Lightstone REIT III's Losses Widen Amid Revenue Decline

TL;DR

**Lightstone REIT III is bleeding cash and shrinking its asset base; steer clear until they can reverse this negative trend.**

AI Summary

Lightstone Value Plus REIT III, Inc. reported a net loss of $324,000 for the three months ended June 30, 2025, a significant increase from the $75,000 net loss in the same period of 2024. For the six months ended June 30, 2025, the net loss widened to $3.362 million, up from $3.062 million in 2024. Revenues decreased to $7.939 million for the three months ended June 30, 2025, from $8.719 million in 2024, and to $14.074 million for the six months, down from $14.989 million. Total assets declined to $119.607 million as of June 30, 2025, from $121.952 million at December 31, 2024, primarily due to a decrease in net investment property from $91.927 million to $90.571 million and a reduction in cash and cash equivalents from $6.175 million to $5.282 million. The company's investments in unconsolidated affiliated real estate entities also decreased from $16.770 million to $15.682 million. Stockholders' equity decreased from $60.799 million to $56.791 million over the same period, driven by the accumulated deficit growing to $64.141 million. The company continues to operate eight wholly-owned limited-service hotels and holds unconsolidated interests in two other hotels, including the Williamsburg Moxy Hotel which opened in March 2023.

Why It Matters

Lightstone Value Plus REIT III's widening net losses and declining revenues signal potential challenges for investors, particularly given the unlisted nature of its common shares and the absence of an active market. The decrease in net investment property and cash could impact future distributions and the company's ability to pursue new opportunities or manage existing assets effectively. Employees and customers of the company's hospitality properties may face indirect impacts if financial pressures lead to operational adjustments. In a competitive real estate market, particularly for hospitality, these financial headwinds could make it harder for Lightstone REIT III to maintain its market position against more robustly capitalized competitors.

Risk Assessment

Risk Level: high — The company reported a net loss of $3.362 million for the six months ended June 30, 2025, a 9.8% increase from the $3.062 million loss in the prior year. Total assets decreased by $2.345 million from December 31, 2024, to June 30, 2025, indicating a shrinking asset base. Furthermore, cash and cash equivalents declined by $893,000 during the six-month period, reflecting negative cash flow from investing and financing activities.

Analyst Insight

Investors should exercise extreme caution and consider divesting any holdings in Lightstone Value Plus REIT III, Inc. The persistent and widening net losses, coupled with declining revenues and a shrinking asset base, suggest significant operational and financial challenges. Without a clear path to profitability or an active public market for its shares, liquidity and capital appreciation prospects are severely limited.

Financial Highlights

debt To Equity

1.10

revenue

$14.074M

operating Margin

-10.2%

total Assets

$119.607M

total Debt

$56.578M

net Income

-$3.362M

eps

-$0.26

gross Margin

27.6%

cash Position

$5.282M

revenue Growth

-5.9%

Revenue Breakdown

Key Numbers

• $3.362M — Net loss for six months ended June 30, 2025 (Increased from $3.062 million in the prior year, indicating widening losses.)
• $14.074M — Revenues for six months ended June 30, 2025 (Decreased from $14.989 million in the prior year, showing revenue decline.)
• $119.607M — Total Assets as of June 30, 2025 (Decreased from $121.952 million at December 31, 2024, reflecting asset reduction.)
• $5.282M — Cash and cash equivalents as of June 30, 2025 (Decreased from $6.175 million at December 31, 2024, indicating cash burn.)
• $56.791M — Total Stockholders' Equity as of June 30, 2025 (Decreased from $60.799 million at December 31, 2024, due to accumulated deficit.)
• 12.7 million — Outstanding shares of common stock as of August 7, 2025 (Reflects share count, including dividend reinvestment plan shares.)
• 99% — General partnership interest in the Operating Partnership (Lightstone REIT III's ownership stake in its primary operating entity.)
• 8 — Wholly-owned limited-service hotels (Number of hotels directly owned and consolidated by the company.)
• 2 — Unconsolidated affiliated real estate entities (Number of joint ventures in which the company holds equity interests.)
• $64.141M — Accumulated deficit as of June 30, 2025 (Increased from $60.779 million at December 31, 2024, highlighting ongoing losses.)

Key Players & Entities

• Lightstone Value Plus REIT III, Inc. (company) — Registrant and parent company
• Lightstone Value Plus REIT III LP (company) — Operating Partnership
• David Lichtenstein (person) — Majority owner of the Advisor and Sponsor, Chairman and CEO
• The Lightstone Group LLC (company) — Sponsor of the REIT
• Lightstone Value Plus REIT III LLC (company) — Advisor to the REIT
• LVP LIC Hotel JV LLC (company) — Unconsolidated affiliated real estate entity (Hilton Garden Inn Joint Venture)
• Bedford Avenue Holdings LLC (company) — Unconsolidated affiliated real estate entity (Williamsburg Moxy Hotel Joint Venture)
• Lightstone SLP III LLC (company) — Special Limited Partner in the Operating Partnership
• SEC (regulator) — Securities and Exchange Commission
• Maryland (regulator) — State of incorporation

FAQ

Risk Factors

• Widening Net Loss [high — financial]: The company reported a net loss of $3.362 million for the six months ended June 30, 2025, an increase from $3.062 million in the prior year. This widening loss trend indicates deteriorating profitability.
• Declining Asset Base [medium — financial]: Total assets decreased to $119.607 million as of June 30, 2025, from $121.952 million at December 31, 2024. This decline is primarily driven by reductions in net investment property and cash and cash equivalents.
• Decreasing Stockholders' Equity [high — financial]: Stockholders' equity fell to $56.791 million as of June 30, 2025, from $60.799 million at December 31, 2024. This decrease is largely attributable to an increasing accumulated deficit of $64.141 million.
• Hotel Industry Dependence [medium — operational]: The company's portfolio consists primarily of limited-service hotels, including eight wholly-owned properties and interests in two others. The performance of these assets is subject to the cyclical nature and specific risks of the hospitality sector.
• Reduced Cash Position [medium — financial]: Cash and cash equivalents decreased from $6.175 million at December 31, 2024, to $5.282 million as of June 30, 2025. This reduction in liquidity could impact the company's ability to fund operations or investments.

Industry Context

The company operates within the commercial hospitality sector, with a focus on limited-service hotels. This industry is sensitive to economic cycles, travel trends, and consumer spending. The recent opening of the Williamsburg Moxy Hotel indicates ongoing development and investment in new properties, while the overall portfolio performance is impacted by broader market conditions affecting occupancy rates and room rates.

Regulatory Implications

As a REIT, Lightstone Value Plus REIT III, Inc. must adhere to specific tax regulations to maintain its status, including distributing a significant portion of its taxable income to shareholders. Changes in real estate or tax laws could impact its operations and profitability. Compliance with environmental, zoning, and building codes is also critical for its hotel properties.

What Investors Should Do

1. Monitor revenue trends closely.
2. Analyze the drivers of the widening net loss.
3. Evaluate the company's asset disposition strategy.
4. Assess the sustainability of cash burn.

Key Dates

• 2025-06-30: Quarterly Financial Reporting — Reported a net loss of $324,000 and revenues of $7.939 million for the three months ended June 30, 2025, showing a worsening financial performance compared to the prior year.
• 2025-06-30: Balance Sheet Date — Total assets stood at $119.607 million, with stockholders' equity at $56.791 million, reflecting a decrease in both from year-end 2024.
• 2024-12-31: Previous Year-End Reporting — Total assets were $121.952 million and stockholders' equity was $60.799 million, providing a baseline for current period changes.
• 2023-03-01: Williamsburg Moxy Hotel Opening — This event marks a significant development in the company's investment portfolio, though its financial impact is not detailed in this 10-Q.

Glossary

REIT

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

UPREIT

Umbrella Partnership REIT. A structure where the REIT owns a controlling interest in a partnership that holds the real estate assets. (Lightstone REIT III operates under this structure, conducting business through its Operating Partnership.)

Accumulated Deficit

The cumulative net losses of a company that have not been offset by net income. (The company's accumulated deficit increased to $64.141 million as of June 30, 2025, contributing to the decline in stockholders' equity.)

Noncontrolling Interests

The portion of equity in a subsidiary that is not attributable to the parent company. (This represents a portion of the total equity not owned by Lightstone REIT III's common stockholders.)

Marketable Securities, Available for Sale

Investments in securities that are not classified as trading or held-to-maturity, and can be sold before maturity. (The company holds $5.979 million in these securities as of June 30, 2025.)

Year-Over-Year Comparison

Lightstone Value Plus REIT III, Inc. has experienced a bearish trend compared to the prior year. Revenues for the six months ended June 30, 2025, decreased by 5.9% to $14.074 million from $14.989 million in 2024. Concurrently, the net loss widened significantly to $3.362 million from $3.062 million. Total assets have also declined to $119.607 million from $121.952 million, and stockholders' equity has decreased to $56.791 million from $60.799 million, primarily due to an increasing accumulated deficit. These metrics collectively indicate a deteriorating financial condition.

Filing Documents

• lvvr310q063025.htm (10-Q) — 797KB
• lvvr3ex31-1.htm (EX-31.1) — 9KB
• lvvr3ex31-2.htm (EX-31.2) — 10KB
• lvvr3ex32-1.htm (EX-32.1) — 4KB
• lvvr3ex32-2.htm (EX-32.2) — 4KB
• 0001185185-25-000985.txt ( ) — 4717KB
• lvvr-20250630.xsd (EX-101.SCH) — 47KB
• lvvr-20250630_cal.xml (EX-101.CAL) — 34KB
• lvvr-20250630_def.xml (EX-101.DEF) — 197KB
• lvvr-20250630_lab.xml (EX-101.LAB) — 364KB
• lvvr-20250630_pre.xml (EX-101.PRE) — 212KB
• lvvr310q063025_htm.xml (XML) — 536KB

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 Comprehensive Loss for the Three and Six Months Ended June 30, 2025 and 2024 5 Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024 6 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 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 23 Item 4.

Controls and Procedures

Controls and Procedures 39 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40 Item 3. Defaults Upon Senior Securities 40 Item 4. Mine Safety Disclosures 40 Item 5. Other Information 40 Item 6. Exhibits 40

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION:

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS: LIGHTSTONE VALUE PLUS REIT III, 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 $ 21,763 $ 21,753 Building and improvements 92,879 92,803 Furniture and fixtures 17,190 17,083 Construction in progress 66 23 Gross investment property 131,898 131,662 Less: accumulated depreciation ( 41,327 ) ( 39,735 ) Net investment property 90,571 91,927 Investments in unconsolidated affiliated real estate entities 15,682 16,770 Cash and cash equivalents 5,282 6,175 Marketable securities, available for sale 5,979 5,858 Accounts receivable and other assets 2,093 1,222 Total Assets $ 119,607 $ 121,952 Liabilities and Stockholders' Equity Accounts payable and other accrued expenses $ 3,503 $ 2,476 Mortgages payable, net 56,578 56,674 Due to related parties 2,735 2,003 Total Liabilities 62,816 61,153 Commitments and Contingencies Stockholders' Equity: Company's stockholders' equity: Preferred stock, $ 0.01 par value; 50.0 million shares authorized, none issued and outstanding - - Common stock, $ 0.01 par value; 200.0 million shares authorized, 12.8 million shares issued and outstanding 127 128 Additional paid-in-capital 108,822 109,478 Accumulated other comprehensive loss ( 109 ) ( 120 ) Accumulated deficit ( 64,141 ) ( 60,779 ) Total Company stockholders' equity 44,699 48,707 Noncontrolling interests 12,092 12,092 Total Stockholders' Equity 56,791 60,799 Total Liabilities and Stockholders' Equity $ 119,607 $ 121,952 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents

FINANCIAL INFORMATION, CONTINUED

PART I. FINANCIAL INFORMATION, CONTINUED:

FINANCIAL STATEMENTS, CONTINUED

ITEM 1. FINANCIAL STATEMENTS, CONTINUED: LIGHTSTONE VALUE PLUS REIT III, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) (Unaudited) For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Revenues $ 7,939 $ 8,719 $ 14,074 $ 14,989 Expenses: Property operating expenses 5,253 5,318 10,156 9,997 Real estate taxes 333 340 668 704 General and administrative costs 707 823 1,461 1,496 Depreciation and amortization 795 828 1,625 1,662 Total expenses 7,088 7,309 13,910 13,859 Interest expense ( 1,187 ) ( 1,336 ) ( 2,363 ) ( 2,673 ) Earnings from investments in unconsolidated affiliated real estate entities 6 ( 253 ) ( 1,259 ) ( 1,754 ) Other income, net 6 104 96 235 Net loss ( 324 ) ( 75 ) ( 3,362 ) ( 3,062 ) Less: net loss attributable to noncontrolling interests - - - - Net loss applicable to Company's common shares $ ( 324 ) $ ( 75 ) $ ( 3,362 ) $ ( 3,062 ) Net loss per Company's common share, basic and diluted $ ( 0.03 ) $ ( 0.01 ) $ ( 0.26 ) $ ( 0.24 ) Weighted average number of common shares outstanding, basic and diluted 12,776 12,902 12,792 12,916 The accompanying notes are an integral part of these consolidated financial statements. 4 Table of Contents

FINANCIAL INFORMATION, CONTINUED

PART I. FINANCIAL INFORMATION, CONTINUED:

FINANCIAL STATEMENTS, CONTINUED

ITEM 1. FINANCIAL STATEMENTS, CONTINUED: LIGHTSTONE VALUE PLUS REIT III, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Amounts in thousands) (Unaudited) For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Net loss $ ( 324 ) $ ( 75 ) $ ( 3,362 ) $ ( 3,062 ) Other comprehensive income: Holding gain on marketable securities, available for sale 7 23 11 41 Comprehensive loss ( 317 ) ( 52 ) ( 3,351 ) ( 3,021 ) Less: Comprehensive loss attributable to noncontrolling interests - - - - Comprehensive loss attributable to the Company's common shares $ ( 317 ) $ ( 52 ) $ ( 3,351 ) $ ( 3,021 ) The accompanying notes are an integral part of these consolidated financial statements. 5 Table of Contents

FINANCIAL INFORMATION, CONTINUED

PART I. FINANCIAL INFORMATION, CONTINUED:

FINANCIAL STATEMENTS, CONTINUED

ITEM 1. FINANCIAL STATEMENTS, CONTINUED: LIGHTSTONE VALUE PLUS REIT III, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in thousands) (Unaudited) Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Total Noncontrolling Total Shares Amount Capital Loss Deficit Interests Equity BALANCE, March 31, 2024 12,930 $ 129 $ 110,439 $ ( 148 ) $ ( 58,531 ) $ 12,092 $ 63,981 Net loss - - - - ( 75 ) - ( 75 ) Other comprehensive income - - - 23 - 23 Redemption and cancellation of shares ( 33 ) - ( 320 ) - - - ( 320 ) BALANCE, June 30, 2024 12,897 $ 129 $ 110,119 $ ( 125 ) $ ( 58,606 ) $ 12,092 $ 63,609 Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Total Noncontrolling Total Shares Amount Capital Loss Deficit Interests Equity BALANCE, December 31, 2023 12,932 $ 129 $ 110,462 $ ( 166 ) $ ( 55,544 ) $ 12,092 $ 66,973 Net loss - - - - ( 3,062 ) - ( 3,062 ) Other comprehensive income - - - 41 - 41 Redemption and cancellation of shares ( 35 ) - ( 343 ) - - - ( 343 ) BALANCE, June 30, 2024 12,897 $ 129 $ 110,119 $ ( 125 ) $ ( 58,606 ) $ 12,092 $ 63,609 6 Table of Contents Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Total Noncontrolling Total Shares Amount Capital Loss Deficit Interests Equity BALANCE, March 31, 2025 12,801 $ 128 $ 109,158 $ ( 116 ) $ ( 63,817 ) $ 12,092 $ 57,445 Net loss - - - - ( 324 ) - ( 324 ) Other comprehensive income - - - 7 - - 7 Redemption and cancellation of shares ( 32 ) ( 1 ) ( 336 ) - - - ( 337 ) BALANCE, June 30, 2025 12,769 $ 127 $ 108,822 $ ( 109 ) $ ( 64,141 ) $ 12,092 $ 56,791 Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Total Noncontrolling Total Shares Amount Capital Loss Deficit Interests Equity BALA

FINANCIAL INFORMATION, CONTINUED

PART I. FINANCIAL INFORMATION, CONTINUED:

FINANCIAL STATEMENTS, CONTINUED

ITEM 1. FINANCIAL STATEMENTS, CONTINUED: LIGHTSTONE VALUE PLUS REIT III, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) For the Six Months Ended June 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 3,362 ) $ ( 3,062 ) Adjustments to reconcile net loss to net cash provided by/(used in) operating activities: Loss from investments in unconsolidated affiliated real estate entities 1,259 1,754 Depreciation and amortization 1,625 1,662 Amortization of deferred financing costs 136 148 Other non-cash adjustments 6 63 Changes in assets and liabilities: Increase in accounts receivable and other assets ( 918 ) ( 2,357 ) Increase in accounts payable and other accrued expenses 1,026 1,051 Increase in due to related parties 732 721 Net cash provided by/(used in) operating activities 504 ( 20 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investment property ( 236 ) ( 204 ) Purchase of marketable securities ( 102 ) ( 96 ) Proceeds from sale of marketable securities - 2,030 Distributions from unconsolidated affiliated real estate entities - 627 Investments in unconsolidated affiliated real estate entities ( 170 ) ( 197 ) Net cash (used in)/provided by investing activities ( 508 ) 2,160 CASH FLOWS FROM FINANCING ACTIVITIES: Payments on mortgages payable ( 232 ) ( 144 ) Distributions to common stockholders - ( 970 ) Redemption and cancellation of common shares ( 657 ) ( 343 ) Net cash used in financing activities ( 889 ) ( 1,457 ) Change in cash and cash equivalents ( 893 ) 683 Cash and cash equivalents, beginning of year 6,175 3,853 Cash and cash equivalents, end of period $ 5,282 $ 4,536 Supplemental cash flow information for the periods indicated is as follows: Cash paid for interest $ 2,253 $ 2,545 The accompanying notes are an integral part of these consolidated financial statements. 8 Tab

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 III, Inc. ("Lightstone REIT III") is a Maryland corporation, formed on October 5, 2012, 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, 2015. Lightstone REIT III 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 III LP, a Delaware limited partnership (the "Operating Partnership"). As of June 30, 2025, Lightstone REIT III had a 99 % general partnership interest in the Operating Partnership's common units. Lightstone REIT III 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 III, its Operating Partnership or the Company as required by the context in which such pronoun is used. Through the Operating Partnership, the Company owns, operates and develops commercial properties and makes real estate-related investments. Since its inception, the Company has primarily acquired, developed and operated commercial hospitality properties, principally consisting of limited-service hotels and one full-service hotel 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 buildi

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's advisor is Lightstone Value Plus REIT III LLC (the "Advisor"), which is majority owned by David Lichtenstein. On July 16, 2014, the Advisor contributed $ 2 to the Operating Partnership in exchange for 200 limited partner units ("Common Units") in the Operating Partnership. The Advisor also owns 20,000 shares of our common stock ("Common Shares") which were issued on December 24, 2012 for $ 200 , or $ 10.00 per share. Mr. Lichtenstein also is a majority owner of the equity interests of the Sponsor, which served as the Company's sponsor during its initial public offering (the "Offering") which terminated on March 31, 2017. Mr. Lichtenstein owns 222,222 Common Shares which were issued on December 11, 2014 for $ 2.0 million, or $ 9.00 per share. Pursuant to the terms of an advisory agreement and subject to the oversight of the Company's board of directors (the "Board of Directors"), the Advisor has primary responsibility for making investment decisions on behalf of the Company and managing its day-to-day operations. Through his ownership and control of the Sponsor, Mr. Lichtenstein is the indirect owner and manager of Lightstone SLP III LLC, a Delaware limited liability company (the "Special Limited Partner"), which owns 242 subordinated participation interests ("Subordinated Participation Interests") in the Operating Partnership which were acquired at a cost of $ 50,000 per unit, or an aggregate consideration of $ 12.1 million in connection with the Offering. Mr. Lichtenstein also acts as the Company's Chairman and Chief Executive Officer. As a result, he exerts influence over but does not control Lightstone REIT III or the Operating Partnership. 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 essent

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) Related Parties The Company's Advisor and certain affiliates of the Sponsor, including the Special Limited Partner, 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, these entities are entitled to compensation and reimbursement for services and costs incurred for services 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. See Note 7 – Related Party Transactions for additional information. 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 and recession. The Company's 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

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) Income Taxes The Company elected to be taxed and qualify as a REIT commencing with the taxable year ended December 31, 2015. 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, or the Code, 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 from qualifying for treatment as a REIT for the four-year period following its failure to qualify as a REIT. Such an event could materially adversely affect the Company's net income and net cash available for distribution to stockholders. Additionally, even if the Company continues to qualify as a REIT for U.S. federal income tax purposes, it may still be subject to some U.S. federal, state and local taxes on its income and property and to U.S. federal income taxes and excise taxes on its undistributed income, if any. To maintain its qualification as a REIT, the Company engages in certain activities through a taxable REIT subsidiary ("TRS"), including when it acquires a hotel it usually establishes a new TRS and enters into an operating lease agreement for the hotel. As such, the Company is subject to U.S. federal and state income taxes and franchi

View Full Filing

View this 10-Q filing on SEC EDGAR