Exhibit
99.2



































LIGHTSTONE
MEMBER II LLC


AND
SUBSIDIARIES


CONSOLIDATED
FINANCIAL STATEMENTS


YEARS
ENDED DECEMBER 31, 2008 AND 2007













LIGHTSTONE
MEMBER II LLC AND SUBSIDIARIES


CONSOLIDATED
FINANCIAL STATEMENTS


YEARS
ENDED DECEMBER 31, 2008 AND 2007











TABLE
OF CONTENTS







Page
No.





Independent
      Auditors’ Report
            1Consolidated
      Balance Sheets
            2Consolidated
      Statements of Operations
            3Consolidated
      Statements of Changes in Members’ Deficit
            4Consolidated
      Statements of Cash Flows
            5Notes
      to Consolidated Financial Statements
            6 –
      13










INDEPENDENT
AUDITORS’ REPORT











To the
Members


Lightstone
Member II LLC and Subsidiaries








We have
audited the accompanying consolidated balance sheets of Lightstone Member II LLC
and Subsidiaries (the “Company”) as of December 31, 2008 and 2007, and the
related consolidated statements of operations, changes in members’ deficit and
cash flows for the years then ended.  These consolidated financial
statements are the responsibility of the Company’s management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.





We
conducted our audits in accordance with auditing standards generally accepted in
the United States of America.  Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.  An audit includes
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting.  Accordingly, we express no
such opinion.   An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Lightstone Member II LLC and
Subsidiaries as of December 31, 2008 and 2007, and the results of their
operations and cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of
America.







/s/
Cornerstone Accounting Group LLP


Roseland,
New Jersey


March 25,
2009




1
 
  LIGHTSTONE
      MEMBER II LLC AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETSDECEMBER
      31, 2008 AND 2007ASSETS2008
                
                
                2007Investments
      in Real Estate, net
                
                $
                61,751,076
                
                
                $
                62,913,297Other
      AssetsCash
      and cash equivalents
                
                
                440,107
                
                
                
                699,014Escrow
      deposits
                
                
                1,613,699
                
                
                
                1,875,440Rents
      and other receivables, net of allowance of $671,186and
      $352,340 in 2008 and 2007, respectively
                
                
                1,307,913
                
                
                
                1,935,687In
      place lease value, net
                
                
                495,430
                
                
                
                795,299Acquired
      lease rights, net
                
                
                420,117
                
                
                
                654,114Deferred
      lease costs, net
                
                
                622,333
                
                
                
                758,381Prepaid
      expenses
                
                
                92,524
                
                
                
                226,020$
                66,743,199
                
                
                $
                69,857,252LIABILITIES
      AND MEMBERS’ DEFICITLiabilitiesMortgage
      note payable
                
                $
                39,061,078
                
                
                $
                39,500,000Notes
      payable – related party
                
                
                35,899,387
                
                
                
                29,294,413Interest
      payable
                
                
                202,986
                
                
                
                174,078Deferred
      revenue
                
                
                348,924
                
                
                
                495,098Accounts
      payable, accrued expenses and other liabilities
                
                
                2,598,648
                
                
                
                3,387,979Acquired
      lease obligations, net
                
                
                271,547
                
                
                
                493,708Due
      to affiliates
                
                
                3,992,813
                
                
                
                3,871,46682,375,383
                
                
                
                77,216,742Members’
      Deficit
                
                
                (15,632,184
                )
                
                
                (7,359,490
                )$
                66,743,199
                
                
                $
                69,857,252The
      accompanying notes are an integral part of these consolidated financial
      statements.


2




LIGHTSTONE
      MEMBER II LLC AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONSYEARS
      ENDED DECEMBER 31, 2008 AND 20072008
                
                
                2007RevenuesRental
                
                $
                6,720,711
                
                
                $
                6,979,761Tenant
      reimbursements
                
                
                2,770,927
                
                
                
                2,714,104Interest
      and other income
                
                
                138,241
                
                
                
                117,6509,629,879
                
                
                
                9,811,515ExpensesRental
      property operating and maintenance expenses
                
                
                5,975,458
                
                
                
                5,237,346Real
      estate taxes
                
                
                732,675
                
                
                
                643,168Loss
      on sale of real estate asset
                
                
                38,533
                
                
                
                -Interest
      expense
                
                
                6,026,444
                
                
                
                5,849,589Depreciation
      and amortization
                
                
                4,570,001
                
                
                
                2,846,790General
      and administrative
                
                
                432,962
                
                
                
                475,87017,776,073
                
                
                
                15,052,763Net
      Loss
                
                $
                (8,146,194
                )
                
                $
                (5,241,248
                )The
      accompanying notes are an integral part of these consolidated financial
      statements.
 3




LIGHTSTONE
      MEMBER II LLC AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CHANGES IN MEMBERS’ DEFICITYEARS
      ENDED DECEMBER 31, 2008 AND 2007Presidential
              
              
              David
              
              
              HaroldRealty
      Corp.
              
              
              Lichtenstein
              
              
              Rubin
              
              
              TotalBalance
      at January 1, 2007
              
              $
              (1,326,658
              )
              
              $
              (851,929
              )
              
              $
              76,845
              
              
              $
              (2,101,742
              )Distributions
              
              
              -
              
              
              
              -
              
              
              
              (16,500
              )
              
              
              (16,500
              )Net
      loss
              
              
              (1,519,962
              )
              
              
              (3,668,874
              )
              
              
              (52,412
              )
              
              
              (5,241,248
              )Balance
      at December 31, 2007
              
              
              (2,846,620
              )
              
              
              (4,520,803
              )
              
              
              7,933
              
              
              
              (7,359,490
              )Distributions
              
              
              -
              
              
              
              -
              
              
              
              (126,500
              )
              
              
              (126,500
              )Net
      loss
              
              
              (2,362,396
              )
              
              
              (5,702,336
              )
              
              
              (81,462
              )
              
              
              (8,146,194
              )Balance
      at December 31, 2008
              
              $
              (5,209,016
              )
              
              $
              (10,223,139
              )
              
              $
              (200,029
              )
              
              $
              (15,632,184
              )The
      accompanying notes are an integral part of these consolidated financial
      statements.


4




LIGHTSTONE
      MEMBER II LLC AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWSYEARS
      ENDED DECEMBER 31, 2008 AND 20072008
                
                
                2007Cash
      Flows From Operating Activities:Net
      loss
                
                $
                (8,146,194
                )
                
                $
                (5,241,248
                )Adjustments
      to reconcile net loss to net cashfrom
      operating activities:Depreciation
      and amortization
                
                
                4,570,001
                
                
                
                2,846,790Loss
      on sale of real estate asset
                
                
                38,533
                
                
                
                -Net
      change in revenue related to acquired lease
    rights/obligations
                
                
                11,836
                
                
                
                101,109Bad
      debt allowance
                
                
                318,846
                
                
                
                265,974Interest
      accrued into note payable - related
                
                
                2,828,710
                
                
                
                1,761,086Rents
      and other receivables
                
                
                308,928
                
                
                
                (290,507
                )Prepaid
      expenses
                
                
                133,462
                
                
                
                (128,960
                )Accounts
      payable, accrued expenses and other liabilities
                
                
                (398,186
                )
                
                
                365,280Interest
      expense payable
                
                
                28,908
                
                
                
                (22,654
                )Due
      to affiliates
                
                
                121,347
                
                
                
                3,042,639Deferred
      revenue
                
                
                (146,174
                )
                
                
                220,930Net cash provided by (used in)
      operating activities
                
                
                (329,983
                )
                
                
                2,920,439Cash
      Flows From Investing Activities:Escrow deposits,
      net
                
                
                261,741
                
                
                
                66,794Deferred
      leasing costs
                
                
                21,088
                
                
                
                (839,446
                )Accounts
      payable, accrued expenses and other liabilities
                
                
                (391,143
                )
                
                
                (704,032
                )Sales
      proceeds from sale of real estate asset
                
                
                411,467
                
                
                
                -Additions
      to properties
                
                
                (3,367,546
                )
                
                
                (13,237,423
                )Net
      cash used in investing activities
                
                
                (3,064,393
                )
                
                
                (14,714,107
                )Cash
      Flows From Financing Activities:Repayment
      of  mortgage note payable
                
                
                (438,922
                )
                
                
                -Proceeds
      from notes payable – related party
                
                
                3,776,264
                
                
                
                16,562,870Repayment
      of notes payable – related party
                
                
                -
                
                
                
                (4,425,685
                )Deferred
      financing costs
                
                
                (75,373
                )
                
                
                (27,900
                )Member
      distributions
                
                
                (126,500
                )
                
                
                (16,500
                )Net
      cash provided by financing activities
                
                
                3,135,469
                
                
                
                12,092,785Net
      change in cash and cash equivalents
                
                
                (258,907
                )
                
                
                299,117Cash
      and cash equivalents, beginning of year
                
                
                699,014
                
                
                
                399,897Cash
      and cash equivalents, end of year
                
                $
                440,107
                
                
                $
                699,014Supplemental
      Disclosures of Cash Flow Information:Cash
      paid during the years ended for:Interest
                
                $
                3,217,884
                
                
                $
                4,075,849The
      accompanying notes are an integral part of these consolidated financial
      statements.


5


LIGHTSTONE
MEMBER II LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007




1.
            ORGANIZATION
      AND DESCRIPTION OF BUSINESS





a.
              Formation





Lightstone
Member II LLC (“Lightstone”) was formed under the laws of the Commonwealth of
Delaware on December 1, 2004.    The purpose of Lightstone
is to acquire, own, develop and manage retail malls.  Lightstone
Member II LLC and Subsidiaries (the “Company”) own the following retail malls as
of December 31, 2008:








Property
            
            
            
            Approximate
            
            
            
            Occupancy
      atName
            
            Location
            
            Square
      Feet
            
            Ownership
            
            Dec. 31,
      2008Shawnee
      Mall
            
            Shawnee,
      OK
            
            
            444,000
            
            Fee
            
            
            71
            %Brazos
      Outlet Center
            
            Lake
      Jackson, TX
            
            
            698,000
            
            Fee
            
            
            76
            %1,142,000







As
      of December 31, 2008, members of Lightstone and their respective
      percentage interests are as
follows:







OwnershipInterestsPresidential
      Realty Corp.
              
              
              29
              %David
      Lichtenstein (Managing Member)
              
              
              70
              %Harold
      Rubin
              
              
              1
              %





b.
            Cash
      Distribution, Profit and Loss
Allocations





Lightstone
shall continue to operate until dissolved per the operating
agreement.  The liability of each of the members is limited to the
amount of capital contributed.





Distributions
of proceeds shall be distributed to the members at the discretion of the
Managing Member, subject to the terms and conditions of all indebtedness of
Lightstone; provided that cash flow shall be distributed not less than annually
and capital proceeds shall be distributed not later than forty-five days from
the closing of the transaction giving rise to such capital
proceeds.





Distributions
of cash flow shall be made to the members as follows:





(a)
            First,
      to the Managing Member and its affiliate, Cedar Asset Management, LLC (or
      Harold Rubin), until the Managing Member and its affiliate (or Harold
      Rubin) have received an aggregate amount equal to an accrued return
      of  11% per annum (“Preferred Return”) on the Managing Member’s
      and affiliate’s unreturned capital
contribution.





(b)
            Then,
      to the members in accordance with their respective ownership
      interests.




6


LIGHTSTONE
MEMBER II LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007




1.
              ORGANIZATION
      AND DESCRIPTION OF BUSINESS
(Continued)





b.
            Cash
      Distribution, Profit and Loss Allocations
  (continued)





Capital
      proceeds shall be distributed to the members as
  follows:





(a)
            First,
      to the Managing Member and its affiliates, until the Managing Member and
      its affiliates have received an aggregate amount equal to an accrued
      return of 11% per annum on the Managing Member’s and its affiliates’
      unreturned capital contribution.





(b)
            Then,
      to the Managing Member and its affiliates, until the Managing Member and
      its affiliates have received an aggregate amount equal the Managing
      Member’s and its affiliates’ capital
  contribution.





(c)
            Then,
      to the members in accordance with their respective ownership
      interests.





c.
            Allocation
      of Profits and Losses





For
financial reporting purposes, income is allocated based upon the cash flow
distribution formula above.  Losses are allocated pro-rata based upon
ownership interests.





2.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING
POLICIES





a.
            Basis
      of Accounting





The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
(“GAAP”).





b.
            Principles
      of Consolidation





The
consolidated financial statements include the accounts of Lightstone Member II
and its wholly-owned subsidiaries, Shawnee Mall LLC and Brazos Outlet Mall LLC.
All material intercompany balances and transactions have been eliminated in
consolidation.





c.
            Use
      of Estimates





The
preparation of the financial statements in conformity with GAAP requires
management to make estimates and assumptions.  These estimates and
assumptions affect the reported amounts of certain assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements.  They also affect reported amounts of revenues and
expenses during the reporting period.  Significant items subject to
such estimates and assumptions include the carrying amount of investments in
real estate, valuation of receivables and the allocation of purchase price to
acquired lease rights and obligations.  Actual results could differ
from those estimates.




7


LIGHTSTONE
MEMBER II LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007




2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)





d.
            Cash
      and Cash Equivalents





For
purposes of the statement of cash flows, the Company considers short-term
investments with maturities of 90 days or less when purchased to be cash
equivalents. The Company maintains cash accounts at financial institutions,
which are insured up to a maximum of $250,000. At various times during the year,
balances exceeded the federally insured limit.  Due to the credit
quality of the financial institutions, such credit risk is considered, by the
Company, to be minimal.





e.
            Revenue
      Recognition and Tenant Receivables





Base
rental revenues from rental retail properties are recognized on a straight-line
basis over the noncancelable terms of the related leases, which are all
accounted for as operating leases.  “Percentage rent” or rental
revenue which is based upon a percentage of the sales recorded by the Company’s
tenants, is recognized in the period in which the tenants achieve their
specified threshold per their lease agreements.  These amounts are
included in rental revenues in the accompanying consolidated statements of
operations.





Rental
income is also recognized in accordance with Statement of Financial Accounting
Standards (SFAS) No. 141, Business Combinations, whereby the amortization of
acquired favorable leases and acquired unfavorable leases is recognized as a
reduction of or an addition to base rental income, respectively, over the terms
of the respective leases.  The net amount included in base rental
income for the years ended December 31, 2008 and 2007 are as
follows:





2008
            
            
            2007Shawnee
      Mall
            
            $
            (20,977
            )
            
            $
            (31,843
            )Brazos
      Outlets Center
            
            
            9,141
            
            
            
            (69,266
            )$
            (11,836
            )
            
            $
            (101,109
            )





Reimbursements
from tenants related to real estate taxes, insurance and other shopping center
operating expenses are recognized as revenue, based on a predetermined formula,
in the period the applicable costs are incurred.  Lease termination
fees are recognized when the related leases are canceled, the tenant surrenders
the space, and the Company has no continuing obligation to provide services to
such former tenants.





The
Company provides an allowance for doubtful accounts against the portion of
tenant receivables which is estimated to be uncollectible. Management of the
Company reviews its allowance for doubtful accounts monthly.  Balances
that are past due over 90 days and over a specified amount are reviewed
individually for collectibility.  Account balances are charged off
against the allowance after all means of collection have been exhausted and the
potential for recovery is considered doubtful.




8




LIGHTSTONE
MEMBER II LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007


2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)





f.
            Deferred
      Charges





Deferred
leasing commissions, acquired in-place lease value, and other direct costs
associated with the acquisition of tenants are capitalized and amortized on a
straight-line basis over the terms of the related leases.  Loan costs
are capitalized and amortized to interest expense over the term of the related
loan.





g.
            Real
      Estate and Depreciation





Real
estate is stated at historical cost less accumulated
depreciation.  The building and improvements thereon are depreciated
on the straight-line basis over an estimated useful life of 40
years.  Tenant improvements are depreciated on the straight-line basis
over the shorter of the lease term or their estimated useful
life.  Equipment is depreciated on the straight-line basis over
estimated useful lives of 5 to 7 years.





Improvements
and replacements are capitalized when they extend the useful life or improve the
efficiency of the asset.  Repairs and maintenance are charged to
expense as incurred.





h.
            Impairment
      of Long-Lived Assets





Management
assesses whether there has been impairment in the value of long-lived assets
whenever events or changes in circumstances indicate the carrying amount of an
asset may not be recoverable.  Recoverability of assets to be held and
used is measured by a comparison of the carrying amount to the future net cash
flows, undiscounted and without interest, expected to be generated by the
asset.  If such assets are considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets.





i.
            Purchase
      Accounting for Acquisition of Interests in Real Estate
      Entities





Management
allocated the purchase price of properties to tangible and identified intangible
assets acquired based on its fair value in accordance with the provisions of
SFAS No. 141, Business Combinations.  The fair value of the tangible
assets of an acquired property (which includes land, building, and improvements)
was determined by valuing the properties as if vacant, and the “as-if-vacant”
value was then allocated to land, building and improvements based on
management’s determination of the relative fair values of these assets.
Management determined the “as-if-vacant” fair value of properties using methods
similar to those used by independent appraisers.





Factors
considered by management in performing these analyses included an estimate of
carrying costs to execute similar leases.  In estimating carrying
costs, management included real estate taxes, insurance and other operating
expenses and estimates of lost rental revenue during the expected lease-up
periods based on current market demand.  Management also estimated
costs to execute similar leases including leasing commissions, legal and other
related costs.




9




LIGHTSTONE
MEMBER II LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007




2.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)





i.
              Purchase
      Accounting for Acquisition of Interests in Real Estate Entities
      (continued)





In
allocating the fair value of the identified intangible assets and liabilities of
acquired properties, above-market and below-market in-place lease values were
recorded based on the present value (using an interest rate which reflects the
risks associated with the leases acquired) of the difference between (i) the
contractual amounts to be paid pursuant to the in-place leases and (ii)
management’s estimate of fair market lease rates for the corresponding in-place
leases, measured over a period equal to the remaining non-cancelable term of the
lease.  The capitalized above-market lease values (included in the
acquired lease rights in the accompanying consolidated balance sheets) are
amortized as a reduction of rental income over the remaining non-cancelable
terms of the respective leases.  The capitalized below-market lease
values (presented as acquired lease obligations in the accompanying consolidated
balance sheets) are amortized as an increase to rental income over the initial
term and any fixed rate renewal periods in the respective leases.





The
aggregate value of other acquired intangible assets, consisting of in-place
leases and tenant relationships, was measured by the excess of (i) the purchase
price paid for a property after adjusting existing in-place leases to market
rental rates over (ii) the estimated fair value of the property as if vacant,
determined as set forth above.  This aggregate value was allocated
between in-place lease values and tenant relationships based on management’s
evaluation of the specific characteristics of each tenant’s lease; however, the
value of tenant relationships has not been separated from in-place lease value
because such value and its consequence to amortization expense is immaterial for
these particular acquisitions.  The value of in-place leases exclusive
of the value of above-market and below-market in-place leases is amortized to
expense over the remaining non-cancelable periods of the respective
leases.  If a lease were to be terminated prior to its stated
expiration, all unamortized amounts relating to that lease would be written
off.





j.
            Income
      Taxes





The
Company is a limited liability company which elected to be treated as a
partnership for income tax purposes and is, therefore, not subject to income
taxes at the entity level.  All income and losses pass through to the
members and are reported by them individually for income tax
purposes.





k.
              Reclassifications




Certain
reclassifications have been made to the 2007 financial statement presentation to
correspond to the current year’s format.





3.
            ESCROW
      DEPOSITS





Escrow
deposits include funds and other restricted deposits required in conjunction
with the Company’s loan agreements.  Such amounts are to be used for
specific purposes, such as the payment of real estate taxes, insurance and
capital improvements.




10


LIGHTSTONE
MEMBER II LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007


4.
            REAL
      ESTATE





At December 31, 2008 and 2007,
investments in real estate consists of the following:





2008
            
            
            2007Land
            
            $
            6,635,593
            
            
            $
            7,085,593Buildings
      and improvements
            
            
            46,423,982
            
            
            
            47,393,346Tenant
      improvements
            
            
            15,840,139
            
            
            
            13,876,64568,899,714
            
            
            
            68,355,584Accumulated
      depreciation
            
            
            (7,148,638
            )
            
            
            (5,442,287
            )$
            61,751,076
            
            
            $
            62,913,297





5.
            LEASE
      INTANGIBLES





Lease
intangibles and the value of assumed lease obligations were comprised as
follows:





2008Acquired
            
            
            
            
            
            AcquiredLease
            
            
            Leases
      in
            
            
            Lease
            
            
            
            
            
            LeaseCommissions
            
            
            Place
            
            
            Rights
            
            
            Total
            
            
            ObligationsCost
            
            $
            862,594
            
            
            $
            2,376,476
            
            
            $
            1,589,107
            
            
            $
            4,828,177
            
            
            $
            (1,328,347
            )Accumulatedamortization
            
            
            (240,261
            )
            
            
            (1,881,046
            )
            
            
            (1,168,990
            )
            
            
            (3,290,297
            )
            
            
            1,056,800$
            622,333
            
            
            $
            495,430
            
            
            $
            420,117
            
            
            $
            1,537,880
            
            
            $
            (271,547
            )





2007Acquired
            
            
            
            
            
            AcquiredLease
            
            
            Leases
      in
            
            
            Lease
            
            
            
            
            
            LeaseCommissions
            
            
            Place
            
            
            Rights
            
            
            Total
            
            
            ObligationsCost
            
            $
            892,045
            
            
            $
            2,818,755
            
            
            $
            1,850,970
            
            
            $
            5,561,770
            
            
            $
            (2,052,018
            )Accumulatedamortization
            
            
            (133,664
            )
            
            
            (2,023,456
            )
            
            
            (1,196,856
            )
            
            
            (3,353,976
            )
            
            
            1,558,310$
            758,381
            
            
            $
            795,299
            
            
            $
            654,114
            
            
            $
            2,207,794
            
            
            $
            (493,708
            )




11





LIGHTSTONE
MEMBER II LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007


5.
              LEASE
      INTANGIBLES (Continued)





The
estimated aggregate amortization expense or rental revenue adjustment for lease
intangibles for the five succeeding years is as follows:





Acquired
            
            
            
            
            
            AcquiredLease
            
            
            Leases
      in
            
            
            Lease
            
            
            
            
            
            LeaseCommission(1)
            
            
            Place(1)
            
            
            Rights (2)
            
            
            Total
            
            
            Obligations(2)2009
            
            $
            105,288
            
            
            $
            148,563
            
            
            $
            159,767
            
            
            $
            413,618
            
            
            $
            (67,240
            )2010
            
            
            85,556
            
            
            
            103,673
            
            
            
            101,114
            
            
            
            290,343
            
            
            
            (55,943
            )2011
            
            
            79,860
            
            
            
            89,999
            
            
            
            90,341
            
            
            
            260,200
            
            
            
            (46,559
            )2012
            
            
            64,524
            
            
            
            67,425
            
            
            
            51,990
            
            
            
            183,939
            
            
            
            (45,493
            )2013
            
            
            59,283
            
            
            
            34,210
            
            
            
            15,726
            
            
            
            109,219
            
            
            
            (21,127
            )Thereafter
            
            
            227,822
            
            
            
            51,560
            
            
            
            1,179
            
            
            
            280,561
            
            
            
            (35,185
            )




(1)
      Charged
      to amortization expense.(2)
      Recorded
      as an adjustment to base rental
revenues.





6.
            MORTGAGE
      NOTE PAYABLE





The
mortgage note payable to Wachovia Bank is due in January
2010,   The note is payable in monthly installments of interest
only at the 30 day LIBOR plus 280 basis points with the LIBOR rate not to be
less that 2.36%.  The interest rate at December 31, 2008 was
5.16%.  The note is secured by the real estate, assignment of leases,
rent and security deposits.




Under the
terms of the subsequent renewal of debt in January 2009, which extended the due
date to January 2010, the lender exercised its right to retain the cash flows of
the property, pursuant to the provisions in the original mortgage note as the
Company’s failed to meet the debt service coverage requirement.


7.
            NOTES
      PAYABLE – RELATED PARTY




Lightstone
borrowed $7,835,000 from Presidential Realty Corp., a member of the Company.
This loan bears interest at the rate of 11% per annum payable in monthly
installments and matures on December 23, 2014.  The loan is
collateralized by Lightstone’s membership interest in each of the subsidiaries
and is subject to the first mortgage lien to Wachovia Bank. The loan has a
prepayment penalty of 3% of principal. Subsequent to the date of these financial
statements Lightstone defaulted on the loan by failing to pay the monthly
interest installment.  An agreement was reached whereby, along with
certain other provisions, the accrued interest on the loan is personally
guaranteed by Mr. Lichtenstein.





The
Company incurred interest expense of $876,214 and $873,820 in 2008 and 2007,
respectively.





A member
of the Company made advances to the Company for working capital needs of the
properties. The loan bears interest of 11% and is payable upon
demand.  Any unpaid interest on the loan is
capitalized   Interest added to the note balance in 2008 was
$2,828,710 and $1,761,086 in 2007. During the year the member made an additional
advance of $3,776,264 to the Company under similar terms.





The
Company incurred interest expense of $2,829,026 and $1,751,086 in 2008 and 2007,
respectively.




12




LIGHTSTONE
MEMBER II LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007




7.
            NOTES
      PAYABLE – RELATED PARTY (Continued)





Also,
during 2007, the Company repaid in full an amount of $4,425,685 to another
member who had advanced funds to the Company for working capital needs of the
properties.





The notes
payable to related parties is made up of the above loan balances as
follows:





2008
            
            
            2007Presidential
      Realty Corp Loan
            
            $
            7,835,000
            
            
            $
            7,835,000Other
      Member Loan
            
            
            28,064,387
            
            
            
            21,459,413$
            35,899,387
            
            
            $
            29,294,413





8.
            DUE
      TO AFFILIATES





The net
amount due to affiliates is due upon demand and bears interest rate of
11%.





9.
            RENTALS
      UNDER OPERATING LEASES





The
Company receives rental income from the leasing of retail shopping center space
under operating leases.  The Company recognizes income from tenant
operating leases on a straight-line basis over the respective lease terms and,
accordingly, rental income in a given period will vary from actual contractual
rental amounts due.  Rental income recorded in 2008 was $331,000 less
than the amounts contractually due.  In 2007 rental income recorded
was $235,000 in excess of amounts contractually due.





The
minimum annual future base rentals due under non-cancelable operating leases as
of December 31, 2008, are as follows:




2009
              
              $
              5,574,8102010
              
              
              4,924,6602011
              
              
              4,271,0372012
              
              
              3,656,8902013
              
              
              3,099,881Thereafter
              
              
              17,399,838$
              38,927,116





Minimum
annual future rentals due do not include amounts which are payable by certain
tenants based upon certain reimbursable operating expenses.  The
tenants include national and regional chains and local retailers and,
consequently, the Company’s credit risk is concentrated in the retail
industry.




13