Lightstone REIT Swings to Profit on Asset Sales, No Impairment Hit

TL;DR

**Lightstone REIT is cleaning house, selling off assets to boost cash and turn a profit, but long-term growth remains a question mark.**

AI Summary

Lightstone Value Plus REIT I, Inc. reported a significant turnaround in net income for the three months ended September 30, 2025, achieving a net income of $2.596 million compared to a net loss of $31.941 million in the same period of 2024. This improvement was primarily driven by the absence of a $34.353 million impairment charge recorded in 2024 and a substantial unrealized gain on marketable equity securities of $5.627 million in 2025. For the nine months ended September 30, 2025, the company still posted a net loss of $7.418 million, a considerable improvement from the $29.649 million net loss in 2024. Total revenues increased slightly to $16.432 million for the three-month period in 2025, up from $15.677 million in 2024, with hotel revenues rising to $13.609 million from $13.084 million. The company's total assets decreased from $447.477 million as of December 31, 2024, to $387.311 million as of September 30, 2025, largely due to the reclassification of $80.592 million in assets held for sale in 2024 to other categories or dispositions in 2025. Cash and cash equivalents significantly increased to $73.228 million from $27.819 million over the same period, bolstered by $76.693 million in proceeds from the disposition of real estate. Mortgages payable, net, saw a slight reduction from $221.252 million to $218.771 million.

Why It Matters

This filing reveals Lightstone Value Plus REIT I, Inc.'s strategic shift, moving from significant losses to profitability in the latest quarter, largely by divesting assets and avoiding prior impairment charges. For investors, the substantial increase in cash and cash equivalents to $73.228 million from $27.819 million, driven by $76.693 million in real estate dispositions, indicates a focus on liquidity and potentially deleveraging. The competitive landscape for REITs remains challenging, but Lightstone's ability to generate positive net income in Q3 2025, even with a year-to-date loss, suggests a more stable operational footing compared to the previous year. Employees and customers of their properties, particularly the Lower East Side Moxy Hotel and Gantry Park Landing, will likely see continued stable operations as the company focuses on its core assets.

Risk Assessment

Risk Level: medium — The company's total assets decreased by $60.166 million from $447.477 million to $387.311 million, partly due to the disposition of real estate, which generated $76.693 million in proceeds. While this boosted cash, the significant reduction in total assets and the continued nine-month net loss of $7.418 million, despite the quarterly profit, indicate ongoing challenges in sustained profitability and asset base growth.

Analyst Insight

Investors should monitor Lightstone Value Plus REIT I, Inc.'s future asset acquisition and development strategies, as the current quarter's profitability is heavily influenced by asset sales and the absence of prior impairment charges. A deeper dive into the use of the increased cash and cash equivalents, particularly for debt reduction or new investments, will be crucial for assessing long-term value. The lack of a listed ticker also implies limited liquidity and transparency for potential investors.

Financial Highlights

debt To Equity

1.47

revenue

$16.432M

operating Margin

14.7%

total Assets

$387.311M

total Debt

$218.771M

net Income

$2.596M

eps

$0.12

gross Margin

14.7%

cash Position

$73.228M

revenue Growth

+4.82%

Revenue Breakdown

Key Numbers

• $2.596M — Net income for Q3 2025 (Significant turnaround from a $31.941 million net loss in Q3 2024)
• $7.418M — Net loss for YTD Q3 2025 (Improved from a $29.649 million net loss in YTD Q3 2024)
• $34.353M — Impairment charge in Q3 2024 (Absence of this charge was a key factor in 2025's improved net income)
• $73.228M — Cash and cash equivalents as of Sep 30, 2025 (Increased from $27.819 million as of Dec 31, 2024)
• $76.693M — Proceeds from disposition of real estate YTD Q3 2025 (Major contributor to increased cash flow)
• $387.311M — Total Assets as of Sep 30, 2025 (Decreased from $447.477 million as of Dec 31, 2024)
• $16.432M — Total revenues for Q3 2025 (Slight increase from $15.677 million in Q3 2024)
• $13.609M — Hotel revenues for Q3 2025 (Increased from $13.084 million in Q3 2024)
• $218.771M — Mortgages payable, net as of Sep 30, 2025 (Slightly reduced from $221.252 million as of Dec 31, 2024)
• 20.9M — Outstanding shares of common stock as of Nov 7, 2025 (Reflects share redemptions and cancellations)

Key Players & Entities

• Lightstone Value Plus REIT I, Inc. (company) — Registrant and primary entity in the filing
• Lightstone Value Plus REIT, L.P. (company) — Operating Partnership through which business is conducted
• David Lichtenstein (person) — Majority owner of the Advisor and Sponsor, Chairman and CEO
• Lightstone Value Plus REIT, LLC (company) — The Advisor to Lightstone REIT I
• The Lightstone Group, LLC (company) — The Sponsor of Lightstone REIT I
• Lower East Side Moxy Hotel (company) — Wholly owned 303-room Marriott branded hotel
• Gantry Park Landing (company) — 199-unit luxury, multifamily residential property owned through 2nd Street Joint Venture
• Marriott International, Inc. (company) — Brand of the Moxy hotel
• SEC (regulator) — Securities and Exchange Commission
• Maryland (regulator) — State of incorporation for Lightstone REIT I

FAQ

Risk Factors

• Asset Impairment and Valuation [medium — financial]: The company recorded a significant impairment charge of $34.353 million in Q3 2024. While absent in Q3 2025, the potential for future impairments exists, impacting net income and asset values. The decrease in total assets from $447.477 million to $387.311 million, partly due to assets held for sale, highlights valuation sensitivities.
• Dependence on Real Estate Dispositions [medium — financial]: The substantial increase in cash to $73.228 million was bolstered by $76.693 million in proceeds from real estate dispositions in the nine months of 2025. Over-reliance on asset sales for liquidity could be unsustainable if market conditions for sales deteriorate.
• Marketable Securities Volatility [low — market]: The company recognized a $5.627 million unrealized gain on marketable equity securities in Q3 2025, a significant positive swing from prior periods. However, these gains are subject to market fluctuations, posing a risk to earnings volatility.
• Leverage and Debt Service [medium — financial]: Mortgages payable remain substantial at $218.771 million as of September 30, 2025. While slightly reduced, the company's ability to service this debt is crucial, especially given the interest expense of $4.975 million in Q3 2025.
• Hotel Revenue Performance [low — operational]: Hotel revenues increased slightly to $13.609 million in Q3 2025. However, hotel operating expenses were $8.955 million, indicating that profitability in this segment is sensitive to operational efficiency and market demand.

Industry Context

The real estate investment trust (REIT) sector, particularly those focused on hospitality and diversified portfolios, is sensitive to economic cycles, interest rate changes, and consumer spending. The hotel segment, a key revenue driver for Lightstone Value Plus REIT I, Inc., is directly impacted by travel trends and occupancy rates. Diversification across property types can mitigate some risks, but overall market sentiment and capital availability heavily influence REIT performance.

Regulatory Implications

REITs are subject to specific tax regulations and reporting requirements. Changes in tax laws or accounting standards could impact profitability and operational strategies. Compliance with SEC filings and disclosure rules is paramount, and any misstatements or omissions can lead to regulatory scrutiny and penalties.

What Investors Should Do

1. Monitor the sustainability of the improved net income.
2. Analyze the impact of real estate dispositions on future liquidity and growth.
3. Assess the risk associated with marketable securities.
4. Evaluate the debt structure and interest rate sensitivity.

Key Dates

• 2025-09-30: End of Q3 2025 — Reported net income of $2.596 million, a significant improvement from the prior year's loss, driven by the absence of impairment charges and unrealized gains on securities.
• 2024-09-30: End of Q3 2024 — Recorded a net loss of $31.941 million, heavily impacted by a $34.353 million impairment charge.
• 2025-12-31: End of Fiscal Year 2024 — Total assets were $447.477 million, with $80.592 million classified as assets held for sale.
• 2025-11-07: Date of Outstanding Shares Disclosure — 20.9 million shares of common stock were outstanding, reflecting share redemptions and cancellations.

Glossary

Impairment charge

A reduction in the carrying value of an asset when its recoverable amount falls below its book value. This reflects a loss in value. (The absence of a $34.353 million impairment charge in Q3 2025 was a primary driver of the reported net income improvement compared to Q3 2024.)

Unrealized gain on marketable equity securities

A profit on the sale of securities that has not yet been realized because the securities have not been sold. It represents an increase in the market value of the investment. (A $5.627 million unrealized gain in Q3 2025 significantly boosted net income, highlighting the impact of market fluctuations on the company's results.)

Assets held for sale

Assets that are classified as held for sale and are available for immediate sale in their present condition and meet specific criteria, such as management commitment to a plan to sell. (The reclassification and disposition of $80.592 million in assets held for sale in 2024 contributed to the decrease in total assets by September 30, 2025.)

Net investment property

The value of real estate properties owned by the company, net of accumulated depreciation. (This represents a core asset class for the REIT, with a net value of $248.216 million as of September 30, 2025.)

Noncontrolling interests

The portion of equity in a subsidiary that is not attributable to the parent company. It represents the ownership interest of outside shareholders. (Changes in noncontrolling interests impact the consolidated net income and equity, as seen in the adjustments for net income/loss attributable to noncontrolling interests.)

Year-Over-Year Comparison

Compared to the prior year's third quarter, Lightstone Value Plus REIT I, Inc. has demonstrated a remarkable financial recovery, swinging from a net loss of $31.941 million to a net income of $2.596 million. This improvement is largely attributed to the absence of a significant $34.353 million impairment charge in the current period and a substantial $5.627 million unrealized gain on marketable equity securities. While total revenues saw a modest increase to $16.432 million, the company's asset base has contracted, with total assets decreasing from $447.477 million to $387.311 million, partly due to the disposition of assets previously held for sale.

Filing Documents

• lvvr110q093025.htm (10-Q) — 1026KB
• lvvr1ex31-1.htm (EX-31.1) — 9KB
• lvvr1ex31-2.htm (EX-31.2) — 9KB
• lvvr1ex32-1.htm (EX-32.1) — 3KB
• lvvr1ex32-2.htm (EX-32.2) — 3KB
• 0001185185-25-001723.txt ( ) — 5787KB
• lvp-20250930.xsd (EX-101.SCH) — 56KB
• lvp-20250930_cal.xml (EX-101.CAL) — 44KB
• lvp-20250930_def.xml (EX-101.DEF) — 238KB
• lvp-20250930_lab.xml (EX-101.LAB) — 442KB
• lvp-20250930_pre.xml (EX-101.PRE) — 253KB
• lvvr110q093025_htm.xml (XML) — 719KB

Financial Statements (unaudited)

Financial Statements (unaudited) Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 3 Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 4 Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2025 and 2024 5 Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2025 and 2024 6 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 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 25 Item 4.

Controls and Procedures

Controls and Procedures 42 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 43 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 43 Item 3. Defaults Upon Senior Securities 43 Item 4. Mine Safety Disclosures 43 Item 5. Other Information 43 Item 6. Exhibits 43 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION:

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS: LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per share data and where indicated in millions) As of September 30, 2025 As of December 31, 2024 (unaudited) Assets Investment property: Land and improvements $ 91,178 $ 91,177 Building and improvements 173,645 173,283 Furniture and fixtures 18,254 17,861 Construction in progress 97 133 Gross investment property 283,174 282,454 Less: accumulated depreciation ( 34,958 ) ( 29,631 ) Net investment property 248,216 252,823 Development project - 19,000 Investment in related party joint venture 402 430 Investment in unconsolidated affiliated entity 12,095 14,778 Cash and cash equivalents 73,228 27,819 Marketable securities 43,176 40,180 Restricted cash 6,319 7,300 Other assets 3,875 4,555 Assets held for sale - 80,592 Total Assets $ 387,311 $ 447,477 Liabilities and Stockholders' Equity Mortgages payable, net $ 218,771 $ 221,252 Accounts payable, accrued expenses and other liabilities 11,841 15,718 Liabilities associated with assets held for sale - 42,188 Total Liabilities 230,612 279,158 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; 60.0 million shares authorized, 21.0 million and 21.3 million shares issued and outstanding, respectively 210 212 Additional paid-in-capital 154,481 157,178 Accumulated other comprehensive income 53 - Accumulated surplus 1,853 9,449 Total Company's stockholders' equity 156,597 166,839 - - Noncontrolling interests 102 1,480 Total Stockholders' Equity 156,699 168,319 Total Liabilities and Stockholders' Equity $ 387,311 $ 447,477 The accompanying notes are an integral part of these consolidated fin

FINANCIAL INFORMATION, CONTINUED

PART I. FINANCIAL INFORMATION, CONTINUED:

FINANCIAL STATEMENTS, CONTINUED

ITEM 1. FINANCIAL STATEMENTS, CONTINUED: LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) (Unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 Revenues: Rental revenues $ 2,823 $ 2,593 $ 8,559 $ 7,916 Hotel revenues 13,609 13,084 37,520 37,444 Total revenues 16,432 15,677 46,079 45,360 Expenses: Property operating expenses 707 846 2,288 2,306 Hotel operating expenses 8,955 8,825 25,750 26,613 Real estate taxes 928 839 2,576 2,217 General and administrative costs 1,684 941 3,728 2,917 Impairment charge - 34,353 - 34,353 Depreciation and amortization 1,791 1,755 5,336 5,260 Total expenses 14,065 47,559 39,678 73,666 Interest and dividend income 937 673 2,292 1,771 Interest expense ( 4,975 ) ( 6,385 ) ( 18,104 ) ( 19,217 ) Gain on debt extinguishment - - 1,929 - (Loss)/gain on disposition of real estate ( 441 ) 2,749 ( 441 ) 13,601 Loss on sale of marketable securities - - ( 108 ) - Mark to market adjustments on derivative financial instruments - ( 25 ) ( 16 ) ( 62 ) Unrealized gain on marketable equity securities 5,627 3,761 3,334 5,824 Loss from investment in unconsolidated affiliated real estate entity ( 891 ) ( 945 ) ( 2,701 ) ( 2,718 ) Other (expense)/income, net ( 28 ) 113 ( 4 ) ( 542 ) Net income/(loss) 2,596 ( 31,941 ) ( 7,418 ) ( 29,649 ) Less: net (income)/loss attributable to noncontrolling interests ( 109 ) 9,353 ( 178 ) 9,304 Net income/(loss) attributable to Company's common shares $ 2,487 $ ( 22,588 ) $ ( 7,596 ) $ ( 20,345 ) Net income/(loss) per Company's common share, basic and diluted $ 0.12 $ ( 1.06 ) $ ( 0.36 ) $ ( 0.95 ) Weighted average number of common shares outstanding, basic and diluted 21,036 21,358 21,116 21,438 The accompanying n

FINANCIAL INFORMATION, CONTINUED

PART I. FINANCIAL INFORMATION, CONTINUED:

FINANCIAL STATEMENTS, CONTINUED

ITEM 1. FINANCIAL STATEMENTS, CONTINUED: LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in thousands) (Unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 Net income/(loss) $ 2,596 $ ( 31,941 ) $ ( 7,418 ) $ ( 29,649 ) Other comprehensive income: Holding gain on available for sale debt securities 35 - 53 - Other comprehensive income: 35 - 53 - Comprehensive income/(loss) 2,631 ( 31,941 ) ( 7,365 ) ( 29,649 ) Less: Comprehensive (income)/loss attributable to noncontrolling interests ( 110 ) 9,353 ( 180 ) 9,304 Comprehensive income/(loss) attributable to the Company's common shares $ 2,521 $ ( 22,588 ) $ ( 7,545 ) $ ( 20,345 ) 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 I, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in thousands) (Unaudited) Common Stock Additional Paid-In Accumulated Noncontrolling Total Stockholders' Shares Amount Capital Surplus Interests Equity BALANCE, June 30, 2024 21,418 $ 213 $ 159,228 $ 27,697 $ 12,317 $ 199,455 Net loss - - - ( 22,588 ) ( 9,353 ) ( 31,941 ) Distributions paid to noncontrolling interests - - - - ( 18 ) ( 18 ) Redemption and cancellation of common shares ( 81 ) - ( 951 ) - - ( 951 ) BALANCE, September30, 2024 21,337 $ 213 $ 158,277 $ 5,109 $ 2,946 $ 166,545 Common Stock Additional Paid-In Accumulated Noncontrolling Total Stockholders' Shares Amount Capital Surplus Interests Equity BALANCE, December 31, 2023 21,581 $ 215 $ 161,174 $ 25,454 $ 11,558 $ 198,401 Net loss - - - ( 20,345 ) ( 9,304 ) ( 29,649 ) Distributions paid to noncontrolling interests - - - - ( 53 ) ( 53 ) Contributions received from noncontrolling interests - - - - 745 745 Redemption and cancellation of common shares ( 244 ) ( 2 ) ( 2,897 ) - - ( 2,899 ) BALANCE, September 30, 2024 21,337 $ 213 $ 158,277 $ 5,109 $ 2,946 $ 166,545 Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Noncontrolling Total Stockholders' Shares Amount Capital Income Surplus Interests Equity BALANCE, June 30, 2025 21,096 $ 210 $ 155,357 $ 19 $ ( 634 ) $ 127 $ 155,079 Net income - - - - 2,487 109 2,596 Other comprehensive income - - - 34 - 1 35 Distributions paid to noncontrolling interests - - - - - ( 135 ) ( 135 ) Redemption and cancellation of common shares ( 80 ) - ( 876 ) - - - ( 876 ) BALANCE, September 30, 2025 2

FINANCIAL INFORMATION, CONTINUED

PART I. FINANCIAL INFORMATION, CONTINUED:

FINANCIAL STATEMENTS, CONTINUED

ITEM 1. FINANCIAL STATEMENTS, CONTINUED: LIGHTSTONE VALUE PLUS REIT I, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) For the Nine Months Ended September 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 7,418 ) $ ( 29,649 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 5,336 5,260 Loss/(gain) on disposition of real estate 441 ( 13,601 ) Gain on debt extinguishment ( 1,929 ) - Impairment charge - 34,353 Loss from investment in unconsolidated affiliated real estate entity 2,701 2,718 Mark to market adjustments on derivative financial instruments 16 62 Unrealized gain on marketable equity securities ( 3,334 ) ( 5,824 ) Loss on sale of marketable securities 108 - Amortization of deferred financing costs 1,576 1,866 Other non-cash adjustments 13 14 Changes in assets and liabilities: Decrease in other assets 704 640 (Decrease)/increase in accounts payable, accrued expenses and other liabilities ( 2,460 ) 1,232 Net cash used in operating activities ( 4,246 ) ( 2,929 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of development property and investment property ( 685 ) ( 1,458 ) Purchase of marketable securities ( 2,215 ) ( 187 ) Proceeds from sale of marketable securities 2,500 187 Proceeds from disposition of real estate 76,693 17,529 Investment in related party joint venture ( 7 ) ( 9 ) Distributions from related party joint venture 35 52 Investment in unconsolidated affiliated real estate entity ( 18 ) ( 10 ) Net cash provided by investing activities 76,303 16,104 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from mortgage financing 83,484 3,036 Mortgage principal payments ( 105,610 ) ( 1,124 ) Proceeds from notes payable - 3,000 Payment of loan fees a

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) (Dollar amounts in thousands, except per share/unit data and where indicated in millions) 1. Business and Structure Lightstone Value Plus REIT I, Inc., is a Maryland corporation ("Lightstone REIT I"), formed on June 8, 2004, which has elected to be taxed and qualify as a real estate investment trust ("REIT") for United States ("U.S.") federal income tax purposes. Lightstone REIT I was formed primarily for the purpose of engaging in the business of investing in and owning commercial and multifamily residential real estate properties and making other real estate-related investments located throughout the U.S. Lightstone REIT I is structured as an umbrella partnership REIT, or UPREIT, and substantially all of its current and future business is and will be conducted through Lightstone Value Plus REIT, L.P. (the "Operating Partnership"), a Delaware limited partnership formed on July 12, 2004. As of September 30, 2025, Lightstone REIT I held a 98 % general partnership interest in the Operating Partnership's common units ("Common Units"). Lightstone REIT I, together with the Operating Partnership and its subsidiaries are collectively referred to as the "Company" and the use of "we," "our," "us" or similar pronouns refers to Lightstone REIT I, its Operating Partnership or the Company as required by the context in which such pronoun is used. Through its Operating Partnership, the Company owns, operates and develops commercial and multifamily residential properties and makes other real estate-related investments, principally in the U.S. The Company's real estate investments are held by it alone or jointly with other parties. The Company also originates or acquires mortgage loans secured by real estate. Although most of its investments are of these types, the Company may invest in whatever types of real estate or real estate-related investments that it believes is in its best interests. Since its inception, the Co

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) (Dollar amounts in thousands, except per share/unit data and where indicated in millions) The Company has no employees. The Company is dependent on the Advisor and certain affiliates of its Sponsor for performing a full range of services that are essential to it, including asset management, property management (excluding its hospitality property, which is managed by unrelated third-party property managers) and acquisition, disposition and financing activities, and other general administrative responsibilities; such as tax, accounting, legal, information technology and investor relations services. If the Advisor and certain affiliates of the Company's Sponsor are unable to provide these services to it, the Company 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 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. Related Parties The Company's Sponsor, Advisor and their affiliates, including Lightstone SLP, LLC, are related parties of the Company as well as 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 of costs incurred for services related to the investment, 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

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) (Dollar amounts in thousands, except per share/unit data and where indicated in millions) 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, tariffs, higher interest rates, labor and supply chain challenges and other changes in economic conditions could adversely affect the Company's future results from operations and its financial condition. 2. Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Lightstone REIT I and its Operating Partnership and its subsidiaries (over which Lightstone REIT I exercises financial and operating control). All inter-company balances and transactions have been eliminated in consolidation. In addition, interests in entities acquired are evaluated based on applicable accounting principles generally accepted in the U.S. ("GAAP"), and if deemed to be variable interest entities ("VIE") in which the Company is the primary beneficiary are also consolidated. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation based on legal form, economic substance, and the extent to which the Company has control, substantive participating rights or both under the respective ownership agreement. For entities in which the Company has less than a controlling interest but has significant influence, the Company accounts for the investment using the equity method of accounting. There are judgments and estimates involved in determining if an entity in which the Company has made an investment is a VIE and, if so, whether the Company is the primary beneficiary. The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage of equity being risked compa

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