EXHIBIT
      10.26

     

    CONDITIONAL
      ASSIGNMENT OF MANAGEMENT AGREEMENT

     

    This
      CONDITIONAL ASSIGNMENT OF MANAGEMENT AGREEMENT (this “Agreement”)
      is
      made as of the 30th day of June, 2006, by SCOTSDALE
      MI LLC (“Scotsdale”),
      CARRIAGE
      PARK MI LLC (“Carriage
      Park”),MACOMB
      MANOR MI LLC
      (“Macomb
      Manor”), and CARRIAGE
      HILL MI LLC (“Carriage
      Hill”), each
      a
      Delaware limited liability company, having its principal place of business
      c/o
      Lightstone Holdings LLC, 326 Third Street, Lakewood, New Jersey 08701
      (hereinafter collectively referred to as the “Borrower”;
      references herein to the Borrower unless otherwise specifically stated, shall
      also mean and refer to each and every one of Scotsdale, Carriage Park, Macomb
      Manor and Carriage Hill, jointly and severally)
      in favor
      of CITIGROUP
      GLOBAL MARKETS REALTY CORP.,
      a New
      York corporation,
      its
      transferees, successors and assigns, having an address at 388
      Greenwich Street, 19th
      Floor,
      New York, New York 10013
      (“Lender”),
      and
      is acknowledged and consented to by Beacon Property Management, LLC
      (“Agent”).

     

    RECITALS

     

    A.  This
      Agreement is being executed in connection with Lender’s making a mortgage loan
      to Borrower in the original principal amount of Fifty-Two Million and No/100
      Dollars ($52,000,000.00) (the “Loan”).
      The
      Loan is being made pursuant to the terms of a Loan and Security Agreement (the
      “Loan
      Agreement”)
      of
      even date herewith, executed by Lender and Borrower; is evidenced by a certain
      Promissory Note (the “Note”)
      of
      even date herewith, made by Borrower in favor of Lender; and is secured by,
      among other things, those certain Mortgages (collectively, the “Instrument”),
      also
      of even date herewith, executed by each Borrower in favor of Lender (the Loan
      Agreement, the Note, the Instrument, this Agreement, and all other documents
      executed in connection with the Loan are collectively referred to as the
“Loan
      Documents”).
      Capitalized terms used herein but not otherwise defined shall have the
      respective meanings assigned to such terms in the Loan Agreement.

     

    B.  The
      proceeds of the Loan will be used for the financing of a multi-family
      portfolio project
      situated on the land described in each Instrument (the “Property”).

     

    C.  Pursuant
      to a certain Management
      Agreement
      between
      Borrower and Agent (the “Management
      Agreement”)
      (a
      true and correct copy of which Management Agreement is attached hereto as
Exhibit
      A),
      Borrower employed Agent exclusively to rent, lease, operate and manage the
      Property.

     

    D.  Lender
      requires as a condition to the making of the Loan that Borrower assign the
      Management Agreement as set forth below.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    NOW,
      THEREFORE, in consideration of the above and the mutual promises contained
      in
      this Agreement, the receipt and sufficiency of which are acknowledged, the
      parties hereto agree as follows:

     

    1.  Assignment
      of Management Agreement.
      As
      additional collateral security for the Loan Agreement, Borrower hereby
      conditionally transfers, sets over and assigns to Lender all of Borrower’s
      right, title and interest in and to the Management Agreement, said transfer
      and
      assignment to automatically become a present, unconditional assignment, at
      Lender’s option, upon the occurrence of an Event of Default.

     

    2.  Termination.
      At
      such
      time as the Loan is paid in full and the Instrument is released of record,
      this
      Agreement and all of Lender’s right, title and interest hereunder with respect
      to the Management Agreement shall terminate.

     

    3.  Borrower’s
      Covenants.
      Borrower
      hereby covenants with Lender that during the term of this Agreement: (a)
      Borrower shall not transfer the responsibility for the management of the
      Property from Agent to any other person or entity without the prior written
      consent of Lender, which consent may be withheld by Lender in Lender’s sole
      discretion; (b) Borrower shall not terminate or amend any of the terms or
      provisions of the Management Agreement without the prior written consent of
      Lender, which consent may be withheld by Lender in Lender’s sole discretion; and
      (c) Borrower shall, in the manner provided for in this Agreement, give notice
      to
      Lender of any notice or information that Borrower receives which indicates
      that
      Agent is terminating the Management Agreement or that Agent is otherwise
      discontinuing its management of the Property. 

     

    4.  Agreement
      by Borrower and Agent.
      Borrower
      and Agent hereby agree that in the event of an Event of Default, Lender shall
      have the right to, at the option of Lender exercised by written notice to
      Borrower and Agent: (a) require all rents, security deposits, issues, proceeds,
      revenues, awards and profits of the Property collected by Agent, after payment
      of all costs and expenses of operating the Property (including, without
      limitation, operating expenses, real estate taxes, insurance premiums, repairs
      and maintenance and the fees and commissions payable under the Management
      Agreement), to be applied in accordance with Lender’s written directions to
      Agent; and (b) exercise its rights under this Agreement and immediately
      terminate the Management Agreement and require Agent to transfer its
      responsibility for the management of the Property to a management company
      selected by Lender in Lender’s sole and absolute discretion.

     

    5.  Lender’s
      Right to Replace Agent.
      In
      addition to the foregoing, Lender shall have the right to require Borrower
      to
      replace Agent with a Person chosen by Lender, upon the earliest to occur of
      any
      one or more of the following events (each an “Agent
      Replacement Event”):
      (i)
      the occurrence and continuance of an Event of Default; (ii) thirty (30) days
      after notice from Lender to Borrower that Agent has engaged in fraud, gross
      negligence, malfeasance or willful misconduct arising from or in connection
      with
      its performance under the Management Agreement, or Agent’s default under the
      Management Agreement which is not cured within any applicable cure period
      provided under the Management Agreement; (iii) a change in control of Agent,
      or
      (iv) if Borrower’s Debt Service Coverage Ratio shall be less than the Minimum
      DSCR Threshold. If an Agent Replacement Event occurs, then Borrower shall enter
      a new management agreement with a property management company acceptable to
      Lender.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

       

    

    6.  Subordination
      of Management Fees and Management Agreement.
      Agent
      agrees that: (a) any and all fees, commissions, compensation and other amounts
      due and payable to the Agent pursuant to the Management Agreement (collectively,
      “Manager’s
      Fees”)
      are
      and shall at all times continue to be subject and subordinate in all respects
      to
      the Loan, the Instrument and the liens and security interests of Lender created
      thereunder, and (b) the Management Agreement and all of the terms, covenants
      and
      provisions thereof and all rights, remedies and options of Agent thereunder
      are
      and shall at all times continue to be subject and subordinate in all respects
      to
      the Loan Documents and all terms, covenants and conditions set forth therein,
      including, without limitation, all renewals, increases, modifications,
      spreaders, consolidations, replacements and extensions thereof and to all sums
      secured thereby and the liens and security interests of Lender created
      thereunder. 

     

    7.  Prohibited
      Payment and Receipt of Manager’s Fees.
      Borrower and Agent hereby agree that Agent shall not be entitled to receive
      any
      Manager’s Fees for and during any period of time that an Event of Default exists
      or any amount due and owing Lender under the Loan Agreement, the Note or any
      other Loan Document is not paid when due. However, Agent shall not be obligated
      to Lender to return or refund any Manager’s Fee to the extent that the same is
      (i) received by Agent prior to the occurrence of such Event of Default, and
      (ii)
      duly owing to Agent, and (iii) duly allocable to the time prior to such Event
      of
      Default. Further, if any such Event of Default is cured and Lender accepts
      such
      cure (and Lender shall have no obligation to accept any cure other than as
      expressly provided in the Note and Instrument and under applicable law), then
      Agent may receive and retain any Manager’s Fee payable to Agent that accrued
      during the Event of Default, subject to the prior provisions of this
      paragraph.

     

    8.  Consent
      and Agreement by Agent.
      Agent
      hereby acknowledges and consents to this Agreement and agrees that Agent will
      act in conformity with the provisions of this Agreement and Lender’s rights
      hereunder or otherwise related to the Management Agreement. Agent further
      covenants with Lender that during the term of this Agreement, Agent shall not
      amend any of the terms or provisions of the Management Agreement without the
      prior written consent of Lender, which consent may be withheld by Lender in
      Lender’s sole discretion. In the event that the responsibility for the
      management of the Property is transferred from Agent in accordance with the
      provisions hereof, Agent shall, and hereby agrees to, fully cooperate in
      transferring its responsibility to a new management company and effectuate
      such
      transfer no later than thirty (30) days from the date the Management Agreement
      is terminated. Further, Agent hereby agrees (a) not to contest or impede the
      exercise by Lender of any right Lender has under or in connection with this
      Agreement; and (b) that it shall, in the manner provided for in this Agreement,
      give at least thirty (30) days prior written notice to Lender of Manager’s
      intention to terminate the Management Agreement or otherwise discontinue its
      management of the Property. In the event Agent gives notice of its intention
      to
      terminate the Management Agreement, Lender shall have the right, but not the
      obligation, to cure Borrower’s defaults thereunder, and Agent agrees to accept
      such cure and not terminate the Management Agreement as a result of such
      defaults. In the event that Lender elects to not terminate the Management
      Agreement in the event it acquires title to the Property through foreclosure,
      exercise of a power of sale, acceptance of a deed in lieu of foreclosure or
      otherwise, Agent agrees to attorn to Lender and continue to operate the Property
      pursuant to the Management Agreement provided that all Manager’s Fees due and
      payable to Agent are paid.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    9.  Lender’s
      Agreement.
      Any sums
      due to Borrower under the Management Agreement shall be distributed to Borrower
      in accordance with the terms of the Loan Agreement.

     

    10.  Notice.
      All
      notices given under this Agreement shall be in writing, and sent to the other
      party at its address set forth below or at such other address as such party
      may
      designate by notice to the other party. Such notices shall be deemed given
      in
      accordance with the criteria set forth in the Instrument.

     

    To
      Borrower:
      At the
      address set forth in the Loan Agreement.

     

    To
      Lender:
      At the
      address set forth in the Loan Agreement.

     

    To
      Agent:

    ______________________________

    ______________________________

    ______________________________

    Attn:
      __________________________       

    Telephone
      No.: __________________     

    Facsimile
      No.: ___________________    

     

    Any
      party
      may change the address at which it is to receive notices hereunder by giving
      written notice of such new address in accordance with the notice criteria set
      forth in the Instrument.

     

    11.  Binding
      Nature of Agreement.
      This
      Agreement shall be binding upon and shall inure to the benefit of the parties
      hereto and their respective successors and assigns.

     

    12.  Counterparts.
      This
      Agreement may be executed in any number of counterparts all of which taken
      together shall constitute one and the same instrument.

     

    13.  Governing
      Law.
      This
      Agreement shall be governed by the laws of the state in which the Property
      is
      located and applicable federal law.

     

    14.  Non-Recourse.
      This
      Agreement is being executed in connection with the making of the Loan pursuant
      to the terms of the Loan Agreement and the Note. Borrower’s liability under this
      Agreement shall be limited to the same extent provided in Article XII of the
      Loan Agreement.

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, this Agreement has been executed by Borrower and Agent
      effective as of the date and year first written above.

    
      
         

        
          	 	
                  BORROWER: 

                
	 	 	 
	 	
                  SCOTSDALE
                    MI LLC,
                    a Delaware limited liability
                    company

                
	 
 	 	 
	 	By:  	LVP
                  Michigan Multifamily Portfolio LLC, a Delaware limited liability
                  company,
                  
	 	 	its sole Managing Member


        

         

        
          
            	 	 By:	/s/
                    David
                    Lichtenstein
	 	 Name:	David
                    Lichtenstein
	 	 Title:	President


          

           

          
             

            
              	 	 	 
	 	
                      CARRIAGE
                        PARK MI LLC,
                        a
                        Delaware limited liability company 

                    
	 
 	 	 
	 	By:  	LVP
                      Michigan Multifamily Portfolio LLC, a Delaware limited liability
                      company,
                      
	 	 	its sole Managing Member


            

             

            
              
                	 	 By:	/s/
                        David
                        Lichtenstein
	 	 Name:	David
                        Lichtenstein
	 	 Title:	President


              

               

            

          

          
            
               

              
                	 	 	 
	 	
                        MACOMB
                          MANOR MI LLC,
                          a
                          Delaware limited liability company 

                      
	 
 	 	 
	 	By:  	LVP
                        Michigan Multifamily Portfolio LLC, a Delaware limited liability
                        company,
                        
	 	 	its sole Managing Member


              

               

              
                
                  	 	 By:	/s/
                          David
                          Lichtenstein
	 	 Name:	David
                          Lichtenstein
	 	 Title:	President


                

                 

                
                   

                  
                    	 	 	 
	 	
                            CARRIAGE
                              HILL MI LLC,
                              a
                              Delaware limited liability company 

                          
	 
 	 	 
	 	By:  	LVP
                            Michigan Multifamily Portfolio LLC, a Delaware limited
                            liability company,
                            
	 	 	its sole Managing Member


                  

                   

                  
                    
                      	 	 By:	/s/
                              David
                              Lichtenstein
	 	 Name:	David
                              Lichtenstein
	 	 Title:	President


                    

                         

                  

                

              

            

          

        

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    EXHIBIT
      A

     

    Management
      Agreement