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What changed in Belpointe PREP, LLC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Belpointe PREP, LLC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+337 added−239 removedSource: 10-K (2025-03-31) vs 10-K (2024-03-29)

Top changes in Belpointe PREP, LLC's 2024 10-K

337 paragraphs added · 239 removed · 155 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

3 edited+136 added−27 removed1 unchanged
Biggest changeItem 1. “Business—Qualified Opportunity Zone Program .” 82 Our Relationship with our Manager and Sponsor We are externally managed by our Manager, which is responsible for managing our day-to-day operations, implementing our investment objectives and strategy and performing certain services for us, subject to oversight by our Board and the limitations set forth in our Operating Agreement.
Biggest changeWe are externally managed by Belpointe PREP Manager, LLC (our “Manager”), which is an affiliate of our sponsor, Belpointe, LLC (our “Sponsor”). 5 Table of Contents Our Manager We are externally managed by our Manager, Belpointe PREP Manager, LLC, and, pursuant to the terms of a management agreement between us, our Operating Companies and our Manager (the “Management Agreement”), our Manager manages our day-to-day operations, implements our investment objectives and strategy and performs certain services for us, subject to oversight by our board of directors (our “Board”).
Our Management Agreement Pursuant to the terms of the Management Agreement, a team of investment and asset management professionals, acting through our Manager, makes all decisions regarding the origination, selection, evaluation, structuring, acquisition, financing and development of our commercial real estate properties, real estate-related assets, including commercial real estate loans and mortgages, and debt and equity securities issued by other real estate-related companies, as well as private equity acquisitions and investments, and opportunistic acquisitions of other qualified opportunity funds and qualified opportunity zone businesses, subject to the limitations in our operating agreement.
Subject to the limitations set forth in our Amended and Restated Limited Liability Company Operating Agreement (our “Operating Agreement”), a team of investment and asset management professionals, acting through our Manager, makes all decisions regarding the origination, selection, evaluation, structuring, acquisition, financing and development of our commercial real estate properties, real estate-related assets, including commercial real estate loans and mortgages, and debt and equity securities issued by other real estate-related companies, as well as private equity acquisitions and investments, and opportunistic acquisitions of other qualified opportunity funds and qualified opportunity zone businesses.
Our Employee and Cost Sharing Agreement Pursuant to the Employee and Cost Sharing Agreement, our Sponsor provides our Manager with access to portfolio management, asset valuation, risk management and asset management services, as well as administration services addressing legal, compliance, investor relations and information technologies necessary for the performance by our Manager of its duties under the Management Agreement, and our Sponsor or one or more of its affiliates is entitled to receive expense reimbursements and our Manager’s allocable share of employment costs incurred by the Sponsor.
We, our Manager and our Sponsor are a party to an employee and cost sharing agreement (the “Employee and Cost Sharing Agreement”) pursuant to which our Sponsor provides our Manager with access to portfolio management, asset valuation, risk management and asset management services, as well as administration services addressing legal, compliance, investor relations and information technologies necessary for the performance by our Manager of its duties under the Management Agreement.
Removed
Our Manager is an affiliate of our Sponsor and is indirectly owned by our Chief Executive Officer and beneficially owned by certain immediate family members of our Chief Executive Officer.
Added
In this Annual Report on Form 10-K (this “Form 10-K”), unless context otherwise requires, references to “we,” “us,” “our,” “Belpointe” or the “Company” refer to Belpointe PREP, LLC, a Delaware limited liability company, its operating companies, Belpointe PREP OC, LLC, a Delaware limited company, and Belpointe PREP TN OC, LLC, a Delaware limited company (each an “Operating Company” and, together, the “Operating Companies”), and each of the Operating Companies’ subsidiaries, taken together.
Removed
Pursuant to the terms of the Management Agreement, our Manager is responsible for, among other things: ● serving as our investment and financial manager with respect to originating, underwriting, acquiring, and managing our investment portfolio; ● structuring the terms and conditions of our acquisitions, sales and joint ventures; and ● retaining, for and on our behalf, services related to, among other things, our Primary Offering, and any other offerings that we may conduct, the development, operation and management of our investments, calculation of our NAV, administrative, accounting, tax, legal and investor relations services, financing services, and services related to property management, leasing, development and construction.
Added
History and Development of the Company We are the successor in interest to Belpointe REIT, Inc., a Maryland corporation (“Belpointe REIT”), incorporated on June 19, 2018. During the year ended December 31, 2021, we acquired all of the outstanding shares of common stock of Belpointe REIT in an exchange offer and related conversion and merger transaction.
Removed
The initial term of the Management Agreement continues through December 31, 2025, and may only be terminated (i) for “cause,” (ii) upon the bankruptcy of our Manager, or (iii) upon a material breach of the Management Agreement by our Manager.
Added
On September 30, 2021, the U.S. Securities and Exchange Commission (the “SEC”) declared effective our initial registration statement on Form S-11, as amended (File No. 333-255424) (the “Primary Registration Statement”), registering a continuous primary offering of up to $750,000,000 in our Class A units (our “Primary Offering”).
Removed
“Cause” is defined in the Management Agreement to mean fraud or willful malfeasance, gross negligence, the commission of a felony or a material violation of applicable law, in each case that has or could reasonably be expected to have a material adverse effect on us.
Added
From the period of October 7, 2021, the date of the first closing held in connection with our Primary Offering, through December 31, 2023, we issued 2,372,289 Class A units in our Primary Offering, raising net offering proceeds of $233.5 million.
Removed
Following the initial term, the Management Agreement will automatically renew for an unlimited number of three-year terms unless we elect not to renew it by providing our Manager with 180 days’ prior notice.
Added
On May 9, 2023, the SEC declared effective our follow-on registration statement on Form S-11, as amended (File No. 333-271262) (the “Follow-on Registration Statement”), registering the offer and sale of up to an additional $750,000,000 of our Class A units on a continuous “best efforts” basis by any method deemed to be an “at the market” offering pursuant to Rule 415(a)(4) under the Securities Act of 1933, as amended (the “Securities Act”), including by offers and sales made directly to investors or through one or more agents (our “Follow-on Offering” and, together with our Primary Offering, our “Public Offerings”).
Removed
Upon any termination or non-renewal of the Management Agreement by us or any termination of the Management Agreement by our Manager for our breach of the Management Agreement, our Manager will be entitled to receive its prorated management fee through the expiration or termination date and will be paid a termination fee equal to six times the annual management fee earned by our Manager during the 12-month period ended as of the last day of the quarter immediately preceding the termination date.
Added
In connection with the Follow-on Registration Statement, we entered into a non-exclusive dealer manager agreement with Emerson Equity LLC (the “Dealer Manager”), a registered broker-dealer, for the sale of our Class A units through the Dealer Manager.
Removed
In addition, upon any termination or non-renewal of the Management Agreement, our Manager will continue to hold our Class B units. Upon termination or non-renewal of the Management Agreement, our Manager will cooperate with us and take all reasonable steps requested by us to assist our Board in making an orderly transition of the management function.
Added
The Dealer Manager will enter into participating dealer agreements and wholesale agreements with other broker-dealers, referred to as “selling group members,” to authorize those broker-dealers to solicit offers to purchase our Class A units.
Removed
Management Fee, Class B Units and Expense Reimbursement As compensation for its services under the Management Agreement, we pay our Manager a quarterly management fee at an annualized rate of 0.75%. The management fee is based on our NAV at the end of each fiscal quarter.
Added
We will pay our Dealer Manager commissions of up to 0.25%, and the selling group members commissions ranging from 0.25% to 4.50%, of the principal amount of Class A unit sold in the Follow-on Offering. In addition, our Follow-on Registration Statement constitutes a post-effective amendment to our Primary Registration Statement, conforming our Primary Offering to our Follow-on Offering.
Removed
During the years ended December 31, 2023, and 2022, we incurred management fees due to our Manager of $2.7 million and $2.6 million, respectively. As additional compensation for its services under the Management Agreement, we issued our Manager 100,000 Class B units, representing all of our issued and outstanding Class B units.
Added
For the year ended December 31, 2024, we issued 41,774 Class A units in connection with our Public Offerings. Together with the gross proceeds raised by Belpointe REIT in its prior offerings, as of December 31, 2024, we have raised aggregate gross offering cash proceeds of $357.3 million.
Removed
The Class B units entitle our Manager to 5% of any gain recognized by or distributed to us or recognized by or distributed from our Operating Companies or any subsidiary.
Added
Overview of our Business and Operations We are the only publicly traded qualified opportunity fund listed on a national securities exchange. We are a Delaware limited liability company formed on January 24, 2020, and a partnership for U.S. federal income tax purposes.
Removed
As a result, any time we recognize an operating gain (excluding depreciation) or receive a distribution, whether from continuing operations, net sale proceeds, refinancing transactions or otherwise, our Manager is entitled to receive 5% of the aggregate amount of such gain or distribution, regardless of whether the holders of our Class A units have received a return of their capital.
Added
We are focused on identifying, acquiring, developing or redeveloping and managing commercial and mixed-use real estate located within qualified opportunity zones. At least 90% of our assets consist of qualified opportunity zone property. We qualified as a qualified opportunity fund beginning with our taxable year ended December 31, 2020.
Removed
The allocation and distribution rights that our Manager is entitled to with respect to its Class B units may not be amended, altered or repealed, and the number of authorized Class B Units may not be increased or decreased, without the consent of our Manager.
Added
Because we are a qualified opportunity fund certain of our investors are eligible for favorable capital gains tax treatment on their investments.
Removed
During the years ended December 31, 2023 and 2022, we did not make any Class B unit allocations or distributions to our Manager. 83 Pursuant to the Management Agreement, we reimburse our Manager and its affiliates, including our Sponsor, for actual fees and expenses incurred in connection with our Primary Offering, the Offer and Merger, the selection, origination, acquisition and management of our investments, and for out-of-pocket expenses paid to third parties in connection with providing services to us.
Added
All of our assets are and will continue to be held by, and all of our operations are and will continue to be conducted through, one or more of our Operating Companies, either directly or indirectly through their subsidiaries.
Removed
Expenses reimbursable are payable at the election of the recipient in cash, by issuance of our Class A units at the then-current NAV, or through some combination of the foregoing. For additional details regarding the Offer and the Merger see, Item 7.
Added
Our Sponsor Our Sponsor, Belpointe, LLC, a leading investment firm based in Greenwich, Connecticut, operates a family office making private investments and oversees its businesses, such as wealth management, legal and real estate services, Our Sponsor’s senior executives have substantial experience in the acquisition, development and ownership of real estate and, as of December 31, 2024, its affiliates have facilitated or originated 13 real estate assets with aggregate purchase prices and construction costs of approximately $400 million.
Removed
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Transactions with Belpointe REIT, Inc.” During the years ended December 31, 2023, and 2022, our Manager and its affiliates, including our Sponsor, incurred $2.9 million, and $2.9 million, respectively, for fees and expenses on our behalf.
Added
Our Sponsor’s financial management division also currently manages over $5 billion in public securities.
Removed
For additional details regarding our Employee and Cost Sharing Agreement, see Item 1. “Business—Human Capital .” During the both years ended December 31, 2023, and 2022, our Sponsor and its affiliates incurred $1.8 million for fees, expenses and employment costs on our behalf.
Added
Our Investment Objectives and Investment Strategy Our primary investment objectives are: ● to preserve, protect and return your capital contribution; ● to pay attractive and consistent cash distributions over the long term; ● to grow net cash from operations so that an increasing amount of cash flow is available for distributions to investors over the long term; and ● to realize growth in the value of our investments.
Removed
Development Fees Pursuant to the terms of development agreements that we enter into with affiliates of our Sponsor, such affiliates are entitled to receive (i) development fees on each project in an amount that is usual and customary for comparable services rendered to similar projects in the geographic market of the project, and (ii) reimbursements for their expenses, such as employee compensation and other overhead expenses incurred in connection with the project.
Added
We cannot assure you that we will achieve our investment objectives. See Item 1A.
Removed
In connection with our acquisitions of 902-1020 First and 900 8th Avenue South, a development fee of 4.5% of total project costs will be charged throughout the course of each project (the “Development Fee”), of which one half was due at the close of each acquisition.
Added
“Risk Factors.” Our initial investments consist of and are expected to continue to consist of properties located in qualified opportunity zones for the development or redevelopment of multifamily, student housing, senior living, healthcare, industrial, self-storage, hospitality, office, mixed-use, data centers and solar projects located throughout the United States and its territories.
Removed
In connection with our acquisition of 1991 Main Street, on March 29, 2022, we commenced construction on one of our properties located in Sarasota, Florida, and in connection therewith, due to an increase in scope of work, we agreed to increase the development fee payable to an affiliate of our Sponsor under the terms of our existing development management agreement from 4.0% to 4.25%.
Added
We also anticipate identifying, acquiring, developing or redeveloping and managing a wide range of commercial real estate properties located throughout the United States and its territories, including, but not limited to, real estate-related assets, such as commercial real estate loans and mortgages, and debt and equity securities issued by other real estate-related companies, as well as making private equity acquisitions and investments, and opportunistic acquisitions of other qualified opportunity funds and qualified opportunity zone businesses, with the goal of increasing distributions and capital appreciation.
Removed
In addition, again due to the increase in scope of work, as well as due to increases in construction costs, we revised our construction budget.
Added
Our investment guidelines delegate to our Manager discretion and authority to execute acquisitions and dispositions of investments (including the reinvestment of capital basis and gains), provided such investments are consistent with our investment objectives and strategy and our investment guidelines.
Removed
As a result of the increase in development fees and revisions to our construction budget, we incurred an additional upfront development fee of $2.5 million, which is included in Real estate under construction in our consolidated balance sheets. The remaining development fee will be earned throughout the project in accordance with the terms of the development management agreement.
Added
Our Manager’s investment committee will periodically review our portfolio of assets and investments, our investment objectives and strategy and our investment guidelines to determine whether they remain in the best interests of our members and may recommend changes to our Board as it deems appropriate.
Removed
The development company receiving the Development Fee is indirectly owned by our Chief Executive Officer and beneficially owned by certain immediate family members of our Chief Executive Officer. For additional details regarding our acquisitions of 1991 Main Street, 902-1020 First, and 900 8th Avenue South see, Item 7.
Added
We may, at any time and without member approval, cease to be a qualified opportunity fund and acquire assets that do not qualify as qualified opportunity zone investments. Furthermore, there are no prohibitions in our Operating Agreement on the amount or percentage of assets that may be invested in a single property.
Removed
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Investments—Investments in Multifamily and Mixed-Use Rental Properties. ” During the year ended December 31, 2023, we incurred $5.9 million for development fees, and we incurred $1.7 million for employee reimbursement expenditures relating to projects under development.
Added
Our Reporting Segments As of December 31, 2024, we have organized our operations into two reporting segments, commercial and mixed-use, based on the way we organize and evaluate our business internally.
Removed
During the year ended December 31, 2022, we incurred $4.3 million for development fees, and we incurred $1.5 million for employee reimbursement expenditures relating to projects under development.
Added
Qualified Opportunity Zone Program The opportunity zone program is a community development program established by the Tax Cuts and Jobs Act of 2017 to encourage new long-term investment in low-income urban and rural communities nationwide.
Removed
Director Independence Our Class A units are listed on the NYSE American under the symbol “OZ.” Pursuant to NYSE American’s corporate governance requirements, a majority of a listed company’s board of directors must be made up of independent directors.
Added
The opportunity zone program provides a tax incentive for investors to re-invest their unrealized capital gains into qualified opportunity funds dedicated to investing in “qualified opportunity zones.” Qualified opportunity zones are census tracts identified and nominated by the chief executives of every state and territory of the United States ( e.g ., state governors) and designated by the Secretary of the Treasury.
Removed
Under the NYSE American corporate governance requirements, a director is “independent” if the director is not an executive officer or employee of the company and the company’s board of directors affirmatively determines that the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Added
There are more than 8,700 qualified opportunity zones throughout the United States and its territories. 6 Table of Contents A “qualified opportunity fund” is generally defined as an investment vehicle that is taxed as a corporation or partnership for U.S. federal income tax purposes and organized to invest in, and at least 90% of its assets consist of, qualified opportunity zone property (the “90% Asset Test”).
Removed
Our Board has determined that Dean Drulias, Timothy Oberweger, Shawn Orser and Ronald Young, Jr. are independent directors under the NYSE American corporate governance requirements.
Added
A qualified opportunity fund must determine whether it meets the 90% Asset Test on each of (i) the last day of the first six-month period of its taxable year, and (ii) the last day of its taxable year (each a “Test Date”).
Added
The opportunity zone regulations allow a qualified opportunity fund to apply the 90% Asset Test without taking into account any investments received in the 6-month period preceding the Test Date, provided those investments are (i) received (a) solely in exchange for stock by a qualified opportunity fund that is a corporation, or (b) as a contribution by a qualified opportunity fund that is a partnership, and (ii) held continuously from the fifth business day after the exchange or contribution, as applicable, through the Test Date in cash, cash equivalents or debt instruments with a term of 18 months or less.
Added
Subject to a one-time six-month cure period, for each month following a Test Date in which a qualified opportunity fund fails to meet the 90% Asset Test it will incur a penalty equal to (a) the excess of 90% of the fund’s aggregate assets over the aggregate amount of qualified opportunity zone property held by the fund, multiplied by (b) the short-term federal interest rate plus 3%.
Added
However, notwithstanding a qualified opportunity fund’s failure to meet the 90% Asset Test, no penalty will be imposed if the fund demonstrates that its failure is due to reasonable cause. We initially qualified as a qualified opportunity fund beginning with our taxable year ended December 31, 2020.
Added
An eligible investor may defer recognition of capital gains (short-term or long-term) resulting from the sale or exchange of capital assets (or business assets the gain on the sale of which is treated as capital gain) with an unrelated person by reinvesting those gains into a qualified opportunity fund within a period of 180 days generally beginning on the date of the sale or exchange (the “Deferred Capital Gains”).
Added
The 180-day period generally begins on the day on which the gains would be recognized for U.S. federal income tax purposes had they not been reinvested into a qualified opportunity fund.
Added
Deferred Capital Gains are recognized on the earlier of December 31, 2026 or the date on which an inclusion event occurs, such as the date on which the investor sells its qualified opportunity fund investment.
Added
All individuals and entities that recognize capital gains for U.S. federal income tax purposes are eligible to elect to defer their capital gains by investing in a qualified opportunity fund within the applicable 180-day period.
Added
This includes natural persons as well as entities such as corporations, regulated investment companies, real estate investment trusts (“REITs”), partnerships and other pass-through entities (including, certain common trust funds, qualified settlement funds, and disputed ownership funds).
Added
Eligible investors must make deferral elections on Form 8949, Sales and Other Dispositions of Capital Assets , which will need to be attached to their U.S. federal income tax returns for the taxable year in which the capital gain would have been recognized had it not been deferred.
Added
In addition, Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments , requires eligible investors holding a qualified opportunity fund investment at any point during the tax year to report: (i) qualified opportunity fund investments holdings at the beginning and end of the tax year; (ii) current tax year capital gains deferred by investing in a qualified opportunity fund; and (iii) qualified opportunity fund investments disposed of during the tax year.
Added
Eligible investors who have not properly followed the instructions for Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments , may receive a Letter 6502, Reporting Qualified Opportunity Fund (QOF) Investments , or a Letter 6503, Annual Reporting of Qualified Opportunity Fund (QOF) Investments , from the Internal Revenue Service (“IRS”) if the IRS is missing information, the investor entered invalid information, or the requirements to maintain a qualifying investment have not been followed.
Added
Eligible investors who receive a Letter 6502, Reporting Qualified Opportunity Fund (QOF) Investments , or a Letter 6503, Annual Reporting of Qualified Opportunity Fund (QOF) Investments , may need to file an amended return or an administrative adjustment request with a properly completed Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments .
Added
An eligible investor may elect to increase the tax basis with respect to its qualified opportunity fund investment interest to the fair market value of the investment interest, and similarly may elect to exclude from income gains from sales of non-inventory assets by the qualified opportunity fund, if the investor holds the qualified opportunity fund investment interest for a period of ten years or more prior to the date of sale, up to December 31, 2047.
Added
Provided these requirements are met, for U.S. federal income tax purposes an eligible investor will not be required to pay federal income tax on a sale of its qualified opportunity fund investment interest. This benefit will not be available with respect to sales or exchanges after December 31, 2047.
Added
Our Investments As of the date of this Form 10-K, our investment portfolio consisted of the following commercial and mixed-use rental properties: 1991 Main Street – Sarasota, Florida (“Aster & Links”) – 1991 Main Street (“1991 Main” or “Aster & Links”) is a 5.13-acre site which was acquired for an aggregate purchase price of $20.7 million, inclusive of transaction costs and deferred financing fees.
Added
On August 24, 2023, through an indirect majority-owned subsidiary of our Operating Company, we acquired land located in Sarasota, Florida, that was previously subject to a ground lease for a purchase price of $4.9 million, inclusive of transaction costs of $0.1 million. We accounted for the transaction as an asset acquisition.
Added
As the acquired land is being held for development, the total purchase price was allocated to Real estate under construction on the consolidated balance sheets . 7 Table of Contents During the year ended December 31, 2024, we completed construction and began lease up at Aster & Links, our mixed-use luxury development in downtown Sarasota, Florida.
Added
Aster & Links is comprised of 424 luxury residential units, including a mix of one-bedroom, two-bedroom, three-bedroom, four-bedroom apartments, townhome-style penthouse apartments, and six guest suite apartments, with approximately 51,000 square feet of retail space located on the first level.
Added
Aster & Links is made up of two distinct 10 story buildings and features over 900 garage and surface-level parking spaces, designed to cater to both residents and retail visitors. In May 2023, we announced the signing of a definitive lease agreement with Sprouts Farmers Market (“Sprouts”).
Added
Sprouts, which opened in September 2024 and occupies 23,000 square feet of retail space at Aster & Links, serves as a key anchor tenant, bringing fresh, natural and organic food options to the heart of downtown Sarasota.
Added
Aster & Links offers a range of high-end amenities for residents, including a clubroom, fitness room, center courtyard with heated saltwater pool and roof top amenities including a community room and a private dining area for private events as well as outdoor grills and seating. Each building has its own leasing office to assist new residents.
Added
Situated in downtown Sarasota, at the intersection of Main Street and Links Avenue, Aster & Links is located in a high foot traffic area next to a number of popular retail establishments.
Added
Sarasota’s metro area economy is the largest of the southwest Florida markets and has had very strong gains in jobs, population, and home values over the past few years.

… 86 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

98 edited+21 added−15 removed295 unchanged
Biggest changeIf a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages that is limited in amount and which may only be paid to the extent that funds are available and in the same percentage as is paid to all other holders of unsecured claims.
Biggest changeIf a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages that is limited in amount and which may only be paid to the extent that funds are available and in the same percentage as is paid to all other holders of unsecured claims. 29 Table of Contents If any of our significant tenants were to become bankrupt or insolvent, suffer a downturn in their business, default under their leases, fail to renew their leases or renew on terms less favorable to us than their current terms, our results of operations and cash flow could be adversely affected.
Our investment guidelines delegate to our Manager discretion and authority to execute acquisitions and dispositions of investments (including the reinvestment of capital basis and gains) in commercial real estate properties, real estate-related assets, including commercial real estate loans and mortgages, and debt and equity securities issued by other real estate-related companies, as well as private equity acquisitions and investments, and opportunistic acquisitions of other qualified opportunity funds and qualified opportunity zone businesses, provided such investments are consistent with our investment objectives and strategy and our investment guidelines.
Our investment guidelines delegate to our Manager discretion and authority to execute acquisitions and dispositions of investments (including the reinvestment of capital basis and gains) in commercial real estate properties, real estate-related assets, including commercial real estate loans and mortgages, and debt and equity securities issued by other real estate-related companies, as well as private equity acquisitions and investments, and opportunistic acquisitions of other qualified opportunity funds and qualified opportunity zone businesses, provided such investments are consistent with our investment objectives and strategy and our investment guidelines.
Such development and redevelopment activities entail risks that could adversely impact our financial condition and results of operations, including: ● construction costs, which may exceed our original estimates due to increases in materials, labor or other costs, which could make the project less profitable; ● permitting or construction delays, which may result in increased debt service expense and increased project costs, as well as deferred revenue; ● supply chain issues or other unavailability of raw materials when needed, which may result in project delays, stoppages or interruptions, which could make the project less profitable; ● federal, state and local grants to complete certain highways, interchange, bridge projects or other public improvements may not be available, which could increase costs and make the project less profitable; ● availability and timely receipt of zoning and other regulatory approvals to develop or redevelop our properties for a particular use or with respect to a particular improvement; ● claims for warranty, product liability and construction defects after a property has been built; ● claims for injuries that occur in the course of construction activities; ● poor performance or nonperformance by, or disputes with, any of our contractors, subcontractors or other third parties on whom we will rely; ● health and safety incidents and site accidents; ● unforeseen engineering, environmental or geological problems, which may result in delays or increased costs; 29 ● labor shortages, slowdowns or interruptions; ● compliance with environmental planning and protection regulations and related legal proceedings; ● liabilities, expenses or project delays, stoppages or interruptions as a result of challenges by third parties in legal proceedings; ● delay or inability to acquire property, rights of way or easements that may result in delays or increased costs; ● acts of war, cyberattacks or terrorism; and ● weather-related and geological interference, including landslides, earthquakes, floods, drought, wildfires and other events, which may result in delays or increased costs.
Such development and redevelopment activities entail risks that could adversely impact our financial condition and results of operations, including: ● construction costs, which may exceed our original estimates due to increases in materials, labor or other costs, which could make the project less profitable; ● permitting or construction delays, which may result in increased debt service expense and increased project costs, as well as deferred revenue; ● supply chain issues or other unavailability of raw materials when needed, which may result in project delays, stoppages or interruptions, which could make the project less profitable; ● federal, state and local grants to complete certain highways, interchange, bridge projects or other public improvements may not be available, which could increase costs and make the project less profitable; ● availability and timely receipt of zoning and other regulatory approvals to develop or redevelop our properties for a particular use or with respect to a particular improvement; ● claims for warranty, product liability and construction defects after a property has been built; ● claims for injuries that occur in the course of construction activities; ● poor performance or nonperformance by, or disputes with, any of our contractors, subcontractors or other third parties on whom we will rely; ● health and safety incidents and site accidents; ● unforeseen engineering, environmental or geological problems, which may result in delays or increased costs; ● labor shortages, slowdowns or interruptions; ● compliance with environmental planning and protection regulations and related legal proceedings; ● liabilities, expenses or project delays, stoppages or interruptions as a result of challenges by third parties in legal proceedings; ● delay or inability to acquire property, rights of way or easements that may result in delays or increased costs; ● acts of war, cyberattacks or terrorism; and ● weather-related and geological interference, including landslides, earthquakes, floods, drought, wildfires and other events, which may result in delays or increased costs.
Some additional risks and conflicts related to our joint venture investments (including joint venture investments with our Manager, Sponsor and members of the Belpointe SP Group) include: ● the joint venture partner may have economic or other interests that are inconsistent with our interests, including interests relating to the financing, management, operation, leasing or sale of the assets purchased by such joint venture; 25 ● tax, Investment Company Act and other regulatory requirements applicable to the joint venture partner may cause it to want to take actions contrary to our interests; ● the joint venture partner may have joint control of the joint venture even in cases where its economic stake in the joint venture is significantly less than ours; ● under the joint venture arrangement, neither we nor the joint venture partner will be in a position to unilaterally control the joint venture, and deadlocks may occur.
Some additional risks and conflicts related to our joint venture investments (including joint venture investments with our Manager, Sponsor and members of the Belpointe SP Group) include: ● the joint venture partner may have economic or other interests that are inconsistent with our interests, including interests relating to the financing, management, operation, leasing or sale of the assets purchased by such joint venture; ● tax, Investment Company Act and other regulatory requirements applicable to the joint venture partner may cause it to want to take actions contrary to our interests; ● the joint venture partner may have joint control of the joint venture even in cases where its economic stake in the joint venture is significantly less than ours; ● under the joint venture arrangement, neither we nor the joint venture partner will be in a position to unilaterally control the joint venture, and deadlocks may occur.
Accordingly, our approach to investing in properties utilizing leverage in order to accomplish our investment objectives may present more risks to investors than comparable real estate programs that do not utilize borrowing to the same degree. 38 If we enter into financing arrangements involving balloon payment obligations, it may adversely affect our ability to make distributions.
Accordingly, our approach to investing in properties utilizing leverage in order to accomplish our investment objectives may present more risks to investors than comparable real estate programs that do not utilize borrowing to the same degree. If we enter into financing arrangements involving balloon payment obligations, it may adversely affect our ability to make distributions.
As with any asset valuation protocol, the conclusions reached by our Manager or any third-party firm that we engage to prepare or assist with preparing the NAV of our Class A units will involve significant judgments, assumptions, and opinions in the application of both observable and unobservable attributes that may or may not prove to be correct.
As with any asset valuation protocol, the conclusions reached by our Manager or any third-party firm that we engage to prepare or assist with preparing the NAV of our Class A units involve significant judgments, assumptions, and opinions in the application of both observable and unobservable attributes that may or may not prove to be correct.
Holders of our Class A units will not have preemptive rights to any units we issue in the future. To the extent we issue additional equity interests your percentage ownership interest in us would be diluted. Our investment guidelines delegate broad discretion to our Manager and our Board will not approve each investment and financing decision made by our Manager.
Holders of our Class A units will not have preemptive rights to any units we issue in the future. To the extent we issue additional equity interests your percentage ownership interest in us would be diluted. Our investment guidelines delegate broad discretion to our Manager and our Board does not approve each investment and financing decision made by our Manager.
Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. 37 Hedging instruments are often not traded on regulated exchanges or guaranteed by an exchange or its clearing house and involve risks and costs that could result in material losses.
Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. Hedging instruments are often not traded on regulated exchanges or guaranteed by an exchange or its clearing house and involve risks and costs that could result in material losses.
Therefore, our treatment as a corporation would result in a material reduction in cash flow and after-tax return to holders of our Class A units, likely causing a substantial reduction in the value of our Class A units. 39 There can be no assurance that we will continue to meet the requirements for classification as a qualified opportunity fund.
Therefore, our treatment as a corporation would result in a material reduction in cash flow and after-tax return to holders of our Class A units, likely causing a substantial reduction in the value of our Class A units. There can be no assurance that we will continue to meet the requirements for classification as a qualified opportunity fund.
It is important to note that the determination of our NAV will not be based on, nor is it intended to comply with, fair value standards under U.S. GAAP, and our NAV may not be indicative of the price that we would receive for our assets at current market conditions.
It is important to note that the determination of our NAV is not based on, nor is it intended to comply with, fair value standards under U.S. GAAP, and our NAV may not be indicative of the price that we would receive for our assets at current market conditions.
It is important to note that the determination of our NAV will not be based on, nor is it intended to comply with, fair value standards under U.S. GAAP, and our NAV may not be indicative of the price that we would receive for our assets at current market conditions.
It is important to note that the determination of our NAV is not based on, nor is it intended to comply with, fair value standards under U.S. GAAP, and our NAV may not be indicative of the price that we would receive for our assets at current market conditions.
Moreover, although we will calculate and provide our NAV on a quarterly basis, our NAV may fluctuate daily, accordingly the NAV in effect for any given fiscal quarter may not accurately reflect the amount that might otherwise be paid for your Class A units in a market transaction.
Moreover, although we calculate and provide our NAV on a quarterly basis, our NAV may fluctuate daily, accordingly the NAV in effect for any given fiscal quarter may not accurately reflect the amount that might otherwise be paid for your Class A units in a market transaction.
A member of the Belpointe SP Group may act as the co-developer of projects with the joint venture partners and developers. 24 ● Our Manager or a member of the Belpointe SP Group will enter into joint ventures with independent third-party experienced local developers to co-invest and co-develop on our behalf.
A member of the Belpointe SP Group may act as the co-developer of projects with the joint venture partners and developers. ● Our Manager or a member of the Belpointe SP Group will enter into joint ventures with independent third-party experienced local developers to co-invest and co-develop on our behalf.
We will depend on tenants for our revenue, and lease defaults or terminations could reduce our net income and limit our ability to pay distributions. The success of our investments materially depends on the financial stability of our tenants.
We depend on tenants for our revenue, and lease defaults or terminations could reduce our net income and limit our ability to pay distributions. The success of our investments materially depends on the financial stability of our tenants.
We will continue to seek to invest substantially all of the net offering proceeds from our Primary Offering, and any other offerings that we may conduct, after the payment of fees and expenses, in the acquisition of or investment in real estate and real estate-related assets, including commercial real estate loans and mortgages, and debt and equity securities issued by other real estate companies, as well as select private equity investments, and opportunistic acquisitions of other qualified opportunity funds and qualified opportunity zone businesses.
We will continue to seek to invest substantially all of the net offering proceeds from our Public Offerings, and any other offerings that we may conduct, after the payment of fees and expenses, in the acquisition of or investment in real estate and real estate-related assets, including commercial real estate loans and mortgages, and debt and equity securities issued by other real estate companies, as well as select private equity investments, and opportunistic acquisitions of other qualified opportunity funds and qualified opportunity zone businesses.
In addition, where we determine that an independent appraisal is necessary, including, without limitation, where our Manager is unsure of its ability to accurately determine the estimated values of our assets and investments, or where third party market values for comparable assets and investments are either nonexistent or extremely inconsistent, we may engage an appraiser that has expertise in appraising the types of assets and investments that we hold to act as our independent valuation expert.
In addition, where we determine that an independent appraisal is necessary, including, without limitation, where our Manager is unsure of its ability to accurately determine the estimated values of our assets and investments, or where third party market values for comparable assets and investments are either nonexistent or extremely inconsistent, we will engage an appraiser that has expertise in appraising the types of assets and investments that we hold to act as our independent valuation expert.
Holders of our Class A units will have no right to enforce the obligations of our Sponsor, Manager, or any of their or our affiliates under the terms of any agreements with the Company.
Holders of our Class A units have no right to enforce the obligations of our Sponsor, Manager, or any of their or our affiliates under the terms of any agreements with the Company.
As of the year ended December 31, 2023, we had 17 qualified opportunity zone investments in three states and are primarily reliant on the proceeds derived from our public offerings and any financing that might be provided by our Sponsor or its affiliates to fund our operations.
As of the year ended December 31, 2024, we had 17 qualified opportunity zone investments in three states and are primarily reliant on the proceeds derived from our public offerings and any financing that might be provided by our Sponsor or its affiliates to fund our operations.
Maintaining our exclusion from registration under the Investment Company Act will limit our ability to make certain investments. In addition, although we intend to continuously monitor our holdings, there can be no assurance that we, our Operating Companies or any of the subsidiaries of our Operating Companies will be able to maintain our exclusion from registration.
Maintaining our exclusion from registration under the Investment Company Act limits our ability to make certain investments. In addition, although we intend to continuously monitor our holdings, there can be no assurance that we, our Operating Companies or any of the subsidiaries of our Operating Companies will be able to maintain our exclusion from registration.
Our NAV will be calculated using a process designed to produce a fair and accurate estimate of the price that would be received for our assets and investments in an arm’s-length transaction between a willing buyer and a willing seller in possession of all material information about our assets and investments.
Our NAV is calculated using a process designed to produce a fair and accurate estimate of the price that would be received for our assets and investments in an arm’s-length transaction between a willing buyer and a willing seller in possession of all material information about our assets and investments.
While our goal is to pay distributions from cash flow from operations, we may, at the discretion of our Manager, subject to Board oversight, use other sources to fund distributions, including, without limitation, the sale of assets, borrowings in anticipation of future operating cash flow, net proceeds of our Primary Offering, and any other offerings that we may conduct, cash advances by our Manager, cash resulting from a waiver of fees or reimbursements due to our Manager or the issuance of additional securities.
While our goal is to pay distributions from cash flow from operations, we may, at the discretion of our Manager, subject to Board oversight, use other sources to fund distributions, including, without limitation, the sale of assets, borrowings in anticipation of future operating cash flow, net proceeds of our Public Offerings, and any other offerings that we may conduct, cash advances by our Manager, cash resulting from a waiver of fees or reimbursements due to our Manager or the issuance of additional securities.
Any agreements between the Company, on one hand, and our Sponsor, Manager, or any of their or our affiliates, on the other, will not grant to the holders of our Class A units, separate and apart from the Company, the right to enforce the terms of such agreements or any obligations of our Sponsor, Manager or their or our affiliates in favor of the Company.
Our agreements between the Company, on one hand, and our Sponsor, Manager, or any of their or our affiliates, on the other, do not grant to the holders of our Class A units, separate and apart from the Company, the right to enforce the terms of such agreements or any obligations of our Sponsor, Manager or their or our affiliates in favor of the Company.
Accordingly, you should consult with your own accountant or other tax advisers concerning the tax consequences of your specific tax circumstances prior to acquiring, holding or disposing of any of our Class A units. 41 We do not expect to be able to furnish definitive Schedule K-1s to IRS Form 1065 to each holder of our Class A units prior to the deadline for filing U.S. income tax returns, which means that holders of our Class A units who are U.S. taxpayers should anticipate the need to file annually a request for an extension of the due date of their income tax returns.
Accordingly, you should consult with your own accountant or other tax advisers concerning the tax consequences of your specific tax circumstances prior to acquiring, holding or disposing of any of our Class A units. 38 Table of Contents We do not expect to be able to furnish definitive Schedule K-1s to IRS Form 1065 to each holder of our Class A units prior to the deadline for filing U.S. income tax returns, which means that holders of our Class A units who are U.S. taxpayers should anticipate the need to file annually a request for an extension of the due date of their income tax returns.
At the same time, the more money we raise in our Primary Offering, and any other offerings that we may conduct, the greater our challenge will be to invest all of the net offering proceeds in investments that meet our investment criteria.
At the same time, the more money we raise in our Public Offerings, and any other offerings that we may conduct, the greater our challenge will be to invest all of the net offering proceeds in investments that meet our investment criteria.
In addition, our Manager may benefit by us retaining ownership of our assets and investments in order to avoid a reduction in our NAV at times when the holders of our Class A units may be better served by the sale or disposition of our assets or investments.
In addition, our Manager may benefit from our retaining ownership of our assets and investments in order to avoid a reduction in our NAV at times when the holders of our Class A units may be better served by the sale or disposition of our assets or investments.
However, any disclosure controls and procedures or internal controls over financial reporting that we put into place, no matter how well designed and operated, can only provide reasonable assurance of achieving their objectives. 23 As a result of the inherent limitations in the design of any system of controls, our disclosure controls and procedures and internal controls over financial reporting may not detect or prevent all misstatements and fraud, and we cannot assure you that there will not be significant deficiencies or material weaknesses in our disclosure controls and procedures and internal control over financial reporting in future periods.
However, any disclosure controls and procedures or internal controls over financial reporting that we put into place, no matter how well designed and operated, can only provide reasonable assurance of achieving their objectives. 22 Table of Contents As a result of the inherent limitations in the design of any system of controls, our disclosure controls and procedures and internal controls over financial reporting may not detect or prevent all misstatements and fraud, and we cannot assure you that there will not be significant deficiencies or material weaknesses in our disclosure controls and procedures and internal control over financial reporting in future periods.
There can be no assurance that the judgments, assumptions, and opinions used by our Manager to calculate our NAV, or the resulting NAV, will be the same as those judgments, assumptions and opinions that would be used, or the NAV that would be calculated, by an independent third-party firm.
There can be no assurance that the judgments, assumptions, and opinions used by our Manager to calculate our NAV, or the resulting NAV, are the same as those judgments, assumptions and opinions that would be used, or the NAV that would be calculated, by an independent third-party firm.
The following factors, among others, may adversely affect the real estate industry, including our properties, and could therefore adversely impact our financial condition and results of operations: ● interest rate fluctuations and lack of availability of financing; ● changes in national, regional or local economic, demographic or capital market conditions; ● persistent inflation; ● a lack of appropriate real estate investment opportunities, including appropriate qualified opportunity zone investment opportunities; ● disease outbreaks; ● acts of war, cyberattacks or terrorism; ● bank liquidity; ● increases in borrowing rates; ● changes in environmental and zoning laws; ● fluctuations in energy costs; ● overbuilding and increased competition for properties targeted by our investment strategy; ● future adverse national real estate trends, including increasing vacancy rates, declining rental rates and general deterioration of market conditions; ● changes in supply and demand fundamentals; ● limitations, reductions or eliminations of tax benefits; ● casualty or condemnation losses; ● bankruptcy, financial difficulty or lease default of a major tenant; ● regulatory limitations on rent; ● increased mortgage defaults and the availability of mortgage funds which may render the sale or refinancing of properties difficult or impracticable; ● changes in laws, regulations and fiscal policies, including increases in property taxes and limitations on rental rates; ● natural disasters, severe weather patterns and similar events. ● declines in consumer confidence and spending; and ● public perception that any of the above events may occur. 28 All of these factors are beyond our control.
The following factors, among others, may adversely affect the real estate industry, including our properties, and could therefore adversely impact our financial condition and results of operations: ● interest rate fluctuations and lack of availability of financing; 26 Table of Contents ● changes in national, regional or local economic, demographic or capital market conditions; ● persistent inflation; ● a lack of appropriate real estate investment opportunities, including appropriate qualified opportunity zone investment opportunities; ● disease outbreaks; ● acts of war, cyberattacks or terrorism; ● bank liquidity; ● increases in borrowing rates; ● changes in environmental and zoning laws; ● fluctuations in energy costs; ● overbuilding and increased competition for properties targeted by our investment strategy; ● future adverse national real estate trends, including increasing vacancy rates, declining rental rates and general deterioration of market conditions; ● changes in supply and demand fundamentals; ● limitations, reductions or eliminations of tax benefits; ● casualty or condemnation losses; ● bankruptcy, financial difficulty or lease default of a major tenant; ● regulatory limitations on rent; ● increased mortgage defaults and the availability of mortgage funds which may render the sale or refinancing of properties difficult or impracticable; ● changes in laws, regulations and fiscal policies, including increases in property taxes and limitations on rental rates; ● natural disasters, severe weather patterns and similar events; ● declines in consumer confidence and spending; and ● public perception that any of the above events may occur.
As with any asset valuation protocol, the conclusions reached by our Manager or any third-party firm that we engage to prepare or assist with preparing the NAV of our Class A units will involve significant judgments, assumptions, and opinions in the application of both observable and unobservable attributes that may or may not prove to be correct.
As with any asset valuation protocol, the conclusions reached by our Manager or any third-party firm that we engage to prepare or assist with preparing the NAV of our Class A units involves significant judgments, assumptions, and opinions in the application of both observable and unobservable attributes that may or may not prove to be correct.
If our NAV is calculated in a way that is not reflective of our actual NAV, then the purchase price of shares of our Class A units may not accurately reflect the value of our assets and investments, and your Class A units may be worth less than the purchase price paid. 35 Risks Related to Sources of Financing and Hedging We may incur significant debt, which may subject us to increased risk of loss and may reduce cash available for distributions.
If our NAV is calculated in a way that is not reflective of our actual NAV, then the purchase price of shares of our Class A units may not accurately reflect the value of our assets and investments, and your Class A units may be worth less than the purchase price paid. 33 Table of Contents Risks Related to Sources of Financing and Hedging We may incur significant debt, which may subject us to increased risk of loss and may reduce cash available for distributions.
These programmatic joint ventures will enable us to increase our presence and expertise in multiple regions. ● Our Manager or a member of the Belpointe SP Group will enter into joint ventures with experienced local developers to co-invest and co-develop projects on a deal-by-deal basis.
These programmatic joint ventures will enable us to increase our presence and expertise in multiple regions. 23 Table of Contents ● Our Manager or a member of the Belpointe SP Group will enter into joint ventures with experienced local developers to co-invest and co-develop projects on a deal-by-deal basis.
Your investment returns may be reduced if we are required to register as an investment company under the Investment Company Act. We will engage primarily in the business of investing in real estate and to conduct our operations such that neither we nor any of our subsidiaries are required to register as an “investment company” under the Investment Company Act.
Your investment returns may be reduced if we are required to register as an investment company under the Investment Company Act. We are engaged primarily in the business of investing in real estate and to conduct our operations such that neither we nor any of our subsidiaries are required to register as an “investment company” under the Investment Company Act.
Further, because we are a qualified opportunity fund eligible investors may defer recognition of capital gains (short-term or long-term) resulting from the sale or exchange of capital assets (or business assets the gain on sale of which is treated as a capital gain) by reinvesting those gains into our Class A units within a period of 180 days generally beginning on the date of the sale or exchange (the “Deferred Capital Gains”).
Further, because we are a qualified opportunity fund eligible investors may defer recognition of capital gains (short-term or long-term) resulting from the sale or exchange of capital assets (or business assets the gain on sale of which is treated as a capital gain) with an unrelated person by reinvesting those gains into our Class A units within a period of 180 days generally beginning on the date of the sale or exchange (the “Deferred Capital Gains”).
In order to receive the benefits of investing in a qualified opportunity fund, taxpayers must make deferral elections on Form 8949, Sales and Other Dispositions of Capital Assets , which will need to be attached to their U.S. federal income tax returns for the taxable year in which gain treated as capital gain (short-term or long-term) that result from the sale or exchange of capital assets would have been recognized had it not been deferred.
In order to receive the benefits of investing in a qualified opportunity fund, taxpayers must make deferral elections on Form 8949, Sales and Other Dispositions of Capital Assets , which will need to be attached to their U.S. federal income tax returns for the taxable year in which gain treated as capital gain (short-term or long-term) that results from the sale or exchange of capital assets to an unrelated person would have been recognized had it not been deferred.
If we fail to raise sufficient proceeds from the sale of Class A units in our Primary Offering, and any other offerings that we may conduct, we may be unable to fund all of our existing projects or to make additional suitable investments.
If we fail to raise sufficient proceeds from the sale of Class A units in our Public Offerings, and any other offerings that we may conduct, we may be unable to fund all of our existing projects or to make additional suitable investments.
We may have difficulty identifying and purchasing suitable properties on attractive terms. In addition, increased competition from other opportunity zone funds, a lack of suitable qualified opportunity zone investment opportunities or other market-related constraints, may also make it more difficult for our Manager to deploy the capital we raise in our Primary Offering.
We may have difficulty identifying and purchasing suitable properties on attractive terms. In addition, increased competition from other opportunity zone funds, a lack of suitable qualified opportunity zone investment opportunities or other market-related constraints, may also make it more difficult for our Manager to deploy the capital we raise in our Public Offerings.
If we are unable to obtain sufficient rental rates across our portfolio, or operating expenses are higher than anticipated, our ability to generate cash flow growth will be negatively impacted. Properties that have significant vacancies could be difficult to sell, which could diminish the return on these properties.
If we are unable to obtain sufficient rental rates across our portfolio, or operating expenses are higher than anticipated, our ability to generate cash flow growth will be negatively impacted. 28 Table of Contents Properties that have significant vacancies could be difficult to sell, which could diminish the return on these properties.
Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in lower distributions to you. 33 Many of our investments are illiquid and we may not be able to vary our portfolio in response to changes in economic and other conditions.
Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in lower distributions to you. 31 Table of Contents Many of our investments are illiquid and we may not be able to vary our portfolio in response to changes in economic and other conditions.
The independent valuation expert will not be responsible for, prepare or assist with preparing our NAV per Class A unit.
The independent valuation expert is not be responsible for, and will not prepare or assist with preparing our NAV per Class A unit.
This in turn could hurt both our ability to pay distributions to holders of our Class A units and the market price of our Class A units. We do not have an exclusive management arrangement with our Manager. We do not have an exclusive management arrangement with our Manager.
This in turn could hurt both our ability to pay distributions to holders of our Class A units and the market price of our Class A units. 17 Table of Contents We do not have an exclusive management arrangement with our Manager. We do not have an exclusive management arrangement with our Manager.
We can provide no assurances that future cash flow will support payment of distributions or maintaining distributions at any level, if at all. Your interest in us will be diluted if we issue additional units.
We can provide no assurances that future cash flow will support payment of distributions or maintaining distributions at any level, if at all. 18 Table of Contents Your interest in us will be diluted if we issue additional units.
However, to the extent that our Manager and its affiliates take actions that are more favorable to other entities than us, these actions could have a negative impact on our financial performance and, consequently, on distributions to the holders of our Class A units and the NAV of our Class A units. 34 The interests of our Manager, and its affiliates may conflict with your interests.
However, to the extent that our Manager and its affiliates take actions that are more favorable to other entities than us, these actions could have a negative impact on our financial performance and, consequently, on distributions to the holders of our Class A units and the NAV of our Class A units. 32 Table of Contents The interests of our Manager, and its affiliates may conflict with your interests.
No assurance can be given that we will be able to obtain any such financing on favorable terms or at all. Risks Relating to U.S. Federal Taxation There will be no assurance that we will continue to meet the requirements for treatment as a partnership.
No assurance can be given that we will be able to obtain any such financing on favorable terms or at all. 36 Table of Contents Risks Relating to U.S. Federal Taxation There will be no assurance that we will continue to meet the requirements for treatment as a partnership.
An inactive market may also impair our ability to raise capital by selling Class A units and may impair our ability to make opportunistic acquisitions of other qualified opportunity funds and qualified opportunity zone businesses using our Class A units as consideration. 15 If we are unable to raise sufficient proceeds in our ongoing Primary Offering, and any other offerings that we may conduct, we may not be able to fund all of our existing projects or find additional suitable investments, and, as a result, we may not be able to achieve our investment objectives or pay distributions.
An inactive market may also impair our ability to raise capital by selling Class A units and may impair our ability to make opportunistic acquisitions of other qualified opportunity funds and qualified opportunity zone businesses using our Class A units as consideration. 14 Table of Contents If we are unable to raise sufficient proceeds in our ongoing Public Offerings, and any other offerings that we may conduct, we may not be able to fund all of our existing projects or find additional suitable investments, and, as a result, we may not be able to achieve our investment objectives or pay distributions.
Our NAV will be calculated using a process that may reflect some or all of the following components: (i) estimated values of each of our assets and investments, including related liabilities (but may, in our discretion, exclude deal-level carried interest allocations), based on: (a) market capitalization rates, comparable transaction information, interest rates, adjusted net operating income; (b) with respect to debt, default rates, discount rates and loss severity rates; (c) for commercial real estate properties that have development or value add plans, progress along such development or value add plans; and (d) in certain instances, reports of the underlying assets and investments by an independent valuation expert; (ii) the price of liquid assets for which third party market quotes are available; (iii) accruals of our periodic distributions; and (iv) estimated accruals of our operating revenues and expenses (excluding property management oversight fees).
Our NAV is calculated using a process that may reflect some or all of the following components: (i) estimated values of each of our assets and investments, including related liabilities (but may, in our discretion, exclude deal-level carried interest allocations), based on: (a) market capitalization rates, comparable transaction information, interest rates, adjusted net operating income; (b) with respect to debt, default rates, discount rates and loss severity rates; (c) for commercial real estate properties that have development or value add plans, progress along such development or value add plans; and (d) in certain instances, reports of the underlying assets and investments by an independent valuation expert; (ii) the price of liquid assets for which third party market quotes are available; (iii) accruals of our periodic distributions; and (iv) estimated accruals of our operating revenues and expenses (excluding property management oversight fees). 15 Table of Contents We may engage a third party to prepare or assist with preparing the NAV of our Class A units.
In the event we are unable to timely locate suitable investments, we may be unable or limited in our ability to pay distributions and we may not be able to meet our investment objectives. Our ability to deploy the capital we raise in our Primary Offering may be constrained.
In the event we are unable to timely locate suitable investments, we may be unable or limited in our ability to pay distributions and we may not be able to meet our investment objectives. Our ability to deploy the capital we raise in our Public Offerings may be constrained.
Therefore, there could be a delay between the time we receive net proceeds from the sale of our Class A units in our Primary Offering and the time we invest the net proceeds.
Therefore, there could be a delay between the time we receive net proceeds from the sale of our Class A units in our Public Offerings and the time we invest the net proceeds.
Our Manager may use complex strategies or enter into costly transactions that are difficult or impossible to unwind by the time they are reviewed by our Board, which could result in investment returns that are below expectations or that result in losses, and which would materially and adversely affect our business operations and results. 20 We may change our investment strategy and guidelines without member consent.
Our Manager may use complex strategies or enter into costly transactions that are difficult or impossible to unwind by the time they are reviewed by our Board, which could result in investment returns that are below expectations or that result in losses, and which would materially and adversely affect our business operations and results.
Moreover, we cannot predict occupancy levels for a particular property or whether any tenant or mortgage or other real estate related loan borrower will remain solvent. We also cannot predict the future value of our investments. Accordingly, we cannot guarantee that you will receive cash distributions.
Moreover, we cannot predict occupancy levels for a particular property or whether any tenant or mortgage or other real estate related loan borrower will remain solvent. We also cannot predict the future value of our investments.
Moreover, certain significant expenditures associated with real estate (such as real estate taxes, maintenance costs and, where applicable, mortgage payments) have no relationship with, and thus do not diminish in proportion to, a reduction in income from the property.
All of these factors are beyond our control. Moreover, certain significant expenditures associated with real estate (such as real estate taxes, maintenance costs and, where applicable, mortgage payments) have no relationship with, and thus do not diminish in proportion to, a reduction in income from the property.
Any contest with the IRS may materially and adversely impact the value of our Class A units. In addition, the costs of any contest with the IRS will be borne indirectly by the holders of our Class A units because the costs will reduce our cash available for distribution.
In addition, the costs of any contest with the IRS will be borne indirectly by the holders of our Class A units because the costs will reduce our cash available for distribution.
Our Board will not, and will not be required to, review all of our proposed investments.
Our Board does not, and is not be required to, review all of our proposed investments.
It is possible that actual costs and expenses associated with maintain our status as a publicly traded partnership and operating as an Exchange Act reporting company will be higher than we currently estimate and we may require additional capital or future earnings to cover these costs and expenses, which could materially and adversely affect our business, results of operations, financial condition, and cash flows.
It is possible that actual costs and expenses associated with maintain our status as a publicly traded partnership and operating as an Exchange Act reporting company will be higher than we currently estimate and we may require additional capital or future earnings to cover these costs and expenses, which could materially and adversely affect our business, results of operations, financial condition, and cash flows. 21 Table of Contents We are not required to comply with certain reporting and disclosure requirements that are applicable to other public companies.
Such trends may result in reduced revenue and lower resale value of properties. 30 We may enter into long-term leases with tenants in certain properties, which may not result in fair market rental rates over time. We may enter into long-term leases with tenants of certain of our properties or include renewal options that specify a maximum rate increase.
We may enter into long-term leases with tenants in certain properties, which may not result in fair market rental rates over time. We may enter into long-term leases with tenants of certain of our properties or include renewal options that specify a maximum rate increase.
If we have a right of first refusal to buy out a joint venture partner, we may be unable to finance such a buy-out if it becomes exercisable or we are required to purchase such interest at a time when it would not otherwise be in our best interest to do so.
In addition, we may in certain circumstances be liable for the actions of our joint venture partners. 24 Table of Contents If we have a right of first refusal to buy out a joint venture partner, we may be unable to finance such a buy-out if it becomes exercisable or we are required to purchase such interest at a time when it would not otherwise be in our best interest to do so.
If we pay higher prices for our assets and investments, our returns could be lower and the value of our assets and investments may not appreciate or may decrease significantly below the prices paid, and you may experience a lower than anticipated return on your investment. Our performance is subject to risks associated with the real estate industry.
If we pay higher prices for our assets and investments, our returns could be lower and the value of our assets and investments may not appreciate or may decrease significantly below the prices paid, and you may experience a lower than anticipated return on your investment.
To the extent that our financing costs will be determined by reference to floating rates, such as the Secured Overnight Financing Rate (SOFR) or a Treasury index, plus a margin, the amount of such costs will depend on a variety of factors, including, without limitation, (i) for collateralized debt, the value and liquidity of the collateral, and for non-collateralized debt, our credit, (ii) the level and movement of interest rates, and (iii) general market conditions and liquidity.
Changes in the level of interest rates also may affect our ability to invest in investments, the value of our investments and our ability to realize gains from the disposition of assets and investments. 34 Table of Contents To the extent that our financing costs will be determined by reference to floating rates, such as the Secured Overnight Financing Rate (SOFR) or a Treasury index, plus a margin, the amount of such costs will depend on a variety of factors, including, without limitation, (i) for collateralized debt, the value and liquidity of the collateral, and for non-collateralized debt, our credit, (ii) the level and movement of interest rates, and (iii) general market conditions and liquidity.
The Class M unit does not represent an economic interest in the Company. 22 If we internalize our management functions, your interest in us could be diluted, and we could incur other significant costs associated with being self-managed. We are externally managed by our Manager, who is an affiliate of our Sponsor.
If we internalize our management functions, your interest in us could be diluted, and we could incur other significant costs associated with being self-managed. We are externally managed by our Manager, who is an affiliate of our Sponsor.
Our Management Agreement with our Manager was negotiated between related parties and its terms, including fees payable, may not be as favorable to us as if it had been negotiated with an unaffiliated third party. We will pay our Manager a management fee regardless of the performance of our investments.
Our Management Agreement with our Manager was negotiated between related parties and its terms, including fees payable, may not be as favorable to us as if it had been negotiated with an unaffiliated third party.
Upon any termination or non-renewal of the Management Agreement by us or any termination of the Management Agreement by our Manager for our breach of the Management Agreement, our Manager will be entitled to receive its prorated management fee through the expiration or termination date and will be paid a termination fee equal to six times the annual management fee earned by our Manager during the 12-month period ended as of the last day of the quarter immediately preceding the termination date (the “Termination Fee”); however, if less than 12 months have elapsed as of the termination date, the Termination Fee will be calculated by annualizing the management fee earned during the most recently completed quarter prior to the termination date. 19 In addition, upon any termination or non-renewal of the Management Agreement, our Manager will continue to hold 100% of our Class B units, which entitle our Manager to 5% of any gain recognized by or distributed to the Company or recognized by or distributed from the Operating Companies or any subsidiary.
Upon any termination or non-renewal of the Management Agreement by us or any termination of the Management Agreement by our Manager for our breach of the Management Agreement, our Manager will be entitled to receive its prorated management fee through the expiration or termination date and will be paid a termination fee equal to six times the annual management fee earned by our Manager during the 12-month period ended as of the last day of the quarter immediately preceding the termination date (the “Termination Fee”); however, if less than 12 months have elapsed as of the termination date, the Termination Fee will be calculated by annualizing the management fee earned during the most recently completed quarter prior to the termination date.
As a result, we and our members, record holders and beneficial owners of our units will not be able to pursue litigation in federal or state court against the Company or our Sponsor, Manager or any of our directors, officers, or other agents, and instead will be required to pursue such claims through a final and binding arbitration proceeding. 21 Our Operating Agreement provides that such arbitration proceedings would generally be conducted in accordance with the rules and policies of the American Arbitration Association.
As a result, we and our members, record holders and beneficial owners of our units will not be able to pursue litigation in federal or state court against the Company or our Sponsor, Manager or any of our directors, officers, or other agents, and instead will be required to pursue such claims through a final and binding arbitration proceeding.
Accordingly, our Manager will be able to determine the outcome of all matters on which a holder of our Class M unit has a vote. Such matters include certain mergers and acquisitions, certain amendments to our Operating Agreement and the election of one Class III director (the “Class M Director”).
Accordingly, our Manager is able to determine the outcome of all matters on which our Class M unit has a vote. Such matters include certain mergers and acquisitions, certain amendments to our Operating Agreement and the election of one Class III director (the “Class M Director”). The Class M unit does not represent an economic interest in the Company.
Without this exposure, you may be at a greater risk of loss because our Sponsor does not have as much to lose from a decrease in the value of our Class A units as a sponsor who makes a more significant equity investment would. 17 Our Sponsor currently sponsors and will in the future sponsor other investment programs some of which may compete with us.
Without this exposure, you may be at a greater risk of loss because our Sponsor does not have as much to lose from a decrease in the value of our Class A units as a sponsor who makes a more significant equity investment would.
Any changes to the U.S. federal tax laws and interpretations thereof may be applied prospectively or retroactively and could make it more difficult or impossible for us to meet the qualifying income exception or qualified opportunity fund requirements and accordingly adversely affect the tax consequences associated with an investment in our Class A units. 40 If the IRS contests the U.S. federal income tax positions we take, the value our Class A units may be adversely impacted, and the cost of any IRS contest will reduce cash available for distributions.
Any changes to the U.S. federal tax laws and interpretations thereof may be applied prospectively or retroactively and could make it more difficult or impossible for us to meet the qualifying income exception or qualified opportunity fund requirements and accordingly adversely affect the tax consequences associated with an investment in our Class A units.
As a result of these trends, we may be more inclined to provide leasing incentives to our tenants in order to compete in a more competitive leasing environment.
As a result of these trends, we may be more inclined to provide leasing incentives to our tenants in order to compete in a more competitive leasing environment. Such trends may result in reduced revenue and lower resale value of properties.
We are not required to comply with certain reporting and disclosure requirements that are applicable to other public companies. We are an “emerging growth company,” as defined in the Jump Start Our Business Startups Act of 2012 (“JOBS Act”).
We are an “emerging growth company,” as defined in the Jump Start Our Business Startups Act of 2012 (“JOBS Act”). As an emerging growth company, we have elected to take advantage of certain exemptions from various reporting and disclosure requirements that are applicable to public companies that are not emerging growth companies.
There are significant risks associated with the development or redevelopment of our real estate investments that may prevent their completion on budget and on schedule and which may adversely affect our financial condition and results of operations.
Accordingly, we cannot guarantee that you will receive cash distributions. 27 Table of Contents There are significant risks associated with the development or redevelopment of our real estate investments that may prevent their completion on budget and on schedule and which may adversely affect our financial condition and results of operations.
Our activities and investments may be adversely affected by changes in market, economic, political or regulatory conditions, such as fluctuations in real estate market prices, rising interest rates, availability of credit, credit defaults, rising inflation rates, supply chain disruptions, labor shortages, economic uncertainty, instability in the banking system, changes in laws (including laws relating to taxation of us or of our investments), and national and international political, environmental and socioeconomic circumstances (including disease outbreaks, wars, cyberattacks, terrorist acts or security operations), such as the escalating conflict between Russia and Ukraine and the severe economic sanctions and export controls imposed by the U.S. and other governments against Russia and Russian interests, as well as by numerous other factors outside of our control.
Our activities and investments may be adversely affected by changes in market, economic, political or regulatory conditions, such as fluctuations in real estate market prices, rising interest rates, availability of credit, credit defaults, rising inflation rates, supply chain disruptions, labor shortages, economic uncertainty, instability in the banking system, changes in laws (including laws relating to taxation of us or of our investments), and national and international political, environmental and socioeconomic circumstances (including disease outbreaks, wars, cyberattacks, terrorist acts or security operations), such as the conflict between Russia and Ukraine, the Israel-Hamas war or changes in U.S. policy that may lead to significant increases in tariffs for imported goods, which may strain international trade relations and increase the risk of retaliatory tariffs imposed by foreign governments on goods imported from the U.S., as well as by numerous other factors outside of our control.
In order to manage the significant risks inherent in our business, we must maintain effective policies, procedures and systems that enable us to identify, monitor and control our exposure to market, operational, legal and reputational risks.
If our techniques for managing risk are ineffective, we may be exposed to unanticipated losses. In order to manage the significant risks inherent in our business, we must maintain effective policies, procedures and systems that enable us to identify, monitor and control our exposure to market, operational, legal and reputational risks.
The tax treatment of an investment in our Class A units could be subject to potential legislative, judicial, or administrative changes or differing interpretations, possibly applied on a retroactive basis. The present U.S. federal income tax treatment of an investment in our Class A units may be modified by administrative, legislative, or judicial interpretation at any time.
The present U.S. federal income tax treatment of an investment in our Class A units may be modified by administrative, legislative, or judicial interpretation at any time.
If we fail to timely invest the net proceeds of our Primary Offering, our results of operations and financial condition may be adversely affected. Our NAV per Class A unit may change materially from our current NAV. We plan to calculate the net asset value (“NAV”) of our Class A units on a quarterly basis.
If we fail to timely invest the net proceeds of our Public Offerings, our results of operations and financial condition may be adversely affected. Our NAV per Class A unit may change materially from our current NAV.
Any failures in our risk management techniques and strategies to accurately quantify such risk exposure could limit our ability to manage risks or to seek positive, risk-adjusted returns. In addition, any risk management failures could cause fund losses to be significantly greater than historical measures predict.
Any failures in our risk management techniques and strategies to accurately quantify such risk exposure could limit our ability to manage risks or to seek positive, risk-adjusted returns.
These rules and policies may provide significantly more limited rights than litigation in a federal or state court. In addition, our Operating Agreement provides that all arbitration proceedings will be closed to the public and confidential, that discovery will be limited to matters directly relevant to issues in the proceeding, and that the parties waive the right to a jury.
In addition, our Operating Agreement provides that all arbitration proceedings will be closed to the public and confidential, that discovery will be limited to matters directly relevant to issues in the proceeding, and that the parties waive the right to a jury.
The per Class A unit purchase price will be adjusted within approximately 60 days of the last day of each quarter (the “Determination Date”). We will calculate our NAV as of the Determination Date (rounded to the nearest dollar) and any adjustment to our NAV will take effect as of the first business day following its public announcement.
We disclose our determination of NAV and NAV per Class A unit within approximately 60 days of the Determination Date. Any adjustments to our NAV and the per Class A unit purchase price take effect as of the first business day following its public announcement.
Any bank credit facilities and repurchase agreements that we may use in the future to finance our assets may require us to provide additional collateral or pay down debt. We may utilize bank credit facilities, repurchase agreements (including term loans and revolving facilities) or guarantee arrangements to finance our assets if they become available on acceptable terms.
We may utilize bank credit facilities, repurchase agreements (including term loans and revolving facilities) or guarantee arrangements to finance our assets if they become available on acceptable terms.
The management fee our Manager receives will be based on our NAV and our Manager is ultimately responsible for calculating our NAV. We pay our Manager a quarterly management fee at an annualized rate of 0.75%. The management fee is based on our NAV, as calculated by our Manager at the end of each quarter.
The management fee our Manager is entitled to receive is based on our NAV and our Manager is ultimately responsible for calculating our NAV. We are obligated to pay our Manager a quarterly management fee at an annualized rate of 0.75%.
We believe that the exclusive forum selection provision in our Operating Agreement is enforceable under both federal and state law, including with respect to federal securities law claims, however, there is uncertainty as to its enforceability and it is possible that it may ultimately be determined to be unenforceable.
We believe that the exclusive forum selection provision in our Operating Agreement is enforceable under both federal and state law, including with respect to federal securities law claims, however, there is uncertainty as to its enforceability and it is possible that it may ultimately be determined to be unenforceable. 20 Table of Contents Holders of our Class A units have limited voting rights and may be bound by a majority or supermajority vote or by a vote of the holder of our Class M unit, as applicable.
Certain claims that may be brought against the Company or our Sponsor, Manager, directors, officers, or other agents must be resolved by final and binding arbitration, which follows a different set of procedures and may be more restrictive than litigation.
These modifications restrict the remedies available to the holders of our units for actions that, without such modifications, may constitute breaches of duty (including fiduciary duty). 19 Table of Contents Certain claims that may be brought against the Company or our Sponsor, Manager, directors, officers, or other agents must be resolved by final and binding arbitration, which follows a different set of procedures and may be more restrictive than litigation.
We could also become subject to cross-default and acceleration rights and, with respect to collateralized debt, the posting of additional collateral and foreclosure rights upon default. 36 Interest rate fluctuations could increase our financing costs and reduce our ability to generate income on our investments, each of which could lead to a significant decrease in our results of operations, cash flows and the market value of our investments.
Interest rate fluctuations could increase our financing costs and reduce our ability to generate income on our investments, each of which could lead to a significant decrease in our results of operations, cash flows and the market value of our investments.
A worsening of economic conditions in U.S. markets and, in particular, the markets where we end up acquiring properties, could have an adverse effect on our business and could impair the value of our collateral. 31 Actions of any joint venture partners that we may have in the future could reduce the returns on joint venture investments and decrease your overall investment return.
A worsening of economic conditions in U.S. markets and, in particular, the markets where we end up acquiring properties, could have an adverse effect on our business and could impair the value of our collateral.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
Item 3. Legal Proceedings. From time to time we may be involved in various claims and legal actions arising in the ordinary course of business. As of December 31, 2023, neither we nor any of our subsidiaries were subject to any material legal proceedings. Item 4. Mine Safety Disclosures. Not applicable. 42 PART II
Added
Item 3. Legal Proceedings. From time to time we may be involved in various claims and legal matters arising in the ordinary course of business. We record loss contingencies for legal matters when it is both probable that liability will be incurred, and the amount of loss can be reasonably estimated.
Added
Where the reasonable estimate of a probable loss is a range, we record the most likely estimate of loss within that range. For the litigation described below, we do not believe liability is probable and therefore have not accrued loss contingencies for the matter. However, litigation and other disputes are inherently unpredictable and subject to substantial uncertainties.
Added
We will reassess our accruals on an ongoing basis taking into account the procedural stage and developments in the litigation.
Added
The Galinn Fund LLC On December 5, 2024, the Galinn Fund LLC, a New York limited liability company (“Galinn”), filed a complaint in Connecticut State Superior Court naming CMC Storrs SPV, LLC (“CMC”), the holding company for our investment property located at 497-501 Middle Turnpike, Storrs, Connecticut (“497-501 Middle”), as a defendant, alongside Chen Ji, an individual (“Chen”), and two additional entities (the “Guarantors”).
Added
In the complaint Galinn alleges, among other things, that on May 24, 2024, Chen, on behalf of CMC, executed a mortgage note (the “Note”) in the principal amount of $3.0 million (the “Loan”), which was secured in part by a mortgage against 497-501 Middle (the “Mortgage”).
Added
Galinn further alleges that CMC is in default under both the Note and Mortgage for failure to make payments when due. Galinn is seeking to foreclose on the Mortgage and damages against CMC and the Guarantors.
Added
In March 2020, when we first acquired an equity interest in CMC, Chen was an affiliate of the entity, however, he thereafter exited the investment and is no longer in any way affiliated with or authorized to act on behalf of CMC.
Added
We maintain that the Loan was obtained as a result of Chen’s fraud and Galinn’s negligence, and had Galinn done adequate due diligence, or reviewed the publicly available filings on the State of Connecticut’s Business Records website, or even a basic Google search, Chen’s lack of authority would have been readily apparent prior to Galinn having made the Loan.
Added
We dispute any liability in this litigation, believe we have substantial defenses to Galinn’s claims, and are vigorously defending the matter. As of December 31, 2024, neither we nor any of our subsidiaries were subject to any other material legal proceedings.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur adjusted NAV will be equal to our adjusted NAV as of the Determination Date (rounded to the nearest dollar) divided by the number of Class A units outstanding on the Determination Date. As of December 31, 2023, our NAV per Class A units was $100.88.
Biggest changeEach quarter, our Manager calculates our NAV and NAV per Class A unit as of the last day of the quarter (the “Determination Date”). Our NAV per Class A unit is equal to our NAV as of the Determination Date, divided by the number of Class A units outstanding on the Determination Date.
See “ Part III, Item 13—Certain Relationships and Related Transactions, and Director Independence—Our Affiliate Transactions ” for additional information regarding fees incurred on our behalf by, and expenses reimbursable to, our Manager and its affiliates.
See “ Part III, Item 13—Certain Relationships and Related Transactions, and Director Independence—Our Affiliate Transactions ” for additional information regarding fees incurred on our behalf by, and expenses reimbursable to, our Manager and its affiliates.
(2) Direct or indirect payments of $1.4 million have been made to others, including payments for legal, accounting, transfer agent, FINRA, and filing fees, as of December 31, 2023. (3) Includes all offering costs incurred by the Company in connection with any offer and sale of securities by the Company.
(2) Direct or indirect payments of $1.4 million have been made to others, including payments for legal, accounting, transfer agent, FINRA, and filing fees, as of December 31, 2024. (3) Includes all offering costs incurred by the Company in connection with any offer and sale of securities by the Company.
(2) Includes direct or indirect payments of $10.0 million to directors, officers and affiliates as of December 31, 2023 predominantly for insurance premiums and employee reimbursement expenditures (pursuant primarily to our development management agreements).
(2) Includes direct or indirect payments of $10.0 million to directors, officers and affiliates as of December 31, 2024 predominantly for insurance premiums and employee reimbursement expenditures (pursuant primarily to our development management agreements).
See “ Part III, Item 13—Certain Relationships and Related Transactions, and Director Independence—Our Affiliate Transactions—Our Transaction with Norpointe, LLC” for additional details regarding our transactions with Norpointe .
See “ Part III, Item 13—Certain Relationships and Related Transactions, and Director Independence—Our Affiliate Transactions—Our Transaction with Norpointe, LLC ” for additional details regarding our transactions with Norpointe.
Neither our Class B units nor our Class M unit are listed or traded on any established public trading market. Holders As of March 22, 2024, there were 46 holders of record of our Class A units, and one holder of record of each of our Class B units and Class M unit, respectively.
Neither our Class B units nor our Class M unit are listed or traded on any established public trading market. Holders As of March 28, 2025, there were 46 holders of record of our Class A units, and one holder of record of each of our Class B units and Class M unit, respectively.
(3) Includes direct or indirect payments of $9.0 million to directors, officers and affiliates as of December 31, 2023 for management fees, insurance premiums and employee cost sharing expenses (pursuant to our Management Agreement and Employee and Cost Sharing Agreement).
(3) Includes direct or indirect payments of $9.4 million to directors, officers and affiliates as of December 31, 2024 for management fees, insurance premiums and employee cost sharing expenses (pursuant to our Management Agreement and Employee and Cost Sharing Agreement).
From the period of October 7, 2021, the date of the first closing held in connection with our Primary Offering, through December 31, 2022, we issued 2,273,339 Class A units in our Primary Offering, raising net offering proceeds of $226.0 million.
From the period of October 7, 2021, the date of the first closing held in connection with our Primary Offering, through December 31, 2023, we issued 2,372,289 Class A units in our Primary Offering, raising net offering proceeds of $233.5 million.
Uses of net offering proceeds Funding of loans receivable (1) $ 34,955 Purchases and development of real estate (2) 152,701 Working capital (3) (4) 19,685 $ 207,341 (1) Includes direct payment of $30.0 million to Norpointe, an affiliate of our Chief Executive Officer.
Uses of net offering proceeds (in thousands) Funding of loans receivable (1) $ 34,955 Purchases and development of real estate (2) 180,594 Working capital (3) (4) 21,031 $ 236,580 (1) Includes direct payment of $30.0 million to Norpointe, an affiliate of our Chief Executive Officer.
We file a prospectus supplement with the SEC disclosing quarterly determinations of our NAV per Class A unit.
As of December 31, 2024, our NAV per Class A units was $119.94. 40 Table of Contents We file a prospectus supplement with the SEC disclosing quarterly determinations of our NAV per Class A unit.
Together with the gross proceeds raised in Belpointe REIT, Inc.’s prior offerings, as of December 31, 2023, we have raised aggregate gross offering cash proceeds of $354.3 million. 43 The following tables summarize certain information about the Public Offering proceeds and our use of proceeds, including direct or indirect payments to our directors, officers, affiliates or to any person owning 10% or more of any class of our equity securities as of December 31, 2023: Offering proceeds Class A units sold 2,372,289 Gross offering proceeds $ 235,265,650 Selling commissions — Offering costs (1) (2) (3) 1,730,669 Net offering proceeds $ 233,534,981 (1) Includes $0.3 million of reimbursements to an affiliate for costs incurred on our behalf.
The following tables summarize certain information about the Public Offering proceeds and our use of proceeds, including direct or indirect payments to our directors, officers, affiliates or to any person owning 10% or more of any class of our equity securities as of December 31, 2024: Offering proceeds Class A units sold 2,414,063 Gross offering proceeds $ 238,326,670 Selling commissions 5,000 Offering costs (1) (2) (3) 1,741,256 Net offering proceeds $ 236,580,414 (1) Includes $0.3 million of reimbursements to an affiliate for costs incurred on our behalf.
(4) Includes direct or indirect payments of $2.8 million to others, including payments for legal, accounting, marketing, transfer agent and filing fees, as of December 31, 2023.
(4) Includes direct or indirect payments of $3.8 million to others, including payments for legal, accounting, marketing, transfer agent and filing fees, as of December 31, 2024. Unregistered Sales of Equity Securities As of December 31, 2024, we have not sold any equity securities within the past three years that were not registered under the Securities Act.
For the year ended December 31, 2023, we issued 98,950 Class A units in connection with our Public Offerings, raising net offering proceeds of $7.5 million.
For the year ended December 31, 2024, we issued 41,774 Class A units in connection with our Public Offerings, raising net offering proceeds of $3.0 million. Together with the gross proceeds raised in Belpointe REIT, Inc.’s prior offerings, as of December 31, 2024, we have raised aggregate gross offering cash proceeds of $357.3 million.
Our Manager calculates our NAV within approximately 60 days of the last day of each quarter (the “Determination Date”). Any adjustment to our NAV will take effect as of the first business day following the public announcement of our NAV.
We disclose our determination of NAV and NAV per Class A unit within approximately 60 days of the Determination Date. Any adjustments to our NAV and the per Class A unit purchase price take effect as of the first business day following its public announcement.
Removed
Unregistered Sales of Equity Securities In connection with our formation, on February 11, 2020, we issued 100 common units representing all of the issued and outstanding limited liability company interests of the Company to our Sponsor for an aggregate purchase price of $10,000.00. No sales commission or other consideration was paid in connection with the sale.
Removed
The offer and sale was exempt from the registration requirements of the Securities Act, in reliance on Section 4(a)(2) thereof, as a transaction by an issuer not involving any public offering.
Removed
Effective October 30, 2020, our Sponsor sold one common unit to Belpointe Capital Management, LLC, an affiliate of our Sponsor, for an aggregate purchase price of $100.00, in reliance upon the exemption from registration set forth in Section 4(a)(1) of the Securities Act, as a transaction by a person other than an issuer, underwriter or dealer not involving any public offering.
Removed
Effective September 13, 2021, we (i) amended and restated our Limited Liability Company Operating Agreement, (ii) reclassified all of our outstanding common units into an equivalent number of Class A units, and (iii) issued 100,000 Class B units and one Class M unit to our Manager.
Removed
The Class B units were issued in consideration of services rendered and to be rendered by the Manager pursuant to the terms of the Management Agreement, and the Class M unit was issued in furtherance of the power and authority delegated to the Manager under the terms of the Management Agreement.
Removed
No sales commission or other consideration was paid in connection with the issuance of the Class B units or the Class M unit. The issuance of the Class B units and Class M unit was exempt from the registration requirements of the Securities Act, in reliance on Section 4(a)(2) thereof, as transactions by an issuer not involving any public offering.
Removed
As of December 31, 2023, we have not sold any other equity securities that were not registered under the Securities Act.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations The following table sets forth information regarding our consolidated results of operations during the years ended December 31, 2023 and 2022 (amounts in thousands): Year Ended December 31, 2023 2022 $ Change % Change Revenue Rental revenue $ 2,254 $ 1,391 $ 863 62 % Total revenue 2,254 1,391 863 62 % Expenses Property expenses 4,179 3,809 370 10 % General and administrative 6,335 5,798 537 9 % Depreciation and amortization 2,067 1,291 776 60 % Impairment of real estate 4,060 — 4,060 100 % Total expenses 16,641 10,898 5,743 53 % Other income Interest income 113 1,850 (1,737 ) (94 )% Other expense (87 ) (469 ) 382 (81 )% Total other income 26 1,381 (1,355 ) (98 )% Loss before income taxes (14,361 ) (8,126 ) (6,235 ) 77 % Provision for income taxes (1 ) (112 ) 111 (99 )% Net loss (14,362 ) (8,238 ) (6,124 ) 74 % Net income attributable to Belpointe PREP, LLC 11 555 (544 ) (98 )% Net loss attributable to Belpointe PREP, LLC $ (14,351 ) $ (7,683 ) $ (6,668 ) 87 % 46 Revenue Rental Revenue For the year ended December 31, 2023 as compared to the same period in 2022, rental revenue increased by $0.9 million.
Biggest changeThe following table details the results of Segment NOI, a supplemental financial measure, reconciled to our consolidated statement of operations for the years ended December 31, 2024, and 2023 (amounts in thousands): Years Ended December 31, 2024 2023 Commercial Segment Mixed-use Segment Total Commercial Segment Mixed-use Segment Total Segment NOI: Rental revenue $ 1,099 $ 1,576 $ 2,675 $ 1,769 $ 485 $ 2,254 Property expenses (1,145 ) (2,989 ) (4,134 ) (730 ) (756 ) (1,486 ) Total Segment NOI $ (46 ) $ (1,413 ) $ (1,459 ) $ 1,039 $ (271 ) $ 768 Non-segment items: Management fees, included in Property expenses (2,705 ) (2,693 ) General and administrative (5,111 ) (6,335 ) Interest expense (10,006 ) — Depreciation and amortization (4,215 ) (2,067 ) Impairment of real estate (777 ) (4,060 ) Interest income 646 113 Other expense (228 ) (87 ) Loss before income taxes (23,855 ) (14,361 ) Provision for income taxes (1 ) (1 ) Net loss (23,856 ) (14,362 ) Net loss attributable to noncontrolling interests — 11 Net loss attributable to Belpointe PREP, LLC $ (23,856 ) $ (14,351 ) Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 Segment NOI Commercial Segment For the year ended December 31, 2024, as compared to the same period in 2023, Segment NOI decreased by $1.1 million.
The recent accounting changes that may potentially impact our business are described under “Recent Accounting Pronouncements” in “ Note 2 — Summary of Significant Accounting Policies .” Off-Balance Sheet Arrangements We currently have no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
The recent accounting changes that may potentially impact our business are described under “Recent Accounting Pronouncements” in “Note 2 — Summary of Significant Accounting Policies.” Off-Balance Sheet Arrangements We currently have no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Our offering and operating fees and expenses include, among other things, legal, audit and valuation fees and expenses, federal and state filing fees, SEC, FINRA and NYSE American filing fees, printing expenses, administrative fees, transfer agent fees, marketing and distribution fees, the management fee that we pay to our Manager, and fees and expenses related to acquiring, financing, appraising, and managing our commercial real estate properties.
Our Public Offering and operating fees and expenses include, among other things, legal, audit and valuation fees and expenses, federal and state filing fees, SEC, FINRA and NYSE filing fees, printing expenses, administrative fees, transfer agent fees, marketing and distribution fees, the management fee that we pay to our Manager, and fees and expenses related to acquiring, financing, appraising, and managing our commercial real estate properties.
Our actual results could differ from these estimates. Our significant accounting policies are described in “ Note 2 — Summary of Significant Accounting Policies .” Many of these accounting policies require judgment and the use of estimates and assumptions when applying these policies in the preparation of our consolidated financial statements.
Our actual results could differ from these estimates. Our significant accounting policies are described in “Note 2 — Summary of Significant Accounting Policies.” Many of these accounting policies require judgment and the use of estimates and assumptions when applying these policies in the preparation of our consolidated financial statements.
Advances under the construction loan bear interest at a per annum rate equal to the one-month term Secured Overnight Financing Rate (SOFR) plus 3.45%, subject to a minimum all-in per annum rate of 8.51%. The 1991 Main Construction Loan has an initial maturity date of May 12, 2027 and contains a one-year extension option, subject to certain restrictions.
Advances under the 1991 Main Construction Loan bear interest at a per annum rate equal to the one-month term SOFR plus 3.45%, subject to a minimum all-in per annum rate of 8.51%. The 1991 Main Construction Loan has an initial maturity date of May 12, 2027 and contains a one-year extension option, subject to certain restrictions.
During the year ended December 31, 2022, our indirect wholly-owned subsidiary entered into a construction management agreement for the development of 1991 Main.
During the year ended December 31, 2022, our indirect majority-owned subsidiary entered into a construction management agreement for the development of 1991 Main.
Liquidity and Capital Resources Our primary needs for liquidity and capital resources are to fund our investments, including construction and development costs, pay our offering and operating fees and expenses, pay any distributions that we make to the holders of our units and pay interest on any outstanding indebtedness that we incur.
Liquidity and Capital Resources Overview Our primary needs for liquidity and capital resources are to fund our investments, including construction and development costs, pay our Public Offering and operating fees and expenses, pay any distributions that we may make to the holders of our units and pay interest on our outstanding indebtedness.
For additional details regarding our 1991 Main investment, see “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota, Florida (also known as “Aster & Links ”).” The construction management agreement contains terms and conditions that are customary for a project of this type and will be subject to guaranteed maximum price.
For additional details regarding 1991 Main, see “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota, Florida (“Aster & Links”) .” The construction management agreement contains terms and conditions that are customary for a project of this type and will be subject to guaranteed maximum price.
There were no organization or Public Offering costs incurred by our Manager and its affiliates during the years ended December 31, 2023 and 2022. During the years ended December 31, 2023 and 2022, our Manager and its affiliates, including our Sponsor, incurred operating expenses of $2.9 million and $2.9 million, respectively, on our behalf.
There were no Public Offering costs incurred by our Manager and its affiliates during the years ended December 31, 2024 and 2023. During the years ended December 31, 2024 and 2023, our Manager and its affiliates, including our Sponsor, incurred operating expenses of $2.6 million and $2.9 million, respectively, on our behalf.
Cash flows used in operating activities for the year ended December 31, 2023 primarily relates to the payment of management fees and employee cost sharing expenses as well as payments for marketing, legal, tax and accounting fees.
Net cash flows used in operating activities for the year ended December 31, 2023 primarily relates to the payment of management fees and employee cost sharing expenses as well as payments for marketing, legal, tax and accounting fees. Net cash flows used in investing activities for the year ended December 31, 2024 primarily relates to the funding of development properties.
As of the date of this Form 10-K, we currently anticipate that the remaining funding for construction and soft costs associated with the development of 1991 Main will be a minimum of $84.8 million (inclusive of the aforementioned unfunded capital commitment).
As of the date of this Form 10-K, we currently anticipate that the remaining funding for construction and soft costs associated with the development of Aster & Links will be a minimum of $25.5 million (inclusive of the aforementioned unfunded capital commitment).
During the year ended December 31, 2023, our indirect majority-owned subsidiary (the “Mortgage Borrower”) entered into a variable-rate construction loan agreement for up to $130.0 million in principal amount (the “1991 Main Construction Loan”) to fund the development of 1991 Main.
During the year ended December 31, 2023, our indirect majority-owned subsidiary entered into a variable-rate construction loan agreement for up to $130.0 million in principal amount to fund the development of Aster & Links.
We will pay our Dealer Manager commissions of up to 0.25%, and the selling group members commissions ranging from 0.25% to 4.50%, of the principal amount of Class A unit sold in the Follow-on Offering. In addition, our Follow-on Registration Statement constitutes a post-effective amendment to our Primary Registration Statement, conforming our Primary Offering to our Follow-on Offering.
We will pay our Dealer Manager commissions of up to 0.25%, and the selling group members commissions ranging from 0.25% to 4.50%, of the principal amount of Class A unit sold in the Follow-on Offering.
In connection with the 1991 Mezzanine Loan, we are required to maintain an interest reserve and carry reserve for purposes of paying accrued but unpaid interest on the 1991 Mezzanine Loan and interest, principal and other obligations under the 1991 Main Construction Loan (the “Reserves”).
In connection with the 1991 Main Mezzanine Loan, we are required to maintain an interest reserve and carry reserve for purposes of paying accrued but unpaid interest on the 1991 Main Mezzanine Loan and interest, principal and other obligations under the 1991 Main Construction Loan. As of December 31, 2024, the 1991 Main Mezzanine Loan balance was $46.2 million.
For additional details regarding our development properties, see “ Part I, Item 1—Our Investments .” Cash flows used in investing activities for the year ended December 31, 2022 primarily relates to the funding of loans receivable in addition to funding costs for our development properties and investments in real estate.
For additional details regarding our development properties, see “ Part I, Item 1—Our Investments. ” Net cash flows used in investing activities for the year ended December 31, 2023 primarily relates to the funding of development properties.
Leverage We employ leverage in order to provide more funds available for investment. We believe that careful use of conservatively structured leverage will help us to achieve our diversification goals and potentially enhance the returns on our investments.
We believe that careful use of conservatively structured leverage will help us to achieve our diversification goals and potentially enhance the returns on our investments.
On May 9, 2023, the SEC declared effective our follow-on registration statement on Form S-11, as amended (File No. 333-271262) (the “Follow-on Registration Statement”), registering the offer and sale of up to an additional $750,000,000 of our Class A units on a continuous “best efforts” basis by any method deemed to be an “at the market” offering pursuant to Rule 415(a)(4) under the Securities Act of 1933, as amended (the “Securities Act”), including by offers and sales made directly to investors or through one or more agents (our “Follow-on Offering” and, together with our Primary Offering, our “Public Offerings”).
On May 9, 2023, the SEC declared effective our follow-on registration statement on Form S-11, as amended (File No. 333-271262) (the “Follow-on Registration Statement”), registering the offer and sale of up to $750,000,000 of our Class A units on a continuous “best efforts” basis by any method deemed to be an “at the market” offering pursuant to Rule 415(a)(4) under the Securities Act of 1933, as amended (the “Securities Act”), including by offers and sales made directly to investors or through one or more agents. 42 Table of Contents In connection with the Follow-on Registration Statement, we entered into a non-exclusive dealer manager agreement with Emerson Equity LLC (the “Dealer Manager”), a registered broker-dealer, for the sale of our Class A units through the Dealer Manager.
For the year ended December 31, 2023, we issued 98,950 Class A units in connection with our Public Offerings. Together with the gross proceeds raised by Belpointe REIT in its prior offerings, as of December 31, 2023, we have raised aggregate gross offering cash proceeds of $354.3 million. On September 30, 2021, the U.S.
For the year ended December 31, 2024, we issued 41,774 Class A units in connection with our Public Offerings. Together with the gross proceeds raised by Belpointe REIT in its prior offerings, as of December 31, 2024, we have raised aggregate gross offering cash proceeds of $357.3 million.
As of December 31, 2023, we had an unfunded capital commitment of $61.8 million under the terms of this agreement.
As of December 31, 2024, we had an unfunded capital commitment totaling $9.7 million under the terms of this agreement.
Cash Flows The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash (amounts in thousands): Years Ended December 31, 2023 2022 Cash flows used in operating activities $ (6,945 ) $ (6,651 ) Cash flows used in investing activities (145,123 ) (63,530 ) Cash flows provided by financing activities 30,686 22,802 Net decrease in cash and cash equivalents and restricted cash $ (121,382 ) $ (47,379 ) As of December 31, 2023 and 2022, cash and cash equivalents and restricted cash totaled approximately $23.6 million and $145.0 million, respectively.
Cash Flows The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash (amounts in thousands): Years Ended December 31, 2024 2023 Cash flows used in operating activities $ (13,689 ) $ (6,945 ) Cash flows used in investing activities (138,089 ) (145,123 ) Cash flows provided by financing activities 157,024 30,686 Net increase (decrease) in cash and cash equivalents and restricted cash $ 5,246 $ (121,382 ) As of December 31, 2024 and 2023, cash and cash equivalents and restricted cash totaled approximately $28.8 million and $23.6 million, respectively.
We currently anticipate that the remaining funding for construction and soft costs associated with the development of 1000 First will be a minimum of approximately $119.2 million (inclusive of the aforementioned unfunded capital commitment).
As of December 31, 2024, we had an unfunded capital commitment totaling $50.3 million under the terms of this agreement. We currently anticipate that the remaining funding for construction and soft costs associated with the development of 1000 First will be a minimum of approximately $62.5 million (inclusive of the aforementioned unfunded capital commitment).
As of December 31, 2023, our NAV per Class A units was $100.88. 45 Our Business Outlook Despite expectations of the U.S. falling into recession in 2023, market conditions for multifamily and mixed-use rental properties remained strong over the past several quarters.
Our Business Outlook Despite expectations of the U.S. falling into recession, market conditions for multifamily and mixed-use rental properties in the geographic regions in which we operate have remained strong over the past several quarters.
Cash flows used in operating activities for the year ended December 31, 2022 primarily relates to the payment of management fees and employee cost sharing expenses as well as payments for marketing, legal, tax and accounting fees. These outflows were partially offset by interest received on our Norpointe Loan, Restructured Norpointe Loan and CMC Loan during the period.
Net cash flows used in operating activities for the year ended December 31, 2024 primarily relates to interest expense incurred on our indebtedness, the payment of employee cost sharing expenses as well as payments for property management, legal, and accounting fees.
Cash flows provided by financing activities for the year ended December 31, 2023 primarily relates to the net proceeds from 1991 Main Construction Loan, proceeds from our Primary Offering, and proceeds from our short-term loan from an affiliate.
Net cash flows provided by financing activities for the year ended December 31, 2024 primarily relates to net proceeds from financings, including the 1991 Main Mezzanine Loan, the 1991 Main Construction Loan, the 1000 First Construction Loan, and the 900 8th Land Loan.
We expect to obtain the liquidity and capital resources that we need over the short and long-term from the proceeds of our Public Offerings and any future offerings that we may conduct, from the advancement of reimbursable fees and expenses by our Manager and its affiliates, including our Sponsor, from secured or unsecured financings from banks and other lenders and from any undistributed funds from operations.
For additional details regarding the 900 8th Land Loan, see “ —Our Investments—900 8th Avenue South – Nashville, Tennessee .” 46 Table of Contents We expect to continue to obtain the capital resources that we need over the short and long-term from cash on-hand, from the proceeds of our Public Offerings and any future offerings that we may conduct, from the advancement of reimbursable fees and expenses by our Manager and its affiliates, including our Sponsor, from the proceeds of secured or unsecured financing from banks and other lenders, from projected operating funds from our real estate assets and from any other undistributed cash flow generated from operations.
Cash flows provided by financing activities for the year ended December 31, 2022 primarily relates to net proceeds received from the Primary Offering partially offset by the repayment of the Acquisition Loan. Critical Accounting Policies Our audited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.
For additional details regarding our outstanding indebtedness, see “ —Liquidity and Capital Resources .” Net cash flows provided by financing activities for the year ended December 31, 2023 primarily relates to the net proceeds from 1991 Main Construction Loan, proceeds from our Public Offerings, and proceeds from our loan from an affiliate. 47 Table of Contents Critical Accounting Policies Our audited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.
Securities and Exchange Commission (the “SEC”) declared effective our initial registration statement on Form S-11, as amended (File No. 333-255424) (the “Primary Registration Statement”), registering a continuous primary offering of up to $750,000,000 in our Class A units (our “Primary Offering”).
In addition, our Follow-on Registration Statement constitutes a post-effective amendment to the registration statement on Form S-11, as amended (File No. 333-255424), registering the offer and sale of our ongoing initial public offering of up to $750,000,000 of our Class A units, declared effective by the SEC on September 30, 2021 (our “Primary Offering” and, together with our Follow-on Offering, our “Public Offerings”) conforming our Primary Offering to our Follow-on Offering.
These increases were partially offset by a lower marketing expenses. Depreciation and Amortization For the year ended December 31, 2023 as compared to the same period in 2022, depreciation and amortization increased by $0.8 million.
Depreciation and Amortization For the year ended December 31, 2024, as compared to the same period in 2023, depreciation and amortization increased by $2.1 million.
Impairment of Real Estate During the year ended December 31, 2023, we recorded impairment charges of $4.1 million, in relation to one of our real estate assets located in Nashville, Tennessee, based on our conclusion that the estimated fair market value of the real estate asset was lower than the carrying value, and as a result, we reduced the carrying value to the fair market value. 47 Other income Interest Income On September 30, 2021, we lent approximately $3.5 million to CMC (the “CMC Loan”) pursuant to the terms of a secured promissory note bearing interest at an annual rate of 12.0% and due and payable on June 27, 2022.
Impairment of Real Estate During the years ended December 31, 2024, and 2023, we recorded impairment charges of $0.8 million and $4.1 million, respectively, in relation to one of our real estate assets located in Nashville, Tennessee, based on our conclusion that the estimated fair market value of the real estate asset was lower than the carrying value, and as a result, we reduced the carrying value to the fair market value.
As discussed in “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota, Florida (also known as “Aster & Links”)—1991 Main Mezzanine Loan ”, on January 31, 2024, our indirect majority-owned subsidiary (the “Mezzanine Borrower”) entered into a mezzanine loan agreement for up to $56.4 million in principal amount (the “1991 Main Mezzanine Loan”).
For additional details regarding the 1991 Main Mezzanine Loan, see “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota, Florida (also known as “Aster & Links”) .” In April 2023, our indirect majority-owned subsidiary entered into a construction management agreement for the development of Viv.
Where our Manager and its affiliates, including our Sponsor, have funded, and in the future if they continue to fund, our liquidity and capital resource needs by advancing us offering and operating fees and expenses, we reimburse our Manager and its affiliates, including our Sponsor, pursuant to the terms of our Management Agreement and Employee and Cost Sharing Agreement.
We believe that our cash on-hand, the anticipated net proceeds from our Public Offerings, the projected cash flows from our real estate assets and our current and anticipated financing activities will be sufficient to meet our liquidity and capital resource requirements for the next 12 months from the date of issuance of this Form 10-K. 45 Table of Contents Capital Requirements and Resources Where our Manager and its affiliates, including our Sponsor, have funded, and in the future if they continue to fund, our capital requirements by advancing us offering and operating fees and expenses, we reimburse our Manager and its affiliates, including our Sponsor, pursuant to the terms of our management agreement and employee and cost sharing agreement.
Our Manager calculates our NAV within approximately 60 days of the last day of each quarter, and any adjustments take effect as of the first business day following its public announcement.
We disclose our determination of NAV and NAV per Class A unit within approximately 60 days of the Determination Date. Any adjustments to our NAV and the per Class A unit purchase price take effect as of the first business day following its public announcement. As of December 31, 2024, our NAV per Class A units was $119.94.
Petersburg, Florida (also known as “Viv”) .” The construction management agreement contains terms and conditions that are customary for a project of this type and will be subject to guaranteed maximum price. As of December 31, 2023, we had an unfunded capital commitment of $40.3 million under the terms of this agreement.
For additional details regarding Viv, see “ Part I, Item 1—Our Investments—1000 First Avenue North and 900 First Avenue North – St. Petersburg, Florida (“Viv”). ” The construction management agreement contains terms and conditions that are customary for a project of this type and will be subject to guaranteed maximum price.
Cash proceeds from the 1991 Mezzanine Loan totaled $39.8 million, after Reserves of $15.0 million were held back at closing, and incurring closing costs of $1.6 million. Proceeds under the 1991 Mezzanine Loan may be used to reimburse the Company for certain costs and expenses incurred in relation to, and to fund the continued development of, 1991 Main.
Proceeds under the 1991 Main Mezzanine Loan may be used to reimburse the Company for certain costs and expenses incurred in relation to, and to fund the continued development of, Aster & Links. The 1991 Main Mezzanine Loan has an initial maturity date of May 12, 2027 and contains a one-year extension option, subject to certain restrictions.
For the year ended December 31, 2023 as compared to the same period in 2022, general and administrative expenses increased by $0.5 million. This increase is primarily due to higher allocation of costs incurred by our Manager and its affiliates to us, as well as dead deal costs incurred during the current year period.
This decrease is primarily due to lower marketing expenses, a decrease in dead deal costs, and a decrease in allocation of costs incurred by our Manager and its affiliates.
Other expense On July 10, 2023, our indirect majority-owned subsidiary (the “Mortgage Borrower”) entered into an interest rate cap agreement (the “1991 Main Interest Rate Cap”) as required under the terms of the variable rate construction loan agreement (the “1991 Main Construction Loan Agreement”) for up to $130.0 million in principal amount that the Mortgage Borrower previously entered into, on May 12, 2023, with Bank OZK, and which is secured by 1991 Main.
As of December 31, 2024, we have drawn down $97.5 million on the 1991 Main Construction Loan. On January 31, 2024, our indirect majority-owned subsidiary entered into a mezzanine loan agreement for up to $56.4 million in principal amount. The 1991 Main Mezzanine Loan bears interest at a rate of 13.0% per annum, and is secured by Aster & Links.
For the year ended December 31, 2023, as compared to the same period in 2022, property expenses increased by $0.4 million. This increase is primarily due an increase in real estate tax expenses at certain investments and an increase in third-party property management fees.
This decrease is primarily due to lower below-market rent intangible amortization impacting rental revenue, as certain intangible liabilities were fully amortized in 2023, as well as higher real estate taxes and insurance expenses. Mixed-use Segment For the year ended December 31, 2024, as compared to the same period in 2023, Segment NOI decreased by $1.1 million.
See “ Certain Relationships and Related Transactions, and Director Independence—Our Management Agreement ” for additional details regarding our Management Agreement and “ Certain Relationships and Related Transactions, and Director Independence—Our Employee and Cost Sharing Agreement ” for additional details regarding our employee and cost sharing agreement.
See “Certain Relationships and Related Transactions, and Director Independence—Our Management Agreement” for additional details regarding our Management Agreement and “Certain Relationships and Related Transactions, and Director Independence—Our Employee and Cost Sharing Agreement” for additional details regarding our employee and cost sharing agreement. 44 Table of Contents For the year ended December 31, 2024, as compared to the same period in 2023, general and administrative expenses decreased by $1.2 million.
Our Manager continuously reviews our investment and financing strategies for optimization and to reduce our risk in the face of the fluidity of these and other factors.
Our Manager continuously reviews our investment and financing strategies for optimization and to reduce our risk in the face of the fluidity of these and other factors. 43 Table of Contents Results of Operations As a result of the placement of Aster & Links in service and the commencement of operations during the year ended December 31, 2024 (see Part I, Item 1—Our Investments ), we have revised our reportable segments to include two distinct segments: Commercial and Mixed-use properties.
During the year ended December 31, 2023, our indirect majority-owned subsidiary entered into a construction management agreement in connection with the development of 1000 First. For additional details regarding our acquisition of 1000 First, see “ Part I, Item 1—Our Investments—1000 First Avenue North and 900 First Avenue North – St.
For additional details regarding the 1000 First Construction Loan, see “ —Our Investments—1000 First Avenue North and 900 First Avenue North – St. Petersburg, Florida (“Viv”) ”. As of December 31, 2024, we have drawn down $29.5 million on the 1000 First Construction Loan.
Removed
In connection with the Follow-on Registration Statement, we entered into a non-exclusive dealer manager agreement with Emerson Equity LLC (the “Dealer Manager”), a registered broker-dealer, for the sale of our Class A units through the Dealer Manager.
Added
Each quarter, our Manager calculates our NAV and NAV per Class A unit as of the last day of the quarter (the “Determination Date”). Our NAV per Class A unit is equal to our NAV as of the Determination Date, divided by the number of Class A units outstanding on the Determination Date.
Removed
From the period of October 7, 2021, the date of the first closing held in connection with our Primary Offering, through December 31, 2022, we issued 2,273,339 Class A units in our Primary Offering, raising net offering proceeds of $226.0 million.
Added
We believe that segment net operating income (loss) (“Segment NOI”) provides a useful measure of our performance of our business, as it reflects the core rental operations of our operating real estate.
Removed
In connection with the Follow-on Registration Statement, we entered into a non-exclusive dealer manager agreement with Emerson Equity LLC (the “Dealer Manager”), a registered broker-dealer, for the sale of our Class A units through the Dealer Manager.
Added
Segment NOI is calculated as total revenues, less property expenses, excluding corporate level items, such as management fees incurred to our Manager, depreciation and amortization, general and administrative expenses, interest expense, and other non-operating items.
Removed
The Dealer Manager will enter into participating dealer agreements and wholesale agreements with other broker-dealers, referred to as “selling group members,” to authorize those broker-dealers to solicit offers to purchase our Class A units.
Added
This decrease is primarily due to the recent placement of Aster & Links in service during the current year. As the property is still in its initial lease-up phase, rental revenue has not yet fully stabilized to offset property expenses.
Removed
We will pay our Dealer Manager commissions of up to 0.25%, and the selling group members commissions ranging from 0.25% to 4.50%, of the principal amount of Class A unit sold in the Follow-on Offering. In addition, our Follow-on Registration Statement constitutes a post-effective amendment to our Primary Registration Statement, conforming our Primary Offering to our Follow-on Offering.
Added
Interest Expense During the years ended December 31, 2024 and 2023, interest expense totaled $10.0 million and zero, respectively, due to gross interest expense of $12.1 million and $0.5 million, respectively, and the impact of non-cash amortization of debt discount and debt issuance costs of $2.3 million and $0.6 million, respectively, partially offset by capitalized interest and fees of $4.4 million and $1.1 million, respectively.
Removed
As of December 31, 2023, $1,264,724,350 remained unsold under our Public Offerings.
Added
This increase is primarily due to the placement of fixed assets in service at Aster & Links during 2024, partially offset by lower in-place lease intangible amortization as certain intangible assets were fully amortized in 2023.
Removed
This increase is primarily related to the amortization of below-market lease intangibles. During the year ended December 31, 2023 one of our tenants vacated our 901-909 Central Avenue investment, therefore, we accelerated the unamortized below-market lease liability in connection with termination of the lease.
Added
Interest Income Interest income for the periods presented were comprised of interest earned from cash balances held in interest bearing bank accounts. The increase in the current year periods as compared to the prior year periods were attributable to higher cash balances in interest bearing accounts.
Removed
Additionally, the increase is related to acquisition of our 1400 Davidson investment in December 2022, whereby the year ended December 31, 2023 reflects a full year of amortization of below-market lease intangibles. Property Expenses Property expenses primarily consists of management fees, property operational expenses, real estate taxes, and utilities and insurance expenses incurred in relation to our operating properties.
Added
Other expense Other expense for the periods presented were primarily comprised of gains and losses in connection with our interest rate caps. Please see “ Note 9 – Derivative Instruments ” in our consolidated financial statements in this Form 10-K for additional information.
Removed
This increase is primarily due to the acquisition of properties during the year ended December 31, 2022, and due to the acceleration of unamortized in-place lease intangible assets at our 901-909 Central Avenue investment as a result of three tenants vacating during the year ended December 31, 2023.
Added
Liquidity Our future needs for liquidity will depend on a variety of factors, including, without limitation, our ability to generate cash flows from operations, the timing and availability of net proceeds from our Public Offerings and any future offerings that we may conduct, the timing and extent of our real estate acquisition and disposition activities, and the timing and extent of our construction and development costs.
Removed
On June 28, 2022, the CMC Loan was repaid in full, including accrued interest of $0.3 million.
Added
Economic uncertainty, uncertainty surrounding legislation, regulation and government policy at the U.S. federal level, fluctuating interest rates, unemployment rates, energy prices, tariffs, immigration, taxes, inflation, volatility in the real estate markets, slowdowns in transaction volume, delays in financings from banks and other lenders and other negative trends may, in the future, adversely impact our ability to timely access potential sources of liquidity.
Removed
On January 3, 2022, we lent $30.0 million (the “Norpointe Loan”) to Norpointe, LLC (“Norpointe”), an affiliate of our Chief Executive Officer, pursuant to the terms of a promissory note secured by a first mortgage lien on certain real property located at 41 Wolfpit Avenue, Norwalk, Connecticut 06851 (the “Norpointe Property”).
Added
If we are unable to raise additional capital when desired, or on terms that are acceptable to us, our business, financial condition and results of operations could be adversely affected.
Removed
On June 28, 2022, for purposes of complying with the qualified opportunity fund requirements under the Internal Revenue Code of 1986, as amended, and related Treasury Regulations, we restructured the Norpointe Loan (the “Restructured Norpointe Loan”). The Restructured Norpointe Loan was evidenced by a promissory note and was secured by a first mortgage lien on the Norpointe Property.
Added
On June 28, 2024, our indirect majority-owned subsidiary entered into a variable-rate construction loan agreement for up to $104.0 million in principal amount. The 1000 First Construction Loan bears interest at a per annum rate equal to the one-month term SOFR plus 3.80%, subject to a minimum all-in per annum rate of 7.55%, and is secured by Viv.
Removed
On December 13, 2022, the Restructured Norpointe Loan was repaid in full. See “ Certain Relationships and Related Transactions, and Director Independence—Our Affiliate Transactions—Our Transaction with Norpointe, LLC ” for additional details regarding our transactions with Norpointe.
Added
Advances under the 1000 First Construction Loan may be used to fund the development of Viv. The 1000 First Construction Loan has an initial maturity date of June 28, 2027 and contains two one-year extension options, subject to certain restrictions.
Removed
On February 23, 2022, we lent approximately $5.0 million to Visco Propco, LLC (the “Visco Loan”), pursuant to the terms of a promissory note secured by a first lien deed of trust on certain real property located at 801 Visco Drive, Nashville, Tennessee 37210.
Added
On June 26, 2024, our indirect majority-owned subsidiary entered into a fixed-rate loan for $10.0 million in principal amount with KHRE SMA Funding, LLC, which is secured by 900 8th Avenue South.
Removed
On December 2, 2022, the Visco Loan was repaid in full, including accrued interest of $0.2 million.
Added
The 900 8th Land Loan bears interest at a rate of 9.50% per annum, and is due to mature on June 26, 2025, with two six-month extension options, subject to certain restrictions.
Removed
For the year ended December 31, 2022, interest income was $1.9 million and is primarily related to interest of $0.7 million earned on the Norpointe Loan, $0.7 million earned on the Restructured Norpointe Loan, $0.2 million earned on the CMC Loan, and $0.2 million on the Visco Loan.
Added
For additional details regarding our Public Offerings, see “ Part II, Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Use of Proceeds from Registered Sales of Securities .” Leverage We employ leverage in order to provide more funds available for investment.
Removed
Further information regarding our commercial real estate loan transactions is provided in “ Note 7 – Loans Receivable ” in the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K.
Removed
During the year ended December 31, 2023, we recognized a net unrealized loss of $0.1 million on the 1991 Main Interest Rate Cap.
Removed
See “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota, Florida (also known as “Aster & Links”)—1991 Main Interest Rate Cap ” for additional information regarding our 1991 Main Construction Loan Agreement and 1991 Main Interest Rate Cap.
Removed
On June 28, 2022, through an indirect majority-owned subsidiary of our Operating Company, we acquired a 70.2% controlling interest in CMC (the “CMC Interest”), for an initial capital contribution of $3.8 million. As part of the transaction two unaffiliated joint venture partners (the “CMC JV Partners”) were deemed to have made a combined initial capital contribution of $3.1 million.
Removed
Following our acquisition of the CMC Interest, we discovered that one of the CMC JV Partners had misappropriated cash from the other CMC JV Partner’s cash account. As a result, the CMC JV Partner agreed to forfeit its interest in CMC as of March 24, 2023.
Removed
Other expense for the year ended December 31, 2022, primarily relates to a loss of $0.4 million recorded in connection with the misappropriated cash. Provision for Income Taxes For the year ended December 31, 2022, provision for income taxes relates to taxes incurred (including interest) in connection with our acquisition of Belpointe REIT.
Removed
As a result of the conversion of Belpointe REIT from a corporation into a limited liability company, Belpointe REIT was deemed to have been liquidated and its tax year ended on October 1, 2021. Belpointe REIT’s deemed liquidation resulted in a taxable gain for the year ended October 1, 2021.
Removed
In connection with the conversion, we filed an extension for the time to file Belpointe REIT’s 2021 tax returns, however, we did not make an estimated payment at that time as we had not yet calculated Belpointe REIT’s 2021 tax liability.

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