Blackstone and KKR Betting Billions on Multifamily Real Estate

As of July 24, 2024, Belpointe OZ’s Class A unit’s trade at discount of just over 28% to NAV, up from a discount of over 40%. In our view, investors seeking a discounted real estate investment opportunity should consider exploiting what’s left of the disparity between the current market price of Belpointe OZ’s (NYSE American: “OZ”) Class A units and its NAV, before that gap closes, notwithstanding the tax benefits that Belpointe OZ, as a qualified opportunity fund, has to offer.

It is our view that the market for Belpointe OZ’s Class A units still fails to adequately price in the fact that Belpointe OZ owns both Aster & Links and Viv, two major assets that could be stabilized and potentially generating cashflow within the next 18 months; although it seems that some advisors and investors are now starting to recognize the opportunity. What’s more, investors do not need capital gains to take advantage of current the NAV-to-Class A unit price disparity. We believe advisors and investors seeking real estate assets with income-producing potential, trading at a 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.

However, it’s important to remember, without investing capital gains investors will not qualify for any of the Opportunity Zone program tax benefits. But with the stock market gains being what they are year-to-date, we believe locking in capital gains and sheltering those gains through the purchase of Belpointe OZ’s Class A units is a strategy that is worthy of consideration.

We think now is the time for advisors and investors alike to take note of where some of the biggest private equity firms are positioning their cash. In our view, the assets they are acquiring and holding now—namely multifamily residential real estate—are those they likely view as having upside potential for growth and income. Both Blackstone and KKR closed on multibillion dollar acquisitions in the luxury apartment sector in June.

In June, Blackstone announced completion of the acquisition of Apartment Income REIT Corp. (“AIR Communities”) in an all-cash transaction valued at approximately $10 billion, including the assumption of debt. AIR Communities held a portfolio of 77 apartment communities comprising over 27,000 apartments units in 10 states, including Florida, and the District of Columbia.

Adding to this seemingly newfound conviction to come off the sidelines and put cash to work, also in June, KKR announced the acquisition of a portfolio of 18 multifamily assets, consisting of over 5,200 recently-built Class A apartments in costal and sunbelt markets, including Florida, from a closed-end fund sponsored by Quarterra Multifamily for approximately $2.1 billion.

Rent growth decelerated year-over-year throughout 2023, amid the largest construction buildout for the multifamily sector in decades, according to data from Yardi Matrix. This construction boom coupled with higher interest rates weighed on apartment property valuations, which, according to data compiled by MSCI, Inc., where down approximately 15% as of December 2023 from their July 2022 peak. We believe that the recent Blackstone and KKR purchases are an early indicator that the market may have found a bottom and of growing confidence that rents and valuations for apartments will stabilize and begin to pick up.

We also believe that the timing of the Blackstone and KKR purchases speaks to the foresight of Belpointe PREP, LLC’s (“Belpointe OZ”) (NYSE American: “OZ”) management team, which had the vision and conviction back in 2021 to acquire properties within opportunity zones and lay out a plan for the construction of its first major multifamily project, Aster & Links, in Sarasota, Florida, which began receiving new tenants as of last month. Belpointe OZ’s second major project, in St. Petersburg, Florida–Viv–is currently slated to be move-in ready in 2025.

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

While the biggest private equity firms in the world are taking multibillion dollar stakes in the Class A apartment sector, it looks like the stock market may also have started to take notice of the sector, with shares of many of the largest listed apartment REIT stocks up over the past 90 days, though in many cases they remain well off their 2022 highs. Looking at the charts of the top 10 leading apartment REIT stocks, there appears to be a new broad uptrend forming and, as of now, it’s getting little to no mention by the financial media.

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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