Sarasota Aster & Links Project Nearing Move-In Ready Stage
Tax time – We anticipate K-1s being available shortly. They will be made available at https://taxpackagesupport.com/belpointeoz as well as being physically mailed to unitholders.
Sometimes, the stock market simply gets it wrong on valuing publicly traded securities out of guilt by association. Many listed REITs have been heavily discounted even though they have no exposure to the troubled corporate office property subsector. And it is true that lending at regional banks for even the most adroit developers of multi-family residential projects in cities where demand is solid has been more challenging due to the unrest within the entire regional bank sector triggered back in March 2022, and more recently by the negative press surrounding New York Community Bancorp.
Attractive terms for construction loans are harder to come by, and yet the executive management team at Belpointe OZ has executed recent financing that further solidifies its business model to make ready its Class A, full featured apartment complex in Sarasota for new residents to move in next month.
On February 29, 2024, Belpointe OZ (NYSE American: “OZ”) released its latest audited Net Asset Value (“NAV”). As of December 31, 2023, the NAV stood at $365.43 million, or $100.88 per Class A unit. “Despite current challenges and uncertainties in the commercial real estate market, including higher interest rates, tighter lending conditions and increased construction costs, we are pleased to announce that our NAV remains relatively stable” said Brandon Lacoff, CEO of Belpointe OZ. As the only publicly traded Qualified Opportunity Zone, there is potential for a disconnect in market pricing, and in the case of OZ units, it is our view that the current distortion of the unit price to NAV is illogical.
The way the NAV is valued does not take into account the stabilized value of Aster & Links. At the current price of $62.50 per unit as of March 8, 2024, and well off the low of $42.75 on February 20, 2024, investors seeking upside potential as Aster & Links comes online are accumulating units at a nearly 40% discount to NAV. New tenants will begin leasing in mid-Apil in the first building (Aster). This is a typical phased move-in sequence for new projects of a building this size.
The luxurious fit and finish of the common areas and of the apartments themselves are of the level that provides optionality to consider conversion to condominiums in the future as a potential exit strategy to maximize total returns to investors. Aster & Links is a stunning property in one of Sarasota’s most desirable urban locations that, in our view, offers tremendous value not realized in the current price of OZ units.
Investors and future tenants can now preview and pre-lease the available units and floorplans on the updated Aster & Links website, which displays the full-featured, Class A luxury apartment layouts with living spaces from 865 to 2,820 sq. feet, 1 bed/1 bath to 4 bed/3.5 bath and a wide array of options to fit the needs and wants of all future tenants. Below is a rendering of a 2,820 sq. foot two-level penthouse that will occupy the topmost floors of the Aster building.
The property will have 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.
Additionally, I’ve included a photo from 1000 First Avenue N (Viv) in St. Petersburg, Florida, another property in Belpointe OZ’s portfolio.
People have invested in OZ units because of the attractive tax benefits allowed by the Opportunity Zone program and should be aware that OZ is not a typical public REIT or partnership where stabilized and cash-flowing assets can be contributed day one. Qualified Opportunity Funds such as Belpointe OZ must invest in ground-up developments, where cash flow will take a number of years to achieve.
It is our view that investors seeking a deeply discounted real estate investment can exploit the unit price disparity from the current NAV on its own, not even taking into account the highly attractive tax benefits this Qualified Opportunity Zone Fund has to offer.
You do not need capital gains to take advantage of the NAV to stock price disparity. Note, doing so does not qualify you for any of the Opportunity Zone program tax benefits.
We believe the projects in Florida and the recently secured financing for Aster & Links makes Belpointe OZ a compelling standalone cash investment.
Belpointe OZ filed a report with the Securities and Exchange Commission (the “SEC”) outlining the recent announcement of its mezzanine financing on its Aster & Links project located in downtown Sarasota, Florida. Management believes this mezzanine piece is much more advantageous to unitholders of OZ since issuing $56 million of common equity at current prices would cause significant dilution.
The full body of the report is available on the SEC’s website.
Given what we believe to be a very promising year ahead for OZ’s projects, investors looking to rebalance portfolios from overweighted mega-cap technology stocks and other major stock market winners should consider swapping into steeply discounted Class-A apartment partnership units such as Belpointe OZ, just as the partnership is set to begin leasing up its first property.
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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