10-Q: Lightstone Value Plus REIT IV Reports Q1 2025 Results: Hotel Revenue Up, Net Loss Persists

Lightstone Value Plus REIT IV saw increased hotel revenue in Q1 2025, driven by improved occupancy and ADR at the Williamsburg Moxy Hotel, but the company still reported a net loss.

Summary

• Lightstone Value Plus REIT IV reported a net loss attributable to the company's common shares of $2.94 million, or $0.36 per share, for the three months ended March 31, 2025, compared to a net loss of $3.83 million, or $0.46 per share, for the same period in 2024.
• Hotel revenues increased to $5.09 million from $4.56 million year-over-year, driven by higher occupancy, RevPAR, and ADR at the Williamsburg Moxy Hotel.
• The Williamsburg Moxy Hotel's occupancy rate increased to 83% from 78%, RevPAR rose to $158.66 from $147.84, and ADR increased to $191.13 from $189.67.
• The company's investment in the 40 East End Ave. Joint Venture resulted in a loss of $0.09 million for both the three months ended March 31, 2025 and 2024.
• As of March 31, 2025, the company had cash and cash equivalents of $5.17 million and restricted cash of $4.62 million.
• The company believes its available cash, future cash flows from the Williamsburg Moxy Hotel, and distributions from the 40 East End Ave. Joint Venture will be sufficient to meet its cash requirements for at least the next 12 months.
• The company repurchased 20,716 common shares at a weighted average price of $9.47 per share during the three months ended March 31, 2025.
• The company's board of directors suspended regular monthly distributions after March 2020 and will determine future distributions based on the company's performance and other factors.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While hotel revenue increased, the company still reported a net loss. The outlook is cautiously optimistic, with the company expecting to meet its cash requirements for the next 12 months.

Positives

• The Williamsburg Moxy Hotel experienced increases in occupancy, RevPAR, and ADR.
• Hotel revenues increased year-over-year.
• The company believes it has sufficient cash to meet its obligations for the next 12 months.
• The company refinanced the Moxy Hotel Joint Venture's construction loan on April 19, 2024, which contributed to a decrease in interest expense.

Negatives

• The company reported a net loss attributable to the company's common shares of $2.94 million for the three months ended March 31, 2025.
• The company's board of directors suspended regular monthly distributions after March 2020.
• The company recognized a casualty loss, net of $0.1 million during the three months ended March 31, 2025 related to fire damage at the Williamsburg Moxy Hotel.
• The company's investment in the 40 East End Ave. Joint Venture resulted in a loss of $0.09 million for both the three months ended March 31, 2025 and 2024.

Risks

• The company's operating results and financial condition are substantially impacted by the overall health of local, U.S. national and global economies.
• The company's business and financial performance may be adversely affected by current and future economic and other conditions, such as inflation, tariffs, recession, political upheaval or uncertainty, terrorism and acts of war, natural and man-made disasters, cybercrime, and outbreaks of contagious diseases.
• The company is dependent on its advisor and certain affiliates of its sponsor for performing a full range of services that are essential to it.
• The company's Moxy Mortgage Loans require the maintenance of certain financial covenants, including a prescribed minimum debt service coverage ratio (DSCR), which if not met, beginning on October 1, 2025, may also be achieved through principal paydowns on the outstanding balance in an amount sufficient to meet the prescribed DSCR.

Future Outlook

The company believes that its available cash on hand, future cash flows generated from the Williamsburg Moxy Hotel, plus any distributions it receives from the 40 East End Ave. Joint Venture resulting from the sale of the three remaining unsold condominium units, will be sufficient to satisfy its expected cash requirements for at least 12 months from the date of filing this report.

Industry Context

The report provides insight into the performance of a REIT focused on real estate and real estate-related investments, particularly in the hospitality sector with the Williamsburg Moxy Hotel. The results reflect the ongoing recovery in the hotel industry, with increased occupancy and revenue metrics, but also highlight the challenges of managing expenses and maintaining profitability in a competitive market.

Comparison to Industry Standards

• The Williamsburg Moxy Hotel's occupancy rate of 83% is strong, but it is important to compare this to the average occupancy rates for hotels in the Williamsburg, Brooklyn area and for Moxy hotels in other locations.
• The RevPAR of $158.66 is a key metric, and it should be compared to the RevPAR of comparable hotels in the same market to assess the Williamsburg Moxy Hotel's competitive performance.
• The ADR of $191.13 should be compared to the average daily rates of similar hotels in the Williamsburg area to determine if the hotel is priced competitively.
• The company's net loss should be compared to the net income or loss of other REITs with similar portfolios to assess its overall financial performance.
• The company's debt levels and financial covenants should be compared to those of other REITs to evaluate its financial risk.

Related Party Transactions

• The Sponsor, Advisor and their affiliates 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, development, management and disposition of the Company's assets.
• The outstanding principal advances and the related accrued interest are subordinate to all of the Company's obligations as well as to the holders of its Common Shares in an amount equal to the shareholders net investment plus a cumulative, pre-tax, non-compounded annual return of 8.0% and only potentially payable to the Sponsor in connection with the Company's liquidation.

Stakeholder Impact

• Shareholders: The company's net loss and suspension of distributions may negatively impact shareholder returns.
• Employees: The company has no employees and is dependent on its advisor and certain affiliates of its sponsor.
• Customers: The performance of the Williamsburg Moxy Hotel impacts the customer experience and satisfaction.
• Creditors: The company's ability to meet its debt obligations is important to its creditors.

Next Steps

• The company will continue to manage the Williamsburg Moxy Hotel and monitor its performance.
• The company will seek to sell the remaining three unsold condominium units in the 40 East End Ave. Joint Venture.
• The company will evaluate future distribution payments based on its performance and other factors.
• The company will monitor its compliance with the financial covenants of the Moxy Mortgage Loans.

Key Dates

Keywords

REIT, Lightstone Value Plus REIT IV, Williamsburg Moxy Hotel, Hotel Revenue, Real Estate, Financial Results, Occupancy, RevPAR, ADR, Net Loss, 40 East End Ave Joint Venture