Tailwinds Of Inflation Data Are Bullish For Multi-Family Property Owners
There isn’t much argument that the stock market is in a period of having to prove its mettle against the forces of rising interest rates, commodity prices and labor costs. Just about every rally attempt has been stifled by wave after wave of selling pressure as institutions, pensions, endowments, sovereign funds and all manner of other investors reduce equity exposure in response to the more-difficult global macro-economic conditions.
As equity markets fight to restore order, one area that is now seeing some increasing selling activity is that of single-family homes, townhouses, and condominiums. The most recent data from realtor.com shows that for the first time since 2019 active listings—the total number of homes on the market during any given period—rose 5% during the week ended May 14, as compared to that same week in 2021. This is the biggest jump in active listing since March 2019. In addition, realtor.com reports that new listings—homes first placed on the market during a given period—rose by 6% during the week ended May 14, as compared to that same week in 2021. Source: https://www.realtor.com/research/weekly-housing-trends-view-data-week-may-14-2022.
Like any asset peak valuations are only captured when sold, and for more homeowners the huge gains of the past many years may be too good to pass up. The National Association of Realtors reported in late April that the median existing-home price for all housing types had reached its highest point in March, up 15% from the year prior, marking 121 consecutive months of year-over-year gains. Source: https://www.nar.realtor/blogs/economists-outlook/existing-home-sales-fall-2-7-as-higher-mortgage-rates-impact-sales-in-march-2022.
But with mortgage rates now topping 5%, there appears to be a change in sentiment which I believe is motivating property owners to seek to realize their heady gains during the historically strong spring and upcoming summer selling season. Especially with the housing market as one of the areas of the economy that the Fed is targeting to help tamp down inflation.
To this point, for investors that own multiple properties that are considering selling or have sold dwellings recently, I have great news. Unlike having to roll proceeds of a property sale into a new property within 180 days to qualify for a tax-deferred 1031 exchange, the realized capital gains can be reinvested into a Qualified Opportunity Zone Fund (QOF) within 180 days of the sale.
In doing so, investors aren’t forced to buy a like-kind property at a time that may represent the beginning of a long pause in home prices, but they can still gain the same tax-deferral features, among many other benefits that only come in the QOF structure.
Belpointe PREP, LLC (NYSE American: “OZ”) is such a QOF engaged in building and seeking acquisitions of multi-family residential Class A luxury apartment dwellings within opportunity zones (OZs) in cities like Nashville, TN, and Sarasota/St. Petersburg, FL.
Belpointe PREP (NYSE American: “OZ”) is the first and thus far the only publicly listed QOF and it requires no paperwork to invest. Belpointe PREP provides investors with the ability to pair off 2021 year-end gains (as well as year-to-date 2022 gains), using a 180-day look-back window, and reinvest those capital gains to defer taxes, in addition to offering investors an opportunity for growth and income, out to December 31, 2026, where all capital appreciation and the majority of pass-through income may be tax-free.
Just a heads up—the 180-day window to shelter capital gains realized from December 31, 2021 is closing. But, there is still time to allocate year-end 2021 capital gains in all asset classes: stocks, bonds, real estate, sale of a business or a partial stake, precious metals, crypto profits, livestock, and collectibles; they all qualify and realized capital gains from any of them can be offset with like-kind dollar amount purchases of Belpointe PREP (NYSE American: “OZ”) Class A units.
In addition, Belpointe PREP’s management team is actively seeking to acquire other QOFs that have stabilized their properties, where there are some clear benefits to acquiring seasoned properties in lieu of new construction with all its attendant risks. Our acquisition team is actively looking for sellers of properties within Opportunity Zones, seeking to purchase assets. Belpointe PREP has cash and currency in the form of its Class A units “OZ” that provide the kind of liquidity that some selling parties may desire.
Cody H. Laidlaw
Editor-in-Chief
Belpointe OZ
255 Glenville Road
Greenwich, CT 06831
T: (203) 883-1944
E: IR@belpointeoz.com
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 claidlaw@belpointe.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.
This communication may contain estimates, projections and other forward-looking statements, typically identified by words and phrases such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” or the negative of such words and other comparable terminology. However, the absence of these words does not mean that a statement is not forward-looking. Any forward-looking statements expressing an expectation or belief as to future events is expressed in good faith and believed to be reasonable at the time such forward-looking statement is made. However, these statements are not guarantees of future events and involve risks, uncertainties and other factors beyond Belpointe PREP’s control. Therefore, we caution you against relying on any of these forward-looking statements. Actual outcomes and results may differ materially from what is expressed in any forward-looking statement. Except as required by applicable law, including federal securities laws, Belpointe PREP does not intend to update any of the forward-looking statements to conform them to actual results or revised expectations.
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