Lightstone REIT III Narrows Losses Amid Revenue Dip

TL;DR

**Lightstone REIT III's Q3 profit is a mirage; declining revenues and assets signal continued struggles in a tough real estate market.**

AI Summary

Lightstone Value Plus REIT III, Inc. reported a net income of $32 thousand for the three months ended September 30, 2025, a significant improvement from a net loss of $444 thousand in the same period of 2024. However, for the nine months ended September 30, 2025, the company still posted a net loss of $3.33 million, though this was an improvement from a $3.51 million net loss in the prior year. Revenues decreased to $8.00 million for the three-month period in 2025 from $8.38 million in 2024, and for the nine-month period, revenues fell to $22.08 million from $23.37 million. Total assets declined to $119.01 million as of September 30, 2025, from $121.95 million at December 31, 2024, primarily due to a decrease in net investment property from $91.93 million to $89.91 million and a reduction in cash and cash equivalents from $6.18 million to $5.17 million. The company's total stockholders' equity also decreased to $56.49 million from $60.80 million over the same period, largely due to an accumulated deficit of $64.11 million. Cash provided by operating activities decreased substantially to $989 thousand for the nine months ended September 30, 2025, from $3.11 million in the prior year, while cash used in financing activities was $1.34 million, including $992 thousand for redemption and cancellation of common shares.

Why It Matters

For investors, Lightstone Value Plus REIT III's ability to turn a profit in Q3 2025, albeit small, signals a potential turning point after sustained losses, despite a continued decline in overall revenue and asset value. The reduction in cash from operating activities and ongoing share redemptions suggest liquidity management and shareholder returns remain key considerations. The company's reliance on an external advisor, Lightstone Value Plus REIT III LLC, and its affiliates, including The Lightstone Group LLC, creates a complex competitive landscape where related-party transactions and potential conflicts of interest could influence performance and investor confidence. The broader market context of rising interest rates and inflation continues to pose headwinds for real estate investment trusts, impacting property valuations and financing costs.

Risk Assessment

Risk Level: medium — The company reported a net loss of $3.33 million for the nine months ended September 30, 2025, and a decrease in total assets from $121.95 million to $119.01 million since December 31, 2024. Furthermore, cash provided by operating activities significantly dropped from $3.11 million in 2024 to $989 thousand in 2025, indicating reduced operational cash generation.

Analyst Insight

Investors should exercise caution and closely monitor Lightstone REIT III's future revenue trends and cash flow generation. Given the declining asset base and continued nine-month losses, a 'wait and see' approach is advisable before considering any new investment.

Financial Highlights

debt To Equity

N/A

revenue

$22.08 million

operating Margin

N/A

total Assets

$119.01 million

total Debt

N/A

net Income

$32 thousand

eps

N/A

gross Margin

N/A

cash Position

$5.17 million

revenue Growth

-5.4%

Key Numbers

• $32 thousand — Net income (For the three months ended September 30, 2025, improved from a $444 thousand net loss in 2024.)
• $3.33 million — Net loss (For the nine months ended September 30, 2025, an improvement from a $3.51 million net loss in 2024.)
• $8.00 million — Revenues (For the three months ended September 30, 2025, a decrease from $8.38 million in 2024.)
• $22.08 million — Revenues (For the nine months ended September 30, 2025, a decrease from $23.37 million in 2024.)
• $119.01 million — Total Assets (As of September 30, 2025, a decrease from $121.95 million at December 31, 2024.)
• $89.91 million — Net investment property (As of September 30, 2025, a decrease from $91.93 million at December 31, 2024.)
• $5.17 million — Cash and cash equivalents (As of September 30, 2025, a decrease from $6.18 million at December 31, 2024.)
• $56.49 million — Total Stockholders' Equity (As of September 30, 2025, a decrease from $60.80 million at December 31, 2024.)
• $989 thousand — Net cash provided by operating activities (For the nine months ended September 30, 2025, a decrease from $3.11 million in 2024.)
• $992 thousand — Redemption and cancellation of common shares (Cash used in financing activities for the nine months ended September 30, 2025.)

Key Players & Entities

• Lightstone Value Plus REIT III, Inc. (company) — Registrant and primary entity
• Lightstone Value Plus REIT III LP (company) — Operating Partnership
• 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 Value Plus REIT II, Inc. (company) — Related party REIT in Hilton Garden Inn Joint Venture
• Lightstone Value Plus REIT IV, Inc. (company) — Related party REIT in Williamsburg Moxy Hotel Joint Venture
• The Lightstone Group LLC (company) — Sponsor of the Company
• Lightstone Value Plus REIT III LLC (company) — Company's Advisor
• David Lichtenstein (person) — Majority owner of Advisor, Sponsor, and Chairman/CEO of the Company
• Lightstone SLP III LLC (company) — Special Limited Partner

FAQ

Risk Factors

• Economic and Geopolitical Volatility [high — market]: The company's operating results are substantially impacted by global economies. Worsening economic conditions, inflation, higher interest rates, and labor/supply chain challenges could adversely affect future results. For the nine months ended September 30, 2025, revenues decreased to $22.08 million from $23.37 million in the prior year, reflecting these pressures.
• Decreasing Asset Value and Cash Position [medium — financial]: Total assets declined to $119.01 million as of September 30, 2025, from $121.95 million at December 31, 2024. This was driven by a decrease in net investment property to $89.91 million and a reduction in cash and cash equivalents to $5.17 million.
• Declining Operating Cash Flow [high — financial]: Cash provided by operating activities decreased substantially to $989 thousand for the nine months ended September 30, 2025, from $3.11 million in the prior year, indicating reduced cash generation from core operations.
• Stockholder Equity Reduction [medium — financial]: Total stockholders' equity decreased to $56.49 million from $60.80 million over the same period, largely due to an accumulated deficit of $64.11 million.
• Dependence on Advisor [medium — operational]: The company has no employees and relies entirely on its Advisor, Lightstone Value Plus REIT III LLC, for essential services including asset management, property management, and administrative functions. Any inability of the Advisor to provide these services would require the company to seek external solutions.
• REIT Qualification Requirements [high — regulatory]: Failure to maintain REIT qualification could result in corporate income tax, materially adversely affecting net income and cash available for distribution. The company must distribute at least 90% of its REIT taxable income annually.
• Unlisted Common Shares [low — market]: The company's Common Shares are not currently listed on a national securities exchange, and there is no intention to list them at this time. This limits liquidity and potentially the marketability for investors.
• Share Redemptions [low — financial]: Cash used in financing activities was $1.34 million for the nine months ended September 30, 2025, which included $992 thousand for the redemption and cancellation of common shares, impacting cash availability.

Industry Context

The commercial hospitality sector, where Lightstone REIT III primarily operates, is sensitive to economic cycles, consumer spending, and travel trends. The company's strategy includes acquiring, developing, and operating commercial properties, with a historical focus on limited-service hotels. Diversification into other real estate types is possible, alongside potential investments in real estate-related debt instruments.

Regulatory Implications

As a REIT, Lightstone REIT III must adhere to strict organizational and operational requirements, including distributing at least 90% of its taxable income annually to avoid corporate-level taxation. Failure to maintain REIT status can lead to significant adverse financial consequences, including taxation at regular corporate rates.

What Investors Should Do

1. Monitor revenue trends and operating cash flow generation closely.
2. Assess the impact of asset value and cash position changes.
3. Evaluate the company's reliance on the Advisor.
4. Understand the implications of the accumulated deficit on equity.

Key Dates

• 2012-10-05: Formation of Lightstone Value Plus REIT III, Inc. — Marks the inception of the company as a Maryland corporation.
• 2015-12-31: Elected REIT status — Commenced operations as a Real Estate Investment Trust for U.S. federal income tax purposes.
• 2017-03-31: Termination of Initial Public Offering — Indicates the conclusion of the primary capital raising phase through the Offering.
• 2024-12-31: Total Assets — $121.95 million
• 2025-09-30: Total Assets — $119.01 million
• 2024-09-30: Net Income/Loss — Net loss of $444 thousand for the three months ended September 30, 2024.
• 2025-09-30: Net Income/Loss — Net income of $32 thousand for the three months ended September 30, 2025.

Glossary

REIT

Real Estate Investment Trust. A company that owns, operates, or finances income-generating real estate. (Lightstone REIT III has elected to qualify as a REIT, impacting its tax obligations and distribution requirements.)

UPREIT

Umbrella Partnership REIT. A structure where a REIT holds its properties through a limited partnership, allowing for tax-deferred contributions of property. (Lightstone REIT III is structured as an UPREIT, with operations conducted through Lightstone Value Plus REIT III LP.)

Advisor

Lightstone Value Plus REIT III LLC, which is majority owned by David Lichtenstein. It manages the company's investments and operations. (The company is dependent on the Advisor for all essential services as it has no employees.)

Accumulated Deficit

The cumulative net losses of a company that have not been offset by net income or other gains. (A significant accumulated deficit of $64.11 million contributed to the decrease in total stockholders' equity.)

Variable Interest Entity (VIE)

An entity in which equity investors do not have sufficient equity at risk for the entity to finance its activities without additional support from other parties, and where the equity holders have voting rights that are insufficient to control the entity. (The company consolidates VIEs where it is deemed the primary beneficiary, impacting its balance sheet.)

Taxable REIT Subsidiary (TRS)

A subsidiary of a REIT that can engage in certain activities that a REIT itself cannot, subject to specific tax rules. (The company engages in certain activities, like hotel operations, through a TRS to maintain its REIT qualification.)

Year-Over-Year Comparison

Compared to the prior year, Lightstone Value Plus REIT III, Inc. has shown an improvement in quarterly net income, moving from a loss of $444 thousand to a gain of $32 thousand for the three months ended September 30, 2025. However, this positive quarterly trend is contrasted by a continued net loss for the nine-month period, albeit reduced from $3.51 million to $3.33 million. Revenue has seen a decline in both the quarterly ($8.00 million vs $8.38 million) and nine-month ($22.08 million vs $23.37 million) periods. Furthermore, operating cash flow has significantly decreased to $989 thousand from $3.11 million year-over-year, and total assets and equity have also contracted.

Filing Documents

• lvvr310q093025.htm (10-Q) — 907KB
• lvvr3ex31-1.htm (EX-31.1) — 12KB
• lvvr3ex31-2.htm (EX-31.2) — 12KB
• lvvr3ex32-1.htm (EX-32.1) — 5KB
• lvvr3ex32-2.htm (EX-32.2) — 5KB
• 0001185185-25-001739.txt ( ) — 4901KB
• lvvr-20250930.xsd (EX-101.SCH) — 47KB
• lvvr-20250930_cal.xml (EX-101.CAL) — 35KB
• lvvr-20250930_def.xml (EX-101.DEF) — 197KB
• lvvr-20250930_lab.xml (EX-101.LAB) — 366KB
• lvvr-20250930_pre.xml (EX-101.PRE) — 212KB
• lvvr310q093025_htm.xml (XML) — 565KB

Financial Statements (unaudited)

Financial Statements (unaudited) 3 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 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 37 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 38 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 38 Item 3. Defaults Upon Senior Securities 38 Item 4. Mine Safety Disclosures 38 Item 5. Other Information 38 Item 6. Exhibits 38 Table of Contents PART I. FINANCIAL INFORMATION: 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) September 30, 2025 December 31, 2024 (unaudited) Assets Investment property: Land and improvements $ 21,764 $ 21,753 Building and improvements 92,991 92,803 Furniture and fixtures 17,234 17,083 Construction in progress 21 23 Gross investment property 132,010 131,662 Less: accumulated depreciation ( 42,104 ) ( 39,735 ) Net investment property 89,906 91,927 Investments in unconsolidated affiliated real estate entities 16,122 16,770 Cash and cash equivalents 5,172 6,175 Marketable securities, available for sale 6,030 5,858 Accounts receivable and other assets 1,782 1,222 Total Assets $ 119,012 $ 121,952 Liabilities and Stockholders' Equity Accounts payable and other accrued expenses $ 2,889 $ 2,476 Mortgages payable, net 56,530 56,674 Due to related parties 3,102 2,003 Total Liabilities 62,521 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, 12.7 million and 12.8 million shares issued and outstanding, respectively 127 128 Additional paid-in-capital 108,487 109,478 Accumulated other comprehensive loss ( 106 ) ( 120 ) Accumulated deficit ( 64,109 ) ( 60,779 ) Total Company stockholders' equity 44,399 48,707 Noncontrolling interests 12,092 12,092 Total Stockholders' E

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 September 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 offic

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 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 essen

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) 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, 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 III and the Operating Partnership and its subsidiaries (over which Lightstone REIT III exercises financial and operating control). As of September 30, 2025, Lightstone REIT III had a 99 % general partnership interest in the common units of the Operating Partnership. All inter-company balances and transactions have been eliminated in consolidation. In addition, interests in entities acquired are eval

financial statements

financial statements. GAAP requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period. The most significant assumptions and estimates relate to the valuation of real estate and depreciable lives. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates. 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. 11 Table of Contents LIGHTSTONE VALUE PLUS REIT III, INC. AND SUBSIDIARIES

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 estab

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