10-Q: Lightstone Value Plus REIT IV Reports Improved Hotel Performance in Q3 2024

Lightstone Value Plus REIT IV saw increased hotel occupancy and revenue per available room in the third quarter of 2024, driven by the performance of its Williamsburg Moxy Hotel.

Summary

• Lightstone Value Plus REIT IV reported its financial results for the third quarter of 2024, showing a net loss attributable to the company's common shares of $1.16 million, or $0.14 per share.
• The company's hotel revenues increased to $8.5 million for the quarter, up from $7.7 million in the same period last year.
• This increase was primarily driven by the Williamsburg Moxy Hotel, which saw its occupancy rate rise to 94% from 87% and its revenue per available room (RevPAR) increase to $280.62 from $244.66.
• The company's total assets were $146.8 million as of September 30, 2024, compared to $145.5 million at the end of 2023.
• The company's net loss for the nine months ended September 30, 2024, was $6.5 million, or $0.79 per share, compared to a net loss of $8.6 million, or $1.04 per share, for the same period in 2023.
• The company's hotel revenues for the nine months ended September 30, 2024, were $21.3 million, compared to $15.8 million for the same period in 2023.
• The Williamsburg Moxy Hotel's occupancy rate for the nine months ended September 30, 2024, was 89%, with a RevPAR of $238.22 and an average daily rate (ADR) of $268.48.
• The company has a 75% membership interest in the Williamsburg Moxy Hotel Joint Venture and a 33.3% membership interest in the 40 East End Ave. Joint Venture.
• The company's share repurchase program repurchased 63,898 common shares at a weighted average price of $9.66 during the nine months ended September 30, 2024.

Sentiment

Score: 7

Explanation: The document shows positive trends in hotel operations and improved financial metrics, but the company is still operating at a loss. The sentiment is cautiously optimistic.

Positives

• The Williamsburg Moxy Hotel experienced strong operational improvements, with increased occupancy and RevPAR.
• Hotel revenues increased significantly for both the three and nine-month periods ending September 30, 2024.
• The company's net loss per share improved compared to the same periods in the previous year.
• The company successfully refinanced the Moxy Construction Loan with new mortgage loans.

Negatives

• The company reported a net loss of $1.16 million for the three months ended September 30, 2024.
• The company's accumulated deficit increased to $45.5 million as of September 30, 2024.
• The company's investment in the 40 East End Ave. Joint Venture resulted in a loss of $0.3 million for the nine months ended September 30, 2024.

Risks

• The company's performance is subject to economic conditions and market challenges.
• The company is dependent on its advisor and affiliates for essential services.
• The company's shares are not listed on a national securities exchange, limiting liquidity.
• The company's debt levels and interest rate exposure could impact its financial performance.
• The company's ability to make distributions to shareholders is not guaranteed.

Future Outlook

The company believes that its available cash, cash flows from the Williamsburg Moxy Hotel, capital contributions, and distributions from the 40 East End Ave. Joint Venture will be sufficient to satisfy its expected cash requirements for at least twelve months.

Management Comments

• Management believes that the company's disclosure controls and procedures were effective as of the end of the reporting period.
• Management has stated that there were no material weaknesses identified in the evaluation of internal controls over financial reporting.

Industry Context

The report reflects the ongoing recovery in the hospitality sector, with the Williamsburg Moxy Hotel showing strong performance metrics. The company's focus on development-related investments aligns with broader trends in the real estate industry.

Comparison to Industry Standards

• The Williamsburg Moxy Hotel's occupancy rate of 94% in Q3 2024 is strong compared to the national average for hotels in major urban areas, which has been recovering but still faces challenges.
• The RevPAR of $280.62 for the Williamsburg Moxy Hotel in Q3 2024 is competitive with similar boutique hotels in New York City.
• The company's net loss per share of $0.14 for the quarter is an improvement over the previous year, but still indicates that the company is not yet profitable, which is not uncommon for REITs with significant development projects.
• The company's reliance on related-party transactions is a common practice for REITs sponsored by larger real estate groups, but it requires careful monitoring to ensure fair value and avoid conflicts of interest.
• The company's debt-to-asset ratio is within the range of other REITs, but the floating interest rate on its mortgage loans exposes it to interest rate risk.

Related Party Transactions

• The company has various related party transactions with its sponsor, advisor, and their affiliates, including asset management fees, development fees, and subordinated advances.
• The company owed the Advisor and its affiliated entities $541,584 as of September 30, 2024.

Stakeholder Impact

• Shareholders may be encouraged by the improved hotel performance and reduced losses, but will be concerned about the lack of distributions.
• Employees of the Williamsburg Moxy Hotel may benefit from the hotel's improved performance.
• The company's creditors will be interested in the company's debt levels and ability to service its loans.

Next Steps

• The company will continue to monitor the performance of the Williamsburg Moxy Hotel.
• The company will continue to manage its debt and interest rate exposure.
• The company will evaluate potential future investments and distributions to shareholders.

Key Dates

Keywords

REIT, Real Estate, Hotel, Williamsburg Moxy Hotel, Occupancy, RevPAR, Mortgage Loans, Financial Results, Joint Venture, Lightstone