|                                                                                                                                                                 
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT 99.4
LIGHTSTONE MEMBER LLC AND SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTSFOR THE PERIOD FROM SEPTEMBER 10, 2004(DATE OF INCEPTION)TO DECEMBER 31, 2004
|                                                                                                                                                                 

|
|



|LIGHTSTONE MEMBER LLC AND SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTSFOR THE PERIOD FROM SEPTEMBER 10, 2004(DATE OF INCEPTION)TO DECEMBER 31, 2004
TABLE OF CONTENTS
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                      

|Page No.                                  
|------------------------------------------
|Independent Auditors Report              
|Consolidated Balance Sheet                
|Consolidated Statement of Operations      
|Consolidated Statement of Members Capital
|Consolidated Statement of Cash Flows      
|Notes to Financial Statements             
|                                          

|
|



|INDEPENDENT AUDITORS REPORT
To the MembersLightstone Member LLCWhite Plains, New York
We have audited the accompanying consolidated balance sheet of Lightstone Member LLC and subsidiaries
(the Company) as of December 31, 2004, and the related consolidated statements of operations,
members capital and cash flows for the period from September 10, 2004 (date of inception) to
December 31, 2004. These financial statements are the responsibility of the Companys management.
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit 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 of material misstatement. 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 audit provides
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of the Company as of December 31, 2004 and the consolidated
results of its operations and its cash flows for the period from September 10, 2004 (date of inception)
to December 31, 2004, in conformity with accounting principles generally accepted in the United States
of America.
The Schonbraun McCann Group LLCRoseland, New JerseyFebruary 24, 2005
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|
|



|LIGHTSTONE MEMBER LLC AND SUSIDIARIESCONSOLIDATED BALANCE SHEETDECEMBER 31, 2004(Dollar amounts in thousands)
|-------------------------------------------------------------------------------------------------------------
|                                                                                                             
|                                                                                                             

|ASSETS                                                                       |  
|---------------------------------------------------------------------------- | -
|
|Investments in real estate, at cost, net of accumulated depreciation of $830 | $
|                                                                             |  
|Other Assets                                                                 |  
|Cash and cash equivalents                                                    |  
|Escrow deposits                                                              |  
|Rents and other receivables                                                  |  
|In place lease value, net of accumulated amortization of $591                |  
|Acquired lease rights, net of accumulated amortization of $122               |  
|Deferred financing costs, net of accumulated amortization of $234            |  
|Prepaid expenses                                                             |  
|                                                                             |  
|                                                                             |  
|                                                                             | $
|                                                                             |  
|
|                                                                             |  
|Liabilities                                                                  |  
|Mortgage note payable                                                        | $
|Mezzanine note payable  member                                              |  
|Deferred revenue                                                             |  
|Accounts payable, accrued expenses and other liabilities                     |  
|Acquired lease obligation, net of accumulated amortization of $381           |  
|Due to affiliates                                                            |  
|                                                                             |  
|                                                                             |  
|                                                                             |  
|Members Equity                                                              |  
|                                                                             |  
|                                                                             |  
|                                                                             | $
|                                                                             |  

|                                                                                    
|------------------------------------------------------------------------------------
|The accompanying notes are an integral part of the consolidated financial statement.

|2
|-



|LIGHTSTONE MEMBER LLC AND SUBSIDIARIESCONSOLIDATED STATEMENT OPERATIONSFOR THE PERIOD FROM SEPTEMBER 10, 2004(DATE OF INCEPTION)TO DECEMBER 31, 2004(Dollar amounts in thousands)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                 
|                                                                                                                                                                                 

|Revenue                                            |   |       |  
|-------------------------------------------------- | - | ----- | -
|Rental                                             | $ | 3,857 |  
|Tenant reimbursements                              |   | 1,289 |  
|Interest and other income                          |   | 46    |  
|                                                   |   |      
|                                                   |   | 5,192 |  
|                                                   |   |      
|                                                   |   |       |  
|Expenses                                           |   |       |  
|Rental property operating and maintenance expenses |   | 1,661 |  
|Real estate taxes                                  |   | 587   |  
|Interest                                           |   | 1,523 |  
|Depreciation and amortization                      |   | 1,655 |  
|General and administrative                         |   | 456   |  
|                                                   |   |      
|                                                   |   | 5,882 |  
|                                                   |   |      
|                                                   |   |       |  
|Net Loss                                           | $ | (690  | )
|                                                   |   |      

|                                                                                    
|------------------------------------------------------------------------------------
|The accompanying notes are an integral part of the consolidated financial statement.

|3
|-



|LIGHTSTONE MEMBER LLC AND SUBSIDIARIESCONSOLIDATED STATEMENT OF MEMBERS CAPITALFOR THE PERIOD FROM SEPTEMBER 10, 2004(DATE OF INCEPTION)TO DECEMBER 31, 2004(Dollar amounts in thousands)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                          
|                                                                                                                                                                                          

|                             | Presidential
      Realty Corp. |      | David
      Lichtenstein |   | Cedar Asset
      Management, LLC |   | Total |   
|---------------------------- | ------------------------------- | ---- | ------------------------ | - | --------------------------------- | - | ----- | --
|                             |                                 |      |                          |   |                                   |   |       |   
|                             |                                 |      |                          |   |                                   |   |       |   
|Initial Capital Contribution | $                               |     |                          | $ | 736                               |   | $     | 11
|                             |                                 |      |                          |   |                                   |   |       |   
|Net loss                     |                                 | (200 | )                        |   | (483                              | ) |       | (7
|                             |                                 |      |                          |   |                                   |   |       |   
|                             |                                 |      |                          |   |                                   |   |       |   
|Balance at December 31, 2004 | $                               | (200 | )                        | $ | 253                               |   | $     | 4 
|                             |                                 |      |                          |   |                                   |   |       |   

|                                                                                    
|------------------------------------------------------------------------------------
|The accompanying notes are an integral part of the consolidated financial statement.

|4
|-



|LIGHTSTONE MEMBER LLC AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CASH FLOWSFOR THE PERIOD FROM SEPTEMBER 10, 2004(DATE OF INCEPTION)TO DECEMBER 31, 2004(Dollar amounts in thousands)Increase (Decrease) in cash and cash equivalents
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                    

|Cash Flows From Operating Activities:                    |   |         |  
|-------------------------------------------------------- | - | ------- | -
|Net loss                                                 | $ | (690    | )
|Adjustments to reconcile net loss to net cash            |   |         |  
|used in operating activities:                            |   |         |  
|Depreciation and amortization                            |   | 1,655   |  
|Net change in revenue related to acquired lease          |   |         |  
|rights/obligations and deferred rent receivable          |   | (313    | )
|Rents and other receivables                              |   | (859    | )
|Escrow deposits                                          |   | (449    | )
|Prepaid expenses                                         |   | (579    | )
|Accounts payable, accrued expenses and other liabilities |   | 994     |  
|Due to affiliates, net                                   |   | 1,294   |  
|Deferred revenue                                         |   | 595     |  
|                                                         |   |        
|Net cash used in operating activities                    |   | 1,648   |  
|                                                         |   |        
|                                                         |   |         |  
|Cash Flows Used In Investing Activities:                 |   |         |  
|Real estate acquisition                                  |   | (84,089 | )
|Escrow deposits                                          |   | (4,659  | )
|                                                         |   |        
|Net cash used in investing activities                    |   | (88,748 | )
|                                                         |   |        
|                                                         |   |         |  
|Cash Flows From Financing Activities:                    |   |         |  
|Proceeds from mortgage loan payable                      |   | 82,038  |  
|Proceeds from mezzanine note payable                     |   | 8,600   |  
|Deferred financing costs                                 |   | (2,656  | )
|Capital contribution                                     |   | 747     |  
|                                                         |   |        
|Net cash provided by financing activities                |   | 88,729  |  
|                                                         |   |        
|                                                         |   |         |  
|Net increase in cash and cash equivalents                |   | 1,629   |  
|                                                         |   |         |  
|Cash and cash equivalents, beginning of period           |   |        |  
|                                                         |   |        
|Cash and cash equivalents, end of period                 | $ | 1,629   |  
|                                                         |   |        
|                                                         |   |         |  
|Supplemental Disclosures of Cash Flow Information:       |   |         |  
|Cash paid during the period ended for:                   |   |         |  
|Interest                                                 | $ | 1,149   |  
|                                                         |   |        

|                                                                                    
|------------------------------------------------------------------------------------
|The accompanying notes are an integral part of the consolidated financial statement.

|5
|-



|LIGHTSTONE MEMBER LLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2004(Dollar amounts in thousands)
|------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                              
|                                                                                                                              

|1. | ORGANIZATION AND DESCRPTION OF BUSINESS
|-- | ---------------------------------------
|   |                                        
|   | a.                                     
|   |                                        
|   |                                        
|   |                                        

|Property
      Name   |  | Location      |  | Approximate
      Square Feet |  | %
      Occupied |  | Ownership | 
|--------------------- |  | ------------- |  | ----------------------------- |  | ---------------- |  | --------- | 
|                      |  |               |  |                               |  |                  |  |           | 
|Mt. Berry Square Mall |  | Rome, GA      |  | 478,000                       |  | 86.7


%         |  | Fee       | 
|Bradley Square Mall   |  | Cleveland, TN |  | 385,000                       |  | 83.7


%         |  | Fee       | 
|W. Manchester Mall    |  | York, PA      |  | 733,000                       |  | 89.6


%         |  | Fee       | 
|Shenango Valley Mall  |  | Hermitage, PA |  | 508,000                       |  | 94.9


%         |  | Leasehold | 
|                      |  |               |  |                               |  |                  |  |           | 
|                      |  |               |  | 2,104,000                     |  |                  |  |           | 
|                      |  |               |  |                               |  |                  |  |           | 
|                      |  |               |  |                               |  |                  |  |           | 

| |  | As of December 31, 2004, members of the Company and their respective percentage interests and initial
  contributions are as follow:
| |  | ------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                     

|                                     | Ownership
      Interests |    | Initial
      Contributions |  
|------------------------------------ | ------------------------- | -- | --------------------------- | -
|                                     |                           |    |                             |  
|Presidential Realty Corp.            |                           | 29 | %                           | $
|David Lichtenstein (Managing Member) |                           | 70 | %                           |  
|Cedar Asset Management, LLC          |                           | 1  | %                           |  
|                                     |                           |    |                             |  
|                                     |                           |    |                             | $
|                                     |                           |    |                             |  
|                                     |                           |    |                             |  

| | b. | Cash Distribution, Profit and Loss Allocations
| | -- | ----------------------------------------------

| | The Company commenced operations on September 10, 2004 and 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 the Company; 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, until the Managing Member
  and its affiliate 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 ($747 as of December 31, 2004).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                            
| | (b) | Then, to the members in accordance with their respective Ownership Interests.                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                            

| | Capital proceeds shall be distributed to the members as follows:
| | ----------------------------------------------------------------
| |                                                                 

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

|6
|-



|LIGHTSTONE MEMBER LLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2004(Dollar amounts in thousands)
|------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                              
|                                                                                                                              

|1. | ORGANIZATION AND DESCRPTION OF BUSINESS (Continued)                    
|-- | -----------------------------------------------------------------------
|   |                                                                        
|   | b.           Cash Distribution, Profit and
Loss Allocations (continued)
|   |                                                                        

| | (b) | Then, to the Managing Member and its affiliate, until the Managing Member and its affiliate have received
  an aggregate amount equal the Managing Members and its affiliates capital contribution
  ($747 as of December 31, 2004).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                       
| | (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 on the accrual method of accounting
  in accordance with accounting principles generally accepted in the United States of America.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                         

| | b.            Principles of Consolidation
| | -----------------------------------------
| |                                          

| | The consolidated financial statements include the accounts of Lightstone Member LLC and its wholly
  owned subsidiaries; Mount Berry Square Mall LLC, Bradley Square Mall LLC, West Manchester Mall LLC
  and Shenango Valley 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 accounting principles generally accepted
  in the United States of America 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 amounts.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| | d.           Cash and Cash Equivalents
| | --------------------------------------
| |                                       

| | For purposes of the statement of cash flow, the Company considers short-term investments with maturities
  of 90 days or less when purchased to be cash equivalents.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7
|-



|LIGHTSTONE MEMBER LLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2004(Dollar amounts in thousands)
|------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                              
|                                                                                                                              
|2.           SUMMARY OF SIGNIFICANT ACCOUNTING



POLICIES (Continued)                                                        
|                                                                                                                              

| | e.          Marketing                                            
| | -----------------------------------------------------------------
| |                                                                  
| | General marketing and advertising costs are expensed as incurred.
| |                                                                  
| | f.           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 revenue in the accompanying financial statements.                                                                
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 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 as an addition to base rental income
  for the period ended December 31, 2004, was approximately $259.                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 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 cancelled,
  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. Allowance of doubtful
  accounts as of December 31, 2004 was approximately $25.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| | g.          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 using a method that approximates the effective-interest method.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8
|-



|LIGHTSTONE MEMBER LLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2004(Dollar amounts in thousands)
|------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                              
|                                                                                                                              
|2.            SUMMARY OF SIGNIFICANT ACCOUNTING



POLICIES (Continued)                                                       
|                                                                                                                              

| | h.          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 being depreciated on the straight-line basis over the shorter of the lease term
  or their estimated useful life. Equipment is being 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.                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| | i.           Impairment of Long-Lived Assets
| | --------------------------------------------
| |                                             

| | Management assesses whether there has been impairment in the value of its 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. Assets to
  be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell.
  Management believes no impairment in the net carrying values of the investments in real estate has occurred.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| | j.           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) is determined by valuing the properties as if vacant, and the as-if-vacant
  value is then allocated to land, building and improvements based on managements determination
  of the relative fair values of these assets. Management determines 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 include an estimate of carrying costs
  to execute similar leases. In estimating carrying costs, management includes 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 estimates costs to execute similar leases including
  leasing commissions, legal and other related costs.                                                                                                                                                                                                               

|9
|-



|LIGHTSTONE MEMBER LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2004(Dollar amounts in thousands)
|-------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                               
|                                                                                                                               
|2.           SUMMARY OF SIGNIFICANT ACCOUNTING



POLICIES (Continued)                                                         
|                                                                                                                               

| | j.           Purchase Accounting for
Acquisition of Interest 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 are 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 sheet) 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 sheet) 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,
  is 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 is 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.    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Purchase accounting was applied, on a pro-rata basis, to the assets and liabilities related to the
  Properties. The results of operations of the Properties since acquisition are included in the accompanying
  consolidated statement of operations. The purchase price of the Properties, including closing costs,
  was $84,089. The fair value of the real estate acquired was allocated to the acquired tangible assets,
  consisting of land and building and improvements, and identified intangible assets and liabilities,
  consisting of the value of above-market and below-market leases, other value of in-place leases and
  value of tenant relationships, if any, based in each case on their fair values.                                                                                                                                                                                                                                                                                                                                                                                        

|10
|--



|LIGHTSTONE MEMBER LLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2004(Dollar amounts in thousands)
|------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                              
|                                                                                                                              
|2.            SUMMARY OF SIGNIFICANT ACCOUNTING



POLICIES (Continued)                                                       
|                                                                                                                              

| | j.            Purchase Accounting for

Acquisition of Interests in Real Estate Entities
              (Continued)
| | -----------------------------------------------------------------------------------------------------------------
| |                                                                                                                  

| | The following are the amounts assigned to each major asset and liability caption at the acquisition
  date:
| | -----------------------------------------------------------------------------------------------------------
| |                                                                                                            

|Land                           | $ | 10,641 |  
|------------------------------ | - | ------ | -
|Buildings and improvements     |   | 70,378 |  
|Acquired lease rights (1)      |   | 2,426  |  
|Acquired lease obligations (1) |   | (6,069 | )
|In-place lease values (1)      |   | 6,713  |  
|                               |  
|                               |   |       
|                               | $ | 84,089 |  
|                               |   |       

| |     |                                                                                                                                                                           
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | These intangibles are being amortized over the remaining lease terms. The weighted average remaining
  lease terms are 13.5 years, 7.8 years and 10.0 years, respectively.

|                        
|------------------------
|k.         
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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                 
|-----------------
|3.ESCROW DEPOSITS
|                 

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

|                        
|------------------------
|4.           REAL ESTATE
|                        

| | At December 31, 2004, real estate consists of the following:
| | ------------------------------------------------------------

|Land                            | $ | 10,641 | 
|------------------------------- | - | ------ | 
|Buildings and improvements      |   | 59,377 | 
|Tenant improvements             |   | 11,001 | 
|                                |   |       
|Total investment in real estate |   | 81,019 | 
|Less accumulated depreciation   |   | 830    | 
|                                |   |       
|                                | $ | 80,189 | 
|                                |   |       

|11
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|LIGHTSTONE MEMBER LLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2004(Dollar amounts in thousands)
|------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                              
|                                                                                                                              
|5.MORTGAGE NOTE PAYABLE                                                                                                       
|                                                                                                                              

| | On September 23, 2004, the Company with its affiliate, PRC Member LLC and subsidiary (PRC),
  borrowed $105,000 from Wachovia Bank, at an interest rate of LIBOR plus 360 basis points (approximately
  6% at December 31, 2004). The loan is payable interest only monthly and is secured by the real estate,
  assignment of leases, rent and security deposits of Martinsburg Mall, LLC (Martinsburg),
  which is owned by PRC, Shenango Valley Mall, LLC (Shenango), Berry Square Mall,
  LLC (Berry), West Manchester Mall, LLC (West Manchester) and Bradley Mall,
  LLC (Bradley). The loan matures in October 2006, with three one-year options to extend
  the loan for an extension fee of .125% of the outstanding principal and repayment of a certain amount
  of principal.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Management allocated the mortgage amount to the Properties as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|Bradley         | $ | 12,168 | 
|--------------- | - | ------ | 
|Shenango        |   | 13,750 | 
|Mount Berry     |   | 25,176 | 
|West Manchester |   | 30,944 | 
|                |   |       
|                | $ | 82,038 | 
|                |   |       

|                                  
|----------------------------------
|6. MEZZANINE NOTE PAYABLE - MEMBER
|                                  

| | On September 23, 2004, the Company borrowed $8,600 from Presidential Realty Corp., a member of the
  Company. The loan bears interest of 11% per annum, payable monthly. The entire loan payable is due
  in September 2014. The loan is secured by an assignment of the Companys ownership interest
  in its subsidiaries, subject to the first mortgage lien to Wachovia Bank.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                  
| | The loan has a prepayment penalty of 3% of principal. As of December 31, 2004, interest expense of
  $266 was paid.                                                                                                                                                                                                                                                              

|                             
|-----------------------------
|7. RELATED PARTY TRANSACTIONS
|                             

| | All cash receipts of the Company and PRC are deposited directly into a restricted lockbox account.
  Receipts are transferred daily to a restricted cash account held by the Company until the debt service
  is satisfied. Any excess cash is transferred to an account held by Company to pay operating expenses.
  The Company received and is holding PRCs receipts in excess of its expenses. Such amount is
  included in the amount due to affiliates in the consolidated balance sheet.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12
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|LIGHTSTONE MEMBER LLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2004(Dollar amounts in thousands)
|------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                              
|                                                                                                                              
|7. RELATED PARTY TRANSACTIONS (Continued)                                                                                     
|                                                                                                                              

| | Prime Retail, the Propertys management company, which is an affiliate of certain members, charged
  $177 for management fees to the Company. Prime Retail also advanced approximately $361 to the Company.
  These amounts are included in due to affiliates in the consolidated balance sheet.                                                                                                                                                                                                                                                                                               
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | On September 24, 2004, the Company and PRC purchased five properties for a total of $110,675 from a
  third party. The Company and PRC allocated $83,675 and $414 to the purchase price and related
  cost associated with purchase of the properties by the Company, the purchase price allocated
  to PRCs property was based upon a third-party appraisal. The remaining purchase price of $83,675
  was allocated ratably to the Companys Properties based upon Wachovia Banks relative allocation
  of principle balance of a cross-collateralized mortgage note, payable (see Note 5).
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | The net amount due to affiliates represents non-interest bearing advances from affiliated entities
  and is due upon demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | On September 24, 2004, a member of the Company advanced $819 to fund the acquisition of the Properties.
  This amount was paid in full, without interest.                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                                 
|---------------------------------
|8. 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 its 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 2004 in excess of amounts contractually
  due was approximately $54.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | The minimum annual future base rentals due under non-cancelable operating leases as of December 31,
  2004, are as follows:                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|2005       | $ | 9,682  | 
|---------- | - | ------ | 
|2006       |   | 8,091  | 
|2007       |   | 7,138  | 
|2008       |   | 6,193  | 
|2009       |   | 5,019  | 
|Thereafter |   | 15,421 | 
|           |   |       
|           |   |        | 
|           | $ | 51,544 | 
|           |   |       

| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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
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|LIGHTSTONE MEMBER LLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2004(Dollar amounts in thousands)
|------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                              
|                                                                                                                              

|9. | COMMITMENT AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Shenango Valley Mall is subject to a ground lease. The initial term of the ground lease expired on
  December 31, 2004. The Company exercised its first 17 year ground lease agreement option. The Company
  paid $48 per annum as ground rent through December 31, 2004. As of January 1, 2005, the new ground
  lease payment is based upon 10% of monthly gross revenues, as defined. The gross revenues, upon which
  the ground rent is computed, cannot be less than 75% of gross revenues for the year 2004.

|
|

|10. | FAIR VALUE OF FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | As of December 31, 2004, the fair values of the Companys mortgage note and mezzanine note payable
  approximate the carrying values as the terms are similar to those currently available to the Company
  for debt with similar risk and the same remaining maturities. The carrying amounts for cash and cash
  equivalents, restricted cash, rents and other receivables, due to affiliates, and accounts payable
  and other liabilities approximate fair value because of the short-term nature of these instruments.

|
|

|11. | SUSEQUENT EVENT                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                               
|    | On  February  14,  2005, the Company paid $23 representing the Preferred Return due
  certain members and an additional $640 to its members according to Percentage Interests.

|14
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