Lightstone Value Plus REIT II, Inc. Annual Report: Performance Summary

I’ve put together this guide to help you understand how Lightstone Value Plus REIT II, Inc. performed this year. My goal is to explain these financial filings in plain English so you can decide if this investment still fits your goals.

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1. What does this company do?

Lightstone Value Plus REIT II owns a collection of hotels and retail shopping centers. As a REIT, the company is structured to pay out at least 90% of its taxable income to shareholders as dividends, provided they have sufficient cash on hand.

The company operates with zero employees, relying entirely on an outside firm, Lightstone Value Plus REIT II Advisors, LLC, to manage properties and handle daily operations. The Advisor receives management fees regardless of the REIT’s profitability. Because the company lacks internal staff, it is entirely dependent on this external management team to maintain operations.

2. Financial performance: Are they making money?

The company reported a $6.1 million loss for 2025. While they generated $47.7 million in revenue, operating costs remained high, including $32.4 million in property expenses, $8.2 million in interest, and $4.5 million in management fees.

• Hotel Trends: Occupancy decreased to 63%, down from 66% in 2024. Although the average nightly room rate increased to $143, the decline in occupancy resulted in lower total room revenue.
• Unexpected Costs: Fires and flooding at two properties resulted in $300,000 in out-of-pocket costs for repairs and lost income, even after accounting for insurance payouts.

3. Financial health: The "Debt" cloud

The company is managing $97.8 million in debt with an average interest rate of 6.8%.

• The Warning Sign: The company failed to meet its required debt-coverage targets in 2025. To satisfy lenders, they utilized $4 million of their cash reserves to pay down the loan principal.
• The "Band-Aid": Even with that payment, the company did not meet its targets and secured a formal waiver from its lender to avoid a default. This waiver requires more frequent reporting and restricts the company’s ability to spend capital on property improvements.
• The Outlook: The company intends to refinance this debt by September 2026. If they are unable to secure new financing, they may be forced to sell properties, potentially at prices below their current book value, to satisfy the debt.

4. What is your share worth?

As of December 31, 2025, the company set the value of your shares at $10.67. This represents a decrease from the $10.89 reported in 2024, reflecting the company’s annual losses and lower property appraisals.

5. Key risks

• Cash Flow Issues: The company currently spends more cash than it earns from operations, relying on asset management and potential sales to maintain liquidity.
• Illiquidity: These shares are not traded on a public stock exchange. Investors are generally locked in until the company completes a liquidity event, such as selling its properties.
• Redemption Issues: The program to sell shares back to the company is frequently suspended or capped. Even when the program is active, the redemption price may be lower than the stated $10.67 share value.

6. Future outlook

The company does not intend to list on a public exchange. The current strategy is to hold properties until they can be sold for a favorable price. Given the current high-interest-rate environment and the company's debt obligations, the primary focus is on preserving cash and managing existing liabilities rather than pursuing new growth.

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This summary reflects the company's current financial position. Given the ongoing losses and the reliance on cash reserves to satisfy debt covenants, you may want to weigh these risks carefully against your personal investment strategy.