Disruptive Technology Leverages Owner/Operator Abilities

Considering all the current challenges facing the economy, the bond market, the stock market, and certain sectors of the real estate market (a.k.a. – office space), there is no getting past a single day without the topic of artificial intelligence making its way into conversations and corporate planning. While most of the attention is currently focused on generative AI—made up of models that learn patterns and structures of throughput data sources, resulting in new text, images and media in response to prompts—I think the brighter future for AI is how companies will be able to monetize AI through its application to their business models.

In particular, the advent of AI within the commercial real estate industry is making the process of executing on projects and acquisitions more efficient, accessible, and transparent. AI is being used to analyze data for making smarter and better business decisions. Financial modeling has forever been an important aspect of the real estate equation, but leading up to the advancement in AI, it was a labor-intensive and time-consuming process often involving tedious manual data entry and analysis.

Number crunching and 24/7 analysis for the purpose of forecasting and optimizing things like energy usage, general maintenance and reducing costs from optimization may bring more top-line revenue. Additionally, everyday tasks such as appointment setting, marketing campaigns, help desks and filtering buyers and sellers can be accomplished with bots instead of people.

But I think the biggest driver for AI in the commercial real estate market will be the potential ability to eliminate unknown and hard to measure risks—such as population and employment analysis to avoid committing to markets where overbuilding can sour valuations. For professional real estate owners and developers, AI can become a major catalyst.

Belpointe PREP, LLC (“Belpointe OZ”) (NYSE American: “OZ”) recently announced the commencement of an offering to raise up to an additional $750 million in capital. This latest offering also affords broker-dealers the opportunity to participate in the selling group, and Belpointe OZ has retained Emerson Equity LLC as dealer manager for the offering. Interested broker-dealers may contact Cody Laidlaw at IR@BelpointeOZ.com or call 203-883-1944 for further information.

Additionally, on May 24th, Belpointe OZ announced the signing of a definitive lease agreement with Sprouts Farmers Market, one of the largest and fastest-growing specialty retailers of fresh, natural and organic food in the United States. Sprouts will occupy approximately 23,000 sq. ft. at Belpointe OZ’s 1991 Main Street development in Sarasota, FL—a two building development dubbed “Aster & Links”—marking a major milestone for the development.

Aster & Links is currently expected to consist of 424 apartment homes that range from one-bedroom, two-bedroom, three-bedroom apartments to four-bedroom townhome-style penthouses spread throughout two high-rise buildings with 7 stories in the front and 10 stories in the rear, and over 900 parking spaces consisting of garage and surface parking. The development will offer full amenities such as 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.

Belpointe OZ is the only publicly traded qualified opportunity fund (“QOF”) that is building and acquiring full-featured Class A apartment complexes in cities that, according to our research, are continuing to grow, like Sarasota, Florida, and Nashville, Tennessee. Click here to visit Belpointe OZ’s website to review our properties in the various phases of conception of project, remodel, ground up construction and acquisition.

Any taxable gain invested in a QOF is not recognized (on the federal level and in many states) until December 31, 2026 (due with the filing of the 2026 return in 2027), or until the interest in the QOF is sold or exchanged, whichever occurs first. The potential to compound growth and income tax-free thereafter within QOFs expires December 31, 2047.

Out of the many opportunity zones that we have reviewed at Belpointe OZ (and there are more than 8,700 of them), we believe that there are less than 100 worth investing in. In addition to Sarasota, Belpointe OZ owns three properties just up the road in St. Petersburg, the coastal part of the greater Tampa, Florida area. Our development team is comprised of executives with combined decades of experience in bringing projects online in the Class-A multi-family apartment sector.

Moreover, Belpointe OZ represents a possible alternative to Internal Revenue Code Section 1031 like-kind exchanges. Investors that have sold real estate within the past 180 days and that may be under pressure to comply with Section 1031 regulations in order to complete a tax-free exchange, may want to avoid the inconvenience of having to identify a replacement property (and one or more alternative replacement properties, just in case a replacement property falls through) within 45 days of selling the original property, escrowing the sale proceeds with a 1031 qualified intermediary, and closing on a replacement property within 180 days of the sale of the original property. Instead, investors may want to consider investing capital gains from the sale of the original property into a QOF.

Further, in its effort to disrupt  the U.S. real estate industry, Belpointe OZ is charging among the lowest fees in the market:

• No investors servicing fees;
• No disposition fees;
• 0.75% annual management fee; and
• 5% carried interest

Those investors that have filed a tax extension or may be considering an amendment and who are sitting on capital gains that were realized at the end of 2022 can still take full advantage of deferring payment of taxes on those capital 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 in December 2022, to be offset and not recognized until December 31, 2026. In the meantime, the potential growth and income from those invested capital gains can be compounding free of taxation as long as the investor holds their interest in Belpointe OZ for at least 10 years, through December 31, 2047. Again, there is no limit on how much in realized capital gains one can reinvest into a QOF.

Have questions? You can contact me, Cody Laidlaw, at (203) 883-1944. I can answer as many of your questions as possible 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
Editor-in-Chief
255 Glenville Road
Greenwich, CT 06831
T: (203) 883-1944
E: IR@belpointeoz.com

Disclosure: Cody H. Laidlaw is the Chief Business Development Officer and Head of Investor Relations. 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.

The information in this communication is for illustrative, educational and informational purposes only and is subject to change. Nothing in this communication is or should be construed as an offer to sell or the solicitation of an offer to buy any securities. Offers may only be made by means of a prospectus.

Belpointe PREP, LLC (“Belpointe OZ”) has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Prior to making an investment decision, you should read Belpointe OZ’s prospectus and the other documents that it has filed with the SEC in their entirety, and carefully consider its investment objectives and strategy, risk factors, fees and expenses and any tax consequences that may results from an investment in the offering. Copies of these documents can be obtained free of charge from www.sec.gov or www.investors.belpointeoz.com or from any broker-dealer participating in the offering.

The information in this communication should not be relied upon as investment or tax advice. You should consult with your own investment and tax advisers concerning the federal, state and local income tax consequences of purchasing, owning or disposing of securities in the offering, and of Belpointe OZ’s election to qualify as a partnership and qualified opportunity fund for federal income tax purposes. There is no guarantee that Belpointe OZ will continue to qualify as a partnership or qualified opportunity fund.

Past performance is not an indicator or a guarantee of future performance. An investment in the offering to which this communication relates involves a high degree of risk, including a complete loss of your investment, and may not be suitable for all investors. The price of Belpointe OZ’s securities will fluctuate in market value and may trade above or below net asset value. Brokerage commissions and expenses will reduce returns.

The offering to which this communication relates is being made on a best-efforts basis on behalf of Belpointe OZ through Emerson Equity, LLC, Member FINRA, SIPC, as managing broker-dealer.

©2023 Belpointe PREP, LLC. All rights reserved.