What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-29 compared with 2023-03-31 · 218 added, 182 removed, 121 unchanged (77% of the section changed)

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

and Development of the Company

are the successor in interest to Belpointe REIT, Inc., a Maryland corporation (“Belpointe REIT”), incorporated on June 19,

During the year ended December 31, 2021, we acquired all of the outstanding shares of common stock of Belpointe REIT in an exchange

offer and related conversion and merger transaction.

connection with the Follow-on Registration Statement, we entered into a non-exclusive dealer manager agreement with Emerson Equity LLC

(the “Dealer Manager”), a registered broker-dealer, for the sale of our Class A units through the Dealer Manager.

Manager will enter into participating dealer agreements and wholesale agreements with other broker-dealers, referred to as “selling

group members,” to authorize those broker-dealers to solicit offers to purchase our Class A units.

We will pay our Dealer Manager

commissions of up to 0.25%, and the selling group members commissions ranging from 0.25% to 4.50%, of the principal amount of Class A

unit sold in the Follow-on Offering.

In addition, our Follow-on Registration Statement constitutes a post-effective amendment to our

Primary Registration Statement, conforming our Primary Offering to our Follow-on Offering.

the year ended December 31, 2023, we issued 98,950 Class A units in connection with our Public Offerings.

Together with the gross proceeds

raised by Belpointe REIT in its prior offerings, as of December 31, 2023, we have raised aggregate gross offering cash proceeds of $354.3

September 30, 2021, the U.S.

Securities and Exchange Commission (the “SEC”) declared effective our registration statement

Securities and Exchange Commission (the “SEC”) declared effective our initial registration statement

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

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.

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.

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

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

From the period of October 7, 2021, the date of the

first closing held in connection with our Primary Offering, through December 31, 2022, we issued 2,273,339 Class A units in our Primary

Offering, raising net offering proceeds of $226.0 million.

May 9, 2023, the SEC declared effective our follow-on registration statement on Form S-11, as amended (File No.

333-271262) (the “Follow-on

Registration Statement”), registering the offer and sale of up to an additional $750,000,000 of our Class A units on a continuous

“best efforts” basis by any method deemed to be an “at the market” offering pursuant to Rule 415(a)(4) under

the Securities Act of 1933, as amended (the “Securities Act”), including by offers and sales made directly to investors or

through one or more agents (our “Follow-on Offering” and, together with our Primary Offering, our “Public Offerings”).

connection with the Follow-on Registration Statement, we entered into a non-exclusive dealer manager agreement with Emerson Equity LLC

(the “Dealer Manager”), a registered broker-dealer, for the sale of our Class A units through the Dealer Manager.

Manager will enter into participating dealer agreements and wholesale agreements with other broker-dealers, referred to as “selling

group members,” to authorize those broker-dealers to solicit offers to purchase our Class A units.

We will pay our Dealer Manager

commissions of up to 0.25%, and the selling group members commissions ranging from 0.25% to 4.50%, of the principal amount of Class A

unit sold in the Follow-on Offering.

In addition, our Follow-on Registration Statement constitutes a post-effective amendment to our

Primary Registration Statement, conforming our Primary Offering to our Follow-on Offering.

As of December 31, 2023, $1,264,724,350 remained

unsold under our Public Offerings.

purchase price for Class A units in our Public Offerings is the lesser of (i) the NAV of our Class A units, and (ii) the average of the

high and low sale prices of our Class A units on the NYSE American during regular trading hours on the last trading day immediately preceding

the investment date on which the NYSE American was open for trading and trading in our Class A units occurred.

Our Manager calculates

our NAV within approximately 60 days of the last day of each quarter, and any adjustments take effect as of the first business day following

its public announcement.

As of December 31, 2023, our NAV per Class A units was $100.88.

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.

Despite expectations of the U.S.

falling into recession in 2023, market

conditions for multifamily and mixed-use rental properties 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 rent growth, rate of new construction, rate of absorption, 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.

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

Year Ended December 31,

following table sets forth information regarding our consolidated results of operations during the years ended December 31, 2023 and

2022 (amounts in thousands):

Year Ended December 31,

Rental revenue

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General and administrative

Depreciation and amortization expense

Depreciation and amortization

Impairment of real estate

Total expenses

Other income (loss)

Gain on redemption of equity investment

Interest income

Other income (expense)

Total other income (loss)

Other expense

Total other income

Loss before income taxes

Provision for income taxes

Net loss (income) attributable to noncontrolling interests

Net income attributable to Belpointe PREP, LLC

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.

For the year ended December 31, 2023 as compared to the same period

in 2022, rental revenue increased by $0.9 million.

This increase is primarily related to the amortization of below-market lease intangibles.

During the year ended December 31, 2023 one of our tenants vacated our 901-909 Central Avenue investment, therefore, we accelerated

the unamortized below-market lease liability in connection with termination of the lease.

Additionally, the increase is related to acquisition

of our 1400 Davidson investment in December 2022, whereby the year ended December 31, 2023 reflects a full year of amortization of

below-market lease intangibles.

expenses primarily consists of management fees, property operational expenses, real estate taxes, and utilities and insurance expenses

incurred in relation to our operating properties.

the year ended December 31, 2023, as compared to the same period in 2022, property expenses increased by $0.4 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.

is primarily due an increase in real estate tax expenses at certain investments and an increase in third-party property management

and Administrative

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 administrative expenses primarily consists of employee cost sharing expenses (pursuant to our Management Agreement and Employee

and Cost Sharing Agreement), marketing expenses, legal, audit, tax and accounting fees.

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

the year ended December 31, 2023 as compared to the same period in 2022, general and administrative expenses increased by $0.5 million.

This increase is primarily due to higher allocation of costs incurred by our Manager and its affiliates to us, as well as dead deal costs incurred

during the current year period.

These increases were partially offset by a lower marketing expenses.

and Amortization

the year ended December 31, 2023 as compared to the same period in 2022, depreciation and amortization increased by $0.8 million.

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

Income (Loss)

on Redemption of Equity Investment

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.

increase is primarily due to the acquisition of properties during the year ended December 31, 2022, and due to the acceleration of unamortized

in-place lease intangible assets at our 901-909 Central Avenue investment as a result of three tenants vacating during the year ended December

of Real Estate

the year ended December 31, 2023, we recorded impairment charges of $4.1 million, in relation to one of our real estate assets located

in Nashville, Tennessee, based on our conclusion that the estimated fair market value of the real estate asset was lower than the carrying

value, and as a result, we reduced the carrying value to the fair market value.

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

note bearing interest at an annual rate of 12.0% and due and payable on June 27, 2022.

On June 28, 2022, the CMC Loan was repaid in full,

including accrued interest of $0.3 million.

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

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On June 28, 2022, for purposes of complying

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

with the qualified opportunity fund requirements under the Internal Revenue Code of 1986, as amended, and related Treasury Regulations, we restructured the Norpointe Loan

(the “Restructured Norpointe Loan”).

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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.

On December 2, 2022, the Visco Loan was repaid in full, including accrued interest of $0.2 million.

For 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 on the Visco Loan.

information regarding our commercial real estate loan transactions is provided in “ Note 7 – Loans Receivable ” in the

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

Income (Expense)

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.

July 10, 2023, our indirect majority-owned subsidiary (the “Mortgage Borrower”) entered into an interest rate cap agreement

(the “1991 Main Interest Rate Cap”) as required under the terms of the variable rate construction loan agreement (the “1991

Main Construction Loan Agreement”) for up to $130.0 million in principal amount that the Mortgage Borrower previously entered into,

on May 12, 2023, with Bank OZK, and which is secured by 1991 Main.

During the year ended December 31, 2023, we recognized a net

unrealized loss of $0.1 million on the 1991 Main Interest Rate Cap.

See “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota, Florida (also known as “Aster & Links”)—1991 Main Interest Rate Cap ” for additional information

regarding our 1991 Main Construction Loan Agreement and 1991 Main Interest Rate Cap.

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.

expense for the year ended December 31, 2022, primarily relates to a loss of $0.4 million recorded in connection with the misappropriated

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

For the year ended December 31, 2022, provision for income taxes relates

to taxes incurred (including interest) in connection with our acquisition of Belpointe REIT.

As a result of the conversion of Belpointe

REIT from a corporation into a limited liability company, 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 liability.

As of the date of this Form 10-K, we have

paid the outstanding income tax liability, including interest.

Loss Attributable to Noncontrolling Interests

loss attributable to noncontrolling interests 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, 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.

For the year ended December 31, 2023 as compared to the same period in 2022, net losses attributable to

noncontrolling interests decreased by $0.5 million.

This decrease primarily relates to losses allocated to noncontrolling interest holders

on our CMC and 900 8th Avenue South investments in the prior year period which was 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

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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.

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 Public Offering costs incurred

by our Manager and its affiliates during the years ended December 31, 2023 and 2022.

During the years ended December 31, 2023

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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.

the year ended December 31, 2022, our indirect wholly-owned subsidiary entered into a construction management agreement for the development

of 1991 Main.

For additional details regarding our 1991 Main investment, see “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota, Florida (also known as “Aster & Links ”).” 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,

2023, we had an unfunded capital commitment of $61.8 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.

As of the date of this Form 10-K,

we currently anticipate that the remaining funding for construction and soft costs associated with the development of 1991 Main will

be a minimum of $84.8 million (inclusive of the aforementioned unfunded capital commitment).

During the year

ended December 31, 2023, our indirect majority-owned subsidiary (the “Mortgage Borrower”) entered into a variable-rate

construction loan agreement for up to $130.0 million in principal amount (the “1991 Main Construction Loan”) to fund the

development of 1991 Main.

Advances under the construction loan bear interest at a per annum rate equal to the one-month term Secured

Overnight Financing Rate (SOFR) plus 3.45%, subject to a minimum all-in per annum rate of 8.51%.

The 1991 Main Construction Loan has

an initial maturity date of May 12, 2027 and contains a one-year extension option, subject to certain restrictions.

As of December 31,

2023, we have drawn down $23.1 million on the 1991 Main Construction Loan.

discussed in “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota, Florida (also known as “Aster & Links”)—1991 Main Mezzanine Loan ”, on January 31, 2024, our indirect majority-owned subsidiary (the “Mezzanine

Borrower”) entered into a mezzanine loan agreement for up to $56.4 million in principal amount (the “1991 Main Mezzanine

The 1991 Mezzanine Loan bears interest at a rate of 13.0% per annum, and is secured by 1991 Main.

connection with the 1991 Mezzanine Loan, we are required to maintain an interest reserve and carry reserve for purposes of paying accrued

but unpaid interest on the 1991 Mezzanine Loan and interest, principal and other obligations under the 1991 Main Construction Loan (the

Cash proceeds from the 1991 Mezzanine Loan totaled $39.8 million, after Reserves of $15.0 million were held

back at closing, and incurring closing costs of $1.6 million.

under the 1991 Mezzanine Loan may be used to reimburse the Company for certain costs and expenses incurred in relation to, and to fund

the continued development of, 1991 Main.

The 1991 Mezzanine Loan has an initial maturity date of May 12, 2027 and contains a one-year

extension option, subject to certain restrictions.

S ee “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota, Florida (also known as “Aster & Links”) ,” for additional information regarding the

1991 Main Construction Loan and the 1991 Mezzanine Loan.

the year ended December 31, 2023, our indirect majority-owned subsidiary entered into a construction

management agreement in connection with the development of 1000 First.

For additional details regarding our acquisition of 1000 First,

see “ Part I, Item 1—Our Investments—1000 First Avenue North and 900 First Avenue North – St.

Petersburg, Florida (also known as “Viv”) .” 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, 2023, we had an unfunded capital

commitment of $40.3 million under the terms of this agreement.

We currently anticipate that the remaining funding for construction and

soft costs associated with the development of 1000 First will be a minimum of approximately $119.2 million (inclusive of the aforementioned

unfunded capital commitment).

expect to obtain the liquidity and capital resources that we need over the short and long-term from the proceeds of our Public Offerings

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 Public 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.

currently anticipate that our available capital resources, including the proceeds from our Public Offerings 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.

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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

Years Ended December 31,

Cash flows used in operating activities

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Cash flows provided by financing activities

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

Net decrease in cash and cash equivalents and restricted cash

of December 31, 2023 and 2022, cash and cash equivalents and restricted cash totaled approximately $23.6 million and $145.0 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.

flows used in operating activities for the year ended December 31, 2023 primarily relates to the payment of management fees and

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

Cash 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

investing activities for the year ended December 31, 2023 primarily relates to the funding of development properties.

For additional

details regarding our development properties, see “ Part I, Item 1—Our Investments .” Cash flows used in investing activities

for the year ended December 31, 2022 primarily relates to the 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 7 ).

flows provided by financing activities for the year ended December 31, 2023 primarily relates to the net proceeds from 1991

Main Construction Loan, proceeds from our Primary Offering, and proceeds from our short-term loan from an affiliate.

provided by financing activities for the year ended December 31, 2022 primarily relates to net proceeds received from the

Primary Offering partially offset by the repayment of the Acquisition Loan.

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 2 — 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