The following discussion and analysis should be read in conjunction with the
accompanying consolidated financial statements of Lightstone Value Plus REIT
III, Inc. and Subsidiaries and the notes thereto. As used herein, the terms
"we," "our" and "us" refer to Lightstone Value Plus REIT III, Inc., a Maryland
corporation, and, as required by context, Lightstone Value Plus REIT III, L.P.,
which we collectively refer to as the "Operating Partnership". Dollar amounts
are presented in thousands, except per share data, revenue per available room
("RevPAR"), average daily rate ("ADR") and where indicated in millions.

Forward-Looking Statements



Certain information included in this Quarterly Report on Form 10-Q contains, and
other materials filed or to be filed by us with the United States Securities and
Exchange Commission (the "SEC"), contain or will contain, forward-looking
statements. All statements, other than statements of historical facts,
including, among others, statements regarding our possible or assumed future
results of our business, financial condition, liquidity, results of operations,
plans and objectives, are forward-looking statements. Those statements include
statements regarding the intent, belief or current expectations of Lightstone
Value Plus REIT III, Inc. and members of our management team, as well as the
assumptions on which such statements are based, and generally are identified by
the use of words such as "may," "will," "seeks," "anticipates," "believes,"
"estimates," "expects," "plans," "intends," "should" or similar expressions.
Forward-looking statements are not guarantees of future performance and involve
risks and uncertainties that actual results may differ materially from those
contemplated by such forward-looking statements.

Such statements are based on assumptions and expectations which may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial and otherwise, may differ from the results discussed in the forward-looking statements.



Risks and other factors that might cause differences, some of which could be
material, include, but are not limited to, economic and market conditions,
competition, joint venture partner(s) bankruptcies, our lack of operating
history, the availability of cash flows from operations to pay distributions,
changes in governmental, tax, real estate and zoning laws and regulations,
financing and development risks, construction delays, cost overruns, the level
and volatility of interest rates, the rate of revenue increases versus expense
increases, our failure to make additional investments in real estate properties,
restrictions in current financing arrangements, insurance, taxes and other
property expenses, our failure to continue to qualify as a real estate
investment trust ("REIT"), the failure to refinance debt at favorable terms and
conditions, an increase in impairment charges, loss of key personnel, failure to
achieve earnings/funds from operations targets or estimates, conflicts of
interest with the Advisor and the Sponsor and their affiliates, failure of joint
venture relationships, significant costs related to environmental issues and
uncertainties regarding the impact of the current COVID-19 pandemic, and
restrictions and other measures intended to prevent its spread on our business
and the economy generally, as well as other risks listed from time to time in
this Form 10-Q, our Form 10-K and in our other reports filed with the SEC.

We believe these forward-looking statements are reasonable; however, undue
reliance should not be placed on any forward-looking statements, which are based
on current expectations. All written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are qualified in their
entirety by these cautionary statements. Further, forward-looking statements
speak only as of the date they are made, and we undertake no obligation to
update or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating results over
time unless required by law.


                                       21




Structure

Lightstone Value Plus REIT III, Inc. ("Lightstone REIT III"), which was formerly
known as Lightstone Value Plus Real Estate Investment Trust III, Inc. before
September 16, 2021, is a Maryland corporation formed on October 5, 2012, which
elected to qualify as a real estate investment trust ("REIT") for U.S. federal
income tax purposes beginning with the taxable year ending December 31, 2015.

Lightstone REIT III is structured as an umbrella partnership REIT ("UPREIT"),
and substantially all of its current and future business is and will be
conducted through Lightstone Value Plus REIT III LP, a Delaware limited
partnership (the "Operating Partnership"). As of September 30, 2022, 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 this annual report refers to the Lightstone REIT III, its
Operating Partnership or the Company as required by the context in which such
pronoun is used.

We have and will continue to seek to acquire a diverse portfolio of real estate
assets and real estate-related investments, including hotels, other commercial
and/or residential properties, primarily located in the United States. All such
properties may be acquired and operated by us alone or jointly with another
party. We may also originate or acquire mortgage loans secured by real estate.
Although we expect that most of our investments will be of these types, we may
make other investments. In fact, we may invest in whatever types of real
estate-related investments that we believe are in our best interests. We
currently intend to hold our investments until such time as we determine that a
sale or other disposition appears to be advantageous to achieve our investment
objectives or until it appears that the objectives will not be met.

We currently have one operating segment. As of September 30, 2022, we (i)
majority owned and consolidated the operating results and financial condition of
eight limited service hotels containing a total of 872 rooms, (ii) held an
unconsolidated 50.0% membership interest in LVP LIC Hotel JV LLC (the "Hilton
Garden Inn Joint Venture") and (iii) held an unconsolidated 25.0% membership
interest in Bedford Avenue Holdings LLC (the "Williamsburg Moxy Hotel Joint
Venture"). We account for our unconsolidated membership interests in the Hilton
Garden Inn Joint Venture and the Williamsburg Moxy Hotel Joint Venture under the
equity method of accounting.

Our 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 in the
Operating Partnership. Our 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 the majority owner of the equity interests of
the Lightstone Group, LLC. The Lightstone Group, LLC served as our sponsor (the
"Sponsor") during our initial public offering (the "Offering") 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 our board of directors
(the "Board of Directors"), the Advisor has primary responsibility for making
investment decisions on our behalf and managing our day-to-day operations.
Through his ownership and control of The Lightstone Group, LLC, 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 for $12.1 million in connection with
our Offering. Mr. Lichtenstein also acts as our Chairman and Chief Executive
Officer. As a result, he exerts influence over but does not control Lightstone
REIT III or the Operating Partnership.

We do not have employees. The Advisor receives compensation and fees for services related to the investment and management of our assets.



Our Advisor has affiliated property managers (the "Property Managers"), which
may manage certain of the properties we acquire. We also use other unaffiliated
third-party property managers, principally for the management of our hospitality
properties.


                                       22




Our Common Shares are not currently listed on a national securities exchange. We
may seek to list our Common Shares for trading on a national securities exchange
only if a majority of our independent directors believe listing would be in the
best interest of our stockholders. We do not intend to list our Common Shares at
this time. We do not anticipate that there would be any active market for our
Common Shares until they are listed for trading. In the event we do not begin
the process of achieving a liquidity event prior to March 31, 2025, which is the
eighth anniversary of the termination of our Offering, our charter requires
either (a) an amendment to our charter to extend the deadline to begin the
process of achieving a liquidity event, or (b) the holding of a stockholders
meeting to vote on a proposal for an orderly liquidation of our portfolio.

Noncontrolling Interests - Partners of the Operating Partnership

Limited Partner



On July 16, 2014, the Advisor contributed $2 to the Operating Partnership in
exchange for 200 limited partner units in the Operating Partnership. The Advisor
has the right to convert the limited partner units into cash or, at our option,
an equal number of our Common Shares.

Special Limited Partner



In connection with our Offering, which terminated on March 31, 2017, the Special
Limited Partner purchased from the Operating Partnership an aggregate of 242
Subordinated Participation Interests for consideration of $12.1 million. The
Subordinated Participation Interests were each purchased for $50 in
consideration and may be entitled to receive liquidation distributions upon the
liquidation of Lightstone REIT III.

As the majority owner of the Special Limited Partner, Mr. Lichtenstein is the
beneficial owner of a 99% interest in such Subordinated Participation Interests
and will thus receive an indirect benefit from any distributions made in respect
thereof.

These Subordinated Participation Interests entitle the Special Limited Partner
to a portion of any regular and liquidation distributions that we make to our
stockholders, but only after our stockholders have received a stated preferred
return. From our inception through September 30, 2022, no distributions have
been declared or paid on the Subordinated Participation Interests.

Tax Status



We elected to qualify and be taxed as a REIT for U.S. federal income tax
purposes beginning with the taxable year ended December 31, 2015. As a REIT, we
generally will not be subject to U.S. federal income tax on our net taxable
income that we distribute currently to our stockholders. To maintain our REIT
qualification under the Internal Revenue Code of 1986, as amended, (the "Code"),
we must meet a number of organizational and operational requirements, including
a requirement that we annually distribute to our stockholders at least 90% of
our REIT taxable income, which does not equal net income, as calculated in
accordance with accounting principles generally accepted in the United States of
America ("GAAP"), determined without regard to the deduction for dividends paid
and excluding any net capital gain. If we fail to remain qualified for taxation
as a REIT in any subsequent year and do not qualify for certain statutory relief
provisions, our income for that year will be taxed at regular corporate rates,
and we may be precluded from qualifying for treatment as a REIT for the
four-year period following our failure to qualify as a REIT. Such an event could
materially adversely affect our net income and net cash available for
distribution to our stockholders.

We engage in certain activities through taxable REIT subsidiaries ("TRSs"),
including when we acquire a hotel we usually establish a TRS which then enters
into an operating lease agreement for the hotel. As such, we may be subject to
U.S. federal and state income taxes and franchise taxes from these activities.

As of September 30, 2022 and December 31, 2021, we had no material uncertain
income tax positions. Additionally, even if we continue to qualify as a REIT for
U.S. federal income tax purposes, we may still be subject to some U.S. federal,
state and local taxes on our income and property and to U.S. federal income
taxes and excise taxes on our undistributed income, if any.


                                       23




Current Environment

Our operating results 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, our 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, political upheaval or uncertainty, natural and man-made
disasters, terrorism and acts of war, unfavorable changes in laws and
regulations, outbreaks of contagious diseases, cybercrime, loss of key
relationships, competition, inflation, recession, supply disruptions and labor
shortages.

These and other market and economic challenges could materially affect (i) the
value and performance of our investments, (ii) our ability to pay future
distributions, if any, (iii) the availability or terms of financings, (iv) our
ability to make scheduled principal and interest payments, and (v) our ability
to refinance any outstanding debt when contractually due.

COVID-19 Pandemic Operations and Liquidity Update


On March 11, 2020, the World Health Organization declared COVID-19 a global
pandemic and it remains highly unpredictable and dynamic and its ultimate
duration and extent continue to be dependent on various developments, such as
the emergence of variants to the virus that may cause additional strains of
COVID-19, and the ongoing development, administration and ultimate effectiveness
of vaccines, including booster shots. Accordingly, the ongoing COVID-19 pandemic
may continue to have negative effects on the U.S. and global economies for the
foreseeable future.

The extent to which our business may be affected by the ongoing COVID-19 pandemic will largely depend on both current and future developments, all of which are highly uncertain and cannot be reasonably predicted.



Furthermore, as a result of the COVID-19 pandemic, room demand and rental rates
for our consolidated and unconsolidated hotels significantly declined starting
in March 2020 at the onset of the pandemic; and while these metrics have
improved since then (beginning late 2020 and continuing through the third
quarter of 2022); room demand and rental rates still remain below their
pre-pandemic historical levels for some of our hotels. Accordingly, the COVID-19
pandemic has negatively impacted our operations, financial position and cash
flow; and while the severity of the impact has lessened considerably, we may
experience a negative impact for the foreseeable future. We cannot currently
estimate if and when room demand and rental rates will return to historical
pre-pandemic levels for all of our hotels.

We also have a 25% membership interest in Bedford Avenue Holdings LLC (the
"Williamsburg Moxy Joint Venture"), which is developing and constructing a
210-room branded hotel (the "Williamsburg Moxy Hotel"). To-date, the COVID-19
pandemic has not had any significant impact on development and construction of
the Williamsburg Moxy Hotel, which is expected to open during the first quarter
of 2023.

In light of the past, present and potential future impact of the COVID-19 pandemic on the operating results of our hotels, we have taken various actions to preserve our liquidity, including the following:

? We have implemented cost reduction strategies for all of our hotels, leading to


   reductions in certain operating expenses and capital expenditures.


? During 2020 and 2021, we obtained certain amendments to our revolving credit


    facility (the "Revolving Credit Facility"). See Note 5 of the Notes to
    Consolidated Financial Statements for additional information.


? In April 2020 and during the first quarter of 2021, our hotels received an

aggregate of $1.5 million and $1.9 million, respectively, from loans provided

under the federal Paycheck Protection Program ("PPP Loans"). See Note 6 of the


    Notes to Consolidated Financial Statements for additional information.




                                       24



? Previously in June 2019, the Board of Directors determined to suspend regular

monthly distributions on our Common Shares and have not declared any

distributions since the suspension. Additionally, in March 2020, the Board of

Directors approved the suspension of all redemptions under our shareholder

repurchase program (the "SRP"). Subsequently in May 2021, the Board of

Directors partially reopened the SRP to allow, subject to various conditions,

for redemptions submitted in connection with a stockholder's death or

hardship. See Note 7 of the Notes to Consolidated Financial Statements for


    additional information.


? During 2020 and 2021, the Hilton Garden Inn Joint Venture obtained various

amendments to its non-recourse mortgage loan secured by the Hilton Garden Inn


    - Long Island City. See Note 3 of the Notes to Consolidated Financial
    Statements for additional information.


On July 13, 2022, the maturity of the Revolving Credit Facility was extended to July 13, 2023.



We believe that these actions, along with our available cash on hand and
marketable securities, as well as our intention to seek to further extend the
maturity date of the Revolving Credit Facility to July 13, 2024 subject to the
conditions, including the lender's approval, of the remaining one-year extension
option, as discussed in Note 5 of the Notes to Consolidated Financial
Statements, will provide us with sufficient liquidity to meet our obligations
for at least 12 months from the date of issuance of these consolidated financial
statements.

We are not currently aware of any other material trends or uncertainties,
favorable or unfavorable, that may be reasonably anticipated to have a material
impact on either capital resources or the revenues or income to be derived from
our operations, other than those referred to above or throughout this Form 10-Q.

Portfolio Summary -

                                                                                       Percentage Occupied            Rev PAR                   ADR
                                                                                             for the                  for the                 For the
                                                                    Year to Date        Nine Months Ended        Nine Months Ended       Nine Months Ended
                                             Year        Date        Available            September 30,            September 30,           September 30,
                              Location      Built      Acquired        Rooms                  2022                     2022                    2022
Wholly-Owned and
Consolidated Hospitality
Properties:

Hampton Inn - Des Moines Des Moines,


                           Iowa              1987      2/4/2015            32,760                        64 %   $             73.64     $            115.36

Courtyard - Durham         Durham, North
                           Carolina          1996      5/15/2015           39,858                        60 %   $             63.08     $            105.71

Hampton Inn - Lansing      Lansing,
                           Michigan          2013      3/10/2016           23,478                        65 %   $             78.11     $            119.73

Courtyard - Warwick        Warwick, Rhode
                           Island            2003      3/23/2016           25,116                        72 %   $             98.81     $            137.08

Home2 Suites - Salt Lake Salt Lake


                           City, Utah        2013      8/2/2016            34,125                        71 %   $             81.17     $            114.94

Home2 Suites - Tukwila     Tukwila,
                           Washington        2015      8/2/2016            37,947                        93 %   $            149.13     $            159.61

Fairfield Inn - Austin     Austin, Texas     2014      9/13/2016           22,932                        78 %   $             74.99     $             95.91

Staybridge Suites -        Austin, Texas
Austin                                       2009      10/7/2016           21,840                        83 %   $             90.77     $            110.07

                                                         Total            238,056                        73 %   $             89.78     $            123.11




                                       25



Unconsolidated Affiliated Real Estate Entity:





                                                                                       Percentage Occupied            Rev PAR                   ADR
                                                                                             for the                  for the                 For the
                                                                    Year to Date        Nine Months Ended        Nine Months Ended       Nine Months Ended
                                             Year        Date        Available            September 30,            September 30,           September 30,
Hospitality                   Location      Built      Acquired        Rooms                  2022                     2022                    

2022


Hilton Garden Inn - Long   Long Island
Island City                City, New York    2014      3/27/2018           49,959                        91 %   $            156.73     $            171.58



As of September 30, 2022, we held an unconsolidated 25.0% membership interest in
the Williamsburg Moxy Hotel Joint Venture which is developing and constructing a
210-room branded hotel (the "Williamsburg Moxy Hotel") in the Williamsburg
neighborhood of Brooklyn in New York City, which is currently expected to open
during the first quarter of 2023.

Critical Accounting Policies and Estimates



There were no material changes during the nine months ended September 30, 2022
to our critical accounting policies as reported in our Annual Report on Form
10-K, for the year ended December 31, 2021.

Results of Operations



We currently have one operating segment. As of September 30, 2022, we (i)
majority owned and consolidated the operating results and financial condition of
eight limited service hotels containing a total of 872 rooms, (ii) held an
unconsolidated 50.0% membership interest in LVP LIC Hotel JV LLC (the "Hilton
Garden Inn Joint Venture") and (iii) held an unconsolidated 25.0% membership
interest in Bedford Avenue Holdings LLC (the "Williamsburg Moxy Hotel Joint
Venture"). We account for our unconsolidated membership interests in the Hilton
Garden Inn Joint Venture and the Williamsburg Moxy Hotel Joint Venture under the
equity method of accounting.

Comparison of the three months ended September 30, 2022 vs. September 30, 2021

Consolidated


Our consolidated revenues, property operating expenses, real estate taxes,
general and administrative expense and depreciation and amortization for the
three months ended September 30, 2022 and 2021 are attributable to our
consolidated hospitality properties, all of which were owned by us during the
entire periods presented.

As a result of the COVID-19 pandemic, room demand and rental rates for our
consolidated and unconsolidated hotels significantly declined starting in March
2020 at the onset of the pandemic; and while these metrics have improved since
then (beginning late 2020 and continuing through the third quarter of 2022);
room demand and rental rates remain below their pre-pandemic historical levels
for some of our hotels. Overall, our hospitality portfolio experienced a slight
decrease in the percentage of rooms occupied from 75% to 74% for the third
quarter of 2021 and 2022, respectively, and increases in RevPAR from $82.68 to
$99.53 for the third quarter of 2021 and 2022, respectively, and the ADR from
$110.00 to $135.00 for the third quarter of 2021 and 2022, respectively.

Revenues


Revenues increased by $1.4 million to $8.2 million during the three months ended
September 30, 2022compared to $6.8 million for the same period in 2021. This
increase reflects the higher RevPAR and ADR during the 2022 period partial
offset by the slightly lower occupancy.

Property operating expenses



Property operating expenses increased by $1.0 million to $5.1 million during the
three months ended September 30, 2022 compared to $4.1 million for the same
period in 2021. This increase reflects higher labor costs, property management
fees and franchise fees during the 2022 period.


                                       26




Real estate taxes

Real estate taxes decreased slightly by $0.1 million to $0.2 million during the three months ended September 30, 2022 compared to $0.3 million for the same period in 2021.

General and administrative costs

General and administrative costs were unchanged at $0.6 million during both the three months ended September 30, 2022 and 2021.

Depreciation and amortization

Depreciation and amortization expense decreased slightly by $0.1 million to $1.2 million during the three months ended September 30, 2022 compared to $1.3 million for the same period in 2021.

Interest expense


Interest expense increased by $0.2 million to $0.9 million during the three
months ended September 30, 2022 compared to $0.7 million for the same period in
2021. Interest expense is attributable to financings associated with our hotels
and also reflect changes in LIBOR and AMERIBOR during these periods.

Gain on forgiveness of debt



During the three months ended September 30, 2022 and 2021 notice was received
from the Small Business Administration ("SBA") that $0.8 million and $0.5
million, respectively, of PPP Loans and related accrued interest had been
legally forgiven and therefore, we recognized a gain on forgiveness of debt for
these amounts during those periods.

Earnings from investments in unconsolidated affiliated real estate entities

Our income from investments in unconsolidated affiliated real estate entities
was $0.3 million during the three months ended September 30, 2022 compared to
$0.1 million for the same period in 2021. Our earnings from investments in
unconsolidated affiliated real estate entities are attributable to our
unconsolidated 50.0% membership interest in the Hilton Garden Inn Joint Venture
and our unconsolidated 25.0% membership interest Williamsburg Moxy Hotel Joint
Venture.

Comparison of the nine months ended September 30, 2022 vs. September 30, 2021

Consolidated


Our consolidated revenues, property operating expenses, real estate taxes,
general and administrative expense and depreciation and amortization for the
nine months ended September 30, 2022 and 2021 are attributable to our
consolidated hospitality properties, all of which were owned by us during the
entire periods presented.

As a result of the COVID-19 pandemic, room demand and rental rates for our
consolidated and unconsolidated hotels significantly declined starting in March
2020 at the onset of the pandemic; and while these metrics have improved since
then (beginning late 2020 and continuing through the third quarter of 2022);
room demand and rental rates remain below their pre-pandemic historical levels
for some of our hotels. Overall, our hospitality portfolio experienced increases
in the percentage of rooms occupied from 68% to 73% for the nine months ended
September 30, 2021 and 2022, respectively, RevPAR from $64.83 to $89.78for the
nine months ended September 30, 2021 and 2022, respectively, and the ADR from
$95.61 to $123.11 for the nine months ended September 30, 2021 and 2022,
respectively.


                                       27




Revenues

Revenues increased by $6.0 million to $21.9 million during the nine months ended
September 30, 2022compared to $15.9 million for the same period in 2021. This
increase reflects the higher occupancy, RevPAR and ADR during the 2022 period.

Property operating expenses



Property operating expenses increased by $3.6 million to $13.6 million during
the nine months ended September 30, 2022 compared to $10.0 million for the same
period in 2021. This increase is attributable to higher occupancy but also
reflects higher labor costs, property management and franchise fees during

the
2022 period.

Real estate taxes

Real estate taxes decreased by $0.2 million to $0.9 million during the nine months ended September 30, 2022 compared to $1.1 million for the same period in 2021.

General and administrative costs

General and administrative costs increased slightly by $0.1 million to $1.9 million during the nine months ended September 30, 2022 compared to $1.8 million for the same period in 2021.

Depreciation and amortization


Depreciation and amortization expense decreased slightly by $0.1 million to $3.7
million during the nine months ended September 30, 2022 compared to $3.8 million
for the same period in 2021.

Interest expense


Interest expense increased by $0.2 million to $2.3 million during the nine
months ended September 30, 2022 compared to $2.1 million for the same period in
2021. Interest expense is attributable to financings associated with our hotels
and also reflects the changes in LIBOR and AMERIBOR during these periods.

Gain on forgiveness of debt



During the nine months ended September 30, 2022 and 2021 notice was received
from the SBA that $1.9 million and $0.9 million, respectively, of PPP Loans and
related accrued interest had been legally forgiven and therefore, we recognized
a gain on forgiveness of debt for these amounts during those periods.

Earnings from investments in unconsolidated affiliated real estate entities

Our income from investments in unconsolidated affiliated real estate entities
was $0.2 million during the nine months ended September 30, 2022 compared to a
loss of $0.3 million for the same period in 2021. Our earnings from investments
in unconsolidated affiliated real estate entities are attributable to our
unconsolidated 50.0% membership interest in the Hilton Garden Inn Joint Venture
and our unconsolidated 25.0% membership interest Williamsburg Moxy Hotel Joint
Venture.


                                       28



Financial Condition, Liquidity and Capital Resources

Overview:



Revenues, interest and dividend income, proceeds from the sale of marketable
securities, cash on hand and borrowings are our principal sources of funds to
pay operating expenses, scheduled debt service, capital expenditures (excluding
non-recurring capital expenditures), contributions to our unconsolidated
affiliated entities, redemptions and cancellations of shares of our common
stock, if approved, and distributions, if any, required to maintain our status
as a REIT.

We currently believe that these cash resources along with our available cash on
hand of $19.5 million and marketable securities of $1.6 million, all as of
September 30, 2022, as well as our intention to seek to further extend the
maturity date of the Revolving Credit Facility to July 13, 2024, subject to the
conditions, including the lender's approval, of the remaining one-year, as
discussed in Note 5 of the Notes to Consolidated Financial Statements, will be
sufficient to satisfy our cash requirements for the foreseeable future, and we
do not currently anticipate a need to raise funds from other than these sources
within the next 12 months. However, to the extent that cash flow from operations
and available cash on hand and marketable securities are not sufficient to cover
our cash needs or our lender does not approve the remaining one-year extension
option under the Revolving Credit Facility, we may use proceeds from additional
borrowings and/or selective asset sales to fund such needs.

In light of the COVID-19 pandemic's impact on our operating performance, we previously negotiated various changes to the terms of our Revolving Credit Facility, including modifications of financial covenants. See "Contractual Mortgage Obligations" for additional information.



As of September 30, 2022, we have $61.3 million of outstanding mortgage debt. We
have and intend to continue to limit our aggregate long-term permanent
borrowings to 75% of the aggregate fair market value of all properties unless
any excess borrowing is approved by a majority of the independent directors and
is disclosed to our stockholders. Market conditions will dictate our overall
leverage limit; as such, our aggregate long-term permanent borrowings may be
less than 75% of aggregate fair market value of all properties. We may also
incur short-term indebtedness, having a maturity of two years or less.

Our charter provides that the aggregate amount of our borrowing, both secured
and unsecured, may not exceed 300% of net assets in the absence of a
justification showing that a higher level is appropriate, the approval of our
Board of Directors and disclosure to stockholders. Net assets means our total
assets, other than intangibles, at cost before deducting depreciation or other
non-cash reserves less our total liabilities, calculated at least quarterly on a
basis consistently applied. Any excess in borrowing over such 300% of net assets
level must be approved by a majority of our independent directors and disclosed
to our stockholders in our next quarterly report to stockholders, along with
justification for such excess. Market conditions will dictate our overall
leverage limit; as such, our aggregate borrowings may be less than 300% of net
assets. As of September 30, 2022, our total borrowings were $61.3 million which
represented 55% of our net assets.

Our borrowings currently consist of mortgages cross-collateralized by a pool of
properties. Our mortgages typically provide for either interest-only payments
(generally for variable-rate indebtedness) or level payments (generally for
fixed-rate indebtedness) with "balloon" payments due at maturity.

Any future properties that we may acquire or develop may be funded through a
combination of borrowings and the proceeds received from the disposition of
certain of our assets. These borrowing may consist of single-property mortgages
as well as mortgages cross-collateralized by a pool of properties. Such
mortgages may be put in place either at the time we acquire a property or
subsequent to our purchasing a property for cash. In addition, we may acquire
properties that are subject to existing indebtedness where we choose to assume
the existing mortgages. Generally, though not exclusively, we intend to seek to
encumber our properties with non-recourse debt. This means that a lender's
rights on default will generally be limited to foreclosing on the property.
However, we may, at our discretion, secure recourse financing or provide a
guarantee to lenders if we believe this may result in more favorable terms. When
we give a guaranty for a property owning entity, we will be responsible to the
lender for the satisfaction of the indebtedness if it is not paid by the
property owning entity.


                                       29




We may also obtain lines of credit to be used to acquire properties. If
obtained, these lines of credit will be at prevailing market terms and will be
repaid from proceeds from the sale or refinancing of properties, working capital
and/or permanent financing. Our Sponsor and/or its affiliates may guarantee our
lines of credit although they are not obligated to do so. We expect that such
properties may be purchased by our Sponsor's affiliates on our behalf, in our
name, in order to minimize the imposition of a transfer tax upon a transfer of
such properties to us.

In addition to meeting working capital needs and distributions, if any, made to
maintain our status as a REIT, our capital resources are used to make certain
payments to our Advisor, including payments related to asset acquisition fees
and asset management fees, the reimbursement of acquisition-related expenses to
our Advisor. We also reimburse our advisor for actual expenses it incurs for
administrative and other services provided to us. Additionally, the Operating
Partnership may be required to make distributions to Lightstone SLP III LLC, an
affiliate of the Advisor.

We have agreements with the Advisor to pay certain fees in exchange for services
performed by the Advisor and/or its affiliated entities. Upon the liquidation of
assets, we may pay our Advisor or its affiliates a real estate disposition
commission. Additionally, our Operating Partnership may be required to make
distributions to Lightstone SLP III LLC, an affiliate of the Advisor.

The advisory agreement has a one-year term and is renewable for an unlimited
number of successive one-year periods upon the mutual consent of the Advisor and
our independent directors.

                                                     For the                        For the
                                               Three Months Ended              Nine Months Ended
                                                  September 30,                  September 30,
                                              2022             2021           2022            2021
Finance fees (1)                           $        -       $      144     $        -       $     144
Asset management fees (general and
administrative costs)                             302              301            905             904
Total                                      $      302       $      445     $      905       $   1,048

(1) A finance fee of $144 paid to the Advisor in connection with arranging the

Williamsburg Moxy Hotel Joint Venture's construction loan was capitalized in

2021 and is included in investment in unconsolidated affiliated real estate

entities on the consolidated balance sheets.

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