Lightstone REIT II's Net Loss Widens Amid Revenue Dip

TL;DR

**Lightstone REIT II is bleeding cash with widening losses and declining property values, making it a risky bet for investors right now.**

AI Summary

Lightstone Value Plus REIT II, Inc. (Lightstone REIT II) reported a net loss of $565,000 for the three months ended June 30, 2025, a significant decline from a net income of $459,000 in the same period of 2024. For the six months ended June 30, 2025, the net loss widened to $4.291 million, compared to a net loss of $2.142 million in the prior year. Total revenues decreased to $13.348 million for the three months ended June 30, 2025, down from $13.935 million in 2024, and to $24.077 million for the six months, down from $24.583 million. The company's net investment property value declined to $135.154 million as of June 30, 2025, from $137.823 million at December 31, 2024. Cash and cash equivalents saw a slight increase to $27.369 million from $27.139 million, while restricted cash significantly dropped from $4.938 million to $1.060 million. Mortgage payable, net, decreased to $97.364 million from $101.183 million, and total stockholders' equity fell to $76.881 million from $84.656 million. A casualty loss of $989,000 was recognized for the six months ended June 30, 2025, contributing to the increased net loss.

Why It Matters

Lightstone REIT II's widening net loss and declining revenues signal potential challenges for investors, particularly given the decrease in net investment property and restricted cash. The company's reliance on its Advisor and Sponsor affiliates for essential services, coupled with its unlisted common shares, limits liquidity and transparency for investors. This performance contrasts with a competitive real estate market, where other REITs might be demonstrating stronger recovery or growth, potentially making Lightstone REIT II a less attractive option. Employees and customers of the underlying hospitality properties may face indirect impacts from the REIT's financial pressures, though direct operational changes are not immediately apparent.

Risk Assessment

Risk Level: high — The company reported a significant net loss of $4.291 million for the six months ended June 30, 2025, more than double the $2.142 million loss in the prior year. Total assets decreased from $193.900 million at December 31, 2024, to $183.612 million at June 30, 2025, indicating a shrinking asset base. Furthermore, the company's common shares are not listed on a national securities exchange, severely limiting liquidity and price discovery for investors.

Analyst Insight

Investors should exercise extreme caution and consider divesting from Lightstone Value Plus REIT II, Inc. given the consistent net losses, declining asset base, and lack of public market liquidity. Focus on REITs with stronger financial performance and transparent market valuations.

Financial Highlights

debt To Equity

1.39

revenue

$24,077,000

operating Margin

-1.3%

total Assets

$183,612,000

total Debt

$97,364,000

net Income

-$4,291,000

eps

-$0.26

gross Margin

N/A

cash Position

$27,369,000

revenue Growth

-2.1%

Revenue Breakdown

Key Numbers

• $4.291M — Net Loss (Increased from $2.142M in prior year for six months ended June 30)
• $24.077M — Total Revenues (Decreased from $24.583M in prior year for six months ended June 30)
• $135.154M — Net Investment Property (Decreased from $137.823M at December 31, 2024)
• $1.060M — Restricted Cash (Significantly decreased from $4.938M at December 31, 2024)
• $97.364M — Mortgage Payable, Net (Decreased from $101.183M at December 31, 2024)
• $76.881M — Total Stockholders' Equity (Decreased from $84.656M at December 31, 2024)
• $989K — Casualty Loss, Net (Recognized for the six months ended June 30, 2025, none in prior year)
• $0.04 — Net loss per common share (For the three months ended June 30, 2025, compared to $0.03 income in 2024)
• $0.26 — Net loss per common share (For the six months ended June 30, 2025, compared to $0.13 loss in 2024)
• 16.0 million — Outstanding Common Shares (As of August 7, 2025, slightly down from 16.1 million at December 31, 2024)

Key Players & Entities

• Lightstone Value Plus REIT II, Inc. (company) — Registrant and primary entity
• Lightstone Value Plus REIT II LP (company) — Operating Partnership for Lightstone REIT II
• David Lichtenstein (person) — Majority owner of the Advisor and Chairman/CEO of Lightstone REIT II
• Lightstone Holdings LLC (company) — Wholly-owned subsidiary of the Sponsor and related party
• Lightstone Group LLC (company) — Sponsor of Lightstone REIT II
• Lightstone Value Plus REIT II LLC (company) — Advisor to Lightstone REIT II
• Lightstone Value Plus REIT III, Inc. (company) — Related party REIT in Hilton Garden Inn Joint Venture
• Lightstone Value Plus REIT I, Inc. (company) — Related party REIT in Hotel Joint Venture
• $4.291 million (dollar_amount) — Net loss for the six months ended June 30, 2025
• $135.154 million (dollar_amount) — Net investment property as of June 30, 2025

FAQ

Risk Factors

• Economic Downturn Impact [high — market]: The company's performance is substantially impacted by the overall health of local, U.S. national, and global economies. Worsening economic conditions, inflation, higher interest rates, and labor/supply chain challenges could adversely affect future results.
• Dependence on Advisor [medium — operational]: The company has no employees and is dependent on its Advisor and affiliates for essential services like asset management, property management, and administrative responsibilities. A failure of the Advisor to provide these services would require the company to find alternative solutions.
• Real Estate Market Volatility [medium — market]: The company's investments are primarily in commercial hospitality properties. Market and other challenges, including financial market volatility and banking failures, can adversely affect business and financial performance.
• Unfavorable Regulatory Changes [low — regulatory]: Unfavorable changes in laws, ordinances, and regulations could adversely affect the company's business and financial performance.
• Financing Availability and Terms [medium — financial]: The availability or terms of financings can impact the company's financial condition. Financial market volatility and banking failures are cited as specific risks.
• Geopolitical and Global Events [medium — operational]: The company's performance is influenced by geopolitical conditions, natural disasters, terrorism, acts of war, and outbreaks of contagious diseases, all of which can impact consumer behavior and operational stability.

Industry Context

Lightstone REIT II primarily operates in the commercial hospitality sector, focusing on limited-service hotels. The company's performance is sensitive to broader economic conditions, consumer behavior, and real estate market dynamics. While historically focused on hotels, the REIT has the flexibility to invest in other real estate types.

Regulatory Implications

As a REIT, Lightstone REIT II must adhere to specific tax regulations. Changes in laws, ordinances, and regulations are identified as a risk factor that could negatively impact its operations. The company's non-listed status means it is not subject to the same immediate exchange listing requirements as publicly traded REITs.

What Investors Should Do

1. Monitor the impact of the increasing net loss and declining revenues on the company's ability to service debt and fund operations.
2. Assess the company's strategy for managing its property portfolio, particularly in light of the declining net investment property value and the significant drop in restricted cash.
3. Evaluate the company's reliance on its Advisor and the potential risks associated with this dependency, especially given the absence of internal employees.
4. Analyze the trend of increasing net losses and the factors contributing to it, such as the recent casualty loss, to understand the sustainability of the current financial performance.
5. Consider the implications of the company's non-listed status on liquidity and potential future marketability of shares.

Key Dates

• 2025-06-30: End of Second Quarter 2025 — Reported a net loss of $565,000 on revenues of $13.348 million, with net investment property value at $135.154 million.
• 2024-06-30: End of Second Quarter 2024 — Reported net income of $459,000 on revenues of $13.935 million.
• 2025-12-31: End of Fiscal Year 2024 — Net investment property value was $137.823 million, and total stockholders' equity was $84.656 million.
• 2008-05-20: Advisor Contribution — The Advisor contributed $2 to the Operating Partnership for Common Units, with cumulative distributions on Subordinated Profits Interests reaching $7.9 million since inception through June 30, 2025.

Glossary

REIT

Real Estate Investment Trust. A company that owns, operates, or finances income-generating real estate. (Lightstone REIT II elected to qualify as a REIT for U.S. federal income tax purposes.)

UPREIT

Umbrella Partnership REIT. A structure where a REIT owns a controlling interest in an operating partnership, which in turn owns the real estate assets. (Lightstone REIT II is structured as an UPREIT, conducting most business through its Operating Partnership.)

Accumulated deficit

The cumulative net losses of a company that have not been offset by net income. (Indicates the company has incurred more losses than profits over its history, with a deficit of $70.5 million as of June 30, 2025.)

Noncontrolling interests

The portion of equity in a subsidiary that is not attributable to the parent company. (Represents ownership stakes in consolidated subsidiaries not held by Lightstone REIT II, totaling $10.857 million as of June 30, 2025.)

Casualty loss, net

A loss incurred due to damage or destruction of property from an unforeseen event. (A $989,000 casualty loss was recognized for the six months ended June 30, 2025, contributing to the net loss.)

Marketable securities, available for sale

Investments in securities that are not classified as trading or held-to-maturity, and can be sold in the open market. (Represents investments that can be liquidated, with a value of $5.820 million as of June 30, 2025.)

Restricted cash

Cash that is not available for general use by the company because it is pledged as collateral or set aside for specific purposes. (Significantly decreased from $4.938 million to $1.060 million, indicating less cash is earmarked for specific obligations.)

Year-Over-Year Comparison

Compared to the prior year, Lightstone REIT II experienced a significant downturn in financial performance for the six months ended June 30, 2025. Total revenues decreased by 2.1% to $24.077 million, while the net loss widened substantially to $4.291 million from a loss of $2.142 million. This deterioration was exacerbated by a $989,000 casualty loss recognized in the current period. Total stockholders' equity also declined from $84.656 million to $76.881 million, reflecting the increased losses.

Key Financial Figures

• $0.075 — ,237 (a) Distributions per share were $0.075. Additional Total Common Stock P
• $0.150 — ,237 (a) Distributions per share were $0.150. Additional Total Common Stock P

Filing Documents

• lvpr210q063025.htm (10-Q) — 846KB
• lvpr2ex31-1.htm (EX-31.1) — 9KB
• lvpr2ex31-2.htm (EX-31.2) — 12KB
• lvpr2ex32-1.htm (EX-32.1) — 3KB
• lvpr2ex32-2.htm (EX-32.2) — 5KB
• 0001185185-25-000987.txt ( ) — 4359KB
• lvpr-20250630.xsd (EX-101.SCH) — 45KB
• lvpr-20250630_cal.xml (EX-101.CAL) — 28KB
• lvpr-20250630_def.xml (EX-101.DEF) — 176KB
• lvpr-20250630_lab.xml (EX-101.LAB) — 326KB
• lvpr-20250630_pre.xml (EX-101.PRE) — 191KB
• lvpr210q063025_htm.xml (XML) — 438KB

Financial Statements (unaudited)

Financial Statements (unaudited) 3 Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 3 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 4 Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024 5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Item 4.

Controls and Procedures

Controls and Procedures 33 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 34 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 34 Item 3. Defaults Upon Senior Securities 34 Item 4. Mine Safety Disclosures 34 Item 5. Other Information 34 Item 6. Exhibits 34 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION:

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS: LIGHTSTONE VALUE PLUS REIT II, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per share data and where indicated in millions) June 30, 2025 December 31, 2024 (unaudited) Assets Investment property: Land and improvements $ 26,180 $ 26,176 Building and improvements 145,115 146,459 Furniture and fixtures 29,084 29,278 Construction in progress 638 228 Gross investment property 201,017 202,141 Less accumulated depreciation ( 65,863 ) ( 64,318 ) Net investment property 135,154 137,823 Investments in unconsolidated affiliated entities 10,799 11,146 Cash and cash equivalents 27,369 27,139 Marketable securities, available for sale 5,820 10,209 Restricted cash 1,060 4,938 Accounts receivable and other assets 3,410 2,645 Total Assets $ 183,612 $ 193,900 Liabilities and Stockholders' Equity Accounts payable and other accrued expenses $ 7,809 $ 6,490 Mortgage payable, net 97,364 101,183 Distributions payable 1,201 1,209 Due to related party 357 362 Total liabilities 106,731 109,244 Commitments and contingencies Stockholders' Equity: Company's stockholders' equity: Preferred shares, $ 0.01 par value, 10.0 million shares authorized, none issued and outstanding - - Common stock, $ 0.01 par value, 100.0 million shares authorized, 16.0 million and 16.1 million shares issued and outstanding, respectively 159 160 Additional paid-in-capital 136,363 137,405 Accumulated deficit ( 70,498 ) ( 63,955 ) Total Company stockholders' equity 66,024 73,610 Noncontrolling interests 10,857 11,046 Total Stockholders' Equity 76,881 84,656 Total Liabilities and Stockholders' Equity $ 183,612 $ 193,900 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents LIGHTSTONE VALUE PLUS REIT II, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amoun

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share/unit data and where indicated in millions) (Unaudited) 1. Business and Structure Lightstone Value Plus REIT II, Inc. ("Lightstone REIT II"), is a Maryland corporation formed on April 28, 2008, which elected to qualify as a real estate investment trust ("REIT") for United States (the "U.S.") federal income tax purposes beginning with the taxable year ended December 31, 2009. Lightstone REIT II is structured as an umbrella partnership REIT, or UPREIT, and substantially all of its current and future business will be conducted through Lightstone Value Plus REIT II LP, a Delaware limited partnership (the "Operating Partnership"). As of June 30, 2025, Lightstone REIT II held an approximately 99 % general partnership interest in the Operating Partnership's common units. Lightstone REIT II and the Operating Partnership and its subsidiaries are collectively referred to as the "Company" and the use of "we," "our," "us" or similar pronouns in these consolidated financial statements refers to Lightstone REIT II, its Operating Partnership or the Company as required by the context in which such pronoun is used. Through the Operating Partnership, the Company owns and operates commercial properties and makes real estate-related investments. Since its inception, the Company has primarily acquired and operated commercial hospitality properties, principally consisting of limited-service-hotels all located in the U.S. Although the Company has historically acquired hotels, it has and may continue to purchase other types of real estate. Assets other than hotels may include, without limitation, office buildings, shopping centers, business and industrial parks, manufacturing facilities, single-tenant properties, multifamily residential properties, student housing properties, warehouses and distribution facilities and medical/life sciences office buildings. The Company's real estate investme

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share/unit data and where indicated in millions) (Unaudited) The Company has no employees. The Company is dependent on the Advisor and certain affiliates of the Sponsor for performing a full range of services that are essential to it, including asset management, property management (excluding our hospitality properties, which are managed by unrelated third-party property managers) and acquisition, disposition and financing activities, and other general administrative responsibilities, such as tax, accounting, legal, information technology and investor relations services. If the Advisor and certain affiliates of the Sponsor are unable to provide these services to the Company, it would be required to provide the services itself or obtain the services from other parties. The Company's Common Shares are not currently listed on a national securities exchange. The Company may seek to list its Common Shares for trading on a national securities exchange only if a majority of its independent directors believe listing them would be in the best interest of its stockholders. However, the Company does not intend to list its Common Shares at this time. The Company does not anticipate that there would be any active market for its Common Shares until they are listed for trading. Noncontrolling Interests – Partners of the Operating Partnership Limited Partner On May 20, 2008, the Advisor contributed $ 2 to the Operating Partnership in exchange for 200 Common Units in the Operating Partnership. The Advisor has the right to convert its Common Units into cash or, at the Company's option, an equal number of Common Shares. Associate General Partner In connection with the Company's Offerings, the Sponsor and LGH contributed (i) cash of $ 12.9 million and (ii) equity interests totaling 48.6 % in the Brownmill Joint Venture, which were valued at $ 4.8 million, respectively, to the Operating P

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share/unit data and where indicated in millions) (Unaudited) Other Noncontrolling Interests in Consolidated Subsidiaries Other noncontrolling interests consist of the (i) membership interest in the Hotel Joint Venture held by Lightstone REIT I and (ii) membership interests held by minority owners in one of the Company's limited-service hotels. Related Parties The Company's Sponsor, Advisor and their affiliates, including the Associate General Partner and LGH, are related parties of the Company as well as the other public REITs also sponsored and/or advised by these entities. Pursuant to the terms of various agreements, certain of these entities are entitled to compensation and reimbursement for services and costs incurred related to the investment, development, management and disposition of the Company's assets. The compensation is generally based on the cost of acquired properties/investments and the annual revenue earned from such properties/investments, and other such fees and expense reimbursements as outlined in each of the respective agreements. Current Environment The Company's 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, its business and financial performance may be adversely affected by current and future economic and other conditions; including, but not limited to, availability or terms of financings, financial markets volatility and banking failures, political upheaval or uncertainty, natural and man-made disasters, terrorism and acts of war, unfavorable changes in laws, ordinances and regulations, outbreaks of contagious diseases, cybercrime, technological advances and challenges, such as the use and impact of artificial intelligence and machine learning, loss of key relationships, inflation, tariffs

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share/unit data and where indicated in millions) (Unaudited) The consolidated balance sheet as of December 31, 2024 included herein has been derived from the consolidated balance sheet included in the Company's 2024 Form 10-K. The unaudited consolidated statements of operations for interim periods are not necessarily indicative of results for the full year or any other period. Tax Status and Income Taxes The Company elected to be taxed and qualify as a REIT commencing with the taxable year ended December 31, 2009. As a REIT, the Company generally will not be subject to U.S. federal income tax on its net taxable income that it distributes currently to its stockholders. To maintain its REIT qualification under the Internal Revenue Code of 1986, as amended, the Company must meet a number of organizational and operational requirements, including a requirement that it annually distribute to its stockholders at least 90% of its 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. If the Company fails to remain qualified for taxation as a REIT in any subsequent year and does not qualify for certain statutory relief provisions, its income for that year will be taxed at regular corporate rates, and it may be precluded

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