Belpointe OZ Inks New Financing Deal

While developers of multi-family projects are seeking follow-on capital to complete current projects and foster the growth of new projects that are in the early construction phase, banks are highly scrutinizing commercial real estate metrics within a tighter marketplace. Within these more stringent market conditions, real estate developers are accessing mezzanine financing. Not only is the sourcing capital taking less time than most bank loans, the mezzanine structure helps the issuer access more capital for growth or acquisition projects while minimizing the dilution of existing shareholders. It can lower the cost of capital for the issuer, as the interest payments on mezzanine debt are tax-deductible (recorded as a business expense) and can increase the return on equity for the issuer since mezzanine debt is cheaper than equity.

To augment the financing of Belpointe OZ’s flagship project in Sarasota, Florida, the partnership announced on February 8 that it originated a mezzanine loan in the aggregate amount of $56.4 million for Aster & Links (the “Project”), a multi-family community development with ground floor retail located on Main Street and Links Avenue in Sarasota, Florida.

This mezzanine financing brings the total Loan-To-Value on Aster & Links to approximately 61%, which is still conservative in the development space.

Spanning over 650,000 square feet, the Project is located in downtown Sarasota, which has attractive supply/demand fundamentals and strong population growth in recent years.

Leasing of apartments will commence in April.

“We are excited to support Belpointe OZ’s development of Aster & Links, a project that we believe will become a vibrant hub for commerce and community in Sarasota,” said Brian Sedrish, Chief Executive Officer of Southern Realty Trust. “Strategically, we believe investments in Class A multi-family real estate have the potential for stable cash flow and strong risk-adjusted returns.”

Back in November 2023, CEO Brandon Lacoff noted that “While Belpointe OZ has no corporate level debt and has low property level debt, we are focused on increasing our equity capital for the company so we can continue to build our pipeline of multifamily developments. If we are unable to raise additional capital during these difficult market conditions. We plan to explore additional methods of capital raising, such as joint venture partnerships, disposition or other types of equity offerings.” With Belpointe OZ Class A units trading at such a steep discount to Net Asset Value (“NAV”), it was determined that a mezzanine loan was the right vehicle to utilize.

From an investment standpoint, it is our view that the current price of Belpointe OZ (NYSE American: “OZ”) Class A units at $55.31 as of February 14, 2024, is wholly dislocated from the NAV as of September 30, 2023, of $370.49 million, or $103.50 per Class A unit. Many investors who purchase OZ stock are looking for the tax benefits of opportunity zones.

That’s just one part of it.

The other part that investors must remember is that Belpointe OZ is not a typical public real estate company. Most public REITs already have stabilized assets and cash flow. Because Belpointe OZ is a qualified opportunity zone fund that must adhere to opportunity regulations, the company has to develop new projects or meet the substantial improvement test, which means it’s pretty much a full tilt construction proposition. Consequently, there will be a predictably delay in cash flow, which puts some pressure on the stock since there is not free cash flow out of the gate.

The Aster and Links website is now online. For more information, click the image below

Aster & Links will consist of 424 luxury apartment homes that range from one-bedroom, two-bedroom, three-bedroom apartments to four-bedroom townhome-style penthouses spread throughout two 10-story high-rise buildings, 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 rooftop amenities, including a community room and a private dining area for private events, as well as outdoor grills and seating.

Belpointe OZ is also making excellent headway on a Class A multi-family residential project in downtown St. Petersburg, Florida, at 1000 First Ave North. Leasing is expected to commence in 2025.

Given what we believe to be a very promising year ahead for OZ projects, investors looking to rebalance portfolios in overweighted Magnificent Seven stocks and other mega-cap tech winners might consider swapping into steeply discounted Class-A apartment stocks such as Belpointe OZ, just as the partnership is set to begin leasing up its first property in two months.

Unlike many private qualified opportunity zone funds, 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

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.

Belpointe OZ
255 Glenville Road
Greenwich, CT 06831
T: (203) 883-1944
E: IR@belpointeoz.com

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 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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