Ongoing Progress Of Key Projects Within Target Markets
Within the universe of Qualified Opportunity Fund (“QOF”) investing, many funds are only investing in single properties. This can be akin to having a one-stock portfolio. You might own Apple Inc. (Nasdaq: AAPL), which turned out to be a gem over the past ten years, or maybe you ended up with AT&T (NYSE: T), which lost nearly half of its value over that same period. The one thing about stocks is that you can generally exit a losing trade and stem the loss. By comparison, in many QOFs, if the single property holding starts taking on water, investors typically face restrictions and penalties to exit the fund, if they can exit at all.
Belpointe PREP, LLC (“Belpointe OZ”) (NYSE American: OZ) is the only publicly traded multi-asset QOF currently targeting four of what we believe are among the strongest markets for long-term growth: Sarasota, Florida, St. Petersburg, Florida, Nashville, Tennessee and Storrs/Mansfield, Connecticut. With several full-featured Class A multifamily projects at various phases of development in the pipeline, I believe Belpointe OZ is laying the groundwork for robust potential investment returns for the next decade and beyond.
Progress on our flagship development project, Aster & Links, located in the heart of downtown Sarasota, Florida, at 1991 Main Street, is currently set to begin leasing Class A apartments in the first half of 2024. Aster & Links will feature two 10-story high-rise buildings and is expected to consist of 424 apartment homes that range from one-bedroom, two-bedroom, and three-bedroom apartments to four-bedroom townhome-style penthouses, catering to a variety of modern lifestyle preferences.
Aster & Links is intended to become a benchmark for elevated living, boasting over 900 parking spaces, including both garage and surface parking options, and will offer a comprehensive array of amenities, including a clubroom, fitness room, center courtyard with a heated saltwater pool, and an exceptional selection of rooftop amenities. The rooftop spaces will feature community rooms, private dining areas for exclusive events, outdoor grills, and comfortable seating, providing residents with picturesque views and a delightful retreat.
On the heels of Aster & Links, construction is underway on a brand new 269-unit development located at 902-1020 First Avenue North in St. Petersburg, Florida. This exciting new development, also located in the center of downtown and walking distance to the waterfront, will be the latest addition to the thriving St. Petersburg community and will feature a wide variety of studio, one-bedroom, two-bedroom, and three-bedroom apartment homes. With approximately 15,500 square feet of retail space and standing at an impressive 15-stories tall, this development promises to offer residents an unparalleled living experience. The complex will feature a club room, fitness center, and swimming pool, providing a luxurious and comfortable living environment.
Belpointe OZ is building out a diversified portfolio within what we believe are some of the most attractive growth cities in America. Out of the many opportunity zones that we’ve reviewed (and there are more than 8,700 of them designated by the government), we believe that there are less than 100 that are worth investing in. Click on the link below to review Belpointe OZ’s current properties in the various phases of conception of the project, remodel, ground-up construction and acquisition.
With the stock market having richly rewarded the mega-cap technology stocks in the first half of 2023, investors who are locking capital gains may want to consider taking full advantage of deferring payment of taxes on those capital gains by reinvesting them in a QOF, such as Belpointe OZ. By purchasing Class A units in Belpointe OZ (NYSE American: “OZ”), investors can take advantage of the 180-day look-back window that allows capital gains realized since January 2023 to be offset and not recognized until December 31, 2026.
From a tax planning standpoint, I think laddering capital gains tax deferment throughout the year by taking advantage of the rolling 180-day look back period, can be very advantageous come the year-end. Buying publicly traded units of OZ gives investors the flexibility to adjust how much capital gains offset they need as the year progresses. Most forms of capital gains qualify for tax deferment—stocks, bonds, mutual funds, ETFs, real estate, the sale of a business, trademarks, patents, cryptocurrencies, precious metals, collectibles, livestock, cars, aircraft, marine craft, etc. In the meantime, the potential growth and income from capital gains reinvested into a QOF can be compounded free of taxation as long as the QOF investment is held for at least 10 years through December 31, 2047. Another key point: there is no limit on how much in realized capital gains one can reinvest into a QOF.
To find out more about this special 180-lookback provision, or if you have questions about Belpointe OZ, feel free to call me, Cody Laidlaw, at (203) 883-1944 or email me at IR@belpointeoz.com.
Belpointe OZ recently announced its unaudited quarterly net asset value (“NAV”) as of March 31, 2023, of $351.7 million or $99.82 per Class A unit. Class A units of OZ, as of July 14th, are trading at around $85, nearly a 15% discount to NAV. It is my personal view that once the market realizes that the Federal Reserve is in fact done with hiking rates, this discount to NAV will narrow. It’s also my view the existing home inventory in these key markets noted will remain highly challenged where demand for luxury apartment living will provide a viable alternative to hundreds and thousands potential home buyers struggling with affordability and high mortgage rates.
A Viable Alternative to 1031 Tax Free Exchanges
We’ve seen a pickup in interest from property owners about how Belpointe OZ might represent an attractive 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, like Belpointe OZ.
Attention Broker-Dealers: Here’s An Attractive Proposition For You
On May 17th, Belpointe OZ announced the commencement of an offering to raise up to $750 million in capital. This latest offering 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.
Advisors and investors alike should make note again that Belpointe OZ recently announced its unaudited quarterly net asset value (“NAV”) as of March 31, 2023, of $351.7 million or $99.82 per Class A unit against a current price of $85 per unit as of July 14. This kind of market dislocation is typically self-correcting when the underlying assets are fundamentally sound, and I believe this is the case for Belpointe OZ.
QOFs, like Belpointe OZ, offer investors looking to shelter capital gains a viable opportunity. As part of the program structure, most taxable gains invested in a QOF are 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 their investment interest in the QOF is sold or exchanged, whichever occurs first. The potential to compound growth and income thereafter within QOFs expires December 31, 2047.
Further, in its effort to disrupt the U.S. real estate industry, Belpointe OZ is charging among the lowest fees in the market, including:
• No investors servicing fees;
• No disposition fees;
• 0.75% annual management fee; and
• 5% carried interest.
Have questions? You can contact 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
255 Glenville Road
Greenwich, CT 06831
T: (203) 883-1944
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.
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