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Breaking News For Opportunity Zone Investors!

New Bi-Partisan OZ Legislation On the Horizon

On September 27th, Republican Representatives Mike Kelly (Pennsylvania) and Carol Miller (West Virginia), together with Democratic Representatives Daniel Kildee (Michigan) and Terri Sewell (Alabama) introduced bipartisan legislation to amend the opportunity zones rules into the House of Representative. The bill was referred to the House Committee on Ways and Means and we’re currently awaiting the Government Publishing Office’s publication of the text. We’ll be watching this latest bipartisan effort with great interest, and will have more to say once the text of the bill becomes available.

As for the market update: there were plenty of fireworks in both the bond and stock markets as the third quarter came to a close. Treasury yields rose, stock indexes shed more of their 2023 gains, and oil prices topped $94 a barrel. In our view volatility took center stage, likely as a result of the higher-for-longer “dot plot” chart illustrating rate projections laid out by the Federal Reserve at the September 19-20 Federal Open Market Committee meeting, which seems to have upended the notion that monetary policy would pivot to easing in the first half of 2024 and to have pushed out the goalposts of lower rate expectations by around six months.

Despite mortgage rates hovering around 7% for buyers with sterling credit ratings, home prices still rose to a new record high in July, marking the sixth straight month of consecutive gains, which has generally been attributed to the ongoing and historically low supply of inventory continuing to push up the cost of a home purchase. Prices rose 0.6% from the month before, according to seasonally adjusted data from the S&P CoreLogic Case-Shiller U.S. National Home Price Index released September 26.

Source: S&P Dow Jones Indices LLC, S&P/Case-Shiller U.S. National Home Price Index (Last accessed: October 8, 2023)

Realtor.com recently reported that “[f]irst-time buyers are facing a housing market in which the median home list prices have shot up 38%, mortgage rates have roughly doubled, … the monthly mortgage payment on a typical home has more than doubled since 2019[, and they] … are competing with cash-flush investors and wealthier, repeat buyers.

Affordability has become a serious and growing problem for millions of first-time potential home buyers. Median incomes are no longer able to buy median homes in desirable locations. Buyers are having to move further out from metro areas to find entry-level homes at less than desirable entry-level prices. One alternative is living close to work and metro amenities by renting in apartment complexes, a trend that we think has a bright future for years to come.

In our opinion renting represents a lifestyle change that affords a high-quality living experience until those seeking a home purchase can increase savings for a larger down payment, wait for mortgage rates to recede (if and when that happens), or wait to see if new home construction puts a dent in the supply shortage. In the meantime, luxury, full-featured multi-family residential communities have become one path of affordable choice, and not just for home seekers, but also for professionals that want optionality in their living conditions.

As we see it, one of the great catalysts for finding well-situated new luxury apartment projects has been the advent of Opportunity Zones and the revitalization of distressed urban areas, some of which are in the hearts of vibrant cities with bright futures. We also believe that this new higher-for-longer rate environment will place Belpointe PREP, LLC (“Belpointe OZ”) (NYSE American: OZ), the only qualified opportunity fund (“QOF”) listed on a national securities exchange, in a position to benefit in early 2024 when its first two multi-family housing projects (currently under construction) located in downtown Sarasota and St. Petersburg, Florida, open their doors to new tenants.

Belpointe OZ has just released a brand-new website for its Aster & Links project. Aster & Links is situated at 1991 Main Street, located in the heart of downtown Sarasota, Florida, in close proximity to the world-famous St. Armand’s Circle and Longboat Key. It’s a very exciting time for Belpointe OZ, in that this Class-A full-featured complex is rapidly coming to life, and investors and future tenants, who are projected to begin moving in in the spring of 2024, can now see first-hand how the project management team has gone to great lengths to bring a luxury living experience to Aster & Links.

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

Belpointe OZ is also making excellent headway on Class A multi-family residential project in downtown St. Petersburg, Florida, at 1000 First Ave North (previously referred to as 902-1020 First Avenue North). 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.

https://investors.belpointeoz.com/select-oz-development-sites/

From a tax planning standpoint, we think laddering capital gains tax deferment throughout the year by taking advantage of the QOF regulation’s rolling 180-day look-back period, can be very advantageous come the year-end. 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 have an opportunity to 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. 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 an investor’s interest in the QOF is sold or exchanged, whichever occurs first. The potential to compound growth and income thereafter within QOFs on a tax-free basis expires December 31, 2047.

On September 1, 2023, Belpointe OZ announced its unaudited quarterly net asset value (“NAV”) as of the quarter ended June 30, 2023, of $351.6 million or $98.58 per Class A unit, as compared to the current market price of around $85 per unit as of September 29, a meaningful discount to NAV. With many sectors of the market in correction mode, it might prove to be an excellent opportunity to book some profits, especially in market leaders that have enjoyed huge runs year-to-date, and to shelter those capital gains in a QOF, like Belpointe OZ where the construction of two large-scale multi-family residential projects in Sarasota and St. Petersburg, Florida, are making excellent progress towards completion in 2024.

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 us at IR@BelpointeOZ.com or call 203-883-1944 for further information.

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.

©2023 Belpointe PREP, LLC. All rights reserved.

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