On July 17, 2019, the Company, through its then wholly owned subsidiary, Bedford Avenue Holdings LLC, acquired land parcels located at 353-361 Bedford Avenue in the Williamsburg neighborhood of the borough of Brooklyn in New York City for the development and construction of the Williamsburg Moxy Hotel.

Williamsburg Moxy Hotel Joint Venture

On August 5, 2021, the Company formed the Williamsburg Moxy Hotel Joint Venture with Lightstone REIT III, pursuant to which Lightstone REIT III acquired 25% of the Company’s membership interest in Bedford Avenue Holdings LLC for aggregate consideration of $7.9 million. Subsequent to its acquisition, Lightstone REIT III has made pro rata capital contributions to the Williamsburg Moxy Hotel Joint Venture aggregating $6.4 million through June 30, 2026. 

As a result, the Company and Lightstone REIT III have 75% and 25% membership interests, respectively, in the Williamsburg Moxy Hotel Joint Venture. Additionally, the Company is the managing member of the Williamsburg Moxy Hotel Joint Venture and Lightstone REIT III has consent rights with respect to all major decisions. 

The Company has determined that the Williamsburg Moxy Hotel Joint Venture is a VIE and the Company is the primary beneficiary. As the Company is the member most closely associated with the Williamsburg Moxy Hotel Joint Venture and therefore has the power to direct the activities of the Williamsburg Moxy Hotel Joint Venture that most significantly impact its performance, the Company has consolidated the operating results and financial condition of the Williamsburg Moxy Hotel Joint Venture and accounted for the ownership interest of Lightstone REIT III as noncontrolling interests commencing on August 5, 2021. Earnings, contributions and distributions are allocated in accordance with each investor’s ownership percentage.

The Williamsburg Moxy Hotel Joint Venture owns the Williamsburg Moxy Hotel located in the Williamsburg neighborhood of Brooklyn in New York City, which it developed, constructed and opened on March 7, 2023.

Fire Damage, Insurance Claim and Casualty Gain/Loss, Net

On December 11, 2024, the Williamsburg Moxy Hotel suffered substantial damage resulting from a fire to its food and beverage venue located in the outdoor garden area on the grounds of the property. As a result, the Williamsburg Moxy Hotel Joint Venture filed an insurance claim related to the physical damages incurred and the loss of business resulting from the closure of the affected food and beverage venue.

During the fourth quarter of 2024, the Williamsburg Moxy Hotel Joint Venture recognized a net casualty loss of $0.5 million representing the write-off of the carrying value of the physically damaged assets of $0.8 million plus remediation costs of $0.2 million, partially offset by an agreed upon initial advance from its insurance carriers of $0.5 million (which was subsequently received during the first quarter of 2025). Thereafter, the Williamsburg Joint Venture recognized a casualty loss of $0.1 million during the first quarter of 2025 related to additional remediation costs and a casualty gain, net of $0.6 million during the third quarter of 2025 related to an agreement with its insurance carriers to fund an additional advance of $1.0 million (which was subsequently received in the fourth quarter of 2025) partially offset by additional remediation costs of $0.4 million. As a result, during the year ended December 31, 2025, the Williamsburg Moxy Hotel Joint Venture recognized a casualty gain, net of $0.5 million. Furthermore, during the third quarter of 2025 the affected food and beverage venue became fully renovated and reopened for business.

During the second quarter of 2026, the Williamsburg Moxy Hotel Joint Venture and its insurance carriers finalized the insurance claim for the physical damages incurred and the loss of business resulting from the closure of the affected food and beverage venue. In connection with the finalization of the insurance claim, the Williamsburg Moxy Hotel Joint Venture received a final payment of $0.6 million for physical damages incurred from its insurance carriers during the second quarter of 2026 and recognized a casualty gain in that amount and the insurance carriers agreed to make a payment of $1.0 million (which was subsequently received in July 2026) for the loss of business, which the Williamsburg Moxy Joint Venture recorded as business interruption insurance recovery during the second quarter of 2026 and which is also included in accounts receivable and other assets on the consolidated balance sheet as of June 30, 2026.

Moxy Mortgage Loans

On April 19, 2024, the Williamsburg Moxy Joint Venture entered into an $86.0 million senior mortgage loan facility (the “Moxy Senior Loan”) and a $9.0 million junior mortgage loan facility (the “Moxy Junior Loan” and together with the Moxy Senior Loan, the “Moxy Mortgage Loans”) with unrelated third parties. 

The Moxy Mortgage Loans bear interest at SOFR plus 5.10%, subject to an 8.75% floor (8.75% and 8.89% as of June 30, 2026 and December 31, 2025, respectively). The Moxy Mortgage Loans initially mature on April 19, 2027, but may be further extended through the exercise of two six-month extension options, subject to the satisfaction of certain conditions. The Moxy Mortgage Loans require monthly interest-only payments with their outstanding principal due in full at maturity and are collateralized by the Williamsburg Moxy Hotel, however, the Moxy Junior Loan is subordinate to the Moxy Senior Loan. The Williamsburg Moxy Hotel Joint Venture used $85.8 million of the proceeds from the Moxy Mortgage Loans in connection with the payoff of all obligations due under a construction loan previously used in connection with the funding of the development of the Williamsburg Moxy Hotel. 

As of both June 30, 2026 and December 31, 2025, the outstanding principal balance of the Moxy Mortgage Loans was $95.0 million, which is presented net of deferred financing fees of $0.9 million and $1.5 million, respectively, on the consolidated balance sheets and is classified as mortgages payable, net.

In connection with the Moxy Mortgage Loans, the Williamsburg Moxy Hotel Joint Venture paid $2.8 million of loan fees and expenses and accrued $0.5 million of loan exit fees which are included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets as of June 30, 2026 and December 31, 2025.

The Moxy Mortgage Loans require the maintenance of certain financial covenants measured at the end of each calendar quarter, including a prescribed minimum debt service coverage ratio (“DSCR”), which if not met, provide the senior lender with an option to retain any excess cash flow from the property until such time as the prescribed minimum DSCR is met for two consecutive calendar quarters. As of June 30, 2026, the Williamsburg Moxy Hotel Joint Venture was in compliance with all of the financial covenants under the Williamsburg Moxy Mortgage Loans.

Although the Moxy Mortgage Loans are scheduled to initially mature on April 19, 2027, the Williamsburg Moxy Hotel Joint Venture currently expects to refinance these loans on or before their initial maturity date. However, if the Williamsburg Moxy Hotel Joint Venture is unable to successfully refinance the Moxy Mortgage Loans at favorable terms on or before their initial maturity date, then the Joint Venture intends to exercise the first of the two available six-month extension options, subject to the satisfaction of certain conditions, which would extend the maturity of the Moxy Mortgage Loans to October 19, 2027.