Fed Rate Cuts Likely to be A Major OZ Catalyst

Sep 27, 2024

Rendering of Viv, a luxury multifamily development in St. Petersburg, FL
Rendering of Viv, a luxury multifamily development in St. Petersburg, FL
Rendering of Viv, a luxury multifamily development in St. Petersburg, FL

More Deal Flow From Largest Real Estate Funds At Work

In our experience, there is typically a moment within any depressed asset class when cash rich funds decide to pre-empt a market turnaround and deploy assets while there is Rothchild-like blood in the streets. We believe this can still be said about the state of commercial office property in several markets where those properties are being transacted at steep discounts to their original purchase prices. We also believe that when trying to read the tea leaves in the deal flow of commercial properties, it may pay to lend a close ear to the largest players in the space.

Blackstone is the largest property owner in the world, led by two of the savviest and prescient real estate minds in the business—Stephen Shwartz and Jon Gray—who need no introduction to this column. Gray gave a recent CNBC interview that we think should put every acquisition department in every real estate fund specializing in deeply discounted commercial real estate on notice. Gray again emphasized that the commercial real estate landscape is bottoming.

Gray stated in the interview that from the hundreds of companies that Blackstone works with, it is reasonable to conclude that there remains real resilience in the economy despite slowing in certain sectors. Gray also predicted, and we agree, that the Fed’s recent 50 basis point rate cut will provide a catalyst for rising deal activity going forward. To be clear, Blackstone deployed or committed over $50 billion to commercial real estate during the second quarter of 2024, well before the “all clear” sign that it was safe to invest.

Gray noted that as the cost of capital comes down, it is supportive of the transaction environment and supportive for asset prices and cash flows. Gray believes that assets are priced at reasonable levels; Blackstone is trying to take advantage of that. Not waiting for that “all clear” sign, Gray is also talking as if exits will pick up in 2025 and realizations from acquisitions of distressed assets during Covid will pay out handsomely. In our view, follow the money. We continue to believe that there are still some incredible discounts in the multi-family residential sector that deserve the attention of investors.

As of August 30, 2024, Belpointe PREP, LLC (“Belpointe OZ”) (NYSE American: “OZ”), the only publicly traded qualified opportunity fund (“QOF”), announced its unaudited quarterly net asset value (“NAV”) as of June 30, 2024, of $356.78 million, or $98.24 per Class A unit. In our view, investors seeking a discounted real estate investment opportunity should consider exploiting the disparity between the current market price of Belpointe OZ’s (NYSE American: “OZ”) Class A units and its NAV, notwithstanding the tax benefits that Belpointe OZ, as a QOF, has to offer.

Belpointe OZ is currently actively signing on new tenants at its Class-A high-rise full-featured luxury multifamily community, Aster & Links, in downtown Sarasota, Florida, a major asset that could be stabilized and potentially generating cashflow within the next 18 months, and with financing now secured for Viv, its second Class A high-rise full-feature multifamily community in downtown St. Petersburg, Florida, that project set to come online and should be stabilized soon thereafter.

We believe that investors seeking hard real estate assets with income-producing potential, trading at a steep discount to NAV and located within one of the fastest growing states in the U.S., should give thought to adding Belpointe OZ’s Class A units to a diversified portfolio of investments.

Investors and future tenants can now preview and lease the available units and floorplans on the updated Aster & Links website, which displays the luxurious layouts with living spaces from 865 to 2,820 sq. feet, one-bed/one-bath to four-bed/three-and-a-half-bath and a wide array of options to fit the needs and wants of all future tenants.

You can learn more about Belpointe PREP, LLC (“Belpointe OZ”) (NYSE American: “OZ”) at belpointeoz.com. Tech investors in particular seem to be enjoying generational wealth-building capital gains in leading AI stocks. It might be time to consider sheltering some of those gains and potentially compounding them in a tax-deferred QOF that trades on the NYSE.

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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