Steep discount to NAV – An Attractive Investment
From an investment standpoint, it is our view that the current price of Belpointe OZ (NYSE American: “OZ”) Class A units at $47.00 as of February 20, 2024, is wholly dislocated from the net asset value (“NAV”) as of September 30, 2023, of $370.49 million, or $103.50 per Class A unit.
OZ is trading approximately 50% off its NAV while the REIT industry-wide discount to NAV is on average 12.94%. Keep in mind that this average also includes office REITs whose valuations have been hit much harder than other real estate asset classes. https://seekingalpha.com/article/4662788-the-state-of-reits-january-2024-edition
Many investors have treated the purchase of OZ units as a pure tax shelter and must remember that OZ is an early-stage development partnership where meaningful cash flow from operations will begin to be realized over the next year, due to new construction and capital-intensive improvements outlined by Opportunity Zone regulations.
The Q4 2023 Net Asset Value will be released by the end of this month, with the Annual Report due out in April.
Investors and future tenants can now pre-lease and preview the available units and floorplans on the updated Aster & Links website displaying the full-featured luxury apartment layouts that living spaces from 865 – 2,840 sq. feet, 1 bed/1/bath -4bed/3.5bath Class A units and a wide array of options to fit the needs and wants of all future tenants. 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.
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 as issuing $56.4MM of common equity at these current prices would cause significant dilution.
Pursuant to the report, the terms of the mezzanine loan are as follows: On January 31, 2024, an indirect majority-owned subsidiary of Belpointe OZ entered into a mezzanine loan agreement with Southern Realty Trust Holdings, LLC, for up to $56.4 million in principal amount (the “Mezzanine Loan”). The Mezzanine Loan bears interest at a rate of 13.0% per annum and is secured by the investment in 1991 Main Street, Sarasota, Florida. Advances under the Mezzanine Loan may be used to reimburse Belpointe OZ for certain costs and expenses incurred in relation to, and to fund the continued development of, 1991 Main Street. The Mezzanine Loan has an initial maturity date of May 12, 2027, and contains a one-year extension option, subject to certain restrictions.
The full body of the report is available on the SEC’s website.
“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.”
Given what we believe to be a very promising year ahead for OZ projects, those 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 REITs such as Belpointe OZ, just as the partnership is set to begin leasing up its first property in two months. And especially with OZ units trading at such a significant discount to NAV.
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.
©2024 Belpointe PREP, LLC. All rights reserved.
