1. Organization Lightstone Value Plus Real Estate Investment Trust II, Inc. (the Lightstone REIT II) is a Maryland corporation formed on April 28, 2008, which has qualified as a real estate investment trust (REIT) for U.S. federal income tax purposes since its taxable year ending December 31, 2009. The Lightstone REIT II was formed primarily for the purpose of engaging in the business of investing in and owning commercial and residential real estate properties located principally in North America, as well as other real estate-related securities, such as collateralized debt obligations, commercial mortgage-backed securities and mortgage and mezzanine loans secured, directly or indirectly, by the same types of properties which it may acquire directly. The Lightstone REIT II is structured as an umbrella partnership REIT, or UPREIT, and substantially all of its current and future business is and will be conducted through Lightstone Value Plus REIT II LP (the Operating Partnership), a Delaware limited partnership formed on April 30, 2008, in which Lightstone REIT II as the general partner, held a 99% interest as of March 31, 2019. The Lightstone REIT II and the Operating Partnership and its subsidiaries are collectively referred to as the Company and the use of we, our, us or similar pronouns refers to the Lightstone REIT II, its Operating Partnership or the Company as required by the context in which such pronoun is used. The Company is managed by Lightstone Value Plus REIT II LLC (the Advisor), an affiliate of The Lightstone Group, Inc. under the terms and conditions of an advisory agreement. The Lightstone Group, Inc. previously served as the Companys sponsor (the Sponsor) during its initial public offering (the Offering) and follow-on offering (the Follow-on Offering, and collectively, the Offerings), which terminated on August 15, 2012 and September 27, 2014, respectively. Subject to the oversight of the Companys board of directors (the Board of Directors), the Advisor has primary responsibility for making investment decisions and managing the Companys day-to-day operations. Through his ownership and control of The Lightstone Group, Inc., Mr. Lichtenstein is the indirect owner of the Advisor and the indirect owner and manager of Lightstone SLP II LLC, which has subordinated profits interests in the Operating Partnership. Mr. Lichtenstein also acts as the Companys Chairman and Chief Executive Officer. As a result, he exerts influence over but does not control Lightstone REIT II or the Operating Partnership. The Company does not have any employees. The Advisor receives compensation and fees for services related to the investment and management of the Companys assets. The Sponsor has various majority owned and controlled affiliated property managers, which may manage certain of the properties the Company acquires. However, the Company also contracts with other unaffiliated third-party property managers, principally for the management of its hospitality properties. The Companys shares of common stock are not currently listed on a national securities exchange. The Company may seek to list its shares of common stock for trading on a national securities exchange only if a majority of its independent directors believe listing would be in the best interest of its stockholders. The Company does not intend to list its shares at this time. The Company does not anticipate that there would be any market for its shares of common stock until they are listed for trading. In the event the Company does not obtain listing prior to the tenth anniversary of the completion or termination of the Follow-on Offering, which was terminated on September 27, 2014, its charter requires that the Board of Directors must either (i) seek stockholder approval of an extension or amendment of this listing deadline; or (ii) seek stockholder approval to adopt a plan of liquidation of the corporation. Assets Held for Sale During the first quarter of 2019, two of the Companys limited service hotels, a Holiday Inn located in Opelika, Alabama and a Holiday Inn Express located in Auburn, Alabama (collectively, the Alabama Hotels) met the criteria to be classified as held for sale and therefore, their associated assets and liabilities are classified as held for sale in the consolidated balance sheet as of March 31, 2019 (See Note 6). Noncontrolling Interests Partners of Operating Partnership On May 20, 2008, the Advisor contributed $2 to the Operating Partnership in exchange for 200 limited partner units in the Operating Partnership. The limited partner has the right to convert Operating Partnership common units into cash or, at the Companys option, an equal number of shares of the common stock of the Company, as allowed by the limited partnership agreement. From the Companys inception through the termination of the Follow-On Offering on September 27, 2014, Lightstone SLP II LLC, which is wholly owned by the Sponsor, contributed (i) cash of approximately $12.9 million and (ii) equity interests totaling 48.6 % in Brownmill LLC (Brownmill), which were valued at $4.8 million, to the Operating Partnership in exchange for 177.0 subordinated profits interests (the Subordinated Profits Interests) in the Operating Partnership with an aggregate value of $17.7 million. See Notes 4 and 9 for additional information. Other Noncontrolling Interests in Consolidated Subsidiaries Other noncontrolling interests consist of (i) a 2.5% membership interest held by Lightstone Value Plus Real Estate Investment Trust, Inc. (Lightstone I), a related party REIT also sponsored by the Companys Sponsor, in a joint venture (the Joint Venture) formed between the Company and Lightstone I that currently owns 8 of our hotels as of March 31, 2019 and (ii) the membership interests held by minority owners in certain of our hotels.