,144 | $ | 8,840 | $ | 9,320 | $ | 147,895 | $ | 346,730 | ||||||||||||||
| (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, 2025was used. |
As of September 30, 2025, we were in compliance with all of our financial debt covenants.
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 the significant conditions and limitations of the program. Additionally, under the terms of the Amended SRP, we will redeem Common Shares 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 request for redemption 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 expected to be shortly after the end of each calendar quarterly period. However, we will not redeem, during any calendar year, more than 5% of the number of Common Shares outstanding on last day of the previous calendar year (the "5% Limitation"). The cash available for redemption of Common Shares will be set by the Board of Directors not less often than annually (the "Funding Limitation" and, together with the 5% Limitation, the "Redemption Limitations"). The Board of Directors set the amount of cash available for redemption of Common Shares for the year ended December 31, 2024 at $8.0 million, which was generally allocated $2.0 million for each calendar quarterly period. We may change the amount of the Redemption Limitations upon 10 business days' notice to our stockholders and will provide notice of any change to the Redemption Limitations by including such information in (a) a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC or (b) a separate mailing to our stockholders.
Redemption requests will be honored pro rata among all requests received subject to the Redemption Limitations and will not be honored 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.
On March 20, 2025, the Board of Directors determined it would consider the amount of cash available for redemption of Common Shares on a calendar quarterly basis throughout 2025. 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 first calendar quarter of 2025. Subsequently, on May 8, 2025 and August 7, 2025, the Board of Directors approved that an amount up to $2.0 million will be made available for consideration of redemption requests for the second and third calendar quarters of 2025, respectively.
For the nine months ended September 30, 2025 we repurchased 444,774 Common Shares, pursuant to its Amended SRP at a weighted average price of $13.49. For the nine months ended September 30, 2024, we repurchased 456,621 Common Shares, pursuant to our Amended SRP at a weighted average price of $13.14.
Distributions
We made an election to qualify as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2008. U.S. federal tax law requires a REIT to distribute at least 90% of its annual REIT taxable income (which does not equal net income, as calculated in accordance with GAAP determined without regard to the deduction for dividends paid and excluding any net capital gain. In order to continue to qualify for REIT status, we may be required to make distributions in excess of cash available. Distributions, if any, are authorized at the discretion of our Board of Directors based on their analysis of our performance over the previous periods and expectations of performance for future periods. Such analyses may include actual and anticipated operating cash flow, capital expenditure needs, general financial and market conditions, proceeds from asset sales and other factors that our Board of Directors deems relevant. Our Board of Directors' decisions will be substantially influenced by the intention to maintain our federal tax status as a REIT. However, we cannot provide assurance that we will pay distributions at any particular level, or at all.
We did not make any distributions to our stockholders during the nine months ended September 30, 2025 and 2024.
2025 Special Distribution
On September 29, 2025, our Board of Directors declared a special cash distribution of $0.08 per Common Share payable to stockholders of record as of September 26, 2025 (the "2025 Special Distribution"). The 2025 Special Distribution totaled $1.5 million, which represented a portion of the net proceeds generated from asset sales, and was paid on or about October 16, 2025.
2024 Special Distribution
On September 27, 2024, our Board of Directors declared a special cash distribution of $0.42 per Common Share payable to stockholders of record as of September 30, 2024 (the "2024 Special Distribution"). The 2024 Special Distribution totaled $8.0 million, which represented a portion of the net proceeds generated from asset sales, and was paid on or about October 15, 2024.
Funds from Operations and Modified Funds from Operations
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative.
Because of these factors, the National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has published a standardized measure of performance known as funds from operations ("FFO"), which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT's operating performance. FFO is not equivalent to our net income or loss as determined under generally accepted accounting principles in the U.S. ("GAAP").
We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the "White Paper"). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Our FFO calculation complies with NAREIT's definition.
We believe that the use of FFO provides a more complete understanding of our performance to investors and to management and reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT's definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.
Because of these factors, the Investment Program Association (the "IPA"), an industry trade group, published a standardized measure of performance known as modified funds from operations ("MFFO"), which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that both before and after we have deployed all of our offering proceeds and are no longer incurring a significant amount of acquisition fees or other related costs, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. MFFO is not equivalent to our net income or loss as determined under GAAP.
We define MFFO, a non-GAAP measure, consistent with the IPA's Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the "Practice Guideline") issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for acquisition and transaction-related fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition and transaction-related fees and expenses (which includes costs incurred in connection with strategic alternatives), amounts relating to deferred rent receivables and amortization of market lease and other intangibles, net (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), accretion of discounts and amortization of premiums on debt investments and borrowings, mark-to-market adjustments included in net income (including gains or losses incurred on assets held for sale), gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.
We believe that, because MFFO excludes costs that we consider more reflective of acquisition activities and other non-operating items, MFFO can provide, on a going-forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we are acquiring properties and once our portfolio is stabilized. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs.
Not all REITs, including publicly registered, non-listed REITs, calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs, including publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO and MFFO are not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as determined under GAAP as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance. FFO and MFFO should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and MFFO, and the adjustments to GAAP in calculating FFO and MFFO.
Neither the SEC, NAREIT, the IPA nor any other regulatory body or industry trade group has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, NAREIT, the IPA or another industry trade group may publish updates to the White Paper or the Practice Guidelines or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry, and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.
Our calculations of FFO and MFFO are presented below:
|
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| Description | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Net (loss)/income | $ | (3,339 | ) | $ | (3,265 | ) | $ | 8,415 | $ | (8,814 | ) | |||||
| FFO adjustments: | ||||||||||||||||
| Depreciation and amortization of real estate assets | 4,078 | 3,854 | 12,446 | 11,513 | ||||||||||||
| Gain on sale of investment property | - | - | (18,112 | ) | - | |||||||||||
| Income tax on sale of real estate | 489 | (65 | ) | 489 | 675 | |||||||||||
| FFO | 1,228 | 524 | 3,238 | 3,374 | ||||||||||||
| MFFO adjustments: | ||||||||||||||||
| Other adjustments: | ||||||||||||||||
| Mark to market adjustments(1) | 185 | 1,073 | 838 | 2,462 | ||||||||||||
| Non-recurring loss from extinguishment/sale of debt, derivatives or securities holdings(2) | 8 | (1 | ) | 14 | 8 | |||||||||||
| MFFO - IPA recommended format | $ | 1,421 | $ | 1,596 | $ | 4,090 | $ | 5,844 | ||||||||
| Net (loss)/income | $ | (3,339 | ) | $ | (3,265 | ) | $ | 8,415 | $ | (8,814 | ) | |||||
| Net (loss)/income per common share, basic and diluted | $ | (0.18 | ) | $ | (0.17 | ) | $ | 0.45 | $ | (0.46 | ) | |||||
| FFO | $ | 1,228 | $ | 524 | $ | 3,238 | $ | 3,374 | ||||||||
| FFO per common share, basic and diluted | $ | 0.07 | $ | 0.03 | $ | 0.17 | $ | 0.18 | ||||||||
| Weighted average number of common shares outstanding, basic and diluted | 18,609 | 19,139 | 18,683 | 19,280 | ||||||||||||
| 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 equity securities and any other items that GAAP requires we make a mark-to-market adjustment for. The need to reflect mark-to-market adjustments is a continuous process and is analyzed on a quarterly and/or annual basis in accordance with GAAP. |
| 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, 2024, which was filed with the US. Securities and Exchange Commission, or SEC, on March 27, 2025.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) and Rule 15d-15(b) under the Exchange Act, our management, including our principal executive officer and principal financial officer, evaluated, as of September 30, 2025, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e) using the criteria established in Internal Control-New Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective, as of September 30, 2025, to provide reasonable assurance that information required to be disclosed by us in this report is recorded, processed, summarized, and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.
Changes in Internal Control over Financial Reporting
There has been no change in internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time in the ordinary course of business, we may become subject to legal proceedings, claims or disputes.
As of the date hereof, we are not a party to any material pending legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on our results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, we have not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
During the period covered by this quarterly report, we did not sell any equity securities that were not registered under the Securities Act of 1933.
Our Common Shares are not currently listed on a national securities exchange. The timing of a liquidity event for our stockholders will depend upon then prevailing market conditions and the Board of Directors' assessment of our investment objectives and liquidity options for our stockholders. On August 7, 2025, the Board of Directors extended the targeted timeline for us to commence a liquidity event until June 30, 2033 based on their assessment of our investment objectives and liquidity options for our stockholders.We can provide no assurances as to the actual timing of the commencement of an actual liquidity event for our stockholders or our ultimate liquidation. Furthermore, we will seek stockholder approval prior to liquidating our entire portfolio.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
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