What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-31 compared with 2022-03-11 · 246 added, 289 removed, 57 unchanged (90% of the section changed)

1 unchanged sentence

following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited

consolidated financial statements and related notes appearing elsewhere in this Form 10-K.

This discussion contains forward-looking statements

that are subject to risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business

prospects, growth strategy and liquidity.

The factors listed under “Risk Factors” and “Forward-Looking Statements”

in this Form 10-K provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the

expectations described in any forward-looking statements.

are the first and only publicly traded qualified opportunity fund listed on a national securities exchange.

We are a Delaware limited

liability company formed on January 24, 2020, and intend to operate in a manner that will allow us to qualify as a partnership for U.S.

federal income tax purposes.

We are focused on identifying, acquiring, developing or redeveloping and managing commercial real estate

located within qualified opportunity zones.

consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K (this “Form 10-K”).

This discussion contains forward-looking statements that are subject to risks and uncertainties and assumptions relating to our operations,

financial results, financial condition, business prospects, growth strategy and liquidity.

The factors listed under “Risk Factors”

and “Forward-Looking Statements” in this Form 10-K provide examples of risks, uncertainties and events that may cause our

actual results to differ materially from the expectations described in any forward-looking statements.

are the only publicly traded qualified opportunity fund listed on a national securities exchange.

We are a Delaware limited liability

company formed to invest in and manage a portfolio consisting primarily of commercial real estate properties, real estate-related assets,

including commercial real estate loans and mortgages, and debt and equity securities issued by other real estate-related companies, and

private equity acquisitions and investments, and opportunistic acquisitions of other qualified opportunity funds and qualified opportunity

zone businesses.

We currently intend to operate in a manner that will allow us to qualify as a partnership for U.S.

federal income tax

are focused on identifying, acquiring, developing or redeveloping and managing commercial real estate located within qualified opportunity

At least 90% of our assets consist of qualified opportunity zone property.

We qualified as

a qualified opportunity fund beginning with our taxable year ended December 31, 2020.

Because we are a qualified opportunity fund certain

of our investors are eligible for favorable capital gains tax treatment on their investments.

of our assets are held by, and all of our operations are conducted through, one or more of our Operating Companies, either directly or

indirectly through their subsidiaries.

We are externally managed by Belpointe PREP Manager, LLC (our “Manager”), which is

an affiliate of our sponsor, Belpointe, LLC (our “Sponsor”).

We qualified as a qualified opportunity fund beginning

with our taxable year ended December 31, 2020.

Because we are a qualified opportunity fund certain of our investors are eligible for

favorable capital gains tax treatment on their investments.

of our assets are and will continue to be held by, and all of our operations are and will continue to be conducted through, one or more

of our Operating Companies, either directly or indirectly through subsidiaries.

We are externally managed by Belpointe PREP Manager,

LLC (our “Manager”), which is an affiliate of our sponsor, Belpointe, LLC (our “Sponsor”).

September 30, 2021, the U.S.

1 unchanged sentence

on Form S-11, as amended (File No.

333-255424) (the “Registration Statement”), registering a continuous primary offering

of up to $750,000,000 in our Class A units (the “Primary Offering”).

From the period of October 7, 2021 through December

31, 2021, we issued 2,132,039 Class A units in our Primary Offering, raising gross offering proceeds of $213.2 million.

Together with

the gross proceeds raised in Belpointe REIT’s prior offerings, as of December 31, 2021, we have raised aggregate gross offering

cash proceeds of $332.2 million.

333-255424) (the “Registration Statement”), registering up to $750,000,000 of our Class

A units on a continuous “best efforts” basis, as part of our ongoing initial public offering (the “Primary Offering”),

at an initial price equal to $100.00 per Class A unit.

Transactions with Belpointe REIT, Inc.

to the terms of an Agreement and Plan of Merger, dated April 21, 2021 (the “Merger Agreement”), we, through BREIT Merger,

LLC, a Delaware limited liability company (“BREIT Merger”), and our wholly-owned subsidiary, completed an offer (the “Offer”)

to exchange each outstanding share of common stock, par value $0.01 per share (the “Common Stock”), of Belpointe REIT, Inc.,

a Maryland corporation (“Belpointe REIT”) validly tendered in the Offer for 1.05 Class A units (the “Class A units”)

representing limited liability company interests of the Company, with any fractional Class A units rounded up to the nearest whole unit

(the “Transaction Consideration”).

Following consummation of the Offer, and upon satisfaction of certain conditions precedent

in the Merger Agreement, on October 1, 2021, in accordance with the terms of the Merger Agreement, Belpointe REIT converted from a corporation

into BREIT, LLC, a Maryland limited liability company (“BREIT”), with each outstanding share of Common Stock being converted

into a limited liability company interest (an “Interest”) in BREIT, and, on October 12, 2021, all other conditions to the

Merger (as defined in the Merger Agreement) having been satisfied, BREIT merged with and into BREIT Merger, with BREIT Merger surviving.

In the Merger, each Interest issued and outstanding immediately prior to the Merger was converted into the right to receive the Transaction

Consideration.

to and in connection with the Offer and Merger, we entered into a series of loan transactions with Belpointe REIT whereby:

(i) on October

28, 2020, Belpointe REIT advanced us $35.0 million evidenced by a secured promissory note (the “First Secured Note”) bearing

interest at a rate of 0.14%, due and payable on the Maturity Date (as hereinafter defined) and secured by all of our assets, (ii) on

February 16, 2021, Belpointe REIT advanced us an additional $24.0 million evidenced by a second secured promissory note (the “Second

Secured Note”) on the same terms as the First Secured Note, and (iii) on May 28, 2021 we entered into an agreement with Belpointe

REIT to amend the Maturity Date of the First Secured Note and Second Secured Note to December 31, 2021 (the “Maturity Date”)

and Belpointe REIT advanced us an additional $15.0 million evidenced by a third secured promissory note (the “Third Secured Note”

and, together with the First Secured Note and Second Secured Note, the “Secured Notes”) on the same terms as the First Secured

Note and Second Secured Note.

consummation of the Merger, effective October 12, 2021, we entered into a Release and Cancellation of Indebtedness agreement with BREIT

Merger, the surviving entity in the Merger, pursuant to the terms of which BREIT Merger cancelled the Secured Notes and discharged us

from all obligations to repay the principal and any accrued interest on the Secured Notes.

has and continues to pose significant threats and in certain cases serious disruptions to the U.S.

and global economy, and has, among

other things, impacted job markets and created ongoing disruptions in global supply chains, leading, in some cases, to increased construction

costs and project delays.

With vaccines now more widely available, as of the year ended December 31, 2021, the global economy has started

to reopen and restrictions previously imposed by governmental and other authorities to contain the spread of the virus have begun to

Nevertheless, the recovery could remain uneven and is subject to setbacks.

An economic slowdown or sustained downturn, related

to COVID-19 or otherwise, continued supply chain disruptions, rising inflation, interest rate increases or weakening of credit markets

could adversely affect our financial condition.

As a result, we remain unable to predict when normal economic activity and business operations

will fully resume and COVID-19 continues to present material uncertainty and risk with respect to our future performance and future financial

results, including the potential to negatively impact our costs of operations, the value of any investments we make and laws, regulations

and governmental and regulatory policies applicable to us.

of December 31, 2021, our investment portfolio consisted of 12 investments in three states.

These investments include:

in Multifamily and Mixed-Use Rental Properties

Main Street – Sarasota, Florida – 1700 Main Street (“1700 Main”) is a 1.3-acre site, consisting of a former

gas station, a three-story office building with parking lot and a three-story retail building, located in Sarasota, Florida, which we

acquired for an aggregate purchase price of $6.9 million, inclusive of transaction costs.

We currently anticipate that 1700 Main will

be redeveloped into a 168-apartment home community consisting of one-bedroom, two-bedroom and three-bedroom apartments, with approximately

7,000 square feet of retail space located on the first two levels.

We anticipate that 1700 Main will consist of a 10-story podium style

building with a 3-story, 360-space garage and 7-stories of apartments above, including a clubroom, fitness center, courtyards with a

swimming pool and rooftop terraces as well as a leasing office.

The existing three-story office building will remain, and the new building

will wrap around it.

Ringling Boulevard – Sarasota, Florida – 1701-1710 Ringling Boulevard (“1701-1710 Ringling”) is a 1.62-acre

site, consisting of a six-story previously owner-occupied office building with parking lot, located in Sarasota, Florida, which we acquired

for an aggregate purchase price of $7.0 million, inclusive of transaction costs.

We currently anticipate that 1701-1710 Ringling will

be renovated into a fully functioning office building, consisting of approximately 80,000 square feet of rentable space and approximately

128 parking spaces, with an existing tenant leasing back approximately 42,000 square feet for 20 years with several lease extensions.

First Avenue North and 900 First Avenue North – St.

Petersburg, Florida – 902-1020 First Avenue North (“902-1020

First”) consists of several parcels, comprising 1.6-acres of land, located in St.

Petersburg, Florida, which we acquired for an

aggregate purchase price of $12.1 million, inclusive of transaction costs.

We currently anticipate that 902-1020 First will be developed

into a high-rise apartment featuring approximately 266-apartment homes consisting of one-bedroom, two-bedroom and three-bedroom apartments,

with approximately 22,100 square feet of retail space located on the first level and a four-level parking garage.

We anticipate that

902-1020 First will consist of two 15-story high-rise buildings and will have a clubroom, fitness center, courtyard with a swimming pool,

shared working space and a game room as well as a leasing office.

First Avenue North (“900 First”) is a parcel of land with a two-tenant retail building, located in St.

Petersburg, Florida,

which we acquired for an aggregate purchase price of $2.5 million, inclusive of transaction costs.

We currently anticipate that 900 First

will remain a two-tenant retail building and that we will take the additional development rights and add them to 902-1020 First.

Fruitville Road – Sarasota Florida – 1900 Fruitville Road is a 1.205-acre site, consisting of a fully leased retail building

and parking lot located in Sarasota, Florida, which we acquired for an aggregate purchase price of $4.7 million, inclusive of transaction

The sole tenant in the building vacated in January 2022 and the property will be used as a future development site.

8th Avenue South – Nashville, Tennessee – 900 8th Avenue South (“900 8th Avenue South”) is a 3.17-acre land

assemblage, consisting of a few small buildings, parking lots and open lots, located in Nashville, Tennessee, which we acquired for an

aggregate purchase price of $19.7 million, inclusive of transaction costs.

We currently anticipate that 900 8th Avenue South will be

redeveloped into an approximately 266-apartment home community consisting of one-bedroom, two-bedroom and three-bedroom apartments, with

approximately 14,100 square feet of retail space located on the first level.

We anticipate that 900 8th Avenue South will consist of

a 7-story building with a 2-story approximately 400-space garage, a fitness center, courtyard with a swimming pool and rooftop terraces

as well as a leasing office.

As of December 31, 2021 we have completed demolition of 900 8th Avenue South.

Road, Connecticut – Storrs Road (“Storrs Road”) is a 9-acre parcel of land located in Storrs, Connecticut, which

we acquired for an aggregate purchase price of $0.1 million, inclusive of transaction costs.

We currently anticipate holding Storrs Road

for future multifamily development.

2 – Nashville, Tennessee – Our second investment in Nashville, Tennessee (“Nashville No.

2”) is an approximately

8-acre site, consisting of two industrial buildings and associated parking, which we acquired for an aggregate purchase price of $21.0

million, inclusive of transaction costs.

We currently anticipate that Nashville No.

2 will be redeveloped into an approximately 412-apartment

home community consisting of one-bedroom, two-bedroom and three-bedroom apartments.

We anticipate that Nashville No.

2 will consist of

two 7-story buildings with a 2-story approximately 533-space garage plus approximately 100 surface level parking spots.

The buildings

will have a fitness center, game room, co-working spaces, outdoor heated saltwater swimming pool, riverfront courtyards and rooftop terraces

as well as a leasing office.

3 – Nashville, Tennessee – Our third investment in Nashville, Tennessee (“Nashville No.

3”) is an approximately

1.66-acre site consisting of a single-story 10,000 square foot retail building and associated parking lot, which we acquired for an aggregate

purchase price of $2.1 million, inclusive of transaction costs.

Upon closing, the building was leased to the seller through November

2022, with the ability to continue month to month thereafter.

Main Street – Sarasota, Florida – 1991 Main Street (“1991 Main”) is a 5.2-acre site located in Sarasota,

Florida, which was originally acquired by Belpointe REIT for an aggregate purchase price of $20.7 million, inclusive of transaction costs

and deferred financing fees.

In furtherance of the Merger, Belpointe REIT sold its interest in the holding company for 1991 Main (the

“1991 Main Interest”) to Belpointe Investment Holding, LLC, a Delaware limited liability company (“BI Holding”)

and affiliate of our Chief Executive Officer.

In connection with the transaction we provided a $24.8 million loan to BI Holding, which

was evidenced by a secured promissory note bearing interest at a rate of 5% per annum and due and payable at maturity on September 14,

2022 (the “BI Secured Note”).

Upon consummation of the Merger, we acquired the BI Secured Note as successor in interest to

Belpointe REIT.

November 30, 2021, we acquired the 1991 Main Interest from BI Holding in consideration of its payment to us of $0.3 million in interest

that had accrued under the terms of the BI Secured Note through November 30, 2021, and in satisfaction of its remaining obligations under

the BI Secured Note.

We currently anticipate that 1991 Main will be redeveloped into an approximately 418-apartment home community consisting

of one-, two- and three-bedroom apartments, and four-bedroom town home-style penthouse apartments, with approximately 60,000 square feet

of retail space located on the first level.

We anticipate that 1991 Main will consist of two high-rise buildings with 7-stories in the

front and 10-stories in the rear, and approximately 715 parking spaces including 590 from an existing parking garage and 125 new spaces

at the ground level.

Central Avenue North – St.

Petersburg, Florida – 901-909 Central Avenue North is a 0.129-acre site consisting of a fully

leased single-story 5,328 gross square foot retail/office building comprised of 4 units located in St.

Petersburg, Florida, which we

acquired for an aggregate purchase price of $2.6 million, inclusive of transaction costs.

in Commercial Real Estate Loans

Secured Loan – In furtherance of the Merger, we lent $3.5 million to CMC Storrs SPV, LLC a Connecticut limited liability company

(“CMC”), pursuant to the terms of a non-recourse promissory note (the “CMC Note”) secured by a Mortgage Deed

and Security Agreement on a property owned by CMC located in Mansfield, Connecticut.

CMC used the proceeds from the CMC Note to enter

into a Redemption Agreement with BPOZ 497 Middle Holding, LLC, a Connecticut limited liability company (“BPOZ 497”), and

indirect majority-owned subsidiary of Belpointe REIT, to redeem BPOZ 497’s preferred equity investment in CMC.

Interest accrues

on the CMC Note at a rate of 12% per annum and is due and payable at maturity on March 29, 2022.

the year ended December 31, 2021, pursuant to the terms of an Agreement and Plan of Merger (the “Merger Agreement”), we conducted

an offer to exchange (the “Offer”) each outstanding share of common stock (the “Common Stock”), of Belpointe

(“Belpointe REIT”) validly tendered in the Offer for 1.05 of our Class A units, with any fractional Class A units

rounded up to the nearest whole unit (the “Transaction Consideration”).

The Offer was completed on September 14, 2021.

the Offer, and in accordance with the terms of the Merger Agreement, Belpointe REIT converted from a corporation into a limited liability

company (the “Conversion”) named BREIT, LLC (“BREIT”).

In the Conversion each outstanding share of Common Stock

was converted into a limited liability company interest (an “Interest”) in BREIT.

The Conversion was completed on October

the Conversion, and in accordance with the terms of the Merger Agreement, BREIT merged with and into BREIT Merger, LLC (“BREIT

Merger”), our wholly-owned subsidiary (the “Merger”).

In the Merger, each outstanding Interest was converted into the

right to receive the Transaction Consideration.

The Merger was completed on October 12, 2021.

to and in connection with the Offer and Merger (collectively, the “Transaction”), we entered into a series of loan transactions

with Belpointe REIT, whereby Belpointe REIT advanced us an aggregate of $74.0 million evidenced by a series of secured promissory notes

(the “Secured Notes”) bearing interest at an annual rate of 0.14%, due and payable on December 31, 2021, and secured by all

of our assets.

Upon consummation of the Merger, BREIT Merger acquired the Secured Notes as successor in interest to Belpointe REIT and,

effective October 12, 2021, we entered into a Release and Cancellation of Indebtedness agreement with BREIT Merger pursuant to the terms

of which BREIT Merger cancelled the Secured Notes and discharged us from all obligations to repay the principal and any accrued interest

on the Secured Notes.

Business Outlook

market conditions for multifamily and mixed-use rental properties have remained strong over the past several quarters, future

economic conditions and the demand for multifamily and mixed-use rental properties are, and the real estate industry in general is,

subject to uncertainty as a result of a number of factors, including, among others, the rate of unemployment, increasing interest

rates, higher rates of inflation, instability in the banking system, the availability of credit, financial market volatility,

general economic uncertainty, increasing energy costs, supply chain disruptions and labor shortages.

The potential effect of these and other factors and the projected impact of these and other events on our

business, results of operations and financial performance, presents material uncertainty and risk with respect to our future

performance and financial results, including the potential to negatively impact our costs of operations, our financing arrangements,

the value of our investments, and the laws, regulations and governmental and regulatory policies applicable to us.

As a result, our

past performance may not be indicative of future results.

the evolving nature of certain of these factors, the extent to which they may impact our future performance and financial results

will depend on future developments which remain highly uncertain and, as a result, at this time we are unable to estimate the impact

that these factors may have on our future financial results.

Our Manager continuously reviews our investment and financing

strategies for optimization and to reduce our risk in the face of the fluidity of these and other factors.

of Operations

the year ended December 31, 2021 and the period beginning January 24, 2020 (formation) to December 31, 2020, revenue totaled $1.0 million

and $0.1 million, respectively, and was primarily derived from lease revenues.

Revenue increased by $0.9 million in 2021 compared to

the period beginning January 24, 2020 (formation) to December 31, 2020 primarily due to an increase in lease revenues as a result of

properties acquired in 2021 as well as properties acquired during the fourth quarter of 2020.

the year ended December 31, 2021, property expenses totaled $1.1 million, and consisted of property expenses, management fees, real estate

taxes, utilities and insurance expenses incurred in relation to our acquired investments.

For the period beginning January 24, 2020 (formation)

to December 31, 2020, property expenses totaled less than $0.1 million, and consisted of property expenses, real estate taxes, utilities

and insurance expenses incurred in relation to our acquired investments.

Year Ended December 31,

(amounts in thousands)

Rental revenue

Total revenue

Property expenses

General and administrative

Depreciation and amortization expense

Total expenses

Other income (loss)

Gain on redemption of equity investment

Interest income

Other income (expense)

Total other income (loss)

Loss before income taxes

Provision for income taxes

Net loss (income) attributable to noncontrolling interests

Net loss attributable to Belpointe PREP, LLC

the year ended December 31, 2022 as compared to the same period in 2021, rental revenue increased by $0.4 million.

This increase is primarily

due to an increase in lease revenues as a result of our 2022 property acquisitions in addition to a full year of activity related to

our 2021 property acquisitions, partially offset by a decrease in rental revenue as a result of the sole tenant vacating 1900 Fruitville.

the year ended December 31, 2022, property expenses consisted of management fees, property operational expenses, real estate taxes,

and utilities and insurance expenses incurred in relation to our 2022 and 2021 property acquisitions.

For the year ended December

31, 2021, property expenses consisted of property expenses, real estate taxes, and utilities and insurance expenses incurred in

relation to our 2021 property acquisitions.

the year ended December 31, 2022, as compared to the same period in 2021, property expenses increased by $2.7 million.

This increase

is primarily due to management fees incurred following the Registration Statement covering our Primary Offering having been declared

effective, and our acquisition of additional properties during 2022 and 2021.

See “ Business—Overview of Our Business and Operations ” for additional details regarding our Primary Offering.

and Administrative

the year ended December 31, 2021, general and administrative expenses totaled $2.9 million and primarily consisted of employee cost sharing

expenses (pursuant to the Management Agreement and Employee and Cost Sharing Agreement), marketing expenses, legal fees, audit and accounting

For the period beginning January 24, 2020 (formation) to December 31, 2020, general and administrative expenses totaled $0.1 million

and primarily consisted of employee cost sharing expenses and audit fees.

For the year ended December 31, 2022

as compared to the same period in 2021, general and administrative expenses increased by $2.9 million.

General and administrative expenses

for the year ended December 31, 2022 primarily consisted of employee cost sharing expenses (pursuant to our management agreement

and employee and cost sharing agreement), marketing expenses, legal, audit, tax and accounting fees.

We became liable for general and

administrative expenses in October 2021, in connection with the first closing in our Primary Offering, and as such general and administrative

expenses for the year ended December 31, 2021 primarily consisted of employee cost sharing expenses (pursuant to our management agreement

and employee and cost sharing agreement).

See “ Certain Relationships and Related Transactions, and Director Independence—Our Management Agreement ” for additional details regarding our management agreement and “ Certain Relationships and Related Transactions, and Director Independence—Our Employee and Cost Sharing Agreement ” for additional

details regarding our employee and cost sharing agreement .

and Amortization

the year ended December 31, 2021, depreciation and amortization expense totaled $0.6 million and was related to depreciation and amortization

incurred on properties acquired.

For the period beginning January 24, 2020 (formation) to December 31, 2020, depreciation and amortization

expense totaled less than $0.1 million and was related to depreciation and amortization incurred on properties acquired after commencing

Income (Expense)

the year ended December 31, 2022 as compared to the same period in 2021, depreciation and amortization increased by $0.7 million.

increase is primarily due to our acquisition of operating properties during 2022 and 2021.

Income (Loss)

on Redemption of Equity Investment

the year ended December 31, 2021, gain on redemption of equity investment increased by $0.3 million and is related to CMC’s redemption

of BPOZ 497’s preferred equity interest.

For additional details, see “—Our Investments—Investments in Commercial Real Estate Loans” above.

There was no comparable activity for the period beginning January 24, 2020 (formation) to December 31,

the year ended December 31, 2021, interest income was $0.4 million and is primarily related to interest earned on the BI Secured Note

of $0.3 million and interest earned on the CMC Note of $0.1 million.

For additional information, see “—Our Investments—Investments in Multifamily and Mixed-Use Rental Properties” and “—Our Investments—Commercial Real Estate Loans” above.

There was no comparable activity for the period beginning January 24, 2020 (formation) to December 31, 2020.

September 30, 2021, we lent approximately $3.5 million to CMC (the “CMC Loan”), pursuant to the terms of a non-recourse promissory

note secured by a Mortgage Deed and Security Agreement on a property owned by CMC located in Mansfield, Connecticut.

CMC used the proceeds

from the CMC Loan to enter into a Redemption Agreement with BPOZ 497 Middle Holding, LLC (“BPOZ 497”), an indirect majority-owned

subsidiary of Belpointe REIT, to redeem BPOZ 497’s preferred equity investment in CMC in furtherance of our Transaction with Belpointe

See “ —Our Transactions with Belpointe REIT, Inc.

” for additional details regarding the Transaction.

2022, CMC repaid the CMC Loan in full.

connection with CMC’s redemption of BPOZ 497’s preferred equity investment, we recognized a gain on redemption of equity

investment of $0.3 million for the year ended December 31, 2021.

There was no comparable activity for the year ended December 31, 2022.

January 3, 2022, we lent $30.0 million (the “Norpointe Loan”) to Norpointe, LLC (“Norpointe”), an affiliate of

our Chief Executive Officer, pursuant to the terms of a promissory note secured by a first mortgage lien on certain real property located

at 41 Wolfpit Avenue, Norwalk, Connecticut 06851 (the “Norpointe Property”).

On June 28, 2023, for purposes of complying

with the qualified opportunity fund requirements under the Code and related Treasury Regulations, we restructured the Norpointe Loan

(the “Restructured Norpointe Loan”).

The Restructured Norpointe Loan was evidenced by a promissory note and was secured by

a first mortgage lien on the Norpointe Property.

On December 13, 2022, the Restructured Norpointe Loan was repaid in full.

See “ Certain Relationships and Related Transactions, and Director Independence—Our Affiliate Transactions—Our Transaction with Norpointe, LLC ” for additional details regarding our transactions with Norpointe.

February 23, 2022, we lent approximately $5.0 million to Visco Propco, LLC (the “Visco Loan”), pursuant to the terms of a

promissory note secured by a first lien deed of trust on certain real property located at 801 Visco Drive, Nashville, Tennessee 37210.

On December 2, 2022, the Visco Loan was repaid in full.

the year ended December 31, 2022, interest income was $1.9 million and is primarily related to interest of $0.7 million earned on the

Norpointe Loan, $0.7 million earned on the Restructured Norpointe Loan, $0.2 million earned on the CMC Loan, and $0.2 million earned

on the Visco Loan.

September 14, 2021, Belpointe REIT lent $24.8 million to Belpointe Investment Holding, LLC (“BI Holding”), an affiliate of

our Sponsor, pursuant to the terms of a secured promissory note (the “BI Secured Note”).

Interest accrued on the BI Secured

Note at an annual rate of 5.0% and was repaid on November 30, 2021, in connection with our acquisition of 1991 Main.

the year ended December 31, 2021, interest income was $0.4 million and is primarily related to interest of $0.3 million earned on the

BI Secured Note, and $0.1 million earned on the CMC Loan.

information regarding our commercial real estate loan transactions is provided in “ Note 8 – Loans Receivable ” in the

Notes to Consolidated Financial Statements included elsewhere in this Form 10-K.

Income (Expense)

the year ended December 31, 2021, other income (expense) primarily relates to sales tax in connection with the 1991 Main parking garage

easement agreement and interest expense on the 900 Eighth Promissory Note ( Note 5 ).

For the period beginning January 24, 2020 (formation)

to December 31, 2020, other income (expense) relates to Belpointe PREP’s interest expense on the Secured Notes.

income attributable to noncontrolling interest

income attributable to noncontrolling interest represents the share of earnings generated in entities we consolidate in which we do not

On June 28, 2022, through an indirect

majority-owned subsidiary of our Operating Company, we acquired a 70.2% controlling interest in CMC (the “CMC Interest”),

for an initial capital contribution of $3.8 million.

As part of the transaction two unaffiliated joint venture partners (the “CMC

JV Partners”) were deemed to have made a combined initial capital contribution of $3.1 million.

Following our acquisition of the

CMC Interest, we discovered that one of the CMC JV Partners had misappropriated cash from the other CMC JV Partner’s cash account.

As a result, the CMC JV Partner agreed to forfeit its interest in CMC as of March 24, 2023.

Other income (expense) for the year ended

December 31, 2022, primarily relates to a loss of $0.4 million recorded in connection with the misappropriated cash.

ended December 31, 2021, Other income (expense) relates to primarily relates to sales tax in connection with the 1991 Main parking

garage easement agreement and interest expense on the 900 Eighth Promissory Note.

for Income Taxes

the year ended December 31, 2022, provision for income taxes relates to taxes incurred (including penalties and interest) in connection

with our acquisition of Belpointe REIT.

As a result of the Conversion of Belpointe REIT into BREIT, Belpointe REIT was deemed to have

been liquidated and its tax year ended on October 1, 2021.

Belpointe REIT’s deemed liquidation resulted in a taxable gain for the

year ended October 1, 2021.

In connection with the Conversion, we filed an extension for the time to file Belpointe REIT’s 2021

tax returns, however, we did not make an estimated payment at that time as we had not yet calculated Belpointe REIT’s 2021 tax

As of the date of this Form 10-K, we have paid the outstanding income tax liability, including interest, and intend to seek

an administrative waiver from the IRS with respect to the outstanding penalties.

Loss Attributable to Noncontrolling Interest

loss attributable to noncontrolling interest represents the share of earnings generated in entities we consolidate in which we do not

own 100% of the equity.

For the year ended December 31, 2021, net income attributable to noncontrolling interest predominantly relates

to income attributable to the shareholders of Belpointe REIT that did not tender their shares in the Offer for the period beginning on

the Exchange Date through October 12, 2021 (the effective date of the Merger).

For the year ended December 31, 2022 as compared to the same period in 2021, net losses attributable to noncontrolling

interest increased by $0.6 million.

This increase primarily relates to losses allocated to noncontrolling interest holders on our CMC

and 900 8th Avenue South investments based upon an allocation of each investment’s net assets at book value as if the investments

were hypothetically liquidated at the end of each reporting period.

and Capital Resources

primary needs for liquidity and capital resources are to fund our investments, including construction and development costs, pay our

Primary Offering and operating fees and expenses, make distributions to the holders of our units and pay interest on any outstanding

offering and operating fees and expenses, pay any distributions that we make to the holders of our units and pay interest on any outstanding

indebtedness that we incur.

are dependent on the net proceeds from our Primary Offering to fund our operations.

For additional details regarding our Primary Offering,

“Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Use of Proceeds from Registered Securities.” We expect to obtain the liquidity and capital resources required to pay our Primary Offering

and operating fees and expenses, fund our investments, including construction and development costs, make distributions to holders of

our units and pay interest on any outstanding indebtedness that we incur, from the proceeds of the Primary Offering and any future offerings

we may conduct, from the advancement of reimbursable expenses by our Manager and its affiliates, including our Sponsor, from secured

or unsecured financings from banks and other lenders and from any undistributed funds from our operations.

addition to making investments in accordance with our investment objectives and strategy, we expect our Primary Offering and operating

fees and expenses will include, among other things, the management fee that we will pay to our Manager, legal, audit and valuation fees

and expenses, federal and state filing fees, printing expenses, administrative fees, transfer agent fees, marketing and distribution

fees, and expenses related to acquiring, financing, appraising and managing our commercial real estate properties.

We do not have any

office or personnel expenses as we do not have any employees.

We will reimburse our Manager and its affiliates, including our Sponsor,

for certain out-of-pocket expenses incurred in connection with our organization and operations.

Fees payable and expenses reimbursable

to our Manager and its affiliates, including our Sponsor, may be paid, at the election of the recipient, in cash, by issuance of our

Class A Units at the then-current NAV, or through some combination of the foregoing.

we are unable to raise substantial offering proceeds in our Primary Offering, we will make fewer investments resulting in less diversification

in terms of the type, number and size of investments we make and the value of an investment in us will fluctuate with the performance

of the specific assets we acquire.

Further, we will have certain fixed operating expenses, including certain expenses associated with

our qualification as a publicly traded partnership, regardless of whether we are able to raise substantial funds in our Primary Offering.

Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net

income and limiting our ability to make investments and distributions.

Manager and its affiliates, including our Sponsor, have funded our liquidity and capital resources on a short-term basis by advancing

us substantially all of our organization and Primary Offering and other operating expenses which we will reimburse to our Manager and

its affiliates, including our Sponsor, pursuant to the terms of the Management Agreement and Employee and Cost Sharing Agreement.

additional details, see Item 1.

“Business—Human Capital.” The Company became liable to reimburse the Manager and its

affiliates, including our Sponsor, when the first closing was held in connection with our Offering, which occurred in October 2021.

the year ended December 31, 2021 and the period beginning January 24, 2020 (formation) to December 31, 2020, our Manager and its affiliates,

including our Sponsor, have incurred organization and Primary Offering expenses of $0.6 million and $0.2 million, respectively, on our

For the year ended December 31, 2021 and the period beginning January 24, 2020 (formation) to December 31, 2020, our Manager

and its affiliates, including our Sponsor, have incurred operating expenses of $1.3 million and $0.1 million, respectively, on our behalf.

intend to employ leverage in order to provide more funds available for investment.

We believe that careful use of conservatively structured

leverage will help us to achieve our diversification goals and potentially enhance the returns on our investments.

offering and operating fees and expenses include, among other things, legal, audit and valuation fees and expenses, federal and state

filing fees, SEC, FINRA and NYSE American filing fees, printing expenses, administrative fees, transfer agent fees, marketing and distribution

fees, the management fee that we pay to our Manager, and fees and expenses related to acquiring, financing, appraising, and managing

our commercial real estate properties.

We do not have office or personnel expenses as we do not have any employees.

Where our Manager and

its affiliates, including our Sponsor, have funded, and in the future if they continue to fund, our liquidity and capital resource needs

by advancing us offering and operating fees and expenses, we reimburse our Manager and its affiliates, including our Sponsor, pursuant

to the terms of our Management Agreement and Employee and Cost Sharing Agreement.

Fees payable and expenses reimbursable to our Manager

and its affiliates, including our Sponsor, may be paid, at the election of the recipient, in cash, by issuance of our Class A Units at

the then-current NAV, or through some combination of the foregoing.

There were no organization or Primary

Offering costs incurred by our Manager and its affiliates during the year ended December 31, 2022 .

During the year ended December 31, 2021, our Manager and its affiliates, including our Sponsor, incurred organization and Primary

Offering expenses of $0.6 million.

During the years ended December 31,

2022 and 2021, our Manager and its affiliates, including our Sponsor, incurred operating expenses of $2.9 million and $1.3 million, respectively,

on our behalf.

During the year ended

December 31, 2022, our indirect wholly owned subsidiary entered into a construction management agreement for the development of 1991

For additional details regarding our acquisition of 1991 Main, see “ —Our Investments—Investments

in Multifamily and Mixed-Use Rental Properties—1991 Main Street - Sarasota Florida.

” The construction management agreement

contains terms and conditions that are customary for a project of this type and will be subject to guaranteed maximum price.

As of December 31,

2022, we had an unfunded capital commitment of $144.3 million under the terms of this agreement.

We currently anticipate that the remaining

funding for construction and soft costs associated with the development of 1991 Main will be a minimum of $218.9 million (inclusive of

the aforementioned unfunded capital commitment).

We expect to obtain

the liquidity and capital resources that we need over the short and long-term from the proceeds of our Primary Offering and any future

offerings that we may conduct, from the advancement of reimbursable fees and expenses by our Manager and its affiliates, including our

Sponsor, from secured or unsecured financings from banks and other lenders and from any undistributed funds from operations.

For additional

details regarding our Primary Offering, see “ Part II, Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Use of Proceeds from Registered Sales of Securities ”

We currently anticipate that our available capital resources, including

the proceeds from our Primary Offering and the proceeds from any construction or other loans that we may incur, when combined with cash

flow generated from our operations, will be sufficient to meet our anticipated working capital and capital expenditure requirements over

the next 12 months and beyond.

employ leverage in order to provide more funds available for investment.

We believe that careful use of conservatively structured leverage

will help us to achieve our diversification goals and potentially enhance the returns on our investments.

targeted aggregate property-level leverage, excluding any debt at the Company level or on assets under development or redevelopment,

11 unchanged sentences

There is no limit on the amount we may borrow with respect to any individual property or

currently anticipate that our available capital resources, including the proceeds from our Primary Offering and the proceeds from

any construction or other loans that we may incur, when combined with cash flow generated from our operations, will be sufficient to

meet our anticipated working capital and capital expenditure requirements for the next 12 months.

A portion of the

acquisition costs of 1991 Main were funded by a secured loan from First Florida Integrity Bank (the “Acquisition Loan”),

which we assumed when we acquired 1991 Main from BI Holding.

For additional details regarding our acquisition of 1991 Main, see “—Our

Investments—Investments in Multifamily and Mixed-Use Rental Properties—1991 Main Street - Sarasota Florida.”

The Acquisition Loan is payable in consecutive monthly payments of interest only, with the outstanding principal balance plus any

accrued and unpaid interest due and payable on May 6, 2022.

The Acquisition Loan bears interest at a fixed rate of 4.75% per annum

and is guaranteed by our Chief Executive Officer.

The current outstanding principal balance of the Acquisition Loan is $10.8

following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash (amounts in thousands):

For the Year Ended

December 31, 2021

For the Period Beginning

January 24, 2020

(Formation) to

December 31, 2020

Cash flows used in operating activities

1 unchanged sentence

Cash flows provided by financing activities

Net increase in cash and cash equivalents and restricted cash

of December 31, 2021 and 2020, cash and cash equivalents and restricted cash totaled $192.3 million and $6.6 million, respectively.

flows used in operating activities for the year ended December 31, 2021 and for the period from January 24, 2020 (formation) through

December 31, 2020 primarily relate to the operating properties acquired.

flows used in investing activities for the year ended December 31, 2021 relate to properties acquired and property deposits paid, costs

paid for our development properties and funding of a loan receivable, all of which were offset by CMC’s redemption of BPOZ 497’s

preferred equity interest, the cash acquired in connection with the acquisition of the 1991 Main Interest and the Offer.

For additional

details regarding the Offer, see Item 1.

“Business—Our Transactions with Belpointe REIT, Inc.” Cash flows used in investing

activities for the period from January 24, 2020 (formation) through December 31, 2020 primarily relate to properties acquired and costs

paid for our development properties.

flows provided by financing activities for the year ended December 31, 2021 primarily relates to net proceeds received from the Primary

Offering and Secured Notes funded by Belpointe REIT.

Cash flows provided by financing activities for the period from January 24, 2020

(formation) through December 31, 2020 primarily relate to the Secured Notes funded by Belpointe REIT, and the private offering proceeds

received from our Sponsor and affiliate.

For additional details see, Item 1.

“Business—Our Transactions with Belpointe REIT, Inc.,” Item 5.

“Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Use of Proceeds from Registered Securities,” and Item 5.

“Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Unregistered Sales of Equity Securities.”

Net (decrease) increase in cash and cash equivalents and restricted cash

of December 31, 2022 and 2021, cash and cash equivalents and restricted cash totaled approximately $145.0 million and $192.3 million,

respectively.

flows used in operating activities for the year ended December 31, 2022 primarily relates to the payment of management fees and employee

cost sharing expenses as well as payments for marketing, legal, tax and accounting fees.

These outflows were partially offset by interest

received on our Norpointe Loan, Restructured Norpointe Loan and CMC Loan during the period.

Cash flows used in operating activities for

the year ended December 31, 2021 primarily relates to operating properties acquired.

flows used in investing activities for the year ended December 31, 2022 relate primarily to funding of loans receivable in addition to

funding costs for our development properties and investments in real estate.

These outflows were partially offset by inflows from the

repayment of the CMC and Restructured Norpointe Loans during the period as well as cash acquired as part of the acquisition of CMC ( Note 8 ).

Cash flows used in investing activities for the year ended December 31, 2021 primarily relates to properties acquired and property

deposits paid, costs paid for our development properties and funding of a loan receivable, all of which were offset by CMC’s redemption

of BPOZ 497’s preferred equity interest, the cash acquired in connection with the acquisition of the 1991 Main Interest and the

For additional details regarding the Offer, see Item 1.

“Business—Our Transactions with Belpointe REIT, Inc.”

Cash flows provided by financing activities

for the year ended December 31, 2022 primarily relate to net proceeds received from the Primary Offering partially offset by the

repayment of the Acquisition Loan.

Cash flows provided by financing activities for the year ended December 31, 2021 primarily relate

to net proceeds received from the Primary Offering and Secured Notes funded by Belpointe REIT.

Accounting Policies

7 unchanged sentences

Our actual results could differ from these estimates.

significant accounting policies are described in “Note 3 — Summary of Significant Accounting Policies.” Many of these

significant accounting policies are described in “ Note 3 — Summary of Significant Accounting Policies.

” Many of these

accounting policies require judgment and the use of estimates and assumptions when applying these policies in the preparation of our

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis