UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported): June 29, 2010
Lightstone
Value Plus Real Estate Investment Trust II, Inc.
(Exact
Name of Registrant as Specified in Charter)
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Maryland
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333-151532
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83-0511223
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(State
or other jurisdiction of incorporation or organization)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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1985
Cedar Bridge Avenue, Suite 1
Lakewood,
New Jersey 08701
(Address,
including zip code, of Principal Executive Offices)
Registrant’s
telephone number, including area code: (732) 367-0129
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
1
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Item
1.01
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Entry
into Material Definitive
Agreements.
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Purchase of a Mortgage
Loan
On June 29, 2010, Lightstone Value Plus Real Estate Investment Trust II,
Inc. (the “Company”), through Lightstone Value REIT II, LP, the
Company’s operating partnership (the
“ Operating
Partnership”), entered into an Assignment and Assumption Agreement
(the “Assignment”) with Citigroup Global Markets
Realty Corp. (the “Seller”). Under the terms of the Assignment, the
Operating Partnership purchased from the Seller a fixed-rate, nonrecourse
mortgage note (the “Loan”) for $7.857 million. In addition, the
Seller agreed to indemnify the Operating Partnership from all existing litigation as
described below. As a result of the Assignment, the
Operating Partnership
assumed all rights and obligations, with the exception of the existing
litigation, in connection with the Loan, and became the lender under the Loan.
The Loan was originated by the Seller in
August 2007 with an original principal balance of $18.675 million, and is
collateralized by a limited service hotel located in East Rutherford,
NJ. The hotel is currently operating under a Marriot Franchise Agreement as a Fairfield
Inn. The Loan was scheduled to mature in September 2017 under its original term,
and has been in default since February 2009. The existing borrower
has initiated on-going litigation against the Seller in connection with its borrowings from the Seller,
including the Loan.
Sponsor
Contribution of Brownmill Interest
Lightstone
SLP II LLC, a wholly-owned subsidiary of The Lightstone Group, LLC (our
“Sponsor”), through an agreement with the Company and its Operating Partnership,
committed to purchase subordinated profits interests of the Operating
Partnership on a semiannual basis, beginning with the quarter ended June 30,
2010, at a price of $100,000 for each $1,000,000 in subscriptions that the
Company accepted as part of its stock offering until the Company achieves the
maximum offering. Our Sponsor may elect to purchase subordinated profits
interests with cash or may contribute interests in real property of equivalent
value.
On June
30, 2010, the Company, through its Operating Partnership, entered into a
Contribution Agreement between the Operating Partnership and Lightstone Holdings
LLC (“LGH”), a wholly-owned subsidiary of our Sponsor, pursuant to which LGH
contributed to our Operating Partnership a 26.25% equity interest in Brownmill
LLC (the “Brownmill Interest”) in order to fulfill our Sponsor’s commitment as
described above. In exchange, the Operating Partnership issued 25 units of
subordinated profits interests, at $100,000 per unit (at total value of $2.5
million), to Lightstone SLP II LLC. Brownmill LLC’s 100% gross value is valued
at approximately $31.8 million of which $9.5 million is in the form of equity
and $22.3 million is in the form of mortgage indebtedness as described
below. The value of the Brownmill Interest is approximately $8.4
million of which $2.5 million is in the form of equity and $5.9 million is in
the form of mortgage indebtedness. The board of directors of the Company, in
part, relied upon an opinion from an independent third party in arriving at
value of the Brownmill Interest.
All
distributions from Brownmill LLC will be made on a pro rata basis in proportion
to each member’s equity interest percentage. The Company will record the
Brownmill Interest under the equity method of accounting, and record its
allocated income or loss from Brownmill LLC based on its 26.25% equity interest
percentage beginning April 1, 2010.
Brownmill
LLC owns two retail properties known as Browntown Shopping Center (“Browntown”)
and Millburn Mall (“Millburn”, and together with Browntown, the “Brownmill
Properties”), which are located in Old Bridge, NJ and Vauxhall, NJ,
respectively. Browntown and Millburn represent 84,851 square
feet and 71,151 square feet, respectively, of total gross leasable area, and
were 58.75% and 95.55% occupied, respectively, as of May 31, 2010. The Brownmill
Properties are cross-collateralized, securing a non-recourse loan maturing on
October 8, 2015. The loan has a 10-year term and monthly principal and interest
payments of $133,051 through its maturity date. The loan bears a
fixed interest rate of 5.36%. The aggregate outstanding balance of the Brownmill
Loan was $22.2 million as of June 30, 2010, $19.8 million of which will be due
upon maturity assuming no prior principal prepayment. Browntown
and Millburn are managed by Beacon Property Management LLC, a subsidiary of our
Sponsor and an affiliate of our advisor.
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Item
2.01
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Completion
of acquisition or disposition of
assets.
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See Sponsor Contribution of Brownmill
Interest in Item 1.01.
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Item
9.01
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Financial
Statements and Exhibits
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(a) and
(b) Financial
Statements and Pro Forma Financial Information.
The
financial statements that may be required by this item are not being filed
herewith. To the extent financial statements are required by this
item, such financial statements will be filed with the Securities and Exchange
Commission by amendment to this Form 8-K no later than 71 days after the date on which this Form 8-K is required to be
filed.
(c) Shell
Company.
Not
applicable.
(d) Exhibits.
None.
2
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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LIGHTSTONE
VALUE PLUS REAL
ESTATE
INVESTMENT TRUST II, INC.
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Date:
July 2, 2010
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By:
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/s/ Donna Brandin | |
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Donna
Brandin
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Chief
Financial Officer and Treasurer
(Principal
Financial and Accounting Officer)
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