Lower Inflation And Bank Turmoil Threaten Further Fed Rate Hikes
The collapse of SVB, Silvergate and Signature banks that roiled equity markets and triggered a stampede into Treasuries, bringing yields way down from the recent highs. It has been an extremely volatile period for stock investors, which is one of the reasons, I believe, for the continuing appeal of Class A multi-family residential property as an alternative for many investors. The way I see it, a robust market for rental properties in cities exhibiting strong migration and employment trends provides stability in the current environment.
Uncertainties in the market make can make for an attractive entry point to invest in full featured multi-family properties. Belpointe PREP, LLC (NYSE American: “OZ” or “Belpointe OZ”) has exposure in Sarasota and St. Petersburg, Florida, Nashville, Tennessee and Mansfield, Connecticut, adjacent to the University of Connecticut. Our executive management team is scouring Austin, Texas and the Research Triangle, in North Carolina, for stabilized acquisition opportunities within qualified opportunity zones (“Opportunity Zones”). More on stabilized asset acquisitions below:
Stabilized Asset Acquisition Strategy: Belpointe OZ is the only publicly traded Opportunity Zone structure, which allows it to acquire other Qualified Opportunity Funds (“QOFs”) and their opportunity zone assets without triggering an inclusion event. This, in turn, allows Belpointe OZ to preserve the Opportunity Zone tax benefits for an acquisition target’s investors and ultimately provides Belpointe OZ’s unitholders with newly built Opportunity Zone assets that are stabilized and focused on generating positive cash flow with minimal construction risk.
Win #1: Sponsors of the acquired QOFs. Typically, a development project takes approximately 2 years to complete. Afterwards, QOFs and their sponsors are required to hold the completed assets for an additional 8 years to meet the minimum 10-year holding period required to receive the full Opportunity Zone tax benefits. Conversely, Belpointe OZ’s unique ability to acquire other QOFs without triggering an inclusion event for the acquisition target’s investors provides sponsors with the flexibility to exit their investment vehicles up to 8 years earlier than previously planned. This provides sponsors the option to receive their carried interest profits up to 8 years faster than expected.
Win #2: Investors of the acquired QOFs. Investors benefit from the ability of Belpointe OZ to acquire their QOFs because they may be able to recognize gains from their investments without losing any of their Opportunity Zones tax benefits. Additionally, there are a number of other benefits that Belpointe OZ provides for its unitholders, such as: greater diversification, liquidity, lower fees, unitholders’ investment exit control, and up to 20% tax deduction benefit on income that exceeds depreciation (via Internal Revenue Code Section 199A).
Win #3: Existing OZ Unitholders. Belpointe OZ’s existing unitholders also benefit when Belpointe OZ acquires other QOFs, as such acquisitions may increase Belpointe OZ’s cash flow from operations and possibly decrease risk by improving investment diversification and eliminating construction and development risks.
One thing on many minds at present is tax planning and the considerations of how not to send Uncle Sam a big check by the tax deadline of April 18. For those that sold real estate, a business, stocks, collectibles, or other assets that generated realized gains in 2022, there is still time to offset those gains by purchasing Class A units in Belpointe OZ (NYSE American: “OZ”) and taking advantage of the 180-day look-back window that allows capital gains realized from early-October through December 31, 2022, to be offset and not recognized until December 31, 2026.
In the meantime, the potential growth and income from those invested capital gains has an opportunity for appreciation free of taxation as long as the investor holds their interest in Belpointe OZ for at least 10 years, through December 31, 2047. With all the uncertainty swirling within the stock market, rather than plow those precious 2022 capital gains back into equities that may still face some stiff headwinds, investors and advisors may instead want to opt for sheltering those gains going out for the better part of four years, that being December 31, 2026. Think about it because the time to defer capital gains for the latter part of 2022 is running out.
This is where the investment proposition regarding Belpointe OZ (NYSE American: “OZ”) comes into focus.
In sum, I see this year for Belpointe OZ as one of preparing properties for lease up in 2024, such as our Class-A full-featured multi-family project in Sarasota, Floridan, and seeking to acquire stabilized assets to deliver potential future capital appreciation and a potential stream of dividend income.
Have questions about how Belpointe OZ (NYSE American: “OZ”) can provide opportunities for investment appreciation and income and help you or your clients to defer or eliminate capital gains tax obligations?
Call me, Cody Laidlaw, at (203) 883-1944. I can answer your questions and direct you to resources that will provide you with information about the nuts and bolts of QOFs and opportunity zone investing, so you can start planning today.
Cody H. Laidlaw
255 Glenville Road
Greenwich, CT 06831
T: (203) 883-1944
P.S. Investing in Belpointe OZ (NYSE American: “OZ”) is as simple as buying any other publicly traded equity. If you purchase Belpointe OZ’s Class A units in the open market, there is no subscription agreement or investor certification required; you can simply purchase Class A units through any brokerage account. Belpointe OZ offers the same Opportunity Zone benefits as any private structure. To properly defer your reinvested capital gains, your accountant will need to file IRS Forms 8949 and 8997 with your tax returns. You will need Belpointe OZ’s EIN which can be found here: Belpointe OZ EIN
P.P.S Want more information? There’s a wealth of detail on our website at investors.belpointeoz.com where investors and advisors alike can learn about Belpointe OZ and some of its key features.
Disclosure: Cody H. Laidlaw is the Chief Investor Relations Officer. Cody is also an investment advisor representative with Seaside Advisory Services, Inc. (d/b/a Seaside Financial & Insurance Services), a SEC registered investment adviser offering advisory accounts and services, and holds a long position in Belpointe PREP, LLC’s Class A units.
Important Information and Qualifications
Belpointe PREP, LLC (“Belpointe PREP”) has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (SEC) for the offer and sale of up to $750,000,000 of Class A units representing limited liability interests in Belpointe PREP. You should read Belpointe PREP’s most recent prospectus and the other documents that it has filed with the SEC for more complete information about Belpointe PREP and the offering
Investing in Belpointe PREP’s Class A units involves a high degree of risk, including a complete loss of investment. Prior to making an investment decision, you should carefully consider Belpointe PREP’s investment objectives and strategy, risk factors, fees and expenses and any tax consequences that may results from an investment in Belpointe PREP’s Class A units. To view Belpointe PREP’s most recent prospectus containing this and other important information visit sec.gov or belpointeoz.com. Alternatively, you may request Belpointe PREP send you the prospectus by calling (203) 883-1944 or emailing email@example.com. Read the prospectus in its entirety before making an investment decision.
This communication, including any links embedded herein, may not be distributed in any jurisdiction where it is unlawful to do so. Nothing in this communication is or should be construed as an offer to sell or solicitation of an offer to buy Belpointe PREP’s Class A units in any jurisdiction where it is unlawful to do so.
Neither Belpointe PREP nor any of its affiliates provide investment or tax advice and do not represent in any manner that the outcomes described herein will result in any particular tax consequence. Prospective investors should consult their own investment and tax advisers concerning the U.S. federal, state and local income tax consequences, as well as any tax consequences under the laws of any other taxing jurisdiction, in relation to their personal tax circumstances, which may vary for prospective investors in different tax situations.
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